Evening star., 1932-09-04
Sustained Advance In Stocks
Increases Hope of Early
Trade Turn.
TEXTILE INDUSTRY LEADS
IN MARCH TO RECOVERY
Marked Improvement in Many
Other Lines Expected Within
Next Sixty Days.
BY CHARLES r. sPEARE.
Special Dispatch to The star.

Special Dispatch to The star.
NEW YORK, September 3.-For the
past two months the attention Of the
public has been centered on the rise in
securities. A vote of confidence has
been given to stocks and bonds whose
values, as recently as the end Of June
were held to be in debt. In the next
go days this same public will be con-
cerned primarily with such evidences
OF industrial expansion as may be ex-
pected to develop from the great ap-
probation in securities and from the
replacement of fear with confidence.
Fortunately this is the season when
busiress normally expands, but 1t will
not be sufficient to discover in the sta
tistical records OF September and Oc-
tober only the changes that come as
trade passes from the dullest period Of
the year into that which is always en-
livened by larger purchases of mer-
chandise for Autumn and holiday dis
tribution and by the movement Of the
staple CROPS to market.
Textiles First TO Benefit.
There are new signs each week that
the benefits of a stabilized situation in
securities and In commodities. plus the
abundance of credit available to the
borrower, are revealing themselves in
various commercial lines. The improve
rnert to date, however. is mainly within
the small circle of industries identified
with textiles. The supply Of these ap-
pears to have been nearer exhaustion
than any other and their prices a few
weeks ago at level comparable to that
OF securities, when their average reach
ed the minimum. Elsewhere there is
yet to be found any distinct improve
ment.
in the prices Of railroad stocks to the
technical position Of such stocks than
in eny other group. They went through
the longest and most drastic liquidation
of any securities and reflected the al
most unanimous opinion among in
vestors that their day had passed and
that there was little remaining equity
In the railroad capital account. A 400
per cent appreciation in carrier stocks
would imply that there had been a
change In figures from red to black.
This Is not so. Were 1t not for the
Reconstruction Finance Corporation or
other Government agencies, two rail-
roads would have suspended payments
on September /. As their rhaturities To
the end of this year came due. others
would be compelled to take recourse
in the courts
The carriers are steadily becoming
heavily involved as debtors to the Gov.
ernment II this condition continue:
we'll into 1898, as now appears prob
able. the Government will have an in
vestment in the American transporta.
ton system compelling policies thai
might readily become feature in 70.
litical platforms. This may be to thu
advantage OF the railroad bondholdsr.
United States Debt Situation.
1t is well to keep in mind the fact
that the stock market turned upward al
precisely the date Of the satisfactory
conclusion Of the Lausanne Conference
Therefore, American investors who have
benefited by a $4,000, 10000 apprecia-
ton in securities In the past two months
owe some part Of this to the betterment
in the foreign political situation. Conse-
quently, they should view with less pref
udice the efforts now being made to
clear UP the entire war debt situation
even If 1t involves comparatively small
sacrifice to American taxpayers. 1t il
important to note that since July, Great
Britain, on the basis of more confident
feeling abroad, has successfully under.
taken huge conversion program and
that France is now entering upon q
similar one. The time seems to be op-
perfume for doing something Of the same
sort in this country.
The weakness of the American debt
situation is that 1t Is concentrated In
the hands of the banks. If there is any
virtue in the argument that a. distribu-
ton of corporation securities among
the public develops a certain amount oi
proprietary interest in these corpora
tions, the principal might also apply
with respect to the Government debt
No effort has been made since the war
to encourage individuals to buy Gov
eminent bonds. Each new issue has
been subscribed for either by banking
institutions or by corporations that find
II. advisable to keep certain proportion
OF their liquid assets In short term Gov
erf1r1ent securities. The public, there
fore, has an academic interest in such
matters as balancing the budget and
preserving the integrity of the Nation s
credit.
It is claimed that our people will not
interest themselves in Government OBJ
legations because the rate of return on
them Is SO low. No attempt, however,
except the childish one of last Winter.
has been made to promote the purchase
CT United States bonds, even though
the extent of the demand for that de-
gree of security that surrounds Govern
ment paper is indicated in the increase
In postal savings in the past three years
from 100000 900 to approximately
$500, 100000, of which $500, 1000, 900 has
taken place since March, 1881.
New Financing Necessary.
The Government will need to borrow
large sums of money for many months.
1t is now in the business of saving cor
porations or by means of credit of
stimulating the low industrial pulse of
the country. The returns from the new
schedule OF Federal taxes are unsatis-
factory. Only in theory is this years
budget balanced. It Is not unlikely
that the Treasury may be called upon
to supply the funds TO cover a huge
bonus payment. as the demand for this
is irresistibly growing in many parts OF
the country.
There can hardly be enough improve
ment in business in the next eight
months to absorb any considerable por-
ton of the army of the unemployed,
which means that a greater amount of
Federal relief. involving additional Gov
ernment financing, will be necessary
next Winter It Is time to prepare for
all Of these requirements and to solicit
the aid of individuals who still have
81, 900 900, 900 or more in boarding and
others who have funds on deposit at
low rates of interest or in securities
that are OF q non-incorae character.
(Copyrisht, 1932)