Evening star., 1948-09-12
Stock List Depressed
By European Tension
And labor Troubles
By Roder Winoet
Assoeioted Press FinuneiaI Writer

NEW YORK, Sept. ll.-Prices OF
stocks we're weighed down this
week by adverse political develop
ments in Europe and growing in
terruptions of industrial activity
at home.
Brokers took their long Labor Dav
week end in happy frame of mind
because of the fine way the stock
market was acting.
But they went home this week
end with some miSgivings over what
had happened to their business.
Actually. the weeks performance of
the market was not one to arouse
black gloom by any means, but
some of the things that occurred
we're unexpected. like the sudden
slammine of a door.
Russian Stubbornness in Berlin.
coupled with mob demonstrations
and killings. banished the Wall
Street hope that something in the
nature OF a settlement of Russian
Western Nation differences might
be worked out.
French Crisis Watched.
That was one development on
the negative side Another was the
growing political trouble in France
where new government was
formed with difficulty. Governments
in France come and go. was one
attitude, and the new one will be
No. ia. But it wasn't formed too
easily. and it was accompanied by
restlessness among the workers and
within the many political parties.
A measuring stick of the trouble,
easy for business-minded men to
see and read, was the jump in the
number OF francs that Frenchmen
were willing to pay for gold and
dollars in the black market. BY
weeks end a dollar commanded
new high price of Ais francs.
Within the United States lot Of
encouraging business and financial
trends were ignored when a wave of
strikes forced more than 100000
workers into idleness These strikes
were across the Nation-West Coast
shipping Western States oil, Detroit
automobiles and Eastern trucking.
Reserve Action Is Surprise.
In the midst Of that came the
announcement that the Federal
Reserve Board had raised Reserve
requirements for member banks by
2 per cent on demand deposits and
T. per cent on time deposits as
authorized last month by Congress
In the battle against imitation.
Wall Street knew the move would
come at any time after the President
signed the bill into law, but most
ditin' expect it so soon. It was not
o shock. of course. because banks
for weeks have been preparing to
meet the higher Reserve require
mcnts.
The step was the fourth in the
Governments campaign to restrict
credit and curb imitation expansion
The first move came when the
Treasurer increased interest rates by
Ia Of ! per cent on short term debt.
That was a signal for banks to in
crease by q to 4 of l per cent
their rates on commercial borrow
ingS.
The second was an increase in the
Federal Reserve rediscount rate to
IL from IA per cent. That made
1t more expensive for member banks
to borrow from the Reserve Bank
in order to lend to their own Gus
toners.
The third move was curtailment
of installment credit buying, effec-
tive September 20.
Psychological Effect Cited.
Actual effect of all these things
on the market was negligible, of
course. The big factor was the
psychological nudge it gave as re-
minder that the Government is
hacking away cautiously at infla-
tion and intends to hold it back.
There are still at least two more
measures that could be taken i'm
medlately along the same line. The
Federal Reserve could raise reserve
requirements 2 per cent additional
on demand deposits before reaching
the ceiling set by Congress. and the
FEEDER al Reserve could pull the pegs
and modify their support program
for long term Government loans.
These bonds have been kept at par
or above to insure 2l2 per cent
rate Lower bond prices induced by
a lower Government support level
would automatically make the rate
OF return on the investment higher.
There is no indication that either
OF these measures are contemplated
right now.
The stock market on the week
contracted by something under 81
O00,O00,O00 of quoted value. The
Associated Press average OF 60
stocks declined 1.8 points. Indus
trials were down 81, rails 30 and
utilities 6 of point.
The opening day OF the week,
Tuesday, was a continuation Of the
previous week with steels and mo-
tors leading a rather hesitant rise,
The following day was slow until