The Morris County chronicle. [volume] (Morristown, N.J.) 1877-1915, 1910-07-12
THE FINANCIAL SITUATION.

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During the past week Wall street
has had another severe attack of hys-
terra bordering on absolute demorali-
cation and collapse, Owners of stocks
and other securities have thrown them
overheard with little consideration
for their present or future value, but
selling voluntarily or from necessity
until it is fair to presume that a level
has been reached where Investment
capital will be attracted by reason Of
the interest returns at present prices
upon good securities even though, the
dividend rate may be reduced by some
of the railroad companies most affected
by the new regulations of the govern
ment.
Many holders of securities have
been wondering why there should be
such depreciation of value~in view Of
the good business and crop prospects
which seem now to be we'll assured.
They lose sight of the fact that in all
dealing in securities or commodities
the price is regulated by supply and
demand.
During the past year investment
capital has been overwhelmed by the
issue of new securities which it has
been impossible to place where they
will be permanently held. The cor
porations have offered special induce
ments to their stock holders to sub
scribe for these new issues and by
making the offer attractive many sub
scribers have ayailed themselves Of
the so-called privilege, not for the
purpose of holding for investment,
but to sell at profit at the first OPP
portunity, this they have found i'm
possible, so that when the market be-
comes demoralized old securities are
sold to take care of others that are
unstable.
Another reason for the decline Is
the very mistaken idea that seems to
prevail that the government is respon-
sible for the present condition. of at
fairs in what is often referred to as
/" batting the corporations y This So
called attack upon corporations is
nothing more than the endeavOr OF
the government to enfore the law re-
garding the regulation and readjust-
ment Of freight and passenger rates
upon uniform and equitable basis !;
that there shall be no discrimination
against any location or individual
that the charges now prevailing for a
comparative short distance shall be
reduced to conform to the charges
made to more distant points.
Some years ago the freight rates
throughout the country were in con-
slant state of decentralization by rea-
son of the railroads rebatink a portion
of the freight charges back to the
shipper, and in this competition the
net earnings were nominal Few rail-
roads were able to earn any dividends
for their stockholders. 1t became the
| function of the government to take
up this matter of competition which
was in unlawful restraint of trade,
and with that end in view drastic laws
were passed and enforced making
heavy penalties for violation until at
present all freight rates are on
stable and uniform basis.
The plea set up by the railroads
that the presentsrates must be in
creased by reason of increasing ex-
penses is recognized by the govern
ment and will receive due considera-
tion from the Interstate Commerce
Commission in the readjustment OF
freight rates in this readjustment 1t
i will be found that the shipper will
fare better, and the holders of securi-
| ties will be upon better secured posi-
tion than heretofore.
In the past year several of the rail
roads have increased their dividends
materially, in face of the fact that
labor demanded and was paid con-
siderable increase in wages. and that
the proposed action of the government
to insist upon a readjuStment OF
freight rates was pending at the time
This was done with mistaken idea
that their credit was to be helped il
order to borrow money upon favorable
terms.
! Now when the government takes W
the issue which has been pending fol
at least a year the presidents and Other
high officials of the roadsset up a calam
ity howl asserting that if the govern
mentinterferes with rates it means dis
aster and ruin to the railroads anC
consequently to the holders OF then
securities, they thus fTighten theil
securities holders unto indiscriminate
selling for whatever price may be
realized.
Holders of good securities need not
be alarmed by such statements. The
situation will right itself to conform
to the new conditions, and it will
be found under the new regulations
earnings will be more uniform Secur
titles will not be unduly inflated or de-
pressed and with return of confidence
investors will furnish the means fol
all legitimate enterprise.
HENRY GRIFFIN.
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