The Washington herald., 1910-10-31
WALL STREET NEWS
Iron and Steel Orders Are
Slow in Coming In.
AFRAID TO BORROW MONEY
Concerns Which Gould Stimulate
Industrial Enterprises Lack Cash
and Fear to Raise Funds-DecIine
in English COnsOls Is an Evidence
of the General Situation.

-N~M AO4 n OGt. 0U.--A certain unit 81
portion OF professional Wall street has
now for two or three weeks past been
engaged in one Of its characters. icaIIy
lmpetuous speculations for the rise IN
the common shares of the United States
Steel Corporation, and the advance here
has been communicated 10 a greater or
less extent 10 other stocks, although tho
action OF these other stocks has demon
strateC that the market is becoming sus-
pic'ous OF the kind Of buying that has
been seen in steel.
TIE use OF The word Characteristic"
Is perhaps not quite fair. because an
approximate parallel to the present
scheme OF operations has in recent yrars
been only the rather singular situation
that arose last February 1t was Then
disclosed that one individual was carry
ing for his speculative account through
many different stock exchange commits
sion houses an amount of stocks COM
monty estimated at being between 10000
and 100000 shares, the largest proportion
OF this being in United States Steel COM
mon. The individual himself, though
known 10 be man of large means. was
not supposed 10 be such a great capitalist
that he could swing such line Of
stocks as has been detailed.
knowledge OF this state of affairs, as
soon as II became dispersed. brought
speculation to an end, and concerted
action on the part of a great many
persons interested was necessary in order
10 avert very serious consequences. TO
the stock market. As it was. a collapse
In prices occurred and a decline In the
stock market started, which lasted for
several months, The present movement
IS doubtless somewhat less one-sided
than the one that has been described. but
the case as II stands seems TO be that
lew spectators without the sympathy OF
banking interests, without the support 10
any extent OF the general public and in
e race Of clouded money and business
conditions have set out TO advance The
price Of one stock in the security market
and must by this time be in possession
Of a block Of single stock which prob
ably exceeds that reached on the former
occasion What have been the reasons
OF legitimate character behind this rise2
Market Is OversOId.
That sufficient cause for a considerable
general advance in the market was 10 be
found in the oversold condition Of affairs
present at the end Of last July is freely
admitted by every one, but this means
a reasonable advance and not d specula-
tive furore, and why should there be
such enormous and contracted buying of
United States Steel common? Il cannot
De said that the price of the stock is
now inordinately cheap, inasmuch as II
soils 10 yield an interest return OF 6 Der
cent. Yield no more than would be ex-
pected IN the case Of the common stock
Of a high grade industrial corporation.
Is II because SOME great Spectator is
mort or the stock and is being squeezed /
II so the movement Is one that carries
lis own obvious danger Is il because of
some unusual development of striking
financial Importance 10 the Steel Cor
poratlon OF which the public has no sus-
plcion. This theory is on its face improb-
able. The explanation OF the rise as
commonly made in the financial district
Is that the prospects Of the iron and steel
business and the general prospect OF BUSH
ness in the country are so brilliant as
10 warrant the current advance and even
more. But examination shows, however. I
that this prospect is thus far composed
OF doubtful hope rather than anything
resembling even tentative reality.
Zach day now for many weeks the
Wall street news agencies and various
commercial bureaus have printed para |
graph reading something like this: Bust !
ness in iron and steel is dull and fat /
such activity as noted being at the *
pense Of prices; but it is firmly believed /
that later on the volume Of new orders /
and especially new railway orders. will
Improve SIN the new orders do not /
put IN on appearance. and the fact is that /
is
current companies of certain spectators /
in Wall street as TO the business out /
look and those Of conservative business /
men, or al least many Of them.
Activity Was Abnormal.
The latter assert that the fundamental |
truth is that for the last nine or ten years
business relations in the United States .
were characterized by abnormal activity /
ard volume. II was discovered al the
beginning of this period that the railroads
or the country practically needed rebuild /
ing. that large amount of construction
a new railway lines was also required. /
a'ld' that mCcA the same conditions OBJ /
tanned in other trades and industries.
Those holding 10 this theory maintain
that while from now on current and rou-
tine REFRESHMENTS or material will go
on, the great work Of reconstruction and
or new building Of railways and other
plants is over, and that a normal instead
or an abnormal amount of business in
this particular will take place. Beyond
all this. there is evidence, as IS declared
that there is a state OF credit expansion
and exhaustion OF capital all over the
world. due 10 many causes, principal
among these being the high cost of com
modiues, which has called for the use
20 4slfah more money than f~-r,,.~1..
der 70 transact business. The result is
a high money rate, which makes difficult
the sale of low interest bearing bonds and
other investment securities.
Hence, therefore. the railroad COM
panies and other concerns that would
like some OF them. to borrow money ex-
tensivey for uses in ways that would
stimulate Industrial enterprises engaged
in the manufacture of the desired sup
plies ind themselvs precluded from doing
so by the impossibility of borrowing, ex-
cept on exceedingly stringent terms. The
most prominent instance of this lately
has been the negotiation by the Michigan
Central Railroad Company, a railway
concern than which none stands in higher
credit in the United States, of one year
AZ per cent notes in Paris at A price /
which, as is rumored, compels. the com
pany to pay for the money at the rate
OF S per cent.
This sale was enforced apparently by
the fact that, according 70 a recent state
ment made by President w. c. Brown. of
the New York Central lines, the best bid
which the Michigan Central was able 10
obtain FOR an issue Of long time debenture
AZ per cent bonds was price of 81 for
the entire issue. Witness 10 this gen
eral movement is also afforded in the
great decline in English consols, in the
even greater heaviness Of German bonds