Evening star., 1935-09-22
Asses STOCKS HESITATE
BACK AS TRADE RECORDS.
TURN STEADY PROGRESS.
Technical Weakness Follows
Long Rise-War Fears >
Also Major Factor.
NERVOUSNESS AFFECTS
INVESTMENT MARKETS
Drop in Treasury Issues Taken
as Sign of Demand for
Better Yields.
BY CHARLES F. SPEARE.

BY CHARLES r. SPEARE.
Special Dispatch to The Star.
NEW YORK, September 2l.-In the
period of six months between the
middle of March and the middle of
September the stock market advanced
on an average over 80 points, or about
40 per cent.
The first portion Of this rise was
predicated on the fact that prices ap-
peared to be out of relation to values
and on a certain amount Of antici-
patton of imitation.
The later extension Of the upward
movement represented the process of
adjusting prices Of equities to recov-
ering business. In this era, indus
trial stocks outdistanced other groups,
for the railroad shares have been
held back by unfavorable earnings
and the public utilities by the new
legislation against holding companies,
in spite of abundant evidence that
the use of electric power is rapidly
increasing.
A stage in the market situation
has now been reached where a long
and extensive rise has introduced the
normal sequel Of technical weakness,
along with a hesitation on the part
of investors to follow up stocks that
seem to have discounted the present
degree of recovery. At the same time
the war outlook abroad creates ap-
prehension here and causes a certain
amount of European selling
While, therefore, a new high level
for common stocks has been reached
this week. the significant feature of
the market has been the profit taking
that has occurred and the shifting
sentiment of brokers. who, until re-
Gently, had been predicting a more or
less uninterrupted rise throughout the
Autumn.
Treasury Issues Affected.
Investment markets also have been
susceptible to influences similar to
those that have affected stocks
Nervousness among holders of Gov
ernment issues have correSponded to
that felt in markets abroad. It was
too much to expect that the era of
extreme low money rates and of alb
normally high prices for national
loans would continue indefinitely. 1t
is already clear that If the Treasury
is to have the same success with its
future loans as with those of the past
1t must adopt rate of return that
will be more attractive to the investor
whose funds it solicits.
The recovery that began In July
has since lifted the business index
about 10 points to the best level since
midsummer of 1893. A Slight gain in
it was made this week in spite of the
small recession in iron and steel pro-
duction pending the renewal of activity
in the automobile trade when new
models will be under construction.
Monetary Problems Grow.
The monetary problems of the lead
ing European nations have been aggra-
waited by the unexpected turn of events
in North Africa. Great Britain must
send fleet to the Mediterranean and
strengthen her colonial frontiers and
keep within the military and naval
budget adopted last Winter. Already
she is preparing a schedule of new
taxes to meet war costs.
France will have greater difficulty
in reducing the deficit that has
plagued her for the last three years
when she has to consider the likeli-
hood of trouble at her German and
Italian boundaries.
The October meeting of the French
Parliament may be in a war atmos-
phere. Even Holland intimated this
week that precautions were necessary
in view of the 8arming news from
the south of Europe.
More Gold From Europe.
While the present flow of gold to
this country, amounting to about
$8O,000,000 since it started last week,
is mainly due to the disparity of the
Dutch guilder and the French franc
in their relation to the American dol
lar and reflects the progressive charac-
ter of the economic and social disease
from which Holland and France are
suffering, portion of it represented
a flight of capital from war -distraught
Europe to the United States.
American securities have been
attractive to British, Dutch, Swiss,
French and Scandinavian investors at
various times since 1929. In volume,
the present dollar holdings of these
countries is modest compared with
those in 1914, in which Germany then
had an important share. So, while a
war that might involve other conti-
mental powers than Italy would dis
turb the American market seriously
for time, the amount of liquidation
growing out of it could readily be
absorbed at lower level by American
investors who are today Withholding
their funds awaiting better buying
basis than is now offered.
Money rates would probably advance
here, with some effect from this on all
high-grade bonds. In fact, there is
already a sign of firmer time rates,
but only in anticipation of more do
mestic borrowing. Commercial paper
is being offered more freely by dealers
than in several years. This is an
accepted sign of business recovery.
Copyright, 1895. by the North American
Newspaper Alliance. Inc)