The Saint Paul globe., 1905-04-10
UNION PACIFIC BOND
ISSUE CAUSES DOUBT
rNr-Y @--------a- :
Purpose Has Not Been An.
nouneed and Conjecture
Is Rife

sition to realize shown in certain ouarteps
and what with recent stock market de-
selopments, the public mind appears
somewhat confused as TO the interpreta-
ton, OF current events. The announce
ment that Union Pacific would issue an
other 800 ,Ql0. 600 of stock came Somewhat
as wet blanket upon bullish enthusiasm
Just what will be done with this new is
sue is not yet made known officially: con-
sequently the financial atmosphere is full
OF conjecture. No doubt the issue Is part
or the comprehensive plans which have
Deen projected for some time past by the
banking interests controlling this and 9TH
er great railroad properties and which,
OF COURSE, are, for the ultimate good of
tneSe properties, but a the public has not
yet been taken into the confidence of the
management 1t seems a little premature
TO form any conclusive ideas as to the
outcome Coming after the announcement
or many other capital issues during the
last Few months. running into the hun
dredS or millions. ii shows that our leading
bankers are still actively engaged in
financing new operations upon a scale
mat empha tically demonstrates their con-
hdence in the general situation
very considerable portion of recent is
sues has been for refunding purposes or
Ior taxing up railroad notes and other
temporary obligations issued a couple of
years ago when conditions were unfavor-
apie 10 placing the new capital issues
which the railroads were obliged to make
Tor the purpose of completing necessary
improvements The Union Pacific issue
may may or may not be step towards ANAL
other systems; though indications point
that way.
~ Bankers Are Bulls
1t will thus be seen that the leading
banking interests are inevitably enlisted
on the bull side of the market; first in
order to successfully finance these enor-
nous operations. and second. to carry out
some of the important deals which they
nave had in prospect for some time past
but which for various reasons We're de-
ferred. How many more stocks and bonds
our bankers propose to launch it is i'm
possible to determine; but the necessities
of the past and the necessities of the fu-
ture suggest that the limit has not been
reached, Erie being the latest applicant
with stock issue of $50. GOO, 000
Our railroads have been wonderfully ia
vored by national prosperity. In spite of
the great increase of facilities made in the
last two or three years, our principal sys-
TENS still find themselves overtaXed with
traffic and with every probability of it's
continuance for months to come. Both
agriculture and industry are also enjoying
much prosperity. In every part of the
country trade is showing increased activ-
ity, and the volume of business reported
exceeds even the unprecedented volume of
the last two years. The south is prosper
Gus. having realized good average prices
Tor cotton; and so. too. is the west, which
IS receiving good prices for it's products.
In the .east-the iron and steel boom con-
tinues unprecedented. We are already be-
ginning TO import pig iron from abroad.
our domestic furnaces being unable to
meet the demand. The railroads have
again entered the iron market as heavy
purchasers of steel rails, bars, locomo-
tiyeS, etc, while the demand for iron and
steel for all sorts of constructive purposes
is expanding marVelouSly: hence record
prices for United States Steel preferred
Just now real estate is also experiencing
one of those periodic boOms for which the
United States is noted. Land values are
rising rapidly. and new buildings of all
sorts are being erected. This movement
may be attributed to several causes. First,
security values have risen so high that
In many cases a satisfactory return there
on Is no longer possible, and holders are
exchanging stocks and bonds for real es-
tate, which. for the time being at least,
in the real estate market is the rapid
growth OF population and the fact that
building has been much restrained for a
year or two by the high cost OF materials
and by high wages. In consequence rents
have been steadily advancing especially
In congested districts. until they have
reached point attractive at least to
speculative capital. 1t cannot be said,
however. that the speculation in real es-
tate has yet obtained dangerous proper
tions; much of the activity is perfectly
legitimate, and seems destined to con-
tinue for some time to come. although 1t
Is well worth remembering that the eli
max OF all great upward movements in
the United States has usually been marked
by real estate boom.
Crest Of Forward Wave
History shows that these movements in
real estate have almost invariably marked
the crest of a forward wave and while
the top may not have been reached. there
Is no reason TO see why this particular
movement should be any exception. We
thus have a series of bulliSh conditions
In the stock market which. under the
support OF powerful banking interests and
excellent outside business conditions, may
easily prove to be the basis of more ac-
tive bullish speculation. On the other
hand, there are influences to be conSid-
cred which will be increasingly effective
against an advance. Chief of these is
the growing firmness of money rates and
the evident intentions Of the big capitalists
TO steadily distribute their holdings at the
present high level of prices. The latter
movement is steadily going on under COW
er, and affords these parties an additional
motive for giving the market their active
cline
The course of the money market will be
watched with exceptional interest. In all
probability the period of extreme ease has
passed. Bank reserves. being exception
ally low, will be apt to rise during the
next few months unless the declared in
tention of the government to withdraw its
deposits should interfere. Secretary Shaw
is likely TO conduct these operations with
as little effect upon the money market as
possible; but the heavy drain of new is
sues upon our surplus capital, the activity
or business and the possibility of gold eX-
ports in connection with our subscrip
tions TO the japanese loan, as well as the
fact that our foreign trade balance is not
satisfactory, all point to the possibility of
considerable future gold shipments. Our
exports of merchandise are making less
and less favorable comparisons with the
last four or five years, while our importa-
tionS are steadily increa sing thus di-
minishing the trade balance
Fortunately, money continues very easy
abroad. especially in London. while both
British and European Investors are show
ing an increased disposition to invest in
American securities. which are among the
safest and most profitable which they can
f1nd in spite of present high prices. Just
now far easy money abroad and foreign
purchases Of American stocks will check
gold exports remains to be seen. AL
together therefore the outlook for the
stock market is favorable Ii is true
prices aretyery high: but no material re-
cessions can be anticipated under existing
conditions There are many cliques in
the market eager TO advance their special-
ties from time TO time and keep up a fair
degree of activity. The public are not
buying stocks for Investment at these
figures; hence transactions are chiefly on
trading account. A further decline of s to
10 points would undoubtedly bring in an
important new buying element and give
the market a fresh and sound basis of
strength. But for reasons above stated
this does not seem probable. Manfpula-
ton, however, Is very active and sharp
receSSionS, due TO realizing are liable to
occur at anytime .--rr
The foreign situation does not seem to
be a faeter at the moment Peace pros
poets have been deferred by the discovery
that neither of the belligerents is yet pre-