Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-12
Dull Summer Period Is Ex-
peCted to End Dur
ing August.
INVESTORS HOLD SHARES
DESPITE BEAR ATTACKS
Decrease in Volume Of Trading
Shows Market Has Been Well
Liquidated.
BY CHARLES F. sPEARE.

Of the various indices OF business shows
that. the low point in the present de-
preston was reached at the end Of
December. The normal length. as
. reckoned by some economists, and by
| others the maximum period of time at
which depression continues at its low
| point, or in its trough" Is seven
months.
If this is an accurate measurement
: We have covered half Of the anticipated
! period Of stagnation and should COM
/ plete it in August. when the natural
| improvement in business preliminary to
| the Autumn and holiday trades sets in.
| Such time would also coincide with a
! two-year term of deflation following the
| FIVE years of imitation which eliminated
| in August, 1929
| The downward movement of securities
! again this year reflects the increasing
! opinion that quiet Spring and Summer
season is to be expected. with lower
corporation profits and, therefore, an
| increasing number of dividend reduc-
| tons; also further cuts in salaries and
in wages. 1t is not a pleasant picture
to consider. but there is some Satisfac-
! ton in knowing that it has been dis
! counted to a considerable degree in the
/ prices Of stocks and that it is accepted
with composure strongly in contrast
: with the mood of the public and Of its
! leaders in finance and in industry dur
! ing the dark days Of last December.
Investment Stocks Held.
The volume of transactions on the
! Stock Exchange again this week has
/ been small in proportion TO the extent
| Of the decline in certain classes OF Sc
| curities While there has been more
J lnlfldatlnV1 than n N
| the ratio OF this to all sales has been
slight. Investors in good securities are
! apparently not disposed TO sacrifice
/ them. They continue to show faith in
/ the eventual resumption of business on
scale that will permit corporations
! again 70 earn profit on their common
| stocks, II not one equal to that OF the
! years I927-l929.
! The 'guerTillas" Of Wall Street have
| been in ambush, with the railroad share
| list their target. Short selling is ac-
| cepted officially as one of the necessary
! phases of a free market for securities.
To those who do not live, and move
and have their being in Wall Street it
Is always difficult TO see just why per-
mission Is given to attack ruthlessly, in
period Of great credit senSitiveness,
| any group of stocks in order to frighten
holders of them into selling and there
! by affect the position not only of indi-
viduals but OF savings banks and life
( insurance companies. This is just what
| happens when certain braggarts 20 on
! the floor of the New York Stock Ex-
! change and slaughter prices in the way
| they have done repeatedly in the past
! six months
! Outlook for Railroads.
! Obviously the position of the railroads
! today is critical. But it has been more
! SO several other times in the past quar-
! ter Of a century. After each crisis the
/ industry has risen to higher plane of
/ efficiency and it has produced a larger
| volume OF dividends than ever. In some
! Of its departments 1t has realized It's
{ maximum possibilities. In others there
/ is stu much slack TO be taken I'D and
! new traffic TO be developed. Permanent
operating economies have been effected
! during the past year which will result
! in p relatively larger increase in net
! operating income than in gross revenue
/ when the turn in the tide Of earnings
occurs. There is abundant evidence
| that the competition with the motor
truck will be reduced by proper regula-
/ ton Of the latte" and that a more COM
| plete coordination CT transportation
! agencies and a more general consolida-
ton of steam railroad companies will
| occur. From them will come an i'm
/ provement in the return on property
; investment.
| A higher degree Of craftsmanship and
other internal adjustments would help
| the outlook for the carriers quite as
much as the changes in external con-
ditions that have been suggested.
Fewer Dividend Cuts.
A high proportion Of the corpora
/ tons declaring dividends this week have
ordered them paid at regular rates. In
only few instances have dividends
! been reduced by prominent corpora
/ tons This does not mean, however,
| that he trend is changing. The num-
! Der of dividends TO be lowered or sus-
pended is more likely to increase than
J 10 decrease in the next few months.
, There is less disposition to pay from
surplus than there was when it seemed
! likely that the country would be on
! the upgrade at the end Of the first
! quarter OF the year.
! Again the question Of dividend rates
! is more and more being determined
| in its relation to salaries and wages
! A corporation that is showing a rapid
! reduction in profits is inclined to make
| its first saving at the expense OF its
stockholders They are the ones who
! are most able TO stand a reduction in
3 IAIlOlilC- 4 iic I'M move III tlb pro-
gram toward &c nomy is in salaries
I This has affected the STATS OF several
/ iron and steel companies this week
! Lastly, and with much hesitation and
1 timidity, comes consideration of the
unit scale Of wages.
| Unless there is a decided improve
ment in sight in the business world in
| the next four months, or by the mid
! die Of August, economic, rather than
! political considerations, will determine
! the policy Of corporations toward
/ wages. Many concerns last year agreed
/ to the Government petition that they
| go on spending as though there had
/ been no drop in their earnings and
maintaining the same scale of wages
as when profits were abnormal Hav-
! ing crippled themselves in this patri-
| otto movement, they are now inclined
! to be more selfish and to look after
! their own particular needs. 1t will not
! be surprising to see a movement for
! ! yer wages in the automobile oil, iron
! ~ steel and railroad industries later
/ IN the year.
Corporation Bonds Slump.
In week in which New York State
| sold an issue Of its bonds at the highest
price since 1907 and when another large
block nj Treasury bills has been heavily
oversubsoribed at fancy figure, the
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