Evening star., 1938-01-23

the hands of trustees Second grade ra
with the lowest price average in five
stood up during the long period of {
of weakening. .
The controversy over the public util-
ity holding company issue was in
tensif1ed by an exchange of compile
ments between Wendell L. Willkie
leader of the power group, and David
Lilienthal, active head of the T. " A.
Investors Discouraged.
Whatever benefits were derived
from the conciliatory attitudes of
business and Government in their
approach to solution of the indus
trial situation were negatived by the
fact of investor discouragement over
the steady decline in the securities
Of the two most sensitive groups of
stocks and bonds on the exchanges
of the country.
This writer is not disposed to mini
mize the value Of the numerous con-
ferences that have taken place in
Washington since the beginning of
the year. They help to acquaint all
participating in them of the existing
problems and how to meet them On
the other hand. what is needed is
immediate aid rather than long dis
tance promises. As one railroad exec
utlVe said today of his industry, I'VE
nave been drifting rapidly down the
Niagara River and have come uncom-
fortably near to the falls"
Rail Cash Shrinks.
For the railroads, an early increase
IN freight rates is imperative if there
are to be no more casualties like
that which has just overtaken the
Erie.
In another two weeks, the Inter-
state Commerce Commission will have
in hand all Of the arguments for and
against a rate increase. It has al
ready made its pronouncement that
more revenue is due the carriers
therefore, it should immediately an.
nounce its decision and the effective
date OF it and then take all the time
required to write its brief. A sur
geon who finds patient near death
operates at once; he does not sit down
ana write out an elaborate treatise
on the disease, allowing the sufferer
TO Gle on his hands,
II the commission grants the fuu
ID per cent demanded, it will net
ON! ABOUT IL per cent on the 1896
oasis OF earnings. What it will
actually produce from current reye-
nues, experiencing a perpendicular
crop since last summer, is a serious
question. >'o
Many OF the strongest roads are
disturbed by the rapid sl1rinkage Of
their cash and the increase in their
unpaid vouchers. Even in November
when the proportions of the traffic
slump had not approached those of
today. six systems. viz. Atchison
Union Pacific, Louisville e. Nashville
PENNSYLVANIA and Burlington. these
paying dividends. and the Southern
Pacific, had s6o,o0o,oo0 less cash than
the year previous
Clarification Urged.
1t is this writer's Judgment that the
effect OF the undistributed profits tax
ana the legal and political phases of
the utility holding company situation
on the general business situation have
been greatly magnified.
just now, comparatively little is
heard of the former, while emphasis
Is being placed on the latter as the
real deterrent to industrial recovery,
'Thpro
stances, corrections that should be
made, to bring relief to the corpora.
ton taxpayer, in the one case, and
assurance of fair treatment, in the
other.
This would involve only a few spe-
clfic statements on the part of Presi-
dent Roosevelt and the leaders in
Congress, which should be emphasized
enough times to sink in the public's
mind. These would have more in
Huence on business sentiment than
ali the conferences that could be
crowded into week of Sundays.
Utility Fears Aroused.
One does not become anxious when
chronic invalid, or one with re-
curing ills, takes to his bed. But,
when a vigorous and virile individual
begins to pale and lose weight, there
is alarm. This is why there is so
much more worry today over the
public utility situation than fear for
the railroads. The one is affected by
potential losses; the other by losses
that are evidenced in accounts rem
dered every "a hours
From the top levels of 1897, high
grade railroad bonds have declined
an everage of about Is points, and
the second grade group AZ points. In
the same period, public utility bonds
have dropped less than points. Rail-
road car loadings have had the most
spectacular decline, since September,
in years, while power production has
suffered relatively small drop.
With dozen prominent railroads
defaulting between 1888 and 1885,
because of competition and an over
loaded capital structure, the rest of
the industry went ahead in 1887 to
realize the best gross and net earnings
since 1880. On the other hand, with
competition threatened, but not yet