Evening star., 1924-12-31
sales for corporations which repre-.
sent the distributive business.
Election Improves Rail Shares.

~
would have virtually bankrupted a
large part of the railway system, was
going to accomplish anything by it
self. But there was for a long time
in the late Summer and Autumn a
definite fear that il would gain suffi-
cient votes to hold the balance of
power. perhaps to throw the choice
of President into Congress and de-
velop enough strength to enforce
part of it's anti-railroad policies.
So far as the railroads were con-
cerned, the big thing in the elections
was not the Republican victory,
which had been long forecast but
the completeness of this victory. The
obstructive elements in Congress
were done away with The party
which wished to amend or abolish
the transportation act Of 1920, with
all that II meant in the way of guar
antee for holders of railways securi-
ties, found itself shorn of all power
control of the legislative body, as of
the executive branch, was left with
those who appreciate the fact that
capital put into railroads must have
fair reward, and were ready to insist
upon this principle despite all the
class agitation, on class and political
grounds, for lower freight rates.
Back on Investment Map.
Probably no accomplishment dur
ing 1924 was more important than the
putting back of railroad shares and
the Junior railroad bonds upon the
Investment map. These securities had
had to struggle against dreadful
handfcaps for years. All through the
war and the postwar period their
market was constantly confronted
with an enormous overhanging sup
ply from abroad. The supply had to
be absorbed, and it took years to
do 1t.
Then there was the development of
Federal regulation and the complete
transfer of the rate-making power
into the hands OF the Interstate
Commerce Commission. The trans
portation act of 1920, with its clause
guaranteeing a fair yield on capital
invested. was reassuring. But 1t did
not remove the railroad question
from the field of politics. The man
ayers of the. roads and security own
ers, rs well as the investing public
generally. felt that there was still
great danger of this law being upset
Consequently. there was a disposition
TO go slow about buying these securi-
ties for investment.
Railroad Consultations Likely.
The great rise in the rails which
set in Immediately after election day
was essentially a vote of confidence
that the present situation was not to
be disturbed, and that roads which
had been long piling up surpluses
and were hesitating for political rea-
sons to pay any part of them out
were at length in a position TO deal
more literally with their share
holders.
Undoubtedly one of the distinctive
features of 1925 will be the CARRYING
out of further consultations Presi-
dent Coolidge reafflrm ed the necessity
of this in his annual message. The
administration plan Is to give the
railroads opportunity to combine
voluntarily, but if they fail to get
together on their own initiative, then
the Government is to exert increas-
ing pressure.
How far these consultations will
benefit holders of securities of the So
called weaker roads is a question
Certainly there Will be no taking over
of the junior stocks at inflated prices.
The stronger roads are going to see
to 1t that they pay no more than is
fair on the basis of earning power as
related to outstanding capital, and in
this attitude 1t is reasonable to con-
clude they will be backed up both by
the Interstate Commerce Commission
and by the courts.
Lower Rates Possible.
If, as the result Of the economies
effected through joint operation and
joint use of terminals, earnings are
increased, it would naturally tend to
higher valuation for the stocks
concerned. But the doubt is as to
whether the governing authorities
would not insist that the fruits of such
economies should be passed on to the
public In the form of lower freight
rates. Altogether, II is not at all
certain that the impending railway
consolidation win constitute an
argument in favor Of stocks In the
non-dividend paying class. Their
future rests rather with their own
earnings and their ability to pay out
Of these.
Expert Opinion on Money Market.
At the close OF the year expert
opinion is much divided about the
money market, and consequently
ties which are valued by money
changes rather than by business
changes. The indications favor the
assumption that the low levels for
money have been seen and that the
tendency from now on will be upward,
although very gradually. Three rea-
sons favor this conclusion. The first
is the largely increased Wall street
demand for funds. what between the
tremendous trading and the great
rise in the price average. The Sec
ond is the present and prospective en-
largement of commercial require
ments. The third is the suspension of
the gold import movement, which
from 1915 to the beginning of 1924
raised the gold holdings of the Fed
eral Reserve system nearly 800 per
cent.
Gold Imporst stopped.
Why the rest of the world has
practically stopped sending gold to
the United States despite the fact
that we are still a great creditor ma
tion is one of the most interesting
questions at the present. And the
answer Is equally interesting, namely,
that for the first time in American
financial history this country is going
heavily into foreign investments We
bought back most of our own securi-
ties during the war and the three
years following the war. We loaned
over $11 900, 100000 to the allied gov
ernments and since 1920 these ad-
vances to foreign governments and
municipalities have been greatly ex-
tended. But the unique development
during the last few months has been
the extension of American credit to
private corporations abroad. This has
been done in two ways. first, through
the purchase of the securities of these
foreign corporations, and, second,
through the direct granting of loans
secured by what these corporations
produce.
Loans Abroad Distinctive Feature.
The prediction may be ventured
that this lending to private business
enterprises in Europe will be one Of
the distinctive features Of 1925. Al