Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-11
Market Discounts Recession
in Industry During Week.
Outlook Is Brighter
QUIET TRADING FORECAST
IN IMMEDIATE FUTURE
Clearing Up of Business Uncertain
ty Held Necessary Before
Next Rise.
BY CHARLES F. SPEARE.
acta1 nixpatch tn The Star

NEW YORK, May 10.-With the
drastic liquidation in equity" shares
completed on Monday, market values
of speculative securities are in better
balance with business conditions ana
earnings than for several months. It
is possible, therefore, to view the situa-
ton with less concern than when prices
of stocks were bounding ahead In
March and in April and the margin be-
tween fictitious and real values was
widening in each days session.
The collapse of the last speculative
movement, which affected the profess
Sional element primarily, has alienated
a public that trades on margin, but
has attracted another body of invest
ors who were quick to see the oppor-
tunities at this weeks low level and
were again willing to draw out funds
from banks in order to realize them.
From the standpoint of stock exchange
commissions, however, the episode has
been costly. Transactions at the end
of the week were only about so per cent
of those on Monday and well below
the daily average throughout April.
The market now needs the same sort
of rest and period of recuperation as
benefited it and permitted the assimi-
lation of weakly held stocks during the
first two months of this year. With
this it will be able to respond more
readily to improvement in general trade
that should begin to show toward the
end of the Summer.
Trade Outlook Uncertain.
There is too much uncertainty in
business Just now and too many vio-
lent readjustmentS growing out OF the
depression to warrant large-scale COM
mitments for rise, even from the
lower levels just established. No one
can as yet determine the extent to
which corporal tons will be compelled to
change their dividend policies as con-
sequence of reduced earnings in the
first six months of this year. Many of
them are well fortified with cash and
marketable securities. II they can see
definite Improvement ahead. they may
feel justified in paying out the same
amount to shareholders as when they
were covering dividend requirements
several times over. Others are not In
so favorable a position and will be re-
quired to declare dividends on the sole
basis of what they are at present able
to earn.
Consequently, we are likely to see in
the next few months the effect of what
has been happening to industry since
last October, even though there is the
appearance OF permanent change for
the better. This week the price Of
cent pound, which brought 1t down
to the lowest figure since 1924. The
original cut from ID to IA cents, made
no impression on the consumers.
Neither did the subsequent reduction
to Is cents Apparently the final con-
cession was all that was required to
bring consumers here and abroad into
harmony with producers, for out of this
lower quotation there developed the first
vigorous buying demand of the year.
Some OF the copper companies can
make profit with metal at 1919 cents.
They cannot, however, earn the divi-
dends they have been paying while
the metal was at 10 cents. Both Ana
conda Copper and Kennecott Copper
have deprecated over go per cent in
market value since they reached their
feel that this brings to q balance the
elements Of market price, the price Of
metal and the probable rate Of dividend
to be paid by these two companies for
the remainder Of 1890. Certainly those
who purchased Anaconda Copper this
week below SIS share and Kenne-
cott Copper under s45 share had no
Is to be maintained at 81 or on the
other at SIS q share.
Steel Recession Recognized.
In the iron and steel industry there
mas not been, so far, a direct response
from consumers to q lowering Of prices,
where they now average So. 68 a ton be-
low the ngure OF year ago. United
States Steel. common was one Of those
that on Monday broke through its
previous 1880 low price. This was not
because Wall Street had doubts over
the maintenance of the per cent
dividend on the stock. The same Is
true of Bethlehem Steel, when it showed
20 per cent shrinkage in market value
compared with its April price. Condi-
tions in the industry compelled recogni-
ton after they had been ignored by
those who expected through a stimula-
ton of stocks of this character to add
vance others not SO strongly grounded.
Furthermore, the prestige Of Steel COM
mon and its wide acceptance as market
index after an experience Of nearly 80
medium for creating sentiment. OF
this the professional element frequently
makes much capital.
As for the railroad stocks, they had
reached q level on Monday where in
dividuals and corporations were willing
to buy them In spite of the fact that
there is no immediate prospect Of an
improvement in their earnings and the
showing of only 356 per cent on prop
erty investment In the first quarter Of
this year compared with SIS last year.
A number of the roads with long divi-
dend records saw their shares this week
selling at the lowest price in two years
and at figures that gave return higher
than that on public utility preferred
stocks Twice in the past seven months
investors have bought stocks on the In
come equation alone and regardless OF
technical market conditions In both
instances they have shown good judg-
ment
Railroad stocks in some respects are
in the position of the copper stocks,
with prices having been adjusted very
sharply to the fall in earnings, but now
at level where, on their past history.
they have discounted great deal. The
only railroad stock whose dividend has
been questioned recently Is to receive
full payment, whether earned or not,
out Of the reserves established in better
times.
tcopyright. 1880.