Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-06
TESTS FOR VALUES
OF STOCKS GIVEN
Economist Explains Factors
Which Control Prices of
Equity Issues.
BY John F. SINCLAIR.

BY JOHN F. SINCLAIR.
Special Dispatch to The Star.
NEW YORK, August 6.-John H.
Williams, economist of Whitehouse &
Co., in recent circular, asks the ques-
ton What makes stock POPULAR"
Upon investigation, he finds that by
dividing certain stocks named In the
Dow-Jones price index into two groups,
(A) the 10 most popular stocks and (B)
20 less popular stocks, it is clearly EVIL
dent that the stocks in the A group
their 1929 earnings, as against only 86
times 1929 earnings for the 20 less
popular stocks in group B.
In other words, each dollar of earn
ings of the 10 most popular stocks is
priced at twice as much as the dollar
of earnings of the 20 less popular stocks
What stocks are the most popular?
Two are those of chemical companies,
can, tobacco, electrical, rail-
road equipment, utility, l radio,
oil and chain store.
The 20 less popular stocks are those
of 2 mining and smelling companies,
sugar, 2 oil, steel, automobile,
aviation, l food, rubber, l agricul-
tural, electrical, / business equipment,
motion picture, mail order and
sulphur company.
What are the important factors that
give the major consideration to stock
prices?
A-The stability of the industry and
the position of company in the in
dustry.
B-Capital structure and working
capital position, including early matur-
ity of bonds Cf any and the prospect
of the company for retiring or refund
ing them. 1t is a notable fact that no.
where do we find company weak in
these respects regarded as of first grade.
Prospects for constantly increas-
ing earnings over long period of time.
What are the prospects?
while we believe the stocks in the
class of the 10 most popular stocks will
continue their leadership of the market,
we are inclined to believe that the
greatest opportunity for profit during
the next few years lies in the stocks
now in second position" says Mr..
Williams.
When Gandhi, the jailed Nationalist
leader of India, started his non-resist-
ant, non-c Operative campaign, few
English business men gave IL much con-
sideration. Just another crank trying to
start up trouble in India, they thought.
But when the demand for British
manufactured goods in India began to
die down that was something else. All
over India the boycott of British goods
was felt.
It is this factor that is causing so
much anxiety in the British Isles today.
But the success of the movement in
India has stirred up the same reac-
lions in Egypt. The Wafd party, anti
British, has started a boycott against
British goods and in addition refuse to
pay taxes to King Fuad, who has Brit
ish backing.
Arthur Henderson, British foreign
secretary, hardly gets out of one trouble
until he is in another. And yet he is
primarily man of peace. He at
tempted, about two months ago, to work
out peace negotiations with Nahas Pasha
in Egypt but the negotiations broke
down, and nothing came of them,
No wonder the British foreign minis
ter has left London for an indefinite
rest.
Prof Michael Pupin of Columbia
University, in his recent book, "Ro-
nance of the Machine" challenges
those critics who believe that man has
not gone salready a long way in sub
DUNG the machine.
What is more complex and marvellous
than the human body? Not surely any
invention that man has ever made
But does the machine feed only the
materialistic urge? Prof. Pupin denies
the charge.
when the World War broke out
Europe had hundreds of airplanes fully
equipped to serve as engines of war
The United States, the native land of
the airplane, had none. When we en-
tered the war we still had none suita-
bic for service as engines of war. and
we practically had none on the West
ern front when the armistice ended the !
war. Our American machine civiliza-
ton had to learn from Europe, the |
proud home of modern culture, how to /,
transform the American machine, a |
OF peace, into an European |
engine of war. Do our European critics !
condemn our machine civilization be-
cause, they say, 1t neglects the spiritual
side of human life"
The machine is causing plenty of
anxious moments. 1t means constant
reorganization and redefinition. But it
is being controlled, not for material
things only, but for the benefit of the
spiritual values of life, says this Co.
lumbia professor.
Work on Boulder Dam, in the Black
Canyon of the Colorado River, has
started.
1t will be the greatest engineering
project undertaken by the United States
since the Panama Canal
was taken over from the French.
The highest dam in the world will
be constructed at the place where the
walls Of the river rise more than 1000
feet in height.
A total of s165, 600 900 will be poured
into the project.
1880. by North American News
DaDpr Alliance