Evening star., 1923-11-25
LESS FEAR Of NEW
CONGRESS SHOWN
Railroad Shares Advance on
Better Feeling Regarding
Future Legislation.
C. & O. is DISAPPOINTING
Higher Dividend Hoped For-Tax
Problem Comes to Front.
Business Unsettled.
C. & O. IS DISAPPOINTING
BY GEORGE #. HUGHES.


Special Dispatch to The Star
NEW YORK, November 24-Specu-
lative sentiment turned optimistic
again this week.
whether II was a coincidence or
whether there was an actual cornec-
tion. the passing Of the crisis in the
relations between France and Great
Britain was followed Immediately by
resumption on the stock exchange
or the buying movement, which start
ed when the Steel Corporation de-
clared an extra dividend on it's COM
mon stock some four weeks ago. And
with the rally in the foreign ex-
cnangeS and the recovery in foreign
bonds the nervousness over the situa-
tion abroad disappeared and attention
was concentrated on our own trade
position and the securities the price
or which is supposed to reflect that
trade position.
Less Fear of Congress.
Even railroad stocks and sperula-
tive bonds shared attention with
those industrials which have been
the speculative favorites and leaders
Tor SO long. The reason generally as
signed for the neglect of railroad
STOCKS IN the recent past has been
the fear of radical legislat ton by the
new Congress. That fear seems to be
subsiding.
AT any rate Wall street is beginning
10 pelieVe that it is just possible the
railroads may be given a chance TO
work out their own salvation. The
talk OF the so-called radical leaders
In the Senate, as it has been reported
TO the financial community, tends to
encourage this view. Senator CAMPER
OF hansas, i'll public address this
week. while urging some cut in rates
Tor the benefit of the farmer. insisted
that he favored fair return for the
carriers. President Byram of the st.
iaul is also quoted as saying that
the hostility toward the railroads in
the northwest is abating. All this
mas been very encouraging, and the
market for railroad securities has i'm
proved accordingly.
Dividend Conservatism.
Railroad directors, however. still
maintain position of extreme con-
serEatlSm in regard to dividends. The
atchlSon is the outstanding example
Keeping its rate at S per cent al
tnouSh earnings available for the
common stock are estimated at more
tnan twice this amount. The decision
OF the Chesapeake and Ohio board to
make no change in it's per cent rate
Notwithstanding the fact that earn
lnes are more than three times that
amount was also disappointing. This
action, coming at the end of the week.
put damper upon speculative enthu-
siasm.
The same kind of disappointment
Vas expressed last month when the
Southern railway directors declined
to make the expected initial dis
bursement on its common stock.
Ihese directors may be. simply using
common business prudence. or they
sentiment of the raising or initiating
of dividends. Whatever the reason
lhe result must be the same. namely
TO postpone that wide distribution
of their shares which they ali admit
is most desirable. Speculative opin-
ion and the speculative markets will
continue TO be governed by actual
earnings. but individual investors in
SlSt on a return commensurate with
that to be obtained from industrial
stocks carrying an equal risk.
Bonds In Strong Position.
The objection to railroad securities
that the return is not adequate does
not OF course, apply to the bonds. for
BOND interest is fixed charge except
IN the case of adjustment or income
bonds. And marked Improvement in
many speculative and semi-specula-
tive railroad bonds has been fea-
ture of the week.
Very high returns are still to be
obtained from securities in this same
general group. Probably the buying
which has advanced quotations even
here. however: has been more for
tors rather than for investors
Meanwhile the securities of sound
public utilities are meeting with in
creasing favor. This is notably the
case with the telephone stocks and
bonds. Excellent progress is re-
ported in the distribution of the new
American Telephone and Telegraph
51s per cent debentures. Electric
light and power issues, whether
stocks or bonds, are also readily alb
SOrbed.
Business Irregular.
AS far as general business goes,
there is much irregularity, but the
outlook is favorable. Intense inter-
eSt.iS taken in the fate of Secretary
Melons proposal for a cut in taxes.
community is ready to assume that
a reduction in taxation is at hand.
But bankers and merchants are a
unit in the opinion that a lessening
of the tax burden would be a great
stimulus to businesses.
Respecting the price outlook. close
watch is being kept upon the pig
iron market. which many experts
consider a business indicator of great
Significance. Whether the recent
burst of buying activity really means
basic industry remains to be seen.
A somewhat similar buying wave in
copper the week previous soon sub
sided
Motor car manufacturers are going
ahead courageously and Wall street
pessimism about overproduction is
not so much in evidence as a month
or two ago.
Copyright, 1921