Evening star., 1937-02-28
Adjustments Also Termed
Necessary After Long
Market Advance.
SOARING COSTS FACED
IN MANY INDUSTRIES
Railroads Believed Unable to Meet
Wage Demands and Avoid
Bankruptcy.
BY CHARLES r. SPEARE.
Srecial Dispatch to The Star.

the most part, declined; MS hlgn-
grade bonds have experienced con-
siderable slump. In fact, the results
of the last quarter are in contrast
with those of the three months
previous; the one showing an -Eerage
decline of several points, the other
an average rise of nearly 10 points.
This change in the price trend OF
securities is readily explainable. Pri-
marily, it results from the long rise
in market values which, temporarily
at least, eliminated soon after he
November election.
In that bull market Of over lo
months, many stocks discounted more
prospects than the business situation
applicable TO them individually. war
ranted. So there was no adjustment
to this factor.
Strikes and Floods Cited.
January and the greater portion oi
February have been months wher
labor strife and the floods tended Il
restrict industrial and mercantile
operations, though, following th'
acute phase of each situation. recoy'
cry was immediate and substantial.
However, labor unrest continues
There is an epidemic of "sit-down'
strikes. Nearly 80 new cases of thi.
type have been reported from tht
Detroit area since the General Motor!
settlement was reacheu.
In New England this week. shot
| workers in 27 plants struck and sub
sequently received Is per cent in.
crease in pay.
Also within this period, the mem
bers Of the various railroad brother.
hoods and unions have notified the
railway managers of their demand;
for wage increases of 20 per cent, ir
one instance, and 20 cents an houl
in the other.
The outlook for business thi.
Spring and for the markets fol
securities is obviously a tied By
labor's demands and the extent Il
which they may be satisfied or re-
jected by employers, as in the iror
and steel and soft coal industries
in the motor trade and in the fielc
of steam transportation.
The automobile companies on which
demands have been made are capable
OF increasing the pay Of their workers
They have done so voluntarily as vel
as under pressure. So are other con.
Germs, as the Aluminium Co. of Amer.
lea, which has just made a $4,000, ,0OC
addition to its pay roll. Not so with
the bituminous coal operators or num-
bers of the railroad companies. The
latter have just begun to recover
from a long and lean period.
Railroads Endangered.
OF course, the railroad unions dc
not expect to receive the full amount
of their demands. If they did. they
would bankrupt another group and We
might have third of all of the rail.
road mileage of the United State.
in the hands of receivers or trustees
. 1t is, however, conceivable that ar
increase all around of from to T
per cent may be the outcome of 6
long drawn out wage controversy
Groups of low-paid railroad men have
legitimate cause for complaint as tt
their annual incomes
The industrial companies can ado
the cost of production-that is, OF
wages-to their products. Shoes will
most likely be dearer after the new
pay scale goes into effect. The rail.
roads have no such recourse.
What they give in additional com.
pensation to their employees must come
out of the physical form of their prop.
critics or from their bond and stock.
holders. If compelled to increas.
wages 20 per cent, they would soor
be moving at rapid pace toware
Government ownership.
In the iron and steel trade, wher,
production this week is at SO per cen
of capacity, rising prices of products
ranging from 50 to $6 a ton, sugges
higher rates of pay. Here is another
instance where the railroads, nov
buying equipment and track material
on larger scale than for some years
are penalized. They are in competi
ton with foreign buyers whose de
mands are intimately related II
threatened war.
Utility Costs Rise.
Again, take the situation of tn,
public utilities, also regulated as t,
| rates and steadily compelled to revis'
these rates downward. They are larg
users of copper metal. This has ad
vanced several cents a pound in tn
last few weeks. nearly cents in tn
last six months The manufacture
of electrical equipment can cover him
self under such circumstances b,
raising his prices on new business
So can the maker of automobile tire
when the cost of rubber goes up, a.
it has in a sensational manner lately
Two facts that emerge from thi
general set of conditions are, first
that labor is anticipating create
profits in some business areas thai
are now in sight, asking larger shar
of existing net gains than seems II
be warranted in income statements
and, second, that wages are risinl
faster than living costs.
While wholesale prices of commodi
ties are advancing, there has been
as yet, no corresponding rise in retail
prices. This may come later. Evi
| = &1xy
pairing for it. Meanwhile, the pur
chasing power of their additional dol
lars is frequently greater than in 1925