Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-08-19
Financial News Letter
By ". G. NICHOLAS.
NEW YORK. Aur,,.t

cultural conditions, although there Is to be
round strong and viciousiy aggressive
professional element fighting prices at
every step. This bearish faction refuses to
SEQ heath In any quarter and insists that
the country Is on the verge Of a great set
DacK. Ihe burden Of the song Is that the
oiscontented masses are in a state of polit-
lcai unrest bordering on revolution, capital
being the object Of the attack; that specula-
ton mas gone mad everywhere and in every
thing; that the balloon is distended to the
bursting limit; that stocks are too high
and that the shelves are overloaded with
IN. unsalaoie ponds which are being carried by
the banks and trust companies for the big
combinations Of speculative bankers. They
oeciare that an immense amount of cauitaI
Is locked UP that way which would other
wise De performing more legitimate mis-
sion. It is upon this alleged weakness in
the banking situation that the bearfsh con-
tingent places its chief reliance That the
danger really exists lacks proof beyond the
unsupported Claims Of the oracies of g.
bearfsh contingent. Meanwhile the buying
OF stocks continues and sentiment Is slowly
becoming more bullish, due to huge crops
and extraordinary prosperity.
X
There Is more intrinsic value In railroad
and Industrial property now than ever be-
fore, probably one-ha1f more in railroads
than ten years ago and two-thirds more In
industrials. There has likewise been a ire
mendous increase in capitalization. This In
crease IN industriais has been very much
greater approximately than in rails, partly
because the era Of combination In manu-
featuring witnessed Its greatest develop
ment within the last seven years, whereas
the transportation interest has been steadily
progressive for more than half century.
Latterly the tendency Of manaeement in
nearly every department Of active business
mas been to reinvest in plants q larger per-
centage OF earnings than formerly. It 10
noticeable increase in intrinsic value than
under the Old regime. There Is more per-
manency to busy property than formerly
and less liability to deterioration. Invest
ing to the theories Of students and com
mentators whose trade 1t Is to note current
phenomena and draw wise deductions there
from.
~
Brooklyn Rapid Transit furnished the fire.
works OF the week in the stock market.
Incidentally, It also made an important con-
tribution to tho Hearst cause Of municipal
ownership Of public utilities. It's open de-
fiance Of the law and the Incorporate Ian
guage Of its officials, supplemented, as they
were. 10y the brutality Of its employees.
and intensity the existing popular prejudice
against an overbearing and poorly managed
corporation: The turmoil served well the
purposes Of q hard-hitting bear group In
Wall street. and broke tho stock Of the
company several points. The raiders have
been after B. r. T. for q good while, and
they were on the verge Of disastrous defeat
~ when this TINS affair came along to hep them
be satisfied until the stock goes down to
zero or passes to tho control Of the city.
They have mapped out large-sized cam
paign. Politically, the damage can be more
accurately appraised. The row adds 10000
votes to the Hearst count for governor of
New York next fall
W.
The import movement Of gold which COM
menoed this week. and which promises to
continue indefinitely, represents an advance
upon future shipments Of grain, provisions
and cotton. America Il pledgin9 its crop
surplus eor ready money and credit with
which to facilitate the movement Of the
commodities from field to warehouse and
eventually to the consumer. incidentally,
Wal street should be the gamer. for Wall
itself making direct provision for the
funds. It can retain portion OF the cash
at home to pay the expenses of CONDUCTING
q bull speculation in the stock market, one
item OF such expense being the payment of
laundry" bills. incident to the "washins
up" OF prices on the stock exchange. On
some accounts the market makers prefer q
comparatively narrow field in which to ma
smaller in q narrow than In a broad mar
ket. And then 1t ID better from q profos-
sionaf viewpoint that the public get in late
than early IN a-bull campaign. There IL
less company on the way up and distribu-
ton can go on Just the same
=
They have stopped loaning money on
real estate was the startling statement
made by an active and an usually cautious
stock operator a day or two ago. BY they
he meant the savings banks and other in
situations Of New York that are in the hab-
1t, Of putting their money into mortgages
on real estate in and about the metropolis,
and by the phrase stopped" he meant that
they are exercising more than the custom
airy conservatism In investing their funds
having detected decided tendency to over
speculate in real estate. There Is still money
to be had on real estate in New York, but
none to encourage boomA or validating In
suburban subdivisions or cornfleld lots
A summary stop has been put on unsafe
investment OF trust funds on doubtful real:
estate security To that extent they" have
stopped and the movement seems not to be
local to this city. There seems to be q con-
cert OF action among the large lenders in
most OF the important communities II Is
by such means that disastrous panics may
be averted and disastrous reaction. conse-
Quences OF wild real estate booming avoid
ed. In the past the collapse of real estate
speculation has marked the beginning of the
end OF periods Of exceptional national PROS
perity. This time it il the hope of the big
people to taper OF realty gambling and
development instead OF breaking 1t on
-.
The depression In the bond market and the
steady decline in prices which has been
going on in this class Of securities for some
time past does not surprise thinking men.
although 1t may be disconcerting. The phe-
nomenon is merely the fuifillment of q law
almost as immutable as the law Of gravity.
1t represents the transference Of an aca-
demic proposition into the arena of reality
the first tangible effects OF prodigious gold
imitation in securities bearing fixed rate
of interest. AS the buying power of money
is reduced al forms of property whose
earning value Is limited to named per
centage naturally declines. Owners of
such investments find they cannot buy as
much with the returns as before the infia-
ton began; consequently the investment be-
comes less valuable. It has been SO ever
since mankind gave thought to the science |
of money. and set watch over the relation
ship between prices and the circulating me-
dunn Wherever there has been q thinning |
NJ 49, Il