HEAVY DECLINE

Dominion, Volume 31, Issue 22, 21 October 1937, Page 14

HEAVY DECLINE

Slump In American Shares WALL STREET PATHOLOGY The events of the last fortnight in Wall Street suggest that the adage "Mena Sana in corpore sano” applies both to markets and meu, said the "Economist” on .September 18. British opinion had begun to accustom itself—more readily, perhaps, than American opinion—to the idea that the bull market which started m Wail .Street at the beginning of 1935 was freer from speculative excesses and better justified by long-term earnings prospects than many of its predecessors. There had been little of the “New Era” phychology which heralded the crash of 1929. Industrial hopes were held in leash by political fears; and the fact that prices maintained their upward trend despite the Administration’s controlling activities suggested that the advance had a fairly solid foundation.

Alas for such counsel! An ostensibly healthy organism has suddenly demanded the attentions of a physician. The causes of the malaise are obscure. President Roosevelt has been so little of a friend to the stock market that his present predicament—in which all his arts of political strategy will be called for if he is to recover the ground lost during the Supreme Court quarrel—can scarcely be the impelling cause of movements like the eight-point fall in prices on September 7, or the similar fall of a week later. The Rusisan Note to Italy did not seem, in Britain, to be a market factor of first importance in itself, even though it threatened to loosen the linch-pin of the somewhat ramshackle chariot of European peace. When the President applied the expressive term “jitters” to the state of contemporary psychology he spoke for American rather than European investors.

Operators who have followed Wall Street’s rise ou the argument that it combined profit with. • political isolation will find that market’s present disorder inconvenient and disagreeable but not wholly illogical. If war were as near as America seemed recently to fear, neither the breadth of the Ailantie nor the provisions of the Neutrality Act would preserve Wall Street from profound dislocation and, possibly, suspension of its normal activities. No amount of analysis of the factors making for resilience in America’s domestic economy can obscure the fact that a single scare which causes the market to “break through the lows” will provoke immediate sales from Dow theorists, chart-readers aud speculative holders whose margins have run out. In existing conditions a ten-word cable may produce a ten-point fall in prices in a single day. What policy should be followed by British investors who, since January, 193Jj, have put about 440 million dollars into American securities? Last year (when they added approximately 220 million dollars to their interests) the continuation of American recovery could be tKkfin for granted. Does the same condition hold to-dqy? And if so, will Wall Street quickly throw off its present mental depression? The “Economist” prints a chart showing the movements of leading stocks —industrials, rails and utilities—during recent years. The chart is based on the jyeekly index figure of the Standard Sta- ! tistics Company for 419 stocks. This is not a highly sensitive index confined to a few dozen leaders, but a steadier representation of market movements. Since March the index has fallen by nearly 16 per cent., and during September it has declined almost perpendicularly. Something like one-third of the rise recorded since March, 1935, has been wiped but in six months. It would be optimistic to assume that this fall will be restored by next spring merely as a matter of course.

The winter prospect for Wall Street is admittedly uncertain. Thanks to the present margin rules, “New Era” buying since 1935 haa been ruled out; but the 55 per cent, cover requirement, coupled with the close surveillance of short selling, has robbed the market of its former resilience. Lacking the cushioning effect of speculative sales—the classical antidote to overtrading or political crisis—the market experiences instead waves of wholesale liquidation. And the substitution of operation by index-number theories for operation by "hunch” or market rumour will tend to accentuate the first impact of all bad news. Thisc, the real lesson of the past fortnight, may need to he continuously borne in mind during the next few months, says the “Economist.” At a time when many competent American observers are awaiting a winter recession in business, it would be unwise to anticipate, at the best, more than the maintenance of present prices. It is much more probable that prices will have touched lower levels before next spring. BASE METALS MARKET Another Sharp Decline By Telegraph.—Press . A&sn.—Copyright. Tiondou, October 19. The official London (middle) quotations ns reported by the Australian Alines and Metals Association, compare, with those previously cabled as follows:—

Okarito Gold Dredge The Okarito Five Mile Beach Gold Dredging Company, Ltd., has advised the Stock Exchange Association that the recent sinking of the dredge pontoon caused warpage of the bucket ladder. The dredge has now been refloated and beached for sheathing the ladder-well with steel plates. The repairs to the ladder are progressing satisfactorily and it is expected that the straightening work will be completed to-day ready for riveting to-morrow. For the 40 hours’ dredging prior to the occurrence of the mishap 19oz. 3dwt. have now been obtained. Dividends and Calls

Antwerp Wool Futures z - ’ By Telegraph.—Press Assn. —Copyright. London, October Antwerp wool futures are quiet. Today’s' quotations compare with those previously cabled as follows: Oct. 12 Oct. 19 Per lb. Per lb. d. d. December 27 28} March 26} 2i May 26} —■ London Butter Market Firm By 'Telegraph.- —Press Assn. —Copyright. London, October 19. The butter market is firm. Danish, 145/- a cwt.: New Zealand and Australian, choicest salted and unsalted,. 136/-. Komat-a Reefs Gold Mining Co, a Lieviewing the position of Komata Reefs Gold Mining Co., Ltd., at the annual meeting in London recently, the chairman of directors, Mr. 0. A. Whitfield, said:—“The most striking feature of the profit and loss account is the amount of £5831 derive dfrom dividends, interest, and commission. The gross amount of this item is more than sufficient to provide for the amounts required for the payment of this company’s regular dividends of 25 per cent., free of tax, but there are outgoings to be met, including London expenses and income tax, which have to be provided, and there we have to rely upon capital appreciation and realisations of investments at a profit. That accounts for the item of £1324 19/7, which is muck more speculative than the receipts from dividends. For file first six years after the reorganisation of this company it was free from the payment of income tax upon profits derived from surplus on investments realised. It. is now liable, but, in spite of this additional liability, we have still be.cn able to pay the regular dividend free of tax." AUCTION DIARY TO-DAY. Carterton .Saleyards, 12 Noon.—Dairy Bull Fair (50 bulls) (Wright, Stephenson and Co.). 20 Turnbull Street, 10.30 a.m.—Sale Timber, Etc. (Kingsways, Ltd.). TO-MORROW. Stratford' Horse Fair, 12.30 p.m.—loo Farm Horses (Newton King, Ltd.). Upper Hutt. Stock Sale, 1 p.m.—Mixed Stock (Dalgety and Co.). Carterton Sale. .11.30 a.m.—Mixed Stock. S WiHeston Street, 10.30 a.m.—Household Furniture .(B. Johnston),

Copper — Oct. 18. Per ton. Oct. 19. Per ton. £ B. . d. £ 8. d. Standard, spot ... 45 8 9 ■12 12 0 Ditto, forward . ... 45 15 0 42 17 6 Electrolytic ... 50 10 0 47 0 0 to 52 10 0 49 0 0 Wire bars .... ... 52 10 o •19 0 Lead— Spot .......... ».. 18'3 14 4j 17 11. Forward ».. 18 4 3 Spelter— Spot 17 12 6 11 10 14 17 0 4i Forward Tin— ... 17 18 Spot ... 219 17 0 206 12 6 6 Forward Silver— ... 219 2 6 200 12 Standard, per oz. . 20d. ,19 7-Sd. Fine .. 219-(10d. 21 9-1 Bd.

N.Z. Guarantee Corporation— final, 2d. per share Oct. 26 Rotoiti Timber—pref, £6/8/p.p.; ord., 4 p.e Oct. 26 South British Insurance—final, 1/5 a share Oct. 28 United Provisions—final, pref, 4 p.c . . . Oct. 28 D.T.C.—pref, 5 p.c. p.a.; ord., 6 p.e. Oct. 29 Drug Houses of Aust. —final, 34 p.c Oct; 30 Amalg. Wireless—final, 5 p.c., plus bonus, 2 p.c Oct, 30 British Tobacco—pref, quarterly, Gk p.c. p.a Oct. 30 Macky, Bogan, Caldwell—2| P.c Nov. 1 Imperial Chemical Industries— int., ord., 3 p.c Nov 1 Martha Mine—int. 1/- per share Nov 2 Bank of Adelaide—int., 2} p.c Nov. 3 Burns, Philp—int., 1/- per share Nov. 15 Broken Hill Ppty—int., 1/3 per 1 li r<* 17 National Bank of A/asia —int., 3 p.e Nov. 24 Bank of New Zealand —int., ord., 1/- per share; D. mort., zxi.chu ae.crtxra oo.Ou.oticwj. Dec,, .11