Evening star., 1933-06-11
Commodities, Retail Ss!es
and Production All Share
in Gains. ~.
BOND ADVANCES EASE
SITUATION OF BANKS
Financial Circles, Where Govern
ment Control Has Aroused Re-
sentiment, Reveal New Hopes.
BY CHARLES F. sPEARE.

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK, June 10-There have
been symptoms this week of buyers
panic, which has not been confined to
the markets for securities.
The sharp rise in the curve of retail
sales, the expansion in the field of
national distribution of merchandise,
the high ratio of production in some
Of the iron and steel centers, and
sudden and vigorous advances in Ger
tain commodities all manifest the
eagerness of consumers to build up their
limited stocks of materials while prices
are still low
For, in spite of decided recovery
in the commodity index, values are
exceptionally favorable to the buyer
and will be until a much greater ad-
vance has occurred.
Apparently the public interested in
securities holds to the same point of
view. 1t has made this the basis for
its commitments rather than the ex-
pectancy Of initiation, which so far has
been overplayed. ~
The rise in bonds, averaging Is
points since the first Of March, is un-
orthodox as phase of inflation-a
fact that has for some time convinced
this writer that 1t was the sudden and
rather universal discovery that mar
kets had been iquidated, that COM
modities had gone down as far as they
would go and that the mood of the
business world had changed that in
duced the first stages Of a rebound in
stocks and bonds, which has now gone
to point where extreme caution
should be exercised.
Wide Gap Still Remains.
After ALL values of securities are de-
pendent on earnings, from which in
terest on bonds and dividends on
stocks are paid. It is true that the
expansion in trade has created q new
picture in many lines of business, but
the corporation deficits of the June
quarter again will be numerous.
Only about 6 or per cent Of the
IL, ,e00, 900 unemployed have returned to
work. There will be slightly higher
average pay roll for May than in April
and some gain in June over May.
Administration efforts are to bring the
But the leaven Is still small.
Meanwhile many securities have risen
from 100 to 800 per cent, and that from
a level OF 8 to 10 points higher than
year previous. Atchison common stock
was one Of those that had dubbed in
price. With no dividend in sight. it
had crossed TO- The preferred had
advanced 80 points.
As yet there are no indications that
the lnnation program will be radical
IN character. In fact, the infiation-
lists are proceeding tirnidly and as II
they could not gauge the effects of
their policy and feared it might get
away from them.
Under the circumstances, a 35-point
average advance in stocks since the
holiday" fairly well discounts the nat
ural improvement in industrial and
banking conditions. If the imitation
plans lag. it may be subjected to a
sharp revision.
The course Of events Is bringing the
banks OF the country under the same
sort Of regulations that have restrict
ed the railroads and the public utili-
ties. This Is one of the strange trans
formations in public policy. for no
group has, IN the past, coveted Its in
dependence more than bankers. There
had been created an aristocracy of
bank and trust company stockholders
that was the envy Of all.
Country Banks Protest.
Now the banks are hedged in by all
sorts OF rules and orders What they
do depends on what the controller
OF the currency or the State banking
superintendent says they may do. Re-
Gently they have been requested" to
defer or reduce their dividends Gin the
interest of further strengthening the
surplus or reserve accounts" of their
institutions.
sTIic ie a ,x,;ee rooor.r.a,la%;o- .-l
one that any conservative bank man
agement would have initiated on its
own authority. 1t has been followed
this week by several Of the large New
York institutions.
There Is evident a growing resent
ment among the bankers of the coun-
try over the manner in which their
operations have been taken out of their
hands and the policies to which they
are being asked to subscribe. This Is
particularly true of the so-called "coun-
try bankers" who greatly outnumber
those in the Reserve centers.
They feel that they are being domi-
mated by the latter and that many of
the regulations to which they are asked
to submit are the suggestions to the
authorities of the "city bankers"
They have good case when they
argue that 1t was the latter who per-
Suaded them to purchase securities
that now are quoted at an average of
so per cent less than cost, and that
the banking scandals, which are fore
ing rigid and oppressive legislation on
all banks, developed in the metro
politan centers.
Branch Plans Threatened.
1t is obvious that If deposit guar
antee or insurance Is localized in its
proposed form, it will for some years
end the prospect for branch banking.
In the campaign for this the country
and the city groups have long been
arrayed against each other, the one
seeking to protect its property from
absentee management and the other
looking for more worlds to conquer.
The brief for branch banking is not
so convincing today as 1t was prior to
1929 The advocates of it have not
proved themselves efficient as bankers
or men Of such profound wisdom in the
selection of securities as they had pro-
fessed to be- Certainly the list of bonds
recently published by 9 New York
bank with many branches did not give
any sign that its management was en-
dowed with unusual ability in selecting
securities that would show least decline
under the depression test.
AS the primary cause Of the closing
of banks In the East and Middle West
and the continued operation of hum
dreds under restrictions was the
shrinkage in their securities, 1t is greatly
to the good of the general situation
that such a pronounced recovery has
taken place In listed bonds in the last
three months.
Today the group OF bonds that was
worth only $4,000 few months ago
may he sppraised at about Al00. 900.