Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-26
BY GEORGE r. HUGHES.


Special Dispatch to The Star.
NEW YORK, February 26.-The
major trend of prices in the stock
market this week has been upward
There have been of course. excep-
tions in individual issues and all the
gains have not been held; but at one
time or another practically every
group has come In for attention from
Spectators for the advance.
The trading element seems to have
reached the conclusion that the line
of least resistance is in the direction
of higher prices There still are
dissenters from this view but they
are in the decided minority. The
rough treatment that has been dealt
out to the short interest has intimi-
dated that party pretty effectually.
Conjecture is widespread AS to how
much of the support that a large
short interest gives to a market has
been removed. Undoubtedly the
technical position has been weakened.
but how extensively is uncertain. AT
the same time there have been evil
dences that public interest Is on the
increase, SO that taking the two fac
tors together the probability of
reaction. temporary but possibly
severe, is heightened.
Credit Supply Abundant.
Taking a longer range view. how
ever. there has been no change in the
situation. The fundamental thing
still Is the abundant supply of credit
which has its main outlet In the
security markets. 1t is this factor
which Is underneath the strength in
stocks and bonds alike.
There was hardening of call
money yesterday, but that was simply
a preliminary to the end-of-themonth
interest and dividend disbursements.
Time money was shade t1rmer hut
that was not significant either. The
position of the Federal Reserve Banks
as revealed in the weekly statement
removed all concern about the money
outlook.
If further preef is needed 1t Is to be
found In the action of United states
Government bonds, two of which SOLD
this week at the highest point IN
their history. and on basis to yield
the investor less than 31s per cent.
Rail Decision a Severe Test.
The market was put to severe
test the day the United States
Supreme Court handed dewn the de
eisien in the Los Angeles Salt
Lake Railroad valuation case. wan
Streets first Interpretation was that
the decision was a blow to the car
riers, and railroad stocks were thrown
overheard In one of the most nasty
liauidations this year. Under the
aaed of selling prices erumbled away.
The important point, However. was
the way I'm which quotations recovered
once II was realized that the ruling
was not as vital as 1t had seemed to
be. 1t Ia true that fer the rest of the
week railroad stocks did not occupy
SO prominent a place as they mao
before and that attention was turned
to the industrial instead. but only a
market in an exceptionally streng
position could have reeuperated SO
quickly.
Rail Prices Really Lew.
As q matter of fact, the Supreme
Court decision did net take away any
thing the railways had beforehand
It did not affect the value of railroad
stocks whatever It may have done
temporarily to prices. A court ruling
on the proper basis for railroad valua-
tians will net come until some one
carrier brings a ease based on an or
der of the Interstate Commerce Com
mission which the railroad in ques-
ton can claim has dene II an injury,
Meanwhile, present dividends can
Ga sily be maintained and in a few
cases possibly increased. and the pre-
vailins price level OF railroad stocks
relative te earnings per share Is still
far below that of the corresponding
utilities.
The cautious investor will compare
ca pitaIization with the cemmission's
valuations, but even then he VIII fnd
net a few instances where property
worth. under any basis of valuation,
is In excess of the total of stocks and
bonds outstanding. Just to mention
a few examples. the Atehisen, Atlantic
Coast Line the Northwestern, the
Laekawanna the Rock Island, the
New Haven, Nerfelk Il Western. and
the Pennsylvania are In this pesitien,
With the exception eff the oil pre-