Evening star., 1920-03-08
|NDUSTR|ALS LEAD
STRONG MARKET
BY STUART p. WEST.
Special Correspondent Of The Sta

news tickers reported that the de-
cision in the lower court had been
| reversed and that stock dividends
were taxable. Immediately there set
| in violent rush to sell. which bore
| hardest. of course. upon the stocks OF
| companies which either had distribut-
ed or were intending to distribute
! large amounts to their share owners
| in this way.
In the space of a few minutes prices
! broke from l to points. with the
greatest weakness in the highpricel
industrials. like General Motors
| American Wool. United States Rubber
and Mexican Petroleum.
Rush to Buy.
1t was not long, however, before
| the truth was made known-that the
Supreme Court decision was precisely
the reverse of wnat had been report
ed. that the income derived from stock
dividends was. after all, not liable to
taxation
The resulting rush to buy was more
furious than the previous impulsive
selling movement. Half an hour af-
ter the false information was made
known American Wool was up nearly
10 points from it's low. United States
Rubber points. Baldwin Locomotive
6. and so on through the industrial
group. Short sellers received the
worst beating they have had to take
in the last six months. They had alb
Solutely no chance to cover within
several points of the bottom. simply
because there were no real stocks Of
fered below these figures for sale.
Rapid Rebound.
The market showed in it's rapid re-
bound the great improvement that has
occurred recently in it's inside posi-
ton. 1t was far reader to respond to
the good news Of the decision than to
the bad news of the false report. Still
this news was the most important and
the most inspiring from a speculative
point of view that has come to hand
since the bull movement eliminated
last autumn.
1t opens UP again great speculative
possibilities for all stocks where there
is an accumulated surplus capable of
being split up.
The beginning of gold imports di-
rect from abroad-the engagement of
$1,25O.QOO was announced this morn
ing-was. OF course. Of much conse
quence. So was the improvement in
the Federal Reserve Bank ratio. But
these were relatively unimportant
from the immediate point of view be-
side the Supreme Court decision,
which settled so much that has long
been matter of uncertainty.
Trnnscontinental OIL.
Those in touch with the Transcon-
more activity in the stock before long
and regard it as one Of the most at
tractive of the low-priced oils. on one
hand. because of the minimum FISK =
volved at the present selling price,
and on the other hand because or lne
large possibilities ahead Of the COM
pany and it's present satisfactory
earnings.
The trouble with Transcontinental
Oil was that the principal market in
terests who had made lot of money
in Mexican Petroleum got altogether
too enthusiastic in the boom last
autumn.
They treated the company as If 1t
were in the full stages of production
instead of merely in the development
stage. Consequently they placed their
ideas Of the immediate market valua-
ton of the stock. altogether too high.
But Transcontinental is very diff
ferent proposition in the EOS from
what it was in the Cos.
Whatever excesses were committed
in it's original market campaign have
been amply atoned for. There is evil
dence that a great deal of stock which
was distributed 80 points higher has
now been taken back. Meanwhile
such progress has been made with the
development of the properties of the
company that operating results are
beginning to show
1t is calculated that for March there
will be around $75O.OOO. and that the
monthly profits will thereafter reach
81 100000. Transcontinental has a
strong cash position and ample work
ing capital to take care of it's entire
expansion problem, ambitious as this
is.
Pnn-American Petroleum.
Wall street learned today for the
first time the real extent of the hold
ings of Mexican Petroleum common
stock by the Pan-American Petroleum
and Transport Company. According
to an analysis of Pan-American just
issued by the stock exchange firm OF
Chandler Bros. & Co, the Pan
American owns 69.5 per cent of
Mexican Petroleum common, as
against only 44.6 per cent during the
years 1917 and 1918.
A considerable portion of the increase
came from exchange of Mexican Pc
troleum shares on a two-for-one basis
into the recently issued Pan-American
Il stock. which differs from the old Pan
Americn shares only to the extent that
it does not possess voting power.
The Pan-American properties in
Mexico, California and South America
are fully described. and details of the
new British Mexican Petroleum Com
pany given. Based on existing con-
tracts" the circular concludes, the
combined sales of the Pan-American
Company and it's controlled companies
for the year 1920 should amount to
more than 100000 barrels of petro-
leum products. With the increasing
demand for oil products and the
strengthening in the prices for these
products there is every prospect that
the year 1920 will show results that
will far exceed those of any previous
year"
stock Dividend POssibilities.
Wall street was almost certain be-
fore the opening that there would be
stock dividend decision by the Su-
preme Court today. Along this line
one of the big wire houses put out the
following on stock dividend possi-
bilities:
During the boom of last year there
were many rumors in connection with
the leading industrial stocks that
stock dividends would be in order.
vorable.
1t may be interesting to examine
reports Of some of the industrial COM
panies that have issued their 1919
statement for indications of finan-
cial strength which might permit OF
declaration of stock dividends in case
such dividends are not to be regarded
| as taxable income.
In the following table an attempt
is made to show the estimated book
value per share for the common STOCK
at the date of the latest balance sheet.
the surplus earrings per share after all
dividends for the past five years and
the net working capital per share for
| the common stock:
Five-year
surplus Working
| earning capital
Estima ted Der share per share
asset after div. Of Co.
| Am. Car & Fdy. s2O4 $67 $l23
Am. Locomotive. .Oi lO3 AZ
Baldwin Locomotive 142 102 III