St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-09-10
THE INDUSTRIES MAY LAG
To Some Extent, Owing to
Excess Of Capacity for
Production.
RAIL EARNINGS INCREASE.
Henry Clews Expresses Hope
for the Future Of Rail-
way Securities.

our last adviceS. the slight reaction in
prices of stocks in the last week OF
August has been followed, during the
past week, by general recovery of
tone and an advance in quotations. This
is evidence that the market has not lost
the confidence inspired by the settle
ment of the tariff, and the. consequent
general revival of business. The m-
proved tone in the merchandise mar
ketS and the presence in the leading
markets of buyers of goods representing
all parts of the country find ready
response in Wall street: the more so as
the railroads already show the effects of
the revival in an Increase of earnings.
The general outlook is interpreted as
favOring a continuance of the present
SYmptO ms of recovery. Everywhere
there is a scarcity of goods. and the
current unprecedentedly low scale of
prices encourages buying. After twelve
months contraction of purchases, alike
by traders and consumers. a consider
able replenishment of supplies seems
inevitable. The buying may be coll
sentative, and consumption may posi-
bly, run largely upon the lower grades
of goods; but, in any case. the ma
chinery OF business has now received a
new impetus, and there is no reason
why it should not steadily recover its
accustomed movement. 1t may be that
the recovery in the industres-or In
some of them
Will Somewhat Lag
behind the movement in commercial
operations; for there is reason 10 fear
that manufacturers are contending
against the difficulty of an excess Of
plant, and for that reason they may find
ground for complaint until their capac-
ity for production becomes better ad-
justed to the demand for products. To
each that adjustment there must be on
the one side an increase in the buying
ability Of the consumers. and. OH the
other, the permanent disuse of plant
which has failed to keep pace with the
march of economy in production. For
these and other reasons we may not he
warranted in expecting any immediate
''b0om" in trade; but we may legiti-
mately anticipate the wholesome process
of recovery that comes from a revision
OF the conditions of production and
distribution. Such revision is calcu-
lated to encourage confidence in invest.
ments; and, it it fails to induce expan-
sion in industrial OUTLAWS, it to the same
extent encourages investment in exist
ing securities. The general situation
of investments seems to favor steady
rise in the value Of railroad securities.
From some causes connected with the
excess of manufacturing plant above
referred to, there may very possibly be
for some time to come check upon the
flow of new capital into the industries.
The tendency of the moment. indeed.
is rather towards the consolidation of
the several separate capitals of impor-
tant trades into single great monopoly
for controlling the effects of
Excessive Production
and consequent competition. This, for
the moment at least, directly tends to
divert the increasing wealth of the
country from industrial uses, and forces
it into other forms of Investment. Rail.
roads are the more calculated to attract
this diverted capital because they are
becoming less and less exposed to COM
petition from the creation Of new CON-
pallieS and the construction of new
lines. Experience is improving their
methods of operation; public opinion is
enforcing upon them greater Integrity
OF management; the current wholesale
reorganization of large companies is not
only wedding out the weak spots in
their finances, but also exhibiting the
necessity for more conservative capitali-
cation and a stricter economy of opera
ton. These facts should make railroad
stocks aud bonds more acceptable to
those who. for the time being. find some
other forms OF corporate investment
surrounded by doubts arising from UNI
settled industrial conditions. For this
reason we expect to find the values of
railroad securities steadily sustained by
a growing investment demand, ana re-
gard them as
AGood Purchase
whether OH speculation or for perma.
nent holding. The gross earnings of
railroads continue to make increasingly
favorable comparisons with this period
OF last year, when the depression of
business had not produced its full effect
upon transportation and when earnings
were sWelled by the worlds fair. For
the four weeks of June, some seventy
five to eighty lines showed decline,
averaging about 20 per cent, from 1893;
and, owing TO the Debs strike, the de-
crease for the first week of July was
over 80 per cent. From that date to the
third week OF July, the decline .dimin-
lshed to IL. 40 per cent, showing the ef-
feet of the breaking up of the strike;
and, for the last week OF that month,
the decrease was less than 2 per cent.
August opened with a merely fractional
falling OFF and the third week OF that
month showed All increase over last
year of 81 per cent. 1t is to be noted.
however, that August of 1898 showed Il
decline of Is per cent as compared with
1892; but the traffic of that month two
years ago was large beyond all prec-
edent. Under all the circumstances,
therefore, the current drift of earnings
must be regarded as assuring.