Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-12-31
CAUTION ADVISED. |
IN 1928 DEAL|NGS
George B. Chapman Sees
Many Uncertainties on the
Financial Horizon.
BY EDWARD c. STONE.

Inc year 1870 VIII De u LliIlc IOT I'd
ton. Higher money rates may result
for Industrial purposes. Some big
corporations may reduce dividends
late in the year, and presidential eiec-
ton uncertainties are likely to cause
lower security prices than now exist.
in the opinion of George 3. Chapman.
resident partner of Hartman q Co.
When asked to explain his views on
the 1928 outlook. the veteran broker
said:
"Philip Guedalla, the English writer,
in q recent article stated that Amer
leans are eager to speculate upon the
future, always provided that such
speculations do not take gloomy
turn. For there is no graver offense
in the whole calendar of American
crime than the anti-national sin or
"knocking," and IL one menace lies in
wait for this country's bright forward
looking eye, it Is the temper that dls'
misses any hint of difficulty as cnuri'
ish pessimism. as deliberately defec'
tive vision
therefore, in trying to give pic
ture Of the year 1928. most OF the IN
terviews or opinions are optlmistlc VI
are tempered in such a manner as 10
indicate optimism, and l hesitate 10
criticise the situation as 1t presents
itself to me, but offer for your analysis
the following suggestions:
THE security market during the
year 1927 has enjoyed phenomenal
rise in many of it's securities, ana the
principal argument in favor or the
advance has been low interest rates
and a plethora of investment funds.
During the year general business mas
not been satisfactory, and we nave
now react I'd the level OF prices at
which 1t is well to consider that II we
are to have a good business year tne
money which has been turned into the
stock market for its activity Will nave
to be withdrawn to be USED IN DUST
ness, and this will have tendency 10
raise the level Of money and to lessen
the sunnlv. This in itself will with.
draw one of the arguments against
further advances in security prices.
Dividends Furnish Problem.
"Should business not improve as 1t
ia honed II will then the question
will he whether many OF the corpora.
lions that have increased their capitai
during the year 1927 or before VIII
be able TO maintain their present
dividends. This. too. viii nave an
effect of bringing about a decline
from the present level OF prices; as
a matter OF fact. we probably will see
toward the end of 1928 some reduc-
ton in dividends that are now being
paid. ar,
sents selective problems because OF Its
MANY diversified interests, in that
what is flesh for one company. so to
sneak. liz fowl for another. but this
theory must not be carried too far
when the general security level Is as
high as II is now.
There is no particular reason to
look for a drastic decline In the early
part Of 1928. except what declines may
take place due to a technical condi-
ton that may exist within the market.
But as the latter part OF 1928 APP
proaches. and we approach then the
election Of a President and the uncer-
tainties that this makes. we may look
for lower prices than now exist.
Installment Buying INFESTED.
"A great deal has been said about
the advantages of installment buying.
but there has never been true test
OF this buying as II IL now done in
this country-that is, since this
method OF purchasing has become 30
general--for we have had no decline
or dullness In business conditions.
Take for an example the conditions
that existed In the coal fields during
the last anthracite strike, which last
ed only for a short period. There was
a total collapse on the part or the
merchants doing business on time pur.
chases In that small area that the
anthracite coal fields covered.
The automobile companies that are
a. W. ~ a.
ucts on time will probably suffer dur
ing 1928 IL business does not improve.
and on this point the general consen.
sus OF opinion Is that we are going
into a period of normal profits. This
means normal earnings and normal
employment. which Is far from what
We have had. Earnings. labor and
employment have been above the nor.
NAL. Therefore. IL seems that this
Is time for caution.
Neither do l picture the railroad
situation as one which should be
viewed with optlmism: certainly not
until the present proposed consolldn.
tons are allowed or disallowed. and
until the Supreme Court has passed
on the question involved In the O'Fal.
Ion case. which is the question of the
valuation OF the railroads" MIR. Chip.
man concluded.
Brokers' Loans Up $.3.s9i. 900.
Brokers' loans increased another
3.2st 900 during the week ended De.
cember IS. reaching a new peak Of
$3,7l7 .6?2. 900. according 10 the Fed
eral Reserve Board at Washington,
At this time a year ago such loans
which represented borrowings OF
brokers and dealers from New York
Federal Reserve banks. totaled $2.7Si..
76i 900.
Large new bond issues and financial
adjustments incident 10 the end OF the
year have much 10 do with the In.
crease In these borrowings. as well as
speculation In stocks.
The Federal Reserve statement
ii..I.. lh.. I.,..al