Evening star., 1932-07-31
Improvements Accumulated
Daily Rather Than Through
Sudden Spurt.
FUNDAMENTAL CHANGES
ARE HELD RESPONSIBLE
New Psychological Reaction
Leaves Public in Buying Mood.
Dollar Makes Gains.
BY CHARLES F. SPEARE.

special Dlspatch to The Star.
NEW YORK, July 30.-The rise in
securities this week is the most i'm
pressive of the series OF advances oc-
curing in the past two years. 1t Is
based on change in fundamentals to
more favorable aspect as we'll as on
new psychology. This has been a
cause rather than an effect of improve
ment in market conditions
Going back to the first week of July,
we find stocks at approximately The
low average of the depression. How
ever, there was then no pressure against
them. Apparently they had again
rached state of complete liquidation.
The Lausanne Conference came to
conclusions that were, more satisfactory
to all involved than had been antici-
pated. The domestic relief bills we're
passed Congress adjourned. The
banking crisis in Chicago district ended.
Commodities began to advance. The
Interstate Commerce Commission ap-
proved the four-party railroad consoli-
dation In the East. Foreign exchanges
turned strongly In favor Of the dollar.
The Government received subscriptions
to new Treasury notes from to IL
times the amount of its offerings. In
stead Of passing the preferred dividend,
the United States Steel Corporation di-
rectors exhibited enough faith in the
future of their industry to order an
other quarterly payment at the regular
rate. From many manufacturing CEN
ters there were reports of slowly re-
Vving trade, more employment, larger
pay rolls.
Public In Buying Mood.
This contrasts with conditions exist
ing when the market had previously ap-
peared to have reached bottom. AL it
had in its favor then was a strong TECH
nical position. 1t has that now, plus
an absence Of those overhanging situa-
tions that In the past have brought on
successive waves of Liquidation and
| spread fear among the investing class.
1t would be difficult to estimate the
| effect ON sentiment generally of such q
| transformation as has occurred in Sc
| curities in the past three weeks. This
| Is due not so much to the fact that
| stocks have advanced an average of 10
| points, the best gain for any month
since June, 1891, or to an equal rise
since the end Of May In domestic and
foreign bonds, as to the fact that the
reign Of terror among private investors
and institutions is over. The public is
once more minded to buy securities
rather than to sell them.
II one Is an optimiSt, he will view the
new situation in the light of a perrna-
| nent change and the beginning of a
period OF universal reconstruction OF
! credit. If one Is peSSimist, he will be
| thankful for this brief interlude of good
feeling. but still convinced that there
are many dark days ahead, during
which the unsolved problems of this
and other countries will have a pro-
! found effect upon securities Markets
respond to a changing sentiment more
quickly and with greater positiveness
| than does trade. This is as true today
| as it has been In the past, when long
| period Of liquidation has finally ended
| in almost complete suspension of stock
exchange business, followed by a grad
| ual appearance Of courage among hold
ers of securities.
1t is significant that markets this
| month recovered ground slowly, consoli-
dating their gains from day to day, in
| contrast with the violent advances that
developed from the Hoover moratorium
| announcement last year, formation Of
| the National Credit Corporation In Oc-
tober and of the Reconstruction Finance
| Corporation in February and passage Of
| the Glass-SteagaIl bill. 1t has been
able to maintain strong technical po-
sition by not becoming too suddenly
topheavy.
Premium on Dollar.
Although it was not generally ap-
preciated at the time. the two periods
| of gravest crisis in the last year were
those when, Europe, in the Autumn Of
1881, was taking gold on large scale
from the United States, and again in
April and May, when the dollar was at
a discount abroad. The possibilities
growing out of this drain provoked
greater fear in Washington and in New
York than any other single factor. It
! can well be understood, therefore, that
the conclusion Of the gold export move
ment and definite change in the trend
toward a premium for the dollar have
| removed serious fears from the minds
of those who have responsibility for
leading this country out OF its economic
troubles.
| For a number of weeks there has
| been a steady advance in the average
price of commodities. So long as COM
modities decline there was the same
unwillingness TO buy them as there
was to take securities during period
of obvious liquidation. Here again
opinions may differ as to the per-
manency of the commodity index irn-
provement. As in securities, 1t has been
slow in arriving. 1t now seems to be
gathering headway and to be affecting
new set of staples each week. It
may be looked uyJon as an evidence Of
imitation and tie effect of the various
banking measures to create a large
/ amount of excess credit.
The fact that this week Federal Re-
serve purchases of Government bonds
were only of small amount may mean
that this part of the program of con-
| trolled credit imitation is nearing a con-
clusion, after an addition of about
| 81 900 900 900 in Government paper to
the Federal Reserve portfolio In the
past four months The abundance Of
money Is indicated in such rates az
1 Il per cent for loans maturing at ths
end Of ti-=s year.
| IHa.w.I.kk gaaaN