Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-05-28

operating cost. maxim; larger dividends
very doubtful
OBJ On account of publ opinion, etc.,
being opposed to further mergers
which were also difficult through un-
favorable security market.
= further Tightening Of the interna-
tlonal money markets, aggravated In the
United States by the announcement of
railroad companies.
g.. Confidence Of investing public dis
turbed by acts Of some railroad mana
ta) By the prediction of enormous can
1tal requirements for railroads during
the next few years.
o. by the exceptionally large dividend
summer, foreshadowing the abandon
ment of the conservative policy which
mad prevailed during the last ten years
&c! by the disclosures recently made be-
lore the insterstate commerce commits
sion following the revelations made
Two years ago as to the management of
ire insurance companies). These dis
closures created the apprehension that
other companies might have been or
might be "overcapitalized," and that it
was not prudent to buy railroad shares
as long as some railroad companies
were buying and selling such large
amounts Of shares of other railroad
companies.
4. Confidence in the value of railroad
securities also disturbed through enacted
and threatening.
(a) State legislation directly affecting the
income of railroad companies and indi-
rectly affecting discipline and esprit de
corps of employees.
o. Through the fear that Congress might
also enact drastic measures affecting the
value of railroad investments
D. Misapprehension principally in two di-
rections:
(a) That valuation Of railroad properties
may be ordered in order to base thereon
possibly increased taxation and lower
rates to be charged.
CD That retroactive legislation might be
enacted as to ''overcapitalization," and
as to the control by one company Of an
other, which control was acquired, in
some cases, years ago, and securities is
sued therefor, which are now in the hands
of innocent bond and stockholders.
Conditions After the "Panic" and Pos
sible Consequences.
1. The heavy liquidation has eliminated
many speculative and weak holders of
securities, and concentrated the attention of
the whole country, even more than before,
on the railroads and their managers all Of
which will be beneficial in the end.
2. The heavy losses not only sustained by
the spectators, but by the general public
and capitalists. have weakened their re-
sources and their desire for new enter
prises.
3. These factors preventing railroads from
obtaining the large capital urgently needed
for improvements, etc, will lead to some
curtailment of business and Of industrial
activity. How severe this curtailment will
be. and whether it will lead to hard times,
will depend mot considering this years
crops) how soon the aforementioned
unfavorable factors as to the money market
and disturbed confidence disappear.
AS to the money market, Secretary Cortel-
situation; he is in good position to con-
tinue to do so, as the United States treas
ury has (as compared to March 1, 1909
gained $144 100000 gold, while the Bank of
England, the Bank Of Germany and the
Banque de France have lost about s75.-
100000 gold in the same period.
AS to restoring confidence in railroads. q
change in the management of some COM
panies and the advocacy and promise of
conservative legislation would, no doubt
have very far-reaching effect. AS to this
legislation, or exercise of increased powers
by the interstate commerce commission the
following might be suggested:
(a) Prevention Of decentralization in the
future.
90 Permission for traffic agreements. with
the consent Of the interstate commerce
commission.
(c) Protection against the building I'D Of
shown.
(d) Prevention Of dealings by one railroad
company in the shares of another without
the consent of the interstate commerce
commission.
(e) Prevention of railroad officers and di-
rectors from making personal profits out
of dealings with their companies.