Omaha daily bee., 1899-07-27
4 no TRrsrs.

There has apparently been n decisive
check put upon the formation of inflated
trusts and the indications are that com
binations or consultations hereafter cf-
fected must he put on the basis Of actual
value in order to sell their stock. The
United States Investor remarks that the
trusts owe their existence to the easy
money conditions which recently pre-
vailed. They found their opportunity in
the fact that the world had become seri-
ously disturbed over the contingency Of
a material reduction of its income. The
promoters offered the public q and Z
per cent investments to take the place
of securities on which the investment
return had been curtailed to figures
far below these. But the inflated and
dangerous character of the trusts hay
ing been pointed out the securities be-
came largely unstable. The under
writer's and promoters now have them
on their hands. says the Investor. They
themselves have had to carry them.
The lending institutions have practically
declined to make loans on them. Hence
the underwriters and promoters have
becn forced to lock up large amounts
OF their own capital in the trust securi-
ties and the loss in interest to them is
piling up each day at n rate which must
grievously trouble them.
A promoter of Industrial combinations
recently said that the old way of or
ganizing them can no longer be worked.
1t is now impossible to raise cash on
any "two for one proposition, he de-
clared. The public will not take any
more "wind.' A good project may be
carried through, but there is no nance
for poor ones. "If q consolidation Is
to be effected, now" he said, ''the plants
must be put in on the basis of actual
value and the sellers must be willing
to take pay In the securities of the new
company. The public will not put their
money into stocks unless they can be
shown to have real value" This situa-
ton had been predicted by conserva-
tive financiers as inevitable, but it has
about one than was expected.
1t does not mean that there will be no
iiiOiS vi ''lISolltiCitlOllo
organized, but it does indicate that the
day of excessively OvercapitaliZed trusts
has gone by, that the public cannot
hereafter be bled for the building up
of his form Of monopoly, but that such
as offer their securities to the public
must be able to show that they have an
adequate basis of actual value. Combi-
nations of that character will not be
the menace to public interests that the
trusts are.
There is another consideration sug-
gested by the Investor and that is as
to what would happen in the event of a
tightening money market. In that case
the banks would be forced to call in
part Of their loans and would most
likely be under the necessity Of throw
ing out a portion, at least, of the Sc.
hypothecated for the purpose
Of obtaining the means to carry the I'M
sold trust securities. That journal ex-
presses the opinion that there would
be the most happy results from a long
period Of 5 to 6 per CEN rates in the
money market. No legitimate business
suffer from such rates, but they
put a quietus on the mushroom
projects which have been springing up
On every side to the very great menace
Of the entire structure of general bust |
ness. There is reason to believe that
the trust craze has about run its course