The Bridgeport evening farmer. [volume] (Bridgeport, Conn.) 1866-1917, 1916-01-21
RECORD DIVIDEND
CAUSES Big SLUMP
In WAR HOLDINGS
Unusual Condition of Stock
Market Reflected In Beth
Iehem'S Drop.

New York, Jan. 21-Nothing could
have better illustrated the character
of the recent speculation in the war
munitions shares than the manner in
which the market received the an
nouncement of the Bethlehem Steel
! dividend, says the New York Evening
Post. The common stock of this COM
pany has never heretofore paid any
: thing to it's holders. Last spring, the
conpany's executive head warned the
public that the company's policy was
for the present to reinvest earnings in
the plant, and that the palicy was
| likely to be continued Earnings have
presumably been larger than was then
anticipated, and yesterday the direct
| ors declared a 80 per cent cash divid-
| end, to be paid out quarterly, during
| 1915, from the earnings Of last year.
| So far from advancing cheerfulIy on
this announcement, Bethlehem Steel
common stock broke rs points, and
declines of 1 to per cent occurred in
| shares of other war munitions COM
| panies.
! In any community but a. Wall Street
| such response would be paradoxical.
But Wall Street, with the assistance
of the speculative outside public,
| busted itself last year in bidding up
/ the stock to figure FfdiScounting''
| dividends far beyond what were an
nounced yesterday. From ASK last
January, the price swept upward to
500 in October. If 8 per cent is taken
as q normal dividend on a stock selling
/ at par, g. 80 per cent dividend might
have warranted October's price al
ways supposing that 1915 was to fig
| the rate of profits for series of
years to come. But that was precisely
what every one-eVen, one might in
j simple charity suppose, the xeck%ed
outsider-knew could not possibly be
/ true. Since very great part of last
years earnings would necessarily be
1 cut off when peace returns and the
/ abnormally large war munitions ord
ers Of belligerent Europe cease, the
1 high price for the stock in 1915 neces-
sarily reflected expectation of much
! larger dividend rate, during the pro-
| gress Of the war, than was fixed yes
terday in price was caused by such
quite unwarranted expectation, and
| how. far the expectation was caused
by the rise in price, is a question
worth debating.
The action of the other ''war indus
trials yesterday and since the begin
ming, of the month, was in its way a
corol1ary to the action of Bethlehem
! Steel. The very large distribution OF
profits by that company doubtless
foreshadowed similar action by other
companies engaged with munitions
contracts. But "BethIehen'' was the
industrial plant best qualified before
1
new machinery, or diversion of old
machinery to new uses, was bound to
be a less exacting requirement in its
operations than in those Of steel bar,
automobile, locomotive, and railway
car manufacturer. Losses from ex-
periments or from rejected material
would presumably be less troublesome
This did not at all mean that the
other companies would not make
handsome profits from their con-
tracts, during the period of war; but it
indicated that the BethIeheHn's results
were at least achieved under the most
favorable auspices. and that the status
+ Of the others might reasonably be judg-
ed accordingly But the inference
from that would depend on whether
previous ideas had been sensible or
foolish.
The gist of the whole matter is, that
this months prolonged decline in the
war munitions shares San hardly have
any more bearing, on the financial and
investment situation as a whole, than
/, did the hysterical rise in the same
stocks last autumn. AS a matter of
fact, though shares yesterday yielded
in price while the industriaIs were
breaking the declines in them were
fractional, and occurred again on a
/ light volume, of trading. AS usual
in market Under the influence Of
speculation, stocks which had led the
earlier weakness recovered irregular
| ~ in the closing halfhour; even Beth
lehem Steel moving up sharply on a
few transactions. But the market as
a whole moved very irregularIy at
the last.
| Foreign exchange rates moved quite
unimportantIy. The Bank OF Eng
lands weekly statement showed $685.
900 loss in gold, and a slight decrease
in ratio of reserve; but the gold hold
13ings still remain above those of the
4 first fVUn f4f hAr hos
i given up some gold for New York this
/ week The Bank of France reported
gain for the week of $1.7oO,ooo gold
la much smaller weekly increase
than in the three-months' period pre-
ceding the last week OF December, but
an offset to recent weekly losses which
brought the gold reserve back to the
highest recorded figure, except for the
three closing weeks of 1915.