An imagined portfolio of American stocks

Title

Language

English

Source

The American Chamber of Commerce Journal Volume XIII (No. 10) October 1933

Year

1933

Rights

In Copyright - Educational Use Permitted

Fulltext

THE AMERICAN CHAMBER OF COMMERCE JOURNAL Octoper, 1933 An Imagined Portfolio of American Stocks Bought a month ago, it would have shrunk in capital value On August 29, when the Journal decided to run a monthly commentary on the New York investment market, prices of that day, of the stocks listed in the box on this page, were taken from a broker’s board: an imagined portfolio was made up. The reader will note comparative prices, of the same day in September. All the stocks were lower except Wrigley. Oddly, that company had shortened hours, raised wages, and yet its stock had gone up. Those things happen. The portfolio was intended to be general, choice of stocks conservative. It is still believed it bears that character. There is a zest of speculation in it, as in the bank stocks perhaps, but not too much. An old turfman once said, glorifying the Grand National Steeple chase run at Liverpool March 15 every year, that ventures without risk of getting hurt are not ventures at all; that is, he said it in rhyme, of which this is a paraphrase. Now you might get hurt by certain items in our port folio, but let’s just follow their fortune through a year and see how much that hurt may be. Each selection was justified with a reason. Man-slaughter and mayhem are sometimes so justified, but good conduct always is. An insight into the reasons: The railroads. You can’t kill rail roads tapping good territory. There is too much public interest in them. Everyone has a vital personal interest in great railroads. . If you own none of their securities, you own insurance. Kill the railroads and you kill life insurance, for the insurance companies hold rail securities in bundles. Besides, in many countries, as in Canada and the United States, railroads are essen tials for national defense; there is no means but railroads to move supplies and troops enough about for a mobilized army. Besides again, railroads can accommodate freight and passengers as no other land facilities of transporta tion can, and better than air-machines can. Over one of our portfolio roads, a man traveled from Detroit to Buffalo in 5 hours; in a bus he made the same trip in 12 hours, very tiring. Elec trical devices made his train trip safety itself; the engineer might have died at the throttle and no mishap come to the train, and if the engineer ignored a slow order, electricity instantly made up the neglect and a reprimand wire awaited the engineer at the next stop. Our traveler was able to work and sleep as the perfect train sped on. All that has happened to that road is the hard times, competition has counted immaterially. This equally applies to the whole list. Take the lowest, the Canadian Pacific. It is a fair guess that this road is not far from dividend resumption. It paid dividends on its common from 1882 to 1931 (latter half), and from 1911 to 1931, or during 20 years, it paid 10% a year. You can’t suspect the good old Santa Fe, nor the still older and equally famous Union Pacific. As for the Pennsylvania, Some Typical American Common Stocks Sept. 29 Aug. 29 Railroads— A. 1’. and S. F.......... 55 69 Canadian Pacific. . . . 13-1, 2 16-3 4 Pennsylvania. ..... . 30 38-1/2 Union Pacific............ 110-1, 2 130 Baltimore and Ohio.. 27 35-3/8 Atchison, Topeka and Santa Fe has paid a 1933 dividend of S3; Pennsylvania, S2; Union Pacific, 36; Canadian Pacific is effecting many economies of operation and cooperating arrangements with the Canadian National such as combined trains, mutual use of trackage, etc.; Baltimore and Ohio is putting earnings into physical betterments such as air-condi tioned fast trains. Hauks— Chase ....................... 22-3/8 28 Empire Trust........... 17-3/4 20 Irving Trust............. 19-1/8 National City........... 24-3 '4 36-7/8 Chase has declared a dividend of 81.40; Empire Trust, 31; National City, 31. Steel— Bethlehem Steel..... 33 V. S. Steel............... 46 Food Products— California Packing... 33 Corn Products......... 86-1 2 General Foods.......... 19 A utomobiles— Chrysler..................... 40-5 8 General Motors....... 28-1/4 Others— Drug, Inc.................. Wrigley (chewing gum)...................... 53 it probably without a peer in the world both as to manage ment and territory. Bought on September 29, Santa Fe at its last dividend, for last year, would pay more than 5%; so would Union Pacific, while Pennsylvania would pay more than 6%. Remaining items in the portfolio embrace °good banks, prime steel companies always in on the shipbuilding, auto mobile companies, foods, drugs and Wrigley’s. These were chosen because their activities are basic and their markets insatiable. Money always has a market, so do foods, drugs, automobiles and steel. Contrary to common as sumption, there is going to be a great deal of building in the United States in the very near future. Housingthere is going to consume building materials, steel included, in great bulk. It is not, in many cities, what it should be at all; replanning and rebuilding neighbor hoods under the new financing arrange ments must be wholesale and continue for years. Taxes are going to be lower, too. Not necessarily federal taxes, but municipal and state taxes—the bulk of all taxes Americans pay. They have been lowered in Iowa amazingly, they have been lowered in Oklahoma 40%. This will stimulate building. Jobs are already more secure, another upping factor. True, there is still a deal of mal adjustment affecting industries in America from the farms up. Difficulties in the way of adjustment are still tremendous, but the goodwill of the people is unbroken—it is even more tremendous. On the other hand, there are rascally chiselers everywhere. A Maryland woman writes her Oklahoma woman friend that wrapping her toma toes in paper and trucking them to the New York produce market, she is given 1 cent a pound for them. The Okla homa woman, though she and her husband owe nothing and are happy that their taxes are 40% lower than last year’s, reports scant food for the stock and wheat not worth the cutting— bringing then 33 cents a bushel. It is these things, these widespread farm calamities, that explain in most part the low figures in our portfolio of stocks. Maybe the new codes will aid the Maryland woman; the produce mer chants tell her the chain stores haggle the prices down—“when we have red tomatoesthey want’em green, and when we have ’em green they want ’em red.” Chiselers. The woman tells her Oklahoma friend that any way, though the summer’s figures show her more in debt, her farm has provided 60 families with work enough to keep them from want. That’s that tremendousness of spirit mentioned above. (All the letters, Atlantic, September, give a grassroots viewpoint of a bad situation.) On the whole, there is no reason to be discouraged about our conservative little port folio. Let’s open it again next month, when General Hugh Samuel Johnson has had 4 weeks more in which to have at the chiselers. 41-5 8 57-1/4 20 89-1 2 37-3, 8 46-3,4 35-1/8 46-1/2

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