Evening star., 1935-09-01
STOCKS HESITATE
WITH TRADE UNTIL
AFTER LABOR DAY
Wall Street Faces Added
Uncertainties With Con.
gress at End.
LONG UPTURN WEAKENS
TECHNICAL POSITION
All Bearish Domestic and Foreign
Developments Exaggerated
by Price Situation.
BY CHARLES r. SPEARE.
Special Dispatch to The Star.

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK. August 3l-The
month Of August ends with the mar
kets for securities in q confused state,
stocks failing to make progress during
this period, and with a slight re-
cession in business due to the sea-
sonal tendency to mark time until
after Labor day.
The adjournment OF Congress has,
in the mind of Wall Street, increased,
rather than lessened, the problems be-
fore the country In the months inter-
vening before the National LegiSla-
ture meets again in January.
On the eve of the League of Ma
tions Conference to determine action
on the Italo-E Ethiopian dispute there
is an uncertainty that affects foreign
currencies and government issues and
somewhat tempers the investment and
speculative operations Of those who
have been actively accommodating Sc
curities for months past.
The fact that prices In almost every
direction have had long rise weak
ems the technical position of all mar
kets and helps to exaggerate the
effect of all bearish domestic and
foreign developments.
Sharp Gains Recorded.
When the stock market definitely
changed its course this week 1t had
had a rise of IS per cent since March.
The production OF iron and steel had
increased nearly 100 per cent. so the
slight drop in its ratio to consumption
this week was to be expected. In diff
ferent centers of the country retail
trade had advanced from 10 to Is
per cent over July and August. 1884.
It was too much to assume that this
degree Of expansion could be con-
tinued indefinitely.
On the other hand, the output OF
electric power goes on growing. The
returns this week indicate an in
crease of 1l6 per cent over last year,
which is the best showing so far made
by the industry. The significant fea-
ture of this report is that the largest
gain is in Eastern industrial centers.
Carloadings are beginning to re-
feet the momentum Of business IN
manufacturing districts. This Is
gratifying. for railroad reports for
July are discouraging to security hold
ers. OF A systems, no fewer than rs
last month had a decrease in their
net operating income. OF the l8 that
made some improvement, consider
able number simply exhibited q
smaller deficit than a year ago.
Cotton Policy Discussed.
It is quite possible that recovery
may be checked temporarily in the
South owing to the change in the
Federal loan plan affecting cotton.
This policy, which threatened po-
litical revolution, emphasizes the diff
Guilty Of the administration in at
tempting the role of a moderate
spender after having been a liberal
one. Those who have benefited from
a bonus or a dole are unwilling to
give up any portion of it, as instanced
in the case of the groups on relief who
have objected to the terms of employ
ment under the Federal Works Prog
ress Administration. Freezing is a
painless process; it Is the thawing out
that is agonizing.
Declines in long-term Treasury Sc
curities have been extended this week
to two and three points from the high
levels of the year. Several of the
newer issues have sold under par.
With a per cent return now avail
able, the Treasury must reform its
ideals of the value of its new offer
ings to the investing public. Like the
bankers, who have been flooding the
market with new corporation issues,
Treasury officials have forced the low
return proposition too far. This has
been apparent in the decline Of the
27s per cent loan of 1855.
Credit Held Unaffected.
This writer is not impressed by the
argument that Government credit is
being affected by the months change
in the Treasury position. 1t has re-
f1ected, as have all high-grade securi-
ties, the conviction of the largest
buyers that markets were too high and
returns of invested capital too low
and that. therefore, they should not
resume their purchases until better
terms were available. The breaking
point between buyers and underwriters
came when a 81 per cent public util-
ity bond was offered above 103A. In
stitutions refused to subscribe. The
issue is now two points under the
original price. Other high-grade util-
tiles sold last month are down one
to two points.
The readjustment has its most Sc
we're phase in the industrial issues that
came along at the tail end of the
distributing movement. One conspicu-
GUS 4 per cent loan offered at 981a
sold this week at 911a: another brought
out at 100 dropped to s31a. Unless
future refunding issues are offered on
a reasonable price basis, considera-
able percentage of them will remain
in the hands of the underwriting
groups.
(Copyrieht. 1895. by the North American
Newspaper Alliance. Inc3
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