Show Outlook for Busin Business ss In InI I 1927 Is Good Conditions Of Credit Stable St ble In U SI S i I Some Reverses in Grain Cotton and Livestock in Past Pa Year Financial Financial Observer States Views On Eco EC Questions ns IT lU r Copyright by Examiner THE year ear l will figure In fl- fl I TIlE 1 reckoning as an ment rather rth r than a a speculative pe- pe period p The Tho ot or money has hos been n low and therefore tho price ot or se- se securities which ore are actually or po- po fixed In their Interest and l dividend l payments has been work wor Ing upward This la Is according to the natural law But lut easy moncy mom conditions while they have hav count count- counted coun ed greatly In the Investment pOr- pOr pOrtions lions of or the th market have counted d little In the speculative Speculative operations h- h the year have havo been helped by bythe Ithe the constant assurance that Illat it did not matter mailer whether call funds re from day to day at 3 I por cent or whether they rose roe oe- oe to 5 S i G I An abundant ant auppl supply waa and so long QS a thero waa no over trading was waa no dancer of If the th banking au- au a 11 suddenly curtailing theIr nd advances anc On the tho other othor hand as part or orthe i the excellent system or orthe the federal reserve Wall Vall speculators do not look upon tho tt o reserve ratio of ot more more than 70 per percent cent for tor the country as a whole ns an Invitation to BO go ahead They that no drain upon bank surpluses how how- hov ever eer large Jarge these surpluses were would be tolerated It Ir merely for tor speculative use EX The past year In has hi been remarkable for tor the tho lon o of great real sums auma ot of capital seck- seck seel Ing nc employment El of- of s 's of new both home lc foreign ha have o not served to take up the slack alack In Xo United States treasury at the on rec- rec record re ord In December getting ready for the new year car reinvestment de d mand Inand It vaa u difficult for Instill llona lIona wishing to buy goo sized size blocks ot of very ery high trade grade bond d to t get tet otters offers around the prevailing level which was also clo clone to the top level of It the Capital has had to be content ii with L a constantly diminishing re- re return re turn This has been one ot or the ecu cen features ot or financial sit sit- Bit ul lol In 1926 Investment lR 1 ot of the rank were pushed up to what were almost prohibitive premiums Then the demand domand shUt shUt- d over to bonds ot or Inferior grad of or their high yield to In- In stock and to the tho securities ot of foreign er ao The rise In European a number ot of which reached their thel for the year In the closing week weeks and a tow row broke their rec- rec records orda for fOl all all- 1 chapter by lt elf How much of c l thir advance Is f to be explained by bythe b the to buy for the ank aake or o a comparatively largo return and nn how much can bo be act down do to Im- Im Improved proved economic conditions la Is a question Doth have havo entered of course Before going further Into Inlo financial conditions which played a a more vital po part rt than In any year before the war It ItIs Is well to take up somo ot or the main aspects of or the situation at ahome home WALL STREET O OVER nC The year ear 1926 out with expeditious In Wall street that tha were welO not destined to bo realized There Ther had been a a bit big on the stock exchange In the th autumn of 1125 1925 and the keynote or orthis this was the Idea that the tho open open- openIng Ine Ing months perhaps the tho first haIr of the succeeding year would wit It ness ncsa a trade oom Leaders In the th e world were talking about abou this prominent bankers were for forthe the most part optimistic The pub pub- public lie lic tot got Its anticipation up only to find that 1826 1926 was not to be b as much ot of a boom year ear as It had ha been led to expect that It was waa to tobe tibo y be a year of or In tho th main but with exceptions In certain tain Individual lines Some manu manu- manufacturers were unable to let get Hell Hell- HellIng Ing up where they thoy would woul leave a reasonable profit margin Wall Vall In consequence had ha to face a radical readjustment of Its lis Ideas and starling with the sec sec- ond week In January and not ter- ter terminating until the tho early arly part of April there was a heavy and per per- selling movement mo on tile th stoCk It prices II all the tho way from 15 to 50 sO points In Inthe the speculative leaders leadem Then the lump was d and after two tw months ot of uncertain variations the forward Onet more the rise In July and Augu t wall based upon too sanguine 8 jud judgment ot of tha business outlook and In the latter part of Septem- Septem September ber and the first half or o a reaction occurred which 0 a good portion ot or the mid midsummer summer rain gain After Arter the tho middle ot October the th lollIon was Improved Stock rallied until the gen average was brought up to even ahead of the tho high ot of the tho year ear But there thoro as no n speculation such auch as ther was vaa In October and November 1925 Wall lis 01 I orations with due du conservatism aa to 1927 Ideas either way wi were not 1027 OUTLOOK IS r O Twelve months ago oro the point most Insisted upon was that ther the was waa no over accumulation of piles In the lands hands of and manufacturers and that the policy waa to buy only for tor Imme diato needs needa It la Is curious to ob- ob observe serve how closely this also a description of or the tho present lion Now at the beginning or Hit wa we have the comfort comtoi able abl credit status the tho same came pro pAt pt of low money rales rat the same healthy relation be- be between tween buyer and seller In most departments or o trade and et withal no ot of an ther such tuch buying movement as that of 1921 which h for tor three months a tremendous push to Wall iLlI stroet operations and wound up In sud den and violent collapse But while fundamental condl- condl cond are aro strong and It Is 19 ha to foresee any period ol or depres- depres depre Ion commodity prices arc low and the fact remains that no tra-J tra boom and no Wall Vall street boom booi h has ever been founded on low la prices There TIIe may be to a In the price situation tater later on But prospects hat not been bettered b by the happen Ings of o 1926 l t Efforts to bring about ft a larger lar er return for tor th armors are still toward that li Is toward o means rather than toward towar natural means REVERSES IU IV IX G lX The to di crOp In the west has not ac- ac accomplished much Wheat farmer had a larger acreage In 1926 1 2 than thanIn tha In 1 25 or 1934 1 24 There was a reduction 08 a wl it-It it b and a fair decre as compared with the three thre years preceding But Dut then again a aln tho 1926 1026 area aroa under wheat was waa larer than the tha l ot of tho I ars 1913 to 1918 Inclusive In a a word the farmer h ha vo continued to plant about as much wheat as they have hava been acc acc- lomed tomed to plant In normal year ears In n the tho past The Tho result has been roer 1 prices price ns a compared with a arear i year rear IlO The sarno I Is true of animal products The wheat grow frow ir r and the Iho beef betl a d hog ho raisers have o no cause to cOI themselves for tor what has hM occurred In Then there thero Is the tho almost tr situation In cotton Spot cotton old as high at cents centa a i pound In September 1926 It 1 went want down practically ly Iy until late lato in the tho prIce pric wai almost almott cut In to t The Tha 19 5 production of ot slightly more than 00 bales balei wa largely In or o requirements On tOl tOlI tOlof toi ot of this with tho aid ot of the th most mos I favorable grow In known In a e g the 1 crop has hM piled up a probable total lota ot or well over 1 1 es bl UP TO COTTON aiE II X Aro the cotton cot ot or the til south going olne to do what the wheat planters or o the tho west did not do d similar conditions and di- di divert vert a n substantial part of their area to other crops This I Is a question upon which a good food deal doal depends depend for the out out- outlook look In 1 27 The Tha only way out of or the tho condition In tile otton I Ither Is either ther through restricted production or through a shortage In tho new crop which will mature malure next autumn In the thi meantime the assumption seems seem that those who havi havu been hurt by the cotton dump will have to cut down their purchases and that this will demand for or general This point Is emphasized alon olon with the lowered farm prices else else- u whore hero by hy those who look for foi some somo sort et of ft R slowing down In Ir the trade trado la 1 1927 MOTORS OUTLOOK F OIt LI The outlook for the th industry Is more favorably regard regard- regarded ed at the llio close of ot the year that than It was two or three months ago Then there was a good deal ot oi talk about Increased competition price cutting and re- re profits This proved to b u much A few com com- did not II n good show show- showIng Ing In their annual semi and quarter Mostly however the reduced output at the tho automobile centers cental in the tho autumn and early wInter was waa t ba be appraised aa as a n I reaction In the tho clos- clos closIng do Ing or the year new order were on tile the Increase I RAIL Through the tho greater part or orthe o the tha tall railway t tonnage broke broko all In the Ilia history of ot the coun- coun country country try This was reflected In J all ally large gross eros ro en revenue and be- be because be cause of o the return to to- expenditure tt 1 t showed aso quite strikinglY III 1 net dl In the tho course or othe year and n a still mora policy the distribution ot or railway profits Is looked for forIn fo in 1937 1 27 provided I bUI ne keeps kops up as Is expected to t at least something like Uko the volume The delay dolay In the tha Nickel Plate has apparently held beld up som of the tho merger merier prospects prospect In other othe field The Tha Nickel Plate Plat expert I I haa been a reminder to bl In these Uese proposed eon eon- not like like- likely likely that they are ly to find It easy dealing minorities Still as 1927 Ins beg there Is every reason to believe that the tho program or o railway con con- ns will make malte This is ithe Y during the th year ear the wish of the th heads of or the gov- gov government I govI ot or the tho railway labor and hipping interests and finally o mallY of the railway executive es who at first were 01 opposed posed V 1 S STEELS STEEL'S STOCK DIVIDED The United States Steels Steel's 40 cent p-cent extra stock dividend was as 11 by It hano had ha no or trade conditions condition n general except t to permit ot or the that no such uch extraordinary nar- nar step would have o been b en had Ultra thOle been any doubt tho continuance ot or good lime The steel corporation simply limplY find Itself in III the tho position after years or s saving and ploughing back SUr- SUr surplus Into Inlo property where It call capitalize part lart of or these ac- ac accumulations for tor the tho benefit or E shareholders During the war ar the hutte hue Pro l or the Ihu period p were recognized as a abnormal and United States paid put part or o these out oUI but In a i form torm ot of extra cash dividends howe or the situation Is quite The Tho corporation Is 15 ad- ad Its Ita capital account to nn Increased earning power in full beller that this baa pro od cl permanent And also It Is adjusting Its It capital account to tho th enormously plant alu s treasury accruing In Ih the last 10 years year EUROPE hero and there thero exceptions I ro to bo noted It will be he gener- gener illy Ily agreed that the th financial and rehabilitation of or i made satisfactory progress I l It was In April th Britain gold pay payments ments and that the th pound virtually to parity with Ih This cave o an nn Incentive 10 ti the he rest ot of the world to attempt ini I Ione ono one degree decre or another tho tu sam ami I For moro more than ot of 1026 tho th forte at In I i tal Europe discouraging In July the French situation bad hadi the tage ot collapse Cil Cap Capital p ital Ial was out of ot till coun iy all artificial alt 10 It In March 4 19 IlIe had sunk lunk to nearly l The Th hundred million dollar loan temporarily turned p tide but It sul suL to hav hao been merely meNly a stol gap top top-apIn In December 1225 1925 the frano I 3 within leu lc than 20 point hat Is 10 Isa les than a fifth ot or a centI of or Ita 1924 bollom franco ranco I had 1 outside means of help other c trie n- n wore not to corn com to the until the budget had brim n really balanced and until an n I emont had bad been bom torI I ill th funding of the war debts With Issue of new ne paper nol made mado uary by the eon eon- coa stant depreciation In purchasing power the franc went from bad to t until In III July 1926 It I touched Its Ita lowest in all l 34 cent cents FRANCS FRANC'S A AMAZING I Th fh subsequent recovery furnish cd ed ono one of the tho most interesting of o the year earS epIsodes episode It b gan b-gan gall with wit the of t tile lo coalition the fhe very cry nature ot of which ws wan an admission that Fral ce was wo In 11 more desperate ot straits than it been war time This coalition tion waa formidable enough to t override opposition and to adopt a financial program in which the lh world had confidence capital began to 10 flow back slowly at ot tint fIrst then more rapidly until In Inthe the th latter week weeks of the year ar tho no movement ment at a r became urS rt I Then or of COUre ro MOW the problem of how French rench industry and anco were to adopt themselves to the th new conditions condition The They had made mad their calculations upon a very ver I much depreciated alue of the pa- pa paper per currency Wage agee coat co l of or IPA- IPA all 11 other mJ InlO tho operation ot or and mercantile enterprises had hi been adjusted acco according lIng to a a crY low level for tor the franc The Tho sudden upturn In the cur cur- currency rency unit was equivalent to nn a equally sudden advance anc in com com- commercial coin mercial costs Likewise It meant that securities Into which pape francs were converted while the latter wire were going down became becam le valuable In the eyes COS or o their holders The Iari Paris Bourse went wen through some days of ri so ere er liquidation dation and con ment was reported In busine lines The toward the end nd of or the year ear waa that tho th French rench government would like to tse see the franc come to rest y arl around the existing level Ing time for tor Industry to catch up before a further recovery was con con- con With Belgium It was a case cae ct ef a i revalorization of ot the th paper curren- curren currency cy acknowledging as ns a fact what wha was waa everywhere appreciated that tha t there thero was no chance chanc of ever got got- ting back to anything like pre wa rate The stabilization was wa fixed where under the th new condl condi- conditions lions the gold standard less leas than Iban a fifth In terms ot of for for- tor Ign mone money of or what it did l lJ I X D CK liH av M 1 UM Toward the end of tl t year thore waa a spread of over 11 14 points between the selling price of tile th German 7 per cent bonds and the Italian 7 per cents both beth dollar dolla loan loans with a similar character or security and having not far Iron from the same samo length to run Thi was wa no to Italian s but It was a mot tribute to the tho recuperation of or G credit Thi German loc ns public and ud private ate were taken the t avidity and lat r commanded rish's Di The enl ell ss of o the yield 09 M the tn result I o the money position was DoS or course a factor but the main con con- consideration was wa the way I In which Germany had met th the first two year ears payments under Dawes plan |