The New York herald., 1921-10-24
FINANCIAL NEWS
AND COMMENT
Railroad Situation Bids Fair to
Rule Financial World Until
Problems Are Settled.
CARRIERS SHARES WEAK
German Exchange at New Low
Britain to Extend Credits
France Conservative.
CARRIERS SHARES WEAK

The action OF last weeks stock mar
ket in recording Il rather rapid decline
of prices during the first two days OF
the week and an even more rapid re-
covel,y during its next four days supplied
a pretty complete measure of tho effect
OF the threatened railroad strike on fin
ancial sentiment. The upturn, OF course,
was prompted in part by the clear indi-
cation that the labor unions could not
go ahead with their programme without,
igurativcly, slapping the Government in
the face; but long before the United
State Railroad Labor Board issued its
manifesto against the strike, prior to a
the market had turned upward.
Strikes have never been very fruit
ful medium for making money by selling
securities with the intention of buying
them back at lower levels. But there
was more than the conventional adage
against selling on strike news, which
directed last weeks quotations. Ths
financial markets were convinced at the
outset that the strike, IL actually begun.
would fall flat They were convinced,
furthermore. that the unions would have
grave difficulty IN persuading the public
that they had a genuine grievance based
on,a wage cut OF l. per cent. at a time
when wages in most lines of industry
had been readjusted downward more eX-
tensivcly. The markets sensed also that
when adequate emphasis had been laid
on the numerous freight rate cuts which
the carriers had made or proposed TO
the Interstate Commerce Commission to
make, the unions would see their conten-
tion that the roads had not acted fairly
about the July wage reductions shot full
OF holes.
RaiIroa. shares Hold Back.
1t is worth more than passing COM
lnent that when stocks began to gather
impetus in their recovery railroad shares
were less buoyant than were industrial
Issues. One might suppose that the
rails would lead, once 1t was apparent
that a great tieup of transportation. with
it's consequent loss of revenue, had prac-
tically been headed Off. That the rails
not only did not lead but actually hung
back indicated that the market feared
that complications might appear in the
conference which the United States Rail-
road Labor Board has scheduled Tor
Wednesday. TO outline one or two un-
known quantities In the proposed meet
ing it is necessary to state a few facts.
The unions called the strike to begin
on October go because they had favor
able vote from n majority Of usmbers
to stop work at the behest OF the leaders
on account Of the wage reduction OF
cell, however. was the strong fntination
at the Chicago meeting OF railroad cx-
ecutives that u second wage reduction OF
10 per cent. would be asked coincident
with a cut Of freight rates.
The argument of the unions In this
weeks conference seems likely to centre
on the assertion that. since the workers
have had imposed on them (by the Rail-
road Labor Board) wage reductions rum
ming from TO 20 per cent. and averag-
ing 12 per cent, that Is all tho cut
which the situation makes necessary.
and now It is up to Che railroads to cut
their freight rates proportionateiy Tho
railroads, on the other hand, have
pointed to many rate cuts. 28 per cent.
on iron ore and other percentages on
various products, and they have pre-
sented figures showing that II mainte-
nance of property had been continued
during the first eight months OF 1921 at
the same rate as in tho corresponding
perlod of last year the roads would have
had a deficit of s70.0oo,ooo. instead OF q
reported net operating revenue amount
ing to 1903, 100000.
Rail Problem Dominates.
These matters are certain to be laid
before the conference. but no one can
forecast whether the records Will pave
the way for what the roads want
namely. further reduction Of operating
costs through additional wage cuts par
allel with q lowering Of charges for
transporting freight Uncertainty about
this point checked railroad shares last
week. The market cav clearly enough
that tho carriers would derive no benc-
fit from an affirmation Of the wage re-
duction Of July and a prohibition against
another cut In the near future The