Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-17
BY CARLTON A. sHIvELY,
Special Dispatch to The star.

Special Dispatch to The Star.
NEW YORK. July l7.-Company re-
ports covering operations in the second
quarter and the first six months Of the
year are holding interest along with
the European financial developments.
With their revelations Of decreased
earnings. more attention is being paid
to the dividend outlook for leading in
dustrial and railroad companies
In the first six months a new high
record for dividend reductions and
for publicly held common and pre-
ferred shares was approximately l,250.
Since the first Of July there have been
80 additions. Some 500 companies
which until this year were paying
dividends to their shareholders. either
out of current profits or out Of surplus
that is, accumulated profits from
former years retained in the cash ac-
count-are now contributing no return
on capital investment. In the aggre-
gate this Is q serious loss to those who
have put their savings into this form
Of investment U. S. Steel common
was held by 15623e with a total Of
1851 900 shares on June 80, q new
high record.
U. s. Steel Action Awaited.
Dividend reductions are unlikely to
end with this year. On the contrary.
the statisticians tell us that dividend
payments usually reach their peak Ses-
eral months after business profits have
begun to decline, and conversely they
touch their nadir some time after earn
ings have started upward This is, OF
course. because OF the practice of di-
rectors to vote dividend payments or
suspensions out of the profits or lack
of them of the three months preceding
their dividend meetings.
Sentimentally. at least. the climax
of the years dividend changes Is ex-
pected to be reached on July %, the
day for the regular quarterly meeting
of the United States Steel Corporation
directors. After the close Of the stock
exchange for that day the Steel board
will release to the press its earnings
show what dividend action was taken.
There is no shadow of doubt about the
safety of the preferred dividend. How
ever, Wall Street is preparing itself to
see a reduction in the 7 per cent rate
paid since 1923. with extras in all but
two years. 1t is generally expected that
the reduction will be to 5 per cent. the
rate prevailing during the postwar
depression year.
United States Steel has an enormous
surplus, built up by retention Of a
large share of each prosperous years
earnings in the business. At the be-
ginning of this year Incorporated
surplus and reserves amounted to $685.
487. 900. However, only $l98.000.000 of
this was in cash and Government Sc
curities. The remainder had been in
vested in the property used to increase
earning assets and operating efficiency
Partly by use of its surplus cash and
partly through new capital secured
through sales of common stock. the cor
poration in 1929 paid off all its funded
debt, leaving only about $l0l 100000
of subsidiary bonds outstanding. In
other words. the assets and earnings
of Steel belong to the holders of the
8. 687 900 shares of common stock, SUBJ
ject to prior dividend rights Of 1902.
600 shares of per cent preferred stock
and liquidating priority Of the senior
issue.
Last Years Record.
Last year Steel earned $9.18 share
on its common stock. In the previous
year earnings were over $21 o share.
Three times since organization in 1901
deficits have been shown-in 1908,
1904 and 1914 In the fourth quarter
Of last year the common dividend was
not earned. In the first quarter OF this
year only cents share was shown.
Earnings for the second quarter will
barely be suficient to show something
for the preferred, but not enough to