New-York tribune., 1906-06-03
The Financial World.

been. National prosperity stays-promises IN ~.
long lasting; but pros2erity's reflection alters
where confidence was merging into enthusiast,
there now intervenes a spirit characterized a.
conservatism. but which may actually be onI,
regarded as doubt and suspicion. Reasons az,
not far 20 seek. No mystery wraps them
little while ago there was wall and ou,c-
against the mania for investigation: but n,o,
who trusted corporation integrity were -.
troubled. for it was their firm faith that mp.s
raking energies would be halted by prompt A.
proof OF ugly allegations. Yet in too co,-
spicUous quarters. instead OF denial. ther. q,
dodgins-elsewhere confession. And Wall ssrso,
(whether Justly or untUstly) reaps now a nsv
Indictment. Pennsylvania inquisiton Stan5s-s
Oil accusation. alleged Beef Trust aoOmInatss-
al echo pessimism into Wall Street Unfsirs
II may be. Temporary? Perhaps InconSs
quential? Unfortunately. no. The public /,
choosing TO consider itself 'On notice" Anoro
gists need not strive to delCde themselves. nm
lie sympathy-at the moment, however brie1v-
is sharpened to keen edge. adversely Ev,-
dences abound Speculative brokerage Offices
are empty, bankers Offering investments srs
without normal custOTl-this weeks record on
the Stock Exchange stands for but the baregr
professionalism
Some new show OF life was infused into sa.-
urday's market. a few stocks becoming fai-Iv
active at advancing quotations, but the demon
stration was hardly OF convincing character
There is a substantial short interest in So
market, and traders so committed may be frnr1
time 70 time forced into hurried covering proc
GSSeS, but actual healthy animation is lacking
To ignore current signs OF the publics dizro
sition would be childish. for looking facts Pm
in the face. il needs be confessed that the sscur
ity market for the time at least. has provoca
ton for hesitanCy and hating. Prosperity has
other uses than 10 be exploited BY issuers OF nav
securities. What is troublesome in the nnan-
cial situation to-day is much less the surface IN
dcation OF grating much indicted than
the competitive making and huckstering cf new
stocks new bonds short time notes and mis-
oa1l n ga nj "a iya ion 11ha
Crop prospects seem almost perfect. General
business conditions are not only without ap-
parent defect, but, both commercially and IN
dUstrially, Good Times tokens multiply. But
positively deterrent are the avalanches Of new
securities-Pennsylvania example less excep-
tional than examination viii disclose.
1t is urged in defence Of the policy OF an over
flowing volume of new capitalization obligations
that funds so realized are for profitable Invest
ment. that net returns will be so augmented as
10 amply justify the enormous drafts being
made. This may ultimately prove 20 be true
though UP to date the theory is not working
quite so we'll as early predictions promised: ths
Pennsylvania example (still adhering 70 that
merely for exampla). disclosing an EXHIBIT Of
bonds expanded from SSS.000000 TO s191. 100000
within half a dozen years and stocks increased
during the same period from under $50 100000
10 over S3O0,0O00G0 Ga total capitalization In
crease OF more than 275000 900. over I25 per
cent? with s8,1S1,0O0 paying the dividends OF
1900 against requirements OF more than S1S.-
100000 for 1s05-and this attended by the dis
able over dividends for Improvements in 1900 IS
expanded in 1905 less than half million dollars.
These are hardly returns officially anticipated.
But critics of Pennsylvania policy are not well
poised If they hurry into free and easy con-
deTnnation OF the plans and accomplishments OF
President Cassatt. Informed critics will not be
forgetful of the tremendous reserve possibilities
available for the rounding out OF the Pennsyl-
vana's policy through its position as beneficiary
from its hundreds Of millions OF investment
The control Of other great railway systems rests
with Pennsylvania From it's Western relation
ships, 1T may be that early increase OF net
revenue Will come into the Pennsylvania trsas-
ury, and its Long Island control may not be FOR
some years a contributor Of profits; but the vast
+ mileage Of Norfolk 6 Western, Chesapeaks &
Ohio and Baltimore & Ohio may be expected to
provide early expansion in dividends for Penn
sylvania advantage. Much stress, indeed. Is laid
by Wall Street upon this element IN the situa-
ton. 1t IS urged that Chesapeake, Norfolk and
Baltimore & Ohio resources viii speedily be Pro-
viding all the increase OF revenue which viii be
necessary TO Offset any delay IN Pennsylvania's
reaping a large reward from it's own expansion
This manner Of optimism does not, however, in
duIge in much particularity. But the suggestion
IS popular. and in the market IL has been in
fiuentiaL
OF PennsyIvanIa's large stock holdings upon
which dividends may be raised, iternization Is
as follows:
Chesapeake & Ohio. S1O.190Oo0
Norfolk & Western. ......-.... 2oS3eet0
Baltimore & Ohio common. 3O,29SSOO
Total ....................... .S8075SsO
1t is pointed out that increased dividends
must be soon QlSDQTSeQ upon dil liALCO u IAA~~c
issues-an increase, IT is forecast OF per cent
all around. Now for the Pennsylvania, what
would thus result? Upon its Chesapeake q
/ Ohio inVeS trnent IL would addIuonaLy IeSetSSSS
S101 OGO NOrfolk's addition would be S-uSptO
and the increase for Baltimore & Ohio wouId %
S30S. .O00-a total gain 6or year, aggresauHs
S607. 800
This would equal exactly one-ffth OF l per
cent. on Pennsylvania own S3toU0OgVe eapldII
stock An increase of per cent tWnlen tS %0ur U.r
make Z per cent for Baltimore & ONO, Per
cent. for Chesapeake & Ohio and per eent-
for Norfolk & Westerly would increase FsI..
svIvania's income by an amount equal 10 W.
ffths OF l per cent. per year unon US SlatS S
capital. But nobody is forecastlng any 'NSA
increase soon. ,-,,,s ~
$500 100000 An alI-rOund l Per cent me- So
paid on every issue-S2 800 0OG-would not CIV s
the company as much as per cent on ~ oSoeo,
standing capital such an increase 'S-''Voru-i -i
being equivalent 10 raising income from sscu-., -
ties approximately another - per Cens. - IoSf
of the IS per cent. expansion SHOWN IoL -, -
1905. following years of expansion IL IetuI I os
70 a continuous period OF unexeepelONa'
perity- ,,,,,anfa
Railroad for 1906 will receive SIuOUVOV 49, ,-ja
dividends from its holdings or FehIlSs F. bur
Company stock. now paying . per cSi., c,lv g
paying nothing from 1890 70 lvVp ana ala o'I Lsvs
per cent in 1901. In hard times dlvldenus -, y,
been dropped from PennsyINaIla CONiR .s-
stock. ON the $40.000,000 held last SsJa SSJ
7 s. 100000 was received by the FeIISS s,-5s
Railroad. OF course. the Pennsy wanna 5 Or
is liable for interest on Con' ertloie 49, 49,. cha
dividends on its own stock issued aSalLtIs' ,sTV
funds obtained with which to finance thsl' ths ~
/ issue of 500. 100000 Pennsylvania COMPANY Seo o1
( PcnnsyIvania's prosperity Is dependent ssT, us
PennSvlvania itself 1t is not wise for optlnils'"
/ 20 be careless.
ST Paul has extraordinary financial operasuO.s sTss
under way. COincident with eNtraorclhalS sR-sbsr R
/ cal eXpansiOn-and there may be some AU'
/ upward 81. Paul movement ,.... ~
In Reading there is forceful nanipu,a' ION ~" ,s%s
] a pool of traders under leadership more % s- -
/ dominated by Richard Canhelc- Inc CoR;sv ;rv
stocks may be SJrOng-OUght TO be, " SS Ss..5crs
capacity IS reflected. for copper trade ,orr
/ have never hitherto been in such satLSi. - n
I sfY,7arfOp ArOaIgau1otA5'S dividend can DC -