Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-21
Rail Shares Not Helped by
Application for Increased
Freight Rates.
BEAR ATTACK RESUMED
IN ABSENCE OF SUPPORT
Thin Market Readily Yields To
Liquidation, Despite Better
Business Reports.
BY CHARLES. F. SPEARE.

ZION LnlS week Dy the railroads lot
IS per cent advance in freight rates
did not prevent another decline in rail-
road stocks. The improvement in vari-
Gus lines of industry including textiles,
oil and wearing apparel, was not sum-
cient to protect manufacturing and dis
tributing company shares from further
forays by the bear element or to halt
some liquidation.
The mood of the Street changed from
one of cheerfulneSs, following the rise
between June and June IL, to one of
disappointment over the failure of prices
to hold. There was not, however, the
encouragement or the despair that were
everywhere reflected in the earlier days
of the month.
A new element was suddenly intro
duced into the market situation on Sat-
urday by the announcement that the
Washington administration Is giving at
tention to conditions in Germany and
will take steps not only to strengthen
them but to assist in economic recovery
here and abroad. 1t took Wall Street
some time to appreciate the significance
Of this announcement. When it finally
began to dawn on spectators that one
Of the most important political and
financial moves OF the past decade had
been made, there was an impressive ad-
vance in securities. This may prove to
be the incident that in the future will be
credited with turning the entire market
trend into q more promising channel.
The stock market this week has been
almost too small to give its decline sig
nificance. 1t has fallen to the lowest
totals in some years. with the turnover
on Wednesday only 100000 shares.
Fluctuations have been out of proper
ton to volume. The market has been
FThnFn hae
sponsorship for leading issues. Again
the professional traders have had the
right of way. They are from those
groups Of whom President Hoover in
MS indianapolis speech on Monday said,
They make their contribution to dis
tresS by raids on our markets with
purpose to profit from depreciation of
securities and commodities" He also
stated in this same address that it must
be determined whether the facilities
OF our security and commodity exhanges
are not being used to create illegitimate
speculation and intensity Expressions. 4"
Some Rate Increase Foreseen.
The freight rate application is well
presented. 1t has been we'll received
throughout the country. It will OBJ
viously meet with opposition in quar-
ters where the days work has for years
consisted in an effort to pare down
rates, regardless of the effect on rail-
road credit. 1t is fair guess, how
ever, that the Interstate Commerce
Commission, after the usual amount of
preliminary investigation, will grant q
high percentage of the increase. Mean
while the railroads must cut their
cloth to the new pattern and abstain
from paying out more than they earn.
This conservative policy has resulted
this week in additional dividend reduc-
lions. 1t may later effect changes in
ether dividend rates.
1t has taken some time for the gen.
eral decrease in corporation dividends
to have an influence on the investing
public. In spite of the / 200 to / 800
rates that were reduced or omitted in
1880, there was comparatively little de-
cline in the total of dollars paid out to
shareholders. Many corporations last
year continued the rates put into effect
in 1928 and in 1929. Not a few in
creased their payments. A consider
able amount of capital that had only
begun to make return to shareholders
in the latter part of 1929 was receiving
the maximum return<on it during 1880.
1t has been only since the early part
OF this year that the dividends cam
celled or contracted have begun to play
part in the economy of the country.
There will be nearly 1000 dividends
paid this half year at lower rate than
in the previous six months. This in
cludeS reductions and emissions on
many large individual amounts of cap
ital. Consequently, the total dollar re-
duction in dividends and in interest is
believed to be between $4,000, 900 and
SIS, 900 900 monthly. This does not in
clude interest in default on real estate
mortgages privately held or publicly dis
tributed, or the contraction in interest
payments on commercial and thrift
accounts in the different groups Of
banks.
Second Quarter Reports.
The nearness of the second quarterly
reports to be made by corporations
whose stocks are listed or publicly
dealt in has q tendency to develop q
beariSh attitude on the part of specu-
lators and to make for caution among
investors. There Is little doubt that
the, record of the second three months
of 1881 will be shown to have, been as
lean as the first quarter. Then indus
trial profits were OF from 40 to As per
cent. The market situation, however,
is in better condition to hear this tale
Of industrial woe than 1t was at the
end Of March, when the average Of
prices was over 80 points higher than
now. -..
1t is true that commodity prices are
lower by as much as or per cent
than they were on March 81 and that
the ratio of iron and steel production
to capacity and Of automobile output
to productive ability have both de-
clined sharply. Compensation, however,
has been partially provided by the
greater activity in smaller industries
and by o broadening out in retail trade
in some centers to the proportions of q
holiday period. The public is more con-
WINGED now than it was three months
ago that the worst Of the situation is
passing, II it has not already gone by,
and that securities have been ground
down to levels that discount almost any
catastrophe.
Echoes Of the Defiation.
There will be echoes of the defiation
in commodities and In securities, as
well as in real estate, for months to
come This is to be expected. These
Go not need, however, to turn markets
upside down or inside out. The back
wash of any period Of depression from
time to time spoils the foreground of
an improving picture of conditions It
does not obliterate 1t. The Chicago
banking troubles have caused nervous
ness among depositors in other parts Of
lCOntlnNed On EnnrlA Esge2
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