The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1907-03-04


current liquidation are: First, Il natu-
raj reimbursement Of prices to Interest
rates. and second. an increasing belief
that the retrenchment by the railroads
Is tho beginning OF period of general
trade reaction.
Stocks have been selling for year
or more on basis yielding an income
from p to S IL per cent. Mr.. Harrl-
man has given a Legitimate enough
explanation OF why he sold Great
Northern and Northern Pacific, the one
as high as 34s last year, and the other
at 2s2 H. and paying but Z per cent
| dividends. This meant an income Of
| 2 per cent. on the one and per cent.
| on the other The proceeds of these
| stocks he turned into shares that yield
! ed from 4 1-2 to S per cent. Corpora
/ tions have been willing to pay from
| 5 1-2 to per cent. for funds, and even
| then have had to fortify their loans
] with collateral of the very best sort
I and sometimes double in value the
Z these circumstances a decline in securi-
I ties was Inevitable Stocks have had to
/ fall into line with the return given
/ on other obligations.
4 Better Dividends.
i At 6 per cent. stock selling at $50
yields per cent 1t requires sO-poin,
4 drop to bring its return up to pei
cent. II is doubtful " the present lidui-
dation can be permanently checked 81
long as the income on old securities !!
& so much less than that on new ones
y This is most true Of bonds and stocks
with fixed interest and dividend rates
There has been vrS heavy contraction
q in bond values, even since the first o
the year. The steady decline In then
does not auger well for stocks. Q
course. the weakness In bonds is a logi
cal sequel OF heavy note issues, and tn
present disposition of corporations, es
tates and individual investors to liqui
date low Interest bearing obligations an
place the proceeds in mortgages % note
yielding from IL to 8 1-2 per cent.
For over year now the country ha
been on per cent. interest basis.
the next few months this situation
likely to change.
,..hether or not one believes in tn
, sincerity Of railroad managers In at
tributing a curtailment OF developmen
work to hostile legislation one has I
admit mat the policy OF contractio
strikes severe blow at the nation
prosperity 1t means that there wi
be n large cancellation of orders fc
! all kinds Of building materials and thn
thousands of unemployed will -
Z thrown back upon the labor marke
a me 1nltlaLlVe OIL tne TpilEOhls lS iilps
{ always followed by the manufacture
{ the merchant and the agriclturalist.
Decline in Money.
A decline in time money to four ar
2 one half of five per cent. would mea
= a very decided contraction in bushes
= Yet this Is the basis for which banke
are looking. Stocks have certain
discounted ten to fifteen per Ger
10 shrtnkage in trade, and II money rat
N fall one to one and one-half per GET
,e 1t Is fair to assume that the liquid
II ton, so far as the stock market Is Co
70 cerned, viii have been completed In a
vance of the business ebb.
10 This ought to be somewhere arou
=. the time when definite ideas respecti
ia the years crops commence to be forms
Unless there should be wholesale
d: struction of the crops or radical ]
in duction in freight rates there ought
nc be no occasion for change In the al
o. dends now being paid on railroad stool
~ There are few companies that have
ts mind reduction in order to meet
nd creasing fixed charges at time VIII
It. high costs of labor and materials {
he causing net earnings to contract, T
re such cases are isolated ones. The n
OF dority OF roads can suffer net decree
nj this fiscal year without having to char
es their arrangements,