Evening Star Newspaper, December 28, 1930, Page 57

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News of Markets Pages 1 to 6 FINANCIAL AND CLASSIFIED he Sunday Star Part 6—10 Pages WASHINGTON, D. d, SUNDAY MORNING, DECEMBER 28, 1930. Classified Ads Pages 7 to 10 BUSINESS IN CAPITAL LITTLE AFFECTED BY DEPRESSION DURING YEAR D. C. RETAIL SALES GOOD DESPITE SLUMP ELSEWHERE Capital Much Less Affected by Trade Depression Than Other Cities—Savings Deposits Have BY EDWARD C. STONE. ASHINGTON, like every| other city in the United | inding up a hec- tic year in finance and busi- | ne Not every cloud has | had a silver lining by ‘any means, al- though every day has brought normal prosperity closer. While the wheels of bus been turning more slowly. the banks have been steadily stowing away money in their vaults or putting it out at interest. A thrift wave, caused by the depression, has turned an ever- growing amount of money into the savings depart- ments. Another out- standing highlight is the fact that in | spite of the Na- tion-wide trade de- pression, retail | sales in Washington have not suffered | to any such an extent as they have in| practically every other city in the| country. ‘The year 1930 has witnessed impor- tant bank mergers in the Capital, Ihe‘r largest Christmas savings fund sub- scriutions on record, a fairly firm tone | among most local securities, comple- | tion of two branch banks, the listing of | several new issues on the Washington Stock Exchange and, what is not so cheerful, a notable decline in local bank | clearings. Strenuous Year in Banking. | Local bankers report that 1930 has| been one of the most strenuous years | on record. Last year call money in New York was up to 20 per cent at times and averaged 9 per cent for the first 10 months. That made profits easy for outside banks that ‘had more funds than they needed to meet home require- | ments. This year call money has been at 1% and 2 per cent during a good of the year, some contrast, to say e least. However, there have been some bright l'ruts in the local banking picture. The slump in Wecll Street late last year was followed by a remarkable turn to- ward thrift which has lasted through- out 1930. Controller Pole reported a substantial mounting in savings in 40 ‘Washington banks, shown by the last call. Of course it has not been easy to put this money out to any great ad- vantage, but most of the banks in this city report an excellent year and their officers believe that 1931 will be a good deal better. ‘The District Bankers' Association has been functioning most successfully, the members meeting many perplexing problems in a fearless manner. The association this year is being guided by Lanier P. McLachlen, president; Ed- ward J. McQuade, first vice president C. H. Pope, second vice presiden George O. Vass, secretary, and Albert 8. Gatley, treasurer. The investment banking and bro- kerage houses have had their problems during an erratic year in securities and merit the highest credit for the manner in which they have maintained their lete working forces in the face of | lighter business. Very few personnel | changes have been made here. ‘ During the year one brokerage office here was closed, this action being caused by the failure of Prince & Whitely in New York. | Two Important Bank Mergers. | ‘The year 1930 has seen two impor- | tant bank mergers in Washington. The | first consolidation took place in Janu- ary, when the Commercial National and the Continental Trust Co. united. In this merger the Commercial National name was retained, and Wade H. Coo- fi:ube&.ome president of the combined tution. ‘The second consolidation was that of the Federal-American National Bank and the Merchants’ Bank & Trust Co., announced on September 16. In this oconsolidation John Poole became head ©of the new institution. During the year the McLachlen Banking Corporation opened a branch in its own building on Fourteenth street opposite the Bureau of Engraving and Printing, and the Washington Me- chanics’ Savings Bank completed and opened a new branch on Connecticut avenue, near Newark street Two, veteran bankers, Peter A. Drury | and Robert N. Harper, retired from ac- | tive banking during the year. Joshua Evans, jr., was elected president of the District National, and on the death of | Dr. Prederic E. Farrington John C.| Walker was chosen president of the Chevy Chase Bavings Bank. l Bank Clearings Reveal Decline. | Checks passing through the Wash- | ington Clearing House in 1930 will not | equal the yearly total in 1929, 1928 or 1927. While December clearings are not yet available, for the first 11 months | of the present year canceled checks reached the sum of $1200,034,523.91, | compared with $1,365,316,098.74 in the corresponding period a vear ago, $1,305.- 744.189.67 In 1928 and $1,262,316,174.58 in 1927 The tollowing compilation shows lo- cal clearings month by month, com- pared with last year, and also shows that January, April’and October were the best business months in 1930, un- Jess the present month should nose | s have Edward C. Stone. them out when the December 31 figures | are in 131,795 129.300.050 126.836.189 124.028. £ 114986.938 3.084.015 137.968.361 102,030,387 120.261,737 7$1,200,034.523 $1,365,316.008 Decembér is always one of the be:t.‘ business months in the year, the slump in 1930 clearings is expec to ly mcm when the final figures are ] D H H uclgg:, president of the Na- tlonal Capital ehnrnnne:l the Clearing House Asso- this year, with Charles E. assistant cashier of the National litan Bank, manager. Associa- tion affairs have moved along like clockwork. Exchange Avoids Distress Selling. has been no pronounced evi- Shown Gain. volume of trading, yet business has been quite satisfactory when business condi- tions throughout the year are consid- ered. The present year has shown no substantial recovery in prices following the New York Stock Market crash a year ago which weakened the securities on all the other exchanges in the coun- try. Comparison of sales on the local board up to the time of the annual meeting this year with business during the record-breaking year of 1929 is of unusual interest and shows very clearly | that prices for securities have not| broken here to any such a degree as they have elsewhere. The sales, accord- lé!g to records kept by W. B.Hibbs & | o.: Cal. year Public utility bonds... Miscellaneous _bonds Unlisted bonds ... Public utility stocks.. al bank stocl 1930 to Nov.14. $1,336,200 42,500 27,600 Shares. 16,345 1.339 1,385 307 703 142 | 29,587 | 331 Savings bank stocks. Fire insurance stocks Title insurance stocks. .. scelianeous Stocks.. .. nlisted stocks... . Exchange in New Quarters. The year was marked by the secur- ing of a new home for the exchange in the Washington Building when the American Security & Trust Co. started | its new annex. The new quarters have | all the conveniences for trading and | compare most favorably with the ex- changes in other cities of equal size. During the year the exchange lost through death one of its oldest mem- bers, Albion K. Parris. Mr. Parris served as president in 1894, was a con- stant attendant in his active days in the financial district and in late years had been the generally accepted his- torian. Several new listings added to the usefulness of the local mart during the year, as follows: 55,070 shares Emerson’s Bromo-Seltzer; 3,000 shares Columbia Medical Corporation; 20,000 shares ce Georges Bank & Trust Co. $300,000 Columbia Country Club 5%s, and $3,000,000 Washington Gas Light 4%%s. Mayflower Hotel 6s, National Press Building first 5,8 and three Wardman Realty Properties bond issues were added to the unlisted department. ‘Transfers of seats during the year were: A, H. Reeside to M. P. West- heimer; estate of Charles J. Bell to Charles E. Howe, Frank B. Pryor to John F. Brawner, and James M. Green to C. G. Parker, in addition to President Walson include: Edward L. Hillyer, vice president; C. J. Gockeler, secretary, and James M. Johnston, treasurer. The most active -bonds on the list have been Capital Traction 5s, Potomac Electric Power Consolidated 5s, Wash- ington Gas Light issues and Washington Rallway & El:ctric Consolidated 4s. In the stock list Capital Traction, Potomac Electric Power preferred, Railway & Electric preferred, Lanston Monotype and Mergenthaler Linotype have been among the most favored issues. Local bank stocks have held up wel several still being well above $400 a share, among them Columbia National, Lincoln National, Riggs National, Na- tional Savings & Trust, Washington Loan & Trust, Security Savings & Com- mercial and United States Savings. Local Trade Outstrips Country. According to the Federal Reserve Board, retail trade in Washington and the rest of the fifth Federal Reserve district has eclipsed nearly all other sections of the country in 1930. Th> teady Government pay foll, with the resultant less unemployment, is the reason for this pleasing condition. Trade for the first 11 months of 1930 in this area was only 4 per cent behind th: corresponding period last year, only the New York district registering any better showing, and Boston equaling the record here. In the United States as a whole, 572 stores reported a drop of 7 per cent in department store sales in the same period. Furthermore, except Norfolk, Wash- ington made the best showing of any city in the fifth district in the 11 months. Refail sales in the Capital were off only 1.5 per cent, while Balti- more stood third with a drop of but 1.7 per cent, While percentage figures make Wash- ington stand out like a beacon light ahead of most of the other cities in the United States, yet all local mer- chants are not so enthusiastic over busi- ness here. Some declare trade far from satisfactory and report that too many people have neglected to buy the higher priced goods. ‘That general business outside of store sales has not been so rosy is shown in the Reserve Board reports on fail- ures. The Richmond bank reports that a large number of small business enter- prises have gone to the wall during 1930. Vacant stores in various parts of the Capital tell their own stories of financial stress and heartaches. An estimated distribution of about $7,000,000 in Christmas club savings in Washington was an important factor in holiday trade, although an unusually large portion of this money is said to have been returned to the banks and other funds used in the payment of vear end bills What Is Ahead for 19317 So much for 1930 in Washington. What of 19317 It is hard to say, but economists insist that the sun will shine more brightly through the finan- cial mists during the coming year. It is dinned into our ears daily that stocks have “scraped bottom,” are now n - “strong hands” and are really “turning,” also that “business cycles” 5 | are not obsolete. Every depression has come to an end, and this one has already run longer than most others. Business needs 1| nothing but an increase in demand for 80ods. The demand will come when the old suit, overcoat, felt hat or derby and the old shoes wear no longer. That time has already arrived for a multi- | tude of people and is fast approach- |ing for a host more. Besides many have never stopped buying. The lpeedilfll‘ Bank, has again been|it CONVICTED BANKER DIES. MILLEDGEVILLE, Ga., December 27 (#).—T. Wallace Hawkes, president of the defunct Merchants & Mechanics' Bank at Macon, Ga. died here today after serving a week of a 10-year sen- |tence in the State penitentiary for embezzlement. Death was ascribed to pneumonia, which he contracted while working on the prison farm last week. The exchange officers | 12 Artificial Stimulus to Ameri- can Business Outruns Con- suming Power. BUYING SHARPLY REDUCED Agriculture Apparently Chief Sufferer From Letdown in Nation’s Trade. BY J. C. ROYLE. HE wildest cross currents ever known in the history of the United States tossed the ship of American business on her im- | ends in 1930. Rolls and pitches disturbed and affected the pocketbook of every man, woman and child in this country, no matter whether the ship was riding the crests or wallowing in the troughs. At the opening of the year busi ness faced the ter- rific depression of stocks and com- modities which took place in Oc- tober, November and December of 1929. It carried on | ¥ a great battle, tak- ing severe punish- ment, but weather- ing the storm. The stability of the “ business and in- dustrial structure and its tenacity of purpose, its strength and endurance were fully exemplified. Weakness in Distribution. ‘The year started with business men in hundreds of industries pledged to such business and industrial programs as had never before been undertaken. They had every intention of fulfilling those pledges. They did their utmost to do 50, but what was not realized was the fact that those pledges and those programs represented not a normal | pracperity, but an artificial stimulus to production with consequent employment and maintenance of buying power. 3. C. Royle. Before the year was over it became evidens that business could not be arti- | ficially stimulated and still be normal. | This resulted largely from a world con- | dition which involved practically every nation on the globe in a business reces- sion which made it impossible for other tions to purchase and pay for prod- ucts from the United States in the same volume in which they had previously been rbed. s From 1926 to 1929 American business devoted itself almost exclusively to the development and perfection of mass production. Mass production in this country attained a volume and an effi- clency never known before in any other nation, but distribution did not keep pace. While factories, mills and pro- ducers of raw materials turned out the products, the selling organizations were unequal to the task of disposing of them. This was not owing so much to lack of buying power as to inefficient mz'tl.l;&dl and lack of adequate retail outlets. This trend was intensified when it became certain that the other nations of the world could not and would not absorb the surplus produced under mass production methods in this country. The nation was producing more ma- terials and products than could be ab- sorbed here and the other markets of the world were practically closed. This resulted in an excess which necessaril had to be absorbed. By mid-year business men realized this fact and readjusted their schemes of production, revamped their programs of distribution, intensified their sales efforts and by the close of the year put the countr‘.z)on such a basis that it was in a position to benefit from any de- velopment in the scope of the business world. Curve Turned Upward. According to the foremost executives of industry and finance the end of the year has seen the depth of depression. The curve has turned upward. This accomplishment has been effected by the readjustment of production to con- sumptive demands. ~Excess stocks of goods in most industries have been well depleted. The shelves of the merchants are almost empty. The buying power of the nation has not been seriously men- aced despite the assertion that unem- ployment today involves over 4,000,000 workers. * ‘The head of the largest retall dis- tributing organization in the Middle- west declares that retail merchants are almost out of stocks. Either they must buy more and buy more immediately or they will have nothing to sell. That means cither they will have to go out of business or buy more goods. If they but more goods there will be an im- mediate stimulus to the production of more goods, which in turn will lead to increased employment, increased ship- ments and a start in the opposite direc- tion of the wheel of business toward prosperity. Agriculture Suffered Most. Perhaps the industry to suffer most was_agriculture. Every nation in the world is working toward the goal of self-sufficiency in raw products. Pur- chasers abroad of raw materials are diminishing. Production of raw ma- terials in America so far as agriculture is concerned has been gaining instead of declining. Until that condition is corrected the position of the farmer is bound to be precarious from year to year. There can be no doubt that the Federal Farm Board did much toward aiding the systematized marketing of agricultural products, but the Farm Board was unable to convince the agri~ cultural population that restriction of acreage and reduction of production was essemtial. Some of the governmental as well as the independent authorities on agricul- ture do not hesitate to declare that the future of agriculture must follow the course taken by all business, that farm- ing must be done in large units, and that the day of the independent small 15 ‘sadition o ohe ar n to the drop in prices, the farmers of many States were desper- ately hurt by the drought of the late Summer. This undoubtedly will neces- sitate relief measures. However, the drop in the farm purchasing power has not been a major factor in the business depression. Farmers as well as indus- trialists have to eat and they have to wear clothes and their purchases have been almost up to normal. Whether those purchases were carried by the; in the local communiiies, by the merchants in those communities or were paid for in cash is a question mmmmmumumwdomm the effect on general business situation. Upper, left to right, H. H. McKee, president of the National Capital Bank and head of the Washington Clearing House Association; Lanier P. McLachlen, head of the McLachlen Banking Corporation, and president of the District of Columbia Bankers' Asociation. Lower, left to right, John H. Snyder, president District of Columbia Life Underwriters’ Association, and George O. Walson, presi- dent Liberty National Bank and of the Washington Stock Exchange. Despite the business setback, the leaders in these four important local organizations report substantial progress in 1930 and look forward with confidence and expectancy to the steady improvement which most economists and other students of finance forecast for 1931. the country showed during the year is exemplified by the fact that while retal sales fell only between 10 and 12 per | cent below the best year that America | ever had, 1928, production was reduced approximately 23 per cent. This is proof that excess stocks have been reduced and no longer overhang the markets with a threat of sudden dumping. Retail buying as a whole attained a tremendous volume, and wound up at the peak in a Christmas business which made many people stare with amaze. ment and demand to know where was the unemployment and distress about which business men were talking. In October of this year retail sales showed a decline of 7 per cent as com- | pared with October, 1929, but it was necessary for the people of the country to pay 6 per cent less for articles of necessity. Therefore, while retail sales, which in 1929 approximated $47,000,- 000,000, did not approach those figures this year in dollar value, the number of sales this year probably was*as large as the number of sales made a year ago.| Chain stores and mail-order houses did not materially increase or expand their | holdings in 1930, but maintained a very satisfactory volume of business as com- pared with the preceding year. The department stores suffered, but they bought their goods more advantageousl and their methods were far more effec tive and efficient than in the 12 months previous. Bills Were Paid. ‘There was not a time during the year when collections were really bad. Losses incidental to the selling of goods on the installment plan were almost negligible, although sales under the installment plan declined very materially. In this connection an official statement by the American Federation of Labor says: “Installment buying has decreased this year. In automobiles the install- ment sales were 22 per cent below last year. Some of the key industries de- pend very largely upon installment pur- chases to sell their goods. Unstable conditions make workmen feel reluctant to commit themselves for long-time payments.” The federation continues urging that confidence be re-established to promote this type of selling, which in many years past has been regarded not as a safe- guard but as a great danger. ‘The banking situation presented prob- ably the most puzzling complexity of the year. The banks were full of money. At the close of the year deposits were probably 5 per cent higher than they were at the close of 1929. The position of the Federal Reserve Banks was stronger than for a long period. Money was avallable, and yet money lay idle throughout most of the year to such an extent that interest rates declined to the lowest point touched in almost a decade. Fortifying With Cheap Money. With money available at low rates of interest, railroads, steel concerns, cor- porations of every description reached out and gathered in assets to make themselves impregnable. The United States Government was able to refund no small portion of its maturing debt at interest rates less than 50 per cent of those which had been paid on the old securities. Big corporations, able to give -du‘um security, borrowed money at the lowest possible figures, bought mate- rials at extremely low rates and lal their plans for future development on such a basis that competitors in the future will have the utmost difficulty in overcoming their advantage. It is extremely likely that before the end of this low-money period the United States Treasury will borrow and re- finance at least $8,000,000,000 worth of its public debt. Indication of this trend was observable in the annual report of Secretary of the Treasury Mellon. Efficlency took longer and faster steps in 1930 than in any previous year. The figures. The majority of these patents were of the industrial type. Even in the worst of the year the de d for macl chine equipment was insistent. facturers admitted that only through use of the latest and most up-to-date and efficient machinery could they hore to compete in the markets of the world. This was only the start of the devel- opment. Nearly every large industrial concern developed or attempted one or more by-products. So bl these that they overshadowed the main output of the company. ‘The life insurance less than the banks in from investments, olume of insurance placed during the ear was perhaps under that of 1929. A variety of causes contributed to this. In 1929 many holders of policies bor- rowed extensively on their policies, tak- ing out new insurance to compensate should they be unable to repay those loans. By the end of this year that trend had passed and there was a ten- dency toward the writing of as many policies as in 1929, but for smaller | amounts. Fire insurance undoubtedly was af- fected by the decline in building during the year. The insurance companies, however, continue to be one of the main stabilizing factors in the finances of the country. Regulated and managed as they are, they provided a background of solid, stable finance which was of inestimable value to the business world in general. Now that the bottom of the depression has been passed, it is anticipated that the investments of the life insurance and fire insurance com- panies in the next six months will rise materially and probably will approach close to a billion dollars. The building year was not a satisfac- tory one. Construction was supparted mainly by the public utility companies, which spent huge sums in the develop- ment of power projects, power houses, ubstations and other equipment, and by State, county and Federal public works. Despite all the stimulus given to it, the constructing of buildings could not seem to gain momentum. Among the public works the building of roads was the main standby. However, President Hoover's an- nouncement that more than $600,000,000 will be spent in the next six months for public works is a sustaining factor which should help to reassure property owners and construction men. Rents were fairly well maintained for businggs structures, but there was a dis- tinct Talling off during the annual mov- ing period in the number of families which changed habitations. Usually these changes are toward higher priced quarters, but this was not the case this year. Farm lands drop) in value, and this brought some of the country banks into straitened circumstances. It was responsible to some extent for failures in the Middle West and South in the Fall, but the majority of these resulted from bad king practice in the past rather than from depression in the present. Railroad Efficlency. The railroads of the country operated more efficiently than in any other previ- ous 12-month period. There was an increase in the tonnage loaded in each car and an increase in the miles trav- eled by each car. Despite this fact, the carriers of the country suffered a se- vere setback. For the Class 1 steam roads the drop during the first 10 months of the year in operating reve nues amounted to nearly 15 per cent. Against this was a curtailment of only 9.9 per cent in expenses and taxes. Net railway income available for interest and dividends was $273,000,000 less than for the corresponding period of 1929. This represented a decline of nearly 33 per cent. Not only did the railroads suffer from a decline in revenue, but they are men- aced, as the Interstate Commerce Com- d | mission admits, by competition from motor transport, inland waterways and pipe lines. Car I showed no ap- preciable increase as the year drew to a close. Despite this fact, the railroads made tremendous expenditures for new equipment, betterments and improve- ments. There was a distinct trend to- ward the supplying of more comfortable and more luxurious passenger coaches in an effort to win travelers from the busses and other means of transport. ‘The announcement of the plan for eonwuustwg of the President Hoover expressed this in his on December 2. WORLD INDUSTRY FEELS RESULTS OF SUDDEN DECLINE WHICH FOLLOWED HIGH-GEARED MACHINE PRODUCTION LEADERS DISTRICT FINANCE Economies in Management and Curtailed Output Tend to Correct Situation. COLLECTIONS ARE GOOD Cheap Money Has Already Shown Its Effect in Re- storing Conditions. both financially and physically, and salvation, provided they are not unduly tion. ‘The shipping business, on the other for loans, aiding the successful bidders ré:slcom!.mcl new ships of improved gn. Lines of Communication. and radio improved strikingly in effi- ciency and gained customers through- out the year. The companies are fol- lowing out a steady, well formulated plan of development and expansion, and the depression did not serve to turn them from their policies. Many new lines of telephonic communication to foreign countries were opened, and it is now possible to telephone almost any- where in the world from America. Ra- dio communication showed unmistak- able signs of growth, but its pace was slowed by a number of important law- suits which involved both routings and patent rights. The public utility companies sold more current in 1930 than they did in 1929, but the rate of gain was far un- der the percentage which had obtained in preceding years. The number of | new domestic customers for electricity, iwhlch approximated 800,000 in 1929, | did not anywhere nearly approach that figure for the current year. Consump- tion of electricity probably will equal approximately 100,000,000,000 kilowatt hours in 1930, however. The utility companies spent tremendous sums on new equipment, especially on steam generating plants. The production of electric current | by water power was hampered by the | drought which struck the country dur- ing the Surmer. No embarrassing shortage was experienced, as the sub- sidiary steam plants sufficed to furnish the required amount. The electric utilities spent $1,250,000,000 in 1930 in new construction and equipment. Pipe Lines a Feature. ‘The real feature of the year in the power field was the development of the natural gas pipe lines. This product, which had for years gone to waste in the oil fields, is new being piped to practically every section of the coun- try. Lines exceeding a thousand miles in length are no longer unusual. The major use for this produce lies in the industrial field, but the superior heat- producing qualities of the natural gas have resulted in mixing natural and artificial gas for the benefit of domes- tic consumers in scores of cities. ‘The construction of these lines was one of the main buttresses of business during the year. Orders for pipe kept steel companies busy when otherwise they would have had to reduce produc- tion sharply. The laying of the lines furnished employment and wages for hundreds of thousands of men. The development of the industry would | have been still more striking had the year not been one of general depres- | sion, because users of power were loath to expend the sums necessary to change from the use of coal to the use of gas. Betwee: $400,000,000 and $500,000,000 was spent in the construction and ex- pansion of these lines during the year, according to estimates by men closely associated with the business. The electric street railroads were granted the right to additional rate in- creases in many cities, but none the less the competition of automobiles and busses and the difficulty with which new financing in the street railway field was accomplished left the industry in a decidedly unsatisfactory state as the year closed. In spite of that fact, large sums were spent for new equip- ment and for maintenance. Foreign Trade, The country maintained a favorable trade balance, but the foreign trade the Nation was curtailed by the de- pression in the foreign nations. This depression resulted in a drop in foreign exchanges. That, in turn, was followed by a flow of gold toward the United States and France. At the close of the year those two nations held ll)prox\- mately one-sixth of the total gold sup- ply of the world. Plenty of Money for Play. The tremendous buying and spend- ing power of the country was exempli- fled in the volume of tourist traffic dur- ing the year. Visits of Americans to Canada and Mexico were somewhat curtailed, but still were in huge volume. ‘The outdor sports of the Nation ac- counted for the expenditure of a larger |sum than has been the case in many years. Base ball had its best year in a decade in 1930. The foot ball season showed a remarkable gain in the total volume of money spent by spectators. Attendance at motion picture thea. ters increased rather than decreased. | The legitimate stage, however, had a should be able to work out their own| interferred with by unfavorable legisla- | hand, took a distinct spurt in 1930. ‘This was promoted by the allotting of | ocean mail contracts which provided | ‘The lines of communication by wire | BY GEORGE T. HUGHES. EW YORK, December 27.—Havoc wrought by the bear market of 1930 can be summarized statis- in the market value of all the listed stocks on the New York Exchange. From January 1 to December 1 this 400,000,000. From the high int of the year ber 1 the loss was $22,770,000,000. From the high of of 1929 to the 1st of December the drop was, again in $36,360,000,000. It should be noted that these clude losses sus- tained in curb val- ues, in value of Special Dispatch to The Star. tically by figures covering swings value dropped $11,- April to Decem- the bull market of round numbers, totals do not in- over - the - counter George T. Hughes. | securities or those recorded on out-of- town exchanges. They do not take into account the break in the bond market. They do not cover the month of De- cember, when the low prices were made, because the official calculations cover that period will not be available uni late in January. They refer only to the stocks dealt in on the New York Stock Exchange, but they tell the story. Striking Contrasts With 1929, Nineteen hundred and thirty presents both contrasts and similarities to 1929, but the contrasts are the more striking. In 1929 the bull market reached its peak, and in 1929 it collapsed in panic. In 1930 the early Spring saw a resump- tion of the upward movement, and the closing months saw prices break vio- lently through their resistance points of the 1929 decline. But these resemblances are superficial. The differences are more interesting. In both years enormous losses were in- curred, but in 1929 it was the “outsider” who suffered, and in 1930 it was the “insider” or professional trader. When the bull market of 1929 dissolved in the October and November break of that year it left its trail of devastation across the entire United States and showed in practically every civilized country of the world. Speculators in all ranks of life were left stranded by the receding tide. This year the losses were concen- trated. The small trader had been wiped out 12 months ago, and it was his big brother who took the blow. In 1929 there were only two failures on the New York Stock Exchange. In 1930 there were five suspensions. Stock Exchange seats at the high of 1930 sold for $480,000, on which the carrying charge at 6 per cent would be $28,800 annually. By the end of the year the market value of a seat had dropped almost 60 per cent, a staggering loss. In 1929 the outside trader with a too thin margin was sold out. He retired from the market and is now out of the picture. His comrade who was better protected by liquid resources has either taken up his stocks, paying for them in full, or has transferred the loan to his bank and is on the sidelines wait- ing for the recovery which every one knows must come in time. The market fairly disastrous year, with many actors unemployed and many theaters dark. Psychological Setbacks. ‘The fall in commodity prices was re- garded by many as a prime factor in the depression of numerous industries, but as the year drew to a close it be- came more evident that prices were stabilizing and that the trend had re- versed itself and turned upward. There 1s no doubt that the lowered commodity ices aided to sustain the volume of throughout the major part of the year, It would seem from a general exami- T activity of 1930, such as it was, was provided by the professional and semi- professional. When the big break came in 1929 it was the fashion to say that the specu- lative bubble had burst, but that “fun- damental conditions were sound.” ‘There was no reason why business should be affected. Commodity prices were not inflated and merchants had not been touched as far as the conduct of their own affairs was concerned by the Stock Exchange mania. That line of reasoning has been abandoned. It is now conceded that the business depres- sion preceded the stock market break and was a cause and not a result of that break. Stocks Respond Tardily. Analyzing the bear market of 1930, we start then with the premise that the phenomenon of declining stock prices can be explained by an industrial de- pression, and that not confined to any f [one country, but world-wide in extent and comparable in depth to the most serious of the recorded downward move- ments of the business cycle. The stock STOCK MARKET RECOVERY AWAITING TRADE REVIVAL $11,400,000,000 Drop in 11 Months Pre- sents Contrasts and Similarities—Big Traders and Not Small Ones Losing. which cut the corn crop so severely was @ bugbear to the stock market, although it should have been evident that the market situation was not to be made worse by an that decreased an unwieldy over-supply of bread and feed Developments abroad both in Europe and in South America delayed the re- turn of confidence. The German elec- tions had their effect not alone on German dollar bonds floated in this | market, but on stocks. In the same way the revolutions in South America, which as a matter of fact were and parcel of the commodity decline, also unsettled stock market sentiment. Explanations of stock market weakness also were sought in Russia. The Soviet dumping rmrram was taken as a threat not simply to American producers of grain, but to all American industry. Bonds’ Trend Discouraging. One phenomenon that attracted much attention and that greatly worried the stock market was the failure of bonds to respond to the normally stimulating influences of easy money and of falling commodity prices. It has been an axiom of the Street that when recovery began from trade depression it was first re- flected in bonds, but this year bonds were weak with stocks. A little closer analysis would have demonstrated that it was only the sec- ond grade and speculative bonds that were under pressure and that in nearly every case there was an unsatisfactory earnings situation for an explanation, but operators for the decline in stocks repeatedly pointed to the bond market as a justification for their ition. An actual and not reason for the downward trend in stocks was the forced liquidation that the marke! was compelled to absorb. This liquida. tion did not come inany large measure, at least from individuals, but was the direct result of a number of difficult business situations, the clearing up "of which involved heavy selling of stocks. In so far as the facts with regard to these situations did not become a mat- ter of public record, the rumor mongers led the gap. Most of these rumors were unfounded and those that had foundation were garbled, but the result was the same—to depress the market. At this point something may be said about short selling. There is a sound defense for the practice under normal conditions. It cannot be prohibited in a free market and it does provide buy- ing power in times of panic. Every ex- periment in the way of eliminating short selling has failed of its purpose :en;i made matters worse than they were ore. All this admittéd, however, wl corterie of bear plungers -flcmpu"nt: capitalize distress selling in times of market unsettlement and of pronounced business depression, no good end is served and much harm is done. How much of this sort of short selling was done this year it is impossible to say. From the nature of the operation evi- q'l“t:ccn‘-l dlmocult to obtain, but that it rried on on a large scale - telligent observer doubts. s In comparison with the speculators in the market, interest this year reached number of the short record pro- Investment Buyer Disappointment. So much for the sellers motives that actuated Lh.eeldl ’m about the buyers? Who were the pur- chasers of the stocks liquidated in 19302 {Lleu;zul:'tst‘phced they were, as usual, e in-and-out trad, for short turns. Fiaon e tended irregularl; Investment Buging Tor Investment ing for odd lots, but amounting aggre- ‘This class of buyers had stocks would look cheap, measured any recent standards, and yet after thelr purchase they would show the buyer s States Steel, W rper loss. Take United or instance, admittedly the er in- vestment industrial. The low in panic of 1929 was $150 a share. the Autumn of 1930 the buyer at that price considered himself not only a for- tunate but an astute investor. market accepted this premise tardily. | entered For the first three months of the year its course was irregularly upward, so much so that there were those who had the assurance to claim that the break of the preceding Autumn was only an interzuption in the bull market that been under way since 1925. But business did not experience the seasonal upswing it should have had and by April the market recognized the fact and headed downward, reaching a low late in June. That low was well above the panic low of the preceding No- vember. Throughout July the trend was upward and the Street pinned its faith to the proposition that the 1929 lows were not to be broken. The market moved uncertainly all Summer and then In September it began to decline, reach- ing a new low in November, and still another and yet lower price level in December. In both the latter months the resistance level of the 4929 panic was penetrated. While the underlying reason for the liquidation in stocks was business re- cesslon, that recession was presented The same comparison holds true for American Telephone & Telegraph, the stock of which is the most widely dis- tributed of any utility. The 19290 low was under 194, but here, too, in October it broke through that point and in November and December went lower. Or take General Motors. Rails Lowest in Years. 1If the buyer had taken railway shares, his position was that much worse. The railway stocks sold not simply under their 1929 paenic lows, but of them for the lowest in years. méfi!:no & Northwestern, for instance, sold at the lowest in 40 years. That was not & typical case, but New York Central at its low this year was below anything on record since 1925, Baltimore & Ohio at the lowest since 1924, Atchison at the lowest since 1927, and 50 on. ‘This was a distressing condition of affairs to the old-timers in the Street. They had been broufil:fi u] that whatever might of ind trials, railroad iy

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