The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1903-07-19
SITUATION FRAUGHT
WITH UNCERTAINTY
Further Decline of "Gilt-Edge"
Securities
STAGNATl0N IN MARkE T
Many Capitalists over-Extended.
Auhara %ha aIanaa Pesfe--The
STAGNATION IN MARKET
Many Capitalists overExtended
Where the Blame Rests-The
ReadIustment of Values-The
Money strIngeney.

New York, July 1s.-(special.) 1.-THE FL
nanclal Age of today says;
The period of Generalization through
which the stock market has just passed.
has been accompanied by features of more
than passing significance, some of which
are without precedent even in the check
cred history of Wall street. Perhaps the
most noteworthy one is the weakness Of
the very choicest railway properties-cor-
porations which disburse millions annual
~ In dividends and interest on outstanding
bond issues and still have a substantial
surplus account remaining; properties
which report monthly increased TRAFFIC
and earnings, and which are controlled by
Americas most prominent financiers
That the securities of such properties as
these should be permitted to establish new
low records, to decline far below the
point where their earning power and sta
tistical strength alone considered. they
should attract the most conservative Of
investors at home and abroad, Is not
alone attributable to the monetary stu
alton, although that is undeniably the
chief underlying cause of the general de-
preston of values.
The ungarnished truth is that the ma
jority of our leading financiers, railroad
men and erstwhile captains Of industry
are over extended. A trife over two.
years ago they were leading the greatest
and most unwarranted "bull' movement
that this or any other country has ever
seen. Drunk with enormous profits
reaped In the stock watering schemes
which marked that period, they turned
their attention to the stock market in the
hope of again doubling or trebling their
capital, as they had done in the organiza-
ton of the large Industrial corporations
many of which are even now beginning
to disintegrate. They were ably assisted
by the outside public. which at that time
was represented in Wall street by every
walk of life from the ministry to the
kitchen. But In spite of the eagerness to
purchase the securities with which the
market was flooded, many remained undi-
gested and are today In the hands of the
syndicates which undertook to float them.
When the panic of May Q, 1901, opened
the eyes of the public to the inherent
weakness Of the movement they were
wise enough to acknowledge that they
lacked the resources necessary to hold
securities the value of which was ex-
tremeiy doubtful, and withdrawing from
the market left the burden where 1t
properly belonged, on the shoulders of the
captains Of industry and the generals
of finance" who today are paying the
penalty for the debauch which marked
the two first eyars of the twentieth CEN
fury.
When one stops to consider the extent
of the liquidation of the past year and of
the resultant shrinkage of values. 1t
seems strange that the readjustment of
prices, of which we heard so much, and
which was popularity supposed would
clarity the financial atmosphere, has
failed to remedy matters, and that, in
stead, there is less resistance than there
was and points up. Low marks estab-
lished in the panic OF 1901 have been
passed. Pennsylvania and New York
Central have shrunk In value more than
one-third, Steel common is selling on a
basis where 1t pays dividends at the rate
of % per cent per annum, and so 1t Is
throughout the list. Yet the interests
which dominate these great properties
either cannot or will not purchase shares
which they eagerly sought at the absurd
prices that ruled two years ago. 1t is
true that the country is prosperous, that
wheat Is still growing, that transatlantic
trains continue to run on schedule time
and that people eat drink and wear
clothes. This encouraging information
has not escaped the notice Of optimistic
commentators at any time during the
long continued shrinkage of values. but Is
1t not singular that II has failed to at
tract to the security market those who
are enjoying the good times and whose
surplus funds could not be better in
vested than In the shares of the corpora
tions which must necessarily reap the
benefits of prosperity.
Wall street is not blind to conditions
that exist west of the Hudson river. not
withstanding popular belief to the con-
trary, and 1t appreciates the value OF
good crops, etc. but IL realizes that there
are other considerations Of equal lmpor-
lance which determine the course of val
ues Chief among these considerations at
the present time Is the trouble In the
money market, brought about by the un-
wholesome syndicate operations and the
Cutting of the security market. When
a railroad like Union Pacific is unable to
borrow s10,000,000 for eighteen months at
less than per cent interest, II Is time