The daily morning journal and courier., 1907-06-22
FRANK A. VANDERBILT
 ID VIRGINIA BANKERS Business Outlook Dominated By Tendencies of Politi-
 cal Sentiment. PROSPERITY GOES ON. Stock Market Isolation From General Business Outlook.
PROSPERITY GOES ON.

Frank A. Vanderlip, vice-president of the National City Bank of New York delivered the following interest ing address before the Virginia Bank CTS association at Jamestown Exposi- ton yesterday:
 Tp an unusual degree the business outlook at the present time is domin- ated by the tendencies of political sen- timent and by the conditions sur rounding the railway properties of this country. We are still in the midst of { evidences of abounding prosperity al- though we have passed through one of the most drastic declines ever witness ed in stock-market values, The stock < market decline has been in itself of most unusual character, particularly in So far that in spite of a fall in prices that cut a third off market values of securities, no failure of importance re- suited from the disturbance. The ab- sence of failures has perhaps led people distant from the center of the dis turbance to minimize it's importance and to argue that in any event it's ef- fleets were not likely to be extended into lines of business not directly re- lated to the security markets. This has. given a sense of independence ana assurance in many sections of the country, unusual after so severe a decline in quotations.
 The further fact, that up to the pres ent time there has been no marked re- \ cession in business, has reinforced the opinion of those who believe that the country has grown so strong financial ly that the general business situation can be divorced from the conditions that are reflected in Wall street prices and who hope, therefore, that the in- cidents of the stock market for the last three months can be largely, if not wholly, isolated from the general business outlook.
 This hopeful opinion is strengthened, for instance by the situation of affairs fin the steel trade. Steel. we are used to say, is the barometer of the busi- ness situation; we find up to the pres ent day that the booking of new orders fin the steel industry so far this year actually exceeds, and that, too, by a considerable amount, the record for the same period of last year. When we remember that last year was a banner year in the industry; the rec ord of the present statistical position of the steel business strongly rein forces the view that we may have con tinued business activity.
 If one should attempt to analyze whether or not there is likely to de- veIop relation more apparent than at present, between the general business situation and the depressed security markets, it would first, perhaps, be useful to endeayor to trace in gen. eral way, the influences that have led to the present state of affairs in re- gard to investment values. Tn the main. the factors which led to the re- cent decline are, without doubt, clear in your mind But we must not for get that the roots of the present situ- ation run back directly to conditions created some years ago.
 With the beginning of that period of great prosperity which started in 1898, railroads were soon taxed beyond the capacity of the scAnt equipment with which they had been provided during the economical administration of the preceding years. In railway practice z there came tendency toward heavier and heavier equipment and toward greater speed. As soon as some pro- gress had been made in the direction of heavy equipment and high speed the necessity for a heavier road-bed became apparent. In placing the orders for new equipment and in the ex- penditures for rebuilding road beds, the railroads contributed a most in- portant part to the general prosperity of the time Their own activities re- acted upon the situation and further increased their traffic, and that in- crease again made necessary further expenditures by the railroads on bet terments and Improvements.
 The circle continued to revolve in Hhis way in a wider and wider area, until another character of expenditures became necessary. Terminals which had been adequate, and had even been planned with what seemed good fore sight, became utterly insufficient and a vast expenditure in that quarter was forced upon the roads. That expendi- ture, although absolutely necessary , for the continuance of business upon the scale that business had grown to, really added nothing to the produc- tion of income, at least directly and immediately.
 We are only now beginning to re- cognize that the railway system of the United States has, in the last eight or nine years, been in a large measure re- built; that on many sections of i'm portant railways as much has been expended in that brief period as had before been expended altogether from the time ground was first broken for the enterprise two or three generations ago.
 This rebuilding of the railway sys- tenn of the country, doubling and more than doubling it's capacity for service this provision of enormously expensive terminals, and the almost complete re-
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