New-York tribune., 1906-11-11
The Financial World.

OF the greWSOTne VlSiOns-tOr we have Isaa
ers in the hnaciaI world who decline % b -
ceptive and impressionable every time a b.s.
speculator starts a-shivering. Illustration !,
this ability to be sane appeared in conspicuou.
quarters while our election fright was ar q,
height-such house as Watson & Co. recov.
nized representing investment interests OF ~.
very first importance. writing days before M
| election straightforward business common sar.n
like this:
II seems TO us that politics has been efvan
| considerable more attention than deserving from
a market standpoint IN the presence Of a sur
stdntfal and unprecedented prosperity. whieb
neither the election of Mr.. Hearst nor anv sa
/ of men Of similar radical views could in roe
| slightest degree impair, even II permitted m
make the attempt. which is not az all Tk.,
/ while the voice Of the people can be heard
L through the courts. legislatures and public
/ press The earnings of Northern Pacific. Baltl-
more q 'E}Ato, Great Northern Pennsylvania
/ Union Pacific ana the United States Steel Cor
poTation. or other of our representative raiI-
/ road systems or Industrial companies, would not
I be one dollar less would single bushei hava
| 20 be sUbtraeted from the total harvest OF tbe
year or the estimates Of what next season nav
produce no matter which candidate be elected
1t must be admitted that the money marker
| is to be reckoned with. There is active demand
for funds all over the country from the sheer
force of prosperity Old enterprises are ex-
panded. new enterprises projected in every d,
rectiOn- Real estate activity is general-minine
development goes on everywhere-generaI busi-
ness grows healthfully. All this demands the
use of money 20 a degree not hitherto known Il
stands TO reason that il money can earn 5 per
cent or more in other channels. Wall Street can
rot borrow it for less. Security market spscu-
lation must recognize and adjust itself to these
conditions.
The wholesome feature of it is that money is
dearer because it is more widely employed
Every dollar available is circulating and help
ing to make another dollar. OF very different
character is that stringenCy which results from
panic boarding. Nothing of that kind exists
now. The actual volume of money IN ctreUla-
ton IS far greater to-day than ever before Out
standing American credits abroad vastly in
excess OF any previous period and are availahe
arise Realization OF this was what caused the
recent advance in the Bank of England discount
rate We can command all the funds We need
from Europe.
The chief stumbling block TO the spontaneous
circulation of money is fiscal system which
IN prosperous times heaps up great sums IN the
United States Treasury which ought To be doing
public service. The present Secretary OF the
Treasury does all in his power to remedy this.
but such power Is limited One of our crying
needs is a radical reform of our currency sys-
tenn, and Republican success fOreshadOws such
reform. 1t may be taken for granted in these
circumstances that Wall Street borrowers will
have 70 pay the legal rate for an indefinite time,
and II Is quite probable that occasional little
furrfes Will occur as they did last week when
sone percentages Of the daily loans We're nego-
tteted as high. as twelve per cent But there "a
nothing alarming IN thts-nOthing TO diSCOUrsge
speeulattOn-nothing to stop the upward move
ment IN sound securities. except in so far as
investors will scrutinize interest and dividend
yield from the standpoint OF dearer money or
course a stock yielding net four per cent Is
not valuable in a six per cent money market
as In the two per cent money market OF two
years ago. But with this in mind study OF the
stocks traded III shows example after example
where yield Is still superior 70 the profit de-
rtvaole from loaning money. and such disparity
must adjust itself Moreover. until there Is
more active public speculation this whole dis
cussion OF the money question Is more academio
than practical Stocks are not held on margin
20 any extent but are owned or carried by the
powerful interests OF the country-and even
when not owned outright are strongly fortified
by time loans. Passing furries we have had
and may have in call loans rarely represent
anything more than the belated borrowings OF
day-to-day spectators on the Board-ars Of al
most tnfnttesimal extent compared 20 the sum
total OF outstanding loans.
New testimony to prosperity is given by the
voluntary advance by the PENNSYLVANIA Rail-
road OF the wages OF $4,000 employees involv-
ing the disbursement by the Company OF an ad-
ditionaI million dollars per month Taking at
a low estimate the average family OF these en-
ployes. many more than half million people
are directly benefited OF course. much OF this
additional disbursement will come back to the
road in the shape OF Increased traffic due the
spending OF the extra wages. such has always
Street criticism 10 the effect that these increased
wages impose additional burden upon Penn
sylvania's revenues. but this is a narrow view
TO take. The Pennsylvania Railroad would not
have assumed these obligations unless IL reir
they were just and warranted by business con-
ditfons. In giving to employees their Just share
OF increased earnings the Company sets a
splendid example TO other Corporations as %
how capital should deal with labor. and puts to
shame the frothy demagOgism which seeks to
excite rancOr and hatred Taking into account
the recent advance IN Pennsylyania's dividends
and the additional obligation for wages account
net earnings on the current basis still leave a
handsome sum to the credit of the surplus. II
may be noted that Reading has followed Penn
sylvan1as example. Doubtless other railroads
will fall in line. The American system is work
ing out its own salvation.
This review has had occasion before -o com
ment on the crudity OF the criticism which
deprecates speculation in mining stocks The
mining business is perfectly legitimate and as
proper medium for investment or speculation
as any other.
But it must be admitted that II has its handi-
caps Fraud finds fruitful held in the ex-
ploitation OF worthless claims. This. however.
is not difficult TO discover.
OF more danger to the public is the over
enthusiasm with which actual good properties
are sometimes handled The proprierors Of
mine Will In all honesty organize oompany'
incur obligations for plant. issue interest bear
ing securities and so ahead trusting rl luck %
meet their payments, Often they strike snags.
There Is delay in actual mining of oreS-buI
wages go right on, interest on borrowings does
not stop-and the first thing YOU know the com
pany is In financial trouble. There may oe moth
ing wrong with the property as "A property, otll
the management is poor, resulting I'm assess
ments and imposing haTdships on innocent buy
ers of stock
The moral is obvious, Those who iavest in
mining stocks should not only consider tle re-
ports OF experts as 10 physical condition should
not only take into consideration the ore Ia sshl
or fairly appreciable-they should rigldly SefV-
tinize the personnel OF managers
II a mining company is found % be backed ~
men OF integrity, ability and ample means, aen
whose word can be relied upon. whose crediV -
high, there can be no good reason for reluetSASS
20 buying its stock Just because lt Is q mime
And there are many such companies TO-DAY
whose shares are purCha sable az prices Whica