Evening star., 1936-11-15
Stocks Now Nearly 100 Per
Cent Above Levels of
March, 1885.
INVESTORS HAIL ERA
OF INCREASING VALUES
Federal Reserve Board and S. E. c.
More Concerned About Future
Than Cheerful Public.
BY CHARLES F. SPEARE.
3peciaI Dispatch 20 The Star,


Is beginning to create anxiety. Hav-
ing had a Landslide" in the political
field, are we to have runaway mar
ket in stocks and are the quotations
for bonds to continue upward under
the leverage of continuing low inter-
est rates?
These are questions that are con-
cerning the Federal Reserve Board
and the Securities Commission more
than the average investor who well
comes an era of increasing values
after the years of def1ation and de-
spair from 1880 to 1885. They were
not so pertinent on Thursday as on
Monday. 1t would be impossible not
to have had response in Wall Street
to such evidences OF prosperity as
were given this week in the golden
outpourings Of the General Motors
the Chrysler Corp.
. Seldom are benefactions of this sort
underestimated in advance as they
were In these instances. They repre-
sent only two of a large number of
similar acts by corporation managers
in sharing their profits with their en-
ployes and their owners, and at the
sam. time, challenging the undivided
surplus tax act. 1t will be interesting
to discover in the tax figures later
to be published If this measure and
the manner Of its reception has
brought to the Treasury the sum an
ticipated.
Need Of Tax Changes Seen.
Washington reports are to the effect
that no further program Of taxation
is scheduled for the next Congress.
The increase in revenues from ex-
panding corporation profits and in
dividual incomes Is expected to pro-
dlice steady reduction in the size Of
the deficit and to keep the new Treas
ury borrowing to the sum indicated
in the last budget message.
With the rising tide Of prosperity
there is no good reason why q general
recasting of the income tax schedules
should be postponed and beginning
made to bring into the list Of income
payers the several millions Of Amer
ican citizens whose average earnings
justify some sharing of these with the
Government to the end that an early
reduction Of the national debt be ef-
fected. This writer believes in cutting
all present exemptions to include in
the income brackets those earning
$1,000 a year and over.
If the recipients Of increased wages
and of larger dividends now being an
nounced are disposed to spend this
new income, there will be degree of
prosperity for the consumption trades
rivalling that of pre-depression days.
Some portion of it obviously must go
to balance the rising cost of living.
This is slow and not at all menacing.
Its progress will be quickened by the
very fact of spending. Retail prices
are at the highest since 1881. The
Dun g. Bradstreet's food index this
week shows the top point since Sum-
mer.
1t Is, however, only slightly above
that of year ago. There are debts
still to be iquidated. On the other
hand, new ones are being contracted,
as the volume Of finance paper proves.
Labor Situation Important.
The relation Of higher wages to the
general labor situation is also i'm
portant. In some instances, as in
the iron and steel industry, increases
followed indications of unrest among
workers that pointed to strikes. Even
now an element in this trade Is op-
posing the sliding scale" method of
adjustment.
It is clear that labor will not regard
passively the flood of stock and cash
disbursements by manufacturing con-
Germs. There is, however, no serious
labor disturbance except that of the
seamen on both coasts. This has its
basis in what appear to be technical
union procedures rather than in the
more fundamental ones of wages and
hours.
Whether or not prices in this coun-
try advance in sympathy with extend
ed prosperity and the enlarged spend
ing ability of the public, plus the gen.
eral world trend based on the abund-
ance of capital seeking an outlet, it is
certain that the bargain days. are
over.
There may still be unexploited areas
in the market for securities and for
real estate. There will be imitation"
markets, even If not justified by facts.
BY and large, however, values have
already adjusted themselves to the
fundamental considerations Of earn
ings and return.
Large Part in Cash.
The strength Of the speculative sit
uation is that so large q portion Of
the buying Of stocks has been for
cash. Brokers loans no longer cut
figure in determining the extent Of
the public's participation. On the
other hand, the objective Of the cash
buyer is profit. Today that profit,
and the proper moment when it is
expedient to realize it, is uppermost
in the minds of large percentage Of
those who first began to interest
themselves in stocks few months
ago. There were at times this week
signs of some liquidation in over
doomed stocks. A weak feature Of the
situation. as it was in 1929, is the un-
willingness Of those whose profits be-
gan to accrue with the rise dating
from March, 1885, and earlier, to take
them because Of the income taxes
involved