Evening star., 1932-10-02
Stocks Enter New Month
With Price Average Con-
siderabIy Higher.
PROOF OF INDUSTRIAL
GAINS ARE MULTIPLYING
Testing Period Lies Immediately
Ahead for New Constructive
Government Agencies.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, October 1.-Business
and markets are today entering the
mcnth that has been accepted as the
test period for the various constructive
agencies set up to oppose deflationary
tendencies 1t will also determine the
tpermanency of the more optimistic SEN
timent engendered by the rise In securi-
ties.
From the speculative standpoint the
situation may not be quite so promising
as it was early in September. On the
other hand, industrial activities have
materially improved recently and ought
to gain momentum during october.
The September quarter contrasts
sharply with the three month period
that ended with June. 1t completes the
first half year Of operations Of the Re-
Construction Finance Corporation and
covers the period during which the con-
trclled credit policy of the Federal Re-
serve System has been in active play
1t also sbrings the first anniversary of
the National Credit Corporation, which
was the earliest of the instrumentalities
promoted to meet the emergency in the
banking world. Its work has about been
completed. 1t is expected soon to be
iquidated
Rebuilding Of Confidence.
The net effect of these efforts to
check bank failures, to uphold the
credit of the railroads and to dis
tribute relief, and thereby increase en-
p,oyment. has been that Of overcoming
the intense fear that prevailed in the
world Of business and banking three
nd IF nft {fxy
for gradual rebuilding OF confidence
and Of stimulating production.
Although there were about the same
number OF bank failures in the Septem-
Der quarter as in the three months to
June 80, the amount of their liabilities
was smaller and more banks reopened.
There were 200 fewer bank suspensions
than in the March quarter. The record
for the past 10 years Is sorry one, with
nearly 10000 fewer banks in operation
today than in I921-a reduction Of
nearly one-third, Of which only small
proportion has been due to the factor
of consultations.
The last quarter Of this year is one
that VIII be influenced not only by what
has been done to stabilize banking and
industry, but by the trend OF domestic
politics and that of the economy of Eu-
rope. A financial panic was checked
three months ago. In the meantime
securities have had remarkable ad-
vance. This In itself is an insurance
against a repetition Of the earlier
alarms. On the other hand, certain
deeply rooted economic ills have not
been cured. They are as much of
menace to the general situation as ever.
Conditions in the farming areas of the
West are even more serious than they
were at the height Of the banking
panic. Unemployment is greater than
it was then, with no prospect of mate
rial change during this quarter, though
an increase in the total is possible due
to seasonal occupations and in spite Of
the daily modest additions to the work.
ing forces of the textile mills, railroads
and numerous small industries.
New Taxes in Prospect.
No progress has been made in the
matter of war debts. This canker In
international relations Is deeply disturb
ing, with Germany this week indicating
her inability to meet small obligation
due this country.
1t is apparent that the latest economy
and tax program of the government has
failed to accomplish its purpose of bal
ancing the budget. so that additional
tdhdtlOll WILL Uc UllG VI tIl6 IlTSU meas
ures to which Congress must give its
attention when 1t convenes. Another
Winter of discomfort and of disturbing
legislative programs in Washington is
inevitable.
In spite Of the reaction in stocks re-
Gently, their average price at the begin
ming of october is nearly double that of
the end of June. The larger part of
the improvement in bonds since the end
of May has also been maintained. In
issues the present average is
above that of a few weeks ago. This
is also true Of Government securities
and of the better types of tax-exempt
obligations Therefore, the recovery
since Spring, as measured by market
values, has been eminently satisfactory
and at higher rate than in previous
depressions.
1t would not be unreasonable to ex-
pect markets to hesitate for while and |
await more evidences Of a permanent |
upbuilding Of the business structure. !
But in the impatience of Wall Street |
for action and in view of the political |
campaign, artificial stimulants may be |
applied to both markets for securities |
and for commodities, and from these |
there could easily be repetition of the |
speculative demonstrations Of last |
month.
(Copyright. 1922