Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-06-12
SECURITY MARKETS.
ARE UNSETTLED BY.
POLITICAL FACTORS
Rapid Advances in Some
Stocks Due to Technical
Position.
BUSINESS MEN AWAITING
CONGRESS ADJOURNMENT
Clearing Up of Uncertainties in
Legislative Situation Should
Benefit Trade Outlook.
BY CHARLES F. SPEARE.
ecial Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, June IL. Correction
of conditions and completion Of legis-
lative plans that had been held re-
sponSible for the depression in Sc
curities to the first Of June have so far
had only a temporary influence in
steadying markets.
The tax bill has been passed. the
dollar has regained most OF its discount
and a corporation for the purchase Of
bonds has been set to work. Still
there Is uneasineSs among investors,
with dip in stocks early this week to
level closely approXimating the low
of the week previous and consider
able reaction in bonds followed by
speculative buying Friday.
Fresh alarms have been created by
the delay in bringing a satisfactory
economy measure to vote in Con-
gress by the threat of passage of a
bonus bill, by the increasing army of
war veterans in Washington. and by
the socialistic government set up in
Chile. The approach Of the Lausanne
conference and the national conven-
tons in Chicago has also had certain
amount Of restraining influence both
on trade and on speculative operations.
Movement of Gold.
What has been accomplished along
constructive lines ought to outweigh
the things that have been left undone
It is true that this week there has been
another heavy outward movement of
gold, which brings the total loss Of
gold reserves of the Federal Reserve
banks, since the end Of March. to
about $500 100000. Compared with
the date Of gold suspension by Great
Britain. September 81, 1881. Federal
Reserve gold reserves are today $780,
100000 lower. Gold and gold certi-
ficates held by the banks this week are
given as 1925, 500 600 as against S797,-
100000 on September Is, 1881. s49l. =
0,000 at the end of March and
1895, 900 900 in the last week of April
This evidently reflects some of the
boarding of gold about which one
hears much talk in banking circles and
which is associated with increasing in
quiries as to the safest place abroad
to ship American currency. It seems
never to have occurred to those who
are attempting to establish the max
imum Of safety for their capital that
gold in bank vaults in this country, or
credits for gold which they hold or
foreign institutions, would either not
be obtainable or have relatively little
value If the political and social over
turn that they fear should come to
pass.
Foreigners in Market.
Foreign credits in this country have
now been reduced to total that elm
mates the possibility of another gold
export on scale similar to that which
has just passed and such as occurred
last Autumn. The evidence recently
Is that foreigners have been taking
American securities on balance. Since
they were informed that they could
find a buyer in the new Securities In
vestment Corporation for substantial
blocks Of good bonds, they have been
less inclined to part with them.
This is one of the indirect values of
an organization that should have been
formed weeks ago and which. by the
very fact of its existence, has produced
a remarkable change in sentiment
toward bonds. 1t cannot. of course.
counterfeit the effect on security prices
of earnings insufficient to cover inter
est charges. 1t can and has produced
a different attitude among holders or
potential buyers of securities that, even
in these hard times, are covering the
service Of their debts several times
over
Wall Street will not feel sure Of it.
self or show much confidence in Sc
curities, even at their present depre-
ciated values, until it sees the bonus
bill disposed Of to its satisfaction and
Congress adjourned There may be-
therefore, another week or 10 days of
Id VII nfe I,,,%
factors in the situation arguing against
decline in prices to the early June
level. One of these Is the strong tech
nical position of a large number Of
stocks, whose rapid advance at the end
Of the week was due to this fact
rather than to any change in their
actual status.
Trade Indices Low.
The mood of the business man is
duplication of that Of the banker in
his community. He. too, is unwilling
to move forward until conditions clear
in Washington or he sees a reflection
in the market for securities of q
change of view among those who he
thinks have deeper understanding of
fundamental changes than he is per-
mitted to possess. He is also deeply
affected by the continued decline in
commodities and the steady drop in the
production and earnings of corpora
lions that are regarded as accurate
barometers of industrial activity.
Many important commodities have
this month fallen lower than ever.
Prices at which wheat and cotton sold
this week add new disbursement to
producers Of these staples The figures
al H.
about duplicate the low ebb in the
trade reached last December. Car load
ings are one-third less than the aver
age of the years 1881 and 1880 at this
season. The value of department store
sales in May was "a per cent smaller
than In the same month of 1881, when
account had already been taken, in
substantial degree, Of the drop in whole
sale prices. We are approaching the
season that normally is the duIlest of
the year, so that, all things considered,
the index of business activity Is likely
to recede slowly through the Summer
and possibly reach its low point in late
August or in September.
Reduced Buying Power.
The purchasing power of the public
is constantly being reduced as unem-
ployment increases and wage and salary
revisions are made and as corporations
find themselves unable to maintain the
dividends that they have been paying
for the past two years. A significant
phase Of the current dividend situation
is the number of reductions by banks
in all parts of the country, including
those with the largest resources, as a
result of the losses experienced in their
~ sa1
loans. It would aI not I be surprising ISM II the
individuals and corporations with mort
gaSed real estate found them unable