Evening star., 1937-02-14
Steel Records in January
Indicate Wide Scope
of Demand.
U. S. STEEL IS EXPECTED
TO CLEAR UP ARREARS
Wall Street Convinced That Board
Plans Convertible Issue as Step
Toward Common Payments.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

CCItiCillChb Va VAC uAoSAliobAAC oolAhS
this week removes the chief obstacle
to progress in the durable goods in
dustry The effect of it should modify
the subsequent attacks that labor was
expected to make in the iron and steel
and soft coal trades, especially as
another wage increase has been made
by General Motors.
When it is considered that produc-
ton of steel ingots last month was
the largest for January in seven years.
although in that period there was a
decided let-down in demand from the
Michigan strike area, it is clear that
other lines of consumption, such as
in the construction industry and pur-
chaseS in behalf of the railroads. are
exerting a strong effect on activities
in the Pittsburgh and other Middle
Western districts. Recovery marches
on.
The remarkable performance Of
United States Steel Corp. common
stock is only in part explained by the
conditions in the iron and steel trade.
Wall street is now convinced that the
directors of this company are planning
to retire the unpaid back dividends
on their preferred shares, amounting
to ga per cent, and representing a
debt of s33 100000 to the holders Of
this stock, through the medium OF a
bond convertible into common, as the
first step toward resuming payments
on the latter.
Higher Earnings Expected.
It is estimated that, in the March
quarter, earnings for the common
will improve on those of S1.65 per
share reported for the three months
ending December 81. 1t has long
been an axiom of Wall street that "as
goes steel common, so goes the msr-
ket." At this weeks high price, it is
more than five times above its low Of
1882. but has a long way to 60 to
equal the 1929 top of 261%.
Building interests estimate that the
1887 gross represented in construction
activities will be $1,000, 900 900. The
1886 purchases of railway equipment
were so per cent larger than in 1885,
approximating $1,o00,000, This
year they will be substantially greater
than in 1886.
While electric power output makes
an unfavorable comparison with re-
cent weeks on account Of the losses in
the flood districts, 1t is over IL per
cent above the same period last year.
Production has reached point where
new equipment is required to meet
from domestic users of power.
1t Is understood that the books Of
the electrical equipment companies
are SO filled with orders that extended
delays in deliveries result.
Momentum Little Checked.
This momentum of recovery is so
vigorous that it suffered little check
when the flood and the strike outlook
was at its worst. With both of these
factors removed, it will undoubtedly
increase in strength.
While the country has before it a
new threat in the form of reorgani-
zation Of the United States Supreme
Court, this does not at once reflect
in the business situation nor has it
had much effect in security markets
after the first shock following its an
nouncement.
Later consequences may be directly
visible in quarters where expansion
had been contemplated, but which are
sensitive tn apv S1IuceStiop of y,roce,Iro
on the courts to arrive at decisions
thought to be inimical to business
The break this week in the ranks of
utility holding companies refusing to
register with the Securities and Ex-
change Commission under the act of
1885 has much significance. It fol-
lows the decision last month by Fed
eral Judge Julian w. Mack in the Elec-
trio Bond & Share case, in which he
indicated the freedom of registering
companies to contest section II of the
holding company act, dealing with the
death sentence" Two prominent
corporations, North American and
American Water Works g. Electric,
have now registered for the practical
reason that, by so doing, they may re-
capitalize in an easy money market
and save substantial annual sum in
fixed charges. Those other holding
companies that persist in staying out
side the fold would seem to be cutting
of their noses, for the period of low
interest rates is passing. Already there
are distinct evidences of this in high
grade bond prices.
New Treasury Financing.
1t has been apparent that, as con-
sequence of the flood, not anticipated
when the 1888 fiscal year budget fig
ures were compiled, the Treasury will
be compelled to do some new finan-
cling. Its working balance is down to
about $1,000, 100000, which is not too
much money in the pocket Of Mr.. Nor
genthau for this Springs require
ments. The trend of this financing, as
to character-Treasury bills or long
term bonds-and the interest rate,
will give further clue Of what to ex-
pect in high-grade securities.
The life insurance companies, with
enormous uninvested funds, may get
some relief from the low coupon pre-
MUM bonds, which constitute the
present new supply, If the door to in
vesting in debenture bonds and pre-
ferred stocks Is opened to them. The
head Of the Federal Deposit Insurance
Co. finds it necessary to caution banks,
pressed for earnings, against pur-
chases Of more or less low-grade
bonds" He further criticizes the poll
icy Of some Of trading In the market
or "in-and-out" operations which
dealers in securities too frequently en-
courage.