Evening star., 1936-11-01
Republican Success Expect
ed to Bring Immediate
and Sharp Rally.
IMPORTANT ISSUES FELT
BY BUSINESS CIRCLES
Roosevelt Victory Likely to Bring
Temporary Drop, With Quick
Market Recovery.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

Gp0Ntul blopotSu w AbS SsSA'
NEW YORK. October 31.-The
question in the minds Of security
owners and dealers, at the end of this
week, is the effect on them Of next
Tuesdays election. Will prices rise
or fall? viii new issues come in
volume on the market or will the
inclination Of borrowers and under
writer's be rather that Of deferring
commitments? There is some aid
in precedent in answering the query.
In the last three presidential cam
paigns, stocks were heavy from one
to four days in the week preceding
the election. Subsequently, they had
a decided advance.
There are two opinions as to the
probable action Of the market follow
ing the announcement of Tuesdays
vote. One quite commonly held is
that Republican success will produce
an immediate and sharp rally.
This would reflect the satisfaction
Of those business and financial in
terests who believe that Gov. Landon's
election would mean greater freedom
for industry, smaller corporation
taxes, less waste of Government funds
and an early balancing of the budget
in other words-an atmosphere
in Washington more sympathetic to
business and more responsive to its
aims.
If this view is sound, it must follow
that the reelection Of President
Roosevelt would cause a drop in Sc
curities because of the continuing
threat to business of the policies
against which it has rebelled.
Both Seen as Temporary.
This, however, does not end the
debate. For many of those who ex-
pect securities to rise If Gov. Iandon
is successful are wise enough to
realize that the promotion of his
campaign policies will mean less
spending, more unemployment, less
purchasing power by the masses, and
consequently. q certain amount Of
industrial and commercial deflatior
by which securities would be affected.
So they say that, while stocks would
rise for a time, they later would prob
ably suffer a reverse, especially as they
have been advancing for over a year
and half with q net average rise in
that period of 80 points.
Then, taking account of the posi-
bility Of President Roosevelt's second
term, the argument is that q quick
and immediate drop in prices from
fear would be followed by another ad-
vance based on credit expansion, con-
tinued brisk business and sustained
purchasing power of the public at
large.
Hold Middle Ground.
A rniddle-ground position Is held by
a considerable body of interested per-
sons who look upon elections as of
secondary consequence In establishing
a permanent trend either in securities
or in business. They have for some
time maintained that, regardless of the
outcome on Tuesday, these trends will
continue to be upward. For, they say,
they reflect industrial prosperity and
improving world conditions and are
not to be detected from their course
by political conditions or economic
or social policies that, in the nature
of things, cannot now be much diff
ferent under Republican than under
q Democratic administration. To this
point Of view the present writer sub
scribes.
Allowing for q certain amount of
emphasis on the business recovery for
political purposes, the statistics Of in
dustry and trade this week again sus-
tain the fact of a progressive improve
ment. This is not likely to be affected
more than temporarily, If at all, by the
results of the election. The momen-
tum of it and the mood of the Amer
ican people is in its favor. It is being
encouraged by those factors in in
creased buying power. namely, higher
wages and larger dividends.
Wage Increases Spread.
The journal Of Commerce points
out, that In the past five months, IS
concerns have publicly announced
wage increases affecting over 100000
employees. The return of the United
States Steel Corps preferred stock to
a per cent dividend basis could only
mean that the 467,000 workers in the
steel industry are also to share in the
rising profits of one of Americas ma
jor industries.
Each week witnesses the return of
companies to a dividend basis after
for the past five years to
distribute profits to their owners.
Others are raising their dividend rates.
Conspicuous examples this week are
Standard Brands, American Rolling
Mill Co., Consolidated Edison of New
York and Sears-Roebuck & Co. It is
known that other corporations are only
waiting until after election to make