Evening star., 1936-07-21
Figures
What They Mean
BY A. A. PATTON,


NEW YORK, July 21.-With recent
rains limiting that the turning point
of the Summers long drought may be
at hand, investment analysts are seek
ing to determine its effect on 1886
corporation earning power.
The affected companies fall into
three groups-those selling to the
farmer, those dependent on raw ma
terial purchased from the farm and
those indirectly concerned.
The first category, with sales arms
stretching out into rural areas, de-
pends on the amount of cash the
farmer has to spend for its prosperity.
Farm purchasing power this year,
statisticians say, will probably sur
pass the 1885 total, despite the
drought, because-higher prices act
as an offset to reduced crops, Govern
ment funds will aid stricken areas, and
the 1884 drought affected the farmers
income but slightly and the present
situation is not generally expected to
be worse than the former.
Farm Implement Manufacturers.
Ranking high in this group are the
farm implement manufacturers. Al
though commentators agree that sales
will be unfavorably affected by re-
duced incomes in specific sections,
they point out that there is approxi-
mately a years lag between a change
in the trend of farm earnings and its
reaction on the sale of equipment.
Profits of these companies are esti-
mated considerably above the 1885
level.
Fertilizer companies, with more
than half of their output sold IN the
South, are expected to be more al
fected by price competition than
curtailed buying due to the drought.
Mail-order houses should be af-
fected but slightly, with sales dips in
burned up areas balanced by in
creases in sections where crops were
little reduced, as we'll as the high
rate of business profits in the in
dustrial areas also served by these
Arms.
COMPANIES buying raw materials
from the farms for processing hild
that profits depend on prices rather
than agricultural income. Firms In
this group for the most part face
higher prices. This cuts their in
come, analysts indicate, unless the
higher cost can be passed on to the
consumer. Part of the boost, they
believe, can be passed along, in view
of the higher level of average in
comes, but many hold that habit is so
strong a force that all of the mark
up will probably not be thus alb
sorbed.
Better Showing Expected.
Gamers, however, are expected to
turn in a better showing this year
than last primarily because the large
oversupply previously hanging over
the market will have been removed
by the reduced size of the pack.
Meat packers, although temporarily
benefited by higher prices jumping the
value of their enormous inventories, in
the long run face smaller sales as
higher quotations temporarily switch
the buying to competitive foods such
as fish.
The large dairy companies should
sustain little injury to their profits as
the dairy regions were not damaged
greatly by heat or lack of rain.
Bakers are also believed to have
come of without especial damage. Al
though prices Of the grains are con-
siderably higher, trade circles indicate
that overhead and labor costs loom
more important on the cost sheet OF
this industry.
The indirectly affected classification
fnds its income swayed by number
of factors. The granger railroads, for
instance, benefit most from the move
ment Of an enormous crop, whatever
price it may bring in the market place.
The earnings of certain Of these roads
will react adversely to the short crops
this year, but it is expected that the
faster tempo of industry will be an
Offset In most cases.
Chain grocers, on the other hand,
are said to be feeling the effects Of
legislation more than the drought.
BAKING COMPANY REPORT.
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