The Washington herald., 1909-02-22
STEEL THE FEATURE
Creation of an Open Market
Causes Break in Stock.
GREAT DOwNPOUR OF SELLING
During Latter Part of Week Activ-
ity in Little Steel OEershadOwed
Rest of the Market-New Bond
Issue by Southern Pacile-Market
Reacted-SteeI the Feature.


Reacted-SteeI the Feature.
New York. Feb. 21-In the early part Of
last week prices Of stocks continued
rather vigorously the upward movement
that had been in slow progress during
the latter portion Of the week before,
and a much more cheerful feeiiBs was
visible In the financial district.
In the holidays around Lincoln's Birth
day there were a number OF favorable
developments looked at msrketwise. and
10 these a very natural response was
made in values
It IS true that the terms Of the permis-
sion granted 10 the Erie Railroad Com
pany 10 make lts issue Of SSo,ooo,oe0 col
lateral trust bonds was looked at by
people in Wall street somewhat askance
upon second consideration The authority
given 10 issue the bonds was coupled
with the proviso that the consent be OBJ
tanned Of 90 per cent OF the mortgage
bondholders whose coupons are 20 be
funded under the new arrangement for
a term Of five years.
The feeling was that II was doubtful
II the consent Of so large a proportion
Of the bondholders as this could De Sc
cured, but inasmuch as the bondhoIders
have until next August 20 think the mat
ter over, the affair is one that Is not
Immediately pressing. II shoulI be en-
phasized. however. that the financial plan
In question seems as advantageous as any
that could be put forward under the cir
cumstances, and that the bondholders
would do wen TO accept il. Very likely
their decision in the matter viii be
largely contingent upon general business
conditions and prospects as the year ad-
vances.
Market Reacted.
After the early squirt in prices was over
last Monday the market reacted some
what on profit taking, the London houses
that have been particularly large buyers
recently Leading in this movement
Toward the middle OF the week the
United states steel issues. principally
Steel common stock. began 10 display dis
tinct signs OF weakness On Thursday a
great dOWnpour Of selling Of United States
Steel common shares occurred. and this
was continued on Friday and Saturday
following the announcement that the
management OF the United States Steel
Corporation had decided TO conduct until
further notice an open market for the
greater number Of steel products On the
same day came the news Of the large
bond issue Of the Southern Pacific Com
pany. which. however. attracted little at
tention. in view of the developments re
garding steel
This financing on the part OF the South
ern Pacific has been almost daily expected
OF late plain intimation thereof having
been given in the annual report OF the
company. published some time since, as
10 the necessity Of framing a permanent
and comprehensive plan of taking care
Of the company's floating debt. such debt
mostly consisting Of advances made by
the Union Pacific Railroad Company 10
the Southern Pacific for purposes Of new
railway construction and general exten-
sion Of enterprise
Steel the Feature.
The new bonds seem attractive. and viii
no doubt be rapidly subscribed for by the
public At the end Of the week. however,
the steel situation was easily the one
overshadOwing feature OF the security
market, and as in all probability this
phase Of the financial situation viii con
tinue for a considerable tine TO come. Il
deserves more than cursOTv discussion.
It ought 10 be stated at the outset that
quite aside from any question as Ia the
stability Of prices for steel manufactures
there is. or was. abundant reason from a
mere speculative point OF view for the
constant decline in the quotation of
United States Steel common stock that
mas taken place since the time two
months ago, when the stock reached its
high notch, more than ten points above
the present figure.
As the days have succeeded each other
il has become obvious that the time is
not yet near at hand for any increase in
the Steel common distribution. Since
January the iron and steel business over
the country has fallen of and there is no
doubt that at the present moment il is
exceedingly dull II is still better than
il has been on corresponding occasions
in the past chiefly because OF the extend
ed use of the small articles Of iron and
steel production, in which the producers
find their greatest profit.
NeW Orders Few
But orders for the large shapes OF steeI.
and particularly for the products adapted
70 railroad use, have been comparatively
few-a state Of affairs that has been
principally brought about By the opera
ton Of two causes The first OF these is
the fact that as the railroads and other
large consumers OF iron and steel had
largely completed their Improvement work
at the time the business depression began
in 1901, they do not now feel the need
OF an immediate resumption OF the big
buying orders that they were so elgerIy
placing just previous 10 the panic DAYS.
IN the second place, the nearness Of the
time when the tariff revision programme
viii be taken Up by the national Con-
gress has operated TO produce in many
lines a practical st0ppage Of business in
the iron and steel trade. Now, there IS
no doubt that there has been for some
time past a certain amount Of price-cut-
ting in the iron and steel wares.
The smaller producers, now being forti-
fed, like their big brothers, in wealth
and general resources, have not been so
well fitted 10 stand the strain OF more
or less prolonged period Of duiI business,
and they have been offering their goods
az concessions. as they always have done
al similar times.