New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1908-04-27
THE FINANCIAL MARKETS
coon EFFECT on SENTIMENT OF THE PENNSFL-
T4NT4 LOAN.
1yeos Once Bond Maket-God Exports Lkev to
tiuue-Eaae in MoneyThe Business Outlook
THE WEEK IN WALL STREET.

markets has been the announcement OF the s4u'-
600 900 loan Of the Pennsylvania Railroad COM
nanv subscriptions for which are to be opened
to-day in this city and abroad. The same cause
which has been largely accountable for the Sc
we're curtailrnent of business activity ana Iiis
consequent release of money from employment
and its ping up in the banks-lack or conn
denca-has operated to deter investors from US
ing their funds ii the purchase OF secuflueS'
however excellent in grade There comes d
time however. following every period of panic
when In the of the slow growth OF conn
dence a considerable body of the investing pup
lie reaches the conclusion that the outlook Tor
the future. although still obscured presents sur
6cient promise to warrant them in removing
funds from safe but unremUnerative Judgment
with the banks and venturing them IN the pur-
chase of revenue returning securities Sun
cautious they naturally seek the most conserVa-
tive form Of investment. and therefore select
bonds. and at the outset require bonds OF the
highest type. The business situation is still far
from giving indications Of speedy return TO the
normal but sentiment has for weeks been i'm
proving and confidence has been reviving, al
though very slowly. as is inevitable, and the at
fftude of Europe toward American investments
has been changing for the better The time has
therefore been deemed opportune by great bank
ers for the public offering of heavy loan of the
highest grade. and their judgment has been vim
dictated by the assured success Of that Offering.
The effect has been to stimulate the whole bond
market and to a smaller extent the stock mar
ket
All Of the railroads are in need of money, and
MANY further bond offerings may be expected to
follow the successful fotation Of the Pennsyl-
vania issue. But that issue is of per cent
bonds. running for forty years and secured by
a first mortgage the main line of a great
railroad. and contributing the strong proba-
biIitv Of its full success is the fact that the
RothsChilds are among the bankers bringing 1t
out. the first direct Identification for many years
with an American financial operation OF that
famous house. the Endorsement Of when carries
s-,N-1 tore N1E
standard set. therefore. is a high one, and other
roads planning 70 issue bonds in large quantity
must for the present be prepared to offer securl-
ties not falling far short of that standard, Tor
investors will for some time TO come incline to
subordinate high revenue yield TO safety The
rate al which the Pennsylvania bonds are being
brought out proves, too If proof were NEEDED
that the day Of free borrowing has not Yet ar
rived. FOR the offering to investors at S6 means
that the railroad has disposed Of its securities
well below that figure, probably at % or a little
less IN other words, that II is getting It's funds
by 10 means cheaply. And In proportion as
other offerings fall below the Pennsylvania
standard the more onerous VIII be the terms
1Jpon which they viii be able to sell their seCuri-
ties While, therefore, il may henceforth be
possible for railroads to raise money by the sale
of their long term securities the proceeds OF
which will be applied 10 the purchase of steel
rails and equipment and to betterment projects.
thus giving a stimulus TO various industries and
aiding the situation as a whole II Is hardly prob
able that the money which costs them so much
will be used for any purposes except necessary
repIaceuents and the completion Of improve
r7ents already under way.
The gold export movement TO the Continent
which began ten days ago. was continued last
week. several millions additional being shipped
To Paris. There has been much discussion
10 the possibility Of the Pennsylvania loan stop
ping that movement, as probably about $40
100000 OF the bonds will be placed abroad, for
which payment must soon be made, but the best
opinion Is that the expectation will continue, al
though the effect OF the bond sale will make
Itself felt by and ny. The foreign exchange
market last week did not reflect an advance
"a Ie Of bills against the Pennsylvania loan. as
would have been expected and further engage
rnents Of gold are looked for the beginning of
the current week Their explanation is found
IN the fact that three months money is cheaper
here than abroad and that the demand for gold
in Germany is still strong Extreme ease is
still prevailing in the money market at this
centre, and time money rates for various
turtles have declined little further in the
week. The loss Of S6.500.000 Of the gold already
engaged for export figured IN the weekly bank
statement Of Saturday. yet 50 heavy the
inflow 81 funds from the interior. sent here be
cause Of inability find profitable use for them
a. home, that the cash holdings Of the Asso-
ciated Banks increased by more than 100000
and the surplus reserve rose to $56,964150. Such
& showing. coupled with the fact of nearly nom
NAL money rates, suggests that much larger
amount Of gold can be withdrawn and that the
/ n q
from the Secretary Of the Treasury for as great
& sum as the rumored 100000 Of their $751;
100000 Of government deposits without material
advance occurring IN the rates for money.
If little that is encouraging can be said Of the
general situation SO far as the DEVELOPMENTS Of
the last week are concerned, similarly the sitIIa
rion presents no now features of discouragenlent
Railway earnings continue show serious de
creases in comparison with the big returns of
the corresponding dates last year. but the roa ds
[
shutdowns are announced here and there but
are Offset by reports Of the reopening Of plants
in many cases, however, not full capacity.
Reports Of price cutting among the iron manu-
faCturers are becoming more definite. and the
attempt to maintain the policy Of price stability
seems likely to fail Its collapse may and
probably will be followed by the receding of the
steel manufacturers from their policy of price
maintenance and the granting of concessions
Of moderate extent, which would be followed by
4 nid and large increase in the volume of their
orders, for il appears 10 be established that
many heavy consumers have been holding off
II the expectation that this important commod-
ity would sooner or later be brought into line
with the great body Of commodities in the mat
ter Of lowered cost. Another commodity which
has Yet been maintained on its former cost
is labor, and II is the opinion Of many COM
petent Judges that the price Of labor, too. must
yield 10 prevailing conditions before a real re-
yiyal Of industry and trade shall be seen.
The stock market III the latter part of the
week became strong and active under the in
ruenCe OF the excellent outlook for the Penn
sylVania loan. and prices advanced rather rap
IDLY, the leader being Union Pacific which Is
soon bring large loan, the sponsors for
which may be the Same bankers who hand
ling the Pennsylvania bonds The stock mar
ket always anticipates by a considerable period
Improvement in the general situation. as il
anticipates the approach OF unfavorable condi-
lions and the prospect Of the entrance Of in
vestors into the bond market, after long avoid
haey7 IcrrY+