Evening star., 1907-09-01
Financial News Letter
BY W. G. NICHOLAS.

special Correspondence OF Ine star.
NEW YORK, N. Y, August 81, 1907.
Thomas F. Ryan, past grand master OF
Machevalian finances, may have overreach-
ed himself in his New York traction deal.
Just prior to his departure for Europe a
couple of months ago he told friends that
he was practically out Of traction securi
ties and was no longer financially inter-
ested in the local situation except to a
very moderate extent. He is evidently
very willing to have it understood that he
has shoudered the burdens and response
bilities upon others. 1t would appear that
the load has landed on Mr.. August Bel
mont and his hackers, who are supposed
to be the Rothschids. They have been
landed with the goods to all appearances.
Mr.. Belmont is left alone to struggle with
the mass Of complications, including de-
faulted guarantees of dividends, deficiencies
in earnings, receiverships and the bank
ruptcy of some of the constituent COM
panies In the merger. He is up against 1t
for sure. A new era of reorganization has
set in, and what the outcome will be is
largely speculative. The only one thing
and the Bronx feel sure about Is that the
tracks will not be torn up and that they
will continue to be given service of some
sort.
The traction manipulation in New York
was directed almost wholly for fire or six
years by Thomas F. Ryan and the late
William c. Whitney. After Mr. Whitney's
death Mr.. Ryan had the entire control
up to something like a year ago, when he
succeeded in working off the surface lines
on MIR. Belmont and his friends, who had
the elevated and subway systems. There
seems to be little doubt that Mr.. Ryan Is
out Of 1t for fair, but does not say sure
that he will not be forced to disgorge large
sums of money squeezed out of tn, proper
ties under his management. How much
money Mr. Whitney and Mr.. Ryan dragged
out of the New York traction game may
never be known, but the total Is quite as
likely to be s75,0Oo,0oO to OO,oOo,o00 as a
smaller sum. 1t is known that in 1S9S-1S99
Mr.. Whitney was practically down and out.
His estate was appraised a few weeks ago
at S25,OOO0 600. Mr. Whitney was never Of
ficially connected with the systems he Jug
gled, and those who are Planning cam
paign to force restitution may have a
hard time getting at the estate. Mr.. Ryan
is not so well protected, and he may be
obliged to make good large sums said to
be illegally wreSted from the property. The
plan on foot contemplates the appointment
of a special states attorney for New
York to criminaliy prosecute Ryan, Nree-
land and their associates in the manipula-
ton, and to use the testimony brought out
in these trials as a basis for civil action.
The theory is that rather than suffer GRIM
inal punishment the big ones will make res
tituton on scale which would make the
famous Jay Goulds $7.0O0,OO0 disgorge-
ment to Erie stockholders appear trivial.
X
The impending reorganization of the trac
ton systems may drag down the Manhat-
tan Elevated, litgating stockholders in
the companies whose securities are guar
anteed would try to ho,d that company
responsible. Manhattan is the only system
that is making money, everything else In
sight being waterlogged with stocks and
bonds and unable to meet even fixed
charges. Third Avenue is running behind
$2,ooo,o0o year, and SO is Metropoltan
surface system. The readjustment which
is ahead Will have to be on a very much
lower aggregate capitalization, the process
entailng heavy scaling down from pres
ent par values.
Indications point to big fight over the
receivership receivershps for the con-
stituent companies of the big traction mer
ger. Minority and asserting stock
holders are suspicious of collusve moves
looking to the appointment or friendly
receivers, who will simply continue the un-
holy legerdemain to the further annihila-
ton of equities.
Il
1t is becoming growingly more evident
that the market is breaking loose from
foolish things, and that people are settling
down to the conviction that the country is
really resting safely on a foundation of sta
bility. The matter of earnings Is again
coming to the front as the essential factor
in figuring on investment. The appeal to
reason is compared by solvent people to
that which was invoked by Mark Hanna
when he impressed the voters with the be-
lief that our national safety depended on
the overthrow of experimentation, and when
the thing for people to do was to stand
NAT X
perimentS. The apparent desire to divorce
politics from business as far as 1t can be
done is having salutary effect on securities
values. Unless there should occur failures
Of international houses Of importance or
calamites which do not now appear to be
imminent prices of dividend ying stocks
should work higher. This may not be the
matter of a day or a month, but the logic
of the situation is for Improvement The
crop outlook is not as good as it might be,
but it is becoming more and more evident
that we to get substantial support from
the old world. This help, added to that
which will be given by Secretary Cortelyou,
will go long ways toward restoration of
faith in the future. The mere knowledge
that there is to be backing for the business
of the country and that borrowers are cur
tailiGg demands everywhere are big factors
for the good.
For the most part the interests which are
behind the leading industrials and railroads
are willing to see the market drift along
without important change either way. They
are well satisfied to let well enough alone
and await the time for recovery Of credit
and confidence. In some quarters. however,
accumulation is going on. This is notably
the case in Union Pacific, Reading, South
ern Pacific, New York Central, St Paul,
Northwestern, Louisville and Nashville,
Pennsylvania, Atchison and in the preferred
stocks Of such industrials as Steel Smell
ferS. Sugar and National Biscuit. Things
seem to be shaping to make Union Pacific
and Reading the leaders, although the wise
people the exchange are puzzled to
the real meaning Of some Of the movements
now going on. Within the last week or ten
days Standard Oil interests have sold at
least 100000 shares Of Union Pacific, and
have made no concealment of the fact. The
we'll grounded theory is entertained that for
two months or more ]. P. Morgan & Co
have been large buyers Of Union Pacific and