The New York herald., 1921-01-31
FINANCIAL NEWS
AND COMMENT
Business Atmosphere Is Clear
ing and More Confidence
Is Evident.
RAIL ISSUES IN DEMAND
Discussion Of Labor Situation
on Roads Has Important
Relation to Profits.
By WILLIAM w. CRAIG.

year has passed away. That is made
clear In news of reopened plants and OF
plans for others to reopen In the near
future after idleness, which. in many
cases, had existed since tho middle of
| December. The steel and iron trade Is
ono which seems to have delayed longer
than most others in readjusting itself
| to changed factors Of sales and prices,
yet belief that further stages remain
to be covered before stability is reached
is tempered to degree by reports of
moderate accumulation Of orders where
orders were declining a month ago. IT
may mean little that independent steel
producers. lately working on 25 to 20
per cent basis of capacity, are about
to increase their output to 50 per cent.
of what they could produce were orders
heavy. On the other hand. experiences
which shows that American business
has passed out OF periods OF depression
and been we'll into prolonged recovery
before the public was aware Of gen.
uine and lasting Improvement is not to
be ignored.
Steel and oil. freed from the initiation
of prices and expanded demand that
marked the last four years. are the
last of the major industries to swing
into a business renascence. Reductions
Of petroleum rrices nave come rapidly
in the last fortnight. there have been
cuts In quotations of refined products
in tho Middle West, steel prices are
lowering around the base level estab-
lished by the largest unit OF the trade
in March. 1919, and few products have
dipped under It. They may go lower.
or the incipient signs Of better buying
seen in recent days may cause equili-
brium for a time. It is significant of
! a great change of perspective in busi-
ness that few persons believe that an
Improvement Of manufacturing and dis
tribution will see an advance soon OF
prices anywhere in the field.
Business Sentiment Improves.
Sentiment has improved this month ;
there has been moderate recovery in
some business lines. notably textiles and
shoes. the state Of unemployment is less
generally directed toward growth. But
one receives little encouragement for
broad activity in the next week or the
next month. Business and banking
opinion lean toward thought OF grad
ual Improvement which will make sure
the foundation for the next period Of
Industrial prosperity. There are lot OF
problems to be solved. OF all the i'm
portant events last week in the invest
ment and foreign exchange markets. In
the effort abroad to fix reparation terms
for Germany to meet. In business and
in transportation. nothing was OF greater
domestic Importance than the discussion
by railroad managers in Chicago OF
means to handle the labor situation.
THAT Is not to say that the employers
| of railroad labor should seize the oppor-
tunity. presented by the tendency OF
wages in certain Industries to cut down
their costs by general Reputation OF
| agreements brought by the stress OF
war and high living costs. Far from It.
| But the roads now nave material sup
plied by four months of unsatisfactory
net returns. in declining flow of trafnc
| which shows. so far as available In
formation goes. that instead OF a per
cent. return upon the investment lest
than per cent. is being earned. 1t is
material which. II properly handled
should appeal to the instinct of coopera'
ton among the railroad workers.
Railroad operating men. long before
the Government guarantee ended, saw
the necessity Of sharp reductions OF
costs. Theoretically the transportation
/ act provides that II one set of freight
and. passenger rates does not supply ar
adequate return another set of higher
rates Is to be applied. But the certain
result OF curtailed traffic through rate
increases from time TO time nullifies the
practical application OF the law. tn,
problem of getting sufficient revenue
and reasonable profts lies wholly In the
need of keeping costs in a proper rela
ton to gross revenue. The pending ar
gument between the roads and the diff
ferent crafts which work on them may
be reduced, then, to mathematics ant
economies, and x Is the hope OF all In
terested In sufficient and cheap railroad
transportation that intelligence and mo-
partisanship will prevail when this grea'
question Is threshed out.
Public shows Faith I'm Rails.
One item of proof that the public be.
lleves that the railroad situation will
improve substantially this year was con.
tained In the great demand for invest.
ment disclosed through the offerings. a
few days ago. Of 100000 of Penn.
syivania Railroad bonds. II might bs
cited. Of course, that tho Pennsyivania
stands In a preferred credit position, but
II may be said. also. that. however good
may be the investment standing OF any
one road, It's securities would not b.
sought especially were II not believed that
the whole railroad situation were sound
at the underpinning. Investment funds
flow toward undertakings when they
offer not only a good return but also
reasonable assurance of conservation
There Is no reason to believe anything
else than that intelligent and tactfu
direction OF negotiations over wages, ths
centre OF railroad expense Will re.
dound by and by to a broad improve
ment of railroad income and a growth
OF credit.
II is difficult 20 determine more thar
a few OF the influences behind the per
sistent rise of sterling and some othei
foreign exchanges last week. Naturally
an abrupt advance OF IL cents In steriIns
in single week and Of 81 cents 10 th,
pound IN less than month was ac
companied by certain amount Of reac
; ton. But the undertone remains firm