Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-04-14


that men like Morgan and Moore and Ryan
took back their stocks when the light
wasted bears were doing the loudest shout
ing. The short interest in the market has
bee very much reduced. and it seems that
the greater part OF the short interest now
standing is OF the light-waisted variety.
Ihe piungers and pikers who were all wild
bulls at the sky prices of last winter be-
came just as bearish last month. and the
lower prices declined the more enthusiastic
caily bearish they became.
The bears of this variety looked upon
the recovery OF the past three weeks simply
as an opportunity to put out more stocks.
They are convinced that the whole under
structure of the market is rotten. and they
are gong TO be on deck when II crashes.
Ihey are talking about receiverships for
some of the weaker roads and a wholesale
cutting down OF dividends on the stronger
roads. After the terrific decline of Feo-
ruary and March. of course. II is no time
to get wildly bullish simply because the
market has recovered some share of lts
losses but ordinarily common sense should
show that after the very severe declines ii
Is better to buy good stocks or the breaks
than to sell them on the bulges. The mimi
mum of risk is on the long side OF the mar
ket so long as standard railway stocks are
seiilng IN the neighborhood OF a u per cent
basis and money continues to be easy
The bond market has been looking up. 1t
remains to be seen whether this is only
temporary AFTER bear market the de
mand for high-grade bonds is usually the
forerunner of an advance In stocks It is
too soon. however. to expect to reversal OF
sentiment After the bear market of 1903.
IN which the low prices were made in ..rp-
tember, 1t was eight months before the
bond houses began to get over the blues
lhngs began to look up in May, With the
successful sale of a block of New YORK city
bonds and there was a steady improvement
IN the bond market during the next three
months. The bull market in stocks began
IN July. The advance got well under way
Immediately after the presidential nominal
tons. Wall street felt that whoever WAS
elected. the country was assured of a fair
ly conservative administration.
Last winter. when prices were very high.
Wall street was talking of gradual prep
aration for the campaign of 1905. The idea
was that there Will be the usual letup in
business toward the end of this year or
early in l9os and that there would he grad
ual liquidation in stocks. But, unexpectedly
to the rank and file of Wall street the
LIQUIDATION started months ahead of time.
and, instead of being gradual, was violent.
1t Is the unexpected that always happens In
Wall street. Looking forward to lgoS-and
1t is not such long way Oft is plain to
see that the big men Will not be anxious to
carry a big load OF stocks through the cam
paign at high prices. Next years pres
idential campaign. it looks now is likely
to develop into one of the hottest political
fights in the history of the country. Con-
sidering the present state of the public
mind, almost anything can happen next
year. There is the possibility that the cleo
ton may so result as to thoroughly UNDER
mine public confidence for the time being in
railroad and industrial securities
Any considerabl BILE advance in prices this
year from the present level would arouse
the suspicion that the big men had a COM
munity of interest to distribute stocks at
high prices for the purpose OF clearing their
decks before the opening of the presidential
campaign. Last month standard railroad
stocks were on the bargain table After
the rise of the past three weeks many of
these stocks still intrinsically cheap. A
further advance of 20 points before the end
of the year would wipe out all the bargain
table prices and make many stocks dear
again. But stocks that are intrinsically
cheap at the present level. under the condi-
tons now existing. would not look cheap at
all were we to have political upheaval
next year.
What is the dividend on steel common 60
ing to be? The action of the stock In the
market does not seem to indicate that the
dividends are to be increased. If the stock
is to go back to the per cent rate this
month, then 1t ought to sell above 80. Dur
ing the winter when the stock selling
around $50 and there was expectation OF
an increase in the dividend at the January
meeting the Morgan following in London
had the tip to buy it for 500. Mr.. Morgan,
it is said would like to the dividend in
creased. He was In favor of increasing 1t
in January. Some of the more conservative
directors, while they recognize that the
company is earning more than 4 to G per
cent on its common stock now, think 1t
would be very unwise to increase the divi-
dend now. with chance that q depression
in the steel business before the presidential
election would make the per cent rate too
high. The company made mistake in the
beginning of putting the stock on a per
cent basis and 1t is thought that IL would
be most unwiSe to make second mistake
in the dividend policy. Some of the leading
men in the steel corporation knew at the
x,se+.. r-,
cent rate on the common stock. but they
were overrued by the big interests. who
wanted to make quick profits out of the
sale of their common stock to the public
The dividends on the stock in the beginning
We're paid for no other purpose than to
make a market for the common stock. The
credulous public was led to believe that the
per cent rate was to be permanent and
they thought they had bonanza when they
were getting upward of per cent on their
money. Some of the practical men in the
steel corporation believe that the time is
not so far off when the common stock will
cross the preferred. The steel business Of
this country is growing rapidly they
say, that the present policy of putting
earnings back into the property on large
scale will eventually give to the common
stock value several times its present mar
ket quota tons.
The copper trade people will insist that
the metal market is as strong 70 k,
and that there no signs of any break
in prices. They say that prices on the
metal exchange here do not amount to
anything anyway, and that the decline in
London is purely speculative But some
good judges of the copper trade. who are
not in the trade themselves. believe that
copper is too high. and that it is going to
decline several cents a pound in the
course of the next few months. A de-
cline In copper TO 20 cents a pound would
hurt nobody. 1t would be beneficial. Sky
prices for raw materials never bcne-
fetal to trade. The present profit in cop
per mining is too large No great Industry
can ever go along over IA long stretch of
time making abnormal profits. 1t is
against economic laws.
The fact that copper mines are making
from 10 TO 20 cents a pound on their out
put on the present level of prices is
enough to indicate that prices cannot hold.
The abnormal profit in copper mining is
bound eventually to Increase the output
very largely. and this increased output will
be the force that will bring prices down
in the end. Many copper mines are
being developed, and ii is only because
the development of copper mines is SLOW
process that prices have not broken be-
fore. Millions upon millions OF dollars of
new capital being put into the develop