Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-02
BY /. A. FLEMING.

Unouestionably the drastic liquida-
ton in the New York stock market has
brought about easier credit conditions,
but the general impression among
bankers Is that the relief at this time,
while welcome, is but temporary and
that within the next 80 days there will
be another period of stringency.
It remains to be seen whether
stocks are to continue slow during the
rest of the Summer, but, in the face
of conditions that are understood by
the trading element, it would be moth
ing more than natural If the present
dull see-saw market should remain.
July 1 is the danger point for tight
money from the viewpoint of the
Street. Hundreds of millions must be
gathered together for the payment OF
dividends and interest due at that time
The maturitieS are factor OF i'm
portance, but probably more important
than anything else will be the f1nanc-
ing of rights" to subscribe to new
stock, Pennsylvania being the most
important, with Chesapeake & Ohio
second in line.
1t is estimated that over a billion OF
dollars will be needed for rights
which must be exercised by July l.
and with other disbursements some
thing like two billions will be needed
In view of these facts it is not likely
that the bankers will permit the bulls
to run away with the market. but
rather that a stiff control will be
maintained over rates in preparation
for the disbursements and it has been
finally demonstrated that rates are ef-
fective in reducing loans.
Distribution Will Ease Rates.
Immediately following the distribu-
ton of the July i funds money should
again find it's normal level. Investors
will be seeking security investments
and it is likely that many of the less
important will seek to place their funds
elsewhere than in New York.
It would seem as If funds might be
used to some advantage in home mar
boom that Wall Street has-investments
regarding which they might have a
personal knowledge and be possessed of
more intimate facts concerning the
operation and earnings of corporations
that they can never hope to intimately
know on Wall Street. Take the local
market, as an example. There have been
few advances during the past year and
yet with the money stringency in New
York reflected everywhere, some local
securities shaded into new lows for the
year.
While it may not be the right time
to buy just now. recovery in prices
before the close of the year seems
assured. AS certain dividend payers
as the preferred stock and bonds OF
the Potomac Electric Co. have declined
with others less firmly fixed as to meet
ing payments. Railway preferred, @
sure 5 per cent payer has gone of
several points. Probably the worst that
can happen to the Capital Traction
stock would probably be a cut In the
dividend from to a per cent
basis-and that, too, in the event of
the ultimate failure of the proposed
merger, while the actual success of the
plan would start the stock on the up
grade and probably result in a saving
that would permit of continuation OF
the per cent payment.
Capital Traction shares are selling
down in the middle 80s, and give an
excellent return even for these days
of tight money. 1t is admitted that the
company is not earning it's z per cent
dividend, but it still has a large sur
plus in cash and seems willing to &c
along with its shareholders as long as
possible. In the meantime the powers
that be will move strongly for action fol
the merger.
Mcl SeAl1ld1eT SttIilS w nave SclIico VI
a basis of 6 per cent regular dividends
with Il per cent extra quarterly, but
some Of the directors are known tc
favor the establishment on a permanent
per cent basis and to continue the
extras that have been featured this
year. The technical position of Mer-
genthaler, with large cash balance
in the bank, said to be nearly If not
quite $l,5o0000, investments valued
at nearly as much. not a dollar OF
funded debt not bank loan and with
its new building completed and paid for
is unquestionably strong. All this may
look like publicity, but it is a simple
statement of fact. Lanston is IN excel
lant rahuSdcal condition also but its