Evening star., 1932-02-28
Securities Markets Are Re-
fIecting More Cheerful
Trade Sentiment.
INDUSTRY FINDS HOPE
IN CREDIT RELIEF WORK
Gradual Recovery From Financial
Stringency Is Now Gen.
orally Expected.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, February 27.-To those
in whom pessimism has become in
grained the past two years and who re-
act only to the movements in stocks, the
first two months of 1882 represent a net
loss. On the other hand, where there
is willingness to acknowledge the ulti-
mate benefits of remedial measures, II
Is possible to see the distinct change IN
sentiment that has developed through
out the business world and to locate the
points at which improvement has been
established in investments and in bank
ing.
If it is true that stocks have not re-
Sponded with enthusiasm to the ron-
structive program for credit relief, 1t
is also fact that We have enjoyed,
since the middle of December, the long
est period of freedom from deeply dis
turbed security markets in a year and
a half, Apparently a level has been
reached both in stocks and in bonds,
where intrinsic values are being recog-
nized. The average investor is thinking
more in terms of what he should buy
than in how much of his portfolio he
should reduce to cash or replace with
Governments.
Bank liquidation is no longer source
of anxiety. Where it Is necessary. It is
being regulated to the current absorbing
capacity of the market. For over two
weeks the bond average has shown a
steady daily advance The additional
gain this week in all Treasury issues Is
one of the most accurate signs Of a new
attitude on the part of the public to-
ward its investments. Most OF 1t oc-
k,1f, t1Hr fn tn
York was reduced to per cent on
Thursday
Credit Relief in Operation.
Beginning with the creation of the
National Credit Corporation last Octo-
ber, the past four and one-half months
have brought into action a group Of
credit relieving agencies that will, in
time, leaven business affairs. 1t IS only
fair that they should be given chance
to function before they are condemned
as inept. If, however, go or 80 days
hence. loans to banks, to railroads and
to other companies by the Reconstruc-
ton Finance Corporation have not put
the borrowers on their feet, and II the
more liberal discounting opportunities
to member banks in the Federal Reserve
System and to their correspondents,
have not lifted them to higher credit
status, it will be time to condemn these
agencies as ineffective and go back to
burying gold in the ground.
No one expects that they will, sepa-
rately or together, work miracles. The
troubles that have arisen since october,
1929 are too numerous, too deep-rooted
and so widespread that they cannot be
cured by a sudden TRANSMISSION from
newborn credit agency to some debili-
tated corporate body. Their whole pur-
pose is to check the ravages of a disease
and then gradually to rebuild the invalid
to health. Most of this year is likely to
be occupied in a process of slow con-
valescence in security markets and in
industry
Furthermore, this recovery will not be
uniform. There are businesses so far
gone that they cannot live, however
heroic the rescue work may be. There
are others that will be compelled to dis
continue dividends. Their securities
will fall behind in any general upward
movement. From present indications
there will be many more dividend ad-
justmentS in the next three months,
rejecting falling profits during the past
year and half and the unwillingness
of boards of directors to encroach fur
ther on their cash reserves. This week
lldS uIOuBAG d IdOlCdL CIldIlSc III OiiC
dividend status of such prominent con-
Germs as Aluminium Go. of America,
American Bank Note, Commercial Sol
vents, National Surety, Worthington
Pump & Machinery, United Corpo-
ration, Union Carbide g. Carbon, Hud-
son Motors, Commercial Credit, General
Railway Signal and New York Transit.
At no period of the depression has
there been a sharper downward trend
in the average of corporation dividends
than since the first of January.
Conditions in Business.
Such adjustments in profit sharing
always increase In momentum toward
the end Of depression. They coincide
naturally with what Is now being wit
nessed-sharply declining railroad earn
| ings a fall in iron and steel production,
weakness in metals and, notably this
week, in silk and in rubber, Is per
cent drop in retail trade, stagnation in
building construction and suspended
animation in the motor industry. In
each one of these different lines of bust
ness, however, there is the belief that
prices of securities and of commodities
have gone through natural liquidation
and today represent intrinsic values, or
values under the cost of production, and
IIldb IlICy uIC llOW III q DOOlIlO1l w ~
spond to a moderate degree of artificial
stimulation. Where there were 10 peo-
pie two months ago worrying about
0ef1ation, one may be found today who
is concerned with the possibility OF In
f1ation.
The question Is frequently asked. II
there is to be recovery, where will 1t
start? 1t is argued that the rebound
from the 1921 panic was promoted by
the boom in building, but that now the
country is overbuilt. 1t is further stated
that the automobile industry has ex-
panded beyond reasonable proportions;
that 1t will be some time before neces-
sary requirements or the purchasing
power of the public can develop another
era of production to stimulate the iron
and steel trade and return to Carriers
that proSpered from automobile traf-
flc their former revenues.
A likely source from which the busi-
ness world will regain its health is from
rise in agricultural products, for until
the farming communities Of the coun-
try are able to sell their products at a
profit the distribution Of goods and the
movement Of high-revenue freight will
be of relatively small proportions. The
that industry improved when farm
products stopped going down and began
to point to higher level.
Investors Hold Key
Whether this will happen again re-
| mains to be seen. Actually or indi-
rectly, the unwillingness to consume
| goods ct the normal rate has been in
fluenced by the tremendous decline in
securities and by the fall in the income
from them. More investors have been
disturbed by the depreciation in their