Evening star., 1936-02-23
MARKET RETURNS
TO MOOD OF 1929
ASST0CKS MOUNT
Speculative Fever Again
Grips PubIic-Danger
Is Seen Ahead.
CASH PURCHASES CITED
AS IMPORTANT CHANGE
Funds Now Drawn From Banks
or Business Reserves Rather
Than From Borrowings.
BY CHARLES r. SPEARE.

special DlSpatcn TO Inc otaT.
NEW YORK, February 22.-Turn
back the pages of financial history to
so recent period as the Summer of
1929 and we find written there the
record of the most extravagant specu-
lation in common stocks ever witnessed
in this country. Going on to the
Summer of 1882, we may read Of the
wreckage that this era produced. To
make these facts concrete, the average
high and low prices of the two periods
are given below by groups:
Ten industrial common stocks, such
as General Electric, General Motors,
Allied Chemical, American Can, Ana
conda Copper. Kennecott Copper,
Montgomery Ward, Radio Corp,
United States Steel and Union Carbide
& Carbon, reached high average of
$199 share in 1929 and dropped be-
tween 1882 and 1885 to low average
of SIT a share, with most of the
minimum prices reached in 1882.
Their present average is $66 share.
Ten public utility stocks. as Ameri-
can &, Foreign Power, American Power
& Light, American Water Works,
Electric Power & Light, Electric Bond
e. Share, Consolidated Gas of New
York. Cities Service, North American,
Public Service of New Jersey and
United Corp, reached a high average
in 1929 of $l58 a share and a low
subsequently of ST a share, with the
present average S21 a share.
Twelve railroad common stocks, as
Aitchison, Baltimore g. Ohio, Chicago
& Northwestern, Delaware g. Hudson,
Erie, Illinois Central, New York Gen.
trail, New Haven, Northern Pacific,
Pennsylvania, Southern Railway and
Union Pacific, touched high average
in 1929 of $165 a share and a low
subsequently of $l1 share, with the
present average over $40 a share.
Mood of 1929 Reappears.
In two trading sessions this week
the turnover on the New York Stock
Exchange averaged 100000 shares,
or what was considered good days
business. say, in August, 1929 United
States Steel common, which mad more
than doubled its price in the last
year. rose points on Tuesday, though
the United States Steel Corp. has just
completed five-year period in which
the total deficit. after dividends, was
$2l9,000.000. This, contrasted with
the slump in public utility issues from
the extreme quotations of the day
previous, when Wall Street guessed
wrong on the T. v. A. decision and
had to make a quick retreat when it
discovered its error.
The point this writer wishes to en-
phasize in reproducing these stock
records and in calling attention to the
large volumes of business now being
transacted on the exchanges is that
the mood of the public is beginning
to approach that of 1929. There is
this important difference, however,
that six years ago the speculation
was with borrowed money, and SO.
highly dangerous, whereas today it
is with funds drawn from business
reserves or from banks. Cash pur-
chases still represent high propor-
ton of the total turnover. The small
increase in brokers' loans supports
this statement.
However. the public is again excited
and following a dangerous trend and
doing just what it pledged itself in
1882 never to do again. A mass
psychology that was built up in 1929
on the assumption that we were in
new era" which would justify prices
of from 5000 to $500 share. or 80
to so times earnings, for stocks that
later sold at 50 and S. share, is
now being created out of the expecta-
tion that there will be some sort of
imitation to give enormous value to
equities" and at the same time,
seriously deflate the prices of all fixed
interest obligations.
Banks Attitude Changes.
Along with this situation is the
gradual change in the attitude of the
banks toward securities. They, too,
after the experience of 1882 and 1888,
vowed they never again would buy
bonds of semi-speculative character.
One trial by fire had been enough.
They had learned their lesson. But
the pressure of increasing deposits
and of low return on their Govern
ments, their municipals. their re-
funded public utilities and their UNDER
lying rails has sharpened their ap-
petite for securities that are on the
border line as to quality. When they
buy such as these they do not mean
to hold them as permanent invest
ment, but just to ride along with the
market and get out-with a profit.
This is another symptom of the re-
turn of the same fever of speculation
that gripped the Nation in 1929 and
(See STOCKS, Page 81