Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-15

Special Dispatch to The Star,

NEW YORK, September 15.-In
other periods of depression it has been
possible to approximate the level at
which the public would begin to inter-
est itself in securities on the basis OF
the yield produced by stock or on a
representative group of so or more is
sues. Under certain conditions yield
of ), 6 per cent would attract the in
weston Again, as in 1921 and in 1922,
he held off until average returns were
around 9 and 10 per cent Last June
yields nearly Appropriated those Of the
previous decade
There was then a considerable amount
of accumulation by those who felt that
this measurement might be accepted as
evidence of a complete liquidation Of
the stock market.
Income Yield.
The difficulty today In forecasting the
probable trend of common stocks Is that
the public seems to have thrown the
factor of income yield overheard. For
merly the publication of a list OF stocks
yielding between 8 and 10 per cent
would bring considerable response, and
the broker who told his client about
such and such an issue at a return sew
eral times greater than in 1929 might
have been sure of obtaining a buying
order. The numerous dividend reduc-
tons that have occurred since the high
average yield level was reached in June
has affected this average materially, in
spite of the fact that many of the
stocks included in the list have gone
under their prices of three months ago
Individual issues. however. are still
quoted on a basis that would produce
high earnings for their holders if pres
ent dividends were TO be maintained
indefinitely.
The lack Of response to the current
high income return represents the alb
sence of faith by the average investor in
even the existing low dividend basis to
which many prominent stocks have de-
clined In its mood today the public
sees ahead many more dividend cuts
and omissions by the railroads and by
the industrials, and before long the
beginning Of changes in the dividend
rates of public utility holding company
common stocks. So it is waiting for
this adjustment to take place, while
these who own stocks with an uncer-
tain dividend promise have been selling
them not only to preserve their capital,
but to limit the risk Of further de-
cline in their incomes,
The highest returns of any one prom
inent group is on the railroads. Five
carrier stocks. namely, Baltimore &
Ohio. Northern Pacific, Chicago &
Northwestern, Missouri Kansas Texas
preferred and Frisco preferred, are
quoted between yields of l425 per cent
and 80 per cent. The average return
on the five stocks is about 81 per cent.
At the same time the average market
price Of this group is 25l2, or, in other
words, the current yield is 80 per cent
OF the current average price Within
the next few months the dividend
status of each one of these stocks is
likely TO be changed. So the perplex-
ing question " the mind of the in
vestor who sees them quoted at prices
unequaled for many years is whether
they have at these extraordinary levels
discounted today's quotations which. in
some instances happen to be lower than
when these same stocks we're on non
dividend basis
Blue Chips"
In 1929, when numerous blue chip"
FiIlctrinlg and T1hlic