Evening star., 1922-12-09
BY STUART p. WEST.
Special Dispatch to The star.

SpeclAI Dispatch to The star.
NEW YORK, December s.-Wall
street is still divided in opinion as
to whether the rise IL the stock mar.
ket during the past week is merely
a recovery from the severe break
in October and November, or whether
it is fresh advance One thing is
certain. and that is that the rebound
is logical and justified by reason of
the fact that the preceding decline
was unwarranted by general business
and financial conditions.
Railroad Stocks Lag Behind.
Railway securities have not felt
anything like the impulse toward i'm
provement that other sections of the
! market have experienced. The rea-
son lies readily at hand. The in
vesting public is constantly being
! reminded that there is serious state
,, is no question of bankruptcy or even
a reduction I'm dividends But the
, roads. as shown in the October fig
! ures. have been called upon to spend
lot more money than usual of
maintenance of plant and equipment.
The suggestion that these expen-
ditures will continue for an indefinite
length of time Is strengthened by
the statement frequently made before
and repeated this week by the Sec
retary of the Treasury in his annual
message that the transportation facil-
tiles of the country have not kept
up TO the needs of business and that
thls is the main reason why prices
are low on the farms and high at
the distributing centers.
Remedial Legislation Remote.
President Harding in his message.
recommended encouragement Of rail-
way combinations and the pooling Of
! freight cars as partial solutions Of
the problem. Unfortunately there is
!lttle or no chance of any remedial
legislation at the present session Of
congress. and at the next session the
balance of power, if not the actual
control. Will rest in the hands of the
program Of rate reduction. regardless
OF what this would entail for the
financial position of the railroads.
In the end any downward revision
| OF freight rates which threatened to
bring earnings below a fair return
on capital invested probably would
not stand in the courts. But the aver
age investor. seeing all this agita-
tlon ahead and recognizing that op-
Grating expenses for months to come
will be under the influence of abnor-
! mally high maintenance charges. is
not Inclined to increase, even though
! he is not reducing, his holdings of rail
securities.
MELONS Report Bull Factor.
Secretary Melons reference TO busi-
ness conditions was an inspiring con-
tributlon to the markets Of the week.
While there was nothing in his sum
mary of the changes of the last
twelve months which was not already
familiar 10 business men, coming from
the Treasury head. it carried much
weight.
! Th. Secretary did not hesitate to
say that while credit and trade con-
ditions had proved SO decidedly at
along the line OF reconstruction in
Europe. This is not in accord with
the predictions of some so-called
/ economists who have been telling the
world for the past two years that Eu-
! rope is on the verge of ruin. But it
thinking business man in the best
possible position to know the facts.
British and Italian Finapces.
The two most striking incidents Of
the week bearing upon foreign af-
fairs were the continued advance in
sterling exchange. and the rise IN
Italian Ira. The pound sterling is
now back over four-fifthS OF the
ground lost during the war and post
war periods. and within less than 30
cents of the normal parity with the
dollar.
The recovery in Italian finances is
nowhere near as far advanced. Stll!
the lira within less than month ard
a half has gone from valuation Of
50. cents to where it is now worth
over 5 cents. and there is no doubt
that this is fair measure Of the op-
timism in Italian commercial clrcieS
regarding the new government. and
the outlook for successful carrying
ont of its fiscal program.
This program calls for a sealing
down Of government expenditures.
more equitable distribution OF taxes