Evening star., 1935-10-27
STOCKS FORGE UP
ON BROAD FRONT
AS TENSION: EASES
Public Buying Increases
SharpIy-Averages Hit
New 1885 Peaks.
REALIZING CONSPICUOUS
AMONG CONSERVATIVE
Cheerful Corporate Reports, Idle
Funds and Shift From Bonds
Affect Equities.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
week has witnessed a carry-over Of
the more confident feeling that was
generated at the end of the previous
week by the passing of the crisis IN
European political affairs.
In the stock market it has found
expression in higher prices for several
groups of equities" a new high level
for the year in the average of all stocks,
and increased buying for the account
of the American public as well as for
investors in England, France and Hol-
land. Trading has been broad, large
individual transactions have been reg
istered on the tape and the familiar
feature of bidding up one set of Sc
curities after another has reappeared.
Proflt-taking has been conspicuous
among the conservative.
Supporting the more optimistic
sentiment, based on the favorable turn
of events abroad. were the satisfying
reports Of corporations for the third
quarter Of the year, the fresh indul-
gence in speculation by those who
have had idle funds and have become
weary OF their unemployment, and
more inclination to transfer the pro-
ceeds Of bonds facing redemption into
stocks. Then. there is the ever-pres-
ent activity of relatively small group
Of professionals who confidently look
for currency initiation and who are
making market commitments in an
ticipation of it.
Idle Money Sways Investments.
The idle money factor not only has
its effect on stocks, but continues to
be the chief influence in the market
for investment securities. The excess
reserves of the banks are approximate
ly s3,000,0 100000. While there is q
small seasonal rise in the volume of
commercial loans, this is heavily over
balanced by the persistent increase in
the imports of gold-this week chiefly
from England.
The State Of New York borrowed
$60,000,000 for eight months at 0.3O
per cent. The Treasury received bids
for seven months bills at an annual
rate of interest of o.181. The City of
Buffalo sold its bonds at prices return
ing per cent for the 1886 maturity
and $50 per cent for those falling
due In 1855. Recent issues Of prime
public utility mortgages have held
their fancy premiums, giving en-
couragement to companies with call
able bonds to prepare for a saving in
fixed charges. 1t is significant of the
times that insurance companies that,
late in the Summer, refused to buy
securities yielding less than 3ia per
cent are cautiously, and on a small
scale, again entering subscriptions for
this class of offerings.
Associated with the movement In
common stocks, rather than in that
of investment bonds, has been the
weeks movement in the junior mort
cages of defaulting railroads. This
has been pronounced and logical. For
if, as now appears, railroad earnings
are to improve, the strong position, in
reorganization of a small group of
underlying or first liens on low capi-
talized properties, is bound to be rec
ognized. This applies to the obliga-
tions of roads in the Southwest and
in the Northwest. On the other hand,
there are features of the set-up of
other carriers, over-capitalized, heavily
committed to undertakings that have
a remote chance of paying their keep,
and large borrowers that do not rec
ommend their second and third mort
cages at the present time to the in
veStor.
New Haven Faces Crisis.
The financial troubles of the New
York, New Haven & Hartford Railroad,
which have long been coming to q
head, reached their climax this week
in a petition for bankruptcy, coming
at the moment when trade reports
from New England were more cheerful
than at any time since 1929.
This suggests that the roads diff
culties were not due entirely to the
depression but were symptomatic of
conditions among those steam trans
portation lines that have sought to
control properties of little merit and
which furnished an opportunity for
high finance" on the part of pro-
moters, which tied themselves up with
long-term obligations and which have
been unable to meet the competition
imposed by new era in the gathering
and distribution of freight and pas
senger traffic.
Already there were about 10000
miles Of American railroads super
vised by the courts, to which the New
Haven adds 1000 miles more. This
is a blight on business that must re-
main so long as a great mass of rail-
road bonds, estimated at $4,000, ,000,-
900, is in default and there is so lit
tie unanimity among securities hold
ers as to the best way to proceed.
Fortunately, the record of railroad
car loadings and of monthly net in
come is improving. Loadings are
running about IS per cent higher than
q year ago. Preliminary reports for
September indicate some astonish-
ing gains in revenue available for in
terest payments.
Repairs Are Delayed.
The fact of under maintenance
over period of several years must,
however, be taken into account in any
consideration of the market values of
railroad common stocks. The New
Haven, for instance, under pressure
Of conserving its cash for interest and
taxes, has cut its repair and i'm
provement item so per cent from the
annual average in the decade from
1921 to 1881. It will be a long day
before those carriers that have sus-
pended dividends will resume them.
(Copyrisht. 1895. By the North American
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