Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-29
Dividend Cuts and Omissions
Cause Halt to Market
Upturn.
BUSINESS IMPROVEMENT
MORE THAN SEASONAL
Absence of Large Selling in Sc.
eurities Illustrates Present
Liquid Conditions.
BY CHARLES F. sPEARK.

for rise in stocks came to a halt this
week when it was recognized that there
was no point in forcing prices against
an increasing flood of unfavorable news.
| The wonder is that stocks held so well,
| in view Of the radical cuts announced
| on the shares of prominent railroad and
| industrial corporations and the intima-
tons that are clearly given in prelim-
mary estimates of earnings for the
March quarter, that many more adjust
ments must be made to the diminishing
profits in business.
The comparatively small average de-
cline in prices again illustrates the
liquidated condition of the market and
the presence Of short interest that is
taking every advantage of the current
grist of bearish statistics to reduce its
commitments. Such public interest as
developed last month, when pools were
manipulating their railroad and indus
! trial specialties. and later during the
| demonstration in public utility issues,
has faded away, leaving the market in
| professional hands.
The daily average StockN Exchange
transactions this month have been less
than two and one-quarter million shares
| Only five times in the March quarter
! has the turnover exceeded 10000
shares. Wall Street business, therefore
! is of in about the same ratio from 1929
| as Is that in most lines of commercial
activity throughout the country.
Corporations Cut Rates.
Two important railroad systems-the
| Baltimore 81 Ohio and the Lacka-
wanna-reduced their dividends this
| week, while among the numerous indus
! trial corporations that found it neces-
sary to allot smaller portion of earn
| ings to their shareholders were Westing-
house Electric, National Cash Register
and Anaconda Copper This covers the
! field of production of raw materials, the
manufacture of finished products and
| that Of transportation. Except in the
! public utility industry. the depression
which began a year and half ago and
which at the end Of the first quarter
of this year is still acute is demanding
| concessions and compromises in every
direction.
In 1880 approximately 1000 divi-
bends were reduced or passed. In the
! three months Of this year the number
amounts to over 500 and the total this
| month is nearly double that CT jan
| uary. Many corporations that would
| have been willing to continue payments
| at the old rates for at least the FIRST
| half of 1881, If they could have found
| evidence that business was to expert
| ence a substantial rebound, have re-
| Gently come to the conclusion that
while conditions are better, the percent
| age of recovery is small and the gains
! from week to week are slow to warrant
! the expenditure of surplus earnings in
high rates of dividends.
Commercial Health Good.
There are also other considerations
! that have had their influence In estab-
| fishing many of the reduced dividend
| policies. The most frequent statement
| appearing in connection with divi-
dend cut is that this has been found
advisable lin order to conserve the
! cash resources Of the company" An
I astonishing feature of many December
/ 81 balance sheets is the amount of
/ cash, demand loans and marketable
| securities on exhibit. inventories also
/ show a good state Of commercial
! health. The Standard Statistics Co.
| has just compiled a composite income
account and balance sheet Of 2l0 indus
| trial corporations in which the current
asset ratio last year was six and one
half times current liabilities compared
with slightly over five times in the
| highly prosperous year of 1929.
! Although last year the percentage
| earned on property investment was
| 1880, compared with an average Of
| 1850 in 1928 and 1929, the sum paid
| in common stock dividends in 1880 eX-
! ceeded that of the two years previous,
| indicating that corporations were hope
! ful of enough improvement in 1881 to
| permit them to maintain rates even II
! they we're compelled to make up por-
| ton Of the amount paid from surplus.
Increasing Consumers Demand.
| To a man who has been out of work
| for year or to the individual who sees
! his income decreasing as more and
more companies reduce their dividends,
| there is little betterment visible in the
| general business world. Both count
their losses as absolute and are but
! slightly impressed by the fact of lower
wholesale and retail prices and moder-
| ate concessions in rents and services.
| To the producer, the manufacturer and
merchant, the railroad executive and
| the operator Of power and light COM
| panies. thsre is distinct evidence not
| only of a chance in the mood OF the
| public toward the outlook, but actual
! proof of increasing demand on the part
| of consumers. And this is more than a
! seasonal condition.
| 1t is reflected in car loadings which
! have been going up steadily for several
weeks against the opposite trend during
! previous. 1t is shown in the demand
/ for labor that has developed in the tex
+; tile and shoe industries in New England
| and in the automobile districts of the
| country. February nay rolls were con-
siderably higher than those in the
month previous. This gain will extend
| through March and April, and should
| be considerably enlarged during May
and June when routine outdoor work is
supplemented by the special improve
rnent programs of public works that are
I being put into effect all over the United
! States
! 1t viii take long time for this to
! have pronounced effect on business,
! as many. who have been among the I'M
employed for months, will be more
! months in gathering up, paying bills
! and cancelling loans. We have been so
| long confronted with a monthly record
Of declining activities that the spirit
of optimism has been crushed, and we
are still more inclined TO emphasize the
adverse conditions in business than to
open our eyes TO the evidences of i'm
proyement.
Banking Situation Improves.
In spite of the many cuts in divi-
bends, the total disbursements TO bond
and stock holders on April ! will be
nearly $700,0000 900, including a reduc-
, tfon In dtvfdauda NJ R90 mn mn from