The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-10-13
6ossfP 81 VAL sFRFFT

- ~ uAIA hIoX O0ulQ Dc 0uNHCNtoQ in
case their profits became 30 large a. 70 excite
thorouRhly aggressive competition. This
prejudice IL perfectly natural and entirely
weu founded. IL Ia Q well ~recoRnized fact
mat the great trunk lines, for INSTANCE, are
practically free from menace OF new rivalry
on account OF the almOat iasuperable dInicuIty
OF obtaining terminals and other necessary
property In the cities and larger towns. On
the other hand q duplicate Of an existing In
oustrial plant could be built In some advan-
tageous location where the authorities would
DO only too anxious 70 encourage the nek In
dustry by various concessions and. Whsre the
taxes would probably be much lower than IN
tine ease OF older plants In somscr6&ded centre
OF population. The force Of this argument
has been 90 strongly felt for many years that
it has been not at all uncommon for investors
wnen the merits OF industrial stocks were
brought 70 their attention to remark rather
lmpatlently that they confne their attention
70 railroad issues. A change haA however,
recently come into the tone Of sentiment In,
favor Of United States Steel. which q now in
very conservative quarters classed with rail-
road stocks OF no mean merit. 49,
The reason why United States Steel IL no
longer classed with other industrial issues Ia
that the company Is not now open to new
composition on an important scale. having
corralled The ore supplies which would have
made II possible for any outside interest
70 compete on equal terms, No great steel
making concern could be built up without
the Dossessi0a % saip;e supplies Of oTs. and
while there are still considerabl bio tracts OF
ore land in private hands the percentag e Of
iron In these runs 90 low that the relative
cost Of extraction would prove q very serious
handicap. Burt even eliminating this An-
sideratton, II would be practically impossible
IL Is argued. for any new interest to obtain,
except by combining the resources OF existing
steel concerns, an amount Of ore at ell com
parable to that possessed by the Steel Corpora
ton. With a company seeking to build a
railroad IL would after all be only a question
Of getting money enough to buy terminal
and other property, but In the steel business
there Is q natural Imitation. s.
At 50 there was a good deal Of Steel for
sale yesterday, as might have been expected.
in view Of the fact that at the present level
the stock Is selling higher than at any time
since 1901. giving an opportunity to people
who have held on for years TO get out at q
profit or comparatively little loss. Large
traders who bought on tho announcement
of the ore deal seem also to be engaged in
realizing. and altogether the 50 mark is a
very natural point for a halt to take breath
II the stock is really about TO make the
jOurney-as many good Judges OF value
belieVe-to par or somewhere near II. The
statement TO be presented to the directors
at their meeting on the last Tuesday OF the
month will undoubtedly make an excellent
showing. but whether it will be made the |
basis for an increase in the dividend is
another question. 1t il certain that the
corporation Is doing very well. indeed. but
I'm view OF the heavy expenditures on ac-
count OF new construction IL In quite possible
that for some little time stockholders inter- |
ests can best be served by holding the
dividend rate down TO a very low basis.
- 1
Advantages arising from the purchase Of
the, Hill ores, and not expectations Of an In
crease in the dividend, have furnished the
basis Of the most important buying OF Steel
In the past week or so. but sever6l
in endeavoring to discover the cause
OF the rise In the stock have reached a false
conclusion and would therefore probably
over their holdings il assured Of the
error in their hypothesis. For this reason
the dividend action may cause a temporary
setback In tho stock. resulting n increased
stock accumulation by . large interests.
Some rather ingenious theories have been
propounded to account for the relative heavi-
ness OF the preferred. because the true ex-
PLANTATION Is so simple that the traders must
have something more romantic: but the fact
remains that the preferred stock Is depressed
by sales coming from interests which buy
200 shares OF the common with the proceeds
Of 100 shares OF the preferred. This switch
Us " Nao WV oNCNA w NNS SNhN WIZ
the belief that within the next six months
DE- so the advance IN the common will be rela-
lively much greater than that in the pre-
'erred, as the latter, being limited in Its divi-
lend possibilities. can hardly advance above
10 at the utmost under prevailing mOne-
tary conditions.
In gersoll-Rand Drill, which was traded in
for the 1rst time, scored an advance OF
over its last sale on the curb. The
is firmly held, being to a large extent /
in the hands OF the Grace family since the
William r. Grace established the COM
Dany on q solid basis. Earnings for the
common are at present running at the rate Of
% per cent. and the company Is In strong
position in respect to business on hand, ef-
ioiency OF plant and amount OF working
Bull tips on Northern Pacific. Reading and
southern, Pacific were circulated at the open
nR, the first named being highly recon-
but traders who watched the result
became suspicious that Southern Pacific
vas sold on the strength Of the others, though
he selling did not proceed from influential
ources.
Rumor supplied one reason for the rise in
Northern Pacisc and incontrovertible fact
The latter was in the sho win OF
I.5I per cent. earned on the stock, as against
SIS per cent, earned on treat northern.
there are, OF course. other considerations
han the records OF earnings to establish
difference in value for the stocks, the prin-
Ipal item accounting for the higher price OF
treat Northern being the latter'1 much
anger interest in the ore deal lust arranged
the United States steel Corporation.
I Is in connection with this phase Of tho
between the two companies that
umor has become busy asserting that the
ale OF the Northern Pacific ores will result in
he distribution of a scrip dividend OF % Ia
er cent. to stockholders OF that company.
I must. however. be evident that II such is |
he case a much larger distribution will be
nade to holders Of Great Northern and there
ore the comparative heaviness OF the latter I
oes not coincide very well with the report
the other property No doubt
substantial distribution will be made intime, :
vt lt lie seriously questioned w. one 10 now !
imminent. 80
A trader who could see nothing bulIish :
/ talk Of q 20 per cent. scrip dividend for :
Pacific changed his view when
I'D that the distribution might be as great q
8 - Is per cent. failing to see that one I
light be as good a. the other II only the I
ividend rate was large enough. The i'm :
ortant point Of what rate OF dividend or q
.