Evening star. [volume] (Washington, D.C.) 1854-1972, 1909-10-10
'SHAKE0UT' IS H|NTED
Comment on the Steel Com
mon Break This Week.
BUYING SPIRIT is STRONG
Bargain Hunters Give Place to
Stronger Investors.
GOODBYE TO CHEAP MONEY
Outlook That Cash Market Will Re-
main Firm Until After End
of the Year.
BUYING SPIRIT is STRONG
GOODBYE TO CHEAP MONEY
Special Correspondence of The Star.

The break in Steel common, which was
the dramatic incident of the week, looked
very much like an engineered shake
out The big pool in Steel has been
playing for the good will of the public
for a long time and won it. but there
are times in every bull campaign when
the managers thereof have too much
company" This was one of those oc-
casions. Everybody was crazy to buy
Steel common, and the market was in
danger of getting out of the control of
those who had 1t in hand and who were
working 1t up. not for the purpose of
temporary speculative profits So much as
to establish it on higher basis. Every
office in the street was full of pyramids,
accounts which had been spread out thin
and purchases made with every few
points profit. 1t was to get rid of this
dangerous element that a shakeOut was
organized. The play went through as
though the machinery was oiled for it.
The moment was taken when the call
money market got hard and banks be-
gan to call loans with unexpected free
dom. A note of alarm was sounded, and
all at once the stock exchange was
flooded with selling orders in Steel.
The rush to capture paper profits be-
fore they got away became almost rout.
Then. after three or four points had been
ripped off, a mass Of stop-loss orders
were caught. The anxiety and the neces-
sity for selling was carried into the sec
Ond day, and even then the market was
left in a nervous state which might easily
have been converted into a secondary
slump for the wiping out of still more
pyramids and shoestring accounts. The
buying spirit was strong, however, and
there were found thousands of men who
were not in the least terrified by the
break. Rather, they look upon it as
d-given chance to get hold of some
Steel common, and sent in their buying
orders to a very large aggregate. They
looked upon the slump for what it was
and as having no relation whatever to
actual trade conditions.
1t is known Of all men that the steel
and iron trade Is wonderfully prosper
Gus and that the big corporation is NOR
ally certain of huge earnings for at least
another year, with strong probability
of continuance into the more distant fu-
conviction that when Steel common
reaches the neighborhood of par there
will be generated colossal short inter-
est which can easily be used lever
ten or fifteen points. This is the bull
market view of the situation.
Pin Faith to Steel Common.
There is to be found in Wall street a
very active and strong contingent which
has followed Steel common from As up,
which Is earnest in the belief that before
the end of 1910 the junior stock will
cross preferred. Here is the way one of
the specialists who has made a large sum
of money on the upturn states the out
look from his point of observations:
'tSteel corporation earned 1855, 100000 in
1907. Would have earned $1SOOOO,OOO In
1907 if panic had not reduced earnings in
last quarter. Plants then in operation
o1,l Ia 20, f,rrp nyrf
than two years ago; so 1910 earnings from
these plants should be.......... .s200. COO. COO
Add Gary in 1910. 22,UOO.OOo
Add Tennessee Coal and Iron. 100000
Net earnings 1910. ............. 1927 zoo, 900
The corporations fixed charges for 1910,
including preferred dividend, will not ex
coed $9O,OOO,OOO. On the basis of the
above calculation there would be about
s145, 100000 net applicable for dividends
on the common stock, equal to nearly 30
per cent. Any such figures are hooted at
and denounced by the bearish element,
but they may not be SO far out of the
way after all.
The movement for. the organization of
Independent iron and steel companies in
to a corporation second only in impor-
lance to the United States Steel Corpora
ton is making quiet and substantial head
way. For somes reason satisfactory to
themselves the people working on the
plans and those most largely interested
enter denials when asked if a merger
project is on. Nevertheless and notwith-
standing the deal is decidedly on and
there is little doubt that it will go through
on substantially the lines tentatively
framed up several months ago. H. c.
Frick by the law of natural selection oc-
cupies the position as arbiter and umpire
on many of the points that come up from
time to time and is at This moment the
central figure upon whom the indie
pendents are leaning. He is also all pow
erful in the big corporation.
Big Merger Planned.
The independent project has the entire
approval Of the corporation management,
a fact which will be developed most UNI
mistakably at the banquet which is to be
given at the WaldorfAstoria October 10
to Mr.. Gary by the independent iron man.
ufacturers. The real background purpose
Of that banquet is to bring the independ-
ents together and to make 1t plain to
them that the trust looks upon them and
their proposition for a merger with friend
~ eyes. AS for the independents them
selves, nine out of ten of them are thor
oughly in favor OF the plan. They feel
that when 1t goes through the iron and
steel industry will be placed on plane
which will insure permanency and safety
for q long, long time to come. Practically
every large independent manufacturer
and owner OF ore east of the Rocky noun
tains will be included in the merger, ex-
ceptng Jones & Laughlin of Pittsburg,
the Cambria and the Pennsylvania, these
latter two being controlled by the Penn
sylyania Railroad Company, which holds
them as insurance against the POSSIBLE
ties of oppression.
The steady liquidation of long stocks
during the last two or three months has
resulted in a reduction in the number
Of stockholders In corporations. This
<nI1f 4RP
in the number of stockholders Of record
age in six months being nearly 5000
from q previous grand total of $1,000.
On the panic break in stocks two years
ago, and during the subsequent six
months of depression and very low prices.
bargain hunters came into the market
by the tens Of thousands, picking up
and hiding away In their strong boxes
shares in properties which looked cheap
to them from q revenue-bearing stand
point These investments, which aggre-
gated nightly, were, for the most part
wisely made. They returned from to
II per cent on the money, but now that
the yield is only 31s to 6 per cent, those
same bargain hunters are taking their
money out Of stocks and either putting
it into something else or depositing it
where they can get hold of it for re-
investment or into their own businesses.
This has been going on steadily since
the level OF high prices was reached last
summer.
Stronger Glass Of Investors.
The place of the bargain hunters who