Break

When Roger W. Babson, famed statistician, last month told the Market it was riding to a fall, and then the Market quickly rallied from the depression caused by his statement, Mr. Babson was flayed by all the financial writers in New York whose pleasure it is to reflect the views of their friends, the brokers. "A statistician who has been always wrong"--"A man for whose opinion the market has no great regard"--"A chronic bear always predicting disaster"--were typical introductory sentences to Babson-flaying opinions. Last week the Market broke and the commentators either blamed the Hatry incident, the Snowden speech, the loans to brokers, or whatnot--or else conceded that stocks had been forced to artificial heights. Vindicated, Mr. Babson said nothing.

Perhaps Mr. Babson was only fractionally vindicated. For though stocks went down last week more than in any other week for a year, October's second week opened with a comeback. Incidents:

P: In Chicago many gangsters, known to be heavy speculators, received margin calls, left brokers' offices muttering threats. Dynamite was thrown into the home of one Charles H. McCarthy, manager of a brokerage Credit department. Stench bombs were tossed into the offices of Hornblower & Weeks, E. A. Pierce & Co., Logan & Bryan. "A new form of wolf has invaded La Salle Street," said the deputy police commissioner, ". . . The racketeer who responds with a bomb when he is called for more margin."

P: A bearish factor was a speech by Philip Snowden, British Chancellor of the Exchequer, which attributed the rise in the Bank of England's rediscount rate to the U. S. "Orgy of speculation." Bulls asked, "How much have British capitalists contributed to the 'orgy'? Did not the Hatry collapse indicate a similar orgy?"

P: An indication of the financial background of many a stock purchaser was seen in the inquiry received by a broker from a customer as to whether Cuba Cane was or was not a corporation dealing in walking sticks, crutches (see p. 50).

P: There was a point last week when the stock of General Motors showed a theoretical loss of over a billion and a quarter dollars ($1,228,000,000) from its year's high. But of all the badly hit motors, the worst hit was Chrysler. The stock had a year's high of 135, sold last week down to 52. Before the worst break, Walter P. Chrysler observed that he could see no reason for low prices in automobile stocks, considering current automobile productions and sale. Last week Mr. Chrysler pointed out that nine months' earnings per share were $5.50 (compared to $7.03 for twelve months of 1928). Meanwhile automotive bears talked of competition, saturation, production figures weighted by disproportionate Ford and Chevrolet output, saw no good in horseless carriage securities. To which bulls replied that automobile stocks, fundamentally sound, had been driven down to attractive levels.

P: Said Dun's Review last week: "Nothing has occurred to indicate that widespread trade recession is under way and statistics of railroad freight traffic show, week after week, that distribution of merchandise remains at a notably high level."