Evening star., 1926-12-15
CHAPMAN PREDICTS 1927 MARKET
OF MUCH SPECULATIVE ACTIVITY
Saws Utilities and Carriers Likely to Show
Earnings Next Year in Excess of
1926 Figures.

/ press an opinion as to what the
market as q whole will do, Tor II ire
uuently happens that the very thing
that makes for prosperity In one CLASS
of securities works to the dlsadvan-
tage of another class. Since the dir-
ferent securities represent practlcaliy
every branch of activity in the United
States. and frequently in other coun'
tries as well, the market can only be
analysed by groups.
Security Values Vary Greatly.
Explaining this point, Mr.. Chapman
added:
when there is a decrease in en-
, ployment tobacco companies ana the
bread and biscuit manufacturing com.
panies have always shown increased
earnings. The reason for this is obvi-
Gus. When men are not employed
they smoke more, and the only OBJ
servation in regard to the biscuit
manufacturing and bread companies
is that the products of these COM
panies are cheaper than other classes
of food and no one at the present
time has noticed a reduction in the
price of bread, Notwithstanding the
decline in the price of grain.
"Nor does it follow in compa MES
such as the railroads. whose earnings
are adjusted by commissions, that
decrease in employment and COM
modify and steel prices is an adverse
feature. 1t has been frequently noted
that losses in traffic are counter
balanced by greater savings through
cheaper employment. cheaper steel,
engines and other articles used by the
railroads in furnishing transportation.
Utility Earnings May Grow.
1T will probably be shown that
the public utilities companies will
show earnings in 1927 exceeding those
of 1926. The same rule applies to
the transportation companies. Their
rate Of charge per person carried or
power served is fixed generally by
commission or law, while the cheap
ness by which they can purchase
material and LABOR will be shown in
their net earnings. Then the surplus
of many corporations is so large, and
their earnings so greatly in excess of
the present dividends paid, that there
can be very decided decrease in
earnings without endangering the
present dividends for several years
to come
During this period of time, Mr..
Chapman continued. there will prob
ably be such an increase in supply
of loanable funds in this country that
it will be very hard to secure yield
of as much as 5 per cent on an in
vestment. This is already showing in
the bond market, and it will be fol-
lowed in the stock market, particu-
larly in those securities representing
staple earning power and larger
surplus. IT seems reasonable to ex-
H. aRrNysr. n
stock issues to advance materially
during the year 1927, and it is not
reasonable to expect declines in COM
mon stock issues Of many OF the
older industrial and transportation
companies.
Three Per Cent Money Ahead.
Certainly with per cent money
market ahead Of us there are few
issues that are not yet cheap, not
withstanding the general opinion that
the general list of securities is high.
AS an illustration of what is possible
when money becomes cheap, the
Union Station in this city was very
largely constructed on money Dor
roWed at the rate of 31a per cent
interest. A repetition of this will be
seen in 1927. 1t is evident that this
means par or better for any security,
common or preferred, paying per
cent, with a reasonable chance that
this rate will be maintained.
when the Federal reserve bill was
before the Senate it was testified to
that if this measure was enacted into
law a per cent money rate for
money would be high. After the bill
was passed the war prevented the
normal operation of the act, but the
measure is now gradually working TO
basis where it can function normally
as intended, and the predictions made
at that time will be verified during
the coming year
More Banks Declare Dividends.
At a meeting of the board of di-
rectors of the Union Trust Co, held
Yesterday afternoon, an extra dlvl-
dend of 1Ia per cent was declared,
payable on December 20, President IL.
J. Stellwagon announced today. The
regular quarterly dividend of 2 per
cent, payable on January Is, was also
declared. The extra dividend will
bring the company's total disburse-
ments for the present year up to 9h2
per cent.
The directors of the United States
Savings Bank have just declared their
regular quarterly dividend of 7R per
holders of record December 20. The
United States Savings Bank now has
capital of 100000, a surplus of
$3.50 900, undivided profits of about
500, 900 and total resources of nearly
SO 900 900, President Wade II. Cooper
reports.
Insurance Firms Best Year.
President William Montgomery of
~, o.,.c Ma fn A1c fn
reports that new business in Novem-
Der amounted to $4.282, 900. Business
for the first nine months of the year
reached $39, ,769 900, as against $685.
500, 400 for the same period in 1925.
On December / the total amount of
insurance in force totaled $222, ,450, 800.
The president expects this figure will
reach 1925, 100000 by the end Of 1925.
which year, he says, has been the
best in the associations history.
Mergenthaler Leads Market.
Mergenthaler Linotype featured
trading on the local exchange today
when 100 shares sold at 10812, the
stock still being ex dividend. Potomac
Electric Power preferred sold at
1O73s, closing at u, while so shares
of Railway and Electric preferred
changed hands at 9014. Lanston sold
at 9312, 80 shares of National Mort
gage and Investment preferred changed
hands at 81s and Capital Traction ap-
peared on the board at 1031s. Capital
Traction SIS selling at par and Railway
and Electric 6s at 103h were the only
sales recorded in the bond division.
PRICES ON PARIS B0URSE.
PARIS. December Is R-PriceS