The Washington herald., 1908-04-13

NV 4oAht AptiI l---AllhOuSn the stock
market last week was still under the IN
fiuence Of the more or less negative fac
tors that have for some time past COM
bined to produce a specie5 OF equilibrium
4 IN values the one definite force that vas
alone effective from speculative point
OF view was the crisis in the affairs OF
the Erie Railroad Company
Discussion regarding the outcome here
| completely 0yershadowed all other ques-
IONS having near or remote market
bearing. The conviction Of the great ma
Jority Of the people in the financial dis
trict was strong early in the week that
something would be done" in one way
or another 10 help the Erie out Of its
difheulties But this feeling was not
shared by banking interests who knew
the real measure Of the plight that the
Erie was in. They knew that there could
be located the holders of only an ex-
oeedingly small number OF the Erie
short term notes for whose maturity on
Wednesday provision had been made. and
that from all that could be learned re-
garding the probable intentions of these
owners it was very doubtful If they would
assent in any considerable volume TO an
exchange Of their notes for the securi-
ties offered b. the Erie directors under
he plan Of readjustment that hal been
formed.
Only Few Notes Deposited.
ID to within an hour or so before the
close Of business hours on Wednesday,
at which time the s5,50O,0OO Of short term
notes would have gone to protest unless
paid, thus aff0rding ground for an appli-
cation for receivership for the Erie sys-
TEN, only a meager quantity Of the notes
had been deposited for exchange under
the terms stated, and official bankruptcy.
| at least OF temporary character. stared
| the Erie in the face. At this juncture q
prominent capitalist who was understood
/ to have large personal interest in Erie
/ at stake. offered 10 furnish the money to
/ redeem the maturing obligations, he be-
/ ing associated in this venture, however,
with other parties. This ended the mat
ter for the time being. al any rate, and
! Wall street was greatly relieved when
/ II discovered both how great the danger
OF the situation had been and how 1t
had been aveTted.
general matter OF the Erie's financial fu-
tuTe. The Fries fixed charges have been
increased by the new Arrangement 10 the
amount Of $4,000 year. For the fiscal
year to date the Erie has earned the in
terest on its bonds, but It is far from earn
ing its fixed charges currently, and II 1t
is TO continue 10 show a deficit in net
earnings such as It has shown IN recent
months even the help that has been given
70 1t cannot do away with the probability
Of further and more serious troubles.
Think Reorganization Needed.
It is an open secret that a large proper
ton Of those most fully informed regard
ing the Erie's status joined also. II daily
expressions OF opinion are TO be trusted.
with the great majority Of the public,
who believe that the best thing that
could happen to the Erie Railroad Com
pany would be a reorganization that
would reduce the enormous capitalization
OF the system and cut down the heavy
interest charges which now hang like
milestone about the neck OF the property;
and whether such expedients as were re-
sorted 10 last week viii prove in the long
run TO be Of beneficial character IS mat
ter deserving serious consideration.
On the other hand a receivership for
the Erie at, the moment would undoubted-
ly be an adverse moral effect upon the
financial situation generally. II would
particularly affect sentiment in Europe
concerning our financial affairs, acd Il is
in fact conceded that for the common
good a proceeding Of this kind ought to
be avoided if it possibly can be-
There were, however, hints as the week
closed that a proposition might be ad-
dressed to the holders themselves OF Erie
securities asking them to consent TO a
voluntary reorganization OF the kind de-
seribed.
Wall street, Of course. construed tbs
entire developments in a favorable way.
not so much perhaps because OF the Erie
incident considered strictly in its own
light. but because il attested that large
financial powers were. anxious 20 do all
that they could just now 70 ward or
blows directed against the general mar
ket
Credit Not Enhanced.
It was easily realized that Mr. Harri-
man, with his $50O00.OOO Union Pacific
bond issue. the 100000 Illinois Central
stock and bond issue, and plans for rails
ing money to pay for the Central Rail
road Of Georgias purchase trembling in
the balance, would not like to see one OF
the largest and oldest railway lines in
the country placed in the hands OF re-
ceiver. and the rise IN prices In the clos
ing days of the week was commonly
spoken Of as belonging to a Hartman
market. Meanwhile obviously what has
occurred has not served to enhance the
credit Of railway short term note issues.
Taking a broader view OF the situation
as Il stands at the moment, the market,
and the course Of general business as
well, seems TO represent something re-
seHbling a balance created by the con-
tending tendencies OF diverse forces.
OF favorable nature Is, first, the mani
fest fact that liquidation in the market
seems TO be over and that there is such
a relative scarcity of stocks IN Wall
STREET that prices rise easier than they
decline. The Erie cloud that overhung
the market for nearly ten days did not
depress prices 10 any notable extent.
even though its influence was exerted
at a time when the technical position
of the market was weak-that Is to say.
Immediately following a sharp rise.
BECOMES Dull Indeed.
The market. after it declined. became
dull and tended indeed to absolute in
ertia This is a state Of affairs that is
always very uncomfortable TO specu-
lators for the fall. and usually. II It is
continued for a short time, leads IN and
of itself TO a recovery IN prices.
Again. the crop outlook just at the mo-
Is not yet developed, and It is remem-
Dered that a relatively high condition OF
winter wheat at this time a year ago
was greatly cut down by poor weather
In the two or three months succeeding.