San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-09-02
Outlook for Reasonable
Prosperity Considered
Favorable.
RAIL ISSUES RISE
Improvement in Sentiment
Reflected in Both
Stocks and Bonds.
BY BYRON SELLER.

| BY BYRON SELLER.
Copyright, by the San Antonio Light.
New York, Sept. with the va
! the period of inactivity in the finan.
cial markets presumably about over,
| the feeling as to the future is tenn
pered with optimism.
The outlook for reasonable business
prosperity is considered favorable and
that is the principal governing inflp-
enee. No one expects boom, but. On
the other hand, there is no expectation
| of depression. Even the admittedly un-
satisfactory condition of affairs abroad
| is not given much emphasis. The Opin-
/ ion seems to be that the European
settlement has already done about ds
much damage to our own domestic
| business as it is likely to do. and
while there is always possibility u
some sudden turn for the worse IN
! foreign affairs, for the moment, at
least, that factor is ignored.
Rail Situation Improved.
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 resentment.
When the Atchison last spring failed
to raise its dividend rate as its care.
ings warranted and as the stOckhoiL-
ers had hoped the excuse was givea
that a raise in the dividend was not
advisable under prevailing conditions
in politics. 1t is prosperity and not
adversely that invites attack and on
this account. if no other. the north
western roads might hope for breat1-
ping spell. It is true that as whoe,
the railroad situation is favorable
from an earning standpoint. nOtwitn-
standing some disappointment over the
July statements.
The fact that an increase in gross
was not proportionately saved for net
can easily be explained on the ground
OF heavy expenditures for maintenance
in preparation for the expected record
breaking traffic in the fall. The only
logical explanation then for the failu: g
of investors to take an interest 'lss
railroad securities is their fear of adj
verse government regulation. If this
fear is modified, the effect upon the
entire investment markets cannot be
other than beneficial. .
Railroad Bonds Rise.
This improvement in sentiment has
ket for both railroad stocks and bonds.
This does not apply to those high
grade investment bonds of the savings
bank class. price fluctuations in this
group being governed by changes IN
the money market. But il does ap-
ply to those stocks and bonds IN
which the return to the investor Is
from q to IL per cent on stocks and
from 8 IL up on bonds. Even ad-
uniting that there is certain TO be IN
attempt in the new Congress to modi-
fly the transportation act to the dis
advantage of the carrier. and that the
inves0r mus always take his chances
Of business fluctuations. there is
point at which the price discounts
these handicaps. There is some eyI-
dence that that point has been about
reached.
There is still another influence that
has operated to depress the price ncr
only of railroad stocks, but of other
Investment stocks, and in some degree
investment bonds. That is the income
tax which. in the case of investors of
large means. takes so large n part IF
the return that the net Weld is actu-
ally greater in tax exempt low COUPON
rate government and municipal secur-
tiles. To such investors current re-
turns on taxable securities are no
longer attractive.
Telephone Stocks Stabilized.
It has been suggested this weox
that part of the recent depression IN
the securities market has been due to
the pressure of sales from this source.
Only when security has been dis
tributed among a large number ~
small investors is the market un,i,s-'s
turbed by this condition. A case I'll
point is American Telephone and Teie-
graph. The fact that This corporation
has now n greater number of stock
holders than any other operates 20
advantage in stabilizing the market
for its shares.
Speaking of tax-exempt securities,
the strong points of the land bank
bonds, both those of the general fedi.
eral. system and of the Joint stock