Evening star., 1936-05-31
Caution Persists on Eve OF
Party Conventions-Eu-
rope Watched.
IMPROVEMENT Is SEEN
IN TECHNICAL POSITION
Stocks and Junior Bonds Make
Good Showing Under Discourag-
ing Conditions and Dizziness.
Srtcial Dispatch to The Star.
BY CHARLES +. SPEARE.

closing Sunday has added much to
the market values Of securities, or
setting the losses of April. con-
siderable part Of the decline that
started In March has been recovered.
There is still an absence OF the
speculative enthusiasm that ruled for
over a year, for both professionals
and the public are not disposed to
make commitments Of any size on the
eve of the political conventions and
with such a tense situation prevailing
throughout Europe. 1t is evidence of
the improved technical condition Of
the market for stocks and for junior
bonds that they have stood their
ground so well under discouraging
conditions and when the dullness in
Wall Street carried bearish impli-
cation.
LOadings Gain Hailed.
In spite of a decline in iron and
steel output the general business in
dex stands at about the highest Of
the year. Aside from the remarkable
proportions of retail trade in nearly
every section of the United States,
rejecting, no doubt, the approaching
soldier bonus payments, the two fac
tors that give new encouragement to
industry are the expansion in railroad
car loadings and the revival in
building.
Current loadings make a new high
record for 1886. They are IS per cent
better than a year ago. April net
operating income was 20 per cent
above that for the corresponding Pc
Rod in 1885
A number of systems that have paid
no dividends since 1901 are con-
sidering moderate disbursement TO
their patient stockholders within a
few months.
A substantial part of the increased
employment last month was due to
more demand for durable goods and
to rising tide in the building in
dustry. In April residential contruc-
ton contracts we're about so per cent
more than last year.
Nothing like a building boom Is
anticipated; rather a steady broaden
ing out Of the demands for residential
projects. especially of the low-cost
home type.
Supreme Court an Issue.
With Chief Justice Hughes this
week aligning himself with the min
ority of the United States Supreme
Court in its adverse decision in the
municipal bankruptcy case. the lay
man is more confused than ever by
the apparent lack of a uniform judg-
ment of this court on questions that
appear to contain a common problem
| in law.
The platform adopted by the Social
iSt party at Cleveland includes a
plank asking for a constitutional
amendment limiting the powers Of
the court and protecting social legis-
| lation.
Arthur Krock. in the New York
Times of May &c, says the court is
recessing next Monday ''to go more or
less on trial in presidential campaign
for the first time in years"
The outbreak of labor troubles this
week is said to be due to irritation
over the recent decision in the Guffey
coal case. Comparisons Of the plat
forms of the two parties, with respect
to the court and its prerogativeS, will
be interesting.
French Policy Uncertain.
Next week should bring clearer
notion Of what the French govern
ment proposes to do in the matter OF
supporting its currency. The trend
of franc exchange the last few days
suggests devaluation for the discount
on futures has reached nearly 80 pei
cent. In Hungary, de facto devaluation
occurred.
Flight OF capital from Holland was
reflected in a heavy loss of gold by
the Bank of Netherlands.
The gain Of the Communists In
Belgium affected Belgian currency
while London markets were somewhat
disturbed by the outbreak of the
Arab population in Palestine. Each
week furnishes some evidence of the
great safety-of American capital COM
pared with that of foreign nations.
On this basis, the Treasury Is again
able to sell large amount of new
bonds and notes to retire about ST.
000. 900, 900 of outstanding loans and
provide for additional working capt.
tai. Recently, nearly all of the long
term Treasury issues have sold at
record prices.
This makes desirable the refunding
at an early date, and with the ad-
vantage of the current low interest
rates, of considerable proportion oi
the short-term Government debt
Nearly $5,000,000, 900 Of such paper
natures in the next year.
It would seem to be q hazardous
policy for Secretary Morgenthau tc
permit this cheap money period te
lapse without provision for substitute
ing Treasury notes for bonds even al
some increase in the immediate cost
of such refunding.
Investment Income Cut.
Among the corporation offerings
this week was an issue of SIS 5,000,-
600 Brooklyn Edison 3k per cent con-
solidated mortgage bonds, the pro-
ceeds Of which are to retire an equal
amount of general mortgage pei
cents. This effects an annual saw
ing for the borrower OF about
81, ,000, 900.
But what does it do to the indi-
vidual lender? On each 1000 bond
it cuts down his income $l7.5o. ol
IS per cent.
Four of the large life insurance
companies held, at the end Of 1895
approximately s12,00o,o0o Of the ole
Brooklyn Edison bonds. II they taxi
|