Evening star. [volume] (Washington, D.C.) 1854-1972, 1919-07-13
LATEST WALL STREET NEWS

profits depended upon the duration of
the war-and there always were two
opinions upon this, with absolute I'M
certainty only to back either of them.
Then, too, there was always the pos
siblity of military reverses to affect
prices, and the spectre of increasing
taxes and enormous loans to dampen
ardor.
Today the question of continuation
of large profits depends. for one
thing. upon the duration of peace,
and that is SO well settled that there
seems no limit. Out of the stage of
uncertainty, which prevailed in the
earlier period of the present bull mar
ket, the situation has grown into one
of assured confidence in the contin-
uation of very great prosperity for
at least number of years. Prices
of industrials are rejecting. also,
accumulation of profits made during
the war; which have put many stocks
into the extra-safe financial class, by
reason of debts cleared away and
large surpluses built up. Then, too.
it is to be considered in looking at
reports of current earnings. that on
account of the excess profits tax, it
is adjudged by corporations and other
business concerns to be good policy
to charge out every cent that can be
placed in the legitimate debit-to use
current profits in fortifying the bust
ness position in every possible way:
for instance. in building up good will
through advertising, etc, etc. There
probably never was a time when so
much money was being so widely
spent in advertising. This creates a
permanent. asset. practically without
cost, as the money would otherwise,
in many concerns, be paid out in
prospective values. The market has
attained something of an investment
character through the somewhat
changed attitude of the public. Peo-
pie bought stocks at first for a turn
and sold out at profit, but the mar
ket kept advancing, and to get in
again they were compelled to pay
higher prices: Sales again resulted
in the same way, until buyers now
are holding for long profits, convinced
that many securities are still selling
below the value which future great
prosperity will give them.
1t must always be borne in mind
however, that after such a persistent
advance over a long period, if past
experience is of any value, reactions
are liable to occur. Ability to in
crease the carrying of large amounts
at high prices is, after all. limited.
and real shortage of funds might
bring about temporary liquidation.
cial committee of bankers appointed
by T. De Witt Cuyler. chairman of the
Association of Railway Executives,
to devise plan under which the rail-
road administration may be reim-
bursed for about $400,000,000 of rail-
and has in part allocated to the rail-
roads, has submitted a plan and it is
now before the director general of
railroads and his financial advisers.
1t provides for the Incorporation of
federal company which shall invest
$148.000.000 in r. per cent cumulative
stock which will be liquidated in equal
installments over period of fifteen
years. This corporation will issue for
public subscription $2SO.000.000 in
equipment trust certificates, which
will bear a rate of interest to be de-
termined later and will mature in
equal installments over the fifteen
year period.
The railroad equipments purchased
by the railroad administration. which
cost approximately $400.000.000. will
be acquired by the federal corpora
ton. and sold conditionally by it to
the railroads, to whom it has been al
located. at the purchase price, which
will be paid in fifteen equal INSTALL
ments. together with per cent year.
pa do'O Scll-dHuudIly, OIL inc uHpdiu
balance. At the end of the fifteen
year period the equipment will be-
come the property of the railroads
and the federal corporation will be
liquidated.
The s2s0.0oo.ooo equipment trust
certificates will be a direct obligation
OF the federal corporation, and it Is
proposed that they be secured by
pledge under trust agreement with
q trustee of the sales agreements of
the railroads and by a reserve fund
to be created out of the proceeds of
the sale of the federal company's cap
ital stock. The proceeds of this stock,
amounting to 100000, is to be
divided as follows: $120,O0O.000, which,
added to the $2S0.000. 900 realized
from the sale of equipment trust GER
tificates. is to reimburse the rail-
road adm Illustration for the $780,
100000 1t has already advanced for
the equipment; $2S.000.000 for the
creation of a reserve fund. out of
which defaults of Individual rail-
roads for equipment will be made
good.