New-York tribune., 1908-02-24
THE WEEK IN WALL STREET.


fessional. the bulk of the selling except for sucn
instances as the break in the Goulo s'ochs
being by operators for the decline, and the occa-
s;onaI rallies being in the main the result OF
covering of short contracts. with little evidence
of narticipation in the buying by the investing
nubI,c The news of the week was generally
sneaking not of sort to encourage the ex-
pectation of an early advance in securities
prices including il did the usual array OF
poor reports of railroad earnings, the safe VI
S. 00o 900 one-year per cent notes oy 'ho
Baltimore & Ohio showing that in the opihioh
of the financiers prominent in the management
of that property conditions do pot yet warrant
q RESUMPTION of bond offerings by stanoaro
roads; and the Presidents communication 10 the
Interstate Commerce Commission, dlrectihs
that body TO make inquiry as to the Justlhcatlon
for proposed reduction of wages by various rail-
road companies.
The extreme weakness Of the Gould issues IN
the early part of the week. when Missouri Pa
cif1c went TO its lowest price for years and
nearly reached the low level of 1898, and West
ern Union touched its lowest figure for thirty
five wears. was accompanied by rumors OF a
receivershfp for the Missouri Pacific, reports
which Mr. Gould promptly and unquallf1edy
denied That denial was accepted by wall
Street as disposing of the rumors. for, although
the earnings of the road so small at present
as to make IL virtually certain that DIVIDENDS
must be suspended the bias of the reports from
the West to the alleged deplorabie phSslcai
condition Of the property is UNDERSTOOD IL
seems probable that the real reason for the
sharp drop in the stocks of the Gould group
was the closing out of heavy loan IN Which
these securities figured as collateral, a reason
which may explain abrupt declines which have
occurred in other stocks also since the panic
period reached its term
The long and bitterly fought controversy over
the control of the Illinois Central is apparently
ended and in favor of Mr.. Hartman, and time
will tell whether that great property Will as
part of the Hartman system be dealt with as
acoo-d;re N the preseA management of the
Kansas City Southern that road was treated
or be brought to an even higher state of eff
cheney and prosperity than that attained by II
under the experienced and successful direction
of Mr. Fish. The decision of Judge Ball dis
solving the injunction restraining the Railroad
Securities Company and the Union Pacific from
voting their Illinois Central stock at the ad-
iourncd annual meeting of general i'm
portance as furnishing precedent for the con-
tention that foreign corporation might own
stock in corporation organized under the laws
of a state other than that of the foreign corpo-
ration's domicile and as Strengthening the prln-
ciple of the holding company"
The time money market has shown slightly
hardening tendency, particularly for the longer
maturities, as a result Of the closer scrutiny
which is being exercised in regard TO the char
acter of the collateral offered although the sup
ply of loanabe funds is far in excess of the de-
mand from borrowers, as is shown by the main
tenance of the nominal rates for money on call,
cAr1fir ,a6 70 10
tween ~ and per cent. except for one day
when 81. per cent was reached as the maxi
num- The foreign exchange market was firm.
a considerable advance occurring early in the
week on the covering Of short sales effected in
the preceding week in the expectation that q
large amount of exchange would be created by
the allotment foreign bidders of a consider
able part of the s50.00o0oG issue of New York
City. bonds, that expectation having failed Of
realization Offerings of commodity bills also
were scanty a fact which contributed to the
strength of the market for sterling.
The Presidents instructions to the Interstate
Commerce Commission. although at first ap-
parently without market effect, later on became
recognized an element of weakness. What
caused especial disquietude the direction to
make inquiry into past business misconduct by
the railroad managers, since such probing might
years ago. That many railroads have at some
time or other figured in financial operations
open to criticism will be generally concededs but
apart from that circumstance recognition must
be given 10 the fact that the country is passing
through a period of severe business depression,
due to the over-extension of all lines of indus
trial activity and the over-straining of credit,
with the naturally concurrent advance of COM
modities in price TO high levels The corrective
Of such conditions in the past has always been
the practising of strict economy, which has in
volved the lowering of commodity prices until
supply and demand have been once more approx
mateIy balanced. The dreary tale of decreased
railroad earnings pointing To reduction or cutting
of of dividend returns for the owners of the roads
and here and there to receivershps. is an ind-
cation that the roads suffering their full
share of the prevailing shrinkage of business
Their fixed charges, however originally in
CURED. must be met for the alternative is bank
must reduce their expenses to an extent rea-
sonably commensurate with the decrease in
their gross earnings. They have long ago sus-
pended the expenditure Of funds for improve
ments and for maintenance beyond actual re-
quirements for preventing serious deterioration
of the properties. Further economies possible
would seem TO be only in the direction of lower
prices for commodities.
In many instances prices Of commodities have
already declined. and the general tendency is
downward. The steel industry is a conspicuous
exception, and the position of the United States
Steel Corporation. which in the years of plent,
adhered TO policy Of fixed prices. is not diff
cult comprehend. Yet in that industry. as
in all others. the law of supply and demand Is
operative; and unless a restoration of confidence
shall come the cutting of steel prices
would seem inevitable There remains for the
railroads one commodity the price of which has
advanced materially -labor-which through the
operation of natural laws moves in The nricf