Evening star., 1937-01-01
MARKETS SIMILAR
IN 1885 AND 1886
Lows of Both Years Set in
Spring, While Highs Came
in November.
BY GEORGE T. HUGHES.
D. ecial Dispatch to The Star

BY GEORGE T. HUGHES.
Dtecisl Dispatch to The Star.
NEW YORK, January when
we compare the bull markets of 1885
and 1885, we find striking similarity
in the patterns made by the move
ments of the general stock averages
That similarity is more notable if we
conflne our comparisons to the in
dustrial stock average, which has been
free from the special influences which
at times have affected the railroad
and utility groups.
Looking at the industrial average
alone. we find that not only is there
conformance in the main swings dur
ing the two years. but the extent of
the gains from the start of each
year to its high point is also very
nearly comparable.
Reviewing briefly the movements of
the Dow-Jones industrial average, we
find that the high point in 1885 was
reached on November 19. while this
years high point was touched on No
vember II. In both cases. what is
known as the closing high" is used
Both years saw trading reactions
which set the approximate lows of the
year in the early Spring. the main
intermediate downtrend in 1885 reach
ing its lower limit in March, while
that of 1886 occurred in April.
Price gains show an even more
striking conformance, for, if we meas
ure the gains in each year from jan
uary levels to the November highs,
we discover that the industrial aver
age added slightly more than AZ points
In 1885. while the 1886 bull market
has scored an advance of only frac-
, ton less than AZ points.
Gain Slows Down.
In percentages, of course. the 1896
E price gains in the industrial group
will figure out as somewhat less than
= the gains of 1885, for the start was
from higher base. Moreover, if we
compare the upward swings from the
Spring lows to the November highs Of
each year, it is found that 1885 has
the edge. with rise of nearly So
points. against this years Spring-to-
Autumn rise of a little more than Al
points
To that extent. therefore. it may be
said that the major upward move
ment is slowing down. Some slowing
down is naturally to be expected. in
view OF the fact that the current bull
market. the foundations of which are
get in the rock-bottom low levels of
mid-1932, has in the last two years
scored an unusually rapid advance
without an old-fashioned healthy
reaction.
From January, 1885. to the high
point of last month, the industrial
stock average has risen about IS per
cent. And 1t is to be remembered that
the level Of January. 1895. was some
thing more than two and one-half
times the average price of the indus
trial group at the depression low point
in 1892 At this years high the indus
trial average stood at nearly four and
one-half times the low of four years
ago
Rails and Utilities Lag.
That indicates rather impressive
improvement in quoted values in the
industrial sections. where corpora
tions have not been hindered in their
efforts to recoup earning power.
But the rails and utilities have
moved by fits and starts. the outlook
for those two groups. while showing
improvement. never becoming so
clearly optimistic as to win wide in
vestment favor for their shares.
The effect of their backwardness
upon the general level of equity
values. however, has not been so great
Is might be supposed, for. Of the
total market value OF all stocks listed
rails and public utilities combined ac-
count for something less than Is per
cent.
Recovery Accelerated.
Essentially. there has been a broad
similarity also between 1885 and 1885
when we turn to what the market
follower calls outside developments"
A we'll sustained and accelerating
business recovery which has spread
out encouragingly into heavy industry,
with railway equipment manufactur-
prs the latest to feel the release Of
deferred demands. has this year, at
last. been the prime mover. proyid-
ing the increasing employment at ris-
ing wages. the profits and the divi-
dends which 60 around and around
In = spiral Of rising economic we'll
being.
Total dividend payments this year
will reach the highest level since
1880, but that part OF such payments
which represents tax-forced distribu-
tions unfortunately tends to enlarge
the picture of actual earning power
70 false proportions.
Second only to business recovery as
q market influence, and some observers
would probably put it first. has been
the continuance of a plethora of
money seeking employment. The
United States Treasury, which sold in
1885 medium-term bonds bearing in
terest at from per cent down to 234
per cent, this year made similar f1ota-
tions at from ~ per cent Gown to az
per cent. with yields on comparable
maturities in the listed market down
to 2h per cent. A utility company.
which priced a refunding issue to
yield 3.17 per cent in April of this
year. has this month fioated addi-
tional bonds of the same maturity to
yield but 1895 per cent.
Setbacks From Abroad.
Looking back over the course of
stock prices in 1896, it must be re-
gsrded as significant that such set
backs as have occurred in the market
have been mainly due to outside"
influences which have had only an
indirect relationship either to recov-
cry or the going return on money.
In April the markets were unsettled
by fears which followed Hitlers
Rhinish gesture. In August it was
the Spanish situation that worried the
markets into q decline, and in Sep
tember there was concern over the