Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-16
UTILITIES FEATURE
MARKETS OF WEEK
Activities on Curb Over.
shadow "Big Board Deal
ings-Tone Improves.
BY CHARLES F. sPEARE.

! u DIX CuIU MdIket IdtLicL o1lnAA ~
New York Stock Exchange. On Wed
nesday the volume of transactions OH
| the former equaled those OF the latter;
| In one curb" issue alone $4,000
shares were turned over between Mon
| day and Saturday. This Is larger
| total for the period than has ever
been reached on any American ex-
change. On Thursday and FRIDAY
about so per cent of all the sales on
the small board were in public utility
stocks.
These incidents reveal the depth and
breadth of the public passion Tor
| stocks whenever strong financial or
corporation interests come into a Sit
uation and, consciously or not, sur
round it with an atmosphere OF mys-
| terry or encourage the hope OF an ap-
probation in market values OF one
group of securities through an align
ment with another group. This seems
| to be easier to effect in the shares
of the electric light and power conf
panies than In those of any other In
| dustry.
Utilities Enjoy Free Hand.
There is no let-up or hindrance APP
parently to the merger OF public utility
corporations. They are under the fegu-
lation of state COMMISSIONS, but sucn
regulation is of beneficient rather than
an autocratic nature today. When the
president Of a steam railway mas IL 10
his advantage and to that OF his as
sociates to accept an offer to head an
other system, he has to ask the inter-
state Commerce Commission If he may
do So If the Commonwealth Power Co.
or the United Co., on the other hand,
deems 1t advisable to buy control OF
| $500, 5000 of other public utilities,
they go ahead and complete the trans
action. Regulatory bodies learn OF II
after it has been consummated.
Either the one authority is too donni-
neering for the public good or the other
Is too free and easy In its offlcial atti-
tude toward negotiations which ulti-
mately result in the creation ot Secur-
tiles of which the public is the final
consumer. The difference in the two
types of method explains much OF the
cleavage between stocks OF railroads
and stocks of public utilities.
There is another factor that has to
do with the apathy for the one group
and enthusiasm for the other. Railroad
men do not seem to be able to come
to an understanding among themselves
on matters of either corporation or
public utility. 1t is not necessary to go
beyond the present tmpasse In the
Eastern situation to illustrate this.
They have all dug in" and are pre-
pairing for a long war after having
been on unfriendly terms for nearly
four years. Not only Is this true, but
they are making attacks on one another
through the medium of rate cutting.
A banker for a group of the largest
transportation lines in the United
States said to the writer shortly after
the O'Fallon case had been decided
favorably for the railroads, II am more
concerned over rate cutting as factor
on railroad credit than am impressed
by the O'Fallon decision as an aid to
such credit"
Mergers May Go Too Far.
The public utility managers seem to
know how to get along with one an
other better than do the railroad exec
utives. Perhaps this is because they
are OF q younger generation and are
not affected by so many traditions
There is danger, however, that the ease
with which they are able to effect great
mergers and float enormous quantities
or securities for a public that eagerly
laps them up may make them too bold
In the end there may be a period of
public investigation of pyramided hold
ing companies and of enormous surplus
accounts suggesting that consumers Of
their products are paying higher rate
than costs warrant, also that prices
which have been placed on the sec,irities
OF companies taken into mergers have
peen OF more temporary advantage tt
tnoSe who rode the market with them
than to their corporation owners
Largely on account of the rise in
public utility stocks and In those of
the electrical companies that prosper
from an expansion in public utility
enterprises, the average Of the general
market now shows a substantial re-
covery from the figure to which It drop
pea on May 81. Combining public
utilities and industrials we find thew
nave regained about % of the "a points
they lost during the first three weeks Of
last month. Elsewhere there has been
comparatively little change.
sentiment undoubtedly has been i'm
proved by the easier money Conditions
Wnlcn, In turn, grow out of q heavy
| contraction in brokers loans and from
some small assistance which the Federal
reserve mas given in the form of
purchases OF bankers acceptances. and
Government securities. The attraction
10 this market Of approximately $3.50
UOo. geo OF gold during the past five and
half months is having more effect at
| present than 1t had when the specula-
| i've excitement absorbed all of the
available funds In this country and
abroad In the New York cali money
market. s'
Money Influence Still Unseen,
One Of the unknown quantities In
| The stock market situation is the
amount of business reaction that has
been caused by high money and the
money: and especially those growing
1ack OF a dennite policy of the Federal
reserve Board The March quarter
TINS year showed the highest percentage
ployed in business in the history of the
country. Earnings for the June quarter
Will also be excellent but probably not
quite so good as those Of the three
previous months.
The effect Of disturbed conditions in
money, anod especially those growing
out Of the decline of prices of farm prod
| uctS, VIII come later in the year.
| There are already definite signs OF A
slowing down in the automobile and
IRON and steel industries and 1t is
doubtful II the volume OF railroad trafic
in the second half Of 1929 WIN produce
net earnings equivalent to those in the
last half of 1928.
study of the after effects of high
money and high prices for stocks over
period OF years reveals significant
facts In 1906 and 1907, In 1920 and
In 1921, business held up in spite OF
high money so long as the public was
making profits from either stocks or
commodities. These profits created an
abnormal purchasing power which
counteracted the effect Of carrying on
business at high credit cost. It is
| quite generally accepted that no small
part OF the prosperity of the so-called
luxury trades in the past year or 80
can be traced to the profits realized,