The Washington times., 1902-01-09
Government Bonds.
COMMENTARY ON THE
DAY IN WALL STREET

The action of the stock market yester-
| day was unexpected and to some seemed
! inconsistent with the developments. The
Steel securities showed great weakness,
opening off a point each and declining
another point before noon. There was
some support after this, but very heavy
| selling continued all day and the close
was very little above the low price
reached before noon. The general market
! declined at the opening in sympathy with
| the Steel securities. but later, under the
! lead of Union Pacific and Sugar, devel-
/ oped marked strength. especially during
! the last half hour of the session. There
had been a very general belief chat the
Steel securities would be the leaders OF
! the market in the point of strength and
activity, and their heaviness caused much
disappointment.
The Selling of the SteeIs.
1t is a matter of considerable import
| ance to the general public, which is an
especially heavy holder of these sccuri-
ties, to determine what the prevailing
character of the selling of the Steel
/ stocks was. If the liquidation was chiefly
| by professional holders of the stock who
have been buying recently in anticipa-
tion of the statement of the company
there is little need of anxiety over the
outcome. 1t was to be expected that there
would be such a selling movement. and the
only surprise yesterday was that It was
so persistent.
On the other hand, If the DeceI1ber Lus-
iness of the Steel Company has been a dis
appointment TO the insiders and they have
been selling the stocks themselves, ,:nder
cover, during the past two days. it seems
possible that the securities may not he
given the important upturn during the
coming month that has been quite gen.
orally looked for.
The Earnings Statement
AS far as can be judged from the fig
ures of the statement itself it gives no
reason for disappointment. The earnings
during the third quarter of the year were
the heaviest so far shown, exceeding those
for the second quarter by more than ST.
OcO,00o. And, moreover, the earnings for
the nine months period are at the rate
of l13,Oe0,0o0 per annum. which would
carry on the business, pay all interest
and dividends at the present rates, pro-
vide for sinking fund and betterments gen
erously, and leave a surplus for the year
OF $4,000, 900, equal to 2.5 per cent on the
entire capital stock of the company. or
equal to per cent on the common stock.
In other words the dividend on the COM
mon stock has been earned more than
twice over.
comparison between the earnings of
this company, with reference to its com
mon stock, and the earnings of the rail-
way companies in general is most inter-
esting. Baltimore and Ohio common is
selling for 106, while the earnings of the
company for the common stock are about
the same proportionately as those of the
steel company. The dividend paid is the
same. Instances of the same kind could
be multiplied. Union Pacific is another.
The difference in price of the securities
OF the Steel Company and the railway
companies is very large. Some conserva-
tive people take the view that it is too
large TO measure the difference In safety
of the industrial and railway stocks
Safety of the Preferred Stock.
The same difference is to be found be-
tween the preferred stocks of the Steel |
Company and the preferred railway scuri- |
ties. Delaware and Hudson is Z per |
cent stock. 1t is selling at double the |
price of Steel preferred. which is also a |
Z per cent security. st. Paul preferred is !
a Z per cent stock, and is selling even |
higher than this. A great number of the |
common stocks paying less divi- |
dends than the Steel preferred are sell |
ing at much higher prices. St. Paul com
mon is one Of these.
The earnings of the Steel Company for |
nine months of its first year were SS4-
500. 900 Deductions of 81 2.2G3 600 for sink |
ing fund and s9,695, 600 for depreciation, !
reserve and improvements, left $72 $40 600 |
and after $l1. 400. 900 more had been paid |
out for interest on the bonds of the com |
pany there remained SCI .420 600 applicable |
for dividend on the preferred stock, which |
is equal to more than 16 per cent for the |
period. The Z per cent requirement for |
the period was s26. $50. 900, SO that there
was a margin of S34,e70,000 above the
dividend.
If the same record Is kept up for the
three months of the year. the
surplus for the year over the preferred
stock dividend will be SAG, 900, 600 This
is on a basis of $113 goo 900 earned for a
year II will be seen that the net earn
ngs of the company could be cut more
than 40 per ccT and that it would still
earn enough TO pay the preferred dividend
in fell.
rhe December Dccrensc in Earnings
The argument of the bears is shat the
ieavy falling Off of earnings in December
s ominous of poor trade conditions. The
statement of the officers of the company
s that the smaller business is due to
he closing OF navigation on the lakes
which cuts down business heavily. The
,ears say that If this is So the outlook
S for aoor showing during the remain