Evening star., 1934-11-18
NEW TEAMWORK
SPEEDS RECOVERY
AND BOOSTS HOPE

Continued From First Page.)
his verbal attack on foreign securities,
the investor had hedged against it,
sold Chicago & Northwestern or Chi
cago. Milwaukee, st. Paul & Pacific
bonds and bought the Argentine 6
per cent issue, he would be in a
pretty position today
Investment practice, like the legal
code, cannot function with safety to
capital if it never deviates from prece-
dent and refuses to recognize the
economic and social changes that, in
the present state of civilization, come
with each generation.
Where Rigid Law Protected.
In one instance the rigidity of the
investment law did protect capital
States were slow to admit the under
lying bonds of power and light COM
panies into their preferred lists. Grad
ually the door was opened to them.
The States did not, however, recog-
nize the obligations of public utility
holding companies and so saved insti-
tutions that were looking for security,
rather than for income, from the de-
probation now taking place in this
group.
There has not so far been any sub
stitute for the product of the public
utilities, which is in contrast with the
rapid growth in the competitive ele-
ment in transportation, compelling a
radical recasting of the financial
structure of railroad systems that. a
decade ago, enjoyed high credit. No
better illustration of the f1uctuating
standards of investment can be given
than to point to the current pre-
eminence of industrial common
stocks and bonds, which. until recent
times, have been accounted specula-
tive and taboo by carefully selected
investment portfolios.
The current strength in the shares
of companies identified with the Fed
eral building projects indicates that
keen students of the market are
keeping step with recovery programs
and are not taking their cue from
imitation suggestions. The high aver
age price this week for industrial
shares contrasts with the small re-
covery in railroad and public utility
stocks from the low level of 1882,
though undoubtedly these last named
groups have been unduly Debated and
have reflected a sentimental attitude
toward them rather than sound judg-
ment as to their intrinsic values.
One of the unknown quantities in
the present situation is the position
of the European gold bloc. That it
is steadily diSintegrating is apparent.
The Brussels Conference last month
produced some bold statements of in
tentions, but tendencies that are
worldwide soon proved that these
could not be maintained.
Belgium and Holland are being
pressed for devaluation of their cur
rencies to preserve their economic
existence. Switzerland, supposed to
be as strong as France for gold. has
this week seen concessions by its in
dustrialists that compromise its as
sociates in the bloc. France Is send
ing s80,000.000 gold to the United
States, where it is not wanted, but is
the only medium available for the
payment of debit trade balances.
1t seems inevitable that, between
politics and trade. the gold bloc" will
be forced into a situation in the next
few months where it must recognize
the exigencies of the times and join
the United States and Great Britain
in devaluing currencies. This would
be the signal for promoting stabiliza-
tion. 1t is believed to be the event
for which the American and British
governments are waiting, and from
which world stabilization will de-
velop.
Copyright, 1894. by the North American
Newspaper Alliance. Incl