New-York tribune., 1920-02-22
The Steel Stock,


stocks: "The recent rise in ths prices
OF steel products has been interpreted
IN some quarters as meaning unusually
large demand. We are inclined to be-
lieve that it Is fully as much the result
Of restricted output. In 1917 and 1918
the United States production of crude
steel was about 45 900 900 tons The
Iron Age estimates our 1919 output at
34,00000o tons. TEe decrease is due,
of course, to the cessation of the war
time demand. If the 1920 aggregate
demand is no greater than that of 1919
the steel industry is likely to operate
at no more tran 75 per cent of its ca
pacity. The January rate is given by
the American Iron and Steel Institute
as about SO Y per cent CT capacity, or
nually. Some of the aftermath Of the
steel strike is undoubtedly reflected in
these figures. Industries likely to use
less steel in 1920 than last year are the
oil industry and the shipbuilding in
dustry. We also face. in the present
condition of foreign trade a considera-
Bile falling off in exports. These three
markets could readily take 5000 600
tons less in 1920 than in 1919 The
railroads, the automobile trade and
general building operations can be re-
lied on to- increase their consumption
Altogether, we do not think it safe to
figure on an abnormally prosperous
year for the steel companies. Most Of
them are in wonderful condition as to
cash and other working assets, and
present dividends can probably be
counted on indefinitely, but any specu-
ative possibilities they possess seem
to rest upon past earnings"
Premium Railroad Bonds
However satisfactory the new pro-
jected railroad legislation may be from
the standpoint of the rails, and there
is still much difference of opinion, it
is quite generally recognized by finan-
cial men and railroad executives that
a whole lot of water will have to pass
over the dam before there can be a
restoration of railroad credit. For
this reason bankers are not oversan-
guine of the success of such new rail-
road financing as will have to be ar
ranged after the return to private con-
troll. Many Of the leading roads will,
it is expected, come into the market
for funds. The head Of one of the
largest investment houses in Wall
Street suggests that perhaps it might
be worth while for the railroads, whose
credit standing is not of the best, to
take a leaf out of the book of the
French government and take a chance
with an offering of premium bonds
While there might be a question of
legality Of such an issue involved, to
offer bonds in which there would be
the possibility of obtaining a fancy
profit for the lucky holder whose bond
was drawn before maturity, would be
merely to emphasize feature which
has already been made use of by Amer
lean corporations. One such is the
United States sinking fund gold 5 per
cent loan, of which a certain percentage
is drawn each year and redeemed at no.
The Credit Situation
"Higher rediscount rates." said J. S.
Bache & Co. yesterday, may have to
be put into effect. Meanwhile nothing
is being done to stop the outgo of
gold, nearly $110,000,000 having been
exported in the last nine weeks, CORE
spondingly reducing the gold reserve
Nor is anything being done about re-
funding the Liberty bonds at higher in
terest, which would distinctively re-
lieve the situation. The technical posi-
ton of the market is better, but the
credit and money situations stand at
present an obstacle to much improve
ment"