Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-09-24

udlAy CdUScu ny TIE
into which the steel trade has worked
Itself The conferences which have been
held this week disclosed the fact that the
industry was threatened with utter pros
tration and that competition for what
orders there are had resulted in radical
cuts in the prices Of the finished product.
On top OF that came the knowledge that
wholesale and retail reorganization of
the manufacturing companies was pro-
grammed. Every steel man in the country,
members of the family, his friends and
the friends Of his friends had some steel
slowed away In the strong box. Every
insider sold out part or all of his holdings
and then notified his friends and connec-
tons to get out. The tip spread and
tremendous and sudden panic was or
ganized among holders of small and large
degree. The liquidation that has been
witnessed this week was widely scattered
and represented not alone men with TO-,
600. 10000 or $4,000 shares, but the thou
sands of individuals with smaller
amounts. The aggregate was immense.
Transactions in United States Steel for
two days were almost as much as all the
ton was SO closely centered on this single
stock that the minor Independent COM
panies were almost overlooked.
Paying Unearned Dividends.
The financial reports Of many rail-
roads show that they are barely earning
dividends. or actually running behind.
The heavy declines in the stock OF
several Of these railroads have called
attention to the narrow margins upon
which they are working. and to the
possibility of being obliged to cut
dividends. In some cases, notably In
ST. Paul and New York, New Haven and
Hartford. where the need of dividend
reduction is plainest. the arrangements
have taken the open position that it
lis the part Of wisdom and sound busi-
stockholders money by continuing
dividends at the old rate. depending on
future business improvement to make
good the drafts upon principal This
sentative business policy, and is being
,harshly criticised as the worst kind of
and as being an exercise
lof managerial power that should not be
states directly prohibit the payment of
,unearned dividends. but the manage
ments that have dipped into resources
to piece out dividends say they are
keeping within the letter of the law, II
claim that they are drawing on earn
ings, albeit they are back earnings. It
is nice point, but one calculated to do
great harm.
Investors not acquainted with the actual
conditions might be led by the continued
payment of unearned dividends to In
vest their money in stocks not worth the
price. They would have the same cause
to complain of being buncoed as though
they had put their money in the get-rlch-
quick schemes Of mining promoters. This
is one of the questions which Is being
threshed out in Wall street. and it is
creating more or less excitement
Europe May Buy Soon.
The early results of the disturbed con-
ditions in Europe has been to throw
back upon America a large volume or
securities held in that country. People
over there sold what they could realize
on easiest and quickest. and they got rid
of their Americans for that reason. II
the disturbance is to continue and grow
into revolutionary proportions as now
seems likely. the next development VIII
be enormous investment IN American Sc
curities by foreigners looking for safe
place to put their funds. This may be
one OF the factors which will contribute
to the next big bull movement in this
market,