The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1900-07-29
ABNORMAL AND ARTIFICIAL
The Railroads Are Over Capitalized
Forty Per Cent.
200 MEN CONTROL BUSINESS OF U. s.
And Can Make Times Easy or Tight. Any One
Who Tries to Compete With Them is
Crushed. Good Crops Basis
Of True Prosperity.
Especial to the Baltimore Sun

NOENNlul W lllC DuH.J
London, July 24.-Financiers have
been asking anxiously and constantly
what is the true condition of the
American rail market and what is the
exact financial condition of the United
States.
They have seen sudden rises with
out much apparent cause and slumrs
from no apparent reason. They have
wondered and wondered and asked
valnly, What does it mean?
There is, perhaps, no one today so
competent to give these inquirers n
good, sound, well-founded reply as j.
X. keene, the astute, cool-headed fl
nancier, who has so often gone con-
trary to the all-prevailing market
ideas and come out the right man,
who boldly says in the face of all: Il
belong to no clique, | am member of
no combination, | am not influenced
by any set of promoters speculate
purely and simply
WHY RAILS ARE LOW.
The conversation was opened by ask
ing Mr. Keene's opinion for the rea-
son why American rails are so low,
whereas American financiers who had
been over here stated that trade was
booming with the railroads and that
more freight was being offered than
they could carry.
american rails replied Mr.. Keene,
''are not at all low now. In fact, l
consider them high"
1T was suggested they were dis
tinctly low compared with what they
We're at this time last year.
They were abnormally high, then"
he said, but those were extraordinary
times. / never saw such times. You
can't keep up boom of that sort. a
reaction must occur"
HAS it taken place, then? Do you
think that the market will not i'm
proven was asked.
Il don't see any reason" he an
severed, why it should not. There
are good, sound railroads in the Unit
ed States, as the Chicago and North
western. but the majority of the rail
reads of the United States have been
robbed to death by people in conneo-
ton with them.
'Only in abnormal times can Ameri-
can railroads be made to pay. 1t is
OllC SOISt<illO OIL anu Oiiip eASAiiN'
ed by the very best management in
the reduction of working expenses
and so on which enables the payment
of dividends.
''After the Spanish war there was a
great buoyancy. People thought Il
new era had come, but that was not
possible under existing conditions.
The whole thing lies in this: There
is not railroad in America, except in
one or two instances, which has not
been overcapitaliZed by mismanage-
ment or by the fraudulent practice
of those connected with it, and placed
with the public at 40 per cent. over
its value.
From that, you see, a road must
earn interest on this 40 per cent. be-
fore the shareholders begin to get any
thing
Suppose they were to raise rates?'
SIT is impossible to put rates high
err" was the reply. There is always
the pressure of people, steamship own
ers and others asking for reduced
rates.
Our very distances are against hi%1
rates because people are living far
away and can only send their produce
to market under very reduced rates.
If they are to make profit there is
competition.
TOO MUCH CAPITALIZATION.
''The case is simply this. You have
got $75,000,000 capital for a concern
which ought to have been capitalized
at $4,000. 900. You have the almost
impossible task of earning a dividend
on the larger capital.
''If the existing railroad mileage of
the United States represented faIr,
honest outlay from the constitution
of the railroad there would be no
more secure of more desirable invest
ment in the world. But, as it repre-
sents, in my opinion, as evidenced by
the capitalization of bonds and stocks,
and outlay of 40 per cent. greater than
it should have been, the struggle to
pay fair, reasonable dividends will al
ways be one to exercise the ability
and ingenuity of the management in
order to furnish them year after
year, while there will be constant per-
plexities in solving the problem salts
factorily.
''If YOU look about you will notice
that the majority of railroad people
who account for all the large fortunes
of the United States have been init
mately connected with the operation o1
this excess of capitalization, placing
the profits to their credit. In one way
of another they have generally be
come attached to transportation in
terests.
200 MEN CONTROL COUNTRY'S
BUSINESS.
what do you say about the increase
of trusts. Mr.. Keene?
I'm America today" he said. 1--WE
may say 200 men control the manu-
featuring and prominent business OF
the country. The great question to-
day has come to be that of monopoly
mo independent man can get into
business without the monopolists com
ing down and crushing him out. In
this way it has come to be that he has
a much better chance in England,
where monopoly tyranny does not eX-
-