Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-09
ENCOURAGING NOTE
IN BUSINESS SEEN
Weekly Review Says Better
Feeling Has Appeared in
Trade Circles.
sneoial Dispatch to The star.

selves during the past week although
there has been an atmosphere OF heSl-
tation due to the sudden appearance
of attempted legislation which, II sue
csssful. would be calculated to cause
some disturbance to financial condltlons,
saws the current review OF Henry CIeWs
& Co. The unexpected resumption Oh
bonus discussion has naturally k2d TO
uncertainty regarding the prospects OF
some classes OF securities; and thus mas
been somewhat hurtful to the eeneral
outlook CtherwiS9, the course OF events
has been quite as favorable as had been
expected. The growth Of business mas
been well maintained, and the outlook
for the Spring is hopzful. StatlstlcaI
indications. based on last years results,
have continued to show here and there
figures that were not satisfactory; put.
as explained in these advices during
uast weeks. they must not be con-
fused with existing prospects The
factors that are now coming TO hgnV
are in nearly all cases sharply in con-
trast with those which had made them
selves evidspt as to last years operations
Expansion of Business.
EXPANSION of business volume has
been the continued basis of favorable
predictions. During the past week
more steel mills have resumed or in
creased operations. while the percent
ace of plant occupied i'll those estab-
lishments which have been at work IN
districts already partly engaged mas
advanced In spite of all that has been
said by pessimists further reductions
of crude oil output have been ehecteq;
and if the process OF conservation can
be maintained and pushed further the
outlook will, in the opinion OF well
qualified European observers who have
cp1VoC no favor
able for further improvement IN the
earnings situation. In congressional
inquiries now current it has been
shown that the manufacturing lnouS-
tries of the Eastern States are turning
to crude petroleum as rule and in
other ways the outlook for the OIL
business has shown improvement. Rec
ord volumes of business are reported by
insurance companies; and the CROWN
of savings which was so remarkable
during the year 1880 has continued
during the first month of the new
wear. Mail order houses report Tor
January showing which indicates
growth as compared with recent
months, Notwithstanding that as COM
pared with last year the retl rms are
still somewhat behind. The fact that
business failures for January were
large is generally regarded as rejecting
mainly the results of difficult conditions
in 1880 and preceding years, which
have been allowed to hold over nto
the current season and are now Git is
asserted, being given what is hoped by
many will be the final cleaning up
Depreciation in investment trust hold
ings and in finance company state
ments likewise represents past opera
tions and need not be seriously con-
sidered, since the market is now evl-
IDENTIFY upon a quite different basis.
Bonus" Discussion.
The main feature of encouragement
in the present position, as already in
dicated. has been the renewal OF So
called bonus discussion. 1t has been
natural that a good deal OF the COM
ment has been of an alarmist nature,
but careful observers are already notlng
that there is as yet no indication what
ever of the line Of action to be followed.
OF some 40 proposals OF different klnos
before congressional committees, 2 or
3 representative types may be recog-
nized The most extreme is that which
proposes to give to bonuS-certlhcate
holders the total ultimate face value OF
their claims. This would be SO, 400 ,000,-
600, less about $500, 100000 of advances
already made. About $500 1000 has,
however, already been carried to sinking
IunQ account ILLS Sli1Ai, ~ SAAnb
at utmost the total OF new funds 10 De
obtained by fresh refunding would be
So. 400 OO0, 600. It is generally con-
ceded, moreover, that this project Is
not likely to find favor in any case, but
that a second type of plan, which would
simply give to the certificate holder the
present worth of his certificate, is lar
more likely to be reported IN some
form. This latter would mean a net
eSyoopdirO ell 100 O00 OU0- III
should not Be forgotten, moreover, that
this. too Is on the assumption that all
certificate holders would call for the
conversion of their holdings. There Is
no ground for supposing any such thing:
Thus far, only about % per cent OF
these holding certificates have Dor
roUed on them under present arrange
ments. and there is little reason for
thinking that there would be much
larger proportion that would call for
full redemption. There are not many
of the experts who would expect TO see
more than $700,000,000 required under
any probable scheme. An alternative Is
afforded by third group OF projects
which would simply enlarge the present
loan value of the certificates IN way
that might require $500, 100000 or so
No reasonable ground exists for doubt
ing that either of the two latter amounts
could be absorbed by the market with
out great suffering if those who nov
hold Government obligations keep theli
heads in the matter and do not cause
serious declines by selling. There i
no denying that the bonus scheme l.
a most regrettable and disturbing prof
ect The greatest hardship would fal
upon those who might find themselve
obliged TO defer carrying out plans a
to new issues TO which they had com
mitted themselves The whole subJec
needs TO be regarded much more calml.
than has been the case hitherto. Their
is thus far no assurance whatever tina
such a measure will become law in an
form.
Corporation Earnings.
This same sort of moderation II
analysis is called for. likewise, in tn
case of current corporation earning
reports. Compilations made by stats
teal agencies have lately shown, TO
large groups Of 1890 earnings, losSt
as compared with 1929 that in som
instances ran as high as 40 or so pr
cent among industrials. 1t has bee
true, no doubt, that the poorer carr
ings have been the latest to be pub
lished, so that, as time has gone b.
the averages have been less faVorab
than those which were issued early
the season. Current observers hav
accordingly, been disposed to vi-w tn
earnings compilations as discouragin
A more thoughtful survey does not SUP
port this attitude On the contrar.
some groups such as the utilities no
appear 10 have done very well for tn
year, while the number of enterprise
which have earned more than averag
yields is gerater than expected. There
certainly a fairly substantial group {
highly competitive concerns whose IT
ports reflect heavy losses of net incon
for the year 1890; running, in not
10 Ioalo