Evening star., 1936-06-30
IDLE FUNDS AID
SECURITY MARKETS
Speculative and Investment
Forces Get Support From
Easy Money.
BY VICTOR EUBANK,
Associated Press Financial Writer.

NEW YORK, June 3U.-F1nanclal
markets bowed out of the first 1886
semester with satisfaction and high
hopes for an even better performance
in the second.
During the six-month period just
ended speculative and investment
forces received support from contin-
ued easy money conditions, large
amounts Of idle funds seeking employ
ment and substantial improvement In
virtually all lines of business and in
dustry. Disastrous floods failed to
halt recovery and the start Of the
presidential campaign created no ap-
preciable market stir.
On the other side of the picture was
the cloudy foreign situation, with
monetary, social and war dangers
threatening from time to time. There
was recurrent weakness In gold bloc
monies and devsluation of the French
franc was discussed as an active po-
tentiality.
Passage of the new tax bill, impos-
ing penalties on undistributed COM
pany profits, injected question mark
into corporate affairs, but brought
hopes of larger disbursements to
shareholders.
First Break in April.
Stocks, after steady and almost
uninterrupted advance since the early
part of 1885. experienced their first
break in April. 1t was the longest
and one of the most extensive rises
on record.
Brokerage observers blamed the de-
cline principally on the sharp swing
to the left in the French elections
and fears that. with the possibility of
the new government devaluing the
franc. huge commitments in American
securities from abroad would be with
drawn with a consequent downfall of
equities prices.
Most analysts, however. attributed
the reversal Of trend to the usual
technical selling which follows a long
upturn. The stock list retraced about
20 per cent of its lengthy rally before
getting back on the high road.
The Associated Press average of go
shares reached its peak for the year
at S64.80 on April 49, At the end of
June the index was not a great dis
tance under this figure, although the
market was highly erratic during the
last two weeks.
The status of the money market
with a direct bearing on. stocks and
ponds, was shown by the fact no listed
United States Government obligations
was selling at a yield of as much as
% per cent.
Boosted to 1 Per Cent,
From last October 80 until Nav q
call money brought only three
fourths Of l per cent. On the latter
cate the New York banks boosted the
rate to l per cent, not because of anv
exceptional demand for funds. but
with the contention that handling
such loans was Improbable at the
lower figure.
secondary bonds followed equities
closely, but low-yield issues sold at
ABOUT the highest levels known tn
the financial district. On the other
hand, foreign bonds traded on the
New York Stock Exchange reached a
low average for the year in June as
DOUBTS arose over the maintenance of
interest payments of some govern
ments. Polish bonds received severe
Setbacks as service in blocked zlotvs
was substituted for dollar interest
domestic refunding operations at
famed large proportions and new
financing demand began to appear.
Industrial stocks easily took the
play throughout the first half of the
year, many establishing new tops since
1880. Even the utilities were in mod
crate demand, although this group was
still under the spell of greater gov
ernmental regulation and moves for
rate reductions. At the same time
electrlc power production was at the
Mghest ever recorded. The rails
moved a little farther up than the
utilities as freight traffic expanded
ana some OF the carriers began to re-
port net income for the first time
since the depression.
Rail Pensions Blocked.
While the transportation systems
were unsuccessful in their fight
against cut in passenger fares, thew
did receive a lift from the United
States District Court Of the District
OF Columbia last week invalidating
the railroad retirement law of 1885.
which would cost the carriers a
sizeable sum annually. Extension of
most emergency freight surcharges was
also helpful.
The steels were a little groggy to-
ward the. finish of the second quar-
ter as unionization drive and prob
able new wage increases came to the
fore. But steel mill operations were
around the best in six years.
Merchandising stocks, generally re-
sponded to the passage of the SOL
dlers' bonus bill, although discountinp
early the final cash payment.
Automobile stocks were among the
strongest as sales of a number of
companies were the largest in history.
The oils reflected expanding gasoline
consumption. Other issues responded
to favorable earnings statements and
Increased dividends.
Brokers blamed high-margin regu-
lations for the dwindling of the trad
Ing volume in the second quarter, but
1t was noted that for the six months.
total transfers approximated 26o.-
10000 shares against about 125.000.-
BOO in the same period last year. The
turnover in bonds amounted to
around S1,741, ,405,0 900, par value, COM
pared with sl,674, ,952 900 in the 1885
months.