Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-04-09
SWIFT CLIMB OF STOCK VALUES
WARMING SIGNAL TO INVESTORS
Shares and Bonds at Highest Level Since
War-Commodity Price Decline
Invites Caution.

idges election, stocks are still running
the longest string of large daily aver.
age advances in that period.
Another long list Of new low prices
for Industrial shares this week points
plainly to the fact that in the midst
Of general prosperity there are an un-
usual number of acute business stu
atoms. II has surprised many that
there could be so much strength in
one section OF the market along with
such great disturbance in another
section. The answer is, of course,
that a majority Of the high credit in.
dustrial stocks and pretty much the
entire list of dividend-paying rails and
public utilities have been moving
along with bonds.
Competition Affects Industry.
There in another factor that is
operating to produce contrary move
ments in these two groups. Competi-
ton is affecting industry much more
than it is transportation. Manulac-
turing capacity has expanded enor'
mously in the last 10 years as railroad
mileage has diminished. Restriction
in railroad building and in the issu-
ance of railroad securities has pre-.
served a good balance between capital
and net income. This stabilizing fac
tor has offset some of the disadvan-
tages of a strict regulation of rates.
The public utilities have come under
similar influences, but with rather
more leeway allowed them for
charges for service than have been
granted to the railroads.
Except for the competition from pri-
vate automobiles and buses. railroads
have had no new element to contract
gross earnings for nearly a quarter of
a century, and the public utilities have
been able profitably to align them
selves with nearly every new inven-
ton that has been introduced into
the life of the country. On the other
hand, there are constant and violent
changes going on in the industrial
world which quickly react on indus
trial securities. 1t has never been a
wise policy to buy stocks of any kind
and put them away and forget them. .
It is less so today than ever.
The country's business outlook is
fairly satisfactory. 1t will be In this
quarter of the year that the volume
Of trade for the next IL or Is months
will be determined. More than sea
sonable lulls are apparent in some dig
tricts, with abnormal activity in
others. There is constant aCCumu'
lation of capital which must find out
let either in investment securities or
in new productive enterprises.
Foreign Factors Important.
/ Abroad the dark spot politically is
China. Japan this week has had a
recurrence of commercial and bank
ing troubles. The Japanese govern
ment keeps very close hand on the
operations of large business in the
empire, and no one questions Jap
anese credit France is taking steps
to stabilize her currency in negotiat-
ing for the return of a large block
of gold transferred to the Bank of
England in 1916. Germany this week
passed her budget for the fiscal year
and exhibits the best economic con-
ditions since the war.
The vigorous competition now tax
ing place among American invest
ment bankers for loans to southern
and western European nations sug-
gests the rapid improvement of credit
conditions on the Continent, as well
as the change of policy of the Amer
lean investor toward loans to any
but the countries of greatest national
wealth and longest record for meet
ing their obligations.