Evening star., 1931-11-22
|DECL|NE IN STOCK
MARKET IS LAID TO
| SAGG|NG RAIL LIST
Carrier lSSeS Break Below
October Minimum in
Weeks Trading.
TRADERS ARE WATCHING
SITUATION IN GERMANY
Sentiment in Financial District Is
Not Marked by Earlier
Pessimism.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, November 21.-The i'm
patience of a public that has as yet
had no concrete proof Of business i'm
provement from the constructive meas
ures that have originated in Washing
ton, save negatively in a reduced num-
ber of bank failures, is reflected this
week in declining prices OF securities as
| we'll as in commodities
The average of railroad stocks has
dropped below the low point of October
Another test of the resisting power OF
industrialS and public utilities Is fore
cast
Happily there is none Of the at
moSphere Of panic or intense peSSimism
that prevailed during September and
| in the first week of october. There is,
however, sort of deadness or numb
ness which grows out of serious appre-
| citation of the two great problems on
which the attention of the Government
| and the financial world centers; name
! ly, those of the railroads and of German
| reparations. Both appear to be ap-
| preaching a crisis. AS each involves so
much that is fundamental to the credit
structure of the United States and of
the world, there is a persistent faith
that neither will be permitted to get
out Of control.
Rail Dividends Passed.
The acute character of the malay
| that has now infected all Of the rail-
reads of the country, is emphasized in
discontinuance this week Of payments
| on Chicago g. Northwestern common
! and preferred stocks, which had an
unbroken record since shortly sfter the
! panic of 1873; in the first cut in the
| rate on Southern Pacific stock in nearly
! twenty-five years, and second reduc-
| ton in 1881 by both the Louisville &,
Nashville and Atlantic Coast Line Sys-
TENS. These are roads that have had
| high credit. With the exception Of the
| Chicago g. Northwestern, they have
held to a conservative policy In the
matter of dividend payments. The
| Northwestern is subject to criticism for
payment of common stock dividends the
| past IL months.
Altogether about $15oooo,oo has
been eliminated from the pay roll of
| American railroads to their stock
/ holders. The end is not in sight. It
| is serious question whether the New
York Central, which paid about $40,-
600 900 annually in dividends in 1880
| and has alesdy cut this in half, will be
| justified In declaring any sort of divi-
| dend next month. 1t is borrowing $50,-
100000. From present indications it
will earn less than l per cent on its
stock to December 81.
1t Is not yet certain that the Inter-
state Commerce Commission will agree
to the modified proposal presented to
| 1t this week by the railroad executives.
| This asks that any assistance by strong
roads to weaker ones be in the form OF
secured loan and not in the nature
OF gift. The aggressive members OF
the commission are in the minority
numerically; potentially they have most
| weight swaying the decisions of that
| body. Their inclination is toward the
naturalization of railroads. In essence
| their proposal of gift to the systems
| needing aid is step toward adopting
the Socialistic idea for all public utili-
| ties. So there Is more than the qiles-
| ton Of revenue at stake in this pooling
| issue.
Wage Cut Debated.
/ The second step taken to bolster up
railroad credit Is in the effort to bring
about voluntary reduction in the pay
| of organized railroad workers. This in
| wolves long trading process, with no
assurance that, in the end, it will bring
about the result that the carriers de-
| sire. With it are associated all sorts
of collateral and somewhat irrelevant
demands which must be dealt with sep
arately and patiently, even while
monthly returns of net operating in
come are compelling dividend readjust-
ments. The American Federation of
Labor estimates the income of railroad
| workers this year as 25 per cent below
1929 This apparently does. not in
| clude Salar1ed workers, who have had
to take their cut whether they liked it
or not. They are in the same position
as the man who has saved his money,
purchased, say New York Central
stock, has had the wages of this part
OF his capital cut so per cent and Is
threatened by entire loss of dividend
| income from this one source.
Reductions in pay obviously affect
| the purchasing power of a people. No
one disputes this fact. In many situ-
aticns there is no other recourse If
| insolvency is to be avoided. The FEEDER
alton of Labor survey estimates the
present income of wage earners as Sill
000, 100000 below 1929. And this does
not include losses of those on a salary
basis. It concludes that there has
been drop Of $8,000000,000 in the
! retail trade OF the country as a result
of this years wage declines. An echo
of this Is to be found in nearly $500
failures among American retailers in
the first nine months Of 1881. This
represents 76 per cent of all business
| inSolvencies for the period, but less
than 20 per cent Of total liabilities in
volved.
Moro Readjustments Seen.
WagsG, salaries and the cost Of pro-
fesSional service cannot escape the
same adjustments that have taken
place in commodities, in the prices of
securities and in the income on invest
ments. The period between 1925 and
| 1880 was as extravagant in its sp-
praiSal of the value of services as it
was in its measurements of the worth
Of securities or real estate. There are
still some leftover contracts of this era,
such as the payment of enormous
bonuses to individuals drawing salaries
from 100000 to $13O,00O a year, that
must be corrected; also the dropping
| from the pay rolls of corporations and
institutions Of high salaried officials
whose blunders have seriously affected
| the credit Of the concerns to which
thev were once attached
The decline this week in commodities
| haG taken from the market for secur-
tiles one Of the primary reasons for
its advance in the early part of the
month. Commodities, however have
retained a higher PERCENTAGE of their
| improvement than have stocks. The
failure Of American and foreign pro-