South Bend news-times. (South Bend, Ind.) 1913-1938, 1916-08-07
OUTLOOK APPEARS
FAR F ROM GLOOMY
Many Danger Spots Do Not
Cause Fear for Continued
Prosperity for U. S.
(By Henry Clews.

News-Times Special Service
NEW YORK, Aug. IA very
striking disposition exists on part of
big corporation managers against
distributing in the form of dividends
current extraordinary profits. While
those engaged in turning out NUM-
tions usually secured the largest re-
wards. big profits have not been
restricted to such concerns, but ex-
tended to many of the regular in
dustrials: and even the railroads
have shared in the general prosper
ity. Circumstances considered, divid-
ends as a rule have been distributed
very conservatively and, while there
have been many increases, the addi-
tional distribution as a whole has
been only a fraction Of the actual
gain in profits. Several reasons con-
tributed to the adoption OF such
policy Munition makers naturally
led in this conservative movement,
and sought TO protect themselves
against the future by Teserving SUI
ficient funds to wipe off cost of plant
or depreciation, to offset the rise in
commodities and wagons. to reduce
Indebtedness and to leave a good
surplus for meeting reaction or any
other Unforeseen conditions that
may develop after the war. Other
chemical concerns. recognized that
the extraordinary gains of 1915 and
1916 were ephemeral, that sound
business management required TAX
ing advantage of such a situation by
reducing fixed obligations. allowing
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 rail-
roads and such industrial concerns
as produced strictly for the home
trade or legitimate export orders.
These. too, enjoyed great activity:
quite sufficient to materially enlarge
their profits. but not enough 10 war
rant more than moderate increases
in dividends, if any.
Many corporations have made un-
usual gains in gross earnings. but
the rise in 'E4ges. commodities and
other costs prevented profits from
becoming abnormal and kept divid-
ends from increasing.
Outlook EncOuraging.
The stock market still refuses to
respond to the stimulus of these
phenomenal profits. In spite of dan
ger spots. the outlook is encourag-
ing. In ordinary times such condi'
tions as now exist would be ac-
companied by widespread and active
speculation IL not a boom surpaSs-
ing all records. But stocks stubborn
ly refuse TO move either up or down,
except within relatively narrow linn
its; every pronounced rise being fol-
lowed by significant selling. while
every fall OF consequence is soon
checked by a withdrawal Of offer
ings Such an anomalous situation
has never been seen. The war. OF
course. is the only explanation. Ii
fills the situation with so many hid
den 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 readjustment to a peace
basis Who can tell how many more
securities Europe viii unload on
this market: and who can fairly
estimate the coming pressure Of for