Evening star., 1932-01-10
SECURITY MARKETS
DISPLAY STRONGER
TONE DURING WEEK
Promise of Early Solution to
World Problems Provides
Cause for Advance.
GOVERNMENT PROGRAM
PUSHED AGGRESSIvELY
Cooperative Efforts Expected to
Give Results Within Next
Sixty Days.
BY CHARLES F. SPEARE.
ecial Dispatch to The Star


and in a more optimistic feeling in
business circles. Some of it has been
for the benefit of institutions and has
been done quietly but effectively. Else
where it has been visible in the concen-
tration of Congress on the passage Of
the Reconstruction Finance Corporation
and in the negotiations payments.
A definite conclusion should be
reached in several important matters
in the coming week. This now promises
to bring to a final vote the reconstruc-
ton measure, to witness settlement of
the railroad wage controversy and to
disclose the terms on which American
bank creditors and German commercial
debtors are willing to extend the stand
Still' arrangement for another year. 1t
may also bring to light the attitude of
representatives of TIE countries most
deeply concerned in the question OF
reparations, which they will indicate at
the Lausanne conference.
Altogether the next 80 or 60 days
will be one of the most important test
periods of the depression. Fortunately,
it is being entered in a spirit of greater
cooperation than ever, as vulnerable
situations are attacked, and with uni
versal appreciation Of the fact that the
financial and economic future of this
country and of Europe depends on the
Willingness OF opposing interests or po-
litical parties to waive prejudiceS or
material advantages for the national
good.
Banks Well Fortified.
The disturbing market movements in
the early part of the week were due
to fears over situations that had been
provided for in the closing days of 1881,
and, to some extent, to a continuation
OF the tax selling and window dress
ing" which helped to exaggerate the
demoralized price conditions in De-
cember. The statements of national
and State banking institutions averaged
hlgf. in their ratios of cash and Gov
ernment securities to deposits. In in
stances they were fantastic in the ex-
treme lengths to which bank manage
ments had gone to promote the element
OF liquidity at the expense of legiti-
mate borrowing constituency.
II the Reconstruction Finance Cor
poration does what it is expected to
do, 1t will relieve banks that have been
generous in their aid to correspond
entS when they could not obtain help
anticipated from the National Credit
Corporation and will permit them a
freer field Of operation in the business
world. Certainly there is no call on
those that in the past have employed
a considerable portion of their re-
sources in financing Stock Exchange
operations to lend money to Wall
Street. This center, with loans less
than one-third those of a year ago
ana under those OF the late war period,
Is impoverished by its liquidity. Those
who now compel attention are the
merchant, the manufacturer the i'm
porter, the exporter, the jobber, the
steam carrier the public utility man
ager, the maker OF automobiles, the
farmer, the real estate owner, the
miner, the oil producer, the cotton
factor and a host of those who. under
Tree credit conditions, create industrial
activity and who Sicken and whose en-
terprises decay when credit is with
held, as 1t has been in the past year.
Money has been too abundant; credit
has been too scarce.
-. With the freezing up of bank credits
there has been recently q freezing of
some OF the primest evidences Of credit,
such as short-term corporation and
municipal obligations. One of the
earliest effects Of the efforts of the
Reconstruction Finance Corporation
credits, permitting holders to realize
on them
Rails More in Favor.
The voluntary reductions in the pay
OF railroad shopmen on different sys-
TENS this week establishes a precedent
that should give leverage at the con-
terence In Chicago next Thursday
between representatives Of the four
brotherhoOdS and the railway eXecu-
tiVeS. Although the directors of the
AtchiSon, Topeka g. Sante Fe found it
advisable on Tuesday to reduce their
common stock dividend to per cent
from 10 per cent-and the Atchison is
in number of respects the strongest
railroad system in the United States
there is quite a different attitude
toward railroad securities than pre-
vailed fortnight ago. This Is due to
a def1ation carried to an extreme in
the Junior issues of roads that are
having no difficulty in meeting their
fixed charges, as well as to the ineWta-
Bile turn in the fortunes of the car
rierS when once regulating bodies had
wakened to the critical state of their
affairs.
1t may not be possible for roads
that are still paying dividends or those
that have not yet found 1t necessary
to reduce their rates to be as liberal
in 1882 to their shareholders as they
were last year. On the other hand,
there Is no evidence of that universal
bankruptcy of the transportation sys-
tenn which was in the mind of the
holder of railroad stocks and bonds
when he offered them last month in
a demoralized market for whatever the
r11orkat tU0l1lS nav for them.
The Reconstruction Finance Corpo-
ration should be as much more helpful
to the railroads than its own little pool
as the same corporation will be to the
banks, compared with the efforts in
their behalf by the National Credit
Corporation For one thing, it will
have an aggressive and courageous
management, probably under the di-
rection of Eugene Meyer, who has the
capacity and the imagination to do
the thing that is demanded by the
times and not in accordance with ortho-
dox ideas or traditions in banking or
in business This does not mean that
new policies need to be reckless ones,
but those developed out of common
sense and an appreciation OF the emer-
gency and the state of the public mind.
A serious run on a metropolitan saw
ings bank this week grew out OF such
a little incident as posting notice
of a change of hours of business on
the doors Of the institution when the
information could as well have been
convened in less alarming manner
to its type OF depoSftors.