Evening star., 1935-01-03
MARKET AWAITS
ANNUAL MESSAGE
Trend Will Be Influenced
Primarily by Proposals
From White House.
BY GEORGE T. HUGHES.

Special Dispatch to The Star.
NEW YORK, January 3.-For the
next three or four weeks, perhaps
longer, the stock market trend will be
influenced primarily by developments
at the National Capital.
Just now trading awaits the Presi-
dents annual message Friday and the
budget message Monday, but even
when Mr. Roosevelt has outlined his
recommendation the reaction of Con-
gress to them remains to be seen.
The proba bilities are that Congress
will do as the President suggests, but
even that is not absolutely certain.
The bonus issue is case in point.
In his letter to the Henderson tTeX)
Legion post commander the other day,
Mr.. Roosevelt, opposing immediate
payment, pointed out that the distri-
button of Sl,000,0O0,00 in 1881, the
last time the question was up, had not
stimulated business and there was no
reason to believe full payment now
would result any differently.
This would seem to indicate re-
lection on the part of the Admins
tration OF the theory that revival can
be accelerated, at least at this stage,
by further large additions to con-
sumer purchasing power. If that in
ference is correct, we have one line
on the 1885 policy.
There is as yet no light on the out
come of the bonus fight in Congress.
1t does not yet appear whether a
bonus veto could be overridden.
Expected to Affect Dollar.
The addition to the already large
burden on the Treasury involved in
cash payment Of the bonus could not
but have a marked effect on the gold
value of the dollar, as registered by
the foreign exchanges, and upon the
market for Government bonds. This
would be so not simply because of
the expenditure on bonus account
but also because of the effect Of
postponing the balancing of the
budget and the increased probability
of imitation.
Some sign of concern showed itself
in the exchanges in the closing days
of 1884, but it was not very pro-
nounced. If it should appear that
there was any danger of Congress
getting out Of control, the foreign
spectators in the dollar would GER
talnly attempt TO capitalize it.
The Secretary OF the Treasury,
through the stabilization fund, can
modify the effect on the dollar of
such foreign speculation. but cannot
offset 1t entirely. That is true also
of the Government bond market. for
the Law gives the Treasury Secretary
authority to operate either in the
exchanges or in Government bonds.
as he sees fit. A supporting influence
on Government obligations is the
lack Of other desirable institutional
investment mediums.
Utility Policy Watched.
OF as much interest. so far as the
markets are concerned, will be the
attitude of the administration toward
the public utilities. 1t may be taken
for granted that there will be no
swerving from the determination to
obtain lower rates for the consumers
OF light and power. That objective
is fixed.
What is in doubt is whether the
President Will be content to attain
his end by reductions made by the
privately owned and privately op-
Grated utilities, voluntarily or invol-
unfairly, or whether he will insist
on duplicating facilities just to have
a 'yardstck"
The New York City situa ton fur
nishes the test. The Consolidated
Gas Co. has offered TO put into effect
the Washington plan, the one under
which Potomac Electric Power Co.
operates. but the proposal has been
received coldly by the municipal au-
thorities.
To build a municipal plant. how
ever, a grant from the Federal Gov
ernment is necessary, and the ques-
ton is whether the P. w. A. will
hold with Mayor La Guardia or
whether it will favor the suggested
compromise. In this matter Con-
gress may be expected to 60 along
with the President The result will
decide the trend in the market for
all utility securities.
tCopyr!sht. 1885. by North American
Newspaper Alliance. Inc