The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-07-25
Wall Street Pays the Fiddler.

Wall SCreeC rays Cue EAuuA0A'
Any business man who has kept In
touch with the financial world during the
past few years, and who has Watched the
reports from Wall street this, week must
have been impressed by the great OBJECT
lesson before him. With conditions at
large fundamentally sound and the country
enjoying prosperity, there has been wit
messed in the financial center depression
so profound as to bring the securities mar
ket to the verge Of panic Enormous losses
have been made and failures are recorded
There never was a time when the senti-
ment in Wall street and the trend in bust
ness affairs on the outside were in such
striking contrast. The cause Of 1t all lies
primarily in a feeling Of doubt and dis
trust, and where there are score of In
cidents each cited specifically as a rea-
son for the declines the one cause under
lying all is lack of confidence. If any one
has doubted that confidence is an asset no
less valuable than capital or brains let
him but turn to Wall street for proof Of
error
Wall street has indeed recognized this
and much has been heard Of it, but while
the expression, lack Of confidence has
been the keynote in many financial re-
port, the street with natural perversity
has misapplied the term and little has
been heard of it's real import. In many
lame analysis emanating from Wall
street source has the effort been made to
show the existence Of uncertainty and
he IF he
maintenance Of prosperity in our coun-
try. Breathing only the heated specula-
tive atmosphere of the street and blinded
by the light beating about the thrones of
the money kings, these carpers have had
their lines of vision distorted and. do not
appear to see that confidence Is lacking,
not in the country or In its ability to con-
tinue prospecting but in the men who hold
the places of leadership in American
finance. A few years ago these men had
the confidence of the public. They mis-
used it and abused it, and prohted great
ly thereby, but to-day they are not
trusted
Many instances Of gross abuse Of conf
dence present themselves. The Steel Cor
poration may preferably be taken, as it
is the company most widely known, the
greatest Industrial corporation in the
world, and has stockholders to the num-
Der of about $4,000. Here is a company
whose common stock is paying dividends
regularly. It sold yesterday at 213s. 1t has
been quoted on a basis to net the investor
almost 20 per cent. The greatest names In
American finance are back Of it. The in
net earnings this year large enough to
pay the dividends on both the preferred
and common stock, and have left a sur
plus Of s35, 100000. Business enough to run
the plants for seven months is booked
and more is in sight. Either there is some
thing wrong with the company or the
American investor is a fool. There is
something wrong. The investing public
does not trust the men who control the
comPany's finances.
How severely public confidence was
strained by the launching of billion dol
lar corporation Is a matter of history
Then came the rise Of Schwab, reports OF
his enormous salary, and other spectac-
ular features. There was much about the
whole great plan to suggest cautious
ness, especially when it was seen that in
transferring his properties. to the new
corporation Mr.. Carnegie would take only
first mortgage bonds in return. Never
theless some 10000 small investors bought
the common stock around so. The com
pany did tremendous business, piled w
great earnings and paid regular dividends
Great as was the amount Of stock ISSUED
there was assurance that in time it would
all have been absorbed by investors. Blu
meanwhile the banking house that pu
the consolidation thru had other grea
combinations in process, and that the,
might be unimpeded it was desirable tina
the remaining "undigested" portion of tn
steel issue be distributed as expeditions
ly as possible. Into the Morgan firm
came Perkins, a young man, but a few
years previous an insurance agent il
Cleveland, whose rise to position amons
the financial leaders Of the day Is one o
the most remarkable instances in our his
tory, and has afforded basis for mucl
dissertation upon the wonderful oppor
tunities for. young men in this day O
trusts and giant combinations. Perkin
has been given credit for originating a
least one Of two plans that shortly be
came public, that one the employees
profit sharing plan, the other the much
criticized bond conversion plan. Unde
the first the employees were to be per
mitted to share the company's profits b.
purchasing preferred stock, and som
thousands bought preferred at S21s, tina
!. they might have bought yesterday at So
But 1t was the so-called bond conversion
plan that did the mischief It pro
posed to convert about $3.50 1000, 900 wort
of shares of preferred stock into bonds
ostensibly for the purpose of economy
The preferred stock draws Z per cent II
dividends and as the bonds would draw
per cent the company would save tn