Evening star., 1932-07-17
Wall Street Believes Thai De-
preston Cycle Has Run
Its Course.
INCREASE IN COMMODITY
VALUES is HOPEFUL SIGN
Lausanne Settlement and Better
Banking Situation Promote I'M
proved Sentiment in Business.
BY GEORGE T. HUGHES.

Special Dispatch TO The Star.
NEW YORK, July 16.-The weeks
recovery in the security markets has
accurately reflected the growing hope
fulness, not only in the financial dis
trict, but among business men, that the
long depression has at last reached
turning point.
1t is important not to confuse cause
and effect. Often it is a rally in stocks
that is responsible for a better feel
ing, instead Of the other way round.
That is not the case now. The markets
are following sentiment, not primarily
creating it, although of course one does
aid the other
This slowly gathering hopefulness is
not founded on any tangible improve
ment in trade. Business remains in
Midsummer Coldrums, accentuated by
the opening SkirmisheS in a presiden-
tial election campaign. Adjournment
of the National Legislature is always
welcomed by the markets, and never
more so than today.
Pastors in Optimism.
The tempered optimism is based on
something quite different The most
important is the spectacle of rising
commodity prices. an irregularly dis
tributed movement, but one SO long
missing that it is greeted with a de-
gree of incredulity. Second and of
equal weight is the great forward step
taken in Europe. the Lausanne settle
ment. and the new spirit to which it
testifies. Finally We have the passing
Of one banking crisis. that at Chicago.
and the belief that if any others are
threatening they will be averted.
The facts as to commodities are
known to all who follow those markets
The advance in hogs and in cattle has
Gone much to disSipate the gloom in
which the agricultural community has
been enyeloped, this Notwithstanding
the disappointing action of wheat.
Sugar has registered recovery which
the most optimistic would have refused
to predict three months ago. Rubber
shows signs of following, and one or
two other markets of minor importance
have rallied. The effect on the financial
mind is to disabuse it of the idea that
some mysterious force, uncontrolled and
uncomfortable, was at work continu-
ouslv and continually depressing COM
modify prices always to lower and lower
depths. 1t is not alone the fact that
some of these commodities have initiat-
ed recovery but that it has been dem
onstrated that the downward trend can
be interrupted, which is correcting a
badly disordered imagination.
As for the Lausanne matter it is un-
fortunate that so much dust has been
raised over the connection between the
reparations agreement and the war
debts. The reparations problem will no
longer trouble the world, no matter
what is done or is not done about the
rln hot hn TTrNit tnI
States In the long run the most seri-
Gus obstacle to world recovery has been
removed.
New Financing Successful.
good impression was also made by
the way in which the new financing of
the week was received. So many months
passed without any new corporate bond
offerings that the feeling grew that
nothing of that kind could be attempted
successfully.
Little encouragement is TO be derived
from the usual trade indiceS. The steel
trade is back where it was before the
Fourth OF July holiday, but that is all.
In proportion to capacity, the rate of
operations continues at record low.
There is no improvement in car load
ings or in electric power output. Retail
distribution remains greatly restricted,
with unemployment no better if no
worse.
1t may be only in accord with the
new temper of the Street, but it is worth
recording that the feeling with regard
to dividends, so freely questioned very
recently, is slowly changing. There is no
statistical basis to be cited. There have
been no earnings statements of char
acter to change the pessimistic view.
Perhaps it is the belief that boards of
directors will experience a change of
heart similar to that of the traders in
securities that encourages the latter to
hope that the threatened commissions
NAV be averted and that the reductions
may not be as severe as anticipated.
Copyright, 1922