New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-05-22
The Financial World.

simplest understanding that far from being .vs
dence of weakens these exports testify ~
strength unprecedented in American annals. +,
is revealed by the course OF the exchange mar
ket that much Of these exports represent loan.
made by American bankers in anticipation OF an
approaching large supply of commercial bills
the transactions becoming profitable by reaso,
of the glut Of money here. forcing loan rates
down to nominal figures Up to date our ex-
ports Of gold are close to S60O0OO00. and NOR,
will follow. But included in this total Is tia
consummation OF the Panama transaction abou,
which so much silly fear was prevalent That
fear should have been allayed the moment thu
plan was ACKNOWLEDGEMENTS j. P. Morgan
& Co. disbursing agents. Such corporation
was guarantee that the clearance would be con-
Quoted with every safeguard to financial inter-
ests-as the sequel splendidly proves
No more important international transaction
so far as the money market is concerned was
ever DEVELOPED. 1t has been handled with a
clean-cut mastery broad comprehension Of
the necessities OF the situation, exciting the ad-
miration and challenging the commentator Of
every fiscal authority. There has been no jar.
no disturbance Of credits, no violent dislocation
OF equities between banking centsrs- Smooth
ness OF accomplishment testifes to the genius Of
the American hnanciers who were confronted
with what has been so much proclaimed Ohsrs
not more than aDrOdQ1 as a grave pIOOlenl--
brought to mastery solution.
The smalIness the meanness, OF the criticaster
side of Wall Street has seldom had more strik-
ing illustration than in the estimates obviously
put forth during the week in endeavors to dis
credit the accomplishment OF the great syndi-
cate which undertook the conversion and retire
ment Of over fifth of the preferred stock OF thu
United States Steel Corporation 1t Is fippauty
proclaimed that the net result Of the gigantic
transaction is the imposition OF net loss Of
eleven per cent; and. in their pettiness and eyni
cisn. the oracIes parade many sorry conclusions
of their own connection. AS against this man
ner of indictment not murmur is anywhere
heard in even the mildest defense Of the syndi-
cate and it's management. Apparently they
who are chiefly responsible for what was under
taken and what has been accomplished, refuse
to be affected by these voluminous outbursts OF
speculative assailants. Yet-in the measurements
OF what actually are the facts,-the record is Tar
different from that which is shouted. When the
conversion syndicate was organized the highest
price at which shareholders agreeing to surrender
stock could have found a market for any part
OF their holdings under 90. Even assuming
that they who converted stock held 1t at so high
a figure (closer to 60 would be actually the tairer
estimate) there was SSOOOOOOO OF preferred
stock changed into bonds at a parity. And at
the conclusion OF the syndicate's operations
the bonds taken have a market value above
70 in contrast with 81 for preferred stock which
they In exchange simply represent-an actual
advantage OF 20 full points in market value
which they who converted have over those who
declined 20 convert.
To be borne clearly IN mind. coincidently. IS
the fact that the decline OF approximately 10
points in the price Of Steel preferred during ths
~ II,
ance with general recession throughout the en-
tire Stock Exchange list. Steel shares figuring
no more unhappilY than has been the average
throughout the entire market, including secur-
tiles ranking at the very top among glt-edged
Investments Indeed but for the transactions OF
this very syndicate Withdrawing SS000000O OF
preferred stock from the market-the shrinkags
must for this one stock have been much more
severe
Now, as to the $50 900. 900 bonds taken on OPP
ton at par for cash by syndicate subscribers
(suppIementing the $sO.OO0OO0 OF preferred
stock surrendereD the showing IS that whils
syndicate associates are therefore IN receipt os
$2O,OOO.OO0 Of bonds in return for their cash in
vestment-these $50 900 Of bonds with mar
ket value at 80 are turned over 10 subscribers
at a net charge of IS.
Critics choosing 20 touch details are confront
ed by an exhibit like this: For each $1,000 OF
stock exchanged for bonds there is to-day a
market value OF S73O. For the coincident $3.50
cash optionaIly paid for bonds. there Is a mar
ket value OF S1S5 plus the net result Of %
points difference between bonds delivered at
As and marketable at T3) or over $50. This rep
resents a return upon each $1,000 conversion OF
1915 50-against an original cash investment Of
$3.50 and 100 shares of stock worth to-day $3.50.
a total OF $3.50.
A shareholder who confded in the good faith
and honor OF the syndicate managers. accepting
their trusteeship. stands thus to-day as COM
pared with the hesitator who kept his preferred
stock intact:
100 shares converted Into bonds $500
bonds for cash s
ro,v.-.,o, r..,-, szaas
Per contra: 100 shares unconvertsi. 540
Market croft per 100 shares by conversion. ST.
One of these days Wall Street will awaken and
be fair with itself-rise superior TO the petty
spirit which Is to-day making the machine OF
greatest possibilities in the world actually the
least in its accomplishment
Truth is that what in Stock Exchange vernae-
ular is styled 'the public" is now and has been
for a long time past held n leash by the qualms
and tremors. the excited suspicious and the fool
performances generally Of Wall Streets profess
sionaI talent" This public as financial history
amply attests. is not permanently foolaoie'
That the security list is full of bargains cannot
be cloaked indefinitely. Evidence of the fact Is
too concrete-actUally intrusive-to license con-
tinuance Of such misrepresentation as has been
recently the fashion. 1t may be lonesome to 20
buTish-but IL is the part of common sense
little confidence planted now viii harvest large
profits before much time goes by.