Evening star., 1937-07-01
FACE LAST HALF
Of 1887 CLOSE TO
LOWS Of DECLINE
French Crisis, Labor Strife
and Summer SIaCkening
Depress Markets.
BY FREDERICK GARDNER,
Associated Press Financial Writer.


swing to the bear side in the first half
of 1887, security markets reached the
midyear post today we'll under the
peaks of long rise from the depres-
sion lows.
Having yielded the last fortnight
more of the ground previously gained
in one of the most sustained advances
in Wall Street history, stocks and
bonds faced the second half take-off
from about the lowest point of the
retreat.
Suspension Of gold payments in
France, accented generally in Wall
Street as prelude to further franc
devaluation, and signs of Summer
business recession at home. together
with a labor controversy in steel. set
up half-year landmarks for trading
circles.
Gold Cut Talked.
Both the French financial difficulties
leading to the franc crisis and pros
poets of Summer industrial letdoWn
following prolonged climb up the
recovery trail, were considered by mar
ket observers as among influences be-
hind the shift in security markets to
bear tack
Liquidation in securities on the
Spring decline, the heaviest in more
than two years, was traced partly to
rumorS, frequently denied, of a pos
siole cut in the United States buying
price for gold to check inflow of the
yellow metal Since much of this
capital movement was attributed to
the French fiscal problems, many Wall
StreeterS were hopeful a solution
finally would end gold rumors which
have bounded security markets for
several months.
AS the first half drew to a close,
indications Of seasonal business
breathing spell. contrasting with ex-
| tension Of the recovery drive last
Summer, increased in steel. textile.
machinery and other sectors Of the
industrial front. However, many au-
thorltleS insisted undercurrents still
were running strongly in favor of
further business expansion aided by
some OF the best crops the country
lids SEEN IN years.
Rails and Utilities Lag.
Meanwhile rail and utility shares
showed the stock market the way~+o
new lows for the Spring decline in
the final week OF the half gear. For
months they had been tagging be-
hind industrial stocks. Iuch as cop
pers, steels and ma&inery issues.
while operating costs mounted faster
| than revenues earned from fixed se-y-
| ice charges.
lndustrials were quick to follow as
they fell under the shadow of busi.
ness recession. However. selling was
llght ana trading dragged at less
IMAM half the speed before the
spring decline. Most of the DAMAGE
was done during the March and April
selling storm, which wiped out more
than s5,000OO0OOO in market values
OF listed shares on the stock ex-
change. This still left the list more
than s25.o00,000,0 to the good, COM
pared with March, 1895. at the or
set OF long upsWing.
Renewed selling in the last half q.
June carried many bonds to the
lowest prices since the Spring Of
1886 or late 1885 This. followed sev-
eral weeks of rather Smooth sailing
alter the Federal Reserve Board had
come to the rescue of a tot+erirg
market for United States Government
loans earlier this year.
| Starts With N,,, W.
| Inc turn dented one of the greatest
ou!l markets in top-grade bonds tho
! illancla! district has seen. The do
cLine' starting with the new year and
saInerlng force while stocks and COM
| hlooltles were still moving ahead
raised investment yields moderately
But rates remained low enough IN
encourage renewed corporate borrow
ing later. Before the half-year mark
was reached underwriters were busv
with plans for several large issues
Inc April storm in speculative
| markets rode in on rumors the United
| states was considering a reduction in
us buying price for gold as a check
on rapidly rising commodity prices
| 1ndlcatlons that Government all.
thorities were concerned over snecula-
Iioh ior the rise in commodities were
seen IN London and Washington.
moreover, industrial warfare in
automotive, steel and other industries
helped frighten traders.
AS prices hit the decline Wall
Street began to talk about business
recession in the second half of the
year. Some profeSsed to be pessi-
mistlc about profits in face of mount
ing costs.
Steel Sets Record.
The drop in security markets found
no immediate reflection in business
barometers. Steel makers set a new
| tonnage record, machine manufac-
| turers worked hard on large backlogs
OF orders, and manufacturing en-
! ployment registered the highest since
| the 1929 stock market collapse. MANY
wondered whether markets had not
forgotten business realities
numerous financial commentators
were content to explain the decline
as natural setback after a long
rise. History running back many
years, they noted offered scant pre-
cedent for such a continuous rise in
share prices as that which had been
under way since March of 1895.
The administrations drive for
| Federal court reform and the mo-
mentous Supreme Court decisions in
the labor relations and social security
cases made profound impression in
financial quarters. 1t was assumed
generally that the economic results in
the long run would be far-reaching.
But what part they played in guiding
markets was difficult to determine.
From a midyear perspective, one
OF the most significant developments
to many observers was indication that
Washington had thrown its weight
against rising prices, apparently afraid
that recovery might turn into
feverish inflationary boom, fed by the