The Savannah morning news., 1903-11-03

/ ElN Il h SMITH >
The report of Mr.. James Smith. re-
ceiver of the United States Shipbuild-
ing Company. a synopsis of which was
published in our dispatches yesterday,
makes a bad showing for Mr.. Charles
| NJ. Schwab, and those associated with
him in that combination of industrial
| plants. 1t hasn't been so very long
since the newspapers of the country
were full of praises for Mr.. Schwab. 1t
was at the time that he was made
| president Of the United States Steel
| Corporation. He was pointed to as
an example for the youth of the coun-
try to follow. No newspapers are adj
| vising young men to take him as an
| example these days. and they never
will again unless he shows that the
| scandals connected with his name have
no foundation of truth.
According to the receivers report the
promoters of the United States Ship
building Company combined plants
that had a book value of little more
than $12,00O,000 and issued securities
ulOu THEM AlldA idu "a 1dGG value VI
more than $4,000 900. These securi-
ties they undertook to unload on the
public, although it was evident that
the company couldn't carry such load
of debt And then there seems to
have been an attempt to wreck the
company so as to get the property into
the hands Of certain of the promoters
at fraction of the face value of the
securities that had been issued on it.
The charges which the receiver makes
are of the most sensational kind. II
is report that is calculated to make
serious trouble for somebody.
One thought in connection with this
report is, that it is not to be wondered
at that there has been such a remark
able decline in the prices of industrial
stocks in view of the revelations which
it makes. When the public was so
eagerly buying stocks, especially
stocks of big industrial corporations, it
did not realize that so many of these
corporations had been so greatly
overcapitalized, and that, in the event
VI iIOuDlOQD AAulGS an the DuSlnESS
world. they wouldn't be able to meet
even their fixed charges, much less pay
dividends on their shares. When it
did realize the extent to which the
shares of these corporations had been
watered il made haste to get rid of
them. Naturally. with such mass of
securities of doubtful value thrown up
on the market, there was a rapid and
sensational decline in prices.
A few days ago a New York paper
published the figures of a statistician
of that city showing that the difference
in the present market price of all the
securities dealt in on the New York
Stock Exchange and the price
of year ago was $4,000, 000,
900. The conclusion drawn was
that the country had lost that
much. Doubtless somebody has lost
money-those who bought stocks and
bonds at a high price and sold them
at low price-but the intrinsic value
of the stocks and bonds dealt in at
| the New York Stock Exchange is
| The railways are earning just as much
as they were then and the industrial
| plants appear to be doing as much
business. The difference is the pub
lie has found out that millions of dol
lars of securities that had been put
upon the market had no substantial
foundation. They discovered, for in
stance. that the $7O,OOOOOO of the Unit
ed States Shipbuilding Company had
the support of only $12,OOOOOO worth of
property. There are many millions
of other securities that are just as
heavily watered as those of that COM
pany. Because paper values have
been wiped out it doesn't follow that
the country has been heavy loser.