Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-08-21
BULLS AND BEARS

Special Dispatch to The Star.
NEW YORK, August 21.-There Is an Inn
portant preponderance Of opinion In the
financial community that while money II
working higher the coming money market
need not necessarily give pause to the stock
market nor set It back. There IL considera-
BILE vagueness about the reasons advanced
for this view. which are In substance that
there IN q lot Of money In this country and
abroad which would become available for
use here only with call money around I per
cent. but the banking sources from which
these optimistic opinions come are authori-
eative
It should be remembered that for about
a year and a half there has been very lit
tie profit. or no profit at all, in lending
money on call. and from the bankers' point
Of view q higher and more active money
market is very desirable.
Nevertheless Wall street is watching with
bit Of uneasiness the rapid depletion Of
surplus reserves in this city and the hard
ening rates for credit are not altogether
treasured by sagacious counsels to the eff
feet that a bull market Is quite feasible,
owing to the impressive conditions OF pros
perity throughout the country. even II the
street should have to pay or even 6 per
cent Tor Its loans for q while.
There seems to be q lurking feeling that
the bull move is likely to stub its toe on
the money rate. and although 1t appears
10 De more or less accepted fact that the
advance would be resumed subsequently.
there Is no unanimous willingness to be
caught in the reaction that may intervene.
The attention that is being paid to the
Russo-Japanese negotiations derives good
deal Of Its motive from the probable conse-
quences OF their outcome the money
market the world over.
X
Commenting on a short table Of stocks
published this morning, which was meant
to show by the dividend yield at current
quotations that the market was pretty
high. an analytical broker says:
There are a good many more dividend
bearing stocks on the executive list that
pay their board. meaning the cost to the
purchaser to carry them, than there are
which return a yield much below the car
rying charges. Atlantic Coast Line which
earns about 20 per cent and paid scrip
extra dividend Of rs per cent last Janu-
airy, yields about per cent at 18TH.
Canadian Pacific, which seems close to
going per cent basis at each sue
cessive dividend period and has enormous
and growing equities, returns about 81
at $50. Chesapeake and Ohio, which is 1
per cent dividend. could easily be In
creased to per cent. yields about 4 at
81. st. Paul yields about 3 Y at 1876. but
Is worth what any wise man chooses to
think.
THE same is true of Northwestern, Del
aware and Hudson, Lackawanna, New
York Central, Northern Pacific and Great
Northern preferred, which are making
earnings enormously in excess Of divi-
calculable value which must sooner or
later be converted into stockholders
profits In most cases both considerations
are true OF the comparatively fair stocks
whose Immediate investment returns are
less than their board bills; but the list Of
stocks yielding from Az to per cent and
more Is very large, high as the average
of market prices has been carried:
ut includes many tOo-negtected indus
trials, and then there Is a long list OF
bonds making good return. l fail to be
converted to bearishness by the argu-
ment that prices are way up, Tor there
are two exceptions. even If general con-
ditions were not so prosperous. and even
If the stiff prices for some issues were
not merited by real values"
The London Statist grew quite cheerful
last week over the outlook in this coun-
try. saying:
THE American crops are now pract1-
cally beyond the reach Of disaster. and 1t
is evident that the country will again ef-
feet an enormous addition to its wealth
by reason OF Its vast agricultural pro-
ducts. All crops. with the exception OF
cotton are satisfactory.
"The railways Of the country are likely
to have a very prosperous year. and their
receipts will probably show marked expan-
sion, even compared with their vast earn
ings OF 1904-05. 1t Is difficult to realize the
marvellous change in the position of Ameri-
can railways in recent years. n 19O4-Oo 1t
contrasted with iS94-95. with an increase in
mileage Of less than 20 per cent. their gross
earnings increased nearly ~ per cent. ana
although there was a nearly corresponding
increase In expenditures, their net earnings
gained no less than $50 per cent.
In considering this vast expansion In the
net earnings. the cnangea gee. o Soh n b or
taken In account. Then the railways were
exerting every effort to keep down ex-
penses and in some instances were starving
their roads and rolling stock In order to
meet their interest charges and to main
tain their dividends: now they are charging
revenue freely with improvements to
roadway and rolling stocks. Further, ten
years ago they were buying material. rails,
oars engines etc. at rock-bottom prices.
now they are paying very high hgures
Then the rate OF wages was low. now 1t Is
| high.
hc have however, enabled them to meet the
increased cost Of material. the rise in wages
and the additional betterment OUTLAWS. and
vet to show an increase in their net earn
ines in the ten years Of nearly 100 per cent,
with an increase in their miles OF road
operated of only about 20 per cent. Con-
trasting the freight rates ten years ago and
in the present year. there Is not very much
difference.
| ..It will be remembered that from 1895 to
| 1899 rates continued to fall. The recovery
that has since taken place has not raised
the average rates secured to the 1S94-9o
level. The improvement In net earnings of
nearly 100 per cent has, indeed. taken place.
withstanding some decline in the aver
age freight rate in the ten years.
"Iuasmuch as most of the American rail-
ways are dividing in dividends only about
| one-half Of the profits available for dividends
! on the comman stock. and that there Is the
prospect OF profits being not merely main
| tanned but increased. 1t will be evident that
| the expectations of further improvement
In distribution are fully warranted.
Under the circumstances, therefore, the
| present relatively high prices for American
railway stocks are justified by their profits.
Indeed, we anticipate that still higher
record may be established for many stocks
within the next few months"