Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-11-16
FACTORS INDICATING
BUSINESS RESUMPTION
Man in Street Fails to See Conditions
Are in Better Shape Than in
1929, Says Writer.

with normal business.
Conservative, efficient boards OF direc-
tors, under ordinary conditions not con-
nected with speculation, do not vote TO
distribute corporate profits to stockhoid- |
ers unless their companies are prosper
GUS When there Is so much talk about
depression, reduced operating schedules
and vanishing profit margins, for q
board of directors to inauguarte divi-
dends on a stock seems to be almost |
beyond the realm of possibility. But in
the eight months ended with August the
number of initial dividends declared
reached the astounding total OF 4SS. In
the same time there also have been MI
increases in rates of disbursement. |
Mute proof of prosperity which we |
have not been able to see through our
indigo specsl
Stock dividends and t'extras" are as
ISOLATED in our minds with capacity |
operations, expanding sales and soaring |
profits. In fact, they have become so |
synonymous with corporate prosperity |
that by close students of the securities |
markets they are considered danger sig |
mails in bull markets. In the first eight |
months of 1880 there have been paid
727 extra dividends, and stock dividends |
have reached exactly the same total. |
But the thick blue film on the glasses |
of the man in the street obscires this |
impressive total of Asa extra and stock |
dividends.
Stock Dividends Increase.
A comparison of these figures with |
those for the corresponding period of |
1929 makes them even more surprising. |
In the same eight months of last year
extra and stock dividends totaled 1,463, |
or Just nine more than in the first eight |
months of this year. Either numerous |
corporations must be prospecting or many |
directors have parted from safe, con-
sentative business policies. If there does
not exist a corporate prosperity and |
soundness of financial conditions not |
appreciated by the man on the street, |
indications are there will be many
changes in those who occupy directors |
chairs early in 1881.
A compilation covering the first nine |
months of the year shows total cash /
dividend disbursements were more than /
$500 ,000, 000,. an increase of about q |
half billion dollars over cash dividends |
paid in the same period last year /
Sounds strange, doesn't 1t, to hear this |
kind Of news now, in a year of depres- |
sion, when 1t Is usually employed by /
pools at the top of the market as BUN |
ammunition for the purpose of pushing /
quotations higher?
There are other factors which seem |
strangely out Of place in period of |
business recession. One hears much of |
the decline in exports of this country, |
and yet raw cotton exports in September |
were the heaviest for any September on |
record and showed an increase of more
than "a per cent over the same month |
last year. Wheat, including -four, ex-
ported from principal ports of the United |
States and Canada in the II weeks
ended with October 20 showed an In
nraa rNF
corresponding weeks In 1929. This Is in
actual volume-measured in bushels, not
In dollars.
More Contagious Than Measles.
The epidemic Of blue funk with
which the country is now affiicted
seems to be more contagious than the
measles. Many statisticians seem to be
broken out with it and facts and fig
uTes which are really optimistic when
interpreted correctly are served up
with wailing and gnashing of teeth. A
recent compilation showed that sales
OF So chain and man-order concerns
for the first nine months of the year
were IL per cent larger than In the
same period last year. Compared with
q normal growth of per cent to
per cent, this does not look so good.
But these sales were reported in dol
lars. To get @ correct view of this
picture, the decline In commodity and
retail prices must be taken into con-
sideration. Commodities, according to
one of the most reliable indices, have
registered decline of over 10 per cent
during the last year and are now down
TO 1915 levels. Retail prices are of
from Q to 30 per cent.
1t Is perfectly obvious that when
commodities are down nearly 20 per
cent, 1t requires just that much less
money to buy the same quantity and
kind Of goods. Making allowance for
the decline In prices, the sales of the
chain and matl-order companies were
far ahead Of the same period last year
IN actual volume. The fact must not
be lost sight Of that we don't eat or
wear dollars, We just measure by them,
and that 1t Is actual volume which
counts In such indices, not dollar
measurements.
One Of the most important of the
chain grocery companies now reports
sales both ways, in dollars and actual
volume. In recent period its sales
were 3.26 per cent larger In dollars
and more than IA per cent larger in
tonnage, than in the same period of
1929. This Is Illustrative of how de-
ceptive q business index can be when
presented In dollars without making
allowance for the decline in commod-
ity and retail prices. These factors
must be taken into consideration in in
terpreting properly many of the busi-
ness indices presented in dollars, such
as debts to Individual accounts, bank
clearings, department store sales and
all others which are related to goods
and materials.
While there is plenty Of room for
Improvement in business activity, when
the generally accepted indices are cor
rectly interpreted In the light Of
many lines the actual volume Of goods
changing hands compares very favor
ably with normal and even with last
year in various instances.
Large Tonnage BY Truck.
In freight car loadings, the figures
which at the present time are making
such sorrowful showing and which
have caused some Of the barometers of
business to fall below the 1921 level,
the large tonnage moved by truck
door movement Of freight by truck
seems to be increasing with alarming
rapidity from the standpoint Of the
| railroads, even for long-haul traffic
At the present time there Is no way of
measuring this tonnage. II such an
index were available it would serve to
reduce very materially the falling of
In freight movement shown in car
loadings.
A brief resume of the present business
recession In contrast with the depression
of 1e20-21 reveals there is really no
comparison In intensity, despite current
statements TO the contrary At that
time the Federal Reserve ratio was just
above 40, comparing with over 80 at the
present time; money was loaning at pro-
hibitive rates, with strong Corporations