San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-09-30
Baltimore & Ohio Shares
Fail to Respond to
Dividend Action.
FOREIGN BONDS FIRM
Negotiations Believed to Be
Under Way for Jap
anese Loan.
BY BYRON SELLER.

BY BYRON SELLER
Copyright. by The San Antonio Light.
New York, 29.-a. e per-
sistent refusal Of both spectators and
investors to take advantage Of the
many apparently attractive securities
at present market prices there are
many explanations, but none Of them
really satisfactory.
1t is hard to understand, for in
stance, why there was not NOR re-
Spouse to the action of the directors OF
the Baltimore & Ohio this week in re-
storing the common stock to dividend
basis. 1t is true that the stock -ad-
vanced substantially, but at the pre-
vailing quotation at the close Of the
week. it was selling on an S34 per
cent basis and the situation with the
bonds is even Lore mysterious.
In view of the strong financial con-
dition and favorable outlook there can
be no question about the investor mer-
its of even the junior issues, but one
of these is still obtainable on a better
than z per cent return.
Fear Of Adverse Legislation.
1t can be said, and said truthfully,
that investors fear legislation by the
new Congress adverse to railway Sc
curities. Outside of the railway execu-
tives and the stockholders the railways
seem to have few friends. The secre-
tary of agriculture only this week
could suggest as remedy for the un.
fortunate situation of the wheat grow
ers nothing better than cut in freight
rates on grain destined for export.
The Interstate Commerce Commits
sion now is engaged in an investiga.
ton of the propriety Of the present
rate scale on anthracite coal. Secre-
tary Wallace's proposal, to put it in
his own words. is that "the railroads
must not be crippled, but reduction
of at least % per cent on freight rates,
especially on agricultural export COM
modities, should be brought about in
some way without further delay. Tho
entire structure of freight rates should
be analysed" Nothing could be more
disturbing to railroad stockholders
than this.
The chances are that in the end sane
counsel will prevail and the railroads
will be given a fair chance. But the
fact is that investors are reluctant to
add to the business risks inherent in
ownership of all common stock.
political risk which it is difficult to
measure. There is, however, another
factor than politics. That is the effect
of the income tax on investors of large
means.
In pre-income tax. days very rich
men could be relied upon to carry the
speculative risk. That is no longer
the case. A very ricl man is better
off with a tax exempt bond and there
is every reason to believe that more
and more the wealthy man is retiring
from the stock market whether for
investment or speculative purposes.
Automobile Shares Sold.
Investment. bankers for long time
have felt the effect of this condition.
They have been compelled to develop
new clientele. They are compelled
to sell in smaller lots and to larger
number of individuals, thus greatly
increasing the cost of distribution. All
this has one advantage. A security
widely distributed is generally perma-
nently placed. 1t may or may not be
significant that the steaIiest stock on
the entire list, American Telephone and
Telegraph. is the one which has the
most stockholders.
There are, of course. those In Wall
street who argue that the markets are
discounting the reaction in general
business. They foresee many disturb
ing possibilities. which is not hard
when you set your mind to it. To mem
ton only one. great concern is ekS-
pressed over the future of the auto
mobile industry. Except pos IDLY the
oils. there has been more speculative
selling of automobile shares than any
other class of stock.
Foreign Bonds Firm.
No one can deny that here is limit
to the expansion Of automobile output.
From the standpoint of value Of pred
uct, the industry is now third in the
United States. This years protection
is estimated around three million cars,
trucks included. More than 100000
workers are, said to be dependent upon
the motor car trade. But when the
so-called saturation poin. will be
reached it is doubtful whether the au-
tomobile manufacturers themselves can
predict.
Although the weeks news from
abroad has been of the gre - IN
portance it has had little effect upon
security prices here. Only the foreign
bonds and the foreign exchanges have
responded to developments on the other
side.
Negotiations are understood to be
under way for a large loan to Japan
and if the conditions are at all reason