Evening star., 1933-02-12
important Reconstructive
Developments Expected
Within 80 Days.
DIVIDEND DECLARATIONS
SHOW HOPEFUL OUTLOOK
Railroad and Realty Problems Are
Now Believed on Way to
Solution.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

BY CHARLES F. sPEARE.
Special Dispatch to The Star.
NEW YORK, February 1.-THE hope
of business and of banking interests is
that new constructive forces will be
started by the incoming Roosevelt ad-
ministration. This Is what they are
now waiting for. Their unwillingness
to make fresh commitments is due to
the desire to discover what the policy
of President-elect Roosevelt and his
Congress will be toward questions as
vital as national economS farm relief,
the reconstruction of railroad credit,
sound money, war debts, tariffs and the
short-term Treasury debt.
THERE'S a disposition to be optimis-
tic regarding the program to be 1nl-
tiated In Washington this Spring. Al
ready speculative interests are begin
ming to discount In securities the i'm
proVement in sentiment and, later, in
trade, that should develop from 1t.
It might reasonably be argued that
the decisions this week Of several i'm
portant companies, as General Motors,
Union Pacific and Eastman Kodak, to
pay their regular dividends was proof
that their directors are looking ahead
to better times 1t was strongly inti-
mated in the annual report of the Amer
lean Telephone g. Telegraph Co. that it,
too, will likewise authorize the regular
quarterly rate on its capital stock next
Wednesday. This will complete series
of important dividend decisions that
have been facing security holders and
should develop a greater degree of con-
hdence among them.
Railroad Outlook Clearing.
More than this, there are a number
Of important railroad situatons that
have reached a stage where those re-
Sponsible for the issuance of their Sc
curities are taking somewhat belated
steps to maintain their standing. II
what they have in mind can be ac-
compliShed, another serious phase in
the general outlook will be relieved.
This involves greater cooperation be-
tween banking groups and the authori-
ties in Washington in the matter OF
providing funds for railroads that are
not now able to meet maturing inter-
est and capital obligations. The feeling
has been steadily growing within the
reconstruction Finance Corporation
and in the Interstate Commerce Com
mission that the Government has been
doing more than its share to "bail out"
reluctance to contribute Government
money to prolong the unsound capital
structures Of railroads whose manage
ments have been distinctly speculative
and who are now deeply embarrassed
by their expansion policies in past years..
1t has been hoped that the proposed
bankruptcy bill would be passed at this
session of Congress and that several
large systems would Immediately take
advantage OF the provisions Of this
measure to reach a voluntary agree
ment with their bondholders for
scaling down Of their debt. However,
the bill appears to have no chance OF
becoming law before Congress ad-
journs. This means that it will be
subject to further delay and be side
tracked in favor of other measures with
the right-of-way after March 4. mas
much as there are several maturities
of substantial size that must be dealt
with In the next three months, includ-
ing those of the Missouri Pacific, Chi
cago q Northwestern and Great North
ern, 1t is imperative that some initiative
be taken by bankers and some use be
made OF the present great amount of
unemployed bank deposits to avert the
serious consequences Of default.
Realty Problems Met.
This Is what is being done. on large
scale in connection with real estate
mortgages maturing in June. In this
field OF finance there has been q greater
Willingness to advance bank funds than
In that of transportation. Each week
witnesses some new development that
lends strength to the general outlook.
II we are able to pass the period of
these railroad and real estate maturi-
ties successfully, much will have been
accomplished to establish sounder con-
dit1ons In the second half Of the year.
Because their securities have been held
mainly by the public, and not by the
savings banks or insurance companies,
there has been little effect on sentiment
OF the failure of considerable num-
Der OF heavily capitalized industrial and
public utility holding companies.
1t Is a significant fact that since the
insurance companies announced their
policy of abandoning foreclosure of
farm mortgages there has been less
open disorder in those sections where
the distress of debtors has been great
est. The movement, however. toward
putting into effect moratoria on farm
mortgages has been spreading through
the States, and, with it, a companion
piece OF legislation whose effect Is to
freeze bank deposits where there is
danger OF a run. Linked with these
general measures of relief are numerous
bills IN Congress for reducing rates of
lnterest on farm mortgages, as well as
proVldlng additional funds at rates
tapering down from per cent to ~
per cent. BY voluntary proceedings
much more is being accomplished In
this direction.
The resistance to reduktion in in
terest rates, general three months ago.
mas broken down. In nearly every type
0! loan and III practically every section
OF the country concessions are being
MADE to borrowers. 1t would seem as
though this spirit of accommodation
would ease up the pressure on Congress
and on State Legislatures for relief and
tnat IL might check the progress of
some OF the most radical Of infiationary
proposals.
IL cannot be too often emphasized at
this stage OF the depression, when the
amount OF defiation that has occurred
In securities. in commodities. in farm
property and in urban real estate pre-
cludes the possibilities of much further
snrlnkage, unless we are to enter an era
OF credit chaos. that imitation has never
yet established nation on a sound
OASIS following panic. It is to be re-
membered, too, that the beginning of
revival after the depressions in the COS
and in the 70s followed definite proof
that the country was to remain on a
sound money basis. Those sections of
the United States that are now de-
manding imitation were equally insistent
for 1t in the last century when they
were going through troubles similar to
those Of today. They later were thank
ful they had been saved from the after
effects Of free silver and other remedies
for low prices of their products.