WASHINGTON, Oct. 30, 1929 (UP) - Wall Street must work out its own salvation without hope of material aid from the government, according to the interpretation placed today on the failure of the Federal Reserve System to make any move to check the tide of stock sales, formal statement or policy alteration.
Board members met again today in executive session. Current Wall Street rumors that the board was ready to approve a reduction in the rediscount rate could not be confirmed. Application for such a reduction must first be made by the New York Federal Reserve Bank, it was explained.
Many who formerly urged that the central bankers maintain a "hands off" policy when prices were at their peak and the rediscount rate less paramount, now are looking to Washington for action in the present emergency. It is rapidly becoming apparent to observers here, however, that there is little the board could do to alleviate the situation.
This stand is taken by Senator Carter Glass, Democrat, Virginia, one of the authors of the Federal Reserve act, and former secretary of the treasury. Glass also believes the Federal Reserve Board and the banks must share responsibility for the crash because they failed to oust "certain New York bankers" who some months ago poured huge sums into the call money market in defiance of the system's recommendations.
Assistant Secretary of Commerce Dr. Julius Klein, reviewing the business outlook in a radio address last night, refused to see any indication of unsound industrial and commercial structures in the situation.
The nation's normal purchasing power, he said, has not been impaired appreciably, adding "after all, the volume of our purchasing power measures the heights of our living standards."
"Boom psychology" influenced the country regarding stock prices, he said, saying many persons bought stocks with little knowledge of their present or probable future dividend-paying capacity, making a reaction inevitable.
Klein said he wished to emphasize "the fundamental soundness of that great mass of economic activities on which the well being of the vast majority of us depends."
A decidedly pessimistic view of the situation is taken by Senator Smith W. Brookhart, Republican, Iowa, who believes the prolonged depression in the stock market is endangering the position of the banks.
The belief prevails in official circles here, however, that "the worst is over," and the rally staged at the close of yesterday's market marks a return of interest on the part of more astute investors, who see real values in the present low level of stock prices.
Officials who have insisted that the nation's business structure remains unimpaired by the market collapse drew some encouragement today from the car loadings report of the American Railway Association. This showed a gain of 6,502 cars for the week ended Oct. 19, as opposed to declines in the two weeks immediately preceding.
The earnings statement of the United States Steel Corporation, and the action of the American Can Co. in voting an extra dividend of $1 and increasing to $4 the annual dividend rate, also was cited as evidence of the high level of trade.
Government financial experts predict a long period of easy money rates, accompanied by improved conditions in the bond market, as a direct result of the unprecedented declines.
