The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-12-30
PRESENT BOOM IS
ON SOLID BASIS
No One Expects Industrial De-
preston Soon
MINING STOCKS MANIA
indications Are That the Public Has
About Its Fill-Dissolution of
the Morgan Bond
Syndicate.
MINING STOCKS MANIA
BY W. G. NICHOLAS.


that the prosperity of that year was with
out parallel in the previous history of the
country. The very skies look different to-
day. All of the best judges of our COM
mercial life agree that there is now no
immediate danger of any such reversal
as there was in 1903. In fact, shrewd
Judges of commercial conditions generally
believe that the present boom will last
for a considerable time. New records were
made in 1906 new records have again been
made this year; and the indications are
that new records will be made in 1907.
No one can foretell, Of course, what I'M
foreseen events may check the tide of
prosperity. The crop question, of course,
Is always with us, but in late years the
AGRICULTURAL interests of the country have
been SO diversified that losses in one crop
have usually been made up by gains in
other crops. The theoretical students OF
commercial conditions do not look for any
serious setback in business until the cycle
period of 1918. The ten-year cycle theory
has a great many believers. We had a
panic in 1875 commercial setback ten
years later; and another panic IN 1855
with a commercial setback In 1908. III TINS
rious depression in 1913
Tho December setback in the prices of
securities in Wall street does not disturb
many people December setbacks are not
uncommon. We had violent one two
wears ago when Mr.. Lawson made his
wel-timed attack on the market This
years slump in the quotations of some of
the high-priced securities has been large
ly a local affair. Some of the big opera
tors were extended in stocks like Read
ing, st. Paul, Great Northern and North
ern Pacific and Union Pacific, and had
to dump over their holdings the moment
the market showed signs of weakening.
These operators thought they could carry
bull speculation through a tight money
period, just as they did last year. but
some of the conservative banking people
thought otherwise. There is no use in
killing the goose that laid the golden egg.
It looks as though the big decline in ST.
Paul, following the announcement of the
offering of S100,000,000 new stock, immed-
lately was brought about by some of the
big interests in the property for the sake
of getting some cheaper stock. 1t looks
like a typical Wall street shakeout. The
decline in the Hill stocks, on the other
hand, was due to the fact that certain
large operators were carrying heavy lines
of them, and found that the inside inter-
ests were unwilling to relieve them OF
their burden when they wanted to sell.
Mr.. Hill and his leading stockholders do
not worry much about the day to day
fluctuations in the prices of Great North
ern and Northern Pacific and they very
seldom have orders in the market for
purely market purposes Mr.. Hill, OF
course, knows more about wall street
than he confesses to, but there is more
than a grain Of truth In his remark the
other day that those who speculate in
Wall street must expect disappointments.
A January rise in security prices is or
dinarily expected, and 1t is likely that
there will be a January rise in 1907 IL
the money market loosens up. But no
bankers of experience expect that we are
to have cheap money for considerable
time. The business, not only OF the
country but of the world, is going on at
such a pace for the time being that cash
is in great demand in commercial enter
prises, and the borrowers of money are
bidding for it in the worlds markets. In
this respect money is commodity like
other things. When people want it they
bid for it and its price goes up; when
they do not need it. they do not scramble
for it, and its price goes down.
Do Not Have Same Effect.
Wide fluctuations in the prices of secur-
tiles, while they interest a great number
of people throughout the country who
have some of their funds invested in rail-
road and industrial stocks, or who specu-
late on margins, do not have the same
effect on the general public that they did
several years ago. In 1903, when we had
a big bear market in stocks involving
heavy losses to spectators and investors
in some of the newer industrial stocks
especially, the country learned that Wall
street could have some pretty stormy
weather without seriously affecting the
rest of the country. In that year 1t was
repeatedly said by bankers and business
men in the west that the only bad spot
on the whole map was Wall street. All
the rest of the country was doing finely.
The big crops in the west and south, to-
gether with the large production of gold
throughout the world. carried the coun-
try through its period of undigested Sc
curites. True the steel industry did
slump in that year. This was due to
the fact that railroads could not raise
new capital on advantageous terms and
SO refused to buy more steel products
than were absolutely needed Their or
ders for rails were cut down to mini
mum. But two years ago they had to
get back in the rail market and order
more than ever and the present boom in
the steel trade is the result. The general
public has come to believe, and with
much reason, that the day to day fluctua-
tions in some of the leading railroad
stocks traded in on Wall street are large
" the result of the gambling operations
of some of the big operators who want
action for tfieir money every day. The
price of Reading shares declined during
q few DAYS in December 500, and they
were worth intrinsically just as much
at the bottom as they were at the top.
But some large operators were plunging
in the stock and when they tried to get
out of their speculative lines they found
that the insiders were unwilling to should
er their burden. The same thing hap
pened some time ago in Union Pacific
After the liquidation was over Union Pa
cific rose about $50 a share. Reading is
probably worth intrinsically nearer SOC
than its present price in the market, but
that is no sign that it will sell there next
month or next year. When Union Pa
chc was selling around $120 expert judges
of railroad values showed that Union
Pacific was worth intrinsically $500 a
share, but those who specialized on this
belief did not all make money. The stock
took many crooks and turns before it
approached $500
Dissolution Of Morgan Syndicate.
One of the significant signs of the
times is the dissolution of the Morgan
bond syndIcates. The last Morgan bond
syndicate to be broken up is the $4,000
Oo0 per cent. b0-year New England Rail
road bond syndicate. nese bonds were
purchased by the Morgan syndicate at
1857 and offered at 1101@. They are now
being offered by Boston and New Yorl;
bankers around 1902. During the year a
total of no less than seven Morgan syn
dicatrs whose original holdings aggre-
gated 1896 a00.000 have been wound up.
These were the burlington per cent,
se4.fso. co.: New York Central So per cent,
sla5,eGo,oao; New Haven 4 per cent. s15.-