Evening star., 1932-10-09
SECURITY MARKETS
SHOW SHARP LOSS
DURING PAST WEEK
Decline Is Declared a Nat
uraI Sequel to ManipuIa-
tions of Traders.
WALL STREET EXPECTS
PREDICTION SELLING
Reaction at This Time Is Held
More Likely Than Later
in the Year.
BY CHARLES F. SPEARE.

! has observed modern. high tractive
locomotive negotiate a mountain grade
with string of loaded cars behind it
has been conscious of its slow and ir-
regular progress. 1t pulls and hauls
and seems about to come to a dead stop.
Eventually it reaches the summit of the
divide and moves freely down on the
other side
This is the way with the present
business situation. 1t started last
Summer from low ground where there
was little resistance to the improve
ment. and is now working up the grade,
| meeting more resistance but all the
time gaining ground.
Confirmation of this fact is given
this week in various directions The
production of iron and steel has in
creased, if only fractionally. So have
car loadlngS. The September sales of
one of the largest of the national dis
tributors of merchandise showed the
| best increase over August in several
years. Bank clearings made more than
| the usual seasonal gains The figures
Of business failures in September. just
| published. were the most satisfactory
were the smallest in two years
Pay Rolls Show Rise.
| Factory employment is slowly in
creasing. This writer visited an indus
| trial section in New England this week
where pay rolls had advanced ma
| terlally over those of two months ago.
1t is the small industries that are
making the greatest relative gain in
| output. Some OF them report the
largest number Of individual orders in
ther history. rejecting the exhaustion
OF supplies and a renewal of purchasing
power that compels quick replenish-
ment of stocks of manufactured goods.
Progress is painfully slow and likely
to be so for some months Under the
| circumstances 1t is natural that there
should be degree of impatience and
feeling Of concern over ability to
retain the ground that has been recov-
cred. The recent heavineSs in all
speculative markets adds to this skepti-
clsm. Commodities touched their high
average in September coincident with
the best prices since July for both
stocks and bonds. In each group.
securities and commodities. there had
been an clement of manipulation and
of exaggerated ideas of early business
improvement that subsequently reacted
against both classifcations.
Tn unWarranted marking I'D of
stocks on September 81 exposed the
professional character of the last stage
OF the Summers bull market and made
il clear that it was no longer the in
vestor who was giving support. He was
standing aside watching rigging"
processes similar to those Of April 1880.
and which officially pass as speculative
proceedings over which there can be no
control.
Grain Prices Slide.
The most disturbing incident of the
week has been the decline in the price
of wheat. Under so cents a bushe: the
December delivery is approximately at
the low of the year. At the same time
corn has approached 25 cents and oats
Is cents bushel Within a month of
the national election, the position OF
the farmer, from the standpoint of the
price OF his products. is as serious as
ever. The expectation that October
would witness a pronounced recovery
IN wheat. and that this might influence
a portion of the electorate, gives little
promise of being fulfilled
The immutable laws of supply and
demand are in control. With crops in
this country, in Canada and in the
Argentine what they are, it will be
difficult to manufacture a sentiment
that can have a sustaining influence
on prices. The gradual decline in
metals the past month is also indica-
tive of the excess OF supplies in period
of low manufacturing and construction
activity.
Financial Crisis Past.
The speech of President Hoover at
DeS MoineS on Tuesday outlined the
dangers that had been faced when the
gold standard Of this country was
threatened last Spring by Frances
and suggested the fortunate escape
from an embarrassment that would
have prevented such recovery as sub
sequently occurred. 1t cannot be too
often emphasized that the crisis six
months ago was of a financial char
acter and that this no longer exists.
This is the foundation on which con-
fidence in the future has been built.
There is no reason why it should again
be unsettled.
However, with the restoration of
equilibrium in the banking world and
the many forms in which additional
credit has been provided there is yet
little evidence that the banks are eX-
panding their commercial loans. The
statements of institutions that have
been published this week. as of Sep
tember 80. again exhibit a high ratio
of liquid assets to deposits.
Attitude of Investor.
The unWillingness of the average in
vestor at the present time to partici-
pate in the stock market is due to
several factors. In the first place he
believes that prices Of securities were
bid up too fast and went too high in
September and that large amounts of
them are today in the hands of pool
operators who would like to liquidate
them but cannot at the present level
Again he is of the opinion that suffi-
cient recovery has occurred to balance
the improvement in sentiment and the
concrete indications of gain in industry
and in transportation. Possibly the
main reason for his Indifference is
based on an inability to measure the
effect of the November election on
securities.
There is now, and has been for
several weeks, a popular notion that,
either before or after November 8, the
stock market averages will decline well
below those ruling during the past
month. Current opinion is more dis
posed to expect prediction reaction
than one later in the year. This has
been growing as commodity prices have
shown tendency to soften and pres
sure on the wheat market has been
intensified.
tcopyTight, 1922 -