The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-07-26
FALL IN UNITED STATES STEEL
UNUSUAL FEATURE IN COMMON
STOCK OF THAT CORPORATION.
At Present Prices 1t Pays 16 Per Cent,
but There Are Few Buyers-Re-
cent Individual Losses.
pecial to the indianapolis Journal.

nine months has been felt by the various
financial institutions that were heavy hold
ers OF stocks and bonds. especially the life
insurance companies. During the bull
movement prominent officials of certain life
insurance companies were induced to ac-
cept partnership in some of the leading
banking houses in Wall street. Unframed
I'm the wiles of the stock market commun-
ity, they were drawn into the stream at
time when enthusiasm was at Its height,
and some of them, 1T Is necessary to relate.
sacrificed their cool judgment for prospects
more glittering than had ever been pre-
sented to them before. and they are only
now beginning to realize why they were
sought out and fiattered into making Wall
street connections. Various financial insti-
tutions, insurance companies not excepted,
invested heavily in securities at the prices
that prevailed year ago.
XXX
One of the gravest and most puzzling fea-
lures of the financial situation is the fall
ure of the extraordinary liquidation which
has been in progress to be reflected In any
substantial shrinkage of bank loans. The
loans of the associated banks of New York
continue in excess of deposits. 1t is evident
that while large loans are being called on
one side. favored people on the other side
have Been holding out their hands for all
the money thus made available. There are
just as many stocks existing to-day as ex-
listed year ago. Commission houses are
carrying only about one-third as many as
they were carrying at the top of the bull
movement, liquidation on the part of out
siders having reduced commission house
lines 70 the smallest average, perhaps, in
FIVE yars. Liquidation bfings stocks directly
back to Wall street, and all the securities
that have been sold back to Wall street
on this decline are somewhere around,
most of them, no doubt I'm bank vaults.
Some OF the most competent observers of
stock market conditions Insist that there
can be no substantial Improvement in
values until loans are reduced. The banks
certainly are not prepared to finance
Dull movement even though conditions
Meanwhile the investment demand for high
class securities, which invariably precedes
an Improvement In stock market conditions,
is very backward. With money worth 511
and per cent, securities yielding and
might be. The impossibiiity of finding a
market for new securities on anything like
of very high credit, such. for example, as
Chicago, Burlington d Quincy and Union
Pacific, into the market as borrowers at 5ls
and per cent. on their notes.
States Steel shares are held by small invest
ors everywhere in this country and by
great many in Europe besides. the senti-
mental effect of, their decline to new low
record prices in something to be recokoned
with. United States Steel common sold this
week below the lowest official quotation for
1t in the panic of May 9. 1901. 1t is the
common stock in which the selling has
been heaviest on this decline. Although
professional operations were conspicuous
it would be ridiculous to insist that they
alone were responsible for the stocks ex-
treme weakness. There has been liquida-
ton Of very urgent and distressing char
acter, seeing which professional traders
went in and offered the stock down. 1t is
persistently rumored that dividends on the
common stock are either to be reduced or
suspended. 1t is said that Mr.. Frick was
offered the presidency of the United States
Steel Corporation and was willing to take
1t on condition that dividends be suspended
on the common stock. Mr.. Morgan would
not agree to that. There is not the slight
ests, especially the Rockefeller interests
have been insisting that dividends on the
common stock be either cut or passed
There is believed to have been friction on
this question between the Morgan faction
on one side and the Rockefeller and other
conservative interests on the other side.
have
thus far prevailed AS a 4 per cent stock
United States Steel common, selling at p
pays 16 per cent. on the investment and at
20 1t would pay 20 per cent. The stock is
either the most extraordinary bargain now
offered in the market a gold brick with
out apologies. Liquidation alone cannot
sufficiently explain its decline to this level
On the other side there has been a con-
tinued absence OF buying power. Inside In.
terests apparently are unwilling to support
their own stock, even though it would re-
turn them 10 per cent. or more on their
money.
Steel common Is more widely distributed
than any other security and is held in small
amounts by poor people who depend upon
to these small investors at between 40
and 30. The only reasonable explanation for
Steel common paying per cent and selling
at % is that interests who are responsible
definitely continued
Pittsburg, Chicago. ST. Louis, Cleveland
and other Western cities have been selling
heavily on this latest decline. Harris,
Gates q Co. forced q great deal of stock
on the market this week. both common and
preferred. 1t was understood long time
associates were out of their Steel and il
was a question much debated this week
whether the selling by Harris, Gates & Co.
was liquidation or for short account. 1t
might easilyhav been good selling, although
1t was not generally believed to be such in
Wall street. Any one of ordinary shrewd-
ness having line or, say $1,000 to 100 900
shares of Steel to sell In a market such as
this, would sell IL through house that
had been hammering the market i'm order
10 give the impression that IL was short
selling and thereby excite opposition. Some
very large lines in which Steel was the
principal collateral. have been sold out re-
Gently, and that alone would account for a
| good deal or the pressure on the Steel
stocks.
There has been good deal of talk around
the street recently OF a GOODNESS between
j. Pierpont Morgan and his junior partner
George w. Perkins. There are several
versions of the trouble. the one most gen.
orally accepted being that Mr.. Morgan
found Mr.. Perkins involved I'm specuiations
with an operator whose exploits have beer
attracting widespread attention. The story
| is that they had large joint account in
! Steel. III has been Mr.. Perkins's misfor.
| tune TO be Intimately Identified with those
| features of the United States Steel Corpor.
alton which have been most severely crit.
/ icised The conversion of 500 900 preferred
stock into bonds was his conceptions and
4 that was seriously opposed by all the con.
! sentative interests. The scheme of selins
preferred stock 10 employees was another OF
/ Mr.. Perkins's conceptions. Mr.. Carnegie
was unalterably opposed TO that There /.
/ already grumbling on the part of the EN-
ployes who subscribed for Steel preferred a
about 10 points on their investment
1t was j. Pierpont Morgan who unwit