New-York tribune., 1909-09-06
FINANCIAL MARKETS
NEW RECORD FOR STEEL.
Speculation Quieting Doson--High-
er Moneu Rates Foreshadozced.

IIdn upon an active demand Tor securities
At the high levels reached sales were made by
interests who had placed buying orders on the
recent collapse in the bull campaign, and toward
the end of the week quotations rule were
off from the best on a speculation made UP en-
tirely OF the operations of an unimportant pro-
fess!onal element The possibility of a resump-
ton of aggressive transactions for higher prices
in the near future does not appear especially
promising, while, the other hand. there is
little in the speculative situation and nothing in
factors governing the intrinsic worth OF securl-
ties that suggests the development OF an actVe
selling movement the outlook apparently favor
ing for time at least period of quiet dealings
within narrow fluctuations in Stock EHchange
values. In view of the hardening tendency III
the money market and the heavy losses incurred
in the recent liquidation. widespread specula-
tive demand for stocks does not appear prooape'
though there many enthusiastic puliS "llo
would like to see another highly inflated DOOM
in the market and who maintain that IRE
suective of the coming fall inquiry for accommo-
dation from the interior in connection with the
moving Of the crops and expanding business
activity, stocks are in position for an advance
TO range far better than any yet recorded
There will he no such movement unless the pub
lie ca be induced to come into the market AT
the moment the outside element shows no dis
position TO buy stocks on borrowed money while
there is rea son to believe that the conservative
Wall Street interests powerful enough to
discourage the dangerous manipulation that was
such a powerful influence in the trading when
Union Pacific was carried to 219. and when other
stocks sold at levels wholly out of proportion TO
their actual value. SLOW improvement is looked
for, however, in many issues in Whlch there IS
still q margin between market value and intrin-
sic worth, including United States Steel COM
mon, which. il IS asserted, should sell at par on
the basis OF the remarkable Improvement IN the
earnings Of the corporation and the excellent
prospects of an Increase IN the dlFloehu peioie
the end OF the year
Il is estimated that in the current quarter the
earnings of the United States Steel Corporation
will run in the neighborhood of S39vo0'ooV' as
against a little than S29,O00OOo IN the
quarter ended June 80. while on the basis OF
earnings so far reported this year and on eX-
pected results in the two last quarters a sur
plus of upward OF II per cent for the common Is
inquired When operating on basis OF loo per
cent of it's capacity the Steel Corporation VIII
be turning out at the rate of 100000 tons OF
finished material a year, and If the ratio OF
earnings a ton Of steel produced Is Sl+' tFle
income of the concern will be at the rate OF
approximately s182 100000 a year, which after
Ill deductions would be equivalent 70 upward
Of 20 per cent upon the s50S 100000 common
stock outstanding. At present the corporation
IS working within per cent OF It's normal
capacity. or at the rate of s145oOo,OoO year
enuaI 70 about 2 per cent on the common stock'
and il therefore is quite evident that the dlrec-
tors would be justified in advancing the rate at
the next dividend period. The prlce or the sloCk
has held remarkably firm in all general decllnes'
nd ir, las
than ever before recorded, with every indication
of accumulation by the interests who are sup
posed to know something regarding future dlvl-
dend pavments The fact that the stock mas
acted so we'll naturally encourages the IDEA or
an increase in the dividend while the position
of the steel industry certainly warrants legitl-
mate optimism on the part OF holders OF the
security. The iron industry practically mas re-
covered all of its lost ground, as in the month or
August production was within 100000 tons or
o+in IN
Of the trade The tendency of pig iron prices is
in the direction OF higher levels, and in spite OF
Increased production no surplus stocks are being
accumulated. Demand for finished steel ma
terials is increasing at a rapid rate' ana the
wealth that will come to the country through
this years large grain harvests will be most
important factor in enlarging the consumption
OF steel products.
Railroad earnings coming to hand furnish good
arguments for satisfaction among the owners of
American investment securities, but they do not
present reason for active bull speculation at the
current range of prices. All factors governing
the stability of securities as solid invest
Hnents are far stronger than they we're year
ago but IL should be borne in mind that since
that time there has been an appreciation in the
market quotations Of the larger number or rail-
road issues that has fully measured the i'm
provement in actual conditions affecting values
though. OF course, If investors satisfied with
less than 3 per cent on their purchases they
may still find many good stocks TO yield a small
but safe income. In the opinion of careful mar
ket judges the opportunity to Invest money at
more attractive prices will be found before any
extensive rise develops Atchison common at
it's present price may be bought to return p
little more than / per cent with the chances.
however, favoring an increase in the dividend
r. ate from to per cent. Baltimore & Ohio is
among the few stocks that return per cent or
better its nearest neighbor in this respect among
the safe investments being Union Pacific, which
Yields fraction under per cent St Paul re
turns less than ~ per cent: Northern Pacific
"a per cent; Great Northern, As per cent New
York Central, Sc per cent; Southern Pacific, 6
per cent: Chesapeake & Ohio, 48 per cent,
Reading "a per cent, and Pennsylvania, AZ per
cent The fact that railroad stocks make rela-
tiVelv low returns while sound industrial shares
may be bought 70 yield better income, has been
responsible in recent weeks for purchases of the
latter by investors such issues as United States
Steel preferred. United States Rubber first pre-
ferred American Locomotive preferred Ameri-
can Telephone and Telegraph, International
Pump preferred and National Lead preferred
finding good buyers Commission houses report
a fair demand for this class of stocks from
small investors--that is, people who buy in
small lots The transfer books Of the industrial
corporations Of merit show many holders OF
from ten TO fifty shares. The general invest
ment business. however. is exceedingly dull, the
bond market being almost stagnant
While money market conditions DO not
courage the expectation of immediate i'm
portant advance in quotations, factors govern
ing the movement of currency suggest a gradual
hardening Of rates at this centre. Money is
higher interior points than It is here. and ex-
change at interior cities is moving against New
York, with nothing in the sterling exchange sit
uation warranting the idea that this country
win be able to bring in large amounts of gold in
the autumn. New York has an enormous loan
account at London. and the country longer
has trade balance in its favor. Our credit i5