Evening star., 1933-05-21
ADVANCE IN STOCK
PRICES PUSHED TO
2OAvERAGE POINTS
Speculative Forces Are
Quickened by Expectancy
of Initiation.
IMPROVEMENT IN TRADE
HAS AIDED SECURITIES
Delay in Rehabiliating Closed
Banks Is Retarding Busi-
ness Recovery.
BY CHARLES F. SPEARE.

special D1Spatcn 10 Inc SIaT.
NEW YORK, May 20-It is now six
weeks since securities and commodities
first recognized the stirring of new
speculative forces based on the ex-
pectancy of imitation. Meanwhile, there
has been an average advance in COM
mon stocks of 20 points, with the pres
ent average 80 points above the low OF
March 2, and one of about points in
bonds. Commodities have had rela-
tive gain. The rise in these different
groups has been consistent with the de-
cline in the dollar.
Imitation SO far has been the product
of a state of mind. 1t has not been
mechanically set in motion. To some
the delay in exercising the privileges
granted in the farm bill suggest that the
administration wishes to deal with in
f1ation psychologically so long as this
is possible; to make business better and
lift the price level by intimation before
resorting to an expansion in the cur
rency through Federal Reserve pur-
chases of Government securities. In
this it has been eminently successful
This weeks record of trade statistics
all point to further expansion in the
volume of domestic output and con-
sumption We are beginning to have
proof that in some directions industrial
activity exceeds that of year ago.
Markets Forecast Trend.
It is the history of all panics that
they are followed by rise in securities,
which the average man cannot under
stand and which appears to contradict
current conditions of business. There
are many now skeptical of the rise In
stocks because it does not conform to
logic in view Of the depressed state of
their own corporation affairs. Markets
may be said to have an intuition that is
rarely at fault in its prophecy OF the
trend of industry. They frequently
forecast a turn six months to year in
advance of it. This is apparently what
is now happening.
Business as we'll as securities had
been thoroughly liquidated early in the
Spring. A recovery in securities was
logical whether or not IL received the
impetus of proposed imitation. The
movement SO far has been as much due
to natural conditions that reasonably
made for appreciation as to speculative
operations based on imitation. The
change had come. Those who were
shrewdest and had deepest insight into
the state of the business world recog-
nized this and made their commitments
accordingly. There was little risk In
the price level, with many stocks quoted
between SIS and $40 share and bonds,
on which interest was being paid, selling
from $50 to 5000 for each 81 900 unit.
Rail, Bank Bills Wait.
Two measures before Congress in
which Wall Street is deeply interested,
namely, those affecting changes in rail-
road administration and in the banking
system, have made little progress re-
Gently. Like the bill to regulate the
issue of new securities, they were drawn
hurriedly and have been found faulty
and unfair in some of their main pro-
visions. 1t has been obvious from the
start that If consolidation or co-ordi-
nation of railroads was to be effected
it would involve the release from en-
ployment of large body of railroad
operatives. This contradictS the pro-
gram of increasing employment as the
first step toward bringing about re-
covery in business The resistance to
the Glass banking bill is growing be-
cause of the inclusion in it of an insur-
ance guarantee of bank deposits.
The unfortunate feature in bank sus-
pensions is the lapse of time between
closing and the payment of first divi-
dendS TO the PUBIC. InS Is matter
that might well concern those who are
trying to inject new ideas into the
banking laws. There are scores of in
stances where bank managements are
ready to reopen and have submitted
plans to the proper authorities. have
had them accepted. then rejected and
again accepted and rejected. Mean
while communities are without banking
facilities. The extent to which this
limits the natural flow of trade is in
calculable, but as over 1000 banks are
still closed and many others are oper-
ating under restrictions, the barrier that
this sets up against business is con-
siderable.
Foreign Exchange.
There has been less violence to the
fluctuations in foreign exchange this
week, which has suggested that fund
for stabiliZing the dollar has been
created and is being operated. This
may develop later, at present the dollar
is being allowed to seek It's own level.
The foreign trade figures for April
were significant in that American ex-
ports were 3 per cent less than in
March, in spite of this country going
off gold, and 20 per cent below those OF
April, 1882
Copyright, 1933)