The Washington times., 1902-05-04
RAILWAY COMBINES
AND THE MARKET
High Prices for Stocks Result, But Spec
ulators Take Advantage of Small
Floating Supply.

The community of interests plan in
shown in the present stock market is
somewhat breezily described in Mr..
Clews' letter this week.
One of the disturbances of the week. in
addition to high money rates, incidental
to May disbursements, the sensational
movements in the industriaIs. and the
railway labor difficulties, has been, he
says, the evidences here and there Of at
tcmpts to secure control of different prop
critics for extension OF the community of
interest idea. The extent to which the
latter schemes, or, In other words, rail-
road concentration movements. are affect
Ing the market is not yet thoroughly ap-
preciated, although they are more large
ly responsible for the high prices of good
railroad shares than any other single
influence. Community of interest has put
a stop to railroad wars and secured bet
ter and more stable rates for transporta-
ton. Traffic being heavy because of the
country's growth and activity, the rail-
roads are enjoying a period of prosperity
far beyond what was ever anticipated.
"
tion from new railroad building while this
community OF interests lasts.
Ii is the permanence of this idea and
the division of the railroads of the coun-
try into few great sytems which the
big railroad magnates are endeavoring to
establish. Forces which they cannot con-
troll are driving them irto these alliances:
for one combination compels another.
and the demands for efficiency. economy,
and simplicity of method are irresistible.
Whether they will or no. railroad mana
gers, or the systems they control, are
Obliged to buy into this road and that
road in order to prevent absorption by
a rival until all the outlying roads are
being rapidly segregated into one larger
system or another. II is quite unneces-
sary to mention examples; they have
been innumerable during the last few
years. But what Is the effect upon the
stock market? Simply this: That the
floating supply of the best railroad stocks.
once active on the list, has been very
much reduced by corporation buying; and
such stocks are tenaciously held because
those possessing control dare not risk its
loss by selling.
Such n situation offers the bold specu-
lator with a few millions behind him a
rare opportunity for spectacular opera
tions: and. through artifices well under
stood in Wall Street. high priced rail-
road stocks are readily lifted several
points day. to the utter confusion Of
the ordinary buyer. or course, such oper-
ations are OF no benefit to the stock mar
ket; they do not encourage buying. and
everyone knows that the real buyers for
control do net rush IN at the top. but
carry their points at times un-
seen and unknown. Control OF Northern !
81 10 uin ha rarpayNhara1 H.
tained long before the price began 10 I
soar. These facts are cited only as one '
reason why so many stocks are selling |
much above their intrinsic values. Such !
securities are best avoided by the specu-
ator. not alone because they are too ex-,
oensive. but also because they are liable
10 sudden and very severe breaks when
he artificial conditions which fostered
such manipulation cease to exist.