The New York herald., 1921-05-21
NEWS
AND COMMENT
Postponed Action on C.. 4 O.
Dividend Forces Decline in
Rail Stocks.

The mas pointed commentary on cur
rent railroad earnings appeared yester-
day in the postponement of action on
dend From the stock market aspect.
the decision Of directors to wait 10 see
what the next few weeks brought forth
vas more suggestive OF underlying con
ditions than had been similar develop
ments IN the case OF Southern Railway
preferred last week and or Hooking VAL
ley shares on Thursday. Stocks broke
down sharply after the news came out
Chesapeake and Ohio shares leading the
slump with q fall OF more than points
were recorded by American Linseed.
Crucibie Steel, Mexican Petroleum, New
York Central Northern Pacific. Houston
OIL and others. Practically the entire
railroad list was weak throughout the
afternoon and reactions were general
among the industrials. Business was
only moderately active. which presuma-
bly, showed that widespread liquidation
vas far less a factor in dealings than
sales for the short account.
Oddly enough the stock market fol-
lowing received the Chesapeake and
Ohio dividend announcement as bolt
from tln blue. evidently seeing no sug
gsstion In the postponement OF the
HoclSing Valleys dividend decision the
day before. The Chesapeake and Ohio
holds more than two-thirds of the Hook
ing Valleys issued capital shares in its
treasury. SC that hindsight at least in
dlcated = community of ideas in regard
L, dividends among the directors OF the
two properties. But in the case OF the
controlling company the Street had been
impressed more with the fact that in the
last two years the stock had been well
thought OF in conservative quarters by
reason OF the conpany's ability to earn
more than the standard return of the
Government during part OF the period of
Federal control, which implied a greater
earning power than many other rail-
roads possessed. The Chesapeake and
Ohio earned in 1920 its 81 dividend
in addition. including two months Of
Federal compensation, but what influ-
enced the directors to await events be-
fore the next dividend declaration was
clearly the results which have obtained
amid falling traffic and high operating
costs so far this year
The setting was favorable for bear
operations before the Chesapeake di-
rectors meeting, as steels and oils had
been notably unsteady from the start
or business and other producing COM
pany issues had followed them down.
ward The excellent weekly statement
OF the reserve system and the decided
improvement OF position by the New
York Reserve Bank had not the
slightest influence 10 buoy quotations
upward. The maintenance of per
cent. call money rate nullified whatever
effect might have come from the bank
reports and the foreign exchanges
ceased TO help sentiment toward stocks.
as sterling and francs experienced a
moderate reaction. Sterling went from
to about 39si., and their market. as
well as those OF francs and lire. drew
back gradually before the noon hour,
reflecting. presumably, considerable
profit taking by spectators who had
bought at The lower price levels Of the
earlier days OF the week.
The financial market, except ex-
change perhaps paid little attention
TO the controversy over Silesia; In fact.
the Impression was stronger in banking
and brokerage offices than il was on
the preceding day that France and Eng
land would soon unite in a policy pre-
scribed by the Treaty OF Versailles
The bond market continued dull and
irregular, certain convertible railroad
issues following rail stocks downward.
while foreign government bonds were
fairly steady.
The May wheat option advanced Sa
cents a bushel, 10 81 .59iz. and tho quo
tation for July wheat gained 2 cents
and more, the grain market being di-
rected upward by more reports OF poor
crop conditions. Corn. however. was
easier than It was on the preceding
day and cotton fluctuated within mar
row limits.