The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-10-12
THE FINANCIAL SITUATION.

The better feeling in financial circles
which has been in evidence since the first
| of the month was chilled u little last week
| by the so called disclosures regarding
| the United States Shipbuilding Company.
A better way to put it, perhaps, would be
that the allegations of ID. Leroy Dresser
at the court hearing upon the application
for the appointment OF permanent re-
ceiver for the Shipbulding company SUI
| feed to induce bearish spectators to make
a more determined raid upon prices than
they had done for many days. There was.
of course, not fact either testified TO by Mr..
Dresser or adduced in any way in the pro-
ceedings that was not already ancient his
tory. But an inexperienced person would
have thought from the tumult made over the
matter by certain newspapers and by
operators for the decline in Wall Street
that such things as the overcapitaliza-
ton of industrial companies and tho
varied devices Of industrial promoters had
just been brought to the surface OF
public attention. Neither for few hours
last Thursday did it matter anything.
| apparently, that the industrial company
under consideration at the moment had
been an utter failure from its very incep-
ton, its stock never having been disturbed in
| the slightest degree and the market effect
Of it's collapse having already been fully
recorded. So far az the name Of Nessrs.
j. p. Morgan 4 Co. has been dragged into
the matter. it is perfectly clear that in that
firms business dealings concerning the
| United States Shipbuilding Company
| dealings which were obviously Of an en-
| forced character-there was not from
| first to last the slightest departure from
| correct standards Of business conduct;
! and there is beginning to be some reaiiza-
| ton of the vicious animus which would
| represent the case otherwise. Sensible
people in Wall Street last week who had
| been agitated over the Shipbuilding matter
at all soon saw that they had been bother
ing with a mass of pretty small and very
| old potatoes; and the spectators who ham
mered' the stock market because OF II
| found that the character Of the market had
! undergone change. Industrial securities
| were still more or less out of favor but
the offering down" Of the standard rail-
way shares was no longer successful in caus-
ing genuine liquidation. Speculative sales
of the railway stocks met with stronger
| buying power than had been seen In the
stock market for good while. 1t was,
in other words, and speaking generally,
fairly easy to bring about net declines in
| tho prices OF the leading railway shares;
but it was equally difficult to buy back
p, at "a profit the stock that had been sold in
the operation.
Such development in the situation
is entirely natural. Industrial securities
,t,n nj,
readjustment OF prices is taking place
in the industrial world. There is general
| realization Of the fact that under the con-
ditions that prevailed last year values Of
manufacturing articles were in many lines
forced so high that consumption Of them
was curtailed, and also that the industrial
life OF the country IA whole at that time
warranted the description that 1t was that Of
a people who. by good rights, should control
the trade Of the world, but who, by reason OF
a reign OF high prices and overspeculation at
home. we're trading almost entirely with
themselves. Manitestly, the condition was
abnormal, artificial and feveriah. The allay-
Ing Of all this fever. the bringing down OF
business to normal basis, the establish
ment OF a real and solid in place Of hcti-
tious trade level. Is q desirable and not an
undesirable process. While it is proceed
! lators, and it has this temporarily unfa vor-
able effect Of genuine character upon
general business that. inasInuch as con-
slmers OF goods do not like TO buy on
declining market, but each and all endeavor
TO place their orders at bottom prices, the
effect Of declining market. once established,
is for a sort Of business heeitancy until there
is reasonable certainty that bottom figures
have been touched. When that assurance
comes there is grand rush again to buy,
Weak industrial stock companies and
| business concerns cannot stand all these
tests, and hence investors are naturally
wary about buying industrial shares until
they see what the test will develop. But
! with the railroads-that is, old and time
tried railroads.&c. case is different. These
companies will, of course, share some
what in any business reaction that may
occur, even If it be reaction from an I'm
healthy to a healthy state of business ac-
tivity. As the prices of iron and steel and
other commodities fall, the railroads will
grant producing companies lower freight
tariffs, though SO far as iron and steel prod
ucts are strictly concerned it is doubtful II
the loss Of all the railroads in the country, by
reason of the reduction in freight charges,
will exceed s5OOO,O0o. But the position Of
these railways is such that, come what may,
certain minimum amount of business
must be theirs, and this, with their enlarged
cash SURPRISES and their possibilities Of
economical operation, arising from the
improvements made in the exceedingly
prosperous years that have just passed,
makes their earnings and dividends secure.
Let Wall Street stop to think moment
what the bringing up to the new standard
of railway equipment and construction,
now we'll nigh absolutely accomplished
over the railway lines of the country in the
last five years, really means, and let there be
added 10 this an entire appreciation of such
facts as the New York Central's cash
holdings Of $685., 900, as compared
with but 81 1881, 900 az little time removed
as 1898; the Atchison's increase in treas
ury cash for the same period from