Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-09-22
Financial News Letter
BY W. G. NICHOLAS.

Lowell level of prices. 1t has been called
upon to take care of enormous liquidation
during the last year and at the decline 1t
can be truthfully said that there is I'M
/ manageable floating supply of stocks The
absorption of high-class shares has for the
last two months or more quite offset the
selling for account of former owners. This
fact may be denied by many people who
think they are in the know, but the transfer
| books Of the standard railroad and indus
trial corporations substantiate the state
ment. Between the last dividend distribu-
ton Of nearly every well-established COM
pany and the date of distribution 1mme
diately preceding there occurred very large
| Increase in the number of shareholders.
Within the period described the stockhold-
ers In Baltimore and Ohio, which Is of the
middle class In numerical ownership. there
was an increase of $500 stockholders. Be
| tween the dates Of the two last distributions
of dividends of Pennsylvania the number
of stockholders increased about 1000
There was even larger proportion of In
crease in the number of holders OF New
York Central. which is one of the stocks
that suffered severe decline These roads
are typical of all of the great systems, and
1t may be said also that they are typical of
some of the stronger industrials. 1t would
appear therefore. that a multitude of people
of means have been taking advantage of
the decline to buy into properties OF known
income-ylelding qualities and are putting
away certificates. This has been going on
to an extent which will not be admitted by
those who strongly committed to the
bear side. The extent of the absorption is
the most encouraging sign of the times and
gives the best possible report to the theory
that the depression that is now on will not
be of long duration.
To get at correct broad understanding
of the present stock market situation 1t
will be necessary to take glance back
ward. Liquidation on a large scale began
about a year ago. 1t dated from the death
of Mr.. Samuel Spencer OF the Southern
railway. That tragic incident gave a
personal shock to j. Pierpont Morgan and
started him to putting his house in order.
1t brought him keenly to a realizing sense
that in the midst Of life we are in death.
and his sudden death had an effect on the
Napoleonic fnancier which nothing else
could have wrought. He began selling
securities Immediately thereafter and kept
1t up for months. With the Morgan liqui
dation came that of John D. Rockefeller
on a scale possibly even larger. This
brought the market up to the second month
of this year, when the street awoke to
a knowledge of the fact that 1t was carry
ing an immense load of stocks which had
come from an unknown and apparently
ineXhaustible source of supply. About
that time other members Of the Stand
ard Oil crowd commenced to sell on
large scale. Then there was an out
break OF public feeling against Mr. Harri-
man. and 1t came to the knowledge of
Wall street that the powerful Rock Island
crowd had inaugurated a stock market
attack on the Union Pacific magnate by
way of reprisal for the trick which he
had played them in the unloading Of
Alton on their shoulders.
Next in chronological order was the
IL,
to the inside operations Of the big people
of the street-that is. as wise as the public
ever gets to the early stages of a grand
campaign In which the larger forces work.
After that came the two or three months
of gradual recovery followed by the violent
August break. Which was precipitated
largely by the stupendous liquidation by
II. II. Rogers William Rookie Teller, H. G.
Frick and which brought about heavy and
general selling by widely distributed
element which had become interested in
copper stocks and which had to let go of
everything rSalable a measure of self
preservation. This Is the story briefly told
which carried the market down to date.
1t has forced a decline in stocks which
has brought many of them down to a
level far below intrinsic values, and which
prove Irresistible attraction to in
vestors. In the foregoing catalogue men,
ton was omitted Of the Hill group of
stocks which We're the worst sufferers of
all and connected with which there is a
story of almost tragic interest. The ter
rife slump in Great Northern, Northern
Pacific and ore certificates carried ruin
to many fortunes in this country, in Lon
don and on the continent 1t cost in actual
losses more than S4G0,O0,O00. Today Great
Northern and Northern Pacific are among
the cheapest stocks In the whole list. 1t
will not be long before people will be
wondering why they allowed such bar
gains to escape them in these two issues.
* X
Many very important people in Wall street
who a year ago and more foresaw the
stock market history which has been made
since are turning bullish. They feel that
the decline which has taken place has dis
counted everything evil which can occur,
especially as affecting railways. Observ-
ing especially the money situation, they
forecast an improvement therein beginning
very soon. One of the very ablest financiers
and bankers in the country. in discussing
the money situation, expresses the opinion
that the reimbursement of the money mar
ket will take place earlier than is generally
anticipa ted and that there will be a decided
rela xation in interest rates during the early
part of next year, the change being
marked and so overwhelmingly indicative
of improved conditions that general conf
dence will be restored and wheels of activ-
ity quickened to an extent now hardly
hoped for. He notes with satisfaction the
reflex action In the currents Of moneys
which has followed the stoppage Of expan-
sion and speculation in every quarter. No
new enterprises have been started In the
last six months, and work Is being con-
tinued on old contracts only where it is
compulsory. This is leading to an accumu-
lation of cash In every center and in a
curtailment Of Indebtedness.
The net result of the facts and reason
ings outlined In the foregoing Is that mar
ket prices for railroad stocks are dragging
on the bottom and that further i'm
portant decline may need be looked for in
that class of securities. AS for industrials,
the outlook is not 80 assuring. A great
majority of the mills and factories are
still going under full head old business.
OF new orders there has been a very
marked decline in nearly everything. This
is especially true of the manufacturing In
stitutions specializing in copper products.
Expansion in the electrifying industry is
one of the things which seemingly can best
be postponed until times get better. The
slump in copper metal Is directly attribu-
table to this fact. the shutting down hav-
ing led to an accumulation Of copper and
to a shrinkage in copper stocks In New
York Boston and elsewhere.
For the first time since the decline began
In tho nrica Of conner metal the manufac-