The Washington times., 1922-07-07
MARKET, COMMENT
BY w. g. COUSINS.
tCOpyright. 1922, by Cosmopolitan News
Service.)

copyright, 1922, by Cosmopolitan News
Service.)
NEW YORK, July wall Street
Is, and has always been, partial to
railroad stocks, and never misses an
opportunity to display its liking for
securities of this class. There is u
well.founded tradition that the be
ginning of the rise in railroad shares
Is the surest indication Of a bull mar
ket, and hence the move in railroads
Ii as welcome as the robins in spring
For good many years the railroads
have had hard shedding, due to the
attitude Of the general public toward
them. But with the changed attitude
and more liberal Government super
vision OF the carrier companies, they
have at last attained a better finan-
cial rating and their stocks and bonds
are no longer the football of the
financial districts.
The action of railroad stocks this
week is abundant evidence that they
still have plenty of kick In them, and
that they are IN favor with a good
sized army of investors. A better
era Of business has been ushered In
for American railroads, but the COM
plaint ~ too rapid prosperity can
hardly be applied TO them at this
time. Under the closest scrutiny,
their net earnings will not measure
up to per cent of their actual valu.
alton. and they can, therefore, easily
defend themselves against the charge
OF profiteering. The best indication
Of the improvement In their credit
position Is the steady rise in the mar
ket prices OF the so.called speculative
railroad bonds--none of which have
defaulted on their coupons, and the
majority of which will be there at
the appointed time when the princi'
pal comes due.
Copper stocks have been fairly az
tive in recent weeks. with a firm ter.
dency to slightly higher prices. ST.
mon Guggenheim, president Of the
American Smelling and Refining
Company, takes a cheerful view OF
the outlook for the copper Industry.
The situation as regards Other met.
ais also is favorable. according to
Mr.. Guggenheim. In a letter ad.
dressed to stockholders. he says that
the present outlook for increased
earnings is distinctively favorable.
Since the first Of the present year
the company's earnings have grad
ually but consistently increased.
with prospects now of still greater
improvement being shown.
While n good many spectators
and investors examine closely into
the record Of earnings ~ their favor
ite securities. II must be considered
that the policy OF the directors with
regard to the distribution of these
earnings is also 4 very important
matter. Some directors declare spe-
cial dividends at every opportunity,
others prefer to accumulate a gigan
tic surplus, or to reserve every extra
penny for development Of their prop
critics.
In the case Of preferred stock. an
important factor is the M spects for
the continuation Of the payment of
the dividend.
A number of high grade preferred
stock have been fairly active in the
market recently aud Gn examination
Of their earnings records will show
ample justification therefore. For
instance, Endicott- johnson earned on
the preferred in 1921 $3a.4I; in 1920,
s21.7s; in 1919. $3.50. International
Harvester's preferred in 1921 earned
$3.50: in 1920, S28.89; in 1919. s38.02,
and in 1918. S44.52. Baldwin Loco.
motive earned on the preferred in
1921 $25.22: in 1920, $22.14: In 1919,
s31.35; In 1918. $49.56; p. Lorillard
earned on the preferred In 1921
s56.53: in 1920, S57.SS; in 1919, s44.07,
and in 1918, $49.77: American To.
bacco earned on the preferred in
1921 $34.64; in 1920, S2S.75: in 1919,
s31.31, and in 1918, s31.54: while the
May Department Stores earned in
1921 on the preferred, $66.S5; in 1920,
1854, and in 1919. $31.26.
The principal items in the weekly
report Of the reserve banks are an
increase Of about $50. 200 900 In mem.
Der bank borrowing. gain OF S7o,.
100000 In the volume of outstanding
Federal reserve note circulation, a
reduction Of $4,000, 900 in the re.
serve account and Of $1,000 900 in
Government deposits. The reserve
ratio shows a decline from tbs to
1913 per cent. The New York bank 8
reserve ratio declined from S3.3 to
S0.7, the Cleveland bank from 7O.4
to 69.3, while the Philadelphia bank
increased from 70 to TIA: the Chicago
bank from S3.7 to S4.S. the Kansas
City from 63.7 to 65.6, and the Dallas
bank from go to 81.
1t is difficult to correctly size up
the current movement In the con.
tinental exchanges. As rule,
French exchange has always followed
the movements from the pound ster.
ling. Recently, however, the market
for sterling has been firm, while
francs have been weak and wobbly,
approaching more the behavior Of
German marks. which as yet have
not seemed to touch bottom. In fact,
the constant addition to the paper
currency of Germany can have no
other effect than the depreciation Of
outstanding notes and the theory of
German bankruptcy In gaining
ground In conservative financial cir.
IL