Evening star., 1934-12-30
Rail and Utility Averages
Forced Below Levels
of November.
INDUSTRIALS REMAIN
STEADY WITH 1888 CLOSE
Lower Interest Rate and Scarcity
Help Offset Unfavorable Nets
on Junior Bonds.
BY CHARLES F. SPEARE.

f1uence in depressing prices of securi-
ties, tax selling this week has affected
railroad and public utility stocks,
bringing the average for the month
below that of November despite some
recovery Friday and today.
1t is significant of the attitude Of
the investing groups toward the diff
ferent types Of equities" that railroad
shares today are an average Il points
below a year ago and the power and
light common stocks about 6 u points
down, while induStrials are at approx
mately the same level as at the end
of 1888.
In railroad junior bonds the number
of those that have lost ground during
the year is comparatively small. Ad-
vances have occurred even in the sec
ond and third mortgages Of lines
whose stocks have reflected some ap-
prehension over ability to meet matur-
ing principal and interest charges.
Debentures Of power and light hold
ing companies have been widely dis
tributed among private investors and
institutions. SO in the process of sub
stituting for them a more stable class
of security. these have suffered a
severe shrinkage. Industrial bonds, on
the other hand, have enjoyed the favor
of buyers attracted by the improve
ment in the earnings and prospects Of
manufacturing and distributing con-
Germs.
Money Rates Declining.
The falling rate of interest and a
scarcity of supply have been helpful
in offsetting the effect of unfavorable
earnings on many corporation bonds
in the lower rating brackets. That
this will continue to be an influence
with investors in 1885 is now apparent.
Worldwide abundance of liquid funds
means further adjustment in the earn
ing power of money.
The 212 per cent rate on savings and
time deposits. about to become general
in the United States, is the smallest re-
turn that bank depositors have re-
ceived in a generation. However. it is
high compared with the rates allowed
to the British depoSitor. who receives
from one-half of per cent to p per
cent, according to whether his resi-
dence is in London or in the prov
inces. The Canadian depositor has
maximum of 2 per cent. Paris banks
are now considering a further rate re-
duction.
This has a bearing on the rate Of
interest demanded of the borrower.
The United States Government has set
an example for bringing this charge
- 1f
money assembled from its sales of
discount bills, short-term notes and
long-term bonds. Frequent state
ments from the White House have en-
phasized the fairness of reducing the
interest rate on loans for housing pur-
poses to per cent. Real estate Or
ganiZations have repeatedly urged a
cut in the mortgage rate from to
per cent as an aid to recovery in the
real estate market.
1t has remained for a banker the
president of the New Jersey Bankers
Association, to come out boldly and
ask of his associates that they recog-
nize the new trend of events in the
world of money and bring their charge
on collateral loans and on real estate
mortgages down to 5 per cent. The
sentimental effect on the borrower Of
a smaller carrying charge on loans or
on mortgages would be even more
beneficial than the saving involved in
the lower rate. The priciple is one
that should be extended to municipali-
ties as their administration becomes
more economical and they exhibit a
determination to keep within their
budgets.
1885 Prospects Brighten.
Prophecy as to the business outlook
in 1885 will come more readily and be
given a more cheerful direction now
that the returns from the holiday trade
have been made available to those who
annually are called on to forecast the
industrial trend. The December VOL
ume of retail sales in every section Of
the country was a convincing proof
that incomes were greater than a year
ago and confidence stronger and more
universal than at any time since the
depression began.
On this foundation there Is legiti-
mate reason for the expectation OF
more business next year and broad
ening area Of commercial activity to
include the long depressed industrial
centers. This growth has been ap-
parent during the last month in vari-
GUS directions. notably in iron and
steel production, which is up another
point this week, moving contrary to
the normal season trend. Automobile
manufacturers and the makers of
farm implements. of road machinery
and of household appliances are all
buster than they have been in some
time. A few of the independent steel
producers are operating at so per cent
of capacity, compared with an aver
age for the entire industry of 36i2
per cent.
There has recently been distinct
change of attitude on the part of
leaders in the trade toward the adj
ministratfon's policies, in which CO.
operation and moves to 60 out after
new business contrast with the pre-
vious stand -offish manner and reluc-
tance to seek customers.
There is a disposition on the part
Of those who prophesy to limit their
predictions to the immediate future.
It is easier to see the effects of the
new momentum from retail trade on
business in the first quarter of 1885
than to forecast the duration Of this
movement. Accordingly, the private
and official surveys nearly all agree
that, between now and the end Of
Winter, there will be a fairly brisk
trade in many lines of consumers and {
capital goods.
(Copyright. 1894. by North American
NeWGpaner Alliance Inc