Evening star., 1936-02-18
SPECULATIVE HIGH.
MARKS'T. V.A.DAY
Market Seethes During
Reading of Opinion In.
voIving Utilities.
BY GEORGE r. HUGHES.


NEW YORK, February 18 (N.A.
Malone thing the Supreme Court
decision on the T. v. A. did was to
reveal the heights to which the specu-
lative fever has mounted.
For over an hour the stock market
seethed as prices rose and fell during
the reading of the opinion by Chief
Justice Hughes, at first advancing IN
the belief that the utilities had won,
and then breaking as it became evi-
dent that the decision, as far as 1t
went, was in favor of the Govern
ment.
The turnover was the largest for
o corresponding interval in more than
two years. The tape ran far behind
transactions on the floor. Trading in
the utilities was so active that In
number of issues it had to be sus-
pended while the buying and selling
orders were Strengthened out.
Some Excuse for Turmoil.
There is some excuse for the tur-
MOL, to be sure. The utilities have
ment regulation and the threat of
Government competition so long that
the bare chance the Supreme Court
would come to their rescue could not
help but stir speculative imagination.
The possibility of large profits if the
outcome was favorable (to the utili-
ties) was alluringly visualized. Hopes
had been aroused also by the record
of the encounters of the New Deal
with the Supreme Court to date. At
the same time it was a particularly
convincing demonstration of the ar
duous task which Chairman Lands
of the S. E. c. has set himself-to
make the United States Nation of
investors.
Just as a suggestion to the Stock
Exchange or the S. E. c., whichever
has the authority, why would it not
be a good idea to suspend trading
while a decision of such moment as
that in the T. v. A. case was being
read? The Cotton Exchange does
that when the Government crop re-
port is due.
AS to the decision itself, the street
was disappointed that it was not more
comprehensive. The court passed on
only one phase of the controversy and
left the main issue unsettled. Both
sides will profess satisfaction publicly,
but neither is really happy. Mean
while there is no occasion for holders
Of utility securities to be overanxious.
Useful Industries Survive.
AS the genial Mr. Cameron says over
the radio Sunday nights, the progress
of science and invention never de-
stroys any useful industry. The auto
does not make the railroad obsolete
Gas is in demand for heating even if
electricity has superseded it for light
ing. More candles are manufactured
now than when our great grandmoth-
ers poured tallow into mould, and
so on. OF course, politicians are
neither scientists nor inventors, 1T
they are not going to destroy the util-
ity industry, either. If the utilities
can serve the consumer better than
the Government can, all things con-
The utilities have had hard sled
ding a long time. They made their
bear market low less than a year ago,
whereas the industrials and the rails
touched bottom back in 1882. 1t was
not simply Government interference
that held the utilities back. It was
their inability to cut their costs, in
cluding the tax item, that worked
against them. Since the low point
last year they have advanced over 200
per cent in market valuation, which
Is large rise anyway you compute it.
Just on general principles, stocks
which have made such a record are
entitled to some reaction. Neverthe-
less, the past few months has wit
messed rising trend in net income
of these same utilities, which is the
important thing from the investment
standpoint. If the holder finds that
the margin of safety for the dividend
on his stock is widening, this does not
seem to be the time to liquidate.
The probabilities are that the T. V.
A. decision will slow down the pace of
speculation for the time being. If
that proves correct, it will be good
thing. On the other hand, there is
no reason to believe that there will
be any adverse effect on business. The
heavy industries and construction will
have to take over the leadership held
by the motor industry up to now.
Copyright. 1886. by the North American