The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-10-11
Trends
Initiation Bugaboo
Again Reaches
Wall Street.
by VINCENT LYONS
Times Financial Editor

" Id EhDA1 . SIoCk MARKET
II performance in which many
issues climbed three points or more
and the total turnover for the ses-
sion more than doubled the volume
Of the preceding day offered one
more indication of how sensitive
the Wall Street fraternity is to
imitation. 1t is accepted as almost
a truism in the financial district
these days that the mere mention
OF imitation by any prominent per-
son is all that is necessary to set
the stock market kettle boiling.
The sharp upturn in security
values yesterday was induced by
a speech delivered the night before
by Charles r. Gay, president of the
New York Stock Exchange Adj
dressing conference Of the
American Management Association,
the recently elected head of the
exchange was assigned as sub
JeCt, stock Market Controls"
In the time allotted him he at
tempted to give a scholarly resume
Of the phenomena associated with
advances and declines in security
values.
The application Of money and
credit to security prices is a func-
tional affair, carrying perils in it
self and with these the Stock EX-
change is concerned. To put it
bluntly, Mr.. Gay told his audience,
the exchange is concerned with in
flation. Initiation in the stock
market occurs, he said, when prices
advance to a level at which they
lose all reasonable relationship to
fundamental values.
"THE same enlightened self-in-
Il terest which impels q cor
poration executive to prefer steady
and orderly process of trade to al
ternating periods of dizzy profits
and crimson deficits" Mr.. Gay de-
clared, dictates to the exchange
that its true welfare is to be found
in the avoidance both of towering
tops and drastically depressed
bottoms
Il am not predicting that stock
prices will become inflated I re-
cognize, however, that the stock
market provides an inviting field
where this might occur, largely be-
nf o,-lyo III
which under normal conditions is
such a benefit to business. Here
we can have initiation in an in
sidously pleasant form, under the
guise of visible, day-by day profits.
With business today at a far
lower level than in 1929, it is I'M
pleasant to contemplate the conse-
quences of a runaway stock market
imitation. In this early stage of
economic convalescence the coun-
try can not afford to permit a
dangerous initiation in security
prices, from whatever cause it may
arise"
DURING the course of his adj
~ dress, Mr.. Gay indicated that
he knew the matter under discus
sion was highly elastic one. Twice
he asserted that he was not to be
construed as an alarmist and on
another occasion he used the
phrase, delicate subject of inf1a-
ton" Yet, in the face of this
tell-tale note of reservation, he held
resolutely to his task in an en-
deavor to associate the conference
with just one of the perils which
confront an orderly stock market.
In Justice to Mr. Gay it should
be stated that the speech he de-
livered doesn't look half as i'm
portant in black and white as it
was made to be. Only after Wall
Street had a crack at it, changing
a may" to a will" could 1t have
been regarded as a means of send
ing the stock market climbing on
the day.
President Gay uncovered no new
avenues of initiation. Every inf1a-
tionary instance he mentioned had
been cited previously by other OBJ
servers of the economic situation.
Perhaps, as has been the case so
often in the past, the trading ele-
ment, searching for a fresh stimu-
liant for the market, selected Mr..
Gays speech as the instrument.