New Britain herald., 1916-08-05

1 current extraordinary profits. While | those engaged in turning out muni- l tiOns usually secured the largest re- l wards, big profits have not been re- l stricted to such concerns, but extend 1 ed to many of the regular industrials; 1 and even the railroads have shared 1 III the general prosperity. Circum- ] stances considered, dividends as 0 l rule have been distributed very con- | serVatively, and, while there have been many increases, the additional | distribution as a whole has been only 1 a fraction of the actual gain in | profits Several reasons contributed
 to the adoption of such a policy. Mu-
 milton makers naturally led in this | conservative movement, and sought l to protect themselves against the fu- | ture by reserving sufficient funds to i wipe off cost of plant or depreciation | to offset the rise in commo modities and l wages to reduce indebtedness and l to leave a good surplus for meeting | reaction or any other unforeseen con- | ditiOns that may develop after the | war. Other industrials, especially l steel and chemical concerns, recog- nized that the extraordinary gains of 1915 and 1916 were ephmeral, that sound business management required taking advantage of such a situation by reducing fixed obligations, allow ing for depreciation and enlarging of plant to meet new demands, and in general placing their business in a strong position against the future There are, however, certain classes of
 securities less directly affected by the
 war; among these being the railroads
 and such industrial concerns as pro-
 two dn
 legitimate export orders. These, too,
 enjoyed great activity; quite sufficient
 to materially enlarge their profits,
 but not enough to warrant more than
 moderate increases in dividends If
 a1v. Many corporations have made
 unusual gains in gross earnings, but
 the rise in wages, commodities and
 other costs prevented profits from be-
 coming abnormal and kept dividends
 from increasing.
 The stock market still refuses to
 respond to the stimulus of these
 phenomenal profits. Tn spite of dan
 ger spots, the outlook is encouraging.
 Tn ordinary times such conditions as
 now exist would be accompanied by
 widespread and active speculation, if
 not a boom surpassing all records.
 But stocks stubbornly refuse to move
 either up or down, except within re-
 latively narrow limits; every pro-
 nounced rise being followed by signi-
 ficant selling, while every fall of con- sequence is soon checked by with drawal of offerings. Such an anoma- lOus situation has never been seen. The war, of course, is the only ex- planation. It fills the situation with so many hidden uncertainties that all ordinary standards of Judgment are apt to miscarry. Who knows when the war will end, and how the country will take the readjustme ent to @ peace basis? Who can tell how many more securities Europe will un- load on this market; and who can fairly estimate the coming pressure of foreign loans? Though all of these problems are being faced in confidence spirit, it is impossible to feel sure of what will happen. Home affairs are not without their perplex- ities. The crop outlook is not en- couraging, both wheat and cotton having suffered rather serious deter ioration, though there will be suffl- cient of both to secure good prices and prevent famine. The labor sit uation is particularly threatening; prosperity seeming to have turned the heads of a certain type of leaders and making them think that the right of the public and owners arc entirely subservient to the demands of labor, whether reasonable or un- reasonable. The national political campaign fairly opened with MT.
 Hughes address and will soon become
 more of factor in estimating the fu-
 f1,r Tha Sc
 from a settlement and may remain
 so for months to come. The money
 outlook is satisfactory and time
 money easy owing to limited demand
 and abundant supply. Money in cir
 culation in the United States now
 amounts to over $4,000, 0,000,000, or
 more than $4O0,0OO,OOO in excess of a
 year ago. The situation in fact has changed so completely that New York banks are transferring their bal ances to London to secure the better rates there. Capital applications in the United States since January 1 ag- gregated about 0,0OO,OOO, or nearly double the amount of a year ago. Of this vast sum nearly $45O,- | OO0, ,OO0 represented foreign loans of 1 various descriptions, about $900,- 900, 1000 industrial issues, while rail- road issues accounted for another l $500, 100000. In July new charters ! of $1,O0O,00O or over in the principal Eastern states aggregated $217,OO0,- 900, compared with $71,O0O.0O0 a
 year ago, and $68, 100000 in 1914. | So much for the very extraordinary
 demands upon our capital market which cannot be prolonged without
 affecting the financial situation on 1 this side. Evidently we are threat
 ened by congestion in the security market which may partly explain the 1 unwillingness of the market to re- i spond to stimulating surface condi- 1 tions.