New-York tribune., 1920-09-12
St. Louis, Southwestern


disposition by several market writers
to comment bullishly on this stock.
Among all the railroad stocks" say
Wrenn Brothers & Co., probably none
shows higher ration of earnings to
maket. price than St. Louis, South
western common. This is one of the
weaker Of the Southwestern railroads,
but its stocks were gradually devel-
oping value even before the war began.
Southwest is the most sparsely popu-
lated section of the United States. The
oil boom and the immense war cotton
profits, however, have given great
impetus to this section. and it's rail-
roads are getting the reflected ,bene-
fit. The company's business this year
has enjoyed a great boom, rejecting
the prosperity Of the territory served,
and for 1.-THE time being the common
stock is probably earning about 1oo
per cent on it's market value. AS
suming this boom to be temporary, and
computing the earning power upon the
basis of 1919 traffic, it is indicated that
the common, under the new rates,
should have an average earning power
of 13 to Is per cent and the preferred
of 16 to 19 per cent. In brief the
common stock seems to have a per-
manent power equal to about SO per
The Reserve Bank Statement
Considering all the rumors that were
abroad prior to the publication of yes
terday's local Federal Reserve Bank
statement, the actual figures, at least
on their surface, proved distinct sur
prise. According to reports current
earlier in the week in brokerage quar-
ters the Street was prepared to see
further decline in the banks combined
reserve ratio. Instead, however, this
stood at the end of the week at 395
per cent, compared with 1876 the week
before. The increase was due not only
to q gain in gold holdings, but to de-
clines in rediscount operations, both
| with member and other Reserve banks.
Railroad Stocks as Collateral
Despite the great amount of atten-
tion which has been focused on the
railroad stocks since the announce
ment of the new freight and passenger
| rates, public buying of these shares
has not yet reached substantial pro-
portions. This is the opinion Of brok-
ers who are keeping close tabs on the
volume of railroad collateral that is
going into their loans.
Traders Take Selling Side
Traders decided yesterday that the
character of the news over Sunday
might prove to unfavorable and as a
| result there was a good deal of profit
taking, as we'll as short selling, par
ticularly in those issues which had en-
joyed the greatest advances in the pre-
ceding days of the week. Much stress
was laid on the PROBABILITY Of great
coal strike throughout England and the
effect it might have in creating unrest
in this country. The situation in
Italy was also commented upon as be-
ing fraught with dangers of an inter
national character. A further decline
in sterling was considered as one of
the outward manifestations of Eng
lads fear of a t:.c-up of its coal in
dustry. The domestic credit strn-
gency, it was pointed out, will prob
ably be again emphasized blythe ap-
preaching payments of income and ex-
cess profits taxes on the 18th of the
month. All these factors in the opin-
ion of traders justified them in TAX
| ing bearish attitude toward the mar
ket, at least for the next few days.