The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1910-08-21
STEADY ADVANCE
IN SECURITY MARKET
Concerted Effort to Lift Mar
ket From Ruts
ABOUT COPPER MERGER
Much Attention Paid to Current Rail-
road Earnings-MOney Market
Conditions Remain Satisfac-
tory--Views Hopeful
BY w. G. NICHOLAS

New York, August 20.-(Special. 1.-The
distinguishing feature of the weeks Sc
curity market has been a continuation OF
the advance which started at the time
the stocks of the Pearson syndicate were
taken over by certain big banking inter-
ests. The advance has been fairly gem
eral with leadership vested in Union
Pacific, Steel common and Reading. The
rise has now been well sustained and
gone so far that the street has settled
down to the conclusion that the taking
over of the Pearson stocks was no nero
incident, but was the initial act In
concerted effort to lift the market out
of recent ruts and bring about genuine
bull campaign. In support OF TINS
theory rumors were current that the
Rock Island stocks, particularly the pre-
ferred. have already found lodging
place Tor keeps. The story has 1t that
Rock Island Is to be acquired by the
Southern Pacific and thus made part
of the great Hartman system 1t is so
far but a story-no facts coming to light
but the street Is in a mood to welcome
speculations of this character. 1t de-
clines to consider that the government
suits still pending against the Hartman
lines might be serious obstacle to any
plan of absorption Of Rock Island. How
ever, that such an obstacle mhSnt arise
1s beyond dispute.
Another controlling factor upon Wall
street sentiment is the iteration and re-
iteration of the story that the famous
copper merger Is about to be completed.
To bring this about, there necessarily
must be an effective agreement for cur
tailment of the worlds copper production
something very difficult of accomplish
ment. Necessarily the preliminary would
have to be consolidated of the principal
American copper producers, and this is
what Wall street bulls says Is about to be
made public. In support of this theory
they site strength of the Amalgamated
copper, but many close observers of the
market are inclined to attribute this
strength to the running in of large be-
lated short interest. And, as In the case
of the Southern Paclfic-Rock Island
merger, so in the case of the copper
merger the United States courts would
have to be reclsoned with. But In Wall
street everything goes when the traders
feel like bulling the market.
It does not seem likely that the big
bankers who took over the Pearson
stocks did so from philanthropic motives
If there Is virtue in precedent they came
to the rescue of the Pearson syndicate
because its downfall threatened security
market generalization. The stocks they
had thus acquired are probably for sale
at reasonable profit on the purchase
price. To secure such profit the sale
must be made to the only customer posi-
ble-the general public. Now, 1t Is an in
dubitable fact that the general public
maintains its attitude of distrust toward
the stock exchange. 1t seems perfectly
willing to engage in speculation In the
largest kind of way in the grain and cot
ton markets, or in California and Texas
oil field ventures, but it maintains relig-
public cooperation any extended, pro-
1onged bull speculation is sheer impos-
sibility. This Is not saying that there
may not be enough financial backing In
the present movement to carry stocks to
q yet higher range but unless the public
attitude changes there can be no main
tenance of present high levels.
Much attention is paid to current rail-
road earnings. Gross receipts continue
to show remarkably good results-June
and July earnings running considerably
more than 10 per cent over January and
February earnings. But qualification at
this is lessened by the poor showing OF
net returns. The fact stands out that
operating expenses more than extinguisn
gross increases, and there are good
reasons for this not hard to see. The
general and substantial advance of wages
to railroad employees, the increase cost of
materials for equipment. maintenance and
betterments, tell heavily upon railroad
financial resources. Hence the demand
of the railroads for higher traffic rates.
in fact higher rates seem to be the only
resource for maintenance of present div
idends. Many roads. notably. for exam
pie, st. Paul and Illinois Central, show
very scanty SURPRISES after payment of
the last dividend. These dividends can
not keep up unless the roads can earn
money. Against advance rates Is very
widespread general public sentiment,
which may find specific expression In the
approaching congressional elections. On
the other hand any attempt upon the part
of the railroads to reduce wages would
incite fierce opposition from labor unions
and induce disastrous strikes. These are
considerations which must enter into any
estimate Of future security market move
ments Everything may turn out all
right, because this country has recupera-