Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-07-17
BULLS AND BEARS.

NEW YORK. July 17.-Undoubtedly the
most successful Illustration of the appre-
citation which will be commanded by a
good bond that is in addition convertible
into good stock Is the new Albany and
Susauehanna issue convertible into Della
ware and Hudson There are. OF course.
special reasons for appreciation in the case
of this bond. but these are general consid-
erations that apply which are well sum
married by Shoemaker & Bates In cir
cular relating to convertible bond issues.
1t Is said in part:
These bonds. provided they are issued
by well-known and stable corporations.
furnish security of principal and income
and government invest beneficial inter-
est In the future growth of the business
of the company. They can be exchanged
at will for stocks should the investor de-
sire a larger return for his money. and at
the same time he will be assured that his
money will be safe at all events. 1t Is an
established fact that stocks of all we'll
managed railroads are becoming more val
liable fntrinsically each year. IL for no
other reason than the process OF gold in
fiation, which means the increased produc-
ton Of gold and consequently the growing
amount of money with enough announced
values throughout the country. as the vol
ume of money increases. business naturally
expands-railroad business to expand to
keep pace, and stock values and dividends
rise steadily in their turn
ION the other hand bond values remain
practically stationary, as they represent
a fixed unit of value and fixed income re-
turn, while the equity represented by
stocks knows no limit of increase. With
such conditions, owners of convertible
bonds often feel gratiied to possess the
opportunity to exchange their bonds into
stock which represents a far greater
monetary value.
1.-The purchasing of these preferred securi-
ties. convertible into stock. as presented in
the shape of bonds. is an old and safe form
of investment and offers to the investor an
interest bearing option on the capital stock
OF the company.
ut is true that investors do not receive
so high yield on their capital as would be
the case If the stock were bought outright,
but herein appears the saving feature-the
keynote to the worth of the convertible Sc
curity-named in the event of sudden dis
turbance in industrial conditions, and con-
sequently in the financial market the bonds
would sell off but little as compared with
the stock, which is sure to suffer a marked
decline, as in the instances when Union
Pacific convertible tours sold at 30. while
the stock was selling at 60
Unofficial forecasts made today were to
the effect that the Steel Corporations net
earnings for the second half-year would
approximate 900, and the figures
to date indicate that the earnings of the
first six months were sufficient for the in
terest and sinking fund charges and pre-
ferred dividends for the whole year, extraor-
dinarily heavy charging off for deprecia-
ton replacement and the like, amounting
perhaps to S4o000.000. would leave sur
plus for the year of $50 100000. This would
compare with s5.O47.S52 last year. $l2304.-
9l6 In 1903 and $34 .253 $50 in 1902. Such
calculations as these. based they are on
known facts. go far to justify the new con-
fidence felt in the future of the corpora
TONS common stock.
| With the opening of the week comes talk
in authoritative quarters that the expected
buying movement in pig iron. otherwise the
awaited revival, has begun. The Journal of
Commerce said this morning:
AT the moment statistics are of secon-
Diary Importance. Contracts for about 49,
coo tons of foundry, forge and basic iron
were placed in the local market during the
week and Saturday the largest pipe in
terest bought 10000 tons of southern iron.
The question is naturally asked whether
this Is the beginning of the long expected
buying movement 1t is very evident that
southern producers believe that it is. ad-
vancing prices from % cents to 30 cents
per ton for the fourth quarter shipment,
and on Saturday some producers even ad-
vanced prices for the third quarter.
1T is possible that the advance In the
south may check buying or throw the bust
ness to northern producers, the prices
now asked for southern iron are equal to if
not little higher than those prevailing for
northern iron delivered to tide water In
quiries at the moment cover between Co.
900 and 1900 tons of iron. The largest pur-
chaser in the market is the United States
Cast Iron Pipe Company, which has al
ready purchased 81 eco n
foundry on the basis of si1 to $11 % for No
Birmingham and is about to close for
10000 tons additional, with tentative in
qulries for. 1000 to $4,000 tons more for
delivery during the fourth quarter"
Attention was called today to the proba-
oil1ty that some of the striking changes in
the bank statement last Saturday were
probably owing to the fact that subscrip-
lions to the $J0,O0O.GOO new Japanese bonds
offered here last week were accompanied
by five per cent of the amount applied for