Evening star., 1928-05-05

that for new issues of bonds. 1t is quite
possible, too, that when the president of
the Pennsylvania Railroad the other day
had to advance 500 900 900 over night to
pay for the Lehigh Valley and Wabash
stock which he has bought from Mr..
Loree, he negotiated a temporary loan
that played some part in this weeks
loan increase of $137,000,000
Loans, therefore, are not out Of har-
mony with the volume OF securities
listed and the average price at which
stocks are being bought and sold. This
average, by the way. was higher when
the market closed Friday for the holi-
day than at any time in Wall Street
history.
Business Tendencies Ignored.
The stock market pays as little atten-
ton to the broad tendencies of business
as 1t does to money movements. 1t Is
Affected by particular situations but not
by conditions as whole. Some of the
trade evidence this week has been salts
factory and some reflects the high cost
OF doing business in an era of excessive
competition. 1t is significant that the
largest gains are by corporations man.
ufacturing luxury type of product or
those moving manufactured articles to
the public under well known trade
names. The heavy industries are more
or less sluggish, and while showing
much better results in the March quar-
ter than in the last three months of
1927, they compare unfavorably with
similar quarters Of other years.
There is evidence OF a let-down in
the iron and steel industry and a de-
cline IN prices. Automobile production
iv, orfa Oh <xT
1927. April and May will show further
gains. 1t is interesting 10 note that,
whereas there was 1000 600. 900 ap-
probation in the value of motor stocks
in March. the same stocks gained only
$34 900 900 in April. though since the
beginning of May they have gone for
ward again.
The dividends declared by corpora
tions should be an accurate index Of
their prosperity. In April total divi-
dends declared were slightly below those
of April. 1927. This was due to the
heavy falling of in payments by oil re-
fining and producing companies, which
we're $10.000.000 less than In 1927 ard
those OF the motor equipment pro-
ducers, which shrlInk so per cent, and
to decline of nearly so per cent in
the dividends of mining and smelling
stores paid out IS per cent more than
they did last year. food and packing
companies 80 per cent, public utilities
over 20 per cent, and banks and insur-
ance companies over 40 per cent, addi-
tional Another evidence of business
conditions is 10 be found in the num-
Der of commercial mortalities. These in
April were the smallest in number for
the month since 1924, and in the
amount Of indebtedness since 1920.
Commodity Level Higher.
A feature of the business situation
that compels some attention Is the re-
cent rise In commodity prices. This has
continued without much interruption
since TIE first of the year. The iavel
today is 8 per cent higher than year
ago. 1t Is still several points under the
average reached in the early part of
1925. when commodities touched the
high point following the dehation of
l920-2l. 1t is true that this recovery is
largely due 10 the advance in the price
of breadstuffs and cotton. Nevertheless
1t is significant and has direct bearlug
on the business outlook.
Wheat this week went above Sl.T0 in
Chicago, but as weather conditions over
the Winter wheat belt improved il broke
10 cents DuNuEl EIcSSuk ulQiCAAkOilS
are that this crop will be from $4,000. 900
bushels to l00.oo0.00o less than a year
ago. This decrease will be an i'm
portant element in the earnings OF rail-
roads serving the States of largest
Winter wheat production.
The California primaries emphasized
the relative strength of the two leading
candidates for President. Wall Street
and the business world have about made
up their minds that Secretary Hoover
and Gov. Smith Will be the choice OF
their parties at the June conventions.
So far the election outlook has had no
influence on securities. Many claim
hat markets are now immune from pre-
election excitement. 1t may we'll be
asked. however. whether with Its ira
ditional conservation Wall Street will
so along merrily bidding up prices
throughout the Summer and up 10 the
eve of an election that will probably be
very closely contested and which may
end In an administration contrasting
strongly at many points with the one
whose policies have been a contributing
element in the present bull market.