Seattle daily post-intelligencer. [volume] (Seattle, W.T. [Wash.]) 1881-1888, 1884-07-31
os;if POST INTElllGENCtR.



has not been confined to ~iioea' VI
vatered stocks, but runs through the
xhole list of quoted securities. IL De
Gan in the middle of 1881, and has been
continuous since that time DurIng TIE
present year the depreciation has oeen
yiolsnt and rapid. sweeping away values
x,,bout cessation, until confidence IN
the safety Of investment 10 even toe
best dividend paving railroads oil the
oouutry has we'll nigh been destroyed
80 great has been this falling on IN val
ss NJ leading securities that IN most
casss Of dividend paying stocks It has
largely exceeded in the past three years
all the dividends declared and p,id, 20
that the person who invested IN choice
railroad stocks in July. 1881, has lost
mt only the interest upon his invest
msnt. bat a considerable portion OF tue
principal.
I'm a rsceu, article in Brddstreefs
il ia shown that bat SIX stocks have
Maid dividends since july, 1881, to an
amount equal TO the decline IN their
rnarke, price. For instance, the CHI
caeo a. Alton Railroad has paid regular
dividends at 8 per cent, and will IN
doubtedly continue to do 10. Yet while
IL has thus paid ID three years - per
oapt. in dividends, its stock has fallen
from l47 to 40, a decline OF 81 per
share. This il one of the stocks that
has suffered least by the decline Dur
ing the same years tbs Central Pacific
paid SIS per share in dividends, and de-
clined $685.. The Chicago, Milwaukee
a. 81. Paul has paid 81 and declined
sfs per share. the New York Central
paid $24 and declined $5z per share.
The Union Pacific paid $l9 70 and de-
olined x97 per share, and the Oregon
Railway and Navigation Company paid
x26 and declined $l0s.5O per share
These are but samples of the list OF
dividend paying securities. Even west
ern Union has declined to nearly double
the amount Of it's paid dividends. hav-
ing paid $3.50 and fallen of $3.50 IN
price during the past three years. The
decline in non dividend paying stocks
has been even greater, with no relief by
receipts from earnings.
Il IL not strange that this enormous
and protractsd shrinkage should result
in financial strinRency and business dc
preston. Investments IN railroad
shares differ materially from invest
msnts in railroad mortgage bonds. Tbs
latter are TO a much larger extent per
msnent investments of capital. which
seeks security, and fair rates of inter
est for an extended period. On the con
trary, investments in the former are q
Temporary, speculative employment OF
the floating capital OF the country
which fuds present but not permanent
lodQment in banks Of deposit, aud is by
these loaned 10 operators on stock col
lateral. In fact, not twenty per cent
of all the stocks In she country belong
TO men who have bought and paid fol
them. Purchasers pay their rwn money
for margins aud bsrrew the rest from
the banks. Stocks are thus bought by
small capitalists 10 an amount largely
in excess Of their ability they are
bought when the purchaser knows the
price to be above their actual value they
are bought for speculation ON quick
turns, not as legitimate business invest
ments.
When the tide tarns, when prices have
become inflated so greatly that the
floating capital invested IN them is SC
nearly absorbed that the banks have nc
more to loan. there comes rush to re-
alice and prices fall. Ordinarily this
decline is at first gradual, bat rs IL con
tinues it gathers weight and momentum
Banks cease TO make and extend loans
and call for margins failing TO receive
which stocks held as security are sold
thus accelcrating the decline. Cautious
depositors take alarm and withdraw
their deposits, which diminishing the
amount Of floating capital available fol
speculative investment, adds to the
strinRensy and precipitates further sales
Buyers become timid and scarce; almost
all the smaller operators and frequently
the heavy ones are forced - realize. A
few 20 to the wall and long lines OF SO
carities held by their agents, the banks,
food the market. Some large banks
fail, adding to the disaster the losses of
their depositors, both large and small
Collaterals onoe good have 50 depre.
ciated as 10 DO almost valuelcss, not
being salabls. Loans are called in. re.
nswals refused and new loans denied
Country banks are called upon TO make
good their overdrafts. aud in turn are
forced to make like demands upon their
customers. The result Ia what Is known
a. hard times Exactly what the
whole country 10 today experiencing. II
Is also true OF England, Germany
France and Holland. although not in
20 great degree.
These fluctuations are unavoidable.
They are inseparably connected with
the speculative element which per
vades, and to great extent controls
the great monetary transactions Of ths
world. They swing like the pendulum
of . clock 10 opposite extremes. Price,
Of speculative securities advance for Z
series of wears, carrying with then
prosperity in all branches OF business
Money 10 easy TO obtain because th,
security offered Is readily convertibi,
and advancing in value. Enterprises
In advance of necessities are iuaugu
rated and pushed forward, some oI
them to completion. An era Of gooS
feeling. confidence and prosperity pre-
vailA Everybody makes. or expects Il
make, money. when the top round ol
the ladder Is reached and the descent