Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-06-16
YIELDS ON STOCKS
REACH HIGH POINT
Present Market Opinion Is
Apparently Reverse of
That in 1929.
BY CHARLES +. SPEARE.

Special Dispatch to The Star.
NEW YORK, June l6.-During this
lull In activity in the security markets,
with Wall Streets attention concen-
trated on Washington, Chicago and
Lausanne, it will be interesting, and
may even be helpful, in orienting our
selves, to review the ground traversed
IN the last three years, not from the
STANDPOINT of prices, but from that OF
yields on money invested.
Back IN 1929 there were three out
standing characteristics of the bull
market-constantly expanding brokers'
loans, constantly rising charges Tor
call money and constantly falling
yields on stocks. Moreover. all these
phenomena were accepted. by most of
US at least, as justified by industrial
and financial conditions, then viewed
entirely normal Today we have con-
stantly falling brokers loans, a purely
nominal charge for call money and
fantastic returns on both stocks and
bonds and, most Of us at least, regard
this situation as entirely in accord
with existing conditions in business
and in finance.
High Yields.
To measure the distance Travelled,
let us take the yields now Obtainable
on four groups of securities: Railway
bonds, bank stocks, public utility pre-
ferred stocks and industrial and utility
common or capital stock. First, the
railway bonds. New York Central Re-
funding IS, an issue of such long term
that income and maturity returns
are practically the same, sell IN the
open market to yield over 10 per cent.
All of 1929 they sold to yield less than
: o.
cured IS of 1864 sold only few days
ago to give a straight income of over
9 per cent; today they are quoted to
return over per cent. They never
sold to yield mere than 5 per cent III
1929 Illustrations could be multiplied.
Suffice it to say that present prices
can only be reconciled to reality on
the theory that wholesale receiver
ships impend.
Now look at bank stocks. Take Ma
tional City Bank, which was paying 81
a share i'll 1929 and which sold at us
low in that year for $3.50, TO yield only
a little over per cent. Today paying
So tthe rate was reduced at the last
meeting. the stock yields almost 8 per
cent. Or take Chase National Bank, our
largest bank yielding at the present
market around per cent to the pur-
chaser, and Guaranty Trust, which
gives more than 10 per cent to the
buyer at prevailing prices. and COM
pare these returns with those TO be had
only three years ago. 1t was nnanclaI
orthodoxy then. and for many years be-
fore, to say that bank stocks always
sold on low yield bases. the holder be-
ing compensated by periodic stock dlyl-
dends or rights to subscribe to add
| tional shares.
We are more or less familiar with the
situation of the public utility pre-
ferreds. They are selling at prices TO
give anywhere from to 20 per cent on
| the money it takes to buy them. Three
years ago they were considered not only
conservative investments, but unworthy
of speculative attention because they
had SO small a market range. National
Power & Light per cent perferred,
With the corporation paying dividends
I on the common stock, is quoted on IA
per cent yield basis.
Prevailing Arguments.