Evening star., 1920-03-09
RAILS feature
; STRONG MARKET
~ STUART p. WEST.

l
/ Special CsFsssDendent Of The Star.
J WALL STREET, New York. March
s.-wall street was confronted this
morning as II started business by pre-
cisely the reverse of the surroundings
under which it was moving fortnight
ago. Then everybody was pessimistic
and the extremists. with prices down
all the way from 20 to so points from
last autumn's high, were DISCUSSING
the prospects of a serious decline ana
were limiting at impending panic.
Today most of these discerning
-. critics had changed around complete
ly. With prices up 10 to 20 and 81
points from last months bottom. they
were discussing the chances OF
'bull market" They had iorsos.en s.,
all about their anxiety over the credit
situation. They did not care to tax
about anything else but YESTERDAY
two decisions by the Supreme tout'
and the great speculative poss'oil,
ties which these held for the stocN
market.
Ssatinent Is Qualified.
Naturally this abrupt reversa. IN the
attitude of the speculative following
made those who had predicted the
OVERRIDING of the bear movement two
weeks ago feel less keen about the
immediate outlook This sentiment
was, however. qualified by the opih-
ion that. while the stock dividend tax
decisiop had in large measure been
discounted by the high priced indus
trials where they were selling TINS
morning. the judgment IN the raii"a!
valuation case. making II mandatory
upon the Interstate Commerce IoHi-
emission to value the roads according
10 nresent reproduction costs and not
ORIGINAL costs. also essentially impor-
tant and at the same time unexpected
that it had not been properly meas
Nred as factor in the market.
Outburst Of Buying.
Consequently, the disposition was
after the first quarter of an hour or so
10 take profits in the industrials and
swing over to the rails. There was
another wild outburst on the buying
side in stocks like General Motors.
Crucible Steel. American Wool and
Baldwin Locomotive. This probably
represented belated covering by ont-oir
town spectators who. on account OF
the interruption to the. wire service,
had not been able to get In their orders
before the close of business last night:
But when this covering demand had
been completed the industrial list fell
into considerable irregularity and for
the most part was inclined to sell OF.
But at the same time that the indus
trials hesitated, the rails were taken
up. Under the lead of Reading. New
OfR central. OulOu dCiHS' SouSiNi 81
Pacific and other of the old line div
idend payers prices rose 2 to ) points.
The low-priced issues. the favorites
of q fortnight ago. were less con-
spicuous, although for the most part
strong.
Reading to BeneAt.
It was something like an old-fash-
another stock which stands to benefit
by both Of yesterdays decisions on
the one hand, 1t can now proceed II 1t
chooses to declare a stock dividend
out Of its treasury assets. consisting
of its equities in coal properties. 1t
stands, ON the other hand, to gain as
much rs any other road from the val
uation decision because OF the enor-
nous increase in the value of its ter.
minals and roadway since the original
tions which made Reading the real
leader in the railway movement today.
Rsek Island Prominent.
Nearly all the selected lists which
went out yesterday and today from
Wall street, nominating the railway
shares which it was considered best
to buy, gave Rock Island prominent
fold. First, 1t Is one of the lines which
has extremely valuable terminals at
the big cities. Second, 1t is one of the
reorEanixed roads where capitalization
has been cut down heavily, and un-
doubtedly falls far below the physical
the remarkable showing in last years
earnings independent of any rate in
crease. the results figuring out some
thing like $14 share on Rock Island
common.
There was an immediate technical
obstacle. however. in the way of
Rock Island today and this was that
. lot of small people had bought the
stock on the first run up across 40
two weeks ago, had subsequently seen
IL down below SO and were anxious
to get out when they could see day
Eight. Consequently. Rock Island ran
into very heavy offerings when it
reached 40 and this induced many of
the active trading elemnnt tempo
rarily to go into other things where
there was less resistance.
RailrsaA Valuation.
AZ a constructive matter. the de-
cision in respect to railroad valua-
tion seems Of even greater Importance
than that on stock dividends This,
in q few words. is the feeling of Wall
Street in general regarding the two
decisions. 1t Is felt that the railroad
decision, which limits the powers of
the Interstate Commerce Commission
in the matter of the appraisal of rail-
road terminal and similar property
for tho purpose OF rate making is not
fully appreciated by the public.
One man expressed it this way:
'One has only to consider how the
value Of terminal properties of our
local railroad companies has increased
over their original cost and the rela-
tive small amount of the capitalize
tion placed upon them to understand
that the order to consider present
value In the ofYicial appraisal is going
to be a great safeguard for the rail-
road business"
The situation of New York Central.
for instance, is pointed out. This
road, 1t is felt is helped enormously
by the SuReme Court decision. The
Grand Central Terminal, for instance.
could not be replaced at the present
time at anything like the cost figures.
Other roads are in the same position.
OF the roads which come directly to
New York they are ranked in the fol-