Evening star., 1936-06-30
BUSINESS INDEX
BEST SINCE 1929
Exceeds Many Estimates,
Appears to Reflect Per-
manent Trend.
Continued from Fifteenth Page)

would have been regarded as revolu-
lutionary in 1928. These are expressed
as emergency measures, although they
may quite possibly become perma-
nent part Of our administration OF
the national economy.
Unemployment and relief go hand
in hand. The fact that they have
shown comparable little response to the
substantial recovery In business in the
past six months, and more particularly
in the last year, suggests that they are
becoming large-scale permanent prob
lens. Associated with them is the
question Of social security, including
old-age pensions and unemployment
insurance, which must be developed in
a satisfactory manner either under
Federal or State authorities If recur-
ring disputes and demand for greater
proportion Of the national wealth are
to be avoided.
1t Is obvious that there must be
amendments to. the Constitution in
order to meet the exactions and the
penalties Of an age that makes in
dustry paramount. 1t is difficult to
determine which Is the greater evil,
the monopoly in industry, which has
been growing in the past six years, or
Capitalization Of government.
Had the States been compelled to
bear the responsibility of protecting
their citizens against the ravageS of
the depression they would have been
crushed. Every crisis from that of
the banks in March, 1898, to the
| Eastern floods last April. has COM
PEELED Intervention on the part of
the National Government in order to
preserve and then reconstruct what
the individual State could not do.
Sick Industries Recovering.
The sickest Of the great industries
from 1881 through the greater part
OF 1885 were iron and steel. building
construction and railroad transporta-
ton. The first has now recovered to
point where profits are possible on
the 70 per cent level of production.
In the building field contracts this
Spring have been greater than those
In many years, though still far below
the abnormal volume in the five
years ending with 1929. In railroad
transportation the improvement has
been slow but constant. And in all
probability it will continue.
In extending for the rest of this
year the emergency freight rates, the
| Interstate Commerce Commission ex-
pressed the opinion that, within the
next six months, traffic would ex-
| pand, because of the increasing in
dustrial activity, and with it there
was the likelihood Of reduction in
transportation. 1t Is q fair as
sumption that more dividends on rail-
road stocks will be resumed in the
half year. A number of systems have
been able to retire their bank loans
and their obligations to the r. F.. C.
and replace them with bonds to which
the public has been an avid subscriber.
There is, however, the blight on
the transportation industry of the
unprecedently large amount of mileage
within the Jurisdiction of the court.
And there is little prospect that this
situation will greatly change during
the rest Of the year. Creditors and
equity holders are too far apart in
their ideas of equality to permit the
kind of reorganization plans that will
be acceptable to the majority or to
the Federal authorities which are
heavy indorsers Of their notes. There
Is also a reluctance on the part of
creditors and of managements to ac-
cept the changes in the railroad situa-
ton and face them courageously.
So long, therefore. as about 80 per
cent of the total railroad mileage of
the United States Is in a bankrupt
condition there will be an unfavor-
able public attitude toward the securi-
ties of railroads as a whole. It is
noticeable that the investments of the
life insurance companies in railroad
bonds are diminishing, while those in
public utilities are increasing.
Utilities Staging Comeback.
The recovery in the bonds, de-
bentures and common and preferred
stocks of the power and light cor
porations has been a notable feature
OF the investment market during the
past year and within the last six
months as well. 1t Is estimated that
the market value Of such issues, listed
and unlisted, has risen approximately
$4,000, 100000 since their low level
was established during the heat of the
public utility holding company cam
paign in Congress In the first half of
1885.
This appreciation has followed a
shrinkage in values that was not JUS
titled by any of the legitimate ele-
ments entering into an appraisal of
security values. 1t was the result of
an emotional outbreak that brought
heavy losses to those who were caught
up in it.
Power and light production is
greater today than ever and, while
the securities of the utility group have
not advanced in proportion to the in
dustrials, they have made improve
ment commensurate with their earn
fngs and prospects.
In the II months from January 1,
1885, to June l, 1886, over $4,000, ,000,-
900 of public utility securities have
been refunded. The average reduction
in the carrying costs Of the bonds or
preferred stocks called has been
around 11a per cent, or SIS per annum
on each $1,000 bond. This represents
saving each year to the debtor cor
porations of about $35,000,000.
tcopyright. 1886. by the North American
Newspaper Alliance, Inc)
II G 0EEIcE E0IIIpMEM1