Evening star., 1934-04-29
Capital Industries Expand,
but Consumer Trades
Show Some Lag.
CONSERVATIVE POLICIES
IMPROVE U. S. BONDS
Long Depressed Treasury IS of
1951-55 Touch Par and Others
Are Quoted at Premium.
BY CHARLES r. SPEARE.
Special Dispatch to The Star.

b1 ChAhLES r. SPEARE.
Special Dispatch to The Star.
NEW YORK, Aprn 28.-Securities
have been marking time most of this
week under the influence Of events
in Washington that were confusing
to professional operators.
Opposition on the part Of the ad-
miniStration to the silver proposals,
and to the attempt to inject a new
element of imitation by paying of In
full depositors of closed banks and
granting further accommodation to
holders Of farm mortgages, has af-
fected those stocks that would benefit
from an expansion in paper money
currency. This has reacted slightly
on the type of bonds that had been
following the course of equities.
On the other hand, the evidence
OF greater conservatism has improved
the position Of Government obliga-
tions. The long depressed and back
ward Treasury IS of 1951-5s have
touched par. The shorter dated IS,
those Of 1887 and 1928, are quoted
at a premium of 314 points.
Demand for good municipal loans
continues unsatisfed. 1t has been
extended by the higher income tax
levies that are to be made against
1884 earnings.
Industrial Trends Reversed.
The situation in the business world
Is that Of a gradual expansion in the
capital industries, after months of
tagging behind the consumer trades,
but a significant contraction in the
latter. Textiles illustrate this reac-
tionary tendency. The retail distri-
button has slowed down considerably.
The rise in prices is beginning to
affect the mood of the buyer. Higher
costs Of labor have been translated
into figures that cause the consumer
to pause before making his COM
mitments.
Underlying the cautious attitude Of
both producer and consumer is the
unknown quantity of future wages.
While there have been only q few
important wage disputes that in
volved large bodies of workers, notably
the railway employees, the number Of
minor controversies is increasing and
demands are becoming more insistent.
An incident this week that was a
minor one, in proportion to the main
situation, may prove to be the turn
ing point in the national program
of regimenting business. It was the
falling Of ] New Jersey tailor for
violation of the suit pressing code.
Frequently ridicule of an unpopular
phase Of Government brings a cor
rection OF 1t where criticism fails.
The episode has emphasized the trivial
and unjust features of N. r. A. ad-
ministration and the degree to which
it has been employed to the advantage
OF the strongest elements in industry.
1t has also aided the argument of
those who believe the time has come
when business should be released from
so many inhibitions and allowed to
chart its own course toward recovery.
Trade Reports Encouraging.
There are many evidences that the
funds supplied by the Government to
start industry on its way have accom-
plished their purpose and that those
formerly needing help are now in
dependent of it. Municipalities, for
instance, are taking better care Of
themselves.
The current trade reviews are
nearly all encouraging. March quar-
ter reports of corporations show large
gains over the similar period in 1888.
Many Of the railroads have net in
creaSes in the three months 100 and
200 per cent over last year. The iron
and steel industry is operating at 81
per cent Of capacity, the highest
since last August, with its March pay
roll 66 per cent higher than the year
previous. Electric power production
IS nearly back to the level of last
July.
There is probably some advance
buying in anticipation of sitter prices
during the Summer. This is not an
unhealthy phase of business. The up
ward movement has not the specula-
tive features of last Spring. The dis
quleting fact Is the rise in the cost
OF necessities, such as food essentials,
and the remarkable advance in build
ing materials, which may check re-
covery in an industry Just beginning
to respond to more liberal credit con-
dlt1ons. The Dow Building Service
this week states that construction
costs are back to the level of 1880.
home in which material and labor
items in 1925 were $4,000 and in 1929
about the same, and which could have
been duplicated in April, 1898, for
$500, now compels an outlay Of
$4,675.
Railroad Wage Situation.
In settling the demands Of the rail-
way employees on the basis announced.
which will restore the full 10 per cent
wage reduction on a graduated scale
within year, 1t occurs to one that an
equitable adjustment might have been
made on the basis of the individual
employers ability to pay. Not much
sympathy was created for the argu-
ment that higher wages should be
given even If this were to involve a
default by the carrier on the service
of its debt. On the other hand, those
roads that are still prosperous, whose
earnings are well In excess of fixed
charges and which are paying divid-
ends could well afford to put back
their employees on the old pay sched-
ule.
The Chesapeake q Ohio is currently
distributing $3.50 on a par of SIS to
its shareholders, having increased the
rate since the wage cut was made ef-
fective. Norfolk & Western pays a div
idend of So a share to its holders of
common stock, and in the March
quarter of this year earned $3.47 a
share. Union Pacific's dividend on its
common Is $6 share. Pennsylvania
has maintained q small dividend
throughout the four and a half years
OF depression. Louisville & Nashville
has been able to resume dividends on
a modest scale Ga has the Riirlinotox,