The Washington times., 1928-01-23


A distinct change has overts
lation has diminished drastics
Powerful New York operators are
still active, but orders from else
where have shriveled up. Irreg-
ularity continues, but the week
shows a modest net advance.
Many Mergers
The absorption OF California Pc
troleum by the Texas corporation
and negotiations for the consoliaa-
ton of more than two dozen coal
properties in Virginia and West
Virginia are significant events. Mer-
gers will be numerous and inn
portant throughout this year. They
will embrace practically every i'm
portant industry and will be no less
prominent in the mercantile world.
Everything is conducive to con-
solicitations. Profit margins are
usually so small that only volume
can yield satisfactory dividends
in most lines. Excess productive
facilities make it doubly hard
for weaker concerns to make ends
meet. Then, money and credit are
plentiful. thus making the financ.
ing of mergers easy.
In my opinion, smaller con-
Germs that are experiencing diff
Guilty in holding their own should
embrace any reasonable oppor-
tunity to merge into a stronger,
ably-managed corporation.
Another very significant devel.
opment relates to the money mar
ket, namely, the liquidation of
security holdings and the reduc-
ton of holding OF open market
bills by the Federal Reserve banks.
This course, inaugurated In the
previous week, was again followed
last week.
Reserve Warning
From what happen to know
concerning the attitude Of Fed.
eral Reserve interests, this pol
icy should be accepted. especially
by Wall Street, as 4 warning that
continued expansion Of brokers'
loans would be resented and, if
persisted in, would bring about
an advance Of the Federal Reserve
IA per cent rediscount rate.
Already time loans in New
York have been marked up. The
importance of this fact should
not be beclouded by the decline in
rates for day.to-day loans on the
New York Stock Exchange.
My guess ID. however. that con-
ditions in the stock market shortly
will bring abous contraction, not
expansion, of brokers loans.
Business news has, been mixed.
Thus:
Certain steel products have been
marked up but iron has weakened.
Orders have been more freely
placed for steel, but the almost
equally important textile industry
reports rather severe curtailment
and some reduction in wages.
Grain prices have enjoyed an adj
vance but cotton has been wob-
bling. Wool is firmer. Bank clear.
ings. notably in New York, are
larger, but railway freight is
lighter than year ago.
Auto Business Gains
Automobile manufacturers are
running fully 20 per cent above
last January and employment in
Detroit is better now than then.
The oil industry, on the other hand,
is still piling up stocks for which
there is no market, due to abb
normal, unregulated production.
Dividend news has included quite
a number Of increases. but also "a
few decreases. The general price
level has been well maintained.
Conditions in the coal industry are
bad. At certain places building
continues very active: at other
places it has fallen off materially.
Commercial failures last week
were heavy-fully 500. Nonferrous
metals are easier and cast iron
pipe prices also were lower last
week.
From some points come reports
of moderate Unemployment, and
wage troubles have broken out
among shoe workers in a number
of Massachusetts factories
The Bank of France, for the Sec
ond time in fortnight, reduced
it's discount rate to 81 per cent.
The Bank of Belgium raised it's
rate from Az to 5 per cent.
Foreign bonds listed on the New
York Stock Exchange are selling
at a new peak Notwithstanding
the irregularity in most divisions
of the security market
More gold has come from Cam
ada, bringing the total to $32 ,500,-
900 in a few weeks. Gold exports,
at least for the moment, have
ceased.
Our Governments removal Of
its ban against the flotation of
French cOfDoratA lOana i'm this
country doubtless will bring new
issues in the near future notwitn.
standing the apparent abundance
of funds in that country.
Tax Collections Up
One pleasing item from Wash
ington was an announcement that
income tax collections during 1927
ran $23.379,677 ahead of 1925. In
dividual collections fell off $50, 000,-
600, but corporation collections
gained.
Other Washington reports were
less cheering. Certain radicals
have attracted attention to them
selves by ill-considered talk, and
the hearing on the proposed in
Vestigation into public utility
companies has revealed a ten
dency on the part of certain
Senators not to pay serious heed
to the objections raised by repre-
sentatives of State regularatory
commissions and utility leaders
who urge that any investigation
decided upon should be along
clearly-defined lines and not take
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