Evening star., 1943-01-01
Significance Hailed
Despite Slow Pace,
Narrow Range
\
Volume Sues to Only
l2l 900, 900 Shores,
Low Since 1914
BY VICTOR EUBANK,

OF Inc OIllIcu NhIlOIlS Oi t1Ac poe
tlefields in 1912.
= Trading in shares in the stock
exchange approximated only 12l.-
100000 shares-lowest since 1914
and prices moved narrowly, but the
trend was significant:
l. Downward in the first four
months of the year to the accom-
paniment of gloomy war news.
2. Upward thereafter as the
United Nations began to take the
offensive.
3. Pronounced interest at times
In peace" stocks by autumn IN
growing anticipation Of eventual
victory.
War almost completely dominated
4 sharply curtailed securities indus
try. Dealers throughout the Ma
ton were organized into Victory
fund committees to sell War bonds
and played a major role in putting
over the Treasury's record-breaking
$1,000, 100000 offering in Decem-
Ger.
Reverses Brought Slump.
From January into April share
prices slowly slumped as headlines
blazed forth the British reverses
In North Africa and. in the Far
East, the fall of Singapore, Java
and finally Bataan.
On April % the average price OF
go stocks touched $32, lowest IN
nine years and down from $3.50
at the start of the year. A few days
later came news of the stopping OF
the Japs in the Battle Of the Coral
Sea.
No one realized at the time that
a turn had come, but a quiet stock
market acted better. After months
of confusion 1t became apparent
that war production was actually
beginning to roll in big volume.
Crushing victory over the japanese
fleet at Midway in June brought
inspiring evidence Of the Nations
fighting power.
Prices continued upward through
most Of the remainder of the year,
getting above $40 a share In the
average in November. There was
naturally little inclination to bid
for stocks on the basis of record
breaking volume of industrial pro-
duction and gross earnings, because
Of the determination to take the
profits out of war through taxes.
Nevertheless, when the new tax bill
finally began to take definite shape
in autumn, corporation levies were
somewhat less severe than expected,
which was a factor in the uptrend
in shares, along with the Russians
heroic defense OF Stalingrad.
Profits Trend Uneven.
A tabulation of net income for
the first nine months OF the year
of 487 companies with shares listed
showed an aggregate reduction OF
only 11.3 per cent. however, from
the substantial profits of the similar
1941 period. But the record was
highly uneven. The railroads, with
record freight volumes, had an in
crease of 525 per cent, while the
automobile industry was off 1913 per
cent and steel 38.9.
The stock market, in theory at
least, foreshadows what is to come
and by autumn. with the United
Nations offensive in North Africa,
Wall Street was definitely mani
Testing an interest in stocks of
companies calculated to do well in
the piping days of peace to come.
Throughout the year there was a
definite tendency to value war busi-
ness at a big discount because of
its obviously temporary nature.
Shares of railroads, hauling vast
quantities of war goods and ma
terials formerly handled by inter-
coastal and coastwise shipping, and
making bigger profits than in 1929,
made little progress.
A tabulation of group share price
performance between January / and
December l showed declines rang
ing from l to IS per cent for steel,
aviation, shipbuilding and operat-
ing and non-ferrous mining cate
gories-all top war businesses. Gains
Of per cent or more were recorded
by machinery, ONCE equipment
building. amusement, automobile
and rubber groups, with the last
showing the biggest increase, IA per
cent.
Rubber Stocks Recover.
Rubber shares had plunmeted
after Pearl Harbor, but came back
rapidly as plans developed for new
sources Of supply, and the companies
were not only staggered by huge
war orders, but saw an enormous
accumulation of civilian needs build
ing up for later fulfiilment. Auto
mobile shares were similarly affect
ed, as civilian motor production
ceased. This industry. however,
completely changed over to war
products. will have a big job of con-
verting back to making automobiles.
The securities and investment
business generally was stripped down
to but a fraction of its former
stature. The turnover in shares in
the stock exchange, at the lowest
level since 1914. when the exchange
was closed for many weeks. becomes
particularly revealing when it is
realized that there are nearly 10
times as many shares now listed for
trading.
Partners and key men in many
brokerage and investment organiza- >
tions left to join the armed forces or
take Government or industrial posi-
tions In war production Consonda-
tions and curtailment OF exchange
member Arms continued apace.
Financing Of new industrial facilities
for war, owing to its temporary
nature. fell largely upon the
Government.
The slackness of dealings in the
exchange necessitated changes In
trading rules to facilitate liquidation
Of large holdings. On February is
the plan was inaugurated to permit
special offerings on the floor Of large
blocks, at the last price, with a
special commission allowed to men,
bers who obtained orders. Some
100000 shares were sold by this
process.