Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-12-10
RAILS IN A SLUMP;
|NDUSTR|ALS WEAK
BY STUART p. WEST.

.
Der 10 Especially .-Another bad break
in the railway shares was the prin-
cipal incident today on the stock ex-
change.
There was another ugly smash in
wheat options. which was the more
disturbing because of the prominen &c
in the news of the day OF the plight
of the farming community and their
unwillingness to sell their product at
what they claimed would De an enor-
nous loss.
For once cotton did not go with
wheat. this market was steadier most
of the time, and the foreign exchange
markets, which also in the recent past
have beer, more or less responsive 10
the general strain, were decidedly oet-
ter. especially sterling.
Again the stock market had 10 FACE
another series Of unpleasant items In
the trade news of the day. Chief OF
these was the monthly statement, OF
untitled United States Steel orders
which showed q much larger oecEeASe
than had been looked for. ORDERS on
the books of the Steel Corporaton
were over 500, 900 tons less at the be.
ginning of December as compared
with the 1st of November
This gave q more vivid picture OIL
the rapidity Of the decline in the steer
trade than any other presented mere
tofore.
Along with this were further re-
ports on wage reductions of yer!
sweenins character and accounts of
the tobacco growers and the WOO
trade taking the same attitude as the
grain and cotton raisers, namely, tha'
to sell at present prices would invoiVe
intolerable losses.
With all that was to be said about
,fy,er hAf q n n
and about business depression causing
q slump in tonnage, these things could
not explain adequately the fact that
many of the low-priced rails were
down to prices lower than those OF
last July, before the announcement OF
This was logically absurd, in view
of the assurance given by the new
transportation act OF good living
income for the railroads Of the coun-
try.
ton based upon disappointment over
the current showing Of earnings was
made very clear in that the decline
was quite as severe in the stocks OF
companies which made a very hand
their September and October returns.
The most notable instance in point
was Chesapeake and Ohio. This road
reported a very large net gain, a
gain that was the more remarkable
because 1t occurred in a comparison
with what was very nne showing
stock broke quite as badly as any of
the other rails today. The higher
priced rails. especially New York
Central and Atchison. were feeling
the effect of the disadvantageous
comparison which they make with
Southern Pacific. The last named. al
most down to IS. The ability Of the
Pacific to earn out OF trans
portatfon operations At least twice the
s per cent dividend IL unquestioned
and meanwhile ~ the result Of the
oil land deal . new cash equity equal
to 81 a share on Southern Pacific
stock has been set up.
At Forced Sale.
It was very hard to explain the
weakness in the railway stocks in
any other way than that they were
being sold by people who had to sell
value. 1t ought to be well understood
by this time that the net earnings of
September and October were no fair
criterion as to what the roads can do
back In private hands and with the
20 to IS per cent rate increase.
The comparisons with last year
were disappointing mainly because
extraordinary appropriations win not
be continued during the winter
months. It 10 true that the traffic Of
the railroads will suner by the bust
ness depression.
But ~ against this there IL fact
that railway stocks have In many In
stances lost all and more Of their en-
tire gain OF the autumn and are back
to where they were selling previous
to the great change in their whole
outlook. which came with the pro-
nouncennent Of the Interstate Com
merce Commission.
The truth seems to be that various
pools in the low-priced rails which
were active in the market Of two
months ago have reached the end of
their rope and been forced to un-
load. Secondly. q lot Of rich inves-
tors who. in order to escape the in
come tax, put their money into the
non. dividend paying rails stocks,
have been compelled by the exiGen-
cies Of the general situation to let 70.
A. for the higher priced dividend
payers It 10 Z rtecegDitous selling un-
Questionably in their case also, for
nobody doubts their ability under the
new rates and with the quasi-guar-
Antee Of q Sufficient income given by
the transportation act, to maintain
their present distribution regardless