The Bridgeport evening farmer., 1916-08-09
HENRY CLEWS'
 WEEKLY LETTER

A very striking disposition exists on part of big corporation managers against distributing in the form o1
 dividends current extraordinary prof its. While those engaged in turn ing out munitions usually secured the largest rewards, big profits have not been restricted to such concerns, but extended to many of the regular in- dustriAls; and even the railroads have shared tnsthe general prosperity. Cir cumstAnces considered, dividends as . rule ,havS been distributed very con servatively, and. while there have been many increases, the additional distribution as . whole has been on- ly | fraction of the actual gain in profits. Several reasons contributed to the adoption of such a policy. Munitton malers naturally led in this conservative movement, and sought to protect themselves against the future v by reserv1ng sufficient funds to wipe or colt of plant or depreciation. to offset the rise In commodities and wa xezI to reduce indebtedness and to leave ' good, surplus for meeting re- action pr any other unforeseen con ditions that may develop after the war. Other industrials, especially steel and chemical concerns, recog- nissd that the extraordinary gains of 1918 and 1916 were ephemeral, that sound business management requir- cd taking advantage of such situa- xion by reducing fixed obligations, al- lowing for depreciation and enlarg- ( Ing of plant to meet new demands. and in general placing their business {~~ = v<sS cf ffo f,s- 2 ture- There are, however, certain classes Of securities less directly af- 1ected by the war; among these being the railroads and such industrial com cerns as produced strictly for the home trade or legitimate export or ders These, too, enjoyed great ac- enlarge their prontz. but not enough to warrant mora than moderate in creases ins dividendA # any Many 2 corporafi6ns have made unusual gains iu grqh6 earningsj but the rise in wa gca. nDmmodfties and other costs pre- vented pronts from becoming abnor- mal and kept dividends from increas- Ing.
 Ths stock market stili refuses to re- spond to the stimulus of these phe- nomenal pruntA m spite of dam 9er spots the outlook II 4ncourag ging- In ofdiunry times such 2conditions as; now sexitt would be accompanied by widespread and active speculation. If not | boom surpassing all records. But stocks stubbornly refuse to move either up or down, exceupt within relatively narrow limits; every pro- nounced rise being followed by sig- nifcant sellinE. while every fall of consequence is soop checked by . withdFaW1f of offerings Such an anomtIous situation has never been seen The war. ofscourse, is the only <xplanktion- It Al1s the situation has never been seen. The war, of course. n the only explanation. IL fills the fsituation with so many hid- den uncertainties that all ordinary standaFdG of judgment are apt to mis- carry. Who knows when the war will end, and how the country will take the readjustment to peace basis 3 Who can tell how many more securities Europe will unload on this market: and who can fairly estimate the ccrninE pressure of foreign loans? Though all of these problems are be- ing faced in . confident spirit, it is impossible to. feel sure of what will happen. Home affairs are not with out thetr perplexities- The crop out look E not encouraging. both wheat and cotton having suffered rather se- fious detefioration,. though there will be yufncient of both to secure good prices and prevent famine.
 The Mexican problem is far from a settlement and may remain so for months to come. Tho money out look is satisfactory and time money easy owing to limited demand and abundant supply. Money in circula- ton in the United States now amounts to over $4,000. 100000 or more than $400. 100000 in excess of year ago. The situation in fact has changed so completely that New York banks are transferring their balances to London to secure the better rates there. Cap ital applications in the United States since January l aggregated about $2.- Oo0, 0,o0O,O00, or nearly double the am- ount of year ago. Of this vast sum nearly 450,000,000 represented for eign loans of various descriptions, about $s00.ooo. 900 industrial issues. while railroad issues. accounted for another $50o.00o,0oo. Tn, July new charters of $1,0O0,000 or over in the principal Eastern States aggregated $217,000sO0O. compared with $71 ,00O,-, 900 . year ago, and $6S.000,00 in 1914 So much for the very extraor- dinary demands upon our capital market which cannot be prolonged without affecting the financial situa- tion on this side. Evidently we are threatened by congestion in the secur- ity market which may partly explain the unwillingness of the market to re- spcnd to stimulating surface condi- ttons.
 Trade is somewhat less active as last week were only 33 per cent ahead of last year, compared with re- cent gains of 40 per cent. and over Railroad earnings are satisfactory, running 25 per cent. more than a year ago; the latest report of the New York Central showing an increase of $21. 100000 of gross earnings for the six months ending June, and $1O,- OOO, ,600 in operating expenses being highly significant. Inside selling at home and war selling abroad, plus tho constant pressure of both new and old issues. create a perplexing aituation. Were the market gov erned by ordinary rules. there would be greater activity and wider, if not sensational. fluctuations. As it is the situation is stabilized by the con-