The Washington times., 1901-07-01
STOCK MARKET COMMENT.
Analysis of the Bank Statement
and Its Indications.
Showing Complicated by seventh Ma
tionnI Failure - The steel Trust
Dividend Question-BeIief That 4
Per Cent VIII BE Given Common.


NEW YORK. June 30.-It must be kept
in mind. in reckoning on yesterdays bank
statement. that the accounts of the
Seventh National Bank have been
stricken from the list This Of itself
would have been equivalent. in a compar-
isen with last Saturdays totals. To- re-
duction Of 81 5000 loans. Of $500. 900 cash,
and of s, zoo. 900 deposits. Since the Seventh
was $l25,O00 below the legal limit Of re
serves last Saturday, the elimination of
its account is equivalent to adding that
sum to the total surplus over require
ments.
But these deductions do little more than
confuse comparisons; for the double rea-
son that on the days of last week
before its failure the Seventh paid over
to other banks, against the clearing house
debit balances. two-thirds of the cash
which it reported a week ago, and that
the receiver promptly deposited with
other banks what cash he found left over
when he assumed control. The inference
is that the general statement yesterday
had an artificial reduction OF liabilities.
while the total Of cash reserves was not
much changed. There is no great profit in
anaIyzing such a statement. The only
seemingly tangible point about it is that
the banks actually reporting yesterday
seem TO have cut down their loans and
liabilities upward OF five millions, and are
hence proportionately stronger.
Somewhat mistaken views regarding
the meaning of the bank return were ac-
cepted on the stock exchange yesterday,
and probably they helped. TO some extent,
in the final show of strength.
What the bank statement does seem to
inI;ga-a fs that hp extreme high money
rate last z week was consequence
quite as much Of nervous apprehension
and Of a wish to make a favorable show
yesterday. as it was of exceptionally large
demands. or of exceptional losses in re
serves. II Will require about week be
fore the money market can fairly test
the effects Of the redistribution of July
dividend and interest money. W hen tnal
is done, the further question viii remain,
what new demands will arise for the use
of this more readily offered capital2 Mid
summer, like midwinter, is the season
when the syndicates ordinarily raise their
necessary funds.
The Impending decision on the Steel
Trusts common dividend is a matter of
more than ordinary interest, not only be-
cause il affects some twenty thousand
investors. but because it is really the first
declaration of fiscal policy regarding a
very remarkable experiment. On the
financial management Of the gigantic
enterprise and on the result of that
management the question largely hangs,
W6eInET
ing industry viii extend further or VIII
be discredited almost at the start
There has probably never been a case
in financial history where the policy OF a
corporation rested as it does in the pres
ent instance on the viii OF one man VINO
was not, in the strict sense OF majority
control, the owner Of the company IN
reality. nobody owns this trade leElathan,
and no one controls il except the bankers
who fioated the combination A contest
for control is all but Inconceivable. To
be applied to Steel Trust ownership, the
recent audacious undertakings OF west
ern railroad man would have to be mag
nified exactly thousand times. snare
holders meetings, such as the EhgnSh
corporations hold, would be impossible.
No public hall in the United States could
accommodate them
Whatever Mr.. Morgans viii as 10 divi-
dend policy may be, the matter Is really
very perpleXing. The presumptive claim,
by holders of common shares to whom
dividends were paid on the shares eX-
changed for Steel common, has already
been referred to in this column These
petitioners base a further claim on the
circular voluntarily put forth by Nj Nor
gan's house on March 2. which plainly as
serted that statements furnished by ofi-
GERS of the several companies show that
the aggregate of the net earnings OF all
the companies for the calendar year 1860
was amply sufficient to pay dividends on
both classes Of the new stocks. besides
making provision for sinking funds and
maintenance OF properties. No figures
this language. taken with the fact that
recent profits have certainly been greater,
may fairly he looked on as significant.
Against this stands the depreciation
problem, all the more formidable because
so hard to measure. Nothing can be more
certain than the fact that neglect Of
proper allowance for renewals and depre-
citation IS the rock on which some Of these
twentieth century argosies viii sooner or
later split Like the false bookkeeping Of
the old AtchisOn, and the manipulation
Of the Reading surplus, IL is a Ear more
inSidious danger than an actual war Of
rates which anyone can measure. Temp
tation to please the investor with large
dividends will always conflict with the
instinct 10 keep intact sufficient surplus,
especially when not even the President Of
the trust can say what the next year S
needs Will be. The whole question is
puzzle II is quite well understood that
the dominating interests in the Steel
Trust are aVerse to paving dividends un-
less assured Of the power TO maintain
them But how can such assurances be
obtained in the case Of Unitec States
Steel common-especially II the profits Of
a boom year in the trade were made
the measure Of dividends? Steel as Mr..
Carnegie once said, IS always either a
prince or pauper. and II Will keep up its
rapid vicissitudes Of fortune until trade
reactions are abolished. But that will not
be until human nature has been changed.