Evening star., 1933-01-15
Securities Have Risen Each
January Since 1e29-Pres-
ent Advance Tops Others.
DRASTIC LIQUIDATION
AIDS BUSINESS OUTLOOK
Real Progress in New Year Is Ex-
pec.ed After Long Process
CT Defation.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, January 14.-The
month of January has been a period OF
rising prices for securities in each year
since the beginning of the present de-
preston.
In 1880 there was an average advance
of over 40 points in industrials from
the low of December into February. In
1881 the average gain for the same
weeks was about 35 points. In 1882
the upward movement was smaller,
covering only 5 points, and of short
duration, although it was continued
later in the Winter and reached its
climax in March
Already this month the average rise
of stocks has been greater than that OF
a year ago. more significant, an average
in domestic bonds.
Wall Streets Mood Changed
There are technical reasons for a
January recovery. In the present in
stance this has resulted from a release
of buying power available from funds
distributed the first of the year 1t has
been encouraged by an absence of
liquidation. In proportion to the turn
over. the amount of tax selling in De-
cember is believed to have been greater
in bonds than in any previous year.
The effect Of this was to drive down
the market prices for such obligations
to extremely low levels. These fire.
L
more than nuisance" values. without
any change in conditions surrounding
companies whose obligations were SO
much Debated, there has developed
both speculative and an investment
demand for bonds which has changed
the mocd Of Wall Street and has re-
vived its interest in stocks.
There Is always at the beginning of
each year new hope or expectation
that, within this period. there will be
an improvement in business This car
ries certain amount of weight both
with the speculator and the investor
The fact that commodity prices appear
to have stabilized again, with wheat In
Chicago this week above so cents; that
there has been a small expansion in
the iron and steel industry and also In
production of power and light and that
the majority Of dividends declared were
the same as those in previous quarters,
have all combined to effect more con-
fident tone in Stock Exchange circles.
The fact is becoming more apparent
each day that this is the year when the
losses of the last three years must be
recognized and written Off We cannot
go on indefinitely carrying securities. or
real estate or merchandise at 1929 or
1880 prices. While the crisis was acute
it was wise policy to fix artificial val
ues to them. This prevented additional
alarms and panics.
The public is now insensitive to con-
ditions that shocked it even year ago.
1t recognizes that losses are general
and that general readjustments must be
made to them So it is prepared for the
lower interest rates. the smaller divi-
dends, the scaling down Of capital, the
postponement of sinking funds and OF
amortization charges and even OF re-
quests for extending mortgages at their
maturity dates that are painful but
recognized sequel of every prolonged
period of economic sickness.
Reducing the Girth.
Figuratively speaking, the country
has lost great amount Of weight III
the last three years. 1t is of no use TO
try to fit the same clothes to it that
were comfortable in 1929. Debts must
be scaled to reasonable proportions ana
in line with what is likely to be the
limit debtors can carry for some years
to come.
If the movements in securities in the
first part of the last three years are
analyzed, it will be discovered that, In
addition to technical and psychological
reasons for them, they have been
founded on an expectation that the
Government was either wise in predict
ing that turn upward in industry was
probable in the Spring or that it had
introduced some new scheme Tor up
holding the corporation structure of the
country. All of these ideas were pro-
mulgated and each of the plans was
initiated in the first half of the year.
1t was in the second half OF each year
that the lowest prices of securities were
realized.
There is now the advantage Of what
seems to be thoroughly Hquidated
condition in both stocks and bonds, and
nearly as complete one in real estate.
1t gives opportunity for dealing with
conditions by private negotiation and
without so much public notice. This
would be a good policy to inaugurate
in the first half of 1888. 1t might
quicken the pace of permanent recovery
and avoid another relapse from arti-
fetal stimulantS such as has dis
tinguished the second six months of the
past three years.
Copyright, 1933)