Evening star., 1934-11-25
Really Increased Volume of
Trade, However, Not De.
cIared Reached.
WILL TO GO FORWARD
is DECLARED EVIDENT
Retail Trade Ahead of Last Year
and More Spending
Is Cited.
BY CHARLES F. SPEARE.


N.A).-The important thing going on
in the business life of the country
today is the change of mood and the
reawakening of confidence.
Except in a few instances. this has
not SO far been translated into larger
volumes OF trade. 1t is true that this
week iron and steel production is at
the highest level since June but it is
still so small that the industry can
only be described as depressed" Elec-
trio power output for the week ended
November II was in excess of any
week since January, 1881. 1t does not
cover typical week, however. On
the other hand, car loadings are dis
couraging to traffic managers employ
ment lags, relief totals rise and higher
taxation to meet emergency expendi-
lures is inevitable.
However, there is the will to 20 for
ward. which contrasts with the un-
Willingness before election to move at
all. Those who cannot or will not see
any change in the national psychology
term all the activities to promote re-
covery ''ballyhoo" and predict speedy
return to the condition of doubt and
dEtruSt that obtained before elec-
ton. But they cannot challenge the
figures of retail trade that is run
ming Is to 20 per cent ahead of last
year-all of which is not by any
means due to Government doles More
people are now spending because they
are more confident of their future,
~
to start up in the face of recognized
uncertainties and in spite of the fact
that they may not make an accept.
able profit on their turnover.
Trade Charts Show Rise.
The banking and merchandising In
terests are in closer cooperation with
the Government than they have been
since March, 1888. They have reason
to believe that the administration Is
primarily concerned with creating
and maintaining recovery and will re-
Sist all political trends that tend TO
defer it. 1t is significant that the
charts Of business reflect a slow
growth of volume, week by week, and
that the total of new building con-
struction is steadily rising under the
influence of intelligent promotion of
the housing program.
The prospect of an extended period
of low interest rates and the lack of
new supplies of acceptable securities
have forced institutions again to enter
the market for listed bonds. Conse-
Quently, the average price of this
group is approaching the level Of last
June. 1t is a condition that has its
duplicate abroad. where trustee issues
are quoted at such small yields that an
overflow into the market for indus
trial shares has developed. This may
be the final outcome here. For there
is an increasing discrimination against
public utility and railroad securities,
although both are actually nearer their
intrinsic values than in years
The debenture bonds of the power
and light holding companies this week
have been under pressure, as we'll as
their preferred shares. Junior mort
cages of such railroad systems as Chi
cago g. Northwestern, Chicago. Mil
waukee. st. Paul & Pacific, New York
Central and New York, New Haven &
Hartford have touched the low Of the
year. The utilities that produce, in
contrast with those that manage, are
not to be denied the right to earn the
legal return on fair investment in
plant. 1t is not strange, however,
that the question arises as to the ne
ceSSity for present rates for service
when these rates pile up such large
surplus in normal times.
Telephone Dividend Problem.
From what may be termed a politi-
cal point of view, the continued pay
ment of the 9 per cent dividend on
American Telephone e. Telegraph
capital stock appears unwise. If"
the utility commissioner argues, this
company can afford this payment dur
ing a depression of great length and
intensity, why cannot it reduce its
rates?"
This is a logical question. 1t covers
other situations in the utility industry.
Payment of dividend from surplus
to the extent of about 100000, 900 in
three years is a matter to be deter
mined by business practice. Some
think it should be considered entirely
from the stockholders standpoint.
But his status is that of an equity
holder, not that of a creditor. The
American Telephone & Telegraph Co.
has direct obligations of SASS 900 900.
Bonds are 20 per cent of total A. T. g.
T. capitalization.
The United States Steel Corp. re-
duced its preferred stock dividend
from Z to 2 per cent. 1t has only 7
per cent bonds to SO per cent stock.
1t is interesting to note that this week
its preferred stock, paying 2 per cent.
has been selling at n per cent Of par
compared with price of par for the
per cent telephone shares.
Perhaps corporation arrangements
have developed more sentimental in
terest in their stockholders and feel
that if they are to provide unemploy-
ment insurance for their workers, they
should also pension the owners of their
properties This involves no incon-
siderable business risk. After all. the
investor who is asked to take even
or per cent on his stock in these
times is lucky and should not COM
plain.
Anxiety Over Gold Bloc.
That there is deep anxiety here over
the position of the gold-bloc countries
of Europe Is undeniable. Their
status is not accurately interpreted by
the amount of gold held in their CEN
tral banks. From this standpoint they
appear invulnerable. The political
and social currents in which the
French, Belgian, Dutch and Swiss
people are involved will, in the end,
determine whether devaluation is 10
(Continued on Third Pare,)