Evening star., 1924-03-30
VARIANCE OF VIEW
Of MARKET ASPECT
Optimistic and Pessimistic
Comment on Conditions
of Past Week.
LET-UP In TRADE SEEN
Railway Issues Attract Money In
terests-Review of Trade Stu
alton Throughout Country.
LET-UP In TRADE SEEN
ny GEORGE IT. HUGHES.

ny GEORGE IT. HUGHES.
Special Dispatch to The Star.
NEW YORK, March 2s,-Judging
from the course OF the markets this
week, investment and speculative
opinions as to the future are wide
apart. Spectators generally are pes
simistic. They put all the emphasis
upon evidences Of a let-up in trade,
notably in textile and in the steel
industries. They profess to be very
dubious about the outlook for the
motor car manufacturers. They point
to the decline in the stock market
as confirming their view. They see
overproduction in many quarters Po-
litiCal developments are a drug upon
business, in their opinion, and so pro-
fcssionals have been selling stocks
which they did not own, but which
they hoped to buy back at Il lower
price later on.
View of the Investors.
The investment view is just the
opposite. Nj that the speculator
says about reaction in certain lines
is admitted to have some foundation,
ciareG to be greatly exaggerated. As
far as the stock market goes, in
VeStorS deny that il is any infallible
barometer. At least they do not
regard present tendencies in specu-
!atiVc circles as fOreCaStinS any gem
eral depression. On the other hand.
they argue that nothing could be
more reasSuring than the almost uni
NerSal caution shown by retail mer-
chants and consumers alike The
- - = e.. nf 81 ok in III
hand mouth buying, which is so
irritating to wholesalers, is certain
insurance against any abrupt or
sweeping decline in general trade.
On the positive side there is the
abundance Of capital seeking en-
nloyment and the conviction that the
"onSumptiN" needs of the country are
rs large, If not larger. than ever
before, and. not having been antiCi-
pdted- must COnt lnue to max q them
selves felt steadily. In other words
the investor feels that reasonably
good business iS assured for q long
time TO come lie, therefore. ignor-
ing the fluctuations in the Specula
tive marke cts. has been all this week
ready buyer of securities of the
middle grade. He has left to banks
and financial institutions government
bonds and railroad mortgages of the
legal class, contcntinE himself with
those railroad and industrial obliga-
ttOnS oil which return of from )
to per cent is attainable with all
reasonable 71fcty.
Rail Interest Revived.
So much for the general mark ct
Now specifically as to the railroads.
IT is not without Signiticance of an
altered attitude on the part Of in
VcStcrS toward the carriers that the
most interesting movement of the
week in which speculative and in
N"Stment interests alike manifested
~ hn i.c-f f,f ttrgN
roads In bonds it was St Paul is
sues that attracted attention and in
stocks it was Norfolk and Western
For some months now sentiment to-
ward The 81. Paul has been more
favorable Recently there have been
reports. unofficial and unconfi rmed,
that corSide ration of the refundng 2
or the ST. PaulS maturitieS next year
had been taken up. When to these
reports was added this week d Febru-
.,ry earnings statement showing the
largest gross in four Years. and an
even larger increase in net, there
was immediate response in the bonds.
Rumor of Lease Boosts Stock.
More Interesting is the case of the
Nqrfo.k and Western. Here the stock
nad remarkable rise in response to
thc announcement that the Pennsyl-
Nitnia was negotiating for lease
off the road. All sorts of reports
we're current as to the terms of the
lease. That the Pennsylvania would
guarantee dividends on Norfolk and
Western stock was take for granted
The uncertainty was as to the rate
and as to whether or not a stock
dividend would be declared first. The
Important point of all this is that
1t as possible now. as il has not been
Ius years, to stimulate speculate tive
imagination rs to the possibilities in
railroad consultations. AS far as
this particular case is concerned. the
.
thf last word. Interests of other
roads must be considered and the
Baltimore and Ohio has been reported
ass obJecting to the proposed arrange
msni. Moreover. under the com
mission tentative consolidation plan
thf Norfolk and Western is made the
nlEleuS of system of it's own. All
these matters will have to be thresh-
edS out before the commission.
largest Deal of kind on Record
sf the lease goes through as plan
hod, 1t Will hc the largest deal of its
kind on record. Many estimates have
H"Gn N"HturPd as to what would be
ing proper market price of A Nor
tolk and Western stock guaranteed
hHt the PENNSYLVANIA. As a rule,
stocks, dividends on which are guar
apteCd hE strong roads sell on n
yield basis comparable to that Of
hiEh grade bonds. Some OF these
guaranteed stocks are regarded equal
t"i nigh grade bonds. Just now ten
OFT the highest grade guaranteed
stocks give an average annual return
ati present market prices of 5.29 per
ceht W hen it is remembered that
thfse dividends are exempt from the
normal income taX it Will he seen
THAT investors rate such securities
very high The case of the Norfolk
AND Western is not quite compare BILE
'oa these high grade guaranteed
stocks because Norfolk and Western
shares come after large mortgage
!naebtdeness ard the system is so
ins%h more extensive. on the other
hSfd, the roads ability to earn hand
sohlc returns for it's stockholders has
heen demonstrated over a long period