Evening star., 1932-09-11
Confidence Is Replacing Fear
in Public Attitude Toward
Trade Outlook.
RECOVERY is HAMPERED
BY SERIOUS OBSTACLES
Unemployment, War Debts, Credit
Collapse Abroad and Other Prob
lens Press for Solution.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, September lO.-In the
domestic business world there are more
indications each week of reviving con-
fldence and of an expansion in produc-
tlon. So far the most visible evidences
OF this are in New England and in the
South, where the activity of the tex
tile mills frequently equals that of pros
porous years and the rise in the price of
raw cotton lends itself to an enlarge
ment of local demands foh merchandise.
The general complaint, however, is
that there is little profit in manufac-
ture. Where employment has increased
IT has been at extremely low wage rates.
The major industries still show a dis
couraging lag, though among them
there is a hopefulness that contrasts
with the hopeleSsness of July and that
grows out of universal change in pub
lie attitude toward conditions and an
entire removal from the field of con-
lecture of those elements that contrib
uted to the fear possessing mems minds
last Spring
Sentiment and Prices.
1t is impossible, of course. to avoid
the conclusion that the progress of
business will be slow. Trade reviews
this week emphasize and reiterate the
fact that the purchasing power of the
great mass of the people is low and that
it cannot be much increased for months.
This will retard the recovery in retail
trade and will compel a continuance
of the Offering of low-priced goods. This
may be done in spite of the moderate
rise in commodities. for there has yet
to be an equalization of wholesale and
retail values. The August statements
of the chain stores and of the national
distributors again make poor compar-
ison with those of year ago. It is an
indication of the unwillingness of the
public to change a tWo-year policy Of
economy that it should be spending so
little for necessities or luxuries after
having enjoyed two months of rapid
appreciation in the market value Of its
securities.
The point now at issue. between those
who believe that securities should go
on advancing and those who maintain
that markets should halt until business
gains conform more closely with those
in stocks, is the factor of sentiment in
establishing market prices. Until July
we had the element of fear working
against securities without much tangible
basis for this fear. Now we have the
quality of confidence largely responsible
for the reconstruction of values and not
much proof that intrinsically, values
are greater than they were in July.
AS a matter of fact there are scores
of corporations today whose stocks have
advanced from 200 to 500 per cent but
whose treasures are lower in cash than
they were two months ago and whose
September quarterly statements will be
for the same period last year. The
question which the buyer of securities
at their eurrent level must answer for
himself h. whether he may not be pay
ing too high a premium for a restora-
ton of confidence, just as he took too
great a discount on his stocks and
bonds when the element of fear con-
trolled him.
There is no disposition here to mini
mize the great fundamental changes
that have taken place during the Sec
ond half of this year, both nationally
and internationally. and out of which
there should have come pronounced
recovery in security prices. But only
the beginning of cure has been ef-
fected. No one knows at this time
how far 1t may go or how permanent
it may be.
Problems That Remain.
The domestic banking crisis, which
was chiefly responsible for the last and
most acute phase of the depression, de-
veloped a year ago. Before that there
were, and still are, such disintegrating
influences as war debts, tariffs, credit
collapse In Germany and South Amer
ica, universal unemployment. increasing
demands on governments and States for
social relief, surplus capacity in indus
try in transportation and in the
public utility field and an unco-
ordinated banking system. None of
these unsettling situations has been
materially changed. The mind accom-
modates itself more readily to corpora
ton or State debts of great size when
prices of securities are rising. The debts
remain, however. Somehow the service
Of these debts has to be met out of a
greatly reduced national income, or
| bankruptcy follows. We are just about
entering the second stage of the senti-
mental Journey which started in July
from Wall Street. On this the obstruc-
tionS to an advance may be more
visible than now
The unknown quantity and the un-
| fathomable mystery, in all market move
mentS Is, after all, the attitude of the
public. In just what direction it will go
under certain circumstances no man
knows. Experience has taught that it
will move in the mass arL not inde-
pendent of certain trend The stock
ticker is seductive. Most of those who
listen to it. lose their common sense and
the good judgment that serves them in
2 different environment. If those who
were loudly proclaiming in June that
the bear market was just beginning
were not now the most enthusiastic
buyers of stocks that have trebled and
quadrupled in the past two months,
one might be less disposed to question
the soundness and permanency of the
current price level
(CopyriRht, 1927