Evening star., 1936-03-01
MARKET REFLECTS
MOvESTOCOMBAT
SPECULATION RISE
Initiation Prospects Fade.
Some Issues Now Above
Investment Levels.
11.M0NTH CLIMB BRINGS
CHANGE IN CONDITIONS
Controllers Ruling Comes at
Time When Bankers Face Con.
fusing Portfolio Problem.
BY CHARLES F. SPEARE.

BY CHARLES r. SPEARE.
Special Dispatch to The Star.
NEW YORK, February 29.-The ex-
tent to which the matter of restraining
speculation in securities has been dis
cussed and acted upon this week car
ries the implication that the public
and the professional traders have not
been entirely devoted to 1 long term
market position.
The chairman Of the Securities and
Exchange Commission has emphasized
the existence of speculation, but has
come to the conclusion that, perhaps,
after all. the critics may be right who
say that We are "a Nation of gamblers"
and that legislative fiat cannot correct
this disease. The Federal Reserve
Board believes speculation may be con.
trolled by raising margin requirements,
though there is no proof that this op-
Grafton has been a success. Investiga-
tion is being made of the sensational
movements in public utility shares on
the day the T. v. A. decision was rem
dered by the United States Supreme
Court, when a third of the total trad
ing was in Is Of the power and light
stocks.
And the controller of the currency,
apparently impressed by the efforts of
the banks under his jurisdiction to
make more income and profit on the
side in buying speculative bonds has
issued an order prohibiting them from
purchase OF investment securities in
which the investment characteristics
are distinctly. or predominantly, spec
ulativt." This confusion of terms
make it difficult for the average banker
to know when he is investing and
when specializing, by the book. His
common sense, however. should teach
him what to avoid when the persuasive
bond salesman drops in for a chat.
One may sympathize with his predica-
ment when his investment" outlet
just now Is confined to low coupon
bonds quoted at high premiums and q
3L4 per cent issue, offered ut par. i'm
mediately sells abound 1o2.
Become "Speculations."
To some extent this emphasis on
overspeculation has affected the mar
ket. Technically, it was in a position
to be influenced by suggestions Of con-
troll or of investigation of what has
seemed to duplicate the old methods
Of "kitins" stocks on the floor OF the
~ ID
over II months, the longest advance
In = quarter of century, and what
were investments" six months ago,
measured by price, relation to earn
ings and to income return, have be-
come "speculations." Furthermore,
the last phase of the bull market was
predicated on currency imitation. This
prospect collapsed during the week
when the leaders Of the movement
in Congress abandoned their program
for issuing soft money" to aid the
distressed farmers and. the recipients
of the soldiers bonus.
Still another influence was the po-
litical crisis in Japan, which, with
the earlier uprising in Spain, drew
attention once more to the sad state
of affairs abroad, from whose effects
this country cannot wholly escape.
improvement in the Japanese situation
brought market response late in the
week.
1t is with this background that the
Treasury on Monday will make its
offering of new refunding issues and
draw on the investment market for
$500 0,000,O of new money. The $780,
100000 Of Treasury bills maturing
March l6 represent nine lots of
$50 1000, 900 each sold between October
2 and November ~. They were
placed at from 0.l9l to O063 per cent
and were oversubscribed twice to nearly
six times.
.. Interest Saving Likely.
Inasmuch as the Treasury this
week had disposed Of similar paper
on q 0.074 per cent basis, it should
have no difficulty in paying of the
maturing bills at a slight saving of
interest charges. The Treasury notes,
due April Is, with payment to be
anticipated by one month, were sold
in May, 1888, with 2N per cent
coupon. Obviously this rate can be
improved upon when taking up this
issue, as three-year Treasury notes,
due In March, 1899, and bearing q
~ per cent coupon, are now quoted
at q premium Of nearly 2 per cent.
It is not with its short-term issues
that the Treasury has anxiety when
they come due. The test of the Inn
mediate Government market will be in
the response to moderate term bond
representing an increase in the ma
tional debt.
It seems probable, too, that the
mid-March financing will be carried
through before q revised Government
budget for the fiscal year 1887 Is
presented to Congress. It Is now
two months since the original was
submitted and Immediately discarded.
A new edition was to be offered for
the consideration Of the country early
next month. !;
Since January 6. there has been .
decided increase in the unemployed.
The December figure Of the National
Industrial Conference Board was
under 100000. That for January IL
9,7l5, 900. This is q normal and sea-
soma! increase following heavy em-
ployment in the holiday trades, but
1t does not make the problem of relief
any easier for the Federal authorities
to solve. The severe weather of Feb
ruary has added to the number out Of
work as well as to the cost Of living.