The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-11-05
THE FINANCIAL SITUATION.

INV hO HtOCh ulAEktJ III NhlA obfctJ III Tic
true sense OF the word. For SOM time
past commission houses have been stimuli
~taneously testifying both TO the fact that
there was no appreciable liquidation OF
stocks by their customers and, on'the other
hand, very little fresh buying; so that it
has been evident hat recent advances and
declines in security prices have been caused
only by the in and out operations Of pro-
fessional traders, mostly OF the smaller
sort. But in the forepart of last week even
these operations sank to a minimum, trans
actions OIL the Stock Exchange on Tuesday
amounting to only 10000 shares, or but
l 900 shares more than those on July 10
last, when the volume of purchases and
sales was contracted TO the smallest quantity
in any full days business thus far recorded
during the year. On the succeeding day
prices declined rather sharply, but that
this recession was due mostly to the work
OF spectators for the fall was shown on
the day following. when all the leading
stocks advanced rapidly on the news that
the annual dividend rate on the Pennsyl-
vania shares had been raised from O to 7
per cent. At the end of the week the domi-
mating influence in the market was, very
clearly, the fact that indications of the
prospective defeat Of the Democratic can
didate for the G~overnorship in this State
had become overwhelming. The convic-
ton spread that an avalanche OF reputation
like that which buried Mr.. Bryan in this
state ten years ago was about to fall upon
the Hearst candidacy, and, of course, no
result could be more gratifying than this
from the point Of view OF business interests.
So far as the increase in the dividend upon
Pennsylvania stock was concerned, opinions
as TO. the wisdom of the step taken did not
altogether agree. Much car be said upon
both sides Of the question whether the di-
rectors OF the company were or were not
justified in advancing the dividend rate.
The earnings of the company warrant such
a step and the ~company's treasury is in re-
ceipt OF exceptional gains. proceeding not
only from the enlargement OF dividends
on the stocks Of many OF its controlled
companies, such as the Baltimore and Ohio
and the Norfolk and Western, hut from the
sale at a large profit of a considerable por-
ton Of the stock thus held. There is some
justice in the plea that the Pennsylvania
stockholders should directly participate in
these revenues. On the other hand, every
body il aware that the Pennsylvania Rail-
road Company has recently incurred a vast
Indebtedness for new construction whose
sun total has by no means been yet reached
and that 1t will be a long time before
this new construction begins to bring in
money TO the road. II may be said. perhaps,
that the increase i'm the Pennsylvania divi-
dend rate is a matter upon which the stock
market has not yet passed final judgment.
The Chesapeake and Ohio directors did not
increase the semi-annual dividend rate on
their stock at their meeting during the week,
and although there had been some talk that
such a rise was coming il was not really ex-
pected in conservative quarters. One OF the
features Of the market in the week was the
strength Of all the different Mexican railroad
securities. based primarily. it seems, upon
a surprisingly large distribution announced
recently in london upon the second
preference stock Of the Mexican Rail-
way Company, which ia dealt in eS-
clusively in the British capital. and
secondarily. upon rumors that the Mexican
Government was negotiating for the pur-
chase OF a large block of the Mexican Central
Railway Company's stock, if not indeed
for the control Of the company itself; but
uron the declaration that these negotia-
tons had fallen through, at least for the
present, the upward movement in Mexican
stopped. or actual news announcements
in the week the most important was that
contained in the financial statement Of the
United States Steel Corporation for the
September quarter, published last Tuesday.
The net earnings of the corporation in the
period were a little over $3S, 900, 900. which
was about 81 600, 900 less than ultra sanguine
forecasts Of the statement had made out.
Few intelligent people anticipated, how
ever. that the revenues of the corporation
in midsummer, when the state OF the weather
almost invariably retards work in the steel
mills, would equal those of the spring
quarter. Earnings for the period were,
however, nearly s7,OOO,OOO more than the
same quarter last year and the untitled
orders Of the corporation on hand rose 10
nearly s,OO0,OOO tons, or much the largest
on record. Putting the case concisely,
the earnings Of the Steel Corporation are
such that If they are continued for only a
little time longer the corporation can easily
make all needful appropriations for i'm
provements and depreciation, pay an annual
dividend Of 4 per cent on its Comnon stock
and pass to surplus account funds sufficient
TO build the entire new plant now in process
of erection at Gary without issuing any
bonds therefor or in any way adding to its
capitalization.
While confidence as to the general future
Of the stock market is still undiminished
and is based al strongly as ever on the
immense and substantial prosperity Of the
country, present and prospective, it is
perhaps fair to say that the outlook for
the money situation during the rest of the
year does not AFFORD such grounds for I'M
qualified optimism concerning financial
matters in this particular period as does
the condition OF political affairs. 1t il still
the belief Of our leading bankers thar al
though the usual temporary rise in money
rates attendant upon the end of the year
settlements may be expected, and that al
though bet ween nov n december 81
no lowering in the present price Of time
funds should be looked for, 10 severe money
.stringency will befall and no severe decline
in prices on this account will be experienced.
A disposition is manifest in these quarters.
however, to extend longer into next year
than has previously been the case the time
when. as calculated, money will be in album
dant supply at this centre owing to its re-
turn from the agricultural district and the
difficulty that the Bar Of England IL having