Evening star., 1933-01-01
SECURITY MARKETS TAKE
CUE FROM RAIL GROUPS
Study of Years Price Movement Shows
Traders Are Watching Carrier
Issues for Trends.

/ to the market valuation is also true Of
the loan figures expressed in dollars.
| These, too, made new low this year
when they touched $3.50, ,763, 900 on July
81, after having run to $4,000, ,000, 900
at the heights Of the 1929 insanity.
No matter what happens, there Is no
weakly margined long account in this
marEet to bring about a fresh decline.
II stocks break, it will be because the
real holders decide to dispose of them,
not because purchasers with borrowed
| money are forced to let 60. As the ex-
preston is. the technical position was
never stronger than at this end Of the
third year OF the bear market.
These comparisons relate, of course,
to stocks, although borrowings by Stock
Exchange members normally include a
| proportion incurred to carry bonds.
The same inferences, however, will be
| drawn from study of the depreciation
| in market valuation Of listed bonds
The drop is not so large, either ahso-
lutely or relatively, because q total of
all listed bonds includes United States
Government securities, which fiuctuate
through a narrow range even In de-
| preston times, and because normally
bonds are more stable than stocks. The
| figures do show severe defiation never
theless. For all listed bonds the decline
in market value between November !,
1881, and November l this year was
something over 5 per cent. That in
| cludes Government obligations. If we
segregate bonds connected with the
| railway industry, which Is the one that
suffered the most. we will find defia-
ton Of over l8 per cent. In figures the
latter would run to nearly billion and
half dollars.
Bonds Show the Way.
During the first six months of 1882,
when stocks were continuously declining.
1t was the example Of the bond market
which was the most dispiriting infiu-
ence. In the same way. when the mid
Summer rally in stocks gathered mo-
mentum, it was because it had been
preceded by a corresponding recovery
In speculative bonds.
The recovery in both stocks and
bonds which started in July reached its
peak in late August and early Septem-
Der. Then followed downward reac-
tion which continued to the first of De-
cember, but never seriously threatened
the July low, and then again another
slow and irregular upward swing. July
Sllu august were tIlC IIlOlAbLAo VI eACdVNob
strength and of most optimism.
To complete the record, the Autumn
reaction conceded with the political
campaign and with the controversy over
the war debts which followed it. Either
or these would have proved strain on
any market. It Is another tribute to
the technical strength that the reversal
did not go any further than it did
DEVELOPMENTS in the international debt
ENHANCEMENT are too recent to need re-
view here. All that Is necessary is to
emphasize the resistance the market put
up to these disturbing influences, sug
gesting as it does a situation where any
really favorable business news would
bring about q sharp advance.
The two heads under which the
events of the last three months of the
year proved disappointing were, first
the controversy over the war debts, rails
ing the question whether all that had
been accomplished for international
economic as well as military peace
would be undone; and, second, the re-
lapse in commodities.
AS for commodities, up to October !,
the price curves of securities and of
staples presented striking correspond
ence. There was never any great spread
between the two lines. Stocks went up
or DOWN Win WneaL ana cotton. In the
last quarter the two parted company.
Commodities reacted as whole to
new low for the depression, but securi-
ties resisted. Which Of these situations
was logical and which illogical no one
can say positively. It Is enough here to
record the fact. Perhaps the only in
ference to be drawn is again the COM
plete liquidation in securities-so COM
plete that reaction in commodities no
longer affected it.
Decline In Rail List,
In no group was the 1882 defiation so
extreme as In the railway securities
both bonds and stocks. According to
the Stock Exchanges own Compilation.
the average price Of all listed United
States railway bonds June l was 45.74,
which compares with the peak price in
the last seven years Of s8.11 January i.
1928. The recovery had reached 56.53
in December of this year but even there
the rail bonds were lower than In any
other month since 1925. The stock
averages tell the same story.
All this being true, it was nevertheless
a fact that both the bond and stock
markets looked to railway issues for q
cue TO the next major movement. II
1lContinued on sixth page.l