The Savannah morning news., 1903-04-07
rND1cEsrED SECURITIES.

UNDIGESTED SECURITIES.
A day or two ago we called atten-
ton to an interview with ]. Pierpont
! Morgan, in which he said that it might
be true that at the present time
there We're many undigested securities
! in the market. but that the character
! of the securities should be taken into
consideration in a broad and compre-
! heDsive view of the situation. In
! speaking of the character of these un-
| digested securities he said that in his
! opinion they We're essentially sound
and stable. In support of this opinion
he cited the fact that very large part
of them were railroad bonds and
stocks issued for the purpose of in
creasing the capacity of railroads 10
handle the enormous business that was
being offered them, and not for the
construction of competing lines.
The New York World has interview
ed fiHanciers and bankers in several
Eastern and Western cities as to the
correctness of Mr.. Morgans opinion in
regard to what he calls undigested Sc
curites, and as to the ability Of the
market to absorb them.
The majority of those interviewed
took the position that the country was
in an exceptionally prosperous condi-
ton, and that the outlook was that
prosperity would continue at least for
twelve months In fact none of them
undertook to place a limit upon it;s hut
nearly all Of them took the position
that the undigested securities were not
as sound and stable as Mr.. Morgan
would have the country believe. They
had no hesitation in saying that the
railroad securities We're Sound and sta
BILE and represented real value, but
they did not seem to think there was
a very great amount of securities of
this kind that was going a-begging
for purchasers.
1t was pointed out that the increase
in railroad tonnage had been immense
and that the demand upon the railroads
to increase their carrying facilities was
still very great. Some idea of the in
crease in the freight traffic is shown
~ Lllt statement lllcil III 1907 llit IluIll-
Der of tons of freight carried by the
railroads in this country was $780,
600, 1000; in 1892 it was $500, 100000, and
in 1902 it was 10000, OOO,O 1t is evil
dent therefore, that there is good rea-
son for the increase in the amount of
railroad securities.
The great bulk of the undigested Sc
curities are what are known as indus
trials. 1t is believed that many of the
industrial corporations are over-capi-
talized. That is the reason their stocks
and bonds are not sought by purchas-
ers. Investors are afraid of them. They
believe that if there should come a
period of depression it would be i'm
possible to pay the interest on the
bonds and much less dividends on the
stocks. The president of the Corn Ex-
change National Bank of Chicago ex-
pressed the opinion that the over-cap-
italized industrial companies would
have to be "reorganized on very diff
ferent lines if their securities are to
be digested with safety to the nations
financial condition"
Only those who have given the sub
ject attention realize how great the
amount of new stocks and bonds listed
on the New York Stock Exchange in
1901 and 1902 was. 1t was $3,SS2, OOO-
600. If all of the securities represented
by this vast sum were gilt-edged the
country would have all it could do to
digest them, even if no new ones were
issued. A large percentage of them
having a rather doubtful value, it is a
safe prediction that many of them will
remain undigested for long while,
even though prosperous conditions con-
tinue for couple of years.