Evening star., 1936-04-26
Industrial Activity Greatest
Since Spring of 1880.
Earnings Mount.
MACHINERY BOOKINGS
BEST IN FIVE YEARS
Weak Technical Position Not Sur.
prise After Steady Advance for
Last Thirteen Months.
BY CHARLES F. SPEARE.

business has been moving ahead this
week. It has not been affected by the
decline in the market for securities.
Perhaps the best measure of busi-
ness activity is the record of bank
clearings, which shows an increase
of Is per cent outside Of New York
and an average of 81 per cent for the
10 cities of Boston, Philadelphia,
Pittsburgh, Cleveland, Cincinnati,
Baltimore, Chicago. Louisville, Port
land, Greg, and Seattle.
In the industries, such as iron and
steel, where the recent sharp gains
in production reflected the recovery
of some business lost during the
floods, there has been a slight reac-
ton. The same is true with the rail-
roads.
On the other hand, automobile out
put is running strong. with the pros
poets of a 5000, ,O00-car year, COM
pared with about 100000 cars in
1885. Altogether, industrial activity
is the greatest since the Spring Of
1880, when the effects Of the depres-
sion had not taken hold of consumers.
Corporation Profits Rise.
In 1885, the net profits of group
Of about 900 corporations were Al
per cent in excess of 1884. Now we
have the results of nearly 100 CEN
Germs that have reported for the
March quarter of this year. These
indicate a gain of over 40 per cent.
compared with the same period in
1885.
To go further, the bookings Of cor
porations engaged in the manufac-
ture of heavy machinery are running
well in advance of those for any
period in the last five years. One
railroad equipment concern is now
engaged on orders Of an estimated
value of $4,000 900, as against work in
hand a year ago valued under So
100000. 1t has been estimated that
shipments Of iron ore from the head
Of the Lakes this year will be 10000
900 tons greater than in 1888. This
not only suggests broad expansion in
steel manufacture, but has an i'm.
portant bearing on the net operat-
ing results of three of the important
Northwestern railroads.
Wall Street does not wait for events
to happen before appraising their
meaning to certain groups of securi-
ties. 1t anticipates and discounts
This it has been doing in recent
months when it was apparent that
industrial earnings were increasing
and that larger distribution of cor
poration profits was probable. From
the appearance Of the stock market
In the last two weeks it may be as
sumed that it has caught up with
business recovery.
In the first 10 days of April it made
an average gain Of nearly five points
which it had considerably more than
lost in the next fortnight. Stocks
that have been overexploited have
been found to have a weak technical
position. They have been difficult
to sell without the owner making a
substantial concession.
This is not surprising when the
fact of a 13-month steady rise ir
prices is taken into account. The
foreign situation has undoubtedly
played a part in this reaction, though
a secondary one.
At the same time a change has
come over the market for investment
securities. Speculative bonds that
move in sympathy with stocks have
been heavy. This is not particularly
significant. The new element is one
OF doubt over the ability of the in.
vestment market to maintain the high
premiums that have been established
on prime issues. Associated with thi.
Is a resistance to the low coupon
rates on bonds of a secondary rating
This has compelled number of Dor.
rowers to advance their rates from tht
level first fixed by underwriters.
'Indigestion" Appears.
The change in sentiment goes fur.
ther. It finds expression in the un.
willingness of holders of called bond.
to take the new issues offered.
Then, condition of mild "indi
gestion of securities" following tn,
great production of corporation, mu
nicipal and Treasury paper in tn,
first three months of this year, play!
a part in the current investment sit
uation. Two striking incidents thi
week were the sale of nine-montl
Treasury bills at the rate of 0.O9:
per cent and of eight-month notes O
the State of New York at 0.3 per cent
The average yield on municipal loan.
Is today the smallest on record.
It is obvious that one effect of tn
new tax bill will be to direct an in
creasing amount Of investment int,
tax-exempt securities.
Wholesale commodity prices are ap
preaching the high average for tn
year reached in February. This is du
to the advance in staples, such a
grain and cotton, as well as in metals
The threatened drought in the South
west may seriously affect the pur
chasing power of sections of tina
territory.
During March, industrial employ
ment in the United States increase,
225, 900. It was then 84.2 per cent o
the 1923-2926 average. It compared
with 81 per cent a year ago and So pc
cent in March, 1888.
Pay rolls last month were 75.7 pc
cent of normal, as against TOT Il
March, 1885. The greater advanc
in the pay roll figure. over that repre-
senting employment, is a clear indi
cation that the individual worker II
industry Is receiving higher com
pensation per week. The increase II
weekly wages of industrial workers II
March is estimated by the Bureau o
Labor statistics at $4,000, 900.
Copyright, 1885. by the North American
Nswspspsr Alliance. {neJ