Evening star., 1923-09-02
VACATION SEASON
ENDS IN MARKETS
Fall Activity to Find Feeling
of Tempered Optimism in
Financial World.
GOOD BUSINESS AHEAD
Unsatisfactory Conditions Abroad
Partly Observation-Disclosures
Among Farmers 0verstated.
GOOD BUSINESS AHEAD
BY GEORGE j. HUGHES.

ny GEORGE j. HUGHES.
Special Dispatch to The Star.
NEW YORK. September with
the vacation season drawing to a
close and the period of inactivity in
the financial markets presuma bly,
about over the feeling as to the flu
ture is of tempered optimism.
The outlook for reasonable busi-
ness prosperity is considered favor
able and that is the principal govern
ing influence. No one expects a boom,
but. on the other hand. there is no
expectation of depression Even the
admittedly unsatisfactory condition
OF affairs abroad is not given much
emphasis. The opinion seems to be
III. srra ,ne european settlement has
already done about as much damage
10 cur own domestic business as il
IS likely TO do, and while there is
always a possibility OF some sudden
turn for the worse in foreign affairs.
Tor the moment at least that factor is
ignored.
Railroads Doing Well.
1t is also the feeling that political
attacks upon the railroads have lost
some of their force. The troubles
of the northwestern roads seemed to
have turned the keen edge of resent
ment. When the AtchiSon last spring
tailed to raise its dividend rate as
lts earnings warranted and as the
stockholders had hoped, the excuse
was given that raise in the divi-
dend was not advisable under pre-
NaIllnS conditions in politics. II is
prosperity and not adversely that in
Nites attack and, on this account. if
no other, the northw estern roads
might hope for a breathing spell
- ush hnln fha tIr<, a
situation is favorable from an earn
ing standpoint Notwithstanding some
disappointment over the July state
ments.
The fact that increase in gross was
not proportionately saved for net can
easily be explained on the ground of
hedVy expenditures for maintenance
in preparation for the expected record
breaking traffic In the fall. The only
logical explanation then for the fail
ure of investors to take an interest
in railroad securities Is their fear of
adverse government regulation. II
this fear is modified the effect upon
the entire investment markets cannot
be other than beneficial.
stocks and Bonds Higher.
This Improvement in sentiment has
been reflected this week in the mar
ket for both railroad stocks and
bonds. This does not apply to those
high grade investment bonds OF the
tions in this group are governed by
, the changes in the money market
1t does apply to those stocks and
bonds on which the return to the in
stocks and from 8 II per cent up on
bonds. Even admitting that there Is
certain to be an attempt In the new
Congress to morify the transportation
act to the disadvantage of the car
riers and that the investor must al
ways take his chances of business
fluctuations, there Is point at which
the price discounts these handicaps
and there is some evidence that that
point has been about reached.
Another Market Factor.
There Is still another influence that
has operated to depress the price not
only of railroad stocks but of other
investment stocks and in some de-
gree investment bonds. That Is the
income tax which, in the case of in
Vestors of large means, takes so large
a part of the return that the net yield
is actually greater In tax exempt low
coupon rate government and munich
pal securities. To such investors
current returns on taxable securities
are no longer attractive.
1t has been suggested this week
that part of the recent depression In
the securities market has been due
TO pressure of sales from this source.
Only when security has been dis
dilOnS HuTnDeE Ot
small investors is the market undis-
turbed by this condition. case in
point Is American Telephone and
Telegraph. The fact that this cor
poration has now greater number
of stockholders than any other ope-
rates greatly to its advantage in
stabiliaIng the market for its shares.
Land Bank Bonds Strong.
Speaking of tax exempt securities
the strong points of the land bank
bonds, both those of the general fed
eral system and of the joint stock
banks. are coming to be better recog-
nized. There is a inarp distinction be-
tween the two. The federal land banks
are operated for the benefit of the
borrowers who are the stockholders.
The joint stock land banks operate
TOR the benefit Of the private investors
who own the stock. In both cases,
however, the security is the land and
made are 50 rigid and the govern
ment supervision is so elaborate that
the investment rating is very high.
1t is also worthy of note that all
the talk about bankrupt farmers has
had no effect on this market. 1t all
goes to show how ill advised Is the
outcry about general agricultural dis
tr.ss, even though the farmer who
raises wheat exclusively is having his
difficulties.
street Railway Troubles.
The controversy about the future
of the electric street railroads will
not down, All northern New Jersey
did without street cars for month
during the strike of the Public Serv-
ice railway employees. There was a
GOOD deal of complaint, but the peo-
plc managed to worry along with the
buses and the private passenger
cars.