Evening star., 1932-07-24
Price Advance During Week
Stimulated by Approval OF
Railroad Merger.
COMMODITY FRICE GAIN
is ENCOURAGING FACTOR
Wall Street in Hopeful Mood as
to Early Settlement of World
Economic Problems.
BY GEORGE T. HUGHES.

Special Dispatch to The Star.
NEW YORK, July 23.-The passing
of another week has deepened the con-
viction that the business situation Is
very gradually undergoing change Tor
the better.
It Is no easier to give convincing evi-
dence of this change today than IL was
a week ago; on the surface all that IS
apparent is an altered attitude. 1t Is
not to be forgotten, however. that at
this stage revived confidence must
necessarily precede revived trade.
The most important domestic hap
pening of the week was, OF course, the
approval by the Interstate commerce
Commission of the Eastern railway con-
solidat;on plan. The markets responded
robustly to the announcement, although
the most casual reflection demonstrates
that no immediate benefit to the rail-
roads can be expected. The mere ap-
proval of consolidation program means
nothing in the way Of increased traf-
fic or larger earnings. 1t does not
touch the problem of motor vehicle or
waterway competition.
Beneficial x Sentiment.
Then. too. there are numberless de-
tails to be arranged before the plan
can be put into effect and almost as
many conflicting interests to be
harmonized 1t is unnecessary to dls-
cusS the technical aspects OF conSonoa :
tion here, but merely to emphasize the
fact that, despite the advances IN ootn
stocks and bonds which followed the
announcement there is much yet 70
do and that the progress so FAR maze
is of psychological value only.
There were even those in Wall street
who echoed with approval the cynlca
comment Of Commissioner Eastman IN
his dissenting opinion. to the effect
that the people of the country are
either fighting to bar the wolf from
the door or they are struggling INSIDE
the threshold to keep his fangs from
their throats. They have little time or
money to spend on railroad consollda-
ton plans" To accept that view,
nevertheless, would be as much mis-
take as to rush to the conclusion that
prosperity was to be restored because
railway consolidation was at last in
sight. The fact is that beginning,
and an important one, has been made.
It does bring into relief the disposition
on the part of the public authorities to
cooperate with the railroads in solv-
ing their most difficult problem, and
that IS an advance.
Oils Join in Rise.
If the better tone in securities had
been confined to railway issues there
would have been left little support for
tire claim that the markets had recog-
nized any change for the better in
business prospects. About all that
could be said would be that it was rec
ognizcd that the prices of railway bonds
and stocks had reached so low level
that any change must be On the side OF
improvement. However. the markets
did not conflne their approval to rail-
way descriptions In stocks and in
bonds the Gil group was as strong as
the railroad list. And here there Is sta
tistical proof of recovery. 1t is re-
vealed concretely in earning statements
and in the petroleum price structure.
1t looks as if at last the oil producers
and distributors had put their business
on firm foundation.
Unfortunately, the same cannot be
said about the public utilities. Steps
taken toward control of dividends on
companies in Wisconsin and in Alabama
arc likely to be initiated in other
States. Somewhat similar is the action
of the New York State Commission in
the Rochester Gas G. Electric case. All
these are signs of the times. The reas-
suring feature is that in its broadest
aspect the course adopted by the pub
lie authorities is in the interest not
only of the consumer, but of the holder
of utility securities There have been
abuses in this field ard they must be
remedied if further financing is to be
accomplished successfully. 1t would
have been better if the reform had come
from the inside, but it had to come in
any event.
Outlook in Commodities.
Outside the security field entirely,
there is ground for encouragement this
week in the scattered advances among
commodities. For the most part these
gains have been in the minor markets,
with the great staples. wheat and cot
ton, laggards in the movement. 1t is
not for financial writer in New York
to discuss the outlook for either wheat
or cotton. The authorities on the
former are in Chicago and on the lat
ter in New Orleans. He can say, how
ever, without breaking any confidence,
that spectators in Wall Street. lean
and hungry after so long a famine in
the stock market are casting longing
eyes on what seems to them to be fair
the statisticians who tell of the over
supplies of both these commodities. but
more especially of wheat, the Wall
Streeters are persuading themselves
that prices are at bargain levels and
that they can be advanced with a little
judicious help
Should they be right in this theory
and both or either of these markets
rally. there would be an immediate
sympathetic response in stocks For
months past the commodity market has
reacted on the security market and
vice versa. Fundamentally it is Just as
true as ever that we shall not emerge
from this depression until there has
been an upward movement in COM
modities.
The German Situation.
There is another proof of the altered
attitude on the part of the financial
community which deserves mention
That is the way in which the drastic
measures taken by the German govern
ment to regulate its internal affairs
were received by the markets. There
was time when any sign of disorder
on the other side. social. political or
economic, was always interpreted as
unfavorably as possible. 1t is not so
today. The Street looks on the new
regime in Prussia as a constructive
development. 1t may not prove to be
that, but until events show that the
theory is wrong it will be believed that
the Germans are working out their own
problems to the advantage of them
selves and the rest of the world.
No vell-defined opinion is prevalent
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