Wave of Bad News

The number of dividend reductions and omissions this year will hit a new peak since 1930-31. Last week 29 corporations reduced or omitted their common dividends.

This compares with only 23 bearish dividend actions in all April, only eight in May 1941. The wave of bad news for stockholders is swelling. The news comes impartially from big & little corporations, munitions-makers and peace-goods producers alike. Reasons given are almost always the same: 1) lower profits because of higher taxes, 2) the need to save cash for emergencies. Examples:

> Republic Steel, No. 3 U.S. steelmaker, halved its quarterly payment to 25-c-, explained: ". . . There will be a very considerable increase in Federal taxes ... in addition there may be wage increases."

> Continental Can, No. 2 U.S.

canmaker, cut its second-quarter payment 50% to 25-c-, blamed it on the loss of civilian can business (because of the tin shortage) and on higher taxes.

> Philco Corp. will pay 10-c-: instead of 25-c-, explained that extra working capital is needed to handle war orders now on the books. The ten biggest companies cutting dividends last week whacked $13,061,100 from their expected annual payments--44% of everything they paid last year. As the wave spreads over all industry, it may wash out 20-25% of total U.S. dividend payments, or about $1 billion. Some of that $1 billion would have been spent on goods & services, contributing to inflation. But some of it would have gone straight into personal income taxes, contributing to the war effort.

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