Evening Star Newspaper, December 31, 1924, Page 20

20 THE EVENING STAR, WASHINGTON, D. C, WEDNESDAY, DECEMBER 3f, 1922 Closing of Year Sees Astonishing Advances-in Stock, Bond and Curb Values Curb Market Fully Justifies Election Impressed Business As Harbinger of Better Times Conclusions Drawn That It Assured Polit- ical Stability Which Resulted in Upward Movement Similar to Boom Periods. BY STUART P. WEST. The foremost representatives in the business world are on record as pre- dicting during the last three months of 1924 a period of good times ahead. The President of the United States has done the same thing publicly. Whatever political differences may be, it has to be admitted that the investment and business commun- itles were pleased with the result of the election. They drew the conclu sion that it was a pledge of poli- tical stability and an assurance against anything KRN drastic in the w STUART P. WEST. of legislation lating to trade This thought was b extraotdinary upwar ement in stocks which started after election day, something which has not been equaled except in such historic “boom years as 1909, 1906 and 1901. The Wall treet advance was solidly based first upon the exceptional ease of credit conditions, and second, upen the fact ments of inflation in business lines. On the contrary, business men, mindful of experiences of 1920-1921, had long been buying for immediate needs only. There had been no ac- cumulation of high-priced raw ma- and unfinished products the was five years ago. There been no hasty and frightened buying-in of n ary supplies the way there had béen in the Spring re- ck of the really Business Position Sound. the doubt bus ends ought soundness of osition as ed with the past difference of lies along the line of whether or not the stock market, with its modern-day tend- ency to go to extremes both ways, has not overdane things. The investment section of the mar- ket developed its main force in the Summer and midway through the Autumn. Liberty bonds and the United States Treasury 43¢ per cent loan of 1952 reached their top prices in late October and early Novem- er. Then a change came about. he speculative element assumed the place of prominence, the investment element grew increasingly less con- spicuous. This was due to two causes, the first being the uncer- tainty over the future course of money rates, the second being the heavy outpour of new security issues. This latter suggests a formidable obstacle confronting the situation in the new year. The statement has not vet been made that the market for these new capital issues has reached the saturation point. It is not clalmed that we are in a condition of “un- digested securities,” like that of 1903 or 1922, Still it seems to be true that the new offerings have not actually gone with the success advertised to the public. They have been oversubscrib- ed, but how large a percentage has found its way into the hands of the ultimate investor is very question- able. The shelves of dealers are probably stocked more heavily than at any time in the last three years. body as seriously to eneral year the Variations Not So Extreme. The past year has not witnessed such extreme variations and changes of mood among business men as did 1923. Still the buying movement in March, 1824, was overdone in certain lines, the same as it was in the corre- sponding month of the year before, and the subsequent reaction was elmost as severe. Steel operations, for instance, went down from 92 per cent in March to not far from 40 per cent in August, and this slump in production was attended by a fall in steel prices which brought them to a comparatively unprofitable-level. The situation continued consistently £ood throughout in the merchandising and general distributive trade. Com- panies doing business in these lines nearly all of them made a lot of money. But the textile trades were 2 bad sore spot. Cotton manufactur- ers had been paving very high prices for their raw material for three years and had not been able to get thelr finished products up in any way com- mensurate. Hence there were shut- downs and part-time arrangements instituted which lasted through the Summer and a good part of the Autumn. The woolen manufacturers were not as poorly off; still their gen- eral circumstances were much the same, and the principal unit in the New England field was finally com- pelled to pass the dividend on its common stock. Industry Very Much Mixed. Numerous other instances could be eited to show that ustry durihg a good part of the year was very much mixed. In certain lines there was Teal prosperity; in others the state of things was decidedly the reverse. One of the principal troubles was the old problem of high labor costs. Prices would come down, but wages would stay up, and even under the altered circumstances toward the close of the vear this problem has by ho_means disappeared. With the exception of a moderate eut at the New England testile cen- ters wage scales have remained very Eigh, and it is still a question as the new yvear begins how this big labor cost is going to be divided equitably between producer and consumer so that the former will derive an ade- yuate profit. Farm Prices Recover. The great change in the industrial situation came with the recovery in Tarm prices which started early in the Summer and which reached quite extraordinary lengths in the Autumn. This was not due, as has often hap- pened in recent vears, to a serious shortage In home production. The corn yleld, to be sure, was off con- siderably, some 500,000 bushels from the recent average. But the wheat harvest was far above the ordinary, and other grains were well up to normal. The advance of 50 cents a busliel in wheat from the low of the Spring to the high of the Autumn ‘was the resgit partly of the heavy falling off in the Canadian crop, part- 1y to the prospective reduction in the yields of other wheat - producing countries and partly to the improved buying power of Europe. This event had a truly revolution- izing effect. It is conceded to have been a prime factor in shaping polit- ical sentiment during the presiden- tial campaign. It did away with much of the discontent in the farming States of the West. Along with the rise in corn and live stock prices, it led to a revival of general buying in those sections which in the latter months of the year showed in a rec- ord-breaking volume of railway traf- fio and in an unparalleled total of that there had been no ele- | sales for corporations which sent the distributive business. ection Improves Rail Shares. The status of rallway securitios as investments was, of course, very greatly fmproved by the election re- sults. Nobody had supposed that the third party with its program, which would have virtually bankrupted a large part of the railway system, was going to accomplish anything by it- self. But there was for a long time in the late Summer and Autumn a deginite fear that it would gain sufi- cient votes to hold the balance of power, perhaps to throw the cholce of President into Congress:'and de- velop enough strength to enforce part of its anti-rallroad policies, So far as the railroads were con- cerned, the blg thing in the elections was not the Republican victory, which had bheen long forecast, but the completeness of this victory. The obstructive elements in _Congress were done away with. The party which wished to amend or abolish the transportation act of 1920, with all that it meant in the way of guar- antee for holders of railways securi- | ties, found itself shorn of all power. Control of the legislative body, as of the executive branch, was left with those who appreciate the fact that capltal put into railroads must have fair reward, and were ready to insist upon this principle despite all the olass agitation, on ciass and political grounds, for lower frelght rates. Back on Investment Map. Probably no accomplishment dur- Ing 1924 was more Important than the putting back of railroad shares and the junior rallroad bonds upon the Investment map. These securities had had to strugkle against dreadful handicaps for years. All through the war and the post-war perfod their market was constantly confronted with an enormous overhanging sup- ply from abroad. The supply had to be absorbed, and it took years to do it. Then there was the development of Federal regulation and the complete transfer of the rate-making power into the hands of the Interstate Commerce Commission. The trans- portation act of 1920, with its clause guaranteeing a fair yleld on capltal invested, was reassuring. But it did not remove the railroad question from the field of politics. The man- agers of the roads and security own- ers. as well as the investing public generally, felt that there was still great danger of this law being upset. Consequently, there was a disposition to go slow about buying these securi- ties for investment. Railroad Comsolidations Likely. The great rise in the rails which set in immediately after election day was essentlally a vote of confidence that the present situation was not to ba disturbed, and that roads which had been long piling up surpluses and were hesitating for political rea- sons to pay any part of them out were at length in a position to deal more liberally with their share- holders. TUndoubtedly one of the distinctive features of 1925 will be the carrying out of further consolidations. Presi- dent Coolidge reaffirmed the necessity of this in his annual message. The administration plan s to give the rallroads opportunity to combine voluntarily, but if they fail to get together on their own initiative, then the Government is to exert Increas- ing pressure. How far these consolidations will benefit holders of securities of the so- called weaker roads is a question. Certainly there will be no taking over of the junior stocks at Inflated prices. The stronger roads are going to see to it that they pay no more than is fair on the basis of earning power as related to outstanding capital, and in this attitude it is reasonable to con- clude they will be backed up both by the Interstate Commerce Commission and by the courts. repre- Lower Rates Poxsible. 1f, as the result of the economies effected through joint operation and joint use.of terminals, earnings are increased, it would naturally tend to a higher valuation for the stocks concerned. But the doubt is as to whether the governing authorities would not insist that the fruits of such economies should be passed on to the publio {n the form of lower freight rates. Altogether, 1t s not at all certain that the impending rallway consolidation ~will constitute an argument in favor of stocks in the non-dividend paying class. Their future rests rather with thelr own earnings and their ability to pay out of these. Expert Opinfon on Money Market. At the close of the year expert opinfon is much divided about the money market, and consequently about the future course of all securi- ties which are valued by money changes rather than by business changes. The indlcations favor the assumption that the low levels for money have been seen and that the tendency from now on will be upward, although very gradually. Three rea- sons favor this conclusion. The first is the largely increased Wall street demand for funds, what between the tremendous trading and the great rise in the price average. The sec- ond is the present and prospective en- largement of commercial require- ments. The third is the suspension of the gold import movement, which from 1915 to the beginning of 1924 ralsed the gold holdings of the Fed- eral Reserve system nearly 300 per cent. Gold Imporst Stopped. Why the rest of the world h: practically stopped sending gold to the United States despite the fact that we are still a great creditor na. tion is one of the most interesting questions at the present. And the answer is equally interesting, namely, that for the first time in American financial history this country is going heavily into foreign investments. We bought back most of our own securi- ties during the war and the three years following the war. We loaned over $11,000,000,000 to the allied gov- ernments and since 1920 these ad- vances to forelgn governments and municipalities have been greatly ex- tended. But the unique development during the last few months has been the extension of Amerlcan credit to private corporations abroad. This has been done in two ways, first, through the purchase of the securities of these foreign corporations, and, second, through the direct granting of loan: secured by what these corporations produce. Loans Abroad Distinctive Feature. The prediction may be ventured that this lending to private business enterprises in Europe will be one of the distinctive features of 1925. Al- ready, combined with the loans to for- eign governments, it has been suffi- clent to cancel the favorable balance in the merchandise trade and to re- duce to a minimum the gold import movement. It is this sort of thing which is looked to for the restora- STOCK PRICES SOAR(HTx AFTER ELECTIONS Mark of Year as Decem- ber Nears Close. TRADERS ARE SURPRISED Magnitude of Buying Power, Fol- lowing Heavy Sales, Brings Much Wonderment. By the Associated Press NEW YORK, December 31.—A post- election boom of unprecedented propor- tions carried stock prices to the highest levels in years in the closing wecks of the year. £ Railroad shares were foremost In the advance, many of them touching the highest prices ever recorded. Not since the early part of the present century, when Harriman and Gould struggled for the control of the leading Western transportation systems of the country has Wall Street witnessed a raflroa market of such breadth and volume as took place in the last two months of the year. Flood of Buying Orders. An enormous investfment demand, ap- parently pent up for years through fear of adverse legislation, broke forth like |a flood in the few weeks following elec- tion, when it became apparent that the so-called radical bloc had lost the bal- ance of power in Congress, that the administration looked with favor upon rafiroad consolidations and that the roads had been successful in increas- ing their net earnings through a re- duction in operating costs. Tangible evidance of this improvement, furnished by the resumption of dividends on stocks of some of the Southwestern carriers, stimulated the demand, which came from large institutions and wealthy in- dividuals as well as a myriad of small investors. Industrials shared in the advance, the largest gains being recorded by the se- curities of those companies whose earnings gave definlte indications of business improvement. Wall Street Amazed. Professional traders admittedly were surprised by the magnitude of the buying power, as indicated by the fact that stocks in which they had buflt up large paper profits In the early Fall were sold heavily in the few days fol- lowing the election, on the theory that they could be repurchased at lower levels. The advance, however, once it got started, was an almost perpendicu- lar one for about six weeks. The market was taken away from the pro- tessionals, who were forced to bid for stocks eeveral points above what they sold them for in order to participate in the upward swing. One of the curious features of the rapid advance was the fact that it was accompanled by a relatively slight Increase in brokers' loans, which was construed as an indication that the stocks were belng taken out of “the Street” and put in strong boxes. Wall street brokerage houses actually found themselves with more business than they could convenier ly handle, despite an average in- crease of 11 per cent in brokerage commissions, which added millions of dollars to their coffers. Steel Shares Erratic. Fluctuations of the steel shares re- flected the course of business, the low state of operations reached in mid-summer forcing the Bethlehem Steel Corporation to suspend its divi- dends on its common stock. The United States Steel Corporation paid its regular quarterly dividend of 1% per cent, and an additional extra of 3 of one per cent each quarter, the stock selling at the highest level since 1917. Most of the ofl shares lost ground, due to the unsettled trade conditions caused by the overproduction of crude. The Pan-American Petroleum & Transport Co., one of the largest of the independents, cut its common dividends in half, and several others were forced to omit their payments. Copper shares showed signs of ac- tivity and strength as the year closed after a long period of relative de- pression, due to the inability of the producers to earn substantial profits because of the low prices of the red metal, and the stiff compstition af- forded by the African product. With Europe again a large potential buyer of copper, the outlook for the indus- try is one of the best in years. A slight falling oft in production (Continued on Page Twenty-three.) — e tlon of stable forelgn exchange rate The rise in the value of the Brit- ish pound, however, has been due to more than this one cause. Great Britain has succeeded extraordinari- 1y in turning a budget deflcit into a surplus to such extent that taxes have been lowered and the meeting of regular interest and amortization requirements on the American war debt been assumed. A great deal has been written about the return of sterling to par. Pre- dictions along this line falled two years ago, but now the essentials are all present as they were not then. England has established a credit in home finances while taking full re- sponsibility for what it owes to us. The trade balance from month to month is running rather heavy against her. but this factor is offset by the enlargement of American cap- ital advances not only to England but to other European countries. The situation s precisely the reverse from what it was 50 years ago, when the United States continually owed money, when it badly needed new funds for development purposes, and when as a conseguence it had to per- suade Europe to buy heavily its bonds and stocks. Much Expected From Dawes Pla Much is expected during the year |1ying ahead from the inauguration of the Dawes plan) which involves the resumption of full reparations pay- ments by August next. The new German currency, resting upon a gold basis again, looks to be secure. The British business situation has, of course, been greatly cheered by the overwhelming Conservative victory at the polls. On the other hand, French finances are more obscure. The rise in the Bank of France dis- count rate from 6 to 7 per cent in the second week of December was the balancing of the budget and the im- provement in financial _conditions generally. It came right on the heels, moreover, of the new loan sup- plied by the United States. It em- phasized the fact that, whatever might be outward expressions, the French banking authorities recog: nized that there was still a state of inflation in the paper currency, which it was getting extremely difficult to cure. Business and wages had grown so accustomed to the debased value of the franc that any move in the direction of deflation was look- ed upon with concern. Nevertheless, the Bank of France finally decided that it was time to check paper note expansion by mak- ing it more expensive to borrow money for business purposes. {Oopyright, 1924, by Consolidated Press.) ge Volume of Business, Record Made in Investments Phenomenal Ease in Money Booms High- BY GEORGE T. HUGHES, Three features combined to make this one of the most remarkable years of a decade in the investment market. These were, firsty the phenomenal ease in money with its stimulat- ing effect upon high-grade securi- tles, notably United States Gov- ernment bonds, the successful ac- complishment of large and impor- tant foreign financing, chief of ‘hich was the German loan and abrupt reversal of sentiment toward rallway securities following the elec- tion. As to the money situation the facts are well known. Extreme ease pre- vailed throughout the most of the year, the lowest rates being reached in Midsummer when time funds loan- €d at rates unequaled since before the World War. Throughout the Sum- mer months call money was obtain- able for weeks at a_time at 2 per cent on the Stock Exchange, while in the so-called outside market ac- commodation could often be ar- ranged at 1% per cent. So great was the abundance of funds that at times money went, lit- erally, begging for employment. This s strikingly shown when the crop- moving season brought about no ma- terfal stiffening in rates, contrary to all precedents, and when the $110,000,- 000 German loan operation was car- ried through without causing a ripple on the surface of the money market. Not until the excited post-election speculation broke out subsequent to the election was there any signs of a change. Excess of Gold Responsible. For this great abundance of money the enormous excess of gold was no doubt chiefly responsible. The esti- mated stock of gold in the entire world is around $5,000,000,000 and the excess of imports into the United States by the end of September had brought the total in this country to over $4,500,000,000, so that at that time this country held one-half the world's available supply. Perhaps never befors in history has any one country at any one time held s0 large a proportion of all the gold in existence. While this great gold supply was accumulating industrial activity fell off and the lack of de- mand from commercial sources was accentuated by the hesitation that preceded the presidential electio One effect of all these conditions was to enable the Secretary of the Treasury to do Government financing at the lowest rate paid since before the war. In June the Secretary offered an issue of certificates of in- debtedness running six months on a 23, per cent basis and the offering was four times oversubscribed. in September another issye was brought out at the same rate, but for a full year's term and this, 00, was heav- ily oversubscribed. Liberty Bonds Make Records. Meanwhile, the banks were eager buyers of Liberty bonds and under this consistent demand quotatlons for every Government issue, with one ex- ception, were carried up to the high- est record for all time. The one ex- ception was the entirely tax-exempt 31%s. The issue most in demand was the one of the longest term, the Treasury 4%s, which at their peak in November sold at a price of 107.7. The high point for the Liberty issues was made during the extreme low for money In late July and early August. The outlook seems to be for mod- erately higher money. It is reason- able to suppose that reviving busi- ness will make more extensive de- mands for credit, but anything ap- proaching stringency seems entirely improbable. The Secretary of the Treasury was criticized by the Investment Bank- ers in convention at Cleveland for not baving taken advantage of the mid- year low rates to float a long-term Government bond Issue. It was pointed out that in September, 1928, there will mature nearly $3,000,000- 000 in third Liberty 4%s and that this refunding operation might be difficult of accomplishment in a tight money market. The Secretary, however, waited until December and then he did offer a long-term bond issue, the first since 1922. The amount for which cash subscriptions were accepted was only $200,000,000, but opportunity was of- fered holders of the third 4% Lib- ertys to exchange their bonds for the new 4s. The response to this offer was so prompt and gratifying that it could not fairly be sald that the interests of the Government had been hurt by the delay. Reserve Banks Hard Put. The great surplus of money which existed during most of the year put the Federal Reserve Banks to the necessity, in order to earn expenses, of going into the open market and buying Goverment securities and ac- ceptances. Both these items, in their weekly statements, showed enormous increases at the end of the year over the figures for such holding 12 months previous. This had the effect of ac- centuating the money ease, and to this extent the operation of the Fed- eral Reserve System, instead of act- ing as a stabilizer as its founders expected, worked the opposite way. The policy which led to this open- market buying by the reserve banks came in for severe criticlsm by econ- omists. The only suggestion offered as a remedy, however, was that the banks draw upon their accumulated surplus for dividends and current ex- penses in times such as prevailed during 1924, when earnings were small because of slackened business and of lessened demand for reserve bank credit. s Enormous Foreign Loans. Second only in importance to money conditions was financing for account of foreign governments and indus- tries. The aggregate of all such loans during 1924 was over $1,000,000,000. Three individual issues made up more than a third of this amount. These were the $150,000,000 Japanese gov- ernment loan in February, the $110,- 000,000 German loan in October and the $100,000,000 French loan in No- vember. The Japanese loan unfortunately was brought out just about the time the Japanese exclusion matter came up in Congress. Considering this fact the bonds went remarkably well, and at the olose of the year were selling around the offering price. The Ger- man loan was offered as a part of the procedure for putting the Dawes plan into effect., The oversubscrip- tion was .enormous, and the bonds promptly went to a premium in the mmfi. which was maintained, G. T. HUGHES. _Frenoh loan was also over-| Boom Sends Many to Highest| Grade Securities—Excess Gold Supply Noted as Important Factor. subacribed, but not to so large an extent. Still, it was a noteworthy success. As a matter of faot, the bankers made much less of an effort to sell the French than they did the German bonds, American Timidity Dissipated. The number of smaller and less im- portant forelgn offerings was too great to be considered in detail. One point, however, is clear. The tradi- tional timidity with which American Investors have regarded forelgn se- curities has been in large measure dissipated. The success of the three loans above enumerated is alone suf- ficient to establish this polnt. Of course, the prompt sale of these new forelgn bonds was made easler by the vast amouat of capital available, even begging for employment, and by the high return all these foreign obligations bring. On the other hand, there {s now a wide and stable mar- ket in America for foreign bonds. It is reasonable to expect that American Investments abroad will grow as the yvears go by. Already predictions are made that 1925 will see an enormous amount of new for- elgn financing in this market. So far the results from the standpoint of the investor has been good. Excluding Russia and Mexico, all our foreign creditors, at least as far as private Investments go, have been reasonably regular in the payment of Interest and principal. There is still risk con- nected with these commitments, but for the most part this risk is politi- cal rather than financal. Industrials Are Different. A little different state of affairs ex- ists with regard to the securities of foreign industrial and utility enter- prises. ‘With obligations of this na- ture it is not enough to have the facts regarding political and economic con- ditions in the country in question, but also some information with regard to the company the securities of which are under consideration is essential. This is not always easy to obtaln when the creditor’s place of business is so far away. It is to be hoped that the proposal of the Investment Bankers' Association for the establishment of a bureau of in- formation covering the credit standing of forelgn borrowers, actual and pros- pective, may be put into effect without delay. It would take only a few serious mistakes to undermine this recently ac- quired confidence. ators Turn to Railroatis. The reversal of sentiment toward railway securities is so recent that all interested are familiar with the facts. The turn came directly after the election, and, while it had for its impelling motive the apparent assur- ance that the carriers would be al- lowed to work out their own salva- tion unhampered by adverse legisla- tion, it was helped along by prospects of coneolidations and by the dividend outlook. Of these the most important was the political situation. The fun- damental facts with regard to the ralls were quite as favorable in Mid- summer as in November, but they were without effect upon the market until the election uncertainties had been cleared away. * Raflway car loadings more than once during the year broke all rec- ords and the movement of traffic con- tinued heavy up to the close. The confidence of directors of railway boards was manifested long before the election in the restoration to a dividend basis of the common stock of such roads as the Southern Rail- way. The great Nickel Plate combination was planned and the details publish- ed long before the presidential cholce had been made, but it was not until radical sentiment was demonstrated to be in a minority that investors and speculators came to the conclusion that no obstacle would be placed in the way of such consolidations by Government authorities at least. Inevitable Excesses Crop Out. Railway stocks were the leaders In the post-election upturn, but railway bonds of the speculative type were a close second. As is always the case, the movement was carried to excesses in some instances, as when a prefer- red stock and an adfustment bond both paying the same rate were quot- ed at the same price, notwithstanding the fact that payments on the bond were a prior charge. In the excitement of the hour cer- tain preferred stocks were bid up to record highs when there were large accumulations of back interest on the adjustment bonds, which would have to be cleared up befors any dividend could be declare on the preferred. All these are familiar phenomena of spec- ulation. Eventual correction is sure. As far as the advance was based upon earnings it was sound. There is, of course, with the junior securi- ties always a chance of a falling off in traffic and the consequent decrease in net income, That is the risk that investors have to take. The compen- sation is the rate of return, and care should be taken to see that this com- pensation is adequate. The benefits to be expected from consolidations are more problematical, and too much confidence should not be placed therein. Mergers to Take Long Time. For one thing these consolidations are going to take a long time to work out. Even granting that the Interstate Commerce Commission is complacent there are many conflicting interests to be reconciled. Nor is there any: thing in the law which can compel the owners of one road to sell out to an- other. If, therefore, an investor or a specu- lator is basing his operations not upon intrinsic merits, but upon the price some other railroad is going to take over his holdings he is on un- safe grounds. One reason that might induce a large and prosperous road to take over a small and weak one arises from the so-called recapture clause of the transportation act. The small road may have low earn- ing power In proportion to valuation and the reverse may be true with re- gard to the large road. When the two are combined these conditions are equalized and the merged carriers do not have to turn over excess earn- ing to the Government. There are cases like this, but they are excep- tions. At all events there is going to be a lot of bargaining before results ‘are obtained, and in the meanwhile speculators may get tired of waiting. Outlook Brighter for Coming Year. This {s not to infer that the rafl- road outlook is not much brighter to- day than it was & year ago. Granting reasonable prosperity and conserva- tive management the railroads will make saitsfactory earnings. They have nothing in the way of foreign competition to fear as have some in- dustrials. What the railroads need most of all is the good will of the public and of thelr employes. The public utllities are far ahead of the rallroads in this respect. The utilities have established themselves in the public favor by their customer ownership campaigns which have been one of the features of the in- 'vestment market throughout the yean BIlLION SUBSCRIBED IN FOREIGN LOANS Financing Sets Record in One of Most Remarkable Years in Market. GERMAN ADVANCE LEADS $110,000,000 Quickly Obtained ‘When Bonds Offered to Public. Some Interest Defaulted. By the Associated Press. NEW YORK, December 31.—Ameri- can investors during 1924 subscribed more than a billion dollars for foreign loans, an outstanding achievement in a year that passes into financial his- tory as one of the most remarkable on record in the point of new financing. Not only did the volume of foreign financing establish a new record, but the total of all new capital flotations as well ranked among the highest in history. Although accurate compila- tions are not yet available, prelimi- nary estimates indicate that public offerings of all stocks and bonds dur- ing ghe year approximated $6,000,000,- 000, contrasted with about $4,700,000,- 000 {n 1923. Foreign bonds ran a close race with State and municipal offerings for first place in the amount of new business handled. Flotations of the latter, aggregating almost $1,400,000,000, eclipsed all previous records, while the latest figures on foreign loans in- dicated that the total would reach slightly more than $1,200,000,000. German Loan Most Vital. Overshadowing zll other individual bond offerings in importance and widespread interest was the American participation in the International loan to Germany. The $110,000,000 portion of*the $200,000,000 financing offered in the United States was more than five times oversubscribed and public de- mand for the bonds enabled them to command a substantial premium in stock exchange trading. The largest single piece of financ- ing was the $150,000.000 Japanese re- construction loan, which was floated early in the r and several times oversubscribed. The $100,000,000 loan to France late in the year, which re- placed a credit of similar size extend- ed by J. P. Morgan & Co., to stab- ilize ‘the franc, ranked third in size The government of Argentina was the most frequent borrower in the American market during the year, placing five separate bond and note ues “aggregating more than $100.- 0,000. Other prominent foreign borrowers were Mexico, $50,000,000 Holland, $40,000,000: Belgium, $80, 000,000; Sweden and Switzerland, $30, 000,000 each: Norway, $25.000,000, and Hungary, $7.500,000. The year witnessed the placing in operation and subsequent collapse of the Mexican debt agreement, when service on the $500,000,000 debt was defaulted on July 1 Defaults on Bonds Increase. Defaults of interest payments on bonds increased during the vear, the total value of industrial issues in de- fault mounting from $96,811,300 to $123,594,000. Total sales of listed bonds on the New York Stock Excliange expand- to almost $4,000.000,000, an im- ive gain over 1923 when tran aggregated approximately $2.- 750,000,000 and within striking dis- tance of the record high level of $4,- 098,696,027 established in 1922 BIG INVESTMENT YEAR. Growth in Deposits Feature of 1924 in Banking Circles. ‘The outstanding development in the fleld of banking this year is the growth in deposits and in aggregate bank credit utilized—loans, discounts and investments combined. The lat- ter figure for the reporting member banks of the Federal Reserve System was $18.576,000,000 on December 10, or $2.187,000.000 more than was re- ported a year earlier. Two-thirds of this increase, says the Guaranty Sur- vey, has taken place since June. And somewhat more than one-half of the total is represented by the growth in investment in securities. Three-fourths of the total increase of $1,055,000,000 in loans and dis- counts in 12 months was in secured loans. Other loans, representing or- dinary commercial borrowing, in- creased only $264,000,000. But this class of loans declined during the second quarter of the year and they now exceed the figure for July 2 by $368,000,000. In the ‘last 12 months the growth of $2,780,000,000 in the deposits of the reporting banks, effected for the most part since June, exceeded by $593,- 000,000 the combined increase in loans and investments. The growth in time deposits alone was $767,000,000 FEWER STEEL INVESTORS. NEW YORK, December 31.—Hoiders of common stock on the books of the U. S. Steel Corporation for the December dividend total 96,317, a de- crease of 200 under September. Pre- ferred shareholders who participated in the November dividend numbered 78514, compared with 78,963 in Au- gust. | By seiling voth to employes ana to customers preferred stock sometimes for cash and sometimes on the install- ment plan they have succeeded, not only in raising new capital, but in establishing a good will item on the asset side of the balance, which has an intangible, but real value. The slectric light and power companies have been foremost in this movement. Incidentally utility securities have in- creased their popularity almost as much as the railroads this year. The leaders in the utility group have been the obligations of the electric light and power companies, not only of the operating corporation but of the holding company. There used to be a prejudice against the securitles of holding companies, but this has been pretty well overcome of late. The wide diversification which the holding company form of organization permits has demonstrated its value and earnings of these companies have shown such steady growth that in- vestors have been attracted from all sides. The fact that active speculation has carried the prices of the common lstocks of some of these enterprises up to record figures must not be al- lowed to obscure the improvement in the investment position of the pre- terred stocks and bonds. It may well be that some of these common stocks have more than discounted the im- proved prospects. That is a matter for the speculator to turn over in his mind. It can, however, be safely asserted that the year 1924 has witnessed a degree of favor accorded to the senior securities of these utilities which the facts fully justify. Nor does there seem to be any reason for expecting any change in this outlook for 1925. Utility for All Kinds of Issues No Longer Invariable Custom to Shift : BY WILLIAM F. HEFFERNAN. Never has industry and the finan- clal world appreciated the necessity of the New York Curb Exchange so much as it has In the year 1924, This organization since its begin- ning has been the primary market for trading in new and unseasoned securities. In the past the custom has been to estab- lish a_market on the Curb Ex- change with the intention of ulti- mately _transfer- ring such issues as are eligible to the New York Stock Exchange. _ For some time, how- ever, many cor- porations and companies mar- keting new issues bave abandoned R HREEENEN TR 1epindt tu better market can be found on ex- changes other than the New York curb. The reason for this is twofold— first, the increased volume of trans- actlons on the New York Stock Ex- change has taxed its facilities to the utmost in order to handle securities already listed; second, the removal of the New York Curb Exchange indoors, which took place June 21, 1921, with new and adequate facilities, ellmi- nated the necessity of removing stocks and bonds once a market had been established. Radio Stocks Score Large Gains. The changed situation has been em- phasized by the vast amount of new financing put through during the past year. With only one exception, stocks of the leading radio companies are dealt in on the New York curb, and no other group has enjoyed such activity and price fluctuations fol- lowing their admittance. It is only necessary to glance over the present quotations as compared with where these stocks were selling earlier in the year. For example, Dubilier Condenser and Radlo at the present quotation, well above 60, compares with 103, the figure at which it was quoted 12 months ago. Hazeltine Corporation, around 40, compares with the low for the year of 12 Ware Radio, well above 30, is 22 points higher than its low, while Tower Manufacturing, at 26, compares with 183z, and all are at practically their high records for all time. These are only few instances of the appreciation in value of radlo company shares. However, advances such as these over a comparatively brief period are not always healthy signs. Unless there are special re sons such reckless upbidding usual spells disaster loss Nevertheless, the radio sharss have gone forward rapidiy under a public demand almost unprecedented. Look- ing back a number of years, it is not difficult to recall mining booms brought about frenzied speculation in the respective stocks, and the development of oil pools re- sulting in a veritable flood of buylng in this class of shares. The shme can be said of any new and uns>a- soned industry where the value of the stocks concerned is mere con- jecture, dnd can be determined only by earning power. 1 Further Expansion In 1925. ‘Whether or not present prices for radio stocks are justified by earnings still remains a question. No one can dispute the fact, however, that during the past two years the industry has expanded to enormous proportions and that the outlook for the coming year gives every indication of fur- ther progress. Its growth has been 50 rapid that it is impossible to com- pile entirely accurate statistics. The data available consists largely of rough estimates. It offers, neverthe- less, some idea of how great the ex- pansion of the past two years has been. Surveys made by qualified au- thoritles indicate sales totaling $350,000,000 for the vear 1924 alone. Total sales for 1923 were about $12 000,000, or 100 per cent above those for 1922, The buying and ultimate heavy at the ‘present high levels appears to be coming chiefly flom sources contending that the price appreciation of the past year has fully been warranted by the rapid growth in the industry. Such im- provement in other groups on past occasions has called for some sort of reaction, if only on technical grounds. This fs usually brought about by the desire of the speculative element to avall itself of accumu- lated paper profits, and once selling of this character Is detected, the pro- fessional contingent working on the side of lower prices Is always eager to accelerate the decline. Even Higher Prices Expected. It the market action of radlo stocks can be taken as an indication of what is expected in the future there is every reason to look for even higher prices. But before coming into the market at the present level considerable caution should be exer- cised and attention given chiefly to the capitalization of these companies, While in most instances {ssues floated during the past year have command- ed a price well above that at which they were offered for public subscrip- tion, it is doubtful if all these sharp advances have been justified. While most concerns manufactur- ing radio sets and apparatus are rep- utable, the industry still has its weak spots. A number of companies al- ready have established their stocks on a regular dividend basis, and ex- pectations are that before the end of the first half of 1925 numerous other stocks will be added to the dividend list. | “On December 19 airectors of the Dubilier Condenser Co. did what was expected in offering to present stock- holders the right to subscribe to 1 additional share of common stock at $50 for each 10 shares held. This was significant in view of the fact ithat on the day the announcement was made the stock was selling at $66 a share. Oils Prove Disappointing. Perhaps no other group during the past year has acted as disappointingly as the oils. During the early months of 1924 the industry found fitself faced with the serious problem of overproduction. This situation was brought about by two causes. Firat, the demand from the automobile in- dustry was unusually late in making itself felt, with the result that com- panies which had been carrying vast amounts of crude in storage, were compelled to mark up inventory charges and carry the product over a longer period than originally in- tended. Second, the opening up of new pools and Increased imports forced a con- siderable reduction in prices for both crude and refined, with the result that stringent prorating measures had to be put into effect, with the intention of discouraging production. ‘This prorating program began to b, Securities to New York Stock Exchange for Prestige. make itself felt In the Bpring and early Summer, and,was not wholly eliminated until late in September. Outlook Brighter for Next Year. As the year draws to a close the outlook for the ofl industry is con- siderably brighter, but this so far has not been reflected in the marke: for oil stocks. Their fallure to join in the “bull movement” started im mediately after election day is attrib uted to uncertainty concerning the future price policy. This situatior however, cannot bs overcome by the independent companies and appears to be due principally to fallure of officials in high quarters to agree upon this question. What the stocks will do in the future depends almost entirely upon the action take: by leading company officials concern ing prices, and what this ultimatel will be still remains a question. Prairie Oil and Gas, the largest of the mid-continent refiners, is quoted today above $200 a share, where it compares with $264 on the first day of 1924. Standard O!l of Indiana, one of the most active of the popular priced so-called Standard Oils, 1s selling some 10 points lower as compared with earlier in the year, while Stand ard of Kentucky at 35 compares witl 471, the price at which it was quote on the first day of 1924 Blames Companies Themselves. President Walter C. Teagle of th Standard Oil Co. of New Jersey, in hi remarks before the annual meeting of the American Petroleum Institute late in December, said: “In my opir ion we are nearer the high road of re- turning prosperity if we admit frank ly that most of our troubles are of our own making: that we are all 1 varying degree responsible, the larger companles, including the one I re sent, perhaps in greater proportionate degree—that none of us is able to say ‘I told you so,’ and that of us all the producer of crude is perhaps the leas to blame." The one group of independent o companies whose shares have become increasingly prominent in the past year are those operating in the Mara caibo Basin of Venezuela, Included among those are Gulf Oil, Lago Petrc leum, Creole Syndicate, Venezuelan Petroleum and Maracaibo Oil, all wit the exception of the last named being dealt in on the Curb Exchange. Whi the price improvement in most stances has heen nothing sensationa thelr recent action has been cause fc considerable comment in oil quarter The main difficulty that these panies have had to face in the past has been the problem of transporta tion, but this is gradually being over come and the shipments fri thi pool have increased substantially in the later months of 1924 The Gulf Oil Co.'s production is now being moved in combination stee barge &nd tug outfits to their ter minal on Los Piedras Bay, off the west coast of Paraguana Peninsula. where a permanent ocean-loading terminal Is being built. The commer- clal development of the Venezuela: oil fislds can said to date from January 1, 1 The manner in whicl development work has progressed cause for belief that these stocks wil come in for more attentlon in the near future Price of Curb Seats Doubled. The number of securities traded up to November 26, 1924, on the Ne York Curb Exchange were 1,035 indi- vidual stocks, 119 domestic bonds and 42 foreign bonds. During the year a number of these were dropped owing to the failure of the companies to liv up to the requirements of the Curb This meant principally inability to submit financial statements. Fron January 9, 1924, to November 26, 41 associate members and 51 regular members were admitted. On January 4 seats on the New York Curb Market could be purchased for $4,000. Today they are not obtainable under $9,000. The establishment of « clearing house similar to that of the New York Stock Exchange has great ly facilitated operations in this mar ket and at the present time almost 200 stocks are being cleared. (Copyright, 1924, by Consolidated Press Asso ciation RECORD EXPORT YEAR. Domestic Canned Goods in Steady Demand Abroad. Movements of canned and dried foods during the early months of 1924 indicated a successful season This promise has completely mate- rialized. With the exception of can- ned meats, canned vegetables and evaporated milk, exports for the 11 months of this vear already exceed those of the whole of In the case of those items which are exeep- tions, exports for the whole year 1924 will be in excess of the preced ing vear, providing that the December exports are not less than those of December, 1923 That the desire of Europe for foods out of the class of bare necessities has not disappeared is shown by the exports of dried and canned fruits Exports of the former for 11 months of this year are nearly double those of last year, while those of the latter are over 50 per cent above the ex ports in 1923 Canned fish, sardines and salmon are still in large demand—an increase of 18 per cent is shown in salmon while sardines are going forward at the same rate of increase as was shown in 1923. If the progress Ir the sardine trade continues, another two years may ses the exports of that product passing those of salmon. TIMBER RECORDS BROKEN Cut From 147 National Forests Surpasses Year 1923. All yearly records for cut of timber from the 147 national forests were broken during the calendar year of 1923, states W. B. Greeley, chief of the forest service, Department of Agriculture, in his annual report. During this period the cut for the first time in the history of the forest service exceeded 1,000,000,000 board feet. This amount exceeded the cut in 1922 by 20 per cent, and had a 23 per cent greater value, the report says. In speaking of the fiscal year ending June 30, 1924, the report states that both cut and receipts sur- passed the calendar year of 1923, Sales of national forest timber dur. ing the calendar year of 1923 also exceeded all records with a total of more than 3,000,000,000 board feet, which had a contract value of more than $9,000,000. Compared with the caiendar year of 1922, this is an in- creasa of 68 per cent in amount, and 70 per cent in contract value. All sales of timber from the na- tional forests take into account the sustained yield principle, thus afford- ing @& perpetual supply on the sale area ofi