The Washington times., 1934-05-03

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anything else.
If washington ~
pushes the vari' - AAEEE ssSISSa
Gus m e Sures Lewis Haney
for controlling business and leans
back on it's former inflationary
tendencies, the market will work
bower. If washington soft pedals
restrictive measures and steps up
its spending policies, stocks will
soon rally.
That is about all one can say.
Broadly considered, the market
spurted last January on the adop-
ton Of a huge spending program
by the Government and the "deval-
uation" of the dollar. Then, after
Sagging back in March, it climbed
Hp again on the basis Of the spring
rise in business and anticipation
Of something doing" for silver.
Now it is in process of abandon
ing all the rise thus made. The
rise was due to initiation prospects
and to hopes that the business
pump would be primed. AS doubts
concerning both have become in
tensified, reactions in the market
have wiped out the gains.
1t is of some interest, too, to
note that the more comprehen-
sive averages are back to about
where they stood in early June,
1888. They were swept up to
that level, first by abandoning
the gold standard and by the
Thomas initiation bill, and then
by the resumption of "Open mar.
ket operations" ito initiate bank
credit and the reputation Of
gold clauses in bonds.
Now it seems to me to be i'm
probable that all these initiation.
ary steps can be retraced. I am,
therefore, inclined to think that
the market is nearing a sort of
pre.inflation plateau, to which it
was lifted in April and May last
year. It has dipped below this
only last October, when there was
$alk of monetary "stabilization."
Thus far it has failed to main
tain advances above that level,
because each time Washington has
cracked down with restrictive ere
form" measures, or has soft
pedaled initiation.
But the dollar still has no def.
mite standard. The Government
is still spending and going into
debt. The "exceSS reserves of
the banks are larger than ever.
Certainly there is little pros
pect Of business being worse
than D year ago land If there
were, the Government could be
counted on to do something
about it,.
So why should the market fall
below the levels Of early January
this year and early June last
year?
:, I am inclined to expect that the
averages will soon hold, and
1luctuate rather narrowly around
the suggested level until the
President makes up his mind as to
the next moves.
Immediately, the market has
shown some resistance to de-
cline at the March low, max.
ing a little dull recovery Tuesday
on reduced volume. But the ma
jority of issues were off, and it
seems rather unlikely that any
immediate rally can do more than
close the gap" left at Mondays
opening.
But it does not seem to me
likely that the decline will carry
below the level Of January 13,
barring Unexpectedly unfavorable
developments at Washington. In
this connection, however, the rail
way stocks seem to be vulnerable,
as they still retain much Of their
rise since then, while prospects
for their traffic and labor costs
are none too favorable.
Meanwhile, see no reason for
b change in policy as to holding
the moderately priced stocks of in
dustrial concerns which produce
necessaries, are relatively fe from
labor difficulties, and earn and
pay dividends which bear a reason
able relation to their prices.
Speculative traders may as well
femain on the Sideline.