Evening star., 1933-12-31

covers phases of the depression without
precedent in the memory of this genera
ton and which might have been ex-
pected to unsettle securities to an even
greater extent than anything that hap
pened in the three preceding years. 1t
takes in the banking holiday. the aban-
comment OF the gold standard and the
controversy over the monetary program
OF the Roosevelt administration
Nevertheless, the market stood up,
suggesting, if not positively establishing
that the long period of liquidation was
over and possibly that a new forward
movement was in the making.
Gold and Paper Prices.
Right here it is necessary that one
reservation be made with regard to
price comparisons. Up to April, 1888.
the United States had a currency unit
freely exchangeable for gold and its
value in terms of foreign currencies
also tied to gold was 100 cents to the
dollar. Suspension of gold payments
and the embargo of gold exports
changed all that and the dollar has
suffered depreciation in gold value
which. at its greatest, ran to more than
40 per cent The result is that one can
make distinction between gold prices
and paper prices which, if applied to
stock market averages, would modify
the conclusion already set down.
That is hardly fair test, however
1t would make difference to French
investor. for example. who bought
stocks in 1892, exchanging his francs
for dollars at the par value for both
and then tried to realize his profit in
1888 after the dollar had droppad to a
heavy discount. He could not then con-
vert the dollars back into francs except
at sacrifice.
To the domestic security holder who
figures his liabilities in dollars. the mat
ter is of academic interest only. 1t is
perfectly proper for him to compute
does his debts. and when he does this
he will find that his capital, or such
part Of 1t as was invested In equities,
has appreciated during the year.
Major Price Movements.
The major price swings of the II
months were. first, the decline which
conceded with the spread of banking
paralysis, eliminating in the closing of
every bank in the Nation and the sus-
pension Of business on the Stock Ex-
change. Next would come the recovery
which started Immediately on the re-
the violent break resulting from over
speculation, principally in the liquor
Stocks A series Of rallies and reactions
ensued. with the averages at one time
in October back to where they were in
May, but promptly turning up again
and exhibiting striking steadiness there
after.
The closing weeks Of the year wit
messed squirt in the market, following
the Presidents proclamation directing
the purchase of silver. The effect was
only temporary and was largely Offset
by the tax selling which normally
makes its appearance in the last days
of December.
The most striking demonstration of
the thoroughly liquidated condition of
the market was Its behavior In the
March banking crisis. 1t will be re-
it the al
spread steadily from State to State un-
til in the afternoon of March the
banks of 90 States had suspended busi-
ness and the country was face to face
with situation, which, on the surface,
at least, was more serious than any,
thing that had happened since 1929.
On the afternoon of that day it was
known that the rest of the banks would
have to close. The bond market was
demoralized. United States Govern
ment obligations were being pressed for
sale in huge volume, as banks franti-
cally cmdeavored to secure cash to
meet demands Of depositors. Hoarding
was going on all over the country and
gold was being withdrawn for foreign
accounts in alarming amounts. The
Hoover administration at Washington
had only few hours more to live and
no one knew what the policy OF the in
coming President would be- No one
knew what policy he couldu adopt that
would be adequate. Panic prevailed in
high places.
Stocks Reverse Trend.
The stock market had been weak for
days. 1t had been influenced by the
acute unsettlement in bonds. Volume
was not large, but the trend was down.
ward. On Friday. March 3. when 1t be-
came certain that banking facilities
would no longer be available for the
clearing of stocks, the closing of the
exchange was assured, although no OFF,
cial announcement was made. The ex-
change cannot function without the aid
of the banks.
With that outlook it would be nat
ural to suppose that stocks would break
violently. They did nothing of the kind.
On the contrary. on the last day on
no assurance of when it could be re-
sumed, the market staged robust rally.
CONTINUED on Third Page)