Daily capital journal. (Salem, Oregon) 1903-1919, 1916-08-10

New York. August 10.-A very
striking disposition exists on part of
big corporation managers against dis
tributing in the form of dividends cur
rent extraordinary profits. While
those engaged in turning out munitions
usually secured the largest rewards,
big profits have not been restricted to
such concerns, but extended to many
Of the regular industrials; and even
the railroads have shared in the gen
eral prosperity. Circumstances con-
sidered, dividends as rule have been
distributed very cOnservatively, and,
while there have been many increases,
the additional distribution as whole
has been only q fraction of the actual
gain in profits. Several reasons con-
tributed to the adoption of such a
policy. Munition makers naturally led
in this conservative movement, and
sought to protect themselves against
the future by reserving sufficient
funds to wipe off cost of plant or de-
probation, TO offset the rise in com
m0iities and wages, to reduce indebt'
edness and to leave a good surplus for
meeting reaction or any other unfor-
seen conditions that may develop after
the war. O,ner industrials, especially
steel and chemical concerts, recog-
nized that the extraordinary gains of
1915 and 1916 were ephemeral, that
sound business managefent required
taking advantage of such situation
by reducing fixed obligations, allow,
ing for depreciation and enlarglng of
plant to meet new demands, and in
general placing their business in a
strong position against the future.
Certain Securities Affected.
There are, however, certain classes of
securities less directly affected by the
war; among these being the railroad
and such industrial concerns as pro-
duced strictly for the home trade or
legitimate export orders. These, too,
enjoyed great activity; quite sufficient
to materially enlarge their profits, but
not enough to warrant more than mod
crate increases in dividends if any.
Many corporations have made unusual
gains in gross earnings, but the rise in
wages, commodities and other costs
prevented profits from becoming alb
normal and kept dividends from in
ereasing.
The stock market still refuses to
respond to the stimulus of these
phenomenal profits. In spite of danger
spots, the outlook is encouraging. In
ordinary times such conditions as now
exist would be accompanied by wide
spread and active speculation, If not a
boom surprising all records. But stocks
stubbornly refuse to move either up or
down, except within relatively narrow
limits; every pronounced rise being fol
lowed by significant selling, while
every fall of consequence is soon
checked by withdrawal of offerings.
Such an anomalous situation has never
been seen. The war, of course, is the
only explanation. 1t fills the situation
with SO many hidden uncertainties that
all ordinary standards of Judgment are
ant to miscarry. Who knows when the
war will end. and how the country will
take the readiustment to a peace basis
All Is Uncertainty.
Who can tell how many more securities
Europe will unload on this market; and
who can fairly estimate the coming
pressure of foreign loansi Though all
Of these problems are being faced in a
confident spirit, it is impossible to feel
sure of what will happen. Home af'
fairs are not without their perplexities.
The crop outlook is not encouraging,