Evening star., 1933-06-08
MARKET AFFECTED
AS PARLEY NEARS
Stocks Rise With Staples
and Debts Default
Is Expected.
Special Dispatch to The Star.

NEW YORK, June 6.-AS the Gay
for the assembling in London Of the
World Economic Conference approaches,
speculation as to the outcome Of this
unprecedented meeting increases and
exerts larger and larger influence
upon the markets. 1t is one factor In
the situation that cannot be ignored.
Then one week from today the SEMI
annual payments on the war debts
owed to the United States by its for
mer associates in the World War will
be due, and that is another element to
be taken into account.
The purpose of the London confer
ence is to stabilize currencies, to in
crease purchasing power and to restore
normal economic conditions. How any
of these objects can be furthered II
the war debts are left out of the dis
cusion 1t is hard to see; and on the
other hand it is just as hard to see
how the United States can make any
acceptable concession, the attitude OF
Congress being what 1t Is. in the short
time remaining between now and
June Is.
Default Expected.
In any event, Wednesdays and to-
days spectacular rise In sterling mega
tived any idea that Great Britain was
making any preparation to meet her
installment due next Thursday. Or II
she was, her purchases of dollars were
offset by selling, speculative or other
wise. from other sources One sugges-
ton was that the strength in the ex-
changes or the weakness In the dollar.
as one prefers, was due to belief that
default on the. war debts had already
been decided upon.
Whatever the reason fer the strength
in sterling, in francs and In the Swiss
bill, which sent the latter currency to
the highest valuation on record, the
effect on stocks and staples was to ad-
vance prices.
It can hardly be a mere coincidence
that the rise in the stock market to q
new peak, at least for industrials and
utilities, was accompanied by resump-
tion of the advance in wheat and in
cotton. In other words, expectation OF
new inf1ationary measures was enough
to explain the price movement. This
is giving due credit to such additional
indications Of business revival as the
current news affords. Any one who
watched the excited speculation for the
rise in the metal stocks Wednesday
could hardly escape the conclusion that
the main influence was something other
than expanding trade.
Hope for Gold Market.
Although all the gold mining stocks,
those representing Canadian as well as
American companies, move together
more or less, it is the shares of the
domestic producers which are the OBJ
jects of the largest speculative interests
just now.
The buyers hope that the Govern
ment at washington will consent to the
establishment of free market for gold,
or in some other way allow American
mines the benefit of the premium at
which gold Is selling in the world mar
ket. Here in the United States gold
brings fixed price Of $20.67 an ounce,
whereas in London 1t Is quoted around
S28 an ounce.
1t is evident that removal of the re-
strictions which now hedge the home
producer would enormously increase
profits. That is why Homestake Min
ing and Alaska Juneau have forged
ahead. Sponsors for Homestake do not
seem content with the fact that their
favorite is selling at $240 share-not
only the highest priced stock on the
exchange but the highest level that
particular issue ever reached.
1t is the strength in the bond market
that is pointed to by the portion of the
financial community which discredits
imitation as the principal influence on
security prices. They say that the
buyers of investment bonds have no
fear of a deprecated dollar. AS fur
ther evidence of the correctness of this
view, they cite the demand for the new
Treasury 2M per cent 5-year notes now
being offered.
Demand Created.
The present outlook is that this por-
ton of the offering will be greatly over
subscribed. The ~ per cent certif-
Gates maturing June Is, which will be
given the preference in the subscrip-
tions, were quoted Wednesday at 1902
bid, with no offerings.
However that may be-and the writer
is not denying the strength of the
argument-there is this reservation,
namely, that the significance of the
strength in bonds depends, in part at
least, on the source of the demand.
So far as United States Government
issues go, the Federal Reserve banks
are obligated to make huge purchases
under the Thomas amendment to the
farm relief bill. They may be relied
upon to take up any unsubscribed
bonds of the new issue, if there are
any AS for corporate obligations, in
surance company buying is not in
dicative of any opinion about the fu-
ture of the dollar, because the in
surance company deals in dollars and
is not concerned about their values
The savings banks, of course, are buy
ers of high-grade bonds, but the un-
derstanding is that they are at present
selling on balance. What the private
investor is doing, if anything, is not
apparent.
(Copyright, 1933)