Evening star., 1932-08-14
.UPTURN IN STOCKS
GIVES IMPETUS TO
NATIONS BUSINESS
Manufacturers Report In
crease in Orders as Sc
curities Rise.
$4,000, 900, 900 MARKET
GAIN WELL MAINTAINED
Recent Improvement in Quotations
Is Laid to Investment Rather
Than Speculation.
BY CHARLES f. SPEARE.


NEW YORK, August 13-It has
been possible this week to observe
some of the benefits to business of the
past months rise in securities and in
commodities. Reports have been COM
ing in from many sections of the coun-
try indicating a release Of orders. to
wholesalers and jobbers and a more
liberal attitude on the part of dealers.
An interest phase of this recovery is
the greater activity among small man
ufacturers than with large corpora
tions. many of which are still witness
ing an ebb in their production and arc,
therefore, skeptical of the Soundness of
the improvement which they see regis
tered on stock and produce exchanges.
They read, too Of the reduction or
passing of dividends by strong corpora
tionS like Eastman Kodak. Delaware g.
Hudson and Canadian Pacific; of an
other decline in the ratio of iron and
steel production, which continues this
industry on starvation basis: of all
output in motor vehicles in July from
40 to so per cent under that of the
month previous or the same month
year ago; or the sharp fall in electric
output; of an increase last month of
80 per cent in commercial failures,
whose liabilities were nearly 10 per cent
in excess of those of July, 1891; and
of 80 per cent shrinkage In depart
ment store sales Naturally they Won
der whether the present phase of the
securities market is not another evi-
dence of poor judgment in Wall Street.
Signposts Of Recovery.
There are other facts, however, that
cannot be disputed and which are en-
titled to greater weight than those re-
flecting statistics of the last stage of
a depression. In order to establish the
genuineness of the recovery in securi-
ties with that portion of the public
that still belittles it, 1t is necessary to
re-emphasize the completely liquidated
condition of stocks and bonds few
weeks ago, the beginning of an up
ward movement in commodities, the
great improvement in political senti-
ment abroad. and the enormous credit
facilities created through various Gov
ernment agencies and now being used
in an attack on the forces of defiat On.
All of these factors slowly changed he
outlook of the public; then overnight
there developed the conviction that the
end of the depression had been
reached and that securities and COM
modities were no longer speculation
but an exceptional investment.
The subsequent fact is that. in about
a months time, over $4,000, ,000,0 of
market value has been added to securi-
nearly 81 900 100000 in agricultural
products and In various other COM
modities 1t is not reasonable TO ex-
pect that those who have benefited
from this gain have not been i'm
pressed by it or that it has not changed
their outlook or their attitude as con-
sumers. From being at deaths door,
so to speak, financially, they have been
saved from bankruptcy.
Bank Portfolios Rise.
Take the case, for instance of a
financial institution whose manage
ment has been sitting up nights nurs-
ing sickly bond portfolio-to be spe-
cific, one that had invested $400.0 900 Of
it's total bond account of $1,000,000 In
issues that were rated below the first
four groups permitted to be carried at
extremely generous book values. This
bank, let us say. had 20 different is
sues whose average cost was around
90. In June the average market value
of these securities was approximately
80. Liquidation of them at that time
would have forced the banks suspen-
sion Today the same bonds show an
average market value between so and
So. Progress is still being made. The
element of impending disaster has been
lifted With it there has come an in
clination to be more liberal in accom-
modating clients.
The effect of this appreciation in
different ways also is being witnessed
among the savings banks and the life
and fire insurance companies whose
depositors and policy holders have
shown signs Of anxiety in recent
months.
Securities Point Way.
In every period of industrial depreS-
sion a rise in securities has foretold
the advent of a change in commercial
conditions. This year is no exception
to the rule. Always there is dispo-
sition to scoff at what appears to be
premature judgment on Wall Streets
part; then, few months later, will
ingness to accept the accuracy of it.
The feature of the present movement
| differing from that in other panic eras
| is that of broad and buoyant market
! arising almost Immediately from the
ashes of a three-year market conf1agra-
| ton Normally when stocks have
finally reached their bottom, they enter
period of moderate ebb and flow,
gradually seeking higher levels, and
| only after several months developing
phases similar to those following al
most Immediately upon the conclusion
| of the seventh major decline in the
| 1929-l932 market.
Another new phase is the character
! of the present buyers of securities.
| They have come to Wall Street and to
! all other financial centerS of the coun-
try with their checks, their hidden
banknotes and their gold and have
/ paid for what they bought. This is
demonstrated in the figures of brokers
loans. which have only increased
s3.O00,000 since the end of June, in
! spite of the $4,000, 100000 apprecia-
! ton meanwhile in market values. On
| the basis of daily transactions run
| ming from 100000 to over 100000
shares, a campaign of speculation on
margin in this period would have
lifted the brokers loan account at least
$500 100000.
| (Copyright 1922
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