New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-05-31
Financial.
The Financial World.

rather disturbing. The heavy selling Of that
day was followed by the customary reaction
considerably helped b. the large and prompt
over-subscription to the Pennsylvania under
writing. Nevertheless. the reaction was less
than might have been expected, the market has
since sold off again; and prices on Friday were
not much above the lowest Of Monday Bear
operations do not account for this They are
but Incidental to unmistakable liquidation. The
Iiquidating movement is still in progress.
In the three weeks from Monday May 4th %
Monday the 18th. the market had a serious fall.
1t was so large that the fact Of no failures 90
curing has been much commented on, and is
particularly noted by the Financial Chronicle
in it's issue OF yesterday. This fact merely en-
phasizes what has often been said. that the diff
ference between declining market and a panic
is only a difference Of time. IF prices fall SLOW
" establishments are constantly going on. and
no failures occur; II they fall rapidly TO
give no opportunity for these readjustment7.
failures result.
Saturday a week ago. and Monday. the selling
was large to give rise to fears OF serious
trouble In these two days St Paul fell from
154 to HTS and the effect on the general list
was demoralizing. But in the previous three
weeks it had declined from 163 to IA without
attractin, more attention than any other lead
ing stock. In this same period. Pennsylvania
declined Is points Atchtson 10. Rock Island II.
Union Pacific s. New York Central .. Louisville
G. Southern Pacific 4. Missouri Pacific 0. Steel
preferred 4. Steel common D. Had these de-
clfnes been spread equally through the period.
the market would not have been disturbed The
disturbance arose from the compression Of 50
large a percentage of the decline into one or
two days.
Our May declines have followed rapidly q
wasting away of prices running through many
months; that to-day's level represents from
the highest figures made for the same stocks in
the boom period, a reduction ranging from 10 10
as high as 80 and 40 points-and this counting
out exceptional cases like Northwest. which was
bought enormous figures with the evident
purpose Of putting the company through the
same process as Rock Island has been. if control
could be obtained. Counting out these cases, We
have the losses mentioned in the ordinary 1ear-
ing stocks of the list.
When prices were at the dizzy figures Of last
year. conservative people had been left behind
considerably. They had iong before declared
that prices were too high yet felt that the Wild
rush Of speculation would carry them higher
The same people now say that stocks have got
back to intrinsic values; but they expect to SEQ
them lower. 1t is safe to buy stocks now. for
their real value: but for one buying on anything
but ample margin there is danger of getting
wiped out. The fact that prices had got beyond
values did not prevent them going higher be-
fore the final turn came The fact that prices
have now got back 10 values viii not prevent
them going lower.
1t is d reasonable expectation that stocks VIII
have to sell at least a = per cent basis bsfo.-
the bottom is reached That is cood s.oc.,
paying per cent will have to sell at par. sr5-
of course. stocks paying more or less than Chi.
will be reekoned at that ratio
This basis is obviously only general -ta ~
ard, and leaves out stocks like the stees. vs-,
are selling greatly below it: and it takes pn
count of non-dividend paying stocks tha u.s. o.
which shows the greatest diversity of Is-.
from Leather common at 10 TO EIook1ya Ta-.--
ton TO neither stock ever having paid r t..--
dend; or Wabash preferred at -. * r. rr.-
ferred at -. Southern Pacific at -
The speculative. element is. i'm respect to tha-.
no11-divdend payers. TO the dividend Jss.r
steeIs. the predominant one We may fFft
Southern Pacific At 80 this stock is utriu-5-
caHy cheap because the condition Of the prop
erty makes it certain that if bought at these
figures as investment. the stock will become
a dividend payer within period which VIII
make the investment 81 profitable one Never
theless there is in this fact, no assurance that
it will not go lower temporarily. simply from
the present downward force Of the speculative
movement
AS to the SteeIs. are left in wonder when
they will rise to prices apPrOximating the diyi-
y o.
demonstration in declining earnings why they
should sell at present figures. The common. at
81, is selling at a non-dividend figure. the pre-
ferred. at ST. at the figure Industrial stock
paying only per cent might be expected TO sell
at. The new per cent bonds have been ad-
vancing while the preferred stock has declined.
Probably the opposite movements have mutual
relation The bonds are about as in
vestment as any high standard railroad bond.
The Street has opportunity 10 see in ths
performances with the new Rock Island seCurj-
ties what would have happened in Northwest.
had the same people succeeded in their scheme
TO buy UP control There would have been is
sues of bonds and stock. something ike TIRES
for one: and the market would have been
flooded with unlimited amo mt of the new
stuff. This would have been worked Off on the
public at the best prices obtainable. and the
promoters would then have looked round for
new properties to capture: meanwhile retaining
control by the same ingenious device as they
hold control Of Rock Island. which does not i'm
volve the investment of a dollar in the property.
1t was a bold conception-this device Of buying
up a railroad. fixing oneself securely IN control
without the necessity Of holding IT'S securities.
of other roads to be put through the same
process The rurnors have been thick that sor1a
of the Rock Island party have been hard pressed
lately. This is less probable than that the trou-
Bile has been with the people upon whom they
unloaded their Rock Island creations. II is true.
however. their failure with the Northwest
scheme cost them heavily
1t was an agreeable surprise to see the big