The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1899-06-12
AS TO COMBINES.
a Check on Reckless Schemes Of
Over capitalization.
REASON FOR THE CHANGE
Is Found in the Increasing Difficulty
of Securing Financial Assistance
for Such Undertnlsings--,rhe Hcnvi-
~ Watcred Stocks-uenry Clcws on
the Financial Situation.

the Financial Situation. & g,fel
New York Journal OF Commerce: It
Is quite apparent that the current
movement toward Industrial consolida-
ton, which had Its beginning In the
organization of the Federal Steel Com
pany last fall and reached such enor-
nous proportions In the early months
Of the current year. is waning. Where
few months ago each mornings
newspaper told OF the formation Of
from one to hnlf dozen Of these
large corporations. It is now an almost
daily occurrence to hear thatsuch deals
have been abandoned or 'atl,lenst SER
iously delayed or modified.
The reason for this change, Is easily
found In the Increasing difficulty Of Sc
curing financial assistance for, such un-
dertakings Not long ago promoters
eagerly took up almost any. consolida-
ton proposition With seeming lndiffer-
ence to Its merits; to-day reputable
tinunciers Will hardly listen to such
projects, and the growing number Of
unsuccessful promotions Is increasing
this unwilllngness. Industrial consoll-
dalton has overdone Itself. New COM
panies enormously ovcrcapitnlized have
been successfully launched with all
most bewildering inpdity. until the
financial community, llnds itself over
burdcned with securities, and now re-
fuses to facilitate an Increase of the
load. No better proof of this condition
Is perhaps to be found than the low
prices at which the stocks Of many new
''industrials' are now selling, and this
despite the most assiduous booming by
their supporters. Take for instance a
combine recently quoted at eighteen
and the preferred at sixty-one. A sub
scriber OF one hundred shares of prefer
red stock at par received. In addition,
IN equal amount OF common, yet de-
spite this great bonus an apparently
enormous clear profit is changed Mt the
quotations given Into an actual loss OF
5000 on every one hundred shares
subscribed for. Sim administration is
found In Republic Iron & Steel secur-
tiles. the common Of which recently
sold at l6 and the preferred below co.
A more severe instance Of depreciation
Is found in Kentucky Distilleries, The
common stock of this company has re-
Gently sold below is and the preferred
Mt 81, n loss OF over $50 on every share
Of preferred taken at par. In face of
these figures it is not surprising that
bankers are reluctant to furnish cash
for more consultations. ~
1t is not necessarily implied that the
Instances cited = are Of exceptionally
poor companies. 1t Is quite probable
that some Of these We're unfortunate III
being launched rather late In the
movement; but rs an indication of the
present financial situation the signiii-
canoe OF these figures Is unmistakable.
TO use ! common expression. the street
has bitten. off more than it can chew"
There Is, however. something more
than over-supp!y Of securities. There
Is o"ersupply aggravated by overcapi-
tali2a.ion and fictitious valuation OF
the most fragrant sort. 1t would be
difficult 10 name q single large indus
trial consolidation formed throughout
the entire current movement whose
s;ocK has not been heavily watercd.
The hundred shares Of common With
every, hundred! Of preferred" bonus for
good VIII. etc. means orercapitalizn-
tl0n. In fact these large bonuses are
titt EsNIt ~ NiiltlA.
been Induced 10 surrender control Of
thejr properties. To this overcaptall-
z.tion is added tho crrthe- watering by
cNcrGs:"c stock commissions paid to
promoters. Numerous INSTANCES could
be given where such commissions have
amounted to S5.G0p.00O In stock, and only
too many Of twice that figure.
Among I'll" larger projected CONSOLE
CATIONS which have either been delayed
or temporarily suspended are the Ma
tional Wooden Company with $50,00oG00
capital. work upon which hus been
postponed at least until next fall; the
silk ribbon combination, for which q
capitalization Of $50.000,00o was also
talked OF. but which the promoters
statc has been abandoned until ncxt
year on account OF difficulty in float
Ing; the United States Varrish Com
pnny. also a $50.cO0000 concern. which
has been dragging along until until its
organization Is extremely doubtful,
and the International Cement COM
pnny, the proposed capitalization Of
which was reduced from sa0.0O0.000 to
$4,000. 600. but which seer,s rs far
from completion Ms ever. The SO,O00,-
900 American Bicycle Company, too. has
suffered with others An extension Of
ust ]. but In the meantime there are
reports OF friction which up" are5t y rem
der the successful contamination OF
the deal at that time highly doubtful
Tie American Railway Equipment
Company, With so .00O.O geo capital. np-
reared to be nearly completed weeks
ago, but little Is now heard OF 1t. The
glue consolidation. with capital of
%j0c9 900. Is also making but slow pro-
gress. and the United States Dry Paint
Company. to be capitalized Mt $750O00O.
~ reported TO be even less likely to ma
teriaiize. Western dispatches state
that the Pacific Coast Biscuit Com
pany. with Si.00o.O0o Of stock and Sl,50O.-
900 bonds, when had proceeded to the
stage Of electinE officers. hns been pos
tt!yeiy abandoned, owing TO financial
difficulties. Tines" ARE but n few In
stances Of what he's become q general
condition. While several large concerns
have recently been Incorporated, there
IS no Intention In most cases Of placing
securities before the public for some
time to come. @
Up to the present It Is the promoter
rather than the public who has suffered
from this reckless fnanciering These
securities have found their way LInto
public favor very slowly: and vthc
banks are ind'sposed to loan upon them
except under special guarantees. Bank
ers generally agree that the present
check to consolidation. while causing
severe haraah'pto many. Is most fortu-
nate In that It may have prevented fnr
more serious consequences. AS II Is,
The situation is sufficiently unsatlsfac-
tory. -
HENRY CLEWS' COMMENT