Las Vegas daily optic. [volume] (Las Vegas, N.M.) 1880-1908, 1907-03-11
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Alcohol
CAUSES o. TIE SLUMP IN
STOCKS.

g. 10 q den0raaixanw liquidation
sales on the New York exchange
AaEtng h@ea M unnsaal ynaaaa~ for
she gas& two days and causing .
Aeasy slump In prices Pretty
much Ill isxaes haze fallen 80 the
lowest prizes a the year. and many
ot them have Eone 10 the lowest
prices see In several years There
hate been NJ Developments in the
business situation 20 cause dastFast.
aud no failures disturbing 10 contI-
denoe. Explanations I accordingly
mnsa 10 sought In other directions.
and the one having greatest vogue
Is that the big Interests = al
taeklag the market either 10 re
vengs against a another or
against the Roosevelt hAministra-
ton.
1t In po@oeible to find AL explana-
ton which win better stand the
test u reasonahlemess This Ia 10
b. found on the one hand In the ex-
traeEdinarliy higb reAs-as which
capital rs now COMMANDING and.
on the other hand. 10 the apparent
fart that Increases In the costs Of
doiug business are beginning to
equal ar exceed as a rule the In,
crease In gross earnings. The nat,
urml consequence Of this must be
q decline In the prices Of securities
whose returns are contingent upon
net divisible income.
To illustrate. take the stock OF
the New York. New Haven and
Hartford railroad. which has fallen
Ito ITS l-2. the lowest price known
In years, and representing n decline
OF over sec a share from the high
price of last year. This Ia y pei
cent stock, even at the low price oil
yesterday. viii net the purchases
less than s per cent. But on notes
offered by the same company tE
new capital the investor can get
per rem or better. and other con
Germs are bidding even higher foI
this capital Obviously. therefore
there IL no reason why New Hay
en- stock should remain N high as
IFS 10, except the chance OF com
ing In for some rights" and the
further chance that gross earnings
will continue to increase 80 far In
advance OF any Increase In costs OI
operation as TO promise an In
crease In the dividend rate.
Setting aside the matter q
rights" as merely IN exceptiona
possibility. there Ia but this On'
chance of increasing net earning
10 hold the stock up as against tn
prices being offered for capital OF
a definite OF fixed obligation. an
what Of the outlook for this on,
chance respecting railroads In ger
oral? II was excellent. say tw,
years ago. and 80 stocks kept 81
going up: II vas fairly good a yea
uun and Aha nfnRG narIaf N1npn
higher up, But there are now II
dlcations that expenses are oveI
taking the increase In earnings
and the chance Of higher dividen
rates tends to disappear, Stock
are forced to stand upon preser
dividend rates without further In
mediate hope Of betterment. an
when prices of stocks came TO b
divided into present rates OF div
dend the result generally Vas foun
to be less favorable TO the investt
than the general market for capits
Is offering. Necessarily therefor,
stocks must fall. while bonds shout
tend to improve In price.
Such appear Ia he the facts an
the law which are forcing a retreo
in speculative prices, Prosperity
splitting over upon itself. The price
of capital and labor are catchin
up at last with the prices of wha
the manufacturer and transportc
and promoter have 10 sell, and s
begins to melt away that extr
margin Of profit which has mad
'yprosperiEy" and carried Gpecula
ton to undue bounds, And In $
far as business venture has bee
committed to the Indefinite contir
uance Of that extra margin OF prctit
the country will so far suffer in tn
reaction. II this adjustment Is no
a heavy one. such a speculative RI
action as we are now experiencing