Evening star., 1933-05-07
Markets Pushed to Higher
Levels by Passage of In.
fIation Measures.
PRIME BONDS HAVE HELD
STRONG UPWARD TREND
Movement Reflects Activities Of
Government in Attempting to
Balance the Budget.
By CHARLES r. sPEARE.

Special Dispatch TO The Star.
NEW YORK, May 6.-There have
been curious inconsistencies in the mar
ket for securities this week. These
have led to more confusion Of mind
among those who are watching prices
as an index Of what imitation might
do to them.
Under imitation. common stocks
should advance. This they have done
to a remarkable extent. so that today
scores are quoted 100 to 200 per cent
over their low levels Of the year. 1t Is
also logical under the same set Of cir
cumstances for bonds, either in default
or on which interest is still being paid
by the grace of lenders. to rise as their
prospects Of covering their charges i'm
prove-if imitation is the proper cure
for sickly corporations. They, too,
have doubled and trebled in price.
Treasury Issues Advance.
On the other hand. imitation, pro-
duced either by an expansion In the
currency or by raising the price leve
through q devaluation Of the dollar
should effect an adverse change In the
status of high-grade railroad and public
utility bonds as we'll as in the oblga-
tions Of the Government. The fact Is
however, that this last group OF securi-
ties has maintained a strong position
throughout the period Of debate on In
flation, with all Of the long-term United
States Treasury loans In great demand
at rising prices.
This phase Of the investment market
u hn nf n
ment obligations while France was del
valuing her currency few years ago
Then French national issues maintained
their old market values. 1t also agrees
with the record Of British funds after
England went of the gold basis. To a
certain extent It reflects the improved
status Of all three governments In
bringing their budgets TO balance and
thereby creating the primary condition
from which all national credit Is fixed
It Is an encouraging symptom for those
who are creditors and have been
alarmed over the possible effect Of in
flation on securities that have been
made the foundation Of the investment
portfolios Of individuals and institutions
It Is insisted that this country must
raise the price level in order to lift
the burden from debtors and to prevent
crisis that would imperil world civili-
zation. It is maintained that the pres
ent price level cannot sustain the ex-
isting debt structure. The propaganda
for imitation is at times as irresistible
as was that promoted for political pur-
poses during the war.
The strength Of the position Of the
political leaders sponsoring imitation
rests on the weariness Of the people
after four-year struggle against losses
Of all sorts and their impatience for
the dawning Of q new day They are
not satisfied to wait while natural forces
bring about q change. Possibly they
do not sense the Improvement that
has recently taken place In many di-
rections.
Commodities Up Sharply.
Substantial progress, however, has al.
ready been made In lifting the level
Of prices. On March is, when the
banks reopened, Moody's commodity
index stood at 88.1. This week it was
tember wheat has risen from IS cents
q bushel to 76 cents and September
corn from 81 to 43 cents. Wheat i,
now higher than 1t has been since
1881. Cotton futures were quoted at 81:
cents q pound on March is and are
now at 9 cents, a better return to the
producer than he has realized sincs
last September. Silk futures have ad.
vanced from $1.15 to $1.55, copper
metal on the Exchange has gone from
AZ cents pound to 6A cents.
Along with this is a recovery In the
iron and steel industry from q is pei
cent level in the middle of March -tc
one Of 80 per cent this week and q sub
stantial rise in the price Of scrap iron
The most interesting feature of this
weeks market has been the activity
and strength In railroad common stock.
and in railroad junior bonds. This
may be to a considerable extent sepa-
rated from any inf1ationary influence
It IS predicted on the sound theory
that the railroads have entered an era
in which they will accommodate them
selves to new conditions, instead Of ig-
noring them, And will receive the bene-
fits Of legislation permitting them to
operate with freedom from restrictions
that have long held down their net re-
turns.
frnpvricht 1oooN