The San Francisco call., 1908-07-01
MONEY, TRADE AND RAILROADS
Money Plentiful, but Trade Quiet and
Railroad Showing Unsatisfactory

The New York circular of Henry Clews says
Under date of June 81:
There clouds in the monetary outlook
and we seem more likely to be afflicted with a
redundancy Of currency than a scarcity. Interest
rates are low the world over; both domestic and
foreign banks are steadily increasing their re-
serves and gold exports from this country have
ceased temporarily at least. On the 1st OF Au-
gust nearly $64, 900, 900 of Spanish per cent
bonds became due. Whether these will be re-
funded at lower rate of interest redeemed in
part whole has not yet been disclosed. In view
fact that the fiscal year about TO close is likely
to show deficit of over $50. .000, 900, the entire
payment of this debt seems unlikely; the treas
ury, however, stu! has surplus OF over S23o,-
600 600, and Of this $l65 600 900 is deposit in
national banks. 1t is, therefore, to be presumed
that the treasury viii before long make consid-
cradle call on the banks; a contingency for which
some institutions are already preparing. Next
payments will become due. As a result of the
panic this is nearly So, 900 900 less in dividends
than year ago. Owing however TO the in
creased output of bonds and short term obliga-
tions interest payments are considerably larger
than year ago; so that the net decrease in in
terest and dividend payments combined will be
only about $1,000 600. There expectations of
a slightly better bond market based on these
large disbursements, but investment purchases
generally are being conducted on strictly conserV-
ative lines.
TRADE AND THE RAILROADS
in the business outlook there IS little change,
and very quiet summer for all lines of industry
is in prospect. 1t is quite evident that further
period of rest will be necessary for convaescence
after the Ss.Yere crisis of last October Recovery
will require more time than some impa tient peo-
pie viii admit. The situation is steadily innprov-
ing. and the outlook is certainly hopeful: but
this is not time 10 be oversanguine. and mod
crate antieipations are much more likely to be
realized than those of overenthusiastic prosperity
boomers, whose wishes are too often father TO the
thought. The unsatisfactory condition of railroad
affairs is still an element to be reckoned with
Latest reports of earnings continue unsatisfac-
tory the gross returns of railroads reported in
May showing loss of over n per cent. compared
with less than 20 per cent in April Il per cent
in March, 10 per cent in February and per cent
in January. 1t has thus taken seven months for
the railroads TO feel the full consequence of the
panic Those consequences have grown steadily
worse The first effect was to render it impos-
sible for the railroads to raise money for carrying
q decrease in earning power and compulsory
decline, and now the companies find themselves
In somewhat serious dilemma. out of which
there only two ways of escape, either re-
covery in earnings through business improve
ment, or a still further retrenchment in expenses
Should the latter be necessary, it means cut
down In wages, a withdrawal of the advances
granted to labor in 1906 and 1907. 1t is TO be
hoped such step will not be necessary and that
a satisfactory solution will be fund in business
revival. There has been serious talk of an ad-
vance in freight rates. but this would be unvise
policy since it would check rather than stimu-
late traffic, and revive public hostility to rail-
roads, which is now really abating. The most
favorable feature In the railroad situation is
that the number of idle cars is beginning to de-
crease"