The New York herald., 1921-04-28
FINANCIAL NEWS
AND COMMENT
P.R.R. Dividend Cut Depresses
Stocks-Steel Market Out
look Improves.

The reduction OF the Pennsylvania
Railroads dividend yesterday. while ex-
pected In many quarters, was depress-
ing on sentiment In the security market
for the reason. particularly. that the
announcement followed other unsettling
developments. They were the unexpect-
edly poor showing made by the Steel
Corporation in it's operations during
March and the impression derived from
overnight cables tina. France was luke
warm to the German reparation pro-
posals. The preponderance Of bearlsh
information entirely overshadowed the
moderately constructive comment which
came from the steel trade applied to
conditions of the last week and caused
practically to be ignored an important
easement of commercial bill discounts to
Z per cent. and to y per cent for
moderate amount of transactions. The
establishment OF u per cent rate for
mercantile loans was significant be-
cause for the first time it brought the
cost of such credits to point lower
II
eral Reserve Bank.
The more active stocks declined /
point to more than points. exceptions
to the general trend being supplied by
selves to many pool undertakings for the
rise. The market was filled with cross
currents at times. showing that while
short selling had been stimulated by
taking urged forth, nevertheless sup
port for certain Industrial and railroad
stocks was forthcoming whichever prices
looked the weakest. The outstanding
cording to the angle from which they
were examined. The fact that the
Steel Corpo ration earned not much
more than s7.o0O.OO in March. while
much. was suggestive of unsatisfactory
results in the second quarter. This was
what caused a fall of full point in
initial transactions In Steel and was
cline of points. But the assumption
that the full three months ended with
June will be relatively poor makes no
allowance for the indications. reported
buying by automobile makers Is more
than the furry that II was first thought
to be-" that oil companies were In
creasing purchases OF materials and that
record of all the companies In the last
three months forecasts lessened costs
at date not distant through wage re-
ductions. The steel trade Is not looking
for a really active year. but the out
look for satisfactory profits on going
business has not been destroyed by what
has occurred since January 1.
The lowering of the Pennsylvania
ers in the programme undertaken by
the management two months ago to
spread the effect OF reduced business
and profits over the classes OF persons
ested in its results. The cut to 4 per
cent. for the first time in more than
twenty years. Is a regrettabIe neces-
sity, but ii is not without value at this
time as a warning TO the country OF
the need to preserve through adequate
handling of labor and freight rates the
earning power and credit Of the major
transportation system.
AS to the German reparation, the
days late news seemed to show that
the stock market, perhaps. had
jumped to conclusions In regard to the
attitude OF France and England. Cabled
dispatches stated that the authorities
Of the countries most interested were
weighing the counter proposal presum-
ably TO determine whether a medium
could be found for a settlement. French
exchange. naturally. reacted from the
point to which speculative buying had
carried 1t on the preceding day, but
sterling was only moderately heavy.
Call money continued at 61k per cent.
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