The Birmingham age-herald., 1909-09-26
CAPITAL GOING ID NEW ENTERPRISES Bearish Sentiment Developing
 on Union Pacific DUE TO HARRIMAN'S DEATH Certain Crowd Feels That His Loss Will Be Felt More keenly in
 Year from Now Than at
 Present.
DUE TO HARRIMAN'S DEATH
BY w. G. NICHOLAS.

Dack there during the panic and the sea son of depression which followed. Tho merchant class and the real owners of cash in large and small quantities pre- ferred then to take their money out of banks and trust companies where it was earning nothing and putting it into secur- ities yielding to F per cent on the in- vestment. Now the situation has re- versed, and the same people are finding use for their capital in their private en- terprises. Stocks have had an enormous advance in the meantime, and are now yielding on an average to 51a per cent They have ceased to be attractive to the people who took advantage of low quo- tations year and half ago, and con- sequently we are in the midst of a period of readjustment. Capital is being taken out of the stock market and again placed within reach of private enterprises pri- vately directed. It is entering into the general business of the country. Europe too, is sending back reams of stocks and bonds bought during the season of red flag quotations. Wall street is getting more than it really needs, and the effort
 
 to keep the market up until they can get rid of the unsold surplus of their spec ulative lines. The workings of the ma chinery are so plainly visible that it is almost as though they were on public ex- hibition in the show windows of the street. Romance and unreality are taking the place of fact and sober reason. The credulity of the public is being taxed to the uttermost and no story is too wild or impossible to find a myriad of willing believers. And all the time, the wise old gray wolves are feeding their stock out.
 A strong and growing bearish sentiment on Union Pacific is developing It IS grounded on the theory that k. H. Harri- man alive was an asset of tremendous value to the company, and that in the nature of things the wping out of that asset is distinct loss the importance of which will be felt harder and appreciated more six months hence than now Those who are taking this position refuse to concede that the withdrawal of the Har- riman personality from Union Pacific can by any process of sane reasoning be tor tured into a bullish market factor. They say he was the soul of the property and so thoroughly identified with its wonder ful growth from next to nothing into one of the greatest railroad systems in the world that deprivation of his services is
 blow of most serious consequences. Talk. freely and fish-bloodedly indulged in by men who are glad he Is dead and out of the way, that Wall street and the railroad world are well rid of him as a disturbing and dangerous person. only infuriates his friends and admirers with out making converts. There is an earnest bear belief that traders getting on top of Union Pacific at these prices can ride it down for 30 to 40 points before July, 1910
 The Steel Corporation is not the first big business concern to treat its own depart ments, bureaus and subsidiary companies as independent customers. Years before the Steel Corporation was born a com mittee of congress had the late Phil D. Armour before 1t in an endeavor to get at the true inwardness of the budding beef trust, of which Mr. Armour was father. The committee was especially anxious to learn about the profits of Ar mour & Co.,, and the founder of the house was ordered to produce the balance sheets. He did so, and it was shown that on a total business of something like $50, 100000 year Armour X Go. (the par ent house) had cleared less than $1O0, 900. That was voted a ridiculously small profit, and the country gave the com mittee such a laugh that it soon gave up the hunt for beef trust oppression. Later on it was discovered that Armour & Co., had 45 departments or subdivisions, to each of which it sold it's packing house products at as near cost as could be figured, leaving the head of each to run that particular part of the business and make the best showing he could at the end of the year-ahd believe it, there was red-hot rivalry as to who could lead in the race. In the aggregate the proi1is of the bristle department, the hoofs and horns department, the lard, the bacon and the ham departments, the fertilizer department, and so on down the line, ran into the millions, but how was an un- sophisticated congressional committee to | know the intricacies of bookkeeping or | down-to-date methods for the ascertain | ment of profits in each of the several ] branches of great establishment? How. l also, is the public to know that by selling of their own products to each other the | companies of the United States | Steel corporation swell the total business | of the parent concern away out of shape | and all to the end that the percentage | of profits on gross volume of business | may appear smaller than 1t really is
 Discouragement and frost meet the at | tennpts of restricted claque to work up | a friendly interest in a movement for a | rise in freight rates. There has probably | never been time when the railroads of | the country were making as much net | money as now. Every report that comes into Wall street goes to show such to be the case. Indeed, rose-tinted are most of the fiscal statements that long-headed | bankers behind the guns are fearful of | agitation for a reduction in charges, either | that or a larger participation by labor in i the fruits of the business. Railroad re- | ports framed for Wall street consump- | tion would be all right if their perusal | could be confined to shareholders and i specuators. The multitude (which paws the freighD gets another angle on ths and inclines to grumble when evidence accumulates that surplus piles up faster than there Is need for-and for the promotion of action in tho stock market. There is a reverse side to every medal.
 The iron and steel mills now in opera ton have capacity of about 31 100000 -ons year. They are running close to 100000 tons week. The year 1907 was that of greatest actual production, the output being little over 25, 900 900 tons of pig It appears, therefore, that We are about 100 per cent of the capacity | of 1907. It is also worthy of note that he country is in the beginning of the lysterical stage of the seventh great boom in the iron and steel industry since | he civil war Each of these booms ran ibout three years. The one now on had | faster initial action than any of the others. Only last April the iron trade | was in the depths of depression. The big l companies were cutting l each others throats in an effort to un- lersel- President Cnrav of tho IIniiAa