Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-26
STOCK PRICES DROP
TO TWO-YEAR LOWS
IN WEEKS TRADING
Heavy Liquidations Send
Some Down to 1927 or
1924 Averages.
SHAREHOLDERS INCOMES
ARE MENACED BY TREND
Unpleasant Financial Reports of
Industrial and Rail Companies
Accesserate Movement.
BY CHARLES F. SPEARE.

BY CHARLES +. SPEARE.
Special Dispatch to The Star.
NEW YORK, April 25.-1t is neces-
sary to record the fact this week that
common stocks have broken through
both the 1929 and 1880 low averages;
that many prominent industrial issues
have been selling within the price areas
of the years 1927 and 1928; that rail-
road stocks have declined to level
not reached since 1924; that numerous
railroad and industrial bonds. to say
nothing of South Americans, have had
a serious reaction, and that an in
fiuential stock exchange house has been
forced to suspend.
Liquidation has been heavier than
since the month Of December. There
has been an expansion in the volume
OF transactions only as the market
has moved in downward direction.
The selling of common stocks has
been of different character from that
which precipitated the fall in prices
late in 1880. This had been brought
about by the unloading of overburdened
speculative accounts as well as by the
clearing out Of collateral in the pos
session Of banks whose position was
known to be precarious. There was
also in November and December an
enormous amount of offering for income
tax purposes, with which was associated
an effort to preserve capital by ex-
changing shares Of corporations. whose
condition was steadily becoming weaker,
into those of concerns able to carry on
and pay regular dividends indefinitely.
Shareholders Income Cut.
What we are now witnessing is liqui-
cation by holders of securities who are
as much concerned over the stability
Of their income as that of their capital.
This has been accelerated by unpleas-
ant reading from the financial reports
Of the last month of the trials of in
duStrial and transportation companies
in keeping their heads above water
Until change in business sentiment
and an upward trend in the statistics
of trade put in their appearance.
The meaning Of the numerous diV-
dend changes to the individual, who has
been strongly stock-minded in the last
few years may be illustrated by assum-
ing that Mr.. A had 100 shares each Of
New York Central Baltimore d. Ohio,
Anaconda. Kennecoot Copper, West
inghouse Electric: Allis-Chalmers. Mont
gomery Ward. National Cash Register.
Remington Rand, Vanadium, Chrysler
and Studebaker Corporation. Within
six months all Of these companies have
been paying their highest dividends in
many years. The total income from
them to Mr.. A was 1886 per annum.
Today. with OF the IL corpora tons
having passed their dividends and the
other Z having materially reduced
their rates the present annual money
return to him is $2,250.
In other words, Mr.. A is now receiv-
ing on this section of his investment
portfolio, which is quite typical and in
cludes many shares that are to be found
in fixed trusts, only 40 per cent as
much income as the same shares gave
him throughout 1890
Drive on blue Chips"
Another phase Of the liquidation is
that which has affected the market
position Of the so-called blue chip"
shares. The pressure against them,
both from professional and from in
vesting sources has been steadily in
creasing. 1t has been due to the fact
that while the current average income
return on all stocks listed on the New
York Exchange is about III per cent
lit may be said that in 1920-21 it was
l to ~ per cent higher, that on a
group of about IS "blue chip" issues is
slightly over per cent. Furthermore,
some Of the poorest of the March
quarter statements Of earnings have
been those Of companies whose Sc
curities are quoted at high premium
over the general market average.
There has been a rather outSpoken
bearishness this week toward a num-
Der of the most popular of the indus
trial and public utility shares. on the
score of the low return available from
them in a season of opportunity for
those who have the courage to invest
ar If hofUPen
6 and 10 per cent.
Trade Prospects Gloomy.
Neither statistics nor trade reviews
this week give encouragement for better
prospects in business this Spring or
Summer. The measures Of industrial
activity show n slight improvement, not
one comparable to normal Wholesale
prices have again declined. They are
now nearly 81 per cent lower than a
year ago. Iron and steel production has
receded. Prices of steel are lower. Cop
per metal has been available to con-
sumers at 9l2 cents a pound. Cotton
and wheat show no permanent rally.
Some of the commodities that have been
artiflcially supported in the foreign mar
kets are lower than ever.
In view of these conditions II has re-
quired considerable courage of men like
ASoAoSAtO 0AAOAu VI LIlc AIucI1Cdu ACAC~
phone q Telegraph Co, President Far
rell and Chairman Taylor of the United
States Steel Corporation. and President
| Atterbruy of the Pennsylvania Railroad
to confirm belief of others that the
times were getting better and that while
Improvement will be slow, this country
Will eventually experience the same
| rapid recovery from the present deprcs-
sion that has occurred following every
| other major decline.
Business Reacts TO Wall Street.
Naturally those in Wall Street feel the
bluest, for the values IN which they
| trade and which are always visible dur
ing business hours show the greatest
| amount OF shrinkage. It is true, never
theless, that the present stagnation OF
INDUSTRY Is as much due to the disap-
pointing turn In the market for Secur1-
ties for the past six weeks as to any
other cause. Business reacts 10 Wall
street more and more year by year.
This fact is readily explained in the
enormous increase in the distribution of
corporation securities during the last
| decade. Permanent stability or a return
OF health in business cannot be expected
so long as We have day after day such
violent declines in common stocks and
| in railroad and in industrial bonds as
have occurred since the market turned
| downward two months ago today. The
! failure OF house that has been identi-
| fed with large underwriting and dis
| tributing operations may have the effect
OF clearing the air for while and hold
AntYfA aAvngN ~