The Waterbury Democrat., 1939-06-30

owever, the experts foresaw a better /, market for the second half of the year accompanied by improvement in volume. They anticipated dupli- cation of last years recovery which started when congress adjourned in mid-June. The 1889 adjournment is expected in mid-July.
 War scares began in January when General Francisco Franco closed in on Barcelona and the business world anticipated an in- ternational crisis. Then came the German invasion of Czechoslo- vakia which was followed by Italy's move into Albania. Later the Danzig problem was thrust into the picture. And finally, the war scare news shifted to the Ori- ent when Japan blockaded Tien- tsin.
 Each of the earlier war scares ended in a blaze of oratory and diplomatic flourish and war was averted. Yet Wall street contin- ued sensitive to any news that even savored of war prospect. Speculative activity in stocks dropped off sharply, although late in the half year the bearish ele- ment was bit more aggressive and the short interest in stocks rose to new high since last Octo- Der.
 Wide Break Made in March
 All sections of the market were lower than the closings of 1888. The years highs were made early in January and then came a sharp decline which wiped out nearly $, ,0O0, 100000 of Stock Exchange market values. In February, which produced no war scareS, the mar ket recovered partially only to fall sharply in March when more than $, ,000, 100000 in values was wiped out. On April 8, the years lows were made and then came a rally which left the market slightly lower in valuation of listed issues. A rally in May was based on tech- nical considerations and on hopes for a business recovery in the sec- ond half of the year. In June when the Japanese blockaded Tientsin, prices turned down again, but the recession was re- Stricted.
 The setback in business was at- tributed to the war Scares for the most part Other factors involved included, according to observers, failure of the capital markets to reopen, continuation of a policy of spending by the government, and little prospect for revision of the labor laws.
 Government forces tried to ease the business mind. There were several attempts at "appease- ment" and late in the half year a tax bill that would be helpful to business recovery was being dis cussed. Market men anticipated a better second half in business and looked for a stock market rise to discount this recovery.
 Business generally held above year ago, but it failed to make the usual seasonal recovery. Late in half progress was again noted in such lines as steel production, car loadings, and electricity output. Retail trade and consumer lines were holding we'll but capital goods industries continued to lag. Best showing was in the war industries -airplanes and shipbuilding. Foreigners Heavy Sellers
 Foreigners continued to send gold here in vast amounts for safe keeping. Our gold hoard scared above $16000,00O,O00 to an all- time record high. However, the foreign holders of American stocks sold just as hastily as did our own citizens on each war scare. They were heavy sellers in April when the averages plunged into new low ground.
 Public participation in the mar ket has been almost at & stand still. However, the small traders who made the 1929 boom possible were watching for an opportunity to "get aboard" Market experts said a short period of freedom from war scares accompanied by business recovery would increase sharply the stock markets busi- ness.
 Volume in the markets was very small in the first half. Stock Ex- change sales were the smallest since 1921. In May. the sales total was the smallest for that month
 since 1915, the year after the World War began.
 ' Incidentally the situation at the present time is far different from what it was prior to the World War. Back in 1914, trading was even lighter than it is today, hut the market men paid little att tention to European develop ments. They finally were swept of their feet when all markets closed on July Sl, 1914. Remembering that situation, the present trading group is ultra-cautious on the mere mention of war, fearing a similar situation. However, the ex- perts contend that the markets would operate in event of another war. although severe restrictions |