Evening star., 1933-07-24
QU|ETER TRADING
HELD DESIRABLE
Inactive Period to Permit
: Gauge Of True Values
:. Declared Need.
BY GEORGE T. HUGHES.


NEW YORK. July A.-What the
markets need more than anything else
now u q period Of relative inactivity.
Too little speculation u undesirable, but
too much speculation Is still more un-
desirable, and 1t Is excess from which
We are suffering now.
1t Is impossible to make any con-
sidered appraisal Of the relation Of
values to prices when the markets are
going through the readjustment pro-
cess after . collapse brought about BY
Is never feasible to estimate the amount
Of forced LIQUIDATION Or the time it will
take to accomplish 1t under such cir
cumStAnces.
During the last three months specu-
lative positions have been built up in
stocks and others erected on top OF
them In commodities. Sometimes the
order has been reversed, but the effect
Is the same. When the break comes In
one market, 1t Is contagious.
The Street Is full Of stories about
individual SPECTATORS who were serious
ly involved In grains, for instance, and
themselves. Most Of these reports may
be discounted as to the amounts con-
cerned, but they all have . measure
of truth. While the corrective processes
are at work, none Of these markets can
reflect with any accuracy the financial
or industrial outlook.
Rails May Give Clue.
After comparative stability has been
restored, the action Of railroad securi-
ties will be watched for . cue to the
courae Of the stock market. During the
break. carrier stocks acted very badly.
They Jagged behind the industriAls IN
the Last STAGES of the advance and yet
they broke as readily Is the rest Of the
List when the break came. Nevertheless
car loadings continue to make favorable
comparisons with those Of . year ago
and seasonally the heaviest movement
Of freight Is yet to come. It Is the
exceptional year when railroad stocks
do not make their high points In the
last six months.
Probably railroad bond prices will
carry more significance than stocks. A
railroad which has maintained interest
payments on its bonds all through the
depression Is not going to default now.
Meanwhile the yields on such securities
are extremely large and the current
charge for money u extremely low.
With the transportation business en-
tering its most profitable months and
with fixed charge obligations offering
inviting yields, only . definite change
for the worst in the industrial prospect
could bring about lower prices for rail-
road bonds.
Cede' System Doubt
As to the future of business itself,
the gravest doubt concerns the work
ability Of the industrial code system,
with its insistence. on higher wages
and shorter hours. In some trades and
In some units there ID . margin to work
on and IN others there Is not. The In
dustyial community Is not disposed to
give map judgement, but it is not con-
fdent. either.
Perhaps the President will clarity all
this in his radio address tonight. The
stock market today will take that pos
sibility into account II 1t has time In
its three-hour session after absorbing
such belated liquidation as IS forced
upon It,
It is too early to come to any con-
clusion about the effect on business
commodity and stock prices. No one
knows how much production was stimu-
lated by the rise nor how much pur-
chasing power was released. Theo-
reticaliy, motor car sales ought to throw
some light on this matter. although the
slack season for automobile buying Is
here and large amount Of replacement
demand already has been satisfied.
The steel trade on the other hand
Is reporting q definite slackening Of
activity. Probably that would have
come. anyway, after its recent striking
recovery, but the weekly statistics on
rate Of operations from now on will be
anxiously scanned.
Securities Act Faces Test
Another reason for concern over the
longer period Is how the new securt-
ties act will affect financing. There
has been no test yet. for about the
only financing since the law was passed
has been for account Of municipalities.
Eventually corporate needs will have
to be met, and with the investment
banking fraternity in its present mood,
including, Of course, the secondary dis
tributors. it Is not going to be easy to
sell bonds except for units in the
strongest of financial positions. Un-
fortunately, there are many refunding
problems to be solved for organizations
which have been and still are in seri-
Gus difnculties. The burden may fall
back on the commercial banks, which
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