Evening star., 1932-08-29
ADVANCING MARKET
ENDS TRADE FEAR
Sentiment Among Business
Men improved by Steadily
Rising Quotations.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, August 29.-When Sc
Curity prices were dropping less than
three months ago into what appeared
10 be the bottomlesS pit of values, Wall
Street, as always, proclaimed that the
tape tells the story" and that the real
facts of the credit and business situa-
ton justified the quotations of that
Gay.
Now that the whole psychology of
the financial district has changed, it
again takes its cue from the ticker and
waves aside all suggestions that the
stock market may be riding along on
wave OF emotion rather than wave
of returning prosperity and that short
" the public may begin to take the
show me" attitude before it follows up
the large daily advances that have
characterized this months transactions
No one disputes the obvious fact
that there has been a pronounced
change IN the fundamentals of the
credit situation since last Spring, or
that there has been concrete proof in
certain industrial activities of an
awakening on the part of both pro-
ducer and consumer. On the whole
the change has been at least 95 per
cent sentimental However, sentiment
sways the world of finance more than
statistics. In all of the great move
ments OF securities it is the underlying
and controlling motive with respect to
price trends.
Confidence Replaces Fear.
The phase that sentiment took a few
months ago was one Of fear. Today it
is one of confidence and hope. In
April and May the American public
feared that the United States was 60
ing eff the gold basis and that most
important American corporations and
institutions would be wrecked. Now
this public is certain that no such
. catastrophe is pending and is express
ing its relief at the averting of a dis
aster, in which it visualized the loss of
all of Its wealth, by adding to those
same evidences of wealth which then
it attempted to transfer into Govern
ment securities or into gold
Since the end CT May junior railroad
bonds, that then were difficult to sell
at to 10 cents on the dollar, have
appreciated from 300 to 500 per cent
Common stocks that were appraised as
practically worthless have had the same
ratio of advance The proportions of
the rise have been so great that they
have undoubtedly destroyed the per-
spective of those who are skeptical of
the whole Wall Street situation, as
they are likely to forget that the bot
tom level of securities in scores of cases
discounted actual receivership.
A bond that had declined to 10 and
has since advanced to 40 has appre-
ciated 800 per cent. and stock that
sold at and has gone to Is is up 400
per cent. But the bond at 40 may be
selling at half of what was regarded
as fair price a year ago and the
stock of Is may be 25 points lower
than it was last October. What the
investor now has to consider is whether
there has been sufficient change in
the earning power of corporations and
in the status of the interest or divi-
dends paid en- their securities since,
say. last October. to justify the diff
ference between individual or average
prices today and those prevailing nine
months ago.
Take, for instance, a group OF seven
railroad stocks, namely AtchiSon, New
York Central Baltimore & Ohio, North
ern Pacific, Pennsylvania, Southern Pa
cific and Union Pacilc. Their average
price today is "a. At the end of last
october it was 63; last February it was
10. All of these roads except Union
Pacific have suspended dividends in the
reduced from 10 per cent to per cent.
Paying 10 per cent last october,
Atchison sold at lis, and now, paying
nothing, has sold at SIS. New York
Central was 81 last october and is now
around o. Pennsylvania is half way to
its market quotation CT last Autumn.
Not only have dividends been sus-
pended but traffic conditions have been
so much poorer this year than in 1881
that comparatively few roads will cover
their fixed charges. Union Pacific and
Northern Pacific are both currently
selling higher than last February.
In list of IL public utilities and in
dustrials, including Consolidated Gas,
Bethlehem Steel, American Can Ameri-
can Telephone & Telegraph. General
Electric, General Motors, Kennecott
Copper, Standard Oil of New jersey,
United States Steel Westinghouse Elec-
trio and Western Union, their present
average price is Al compared with 40
last February and 81 october 81, 1881.
Consolidated Gas, Bethlehem Steel,
American Can, American Telephone,
Standard Oil of New Jersey, United
States Steel and Westinghouse are all
selling higher than in February al
though, meanwhile, dividends on Bethle-
hem Steel United States Steel and West
inghouse have been passed. General
Electric and Western Union are quoted
at about the same prices as in February.
with the dividend of the one reduced
and that of the other omitted. All
these stocks have now enjoyed an ap-
probation from their low prices ranging
from 100 per cent to over 200 per cent.
Cautious Policy Urged.
While no attempt is made to mini
mize the Importance of the recovery
in securities or the justification for it,
and the effort has been made to point
cut that the unusual percentages OF
gain were from what was probably the
lowest level for good securities on record,
it is quite evident that Wall Street Is be-
ginning to lose its sense of proportion,
as it did in 1929 The actual condi-
tions within corporations as a whole
have changed comparatively little, nor
are they likely to change much in the
next three months. 1t is time for the
investor to stop look and listen" and
to keep his feet on solid ground