New-York tribune., 1910-06-06
FINANCIAL MARKETS
Week of Falling Prices on the
Stock Exchange.

ilonS IN tne lnlIne0lats 1uture. III
tho governments temporary Injunction
against the railroads that have COM
bined TO advance freight rates is made
permanent further material declines
doubtless will take place in stock market
prices, while If it should be dismissed
Improvement may be looked for. At the
moment il looks as if a long drawn out
fight had begun, with the life of traffic
associations at stake, but in the mean
time it is quite probable that the rail-
roads will continue to do business and
that the country will not go into bank
rUptcy, although industrial activities
may be curtailed if the action Of the
administration against the transporta-
tion companies leads to a general can
collation. Of equipment orders and ces-
sation of improvement work which rail-
road men are now predicting.
The railroad interests maintain that
they will be unable TO find a market at
home or abroad for new securities pend
ing the settlement of the rate question;
they argue that the government is show
ing a vicious antagonism to corporations
=
activity, and they apparently believe
that with the heavy increase in their
wage account and the growing cost of
operating their properties q. big reduc-
ton in net earnings must be looked for
unless they are permitted to advance
their freight carrying charges. And
Wall Street has rushed to the conclu-
:, In
some cases passed. as a consequence Of
the policies ofs the federal government.
Gross earnings Of the railroads continue
to show encouraging improvement as
compared with corresponding periods
last year, while in some cases. chiefly In
the West, net income shows a note
worthy contraction, the latter naturally
suggesting that greater economy will
have to be practised for a tine, but the
view that a wholesale reduction IN divi-
dends will be found necessary Is not ac-
cepted by the best informed people, who
base their calculations on the past per-
formances of the railroads and upon the
expectation that after a possible reac-
period in business in the sum
mer months active expansion will de-
velop in all lines in the autumn.
Present prospects favor abundant
crops, both of grain and cotton, refiec-
ton of which is found in falling COM
modify prices, and if the harvests turn
out as promised Wall Street will soon
forget its predictions of railroad insol-
vencies. Capital, however, is extremely
sensitive, and it is not unlikely that for
some time to come there will be more or
less unea siness on the part of investors
and q tendency on the part of money to
move into railway mortgage issues
rather than into stocks, the income upon
which would be affected by widespread
depression, of which, fortu-
nately. there is no indication in the cur
rent course of affairs, despite the liqul-
dation under way on the Stock Ex-
change. At present prices there are
many attractive opportunities for the
safe investment of capital in American
railroad bonds. A few months ago
there was a dearth of high grade mort
gage securities yielding q satisfactory
income. but since that time there has
nCpn q
values of the standard issues, while
large inroads have been made in the
prices Of the medium grade offerings,
the latter having declined in many IN
stances to an absolute bargain level,
with the heaviest losses in the indus
trials. If prices continue to decline, the
movement undoubtedly will attract pri-
md hn me
thing may be said OF the first class
stocks. inGuding preferred industrlals'
which have demonstrated their ability
IN return satisfactory dividends in the
worst periods of industrial reactions. IN
modern times.
Just now il is impossible TO Judge Win
any degree of certainty Of the effect OF
the railway rate situation in this coun-
try 11pon negotiations for the placing OF
our securities abroad, but it is interest
ing 10 note that foreign houses nave
heen heavy buyers on balance Tor spec
,,la+i,-e account in the local market. the
,,,,,.er,ant together with the recent sale
>, poris of American railroad bonds and
tho increased offering of bills against
oxnorts of commodities having broushI
aho,,t a material decline in sterling eA-
change quotations. The Bank OF Eng
land reduced its minimum rate OF dis
count last week, and there is ht1Ie poS-
sibilitv of shipments of gold from mere
IN the rest of the year. Indeed, IL is
,,;,e nrohable that in the autumn the
,-ollovv metal will move from Europe 10
n-a,, York as a consequence or eSpecIeu
o.sv money rates in London, high rale9
- this centre and heavy merchdhuioo
from this country. Local oahA
.osor,,as are large. and the banks are
conserving their resources Win 'iA0
nectation of heavy Withdrawals 1or ciop
moving nurposes later in the season
rr-o,, rresent indications the interior
so-,.,d Cor funds in the East VIII pe
unusually active this year unless theio
,,,o,,,d he q drastic contraction in west
-, h,nl loans. which have been eA-
bevond the limits of prudence
- ...fo+v And il is not unlikely thal
the federal Treasury will be compeileu
a. core into the market for funds oetore
.be fall IN spite of gradually improVlle
-oooirts on ordinary income account the
deficit i'm which amounts for ihe HSO7'
1-oar 70 date 10 about S12eeo,ovo, COM
nared with a deficit Of more than So7'-
600 600 in the same time last year. oh
oil accounts the deficit is S43,ooS,ooS'
- Ill