The Washington times., 1935-01-28

The percentage
of the total vol II
ume which was
confined to a ~
few active is Lewis nancy
sues, increased.
Among the most active issues,
electrical equipments, utilities,
and amusements gained a little,
while steels and motors lost a
little ground. On the whole, the
character of leadership was not at
AL impressive.
Obviously, the action of the
market may be interpreted as a
sort of secondary" reaction fol.
lowing the recovery from the de.
cline of two weeks ago. There are
so many unusual factors and so
much uncertainty, however, that
this observation does not help
much. 1t throws little light on
the important question, what
next?
Only one thing seems clear,
and that is that the confidence
and cOOp@atiOn" rise which be-
gan in October, has now ceased.
ut lost heart in mid-SeaSOn, and
died January 10.) The market,
therefore, seems to be entering
q new phase.
One factor is the trend Of
business activity, the question
being, will the current expand
ing phase (which is chiefly
based upon automobile prOduc-
tom carry through much fur
ther? If so, will it mean profits
for corporation stockholders?
There is much doubt in Wall
Street, particularly as to the
latter question. OF course, this
holds Steels and motors in check.
Underlying this factor, however,
is the big question, will the Su-
preme Court undertake to check
radicalsm? The pending gold
clause decision is just one aspect
OF this question.
I suppose that it is barely con.
ceivable that adverse court deci-
Sions, combined with growing dis
illusionment concerning new deal
experiments, might precipitate
liquidation and deflation. I sup
pose that it is even possible that
the business leaders" might come
to prefer the wringer of deflation
to the rack of state socialism,
But this does not seem prob
able.
! The probability seems to be
that we will muddle along in a
maze of politics and debit until
finally the question, who pays
for it all, becomes so acute that
it can no longer be avoided.
Meanwhile, the alternatives
are: Cd Having our money
taken away from us by taxes
and forced loans, or CD having
it taken away by depreciating
the value of the dollar.
But the huge spending
.schemes of the New Dealers
plainly cannot be financed by
taxation, so eventually the
escape will be payment" in
promises to pay, or notes"
And this will be true, no mat
ter what the Supreme Court
decides concerning gold
clauses.
: So what the market is wait
ing for is not so much the
decision of the court as it is
the next move of the New
Dealers (whO, by the way, are
led by the President).
On the bull side, we find
considerable short interest in
some stocks. There has been
little selling pressure thus far.
A majority of the most active
stocks have not sold off. Bonds
have gained, as money rates
have eased and excess bank re-
serves accumulate. Industrial
activity still points up.
On the bear side, we find con-
siderable doubt as to future prof.
its in business. Railway stocks
have been weak. The hourly vol
une of trading picked up on
weakness Saturday. Suggestions
of a descending triangle" appear
on the charts. People with money
(who are the only ones who can
buy stockS) are diSmayed at
sweeping socialistic schemes and
the prevalence of fantastic ideal
ism which disregards costs and
laughs at the question, who
pays?"
Better wait for further devel-