Evening star., 1932-02-07
Technical Status of Market
Firm After Long Period
of Liquidation.
GOVERNMENT AGENCIES
PLANNING FOR RECOVERY
Psychological Improvement Is
Tending to Break Down
Reign of Fear.
BY CHARLES F. SPEARE,
cial Dispatch to The Star,

NEW YORK, February 6.-The con-
dition Of business, rather than the
technical status of the security mar
kets, has been responsible for this
weeks slow sag in the level Of stock
prices.
The various indices of commercial
activity oetray a degree of stupor in
nearly all of the major industries and
| In transportation and a contraction
that is more than seasonal in retail
! trade. OF nearly 100 lines of business
reporting to Bradstreet's, about IS per
cent are showing sales below those of
a year ago. The steel industry, which
had been gaining a little momentum
during January, has slightly reversed
its trend. The implication in the re-
duction of the General Motors divi-
dend on Wednesday was of an unfa-
vorable outlook for earnings in the early
of this year as in that season when
production and profits are at their
maximum.
Car loadings fail to exhibit any pick
up in the movement Of merchandise
or heavy commodities, while further
declines in metals, hides, sugar and
steel contribute to the cautious atti-
tude of the consumer, whose stocks are
low, but who Is unwilling to make COM
mitments In a declining market.
This is a gloomy picture. 1t repre-
sents the realities of the business stu
alton but does not allow for values OF
q sentimental or psychological charac-
ter that are steadily being created and
which eventually will promote some
degree of industrial recovery In re-
lating the business outlook to the Sc
curities market, 1t must not be over
looked that prices have frequently dis
counted even more than the percent
ages of decreased earnings and reduced
dividends and that the thoroughness
of Wall Street liquidation. reflected in
the smallest total Of brokers loans
since 1918, as well as in the tremendous
shrinkages in the loans and investments
of all banks, establishes the market on
a strong technical foundation.
Dividend Revisions.
No doubt there will be further divi-
dend reductions. These will lead to an
adjustment in prices OF the stocks al
fected. In general, the phase OF the
depression represented by an accom-
modation in the profit sharing of cor
porations with their stockholders is
nearly completed. 1t is being replaced
by the Complementary phase Of re-
duction in wages and in salaries that,
until recently. have been somewhat out
of line, not only with corporation
profits, but with living costs,
The most striking OF these adjust
ments was completed week ago when
more than 100000 railroad employees
accepted 10 per cent cut, lnVoVing
| 5000 600 600, during the year in which
it is to be effective. This compares
with about s225, ,0Oo,o 900 per annum that
had previously been subtracted from
the incomes of holders of railroad
stocks The negotiations that are now
under way in the building trades
| throughout the country should result,
before April l, in a revision of the rates
of basic pay that will encourage one
of the severest afflicted Of American
industries With all of these conces-
sions to period of unprecedented oe-
preston and to living costs that ad-
vantage the consumer more than at
any time since before the war, there is
no reason why equal sacrifices should
not be made by that great body OF
public servants who have been pro-
| tected in their positions for the past
2l2 years and whose average income
makes a satisfactory comparison with
that of all other workers. The great
est resistance today to governmental
and municipal economy comes from
| IllOSe WIZ dlt 4dI SCly ltopOALoACAC 4oA
the wastage of public monies.
On the other hand, there has never
been a period of industrial depression
when so little friction has charac-
teriZed negotiations for wage cuts. 1t
was pointed out this week in one OF
the banking reviews that, in the first
IL months of 1881 there were 1881
wage reductions, involving more than
100000 workers, and only 760 wage dis
putes. In 1920 there were 3,4l1 dis
putes and 1885 in 1921. This demon
strates the improved mutual under
| sta anding between capital and labor that
has come about over the past few
wears" So remarkable were the re-
lations between the representatives OF
the railroads and Of the brotherhoods
at the Chicago conference that lustl-
fication exists for the belief that new
era in labor matters in this great in
dustry has been entered.
Banking Problem Foremost.
During the first two years of the de-
| preston the public was chiefly con-
| cerned with the decline in security VAL
lies and in the prices of commodities.
Each reacted on the other. BY the end
of August, 1881, there was a reasonable
| belief that both had been liquidated
and sufficiently Debated. The present
! phase is the one over Wnlcn tnere Is
most concern, as it has taken the form
of a financial or banking panic during
| which. in five months to the end of
| January, there have been no fewer than
|, 500 bank suspensions. Obviously this
results from the earlier defation in the
primary assets of banks such as securi-
| ties, real estate and commodities, to-
gether with the inability of borrowers
| to reduce their loans owing to the
shrinkage in their normal incomes
Fear has possessed bank depositors
ever since England went off the gold
basis, resulting in boarding of currency
estimated this week in President Hoo
ver's statement as high as $1,300,000,-
900. The problem now is how to restore
shattered confidence and return to cir
culation funds that are greatly needed
to assist in the process of industrial re-
covery. 1t is confidently believed that
the Government agencies set up will
steadily, if slowly, accomplish this and
at the same time release credits for the
employment of larger groups of workers.
An illustration of this is the proposed
continuation of the Pennsylvania Rail
| roads electrification program from
monthly allowances by the Reconstruc-
ton Finance Corporation. 1t is quite
generally known that banks in central
reserve districts have made substantial
loans to their interior correspondents
and have given assistance in situations
that will be relieved by this Govern,
'ment agency. This will permit them
q freer hand In granting accommoda-
tons to general business and lessen