Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-08-21
HIGH LEVEL UPHELD
Stock Market Proves Surprise
to Pessimistic Ones.
GOING INTO STRONG BOXES
Evidence That Some Of the Recent
Purchases Were for Keeps.
BARGAINS STILL TO BE HAD
Even at Highest Level Some Of the
Established Dividend Payers
Are Good Buys.
GOING INTO STRONG BOXES
BARGAINS STILL TO BE HAD
By w. G. Nicholas.
'respondence Of The Star.

By w. G. Nicholas.
Special Correspondence Of The Star
NEW YORK, August 20, 1910.
The distinguishing feature of the weeks
security 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
interests. The advance has been fairly gen.
eral with leadership vested IN Union Pa
cific, Steel common and Reading. The rise
has now been so 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 mere Incl
dent, but was the initial act in q con-
certed effort to lift the market out of
recent ruts and bring about a genuine
bull campaign.
In support OF this theory rumors are
current that the Rock Island stocks,
particularly the preferred. have already
found q lodging place for keeps. The
story has ii that Rock Island Is to be
acquired by Southern Pacific, and thus
made part of the great Hartman system.
1t is SO far but story-no facts coming
TO light-but the street is in q mood
to welcome speculations of this Character.
Ii declines to consider that the govern
ment suits still pending against the Har-
riman lines might be serious obstacle
to any plan Of absorption Of Rock Island.
However, that such an obstacle might
arise is beyond dispute.
Story Of Copper Merger.
Another controlling factor upon Wall
street sentiment Is the iteration and
reiteration of the story that the famous
copper merger Is about to be completed.
To bring this about there necessarily
must be effective agreement for eurtaii-
ment of the worlds copper production
something very difficult of accomplish
American copp@ producers, and this is
what Wall street bulls say is about to be
made public.
In support of this theory they cite
strength for Amalgamated Copper, but
many close observers Of the market are
inclined to attribute this strength to the
running in Of large belated short inter-
est. And, as in the case of Southern
Pacific-Rock Island merger. so in the case
courts would have to be reckOned with.
But In Wall street everything goes when
the traders feel like bulling the market.
Are Not Philanthropists.
1t does not seem likely that the big
bankers who took over the Pearson
stocks did SO from philanthropic mo-
tives. IL there is virtue in precedent,
they came to the rescue OF the Pearson
syndicate because its downfall threaten
ed security market decentralization. The
stocks they had thus acquired are prob
ably for sale at a reasonable profit on
the purchase price To secure such prof
1t the sale must be made to the only
customer possible-the general public.
Now, it IL an indubitable 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 cotton markets. or In
California and Texas oil field ventures.
but il maintains religious aloOfness from
Wall street, Without public cooperation
any extended. prolonged bull speculation
is a sheer impcssibiity. This is not say
ing that there may not be enough. imam
cial backing in the present movement to
carry stocks to a yet higher range, but
unless the public attitude changes there
can be no maintenance of present high
levels.
Eyes on Railroad Earnings.
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 extinguish
gross increases-and there are good rea-
sons for this not hard to see. The gen.
eral and substantial advance OF wages
to railroad employees and the increased
cost of materials for equipment. main
tenance and betterments tell heavily upon
ar toll H.
mand of the railroads for higher traffic
rates. In fact, higher rates seem to be
the only resource for maintenance of
present dividends.
Many roads; notably. for example. St.
scanty SURPRISES after payment OF the
last dividend These dividends cannot
keep up unless the roads can earn more
money. Against advanced rates is a very
widespread general public sentiment.
approaching congressional elections. On
the other hand any attempt upon the
part of the railroads to reduce wages
would incite fierce OPT position from labor
unions and induce disastrous strikes
These are considerations which must en-
ter into any estimate Of future security
market movements. Everything may
turn out all right. because this country
extent. but it is by no means clear sail
ing. Hence IL Is not likely that the re-
cent syndicate requirement of great
blocks Of stocks Is Of permanent char
acter.
Wall Street Gets Money.
Money market conditions remain sat
isfactory so far as Wall street borrow
ing is concerned. Call loans are abnor-
mally cheap and time loans can be ef-
fected at bargain rates. From the Urea
sury Department at Washington comes
expression Of opinion that the west will.
to large extent. be able itself to take
care OF the crop moving financial stu
alton. Recent apprehensions of over
extension of loans by western banks
are, SO Washington says, much exag-
gerated. This. of course. is cheerful and
encouraging news. which will exercise
due influence. Many prominent western
bankers share this view, among whom
amy be mentioned j. G. Rounds, presi-