The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1906-02-04

NEW 1Ohks req. o.--Ihe past "SShi
in many ways the most remark
able in the speculative market OF Wall
Street within many months, was not
able chiefly because OF the rapid shift
ing of speculative sentiment from OPP
timism to pessimism and back to optt-
mism.
The storm center in the first move
ment was the great Pennsylvania
railroad system and the pivotal point
in the reverse Of sentiment was the
Steel Corporation.
The marvelously favorable statement
of the Steel Corporation for the last
quarter of 1905 and for the full year,
published on Tuesday afternoon. caused
a complete reversal of the pessimistic
feeling that had arisen and whatever
may be said OF the events which fol-
lowed in the balance Of the week in
connection with copper and other Sc
curities. started the stock market upon
it's recovery. The real reason for en-
thusiasm over the Steel statement is
not found in the mere statement Of
earnings, or of orders on hand, al
though the latter point has the most
important bearing.
Needed Stability.
What the steel industry has always
needed is stability and, if IL is ever TO
assume an investment character, IL
must cease to justify the criticism Of
prince of pauper." There is more
evidence of growing stability in the
last quarters report than has hither-
TO been shown.
There is little ground for enthusiasm
in the bare statement that net earnings
for the December quarter totaled S35,-
27S,6SS, despite the fact that only twice
before have the earnings been larger
and that in 1892 the June quarter
showed the corporations record earn
ings but slightly larger-only S37,-
662.058. Enthusiasm then was very
general, and how misguided IL was is
matter OF history.
The whole year Of 1902. with SI3S.-
apS.0O0 of net earnings. was very much
better than 1905. OF which the full to-
tai was s119.S50.2S2. And yet 1903 and
1904 made a record so poor that it
would be well to remember the great
slump that ihen occurred, in order TO
temper too great optimism over cur
rent earnings.
The only excuse for the belief that q
slump similar to the last is now irnpos-
siblc lies in the developing stability of
the industry. toward which goal the
corporation has expended its every en-
ergy since its formation. The last quar-
ter's large earnings were made upon a
larger amount OF business than ever
done before. and the business was done
Al a smaller percentage of profit. that
is on a lower scale of prices, than pre-
vailed in 1892.
The fact that Steel company securities
do not sell as high as do railroad securi-
tics is not because they do not earn as
much. but because they do not earn
steadily. Upon the basis of the last
quarter Steel common is earning at the
rate Of L per cent year. whereas two
years ago nothing was being earned. !
Meantime a railroad, such as the Penn
sylvania or the Union Pacific, has in
creased its earnings largely, but not in
any such ratio. II the Steel company In
case OF a business slump could be Sc
cure against a reduction in earnings any
more serious than that suffered by the
railroads. its securities would have an
investment character equal to that OF
railroad securities. OF course, such a !
condition is too impossible for discus |
sion. but the extent 10 which that con- |
dition of stability is approached is the |
guiding factor in determining the merit |
of Steel securities.
Pig Iron Sold High.
Pig iron sold as high as s22 a ton early |
in 1903 and steel billets as high as 1913 |
a ton. In 1901 the price of iron had /
been 1858 and of steel billets $24.13. In 1
the slump that followed the high prices !
of 1908 the 1901 prices upon which the |
Steel corporation had it's inception. were /
much reduced In 1903. when the highest /
prices on record were made, the COun- 1
try's pig iron production was 1908. AS /
tons, whereas II was about 24000000 in /
1905. and Is certain to be considerably /
larger this year. The condition now, as
with the record year is about
as follows: Earnings are about as large,
but business is immensely larger.
Larger business upon a smaller per
centage of profit is the aim of every
industry. and. has been
the achievement Of the United States
Steel Corporation. Consequently there
is now much greater stability TO its
earnings than in 1892 or than ever be-
fore. The enthusiasm then current over
the cOmpanys prospects was very i'll
advised. but there would be much more
substantial foundation for similar feel
inss now. Whether there is enough
ground for current optimism TO Justify
1t is hard To say. but there is certain
fore.
Such prosperous condition of affairs
as was demonstrated by the steel ex- ]
hibit reversed the pessimistic feeling
that had grown out of the determine
ton OF Congress to investigate the Penn
sylvania railroad. So productive of sen
sation have recent Investigations been g:
that the suggestion had d chilling effect,
IL is thought in many quarters
that the investigation mania which has
developed recently viii cease shortly, /
when II is found that very many cor
porations can stand close scrutiny. 1t
win really be of substantial benefit to
confidence to have a few properties
looked into that can reflect an unsullied
condition. IT is not known now how far
he investigation in question viii go. but /
1ne thing certain is that ii has already |
caused a closer investment inquiry into 4
PennSyIvania's value. This premier Sc
'urity Pennsylvania stock. has long 4
,een neglected in the stock market, sup
,osediy because spectators find it's
not rapid enough and be
ause investors have not been noticing Il