Evening star., 1935-11-24
Artificial Methods to Excite
Speculation Also Gain
Attention in Week.
RESISTANCE is SHOWN
TO STEADY PRICE RISE
Critical French Outlook Followed.
Many Signs of Growing Trade
Recovery Studied.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, November 23.-There
has been nothing in the domestic
business situation this week to
cause the tremor in the stock mar
ket. 1t was due to the caution
that is born after a long rise has
been in progress and evidence begins
to accumulate that artificial methods
are being employed to excite specula-
ton and investors show signs of re-
sistance to a constant advance in the
price level. The critical French
political and financial outlook also
has been factor.
In the business world there have
been ample signs Of returning recov-
cry and of growing confidence In the
permanency of this trend. That the
profits of corporations are reaching
a point where it is now possible for
them to share these with stockholders
is clear from the enlarging list Of
dividend payments. This makes for
a more reasonable ratio between what
securities of the equity" type sell
for and what they yield the buyer.
In numerous instances this ratio has
been out of balance.
Where there had been suggestions
of reaction in industry, as the Win
ter season approaches, the actual
fact is that volume of production has
gone on rising. This is true in the
iron and steel trade, which has about
reached the estimated peak" Of SIS
per cent for the year with the expan-
sion in miscellaneous demands rather
than from concentration of them in
the automobile industry.
Power Output Aids Financing.
Each week for the last month the
public utilities have gained on their
output of a year ago. This is now
about Is per cent higher than in
November, 1884, and running at a
record pace. 1t all helps to aid the
market for their refunding operations,
900 of bonds this week, brings the
grand total Of such financing for the
year to above $1,000 100000.
In the distribution of merchandise
by retailers, chain stores and by mail
order homes the record is one that
parallels 1880 and is close to 1929.
Bank clearings this week were % per
cent larger than in the same period
of 1884.
The October showing of the rail-
roads, in respect to gains in gross
earnings and in net operating reve-
nues, has been brilliant. This has
encouraged moderate investment in
their securities and has aroused the
hope that they can begin to meet
their obligations independent of Fed
eral aid. The proposed retirement by
the New York Central of a portion
of its floating debt, without new bor-
rowing, contrasts sharply with the
emergency character of its financing
for several years past.
Remains Behind 1893 Boom.
The business index has never been
able to approximate that of the short
boom period of 1888, which followed
the bank holiday, the devaluation of
the dollar and the feverish buying
of merchandise and raw materials
prior to the adoption of the N. r. A.
codes.
Since the turn came in July 1t
has advanced Is points. It was an
ticipated by the stock market, which
touched its lowest average on March
18 and has subsequently maintained
a form that has publicized it to the
investment world as probably the most
accurate of the many indices of our
economic recovery. In eight months
it has advanced an average of so
per cent, which, technically, is the
most persuasive of the bearish factors
surrounding it, although as Chair
man Eccles of the Federal Reserve
Board now states, this has been the
result of buying of stocks with cash
and has been going on while bank
loans on securities and brokers loans
have been declining, a phenomenon
unusual in a rising market.
New Policies Urged.
If we adopt the postulate that the
ruinous features of the depression are
behind us and that industrial recovery,
definite and permanent, Is ahead
and this appears to be supported by
an eight months rise in securities
and five months of expansion in busi-
ness volume-what should be the fp-
ture attitude of the business world and
the Federal Government toward this
changed situation?
Can either or both continue with
policies that were logical and neces-
sary while emergency conditions pre-
vailed? Is it now sound practice for
business men and bankers to clay of"
from expansion and the re-employ-
ment of idle forces, or from the use
Of their excess funds In legitimate
undertakings because there still are
some clouds floating over the indus
trial and political skies?
(Copyright. 1895. by the North American
Newspaper Alliance. Inc.)
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