Evening star., 1932-01-11
SECURITY MARKETS
ON BETTER BASIS
Constructive Factors Exert
Strengthening Influence on
Stocks and Bonds.
BY CHARLES w. STORM,

Special Dispatch to The Star.
NEW YORK, January 11-shaping
of constructive factors conducive to a
more stabilized market for securities was
apparent the last week Action of the
prices Of stocks and bonds in advancing
sharply would seem to indicate that
liquidation has been completed and that
there has been reversal OF opinion re-
garding the outlook for securities.
Because of the shortness o. Saturdays
session, little discussion was heard rela-
tive to the important statement made
by George L. Harrison, governor of the
New York Federal Reserve Bank, before
the convention Of the New York State
Bankers Association, in which he said
that the Reserve banks are fortified
with sufficient gold at present to expand
Federal Reserve credit by some $780,
100000. This, the speaker estimated,
could mathematically form the base for
a stupendous increase-as much as $685.
600, 900, ,000-in bank credit.
Mr. Harrison, who was talking pub
licly for the first time since he became
governor Of the bank, stated that the
machinery to stop deflation and gradu-
ally build up structure of sound val
ueS and sound business is available.
1t has been assumed right along that
certain amount of initiation would be
necessary to arrest the defiation which
has been going on and start recov-
cry. While initiation is considered dam
gerouS, this danger, under existing con-
ditionS, would be minimiZed if properly
regulated, as it is expected to be.
Cancellation of Reparations.
Another important development con-
sidered favorable to the security mar
kets is the intination from abroad that
Germany at the forthcoming conference
of European representatives will insist
upon cancellation of reparations pay
mentS for all time. While 1t Is not ex-
pected that the Germans will succeed
in bringing about complete cancellation,
even a substantial reduction of the pay
ments would be construed as bullish on
the stock market, as it would insure
payment of the private credits which
are considered the backbone of inter-
national trade.
Railroad News Expected.
Important and favorable develop
ments are expected to take shape this
week owing to the fact that the rail-
road executives and railroad employees
will confer regarding the question Of
wages. The fact that some branches
of railroad labor have recently con-
sented to reduction of 10 per cent IN
wages leads to the expectation that this
weeks gathering will result In some
thing definite.
The reasons for the recent improved
demand for railroad securities Is per-
haps summed up best by E. j. Barry,
member of F. B. Keech 65 Co., con-
sidered an expert on railroad securities,
who says:
IT believe that the railroad situation
will show a material improvement TINS
year for the following reasons:
"Q) The per cent rate increase
already granted should add at least
s10O, 1000, 900 to their earnings over 1881.
"(2) The decision handed down oy
the Supreme Court on grain rates,
which was favorable to the railroads,
will add S20,000,0D3 more to their earn
ings for 1892 over 1881.
"(3) The 10 per cent wage reduc-
ton, which we believe will be effected,
will add s250,000,0O to the revenue OF
the railroads for 1882 as against 1881.
These three Items mean increased rev.
enues OF s270,000,000 --,.-.
I'm addition, I thi1k the possibilities
of mergers or consultations are re-
gardad in a more favorable light today
than in the speculative period OF 1879.
/ also DSuGpS LIldb lCLlCdidi sAStA
will be enacted regulating truck and bus
competition. The passage Of the bill
creating a reconstruction finance cor
poration will also be favorable for the
railroads capital lunds."
Banking Situation Helped.
Another important constructive de-
velopment is that important banking
interests are extending substantial
| financial assistance to a number OF
banking institutions whose apprehensive
| liquidation was having a depressing
| influence on the securities markets.
The general stock market had a sharp
advance the last week and the COM
prehensiveness of his rise induced some
| profit-taking on Saturday, but the
worst is believed to have been wit
messed Stocks and bonds are now ex-
pected to go forward on the road OF
reconstruction.
tCopyright, 1882, by the North American
Newspaper Alliance. Inc)