Evening star., 1932-02-21
|NEW LEGISLATION
| TOBOLSTERCRED|T
| FELT IN MARKETS
Commercial Failures De-
crease and Bank CIosinqs
Drop to Small Number.
PRICES OF COMMODITIES
EXHIBIT STEADINESS
Investment Trading Is First to Re-
fleet Changed Mood of Public
With New Buoyancy.
BY CHARLES F. SPEARE.

BY CHARLES F. SPEARE.
NEW YORK, February 2o.-The
benefits Of the various emergency
measures to assist the credit Of banks
and Of corporations are beginning to
show in positive way in the markets
for securities.
Some symptoms Of improvement are
appearing in the business world Com
mercial failures are decreasing. The
number OF bank suspensions has dropped
to a small weekly total. In parts Of
the country clear1ngs give the first evi-
dence OF gain: Commodity prices ex-
hibit greater steadiness. A more conf
dent feeling prevails even where sta
tiSticS fail to make a case for trade re-
coVery. Liquidation has at least been
suspended, If it has not actually been
completed.
Whether or not one believes we are
entering period of moderate imitation,
the conviction is that We have passed
out Of the era of defation.
Markets Respond Quickly.
The speculative and investment mar
kets, as is always the case, are the first
to reflect the changed mood Of the pub
lie Both have been buoyant this week.
The average prices Of industrial stocks
have advanced Is points above their
January low, those of railroad shares
about 10 points and public utilities over
S points While this has chiefly de-
veloped from the reversal of policy by
the professional element and repre-
sents the repurchaSe OF stocks sold for
short account it is no less a sign that
the constructive program Of the admin
istration is having wholesome effect.
Turning to the market for bonds, We
find there an absence of offerings and
an ability to sell on good bids issues
that were unmarketable a short time
ago. Corporation bonds have this week
been within a point Of the high average
Of January and points over the low
level Of December. What is more sig
nificant, United States Government
loans are today 5la points higher than
the low average Of December. with
four Of the active trading issues at, or
above par, in contrast with severe dis
counts on all long-term Government
paper in January.
This clearly indicates that the pres
| sure of bank liquidation has been lifted
from the investment market and that,
either through the preservation of in
cause of the proposed enlarged redis-
counting privileges, those that were ex-
perienclng an exhaustion of their eligi-
BILE paper are no longer compelled to
sacrifice their marketable assets. In
addition there has been less evidence Of
boarding, as shown by the reduced fig
ures of circulation, and benefits are an
ticipated from the campaign to bring
money out Of hiding by means Of a
public sale Of reconstruction bonds.
Potential Buying Power.
The figures published this week by
the controller Of the currency show
decrease in the amount of bonds and
banks, on December 81, of 1855, 900 900.
compared with those on September 20.
As this represents the results of less
than one-third of the banks Of the
country and inasmuch as bank suspen-
sions have been much larger among
non-member institutions than with
member banks. it is fair to infer that
the total decrease for all banks would
greatly exceed the figure given. Obvi-
ously day OF replacement Of con-
siderable portion of securities sold from
necessity. as well as from fear. must
come. When it does, the movement to
recover what has been sold will be led
by the large institutions There has
been some evidence this week that they
were taking back at discount Govern
ment issues which they had sold some
months ago at premium or at face
value. There Is, consequently, great
potential buying power under the In
vestment market which is likely to be
directed chiefly into the region of the
highest grade securities.
Congress Encourages Business.
The urgency for balancing the Gov
ernment budget as a necessary part of
the administration program for restor-
ing confidence has brought forward
this week fresh consideration of income
tax increases. Evidence that this pro-
poSal has been taken out Of the realm
OF partisan politics makes its success
probable. It is another expression of
bipartisan action in Congress that has
done a great deal to encourage business
men and increased their respect for
their representatives in Washington. It
recovery in Government securities.
The foreign trade figures for January
witness the extent to which business
with the rest of the world has con-
tracted. Exports were 40 per cent be-
low the comparatively small figure Of a
year ago and 10 per cent under those of
January, 1929 Imports were 26 per
cent lower than last year and about
10 per cent less than in 1929. In other
words, the total foreign trade Of the
United States last month was $685.
100000, compared with $433, 1000, 900 a
year ago and with 1856, 100000 three
years ago.
Some part Of this shrinkage was of
course, due to the wide decline in the
prices of commodities and of manu-
factured goods. The greater part Of it
represents the decrease in purchasing
power Of the public and the tariff bar
riers that have been set up everywhere
The trade reports from Germany,
France and Great Britain indicate the
same condition last month as those ex-
hibited here. So the problem Of OBJ
tanning exchange for foreign payments
Is steadily more difficult to solve.
| (Copyright, 1922