Evening star., 1927-12-31


great abundance
of canital at low interest rates ha
overhalanced the statistical records o
production and earnings.
The money situation has played ar
iroportant part in all stock market
movements during 1927, ana the Thu
enca il will have on the price aVeilSe
next wear makes il more difficult thar
ever 10 read the future correctly
The developments that are nkelS
to play an important part IN deter
mining the course OF business ana "i
securities in 1928 are: Intense com
petition in nearly all of the leadinS
industries and an unstable price stu
alton: the uncertainty as to candidates
for the presidency: the volume OF goio
exrorts: the position Of the farmer
railroad consolidation; foreign borrow
ing and foreign competition win
American manufacturers: the large
proportion of bank loans made on Sc.
curit;es as well as the high ratio OK
hank investments in slow-movlng
bonds; the demand for some tariff re.
duction. and. finally. the political and
economic conditions in Germany.
France, Italy and southeastern Eu-
rope.
1921 Trade Volume Declines.
The peak Of production following
the war was reached in 1925 and in
1926. These were also years of very
satisfactory margins of profit On in.
dustrial turnovers. In contrast. 1877
has witnessed a steady contraction in
the volume of ma jor lines of trade,
and a slow and wearing recession in
prices. This has been conspicuous in
iron and steel.
The wear has been ore of great
problems for the small producer. in
adequately equipped 10 meet the low
cost of production of the large manu-
featuring units, as well as for the
small merchant with limited credit
who endeavored 10 compete with the
efficiently managed "hain store and
mail order concern. The commercial
mortality has been high among those
with small resources, and IT Will con.
tinue TO be so during the process of
indignation of producing and distrib-
uting organizations in this country.
II is only necessary to review the
records of the railroads for the last
three months 10 realize how pronoun-
ced has been the reaction in business.
Car ioadings in the aggregate repre-.
sent conditions in practically all lines
Of trade, as well as in the movement
OF bulk commodities.
AS an evidence of the prosperity of
earlier years, when large surplus re.
serves were built up. there have been
few corporations compelled TO reduce
Or pass their dividends this year in
spite of unsatisfactory earnings. The
exception is in the oil trade. Here
the full effect of nearly a year of
overproduction and low selling prices
has not reached its maximum. Net
income of refining and producing COM
panies will be nearly so per cent be-
low that Of 1925.
Some companies have deferred
making payments 10 shareholders
which they had expected 10 be able 10
make at the beginning OF 1927. Com
paratively few Of the wealthier COM
binations have greatly increased their
distributions 20 shareholders An
analysis of the total Of dividends and
interest paid for 1921. however. re-
yeaIs the fact that most Of the in.
crease over 1925 was the result of
payments on newly created securities
rather than increased payments on
the 1926 list. In this connection the
years anomaly Of receding trade and
the largest volume Of new stocks and
bonds ever created for expansion pur.
pJhEE IN presented.
New Financing Operations Heavy.
About 10 per cent Of the aggregate
Of $4,000 900 900 new securities was
absorbed in refgnding operations b.
American coYppra fionE, and in loans
20 foreign borrowers. Another % 20
IS per cent represented the require
n1ents If the public utilities. which
have continued 20 sn1ov prosperity
3r the Midst ~ industrial reaction.
while 20 per cent has been employed
b. the railroads whose conditions.
while not 50 good as in 1875. have
been highly satisfactory and have
warranted them in borrowing for the
enlargement of their facilities.
As 10 the remainder IL in quite
probable that a large portion ~ II has
been used ~ bring about lower pro.
egclnR costs by means ~ more
modern machinery Snd other up-'0
date equipment. all of which has had
Tire effect above mentioned of driving
the email unite out of business.
Tzcfrt for The prices of farm prod
ncts. fbe year tss been one ~ lie
dining comno1ty quotations The
average IN The f+st half of 1927 Was
g. tns loveft IN Two years THE
feneen"y vas ss pronounced in parts
~ Europe az y was IN the United
states iu the fret quarter Of the
second half ~ 1927. commodities rose
H'I3ts SHARPLY, bat lstteriy they have
been slowly receding IN ths market
values - cot'pn aud grain hsve an.
39s,ef themselves ~ the fnaI figures
~ The Sehr's crops
We IRE probably in for long period
~ falling commodity prizes This IN
one - ne unfs yorabie aspects ~ the
business situation.
For the present the position ~ the
FsFrne, is better then II hss been for
several years Although the cpiton
rFop Wall he less than j 6o9 600 bales
rompateG with 8bout ~ 600 900 be lrs
isst yesf 'befe is psrtisl rompf nss
tIon fGf this loss in higher price
PEI poBbo
The wheat grower nf ihe soul h We 81
Eud N0t9hwest and the corn aisers Gf
the crest Mississippi bsstn stsses
have been blessed with abundant yields
1his year and therefore, have been
sble - pay or Old debts, purcha se
necessities and lusuTies snd increass
their baDE accounts. Their status to'
day 10 such that they sTe thinking less
81 their troubles thsn for long While
sud they are not ~ politically active
sk tLey we're d year ~ 80 ago. This
vii be ~ importance In the l32s
yieh!dentiai campaign
Two Views II 1927 Results.
~ answering the question whether
1927 has been year ~ prospetiiy, II
is nefesfsry 80 view prosperity from
fuo sueiek ON the one sids, ws MUS
aesi with the lesUlLs Of coTpofstl9l