The Washington herald., 1907-03-11
DemOralized Condition Con-
tinues During Week.
RAILWAY EARNINGS DECREASE
PessImism Exists I'm Practically All
Lines and Money Situation NO More
Encouraging Than Railway Re-
pOrts-AIdrich Bill Not Boom Ex-
pected-Two-cent Fare Agitation.

were carried on last week IN more eX-
cited manner than they have been at any
time since the great liquidating movement
in 1865 The market was. in fact de-
moralized throughout the week. Il was
not panicl1y. because its downward trend
was broken on one or two occasions by
sharp rallies and a notable feature Of
the transactions was that they were I'M
accompanied with rumors of financial
trouble on the part of firms or individuals
such as We're freely circulated at the
close Of last year. 1t must be admitted,
however, that the support extended to the
market was poor, and that by far the
larger portion of the buying of stocks
that took place seemed to be that pro-
ceeding from the purchases made to
cover" speculative sales for the decline
There were few. if any. incidents during
the week that seemed to specifically af-
feet values in one way OF the other.
Railroad earnings as a rule continued to
show net decreases, and in some instances
decreases in gross The break, particu-
larly in the Southern Railway stocks, was
perhaps attributable to fsArs that the
continuance of the present dividend dis
tributiOn on the COmpany's preferred
shares was impelled by the large reduc-
ton In the company's surplus shown dur
ing the first seven months of its present
fiscal year. On Friday, however, the di-
rectors of the Southern Railway Com
pany declared the semi-annual dividend
on the company's preferred stock at the
regular rate Of 21-2 per cent, and as has
falling off in the eompany's surplus in
the year thus far has undoubtedly been
due as much as anything else TO expendi-
lures made from earnings upon the i'm
provement Of the compaly's property.
There was, similarly, selling Of the Erie
and other stocks in which margins of net
earnings over dividend distributions are
not notably large. Violent declines also
occurred in the Atchison and Southern
Pacific common stocks. due in one case to
an impression that the dividend rate ou
Atchison common will not be advanced in
April. as has long been supposed, 10 Il g
per cent basis.
LORdOH's Bank Statement Poor.
It may be. too. that pessimism regard
Ing the money situation was somewhat
increased by the poor statement of con
dition made by the Bank OF England in
the middle If The week. England is still
shipping gold heavily to South America
and owing TO the activity of domestic
trade in Great Britain bank loans in the
country are expanding rapidly. There is.
it seems, therefore, little prospect of "a
reduction in the Bank of EnglanGs dis
count rate, an occurrence which some
weeks ago seemed near at hand. Events
in our own country that We're of most in
tereSt 10 Wall street We're the passage
of the Aldrich financial bill by Congress
which cane 10 be regarded. however. as
"a mere academic matter-and the con-
unued enactment Of 2-cent passenger fare
legislation in different States Of the Union
This has led naturally 10 the abolition
ia larger part, by the railroads concerned
of special privileges as regards rates OF
passenger transportation; and it Is not
zoo much 10 say that a condition more
or less resembling war between these
railroads and the people in many differ
eEt sections of the country has thus come
Into being. leading 10 the apprehension
taat d reduction OF freight rates by the
railways may be enforced. Such a state
of affairs offers clearly enough one
reason Tor the absence Of public buying
in the security market People who would
ordinarily, Irrespective of the conditions
Of the money market buy railroad stocks
for investment or speculation after such
declines in them as have been recorded
are deferred from doing so because of ig-
uorancc as to the basis from a political
point of view. from which railway invest
ments must be hereafter regarded
IndustriaIs Holding I'D.
While the securities of the great indus
trial companies have fallen in price they
have fallen only moderately. although
presumably holdings OF them either on the
part Of spectators Of investors were as
large prop0rtiOnately as in the case ol
the railways. The banks and money lend
ors, who usually require that the col
lateral security deposited on Wall stree
loans shall be composed of two-third.
railway and one-third industrial stocks
have found 50 far that it is the indus
trial securities against which they hay,
Disseminated that have stood the fall il
the market best OF course, If the stocl
market continues TO fall industrial stock.
viii decline too. and the pace Of genera
business viii halt. Yet it may be interest
ms to note briefly the peculiar reasons
as they are now currently stated in Wal
street, that account for the singular cir
Cumstances Of large decline in railwa,
securities while the price of stocks repte
senting general mercantile and CONNER
clal business operations has fallen rela
lively little. The reasons thus urgeC
may not be sound. but there can be NJ
ignoring the fact that they have beer
used with formidable effect against tn,
market
1t is declared in the first place and from
the point of view OF close observers O
the security market that speculation pur,
and simple pushed prices of railway
stocks last year to an absurdly high level
This speculation was none the less. reck
less because very rich men INDUCED in It
and events have proved, il is declared
that these rich men like anybody aIs,
could misread the money market and 9th
er signs Of the immediate financial future
Such prices as We're reached last year fo
the Great Northern and Northern Pacif,
Shares might have been justified. il is ad
mitted, if there could have been a con
version into cash of all the equities o
these companies at their full value. bu
the monetary conditions did not allow %
this conversion and when liquidation II
the stocks started il was found that In,
market for the securities was poor.
Pools Blamed for Trouble.
In the second place hostile critics o.
the market affect TO find cause fol
the depression in railroad stocks in tn,
influences that have developed from thr
working Of the community of interes
plan between the railway companies tha
was started ten years ago. Just why thi.
plan was put into operation is of cours,
well understood For many years pre-
N0usly the trouble with the railways haC
been that there were more railways THAI
there was business and that the effort.
OF the different raf fIx-ax- cor7paniee Il