Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-03
Stocks Had Lost Average OF
35 Points in Decline of More
Than Two Months.
WHISPERING CAMPAIGN"
AGAIN UNNERvES STPEET
Factors Converge to Give Business
Outlook Depressing Trend
During Week.
BY CHARLES F. SPEARE.
,ial Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, May 2.-On a smaller
scale this weeks stock market re-
sembled that of the middle of De-
cember. when the prolonged decline
reached its climax. The duration of
the downward movement then was four
months and the average fall in prices
about so points. When stocks touched
their lowest on Thursday they had been
dropping for over two months and
had had an average loss of about IS
points. They we're of an average Of
100 points from the end of the previous
April.
The recovery which followed Thurs
days low level was the greatest for
any session in four months and cor
responded favorably to that which took
place upon the cessation Of liquidation
last December. 1t did not last long,
however.
The failure Of a second Stock Ex-
change house and a reorganization OF
the affairs Of third supplemented
last weeks suspension. While they
eventually improved market conditions
and speculative sentiment, they oc-
casioned many rumorS concerning the
stability Of other houses. Wall Street
again LIllS Week was uIulCENGo ny a
whispering campaign" in which prom
inent names were mentioned. while
others were held up to suspicion.
Reforms Held Necessary.
The president of the New York Stock
Exchange Is taking the lead in an ef-
fort to correct various abuses that have
grown up in corporation accounting.
He is also seeking the protection of
invacfnrc aOainct lOOSolU Tdanaoad
panies selling securities to the public.
1t seems as if something might be done
to put a quietus on the malicious re-
ports that circulate in Wall Street from
time to time and which do permanent
damage to the credit of responsible
firms and institutions.
Another reform worth considering as
A safeguard for funds placed in the
hands of stock exchange houses would
be to prohibit exchange members from
participating in undertakings and act
ing as principals in syndicate opera
tionS. At least rs per cent Of the
troubles Of the stock exchange houses
suspended during the past 10 months
were due to particular situations with
which they had concerned themselves
apart from their regular brokerage
ment trust to look after or some In
volved public utility financing, along
with which was an obligation to make
a market" for specific securities; In
other words, providing support for
stocks and bonds at most inopportune
times. In the end this has caused
bankruptcy and. heavy losses to the
clients Of the member firms.
Trade News Depressing.
Aside from the reaction from in
ternal conditions in Wall street this
week, there was in the first half of it
a feeling of deep depression growing
out of the increasing number of poor
corporation reports, reduced dividends,
lower commodity prices, declining
trend in the business index and the
difficulty in establishing q minimum
basis for junior railroad bonds and
various foreign dollar obligations. The
Scent per common share earnings on
United States Steel Corporation in the
March quarter came as a shock to the
business world and overshadowed the
declaration of the regular quarterly
dividend on this stock, forcing its price
to the lowest since the 40 per cent
stock dividend in 1927.
Bethlehem Steel did little better In
the same period, but its directors felt
to reduce their dividend rate
from Sc a share to 81. The dividend
on Colorado Fuel was omitted, and
those on Inland Steel and Jones &
Laugh11n Steel were substantially re-
duced. Iron and steel production
dropped below 40 per cent Of capacity
after touching 81 per cent in March.
giving another illustration Of the way
IN which the curve Of business, which
rose slightly IN the first quarter Of the
year, turned downward early in April
and has again fattened out.
Rail Dividends Cut.
Dividend reductions in April were
one-third less than in March. They
included a number Of stocks whose
market action has a powerful effect
on speculative and investment senti-
ment. A case in point is that of Illi-
nois. Central, whose rate was lowered
this week from ST a share to 81. nli-
nois Central and Chicago e. Northwest
ern are now paying the smallest return
to their shareholders in half a century.
This reflects a change in the status
Of individual railroads rather than q
general breakup in the financial or
physical structure of the carriers. There
are still many roads that are paying.
and are likely to go on paying, the
highest dividends since the reorgani-
zation period of 1898. When business
improves railroad earnings will have a
increase. as they invari-
ably do after every depression.
At the moment sentiment toward rail-
road stocks has been assisted by a more
favorable comparison in March with
net operating income the year previ-
ous.. However. a 25 per cent .reductHa
even though it is less than half that
shown In February, is nothing t.Ae
abroad executives are likely to shcWS
about from the houSetopA
Figures presented today in tbs
monthly bulletin of the National CixS
Bank indicate a decrease of nearly so
Der cent in the net profits Of 200 In
iustrial corporations during the March
quarter. From the same source it had
previously been indicated that the net
,rofits of 1850 manufacturing and
rading groups in the entire IL months
If 1880 had declined about Is per
;ent. Apparently, then, the severity
# the depression has been greater this
ear than the average Of last year.
The cumulative effect Of this will I'M
loubtedly be visible in further reduce
ions and omissions of dividends
Copyright, 1919