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Evening star. [volume] (Washington, D.C.) 1854-1972, December 31, 1926, Image 22

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Bonds Higher at Close 0f1926 Than at Any Time Since Before Outbreak of War
Cheap Money and Lower Commodity
Prices Influence Market—Foreign
Investments Improve.
MJW YORK. December 31.—The
Year 1926 closed with the average
price of investment bonds higher
than at any time since 31+13. During
most of the period
quotations held ~~
above anything
seen in a decade —
that is to say. JBL '
since late in 1216 -I®
and early in 1917
-and in the last
month the ad
vance was carried |V|R Jr
through the old j J§|| • , s|g| jgf
war-time high mi gVL**
lit quotations were B
< omparable with Ry. YaeMisiff
those obtaining
< ial structure was p|l|
outbreak of world
hostilitirs. ill ol!I>.
lhe low point
in the cycle, so far as bonds are con
cerned, was reached in May. 1920. Just
when commodity prices touched’’the
peak of a generation. The ensuing re
covery did not get well under wav un
til the middle of 11*21. but there there ;
was a prolonged rise lasting approxi
mately a, year, after which there was
e mild reaction, and then a new ad
vance beginning in the second half of
1923 and continuing with only minor
interruptions right up to the present
The feature of the rise iliis year
was its uniform character, the way in
which demand persisted regardless of
the violent fluctuations in the stock
market. While there was. of course,
from time to time, slight setbacks,
there was never any real let-up In the
Inquiry for high-grade investments or i
any sign of doubt as to the essential !
stability of the market. There is no i
• better illustration of this than the way.!
in which the last long term United !
Mates Government financing was nc- i
complished in March of tiiis year, just
at the time the speculative campaign j
in stocks was collapsing.
The Secretary of the Treasury an- J
Pounced this new offering in the very
week that the stock market was break
ing after its prolonged advance. The
new bonds, carrying a 3-7, per cent
coupon, which was a lower interest !
rate than any long-term offering by 1
the United States since the first Lib- !
my loan 3%s in 1917. were offered at
TOO 1 ;* to the amount of $500,000,000
and were at once oversubscribed by
$100,000,000. They never sold there
after more than 5 S below the offering
f price, and that in small amount and
lor only a brief time, while today they j
are quoted at a premium of something j
like 3 points and on a yield basis of j
not much above 3.50 per cent. Com-{
pari son with the Liberty 3 1 (. s is unfair !
to the new bond*, unless it be remem- [
bered that the former are entirely tax j
exempt, whereas the latter are not. •
Ollier V. S. Issues Soar.
In the months that followed she
marketing of the Treasury 3 3 ,j5. the
two other Treasury issues, the 4' 4 s of
k 1947-52 and the 4s of 1944 54. went to
Knew record high prices. The older
Huberty loans were in brisk demand all
!Tyear, but they did not reach the record
hifjhs of 1924 and 1925. and the reason
for the greater favor shown toward
the Treasury bonds over the Liberties
was simply that investors wanted the
bond with the longest term to run.
This in itself was an expression of
confidence in the future of investment
values, otherwise the nearer maturi
ties would have had the preference.
Even those investors who were not
quite convinced that the long-term
trend of corporate bonds was upward
were willing to admit that there was
no prospect of any materia! shading
of prices for United States Govern
ment securities, no matter what
might happen elsewhere in the mar
ket. The fact that the outstanding
supply was constantly diminishing
tli rough operation of the sinking
fund and that the Government seemed
able to accomplish its financing at pro
gressively lower rates was very im
The upward movement in corpora
tion bonds paralleled that in Govern-!
* ment issues. The average was at the j
low in January and it reached the top
1n November and December. When
ever there was a pause in the advance
it was short and due principally to
realizing sales. There was never any
real abatement of the investment de
mand. It did have this distinction,
however, from the market of other
years the gains were more pro
nounced in the high-grade public util
ity obligations than In the old-line
first mortgage rails.
The progress made by the electric
light and power companies, as testi
fied to by their earning statements,
was chiefly responsible for this turn- |
Ing toward utility issues, and the re- ;
suit was a narrowing of the spread in !
price between the l<est secured obllga- '
tions in this and in the railway field. J
Another influence was the broaderat
fitude taken toward public utility in* j
vestments by various State Legisla
tures. Massachusetts, for instance, j
made public utility bonds that meet j
certain rigid requirements legal in- j
vestments for savings hanks in that I
Mate. A similar movement in New j
York failed, but its promoters believe 1
the setback is only temporary.
Refunding Operations.
The utilities and their bankers were
pot slow to taken advantage of this
stew situation as a basis for refunding
Operations. In January the Common
tb Edison to. of Chicago sold
H 5,000,000 iii mortgage bonds with a
< s i! per cent coupqn, which was the \
first time since the World War that a !
long-term utility obligation had been I
Put out at so low a rate, in May the
New England Telephone & Tele- !
graph financed its requirements also
with a 4' 2 per cent bond issue, and in }
Roth instances the offerings were read
ily absorbed. Later in the year there !
were Other issues of this kind, and as
the period drew to a dose no first- 1
mortgage bond of an old established
public utiihy operating comjiuny could
be purchased at a price to yield the in- j
vest or 5 per cent.
The rise in seasoned bonds, both util-!
Hies and railroads, brought into promi
nence the importance of the redemp
tion price as a bar to further appre
ciation in the ease of the higher cou
pon descriptions. A 6 per cent mort
gage bond callable, say. at 107 4a could
not. very well sell much above that j
price, no matter how well secured by
property value or how well protected
by earnings, simply because investors
were always afraid that the corpora
tion would exercise the redemption
privilege under money market condi
tions such as existed during most of
With bonds of higher coupon rates j
the argument was even stronger. In i
fact, if a company did not refund a 7 J
per cent bond issue, provided the in
denture permitted it. it was regarded
as a sign of weakness. The result
was that a. higher current income yield
could be had on 6 per cent bonds than
on B, even when both were the obliga
tion of the same company and secux'ed
by the same mortgage. The investor
j was willing to pay a relatively higher
price for the lower Coupon issue, be-
I cause it had possibilities of market
j price advance which the other did not
Convertible Bonds Popular.
In one respect the activity and
strength in the stock market was re
flected in bonds. At times the spec
j facie of rapidly rising prices for stocks
detracted interest from bonds, but the
investment bankers Surmounted this
obstacle by offerings of bonds with
participating or conversion privileges.
Not at any time since the war has
this type of bond been as popular as
it was in 1926. Its use answers the
objection tlmt the bondholder, al
though he assumes appreciable risk
pot in the same degree, of course, as
'the stockholder. J>ut still t<> some ex
| tent lias no share in the profits of
j the enterprise it it proves successful.
Advocates of the superiority of a
1 diversified list of common stock over
| bonds for a long-term investment
j pressed their claims vigorously and
j with much success all the year, so that
! some concession appeared advisable
| and the convertible bond was the re
sult. Any new issue carrying a fea
ture of this kind was quickly snapped
up. Seasoned bonds of this type, both
rails and utilities, scored striking ad
vances as she market price of their
respective stocks went up in the series
of “bull” movements of which the
1926 stock market was made up.
The convertible bond had another
advantage, in that it could lie bought
by financial institutions which wen
prohibited by law from investing in
stocks. It is no secret that a good
many of those institutions embraced i
! this opportunity to acquire a specula-
I live security which they could not ob-
J tain in any other way. Os course, this
| opportunity had to be paid for. The !
i conversion privilege was used to sell
i obligations which could not have been ;
j marketed on any terms so favorable j
! to the borrower otherwise.
| The fundamental reason for the re- !
i markable and persistent strength in j
the 1926 bond market was the alum- i
dance of investment capital, the com- !
parativeiy low rates for money and ]
i the widely prevalent belief that these i
j conditions were going to persist for a i
long time to come. It is true that the !
| money rates did not fall to tit© ex- J
trenie lows of two or three years ago. ;
but considering the high level of busi
ness activity and the large demand
upon the supply from stock market !
operations they were remarkably low
fall Money Variable.
Call money ranged between 3 and <1 *
> per cent, the low rate obtaining in :
| April and the higher for the most
[ part at month ends, when interest
| and div idend requirements were
i heavy. The range for time money
was from 4 to 5L per cent, which was
-a little higher than in the preceding
year, but still low measured by war '
and post-war standards. Commercial \
paper fluctuated between 4 and 4 :i 4
per cent. At. no time during the year j
did the Federal reserve weekly state- >
tnents reveal any drain whatever |
upon credit resources.
On balance the United States was !
an importer of gold during the year, j
thereby adding to the huge stocks ;
which have accumulated in this eoun- j
try until it is estimated half the world i
supply is on this side of the Atlantic, i
For the first 10 months of the year i
gold imports totaled $179,349,261.,!
against exports of *100,743.771. Ini
1925 the movement was directly re
versed, exports largely exceeding im
It was not so much these concrete
statistics, however, that the bond
market was reflecting, but rather the
historical analogy of conditions exist
ing after other great wars, and es- 1
pecially the apparent downward trend
in commodity prices. For it is not
only interest rates that affect bond
; values, but the amount of goods that
the proceeds of a bond coupon will
If. therefore, there is any major)
downward trend in prices for com-1
modifies it must mean higher quota- i
tions for bonds. Opinions may differ
as to whether any such trend has been !
definitely established. The various)'
index figures show only that the high j
for the year was recorded in January, j
and that fluctuations since have been j
uncertain. If the curve is plotted,
however, it will at least be plain that
the tendency is not upward.
Perhaps some light will be thrown
on the subject by examination of a
list of typical commodities, comparing
prices today with what they were a I
year ago. Taking the foodstuffs first,
wheat is down sharply and corn
slightly. Rye and oats are much the
same; flour is much lower. Coffee is !
down, but sugar is up. Butter is a |
little higher, but eggs are lower. |
Laid, pork and beef are all very much i;
lower. The average for foodstuffs is j
distinctly down.
Now take the metals. Iron is down i i
but steel is unchanged. Lead is much I'
lower. So is copper and zinc. The!’
only exception is tin, which has had !
a sharp advance. Coming to the tex
tiles, cotton, as every one knows, is
way down. Print cloths and silk are j 1
dow n also. In the miscellaneous class j
rubber is much lower. Hides are! 1
down a little. Gasoline and crude oil | 1
show advances, having moved against j
the rest. If this showing means any- |
thing it is that prices as a whole arc ! 1
trending lower.
The upward movement in foreign •
bonds■paralleled that in domestic obli
tContinued on Twenty-third Page.) i
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Li. •''
. i ■ M 3 ssssvMcti. TWv'ritrV** 9\'As A'
On the New York Curb Exchange
the year 1926 set a new high record
for total of transactions.
The bull campaign of October-
November, 1925, which had its incep
tion in the excited
speculation in the p 1
motor shares both
here and on the JpiiPNllfc
and subsequently f*
comnnmu u l 9
ing the 1925 trails- J** ju
nctions ti tHO V rtNbc
maximum of 113.- -»<■ ,
060.000 sha.i es. Jk
While this volume Jt a JmSfh.i
has been exceeded ■ J
in 1 lie yi nr J>j - T gif Hg .AgpflHp!
ended. 11 w.e- jH J
the resul; of
unwarranted spec- „ K ii e fr t .,„ a „
illation for tin*
rise, sucli as that of the late months
of 1925, which had its culmination in
the drastic break in prices some
three months later.
It is conservatively estimated- that
total sales of stocks for 1926 will ap
proximate 125.000.000 shares, while
bond sales will diselose a gain of
some $25,000,000 to a total <<f $300,-
000,00a. r rhe signifleant feature con
cerning this increased volume if btisi- J
ness was that it was accompanied i
by a more orderly price movement, j
amt accountable for by the fact that i
new issues representing more than i
600 companies were listed, bringing j
the total number of stocks and bonds !
dealt in to approximately 1,375, com-j
pared with 1.100 in 1925.
Price Movements Selective.
Exchange memberships have not!
experienced the phenomenal rise I
which occurred during 1925. when a j
record price of $37,500 quadrupled i
that at which they were obtainable at j
the outset. But they have managed
to maintain the greater portion of
the appreciation in value, * several
changing hands close to the maximum
Shares of companies which have
their principal market on the Curb
represent practically every line of in
jdustrial and commercial enterprise
save the railroads, of w r hich there are
but few. Therefore, it has been
natural that price movements
throughout the year have been sim
ilar to those on the Stock Exchange
and have been governed by the same
The money situation played but a
minor part in the speculation. There
was an abundant supply of funds
available for Wall Street purposes,
and at no time did the Federal Re
serve find it necessary to exert its
influence. It would appear that the
movement <»f prices has been gov
erned chiefly by developments in the
industrial situation itself, as they
related to individual industries.
The Oil Shares.
Because of the large number cf oil j
shares dealt in in this market, they)
are to be ranked as the group which i
holds most public interest. Standard j
Oil subsidiaries, since the dissolution
of the parent company 7$ years ago.
with few exceptions have maintained
their market on the Curb. Standard
Oil Co. of New York, was the latest
to be transferred to the New York
Stock Exchange, familiarly known as
the Big Board. It seems reasonable
to assume, however, that the market
for the remaining so-called Standard
issues will continue to be the Curb.
The close of the year finds the oil
shares in many instances down sub
| stantially from the high prices estab
i fished late in 1925, but with the out
| look for the immediate future brighter
) than it has appeared at any period
| during the year.
! Despite all this, oil companies of
: the better grade report net income
land profits in excess of those for]
! 1925. When distribution has been *
j completed cash dividends of the
! Standard oil group for the full year
| will amount to $200,263,594, the larg-
I est annual payment since the Stand
ard Oil of New Jersey dissolution, and
j in excess of 1925 disbursements by
) $4C,757,495. Dividends payable in the
fourth quarter, and included in this
total, amounted to $62,621,548, the
largest of any single quarter, and ex
ceeded by more than $10,000,090 pay
ments made during 1912, the first
year after the dissolution of the
parent company.
In addition to the casli payments,
j large distributions in stock have l>een
I awarded share owners. Standard'of
; New' York distributed approximately
' $72,000,000 as »a 25 per cent stock
dividend. Standard Oil of "Nebraska
gave $1.500s00(i as a 50 per cent stock
dividend. Subscription privileges wi re
granted shareowners of the Humble
Oil & Refining Co. and Standard Oil
of New Jersey carrying the light to
purchase at par 66 2 -? per cent and
16% per cent, respectively, of their
holdings. These increases in capital
stock explain in large part the in
crease in the tola! paid in cash dis
tributions, but increased dividend
rates by various companies also
swelled the total.
Payments in the fourth quarter ex
ceeded those of the third by $16,000,-
j 000 and were $20,000,000 larger than i
iin the final three months a year ago.
j Extra dividends by Vacuum Oil, in-i
! ternational Petroleum. Imperial Oil j
i Ltd., South Penn Oil, Chesebrougli
Manufacturing, Standard Oil of Ne
braska, along with extras by Standard
of New Jersey and Standard of Cali
fornia dealt in on the Stock Ex
change, and semi-annual payments,
increased the amount of distributions
lor the final quarter.
For 1925 the Ohio Oil Co. paid out
to stockholders $2.50 a share on its
60,000,000 shares capitalization. Dis
bursements for 1926 will total 53.50.
Complete distributions for Standard !
Oil of Indiana shareholders will
amount to $3.50 as compared with
$2.50 for the previous year. South
Penn Oil’s distributions will total $2.75
a share as compared with $1.50 for
1925. These are a few instances of
the ability of oil companies of the
j first rank to show increased earnings
! in a. period generally considered un
favorable for tiie oil industry, and
to reward stockholders through dis
tribution of larger dividend payments.
Much has been said about the possi
bilities of companies engaged in de- ]
veloping of South American properties i
around the Maracaibo Basin. During
the past year operations have gone a
long way toward eliminating tiie dif
ficulties experienced in the first few
years of development, and the fact
that many of the large American am’
other interests affiliated with Standard
OH are becoming concerned with the ,
possibilities of this field, has been
| duly reflected in increasing activity
f in the market for tropical oil shares.
Public utility stocks, which have
i commanded a place of prominence in
j the speculation of the past year, are
i selling in many instances at prices
* considerably below those established
in the late months of 1925 and the
first quarter of the succeeding year.
But as was the case on the side of
higher prices, Wall Street went too
far in discounting actual property
I values. Hence the year ends with the
I public utility shares at prices gener
j ally considered attractive, with the
j market inclined to seek its proper
Electric Refrigerator Stocks.
In many respects conditions which
j confronted the electric refrigeration
j industry were similar to those ex
perienced in the radio industry during
the first few' years of its inception.
But it has been generally agreed that
the financial background of the for
mer was superior and that competi
tion has not become keen enough for
-the industry to reach the saturation
Competition had to bo eliminated
where this was possible. This was
accomplished to a large extent by the
consolidation early in 1926 of three
prominent manufacturers, namely the
Kelvinator Corporation, Nizer Corpora,-
and Grand Rapids Refrigerator
Co. Following the. combination of
what was commonly referred to at
that time as the “Big Three,” Kelvina
tor and Nizer shares were eliminated
from trading or. the Curb Exchange.
The close of 1926 finds the Curb
Market with only one issue of prom
inence representing this industry still
being dealt in. and with the market
for electric refrigration stocks here
and elsew here sill endeavoring to seek
its proper level.
Os the various new indutries whick
have their representation in Curt
stocks, considerable attention has been
directed to consolidations which hav<*
taken place among laundry companies.
The largest consolidation of this kind
was effected in New York City through
formation of Consolidated Latin dies
Corporation in the latter part of 1925
by the amalgamation of 17 independ
ent units.
(Copyright. 1926.9
1926 Stands in Financial Reckoning as
Investment Rather Than Speculative
Period—Europe Strides Forward*
The year 1926 will figure in financial
reckoning as an investment rather
than a speculative period. The price
of money has been low,*arid therefore
the price of secur
ities which are ac
tially fixed in their
has been working
upward. This is
m the speculative. f 1
erations through- WEST,
out the year have
been helped by the constant assur
ance that it did not matter whether
call funds were available from day to
day at 3 1 1 per cent or whether they
rose occasionally to 5% and 6. An
abundant supply was certain, and so
j long as there was no overtrading
there was no danger of the banking
authorities suddenly curtailing their
On the other hand, as part of the
excellent equalizing system of the
Federal Reserve, Wall Street specula
tors do not look upon the reserve
i ratio of more than 70 per cent for the
j country as a whole as an invitation
ito go recklessly ahead. They realize
that no actual drain upon bank sur
! pluses, however large these surpluses
) were, would be tolerated if intended
j merely for speculative uses.
| Investment Demand Exceeds Supply.
The past year in investments has
j been remarkable for the accumula
: tion of great sums of capital seeking
employment. Enormous offerings of
new securities, both home and foreign,
have not entirely served to take up
! the slack. In November United States
! Treasury loans sold at the highest on
j record. In December, getting ready
for the new year reinvestment de
mand. it was difficult for institutions
wishing to buy good-sized blocks of
very high-grade bonds to get offers
i around the prevailing level, which
j was also close to the top level of the
, year.
Capital has had to be content with
i a constantly diminishing return. This
‘ ) has been one of the central features
of the financial situation in 1926. In
| vestment issues of the highest rank
; were pushed up to what were almost
i prohibitive premiums. Then the de
] mand shifted over to bonds of in
j ferior grade because of th* i“ high
! yield, to investment stocks, and esi«*-
i cially to the securities of foreign gov-
I ernments.
Tho rise in European obligations,
a number of which reached their high
\ est for the year in the closing weeks,
and a few broke their records for all
; time, constitutes a chapter by itself.
' How much of this advance is to be 1
'explained by the urge to buy for the
sake of a comparatively large return.
| and how much can be set down to
improved economic conditions abroad,
Is a question. Both considerations
have entered strongly, of course.
Before going further into foreign
financial conditions, which have play
ed a more vital part than in any
year since before the war. it is well
! to take up some of the main aspects
1 of the situation at home.
Wall Street Overoptimistic.
' The year 1926 started out with ex
! pectations in Wall Street that were
, not destined to lie realized. There
had been a big speculation on the
’ Stock Exchange in the Autumn of
1925, and the keynote of this was the
1 idea that the opening months, per
haps the first half of the succeeding
year, would witness a trade boom.
‘ Leaders in the business world were
talking about this; prominent bank
ers were for the most part optimistic.
The public got its anticipations up,
only to find that 1926 was not to be
as much of a boom year as it had
been led to expect: that it was to be a
year of good business in the main, j
but with exceptions in certain indi- i
vidua! lines. Some manufacturers 1
were unable to get selling prices up j
where they would leave a reasonable j
profit margin.
Wall Street, in consequence, had to
face a radical readjustment of its
ideas, and starting with the second
week in January and not terminating
until the early part of April, there
was a heavy and persistent selling
movement on the Stock Exchange.
It swept individual prices down all
the way from 15 to 50 points in the
speculative leaders. Then tho slump
was checked, and after two months
of uncertain variations the market )
started forward again. Once more
the rise in July and August was based
upon too sanguine a judgment of the
business outlook, and in the latter
part of September and the first half
of October a reaction occurred which
extinguished a good portion of the
Midsummer gain.
After the middle of October the posi
tion was improved. Stocks rallied con
sistently until the general average )
was brought up to and even ahead of
the previous high of the year. But
there was no excited speculation, such
as there was in October and Novem
ber, 1925. Wall Street shaped its
operations with due conservatism as ‘
to 1927. Extreme ideas either way •'
were not popular.
Twelve months ago the point most 1
insisted upon was that there was no s
overaccumulation of supplies in the 1
hands of merchants and manufactur
ers, and that the policy was to buy
only for immediate needs. It Is curb
ons to observe how closely this also
tits a description of the present situ *
tlon. Now, as at the beginning of
1926. we have the same comfortable
credit status, the same prospect o:
low money rates, the same healthy re
lation between buyer and seller in
most departments of trade, and ye?
withal, no suggestion of another such
buying movement ns that of 1923,
which, for three months, Kate a tr«
mendous push to Wall Street otter
tions and wound tii> in a sudden and
violent collapse.
Hut while fundamental conditions
are strong and it. is hard to foresee
any period of depression, cotmnodlt *
t*riees are low, and the fact remains
that ntt trade boom and rm Wall
Street boom has even been founded on
low prices. There may lie a change
in the price situation later on. but ay
ricultural prospects have not been
bettered by the happenings of 102*1
Kfforts to-bring about a larger return
, for the farmers are still looking t>
ward artificial that is, toward leg is
t i lative— means rather than toward n.u
, ural means.
Keverses in Drain and Cotton.
■j The propaganda, to diversify crop
I planting in the West lias not accon
, I plished much. Wheat farmers had ..
I larger acreage in 1926 than in 1925 <■■■
j 1024. There was a slight reduction a
. j compared with 1923 and a fair-sized
, | decrease as compared with the thre>
j years preceding, but then again the
,! 1026 area under wheat was large*
! I than the average of the years 1913 to
1 1 1918, inclusive.
, In a word, the farmers have eontit
j tied to plant about as much wheat as
| they have been accustomed to plain
j in normal years in the twist. The r.
; suit has been low prices as eomt>ared
. j with a year ago. The same is true of
. i animal products. The w heat grower
1 j and the beef and hog raisers have in
cause to congratulate themselves for
i what has occurred in 192*1.
i Then there is the almost tragic sa
ltation in cotton. Spot cotton sold a>
high as 24.23 cents a pound in Sej
. | tember. 1925. It went down practi
i j cally continuously until, late in 192*;.
the price was almost cut in two. The
* 1925 production of slightly more than
16,(101), <»00 bales was largely in excess
of requirements. On top of this, with
the aid of the most favorable growing
conditions known in a generation, th~
, j 1926 crop has piled up a probable tot :;
i i of well over 18,500,000 bales.
I p to Cotton Men.
Are the cotton planters of the South
jgbing to do what the wheat planters
.j of the West did not do under similar
[conditions and divert a substantial
j part of their area to other crops?
1 This is a question upon which a
good deal depends for the outlook in
1927. The only way out of the de
pressed condition in the cotton trade
is either through restricted production
j or through a shortage in the new crop
j which w ill mature next Autumn. In
tlm meantime the assumption seems
reasonable that those who have lieen
hurt bv the cotton slump w ill have ;»
cut down their outside purchases, and
that tijis will affect demand for gen
i era I merchandise. This point is ei
pha.sized, along with the lowered farm
prices elsewhere, by those who look
for some sort of a slowing down in
the general trade movement in 1927.
Motors Outlook More l*'avorjU*le.
The outlook for the automobile i.-
dustry is more favorably regarded .it
the close of the year than it was two
or three months ago. Then there was
a good deal of talking about increasing
competition, necessitating price cut
ting and reduced profits. This proved
to lie much exaggerated. A few cor
panics did not moke a good showing
in their semi-annual and thiid tuarter
Mostly, however, the reduced outpn*
at the automobile centers in the Ai
tumn and early Winter was to he ai
praised as mainly a seasonal reaction
In the closing weeks of the year new
orders were on the increase.
Record Rail Tonnage.
) Through the greater part of the Fad
j railway tonnage broke ail records in
! the history- of the country. This wa
j reflected in unusually largo gross re\
j enues. and, because of the return t>>
| normal maintenance expenditures, .t
showed also quite strikingly in net
earnings. Numerous dividends were
increased in the course of the year,
and a still more liberal policy regard
ing the distribution of railway prolb
is looked for in 1927. provided gen
eral business keeps up, as is expected,
to ar least something like the presei
The delay in the Nickel Plate ,an
has apparently held up some of tic
| merger prospects in other ti.bl- The
Nickel Plate experience has lieen a r<-
minder to big interests in these pro
posed consolidations that Ihcv are not
likely to find it east dealing* w ith nr
norities. still, as 1927 begins then
is every reason to believe sljat th.
progiam of railway consolldati'm xviil
make substantial headway during tho
year. This is the wish of the heads of
the Government, of tho railwav. labor
and shipping interests, and finally of
many of th- railway executives them
selves who at lirst were opposed.
I . S. Steel's Stock Dividend.
The United States Steels 4*» ii,r
cent, extra stock dividend was an epi«
■sode by itself, it had no siguUieaiic®
tor trade conditions in general, except
to permit, of the conclusion tluit no
such extraordinary step would have
been taken had there been any doubt
about the continuance of good times.
; I'lio Steel Corporation simplv finds
j itself in the position, after dinars of
j saving 1 and plowing baeJc surplus
: into property, where it can safely cap
italize pare of these accumulations for
J the benefit of shareholders,
i During the war tiie huge profits e
t.io period were recognized as abnoi
! ntal and United States Steel paid pan
t°. r <hese out. but in a form i,ore fur
I Payments (, oul<l readily tio
- that is. tho form of extra cash divi
dends. Now, however, the situation is
i <|uito different. The corporation is ad
; justing its capital account to an in
creased earning power in full belief
that this increase has proved itself
pcini,merit. And also it is adjusting
•saua.v oi Jstq <>uj uj Huiruo.m
i v-tnsno.il pun santc.v piwfd p-uiauiUrt
j A[S'iiouuouo oqi o} lunoooi: pn|dEU sjr
Europe Makes Big strides.
! While here and there exceptions
! are to be noted, it will be generally
| agreed that the financial and eco
nomic rehabilitation of Kuropc made
satisfactory progress during 192(1 Ir
was in April, 1925, that Great
Britain resumed gold payments and
that the pound sterling returned
virtually to parity witii the dollar
This gave an incentive to the rest
of the world to attempt in one degree
or another the same thing.
For more than half of l!»:•»: the ef
forts at stabilization in continental
Kurope were discouraging. In Julj
the French situation had reached the
(Continued, on Twenty-fourth Bage.j

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