Richmond daily palladium., 1906-01-29

aSJef Oh any 4hlHd- - lrl gii1A ~tA6 IL
nanciaI skies are cloudless, and the
only unsetthng features are the fire.
quent reactions induced by persist
ent inside realizing. The failure of
Union Pacific TO increase its dividend
to 6 per cent Is severe disappoint
ment to those optimistically inclined
The road; it is claimed has been earn
ing over 10 per cent, and predictions
were freely made that the dividend
would be advanced to- 6 per cent.
This stock has. recently been selling
above 100. which, considering forth
coming new capital issues and that it
may not pay more than 5 per cent,
X a price much beyond It's real value.
st. Paul Is a Z per cent stock, selling
a 100, with a large amount Of new
stock forthcoming. Pennsylvania
IS smother per cent issue. selling at
IA, with no prospect of better div
idend owing to the heavy increases in
capitalization Reading i a per
cent stock, selling over 100 at time
VIXEN consumption Of coal has mater
tally decreased. Such instances Of
exaggeration in values could easily
be multiplied, hut these sufficiently
demonstrate that there is no justif-
cation to be found@in the present
high level Of the stock market.
Another field in which speculation
is becoming irrational is in real es-
tate. Last year building permits to
the value of 1923 100000 were taken
out in twenty-six American cities,
compared with $375,000,000 in the
year 1904 The climax of all peri
DDS of prosperity has been marked
by just such a movement as we are
now experiencing in real estate from
the Atlantic to the Pacific. 1t nat
urally follows the exhaustion of 9TH
er avenues of investment. The ac-
tivity in speculation is probably
greater in New York than elsewhere,
for the simple reason that the city is
growing with wonderful rapidity,
and thespeculative temper focuses
where capital is most abundant and
most readily obtained for any plaus-
ible enterprise. Land values in
New York have already risen to what
seem extortionate prices, and it may
become serious question as to
whether many business enterprises
will be able to stand the test of reac-
ton when loaded with the heavy
rents which present high prices of
real estate and the cost of buildings
necessarily impose. 1t should be re-
membered, also, that real estate in
New York is exposed to one very Sc
rious disturbance: that is, the chang
es which result from the opening up
of new lines of local travel. The
rapid extension of subways, bridges.
tunnels and the vast terminals such
as those designed by the Pennsylva-
MIA and the New York Central create
new business and residential centers,
promoting great speculative activi-
ty Ill those quarters, but at the same
time frequently impairing the value
of much property by the diversion of
traffic. The shifting, for instance,
of business both wholesale. and re-
tail from down town to uptown has
caused a sharp depreciation I'm the
districts which have necessarily been
at least temporarily deserted by the
old class of tenants. The same in
huenees have been at work in certain
residential districts. In the course
of years these may recover a portion
Of their lost values, but during the
interval rental values have decreased
and losses have been incurred-a pro-
cess which may easily be continued
and cause more or less general unset
tlement. Further than that, many
Of the projects now under contempla-
tion seem to be ill-advised, and in
vestors who go blindly into real es-
tate when land values and building
are at the highest cost on record, are
likely to invite the risk of more or
less embarrassment when business re-
action fairly sets in.
So far as the immediate situation
is concerned in the stock market, we
cannot conseientiously advise the
purchase of stocks. Quite possibly
manipulation may force prices here
and there to higher level, but it is
practically certain that current liq-
uidation will continue until all of the
larger interests have parted with
their surplus holdings. When that
point is reached there will be a
scramble among the little fellows to