The Birmingham age-herald., 1913-11-06
Gary and Hill Reach Almost
Same Conclusion by Diff
ferent Routes
GARY'S SPEECH is
GIVEN MUCH STUDY
Hill Contends Country Is water
logged With Bonds"-Gary
Thinks Obstacles Are
Chiefly Political
BY HOLLAND.

E. II. Gray, chairman of the board OF
directors of the United States Steel cor
poration, and by James j. Hill, would
quickly make it clear that, although at
a superficial reading these two great
| intellects seem to differ as to the causes
of alleged business depression, neverthe-
less there is no real difference of view
to distinguish one from the other. Judge
Gary's address has been more carefully
read in this city than have many of the
formal addresses made at large represent
ative bodies. The two features of the
address which have occasioned a great
deal of comment are, first, statistical
demonstration of the magnitude of the
material wealth of the United States,
and next, his view that this material
wealth can be wonderfully increased and
fairly distributed, if certain obstacles,
chiefly political, to- some extent dema-
gogic are removed so that there can be
cordial cooperation between capital, la
Dor and public opinion.
A superficial reading of Mr. Hills ad-
dress would lead to the belief that he
attributes much of our financial and busi-
ness disturbance to a vast and unhealthy
expansion of and demand upon credit
illustrated by the attempt to market
bonds of all kinds and upon every con-
ceivable pretext.
Mr.. Hill as is not infrequently the case,
compacts his view into an apothegm
which is likely to have as frequent repeti-
tion as that attributed to the late j. p.
Morgan in which he stated that the trou-
BILE with the country was that 1T had a
mass OF undigested securities. Mr.. Hill
states that "the country is waterloGged
with bonds" and the meaning which is
behind this apothegm is precisely the
same as that concealed in Mr.. Morgan S
sententious remark.
Judge Gary in his address stated that
capital, always timid, has been seriously
affected, by unreasonable and uncalled for
political agitation and attack. Indeed, 1t
is becoming frightened. Judge Gary has
had abundant reason to know that while
capital Is sometimes timid it is often very
courageous. The building of the railroads
of the United States, especially those west
of the Allegheny mountains, tell won
derful story of the courage of capital In
fact the organiza ton of the very cor
poration of whose board of directors
Judge Gary IS chairman bears witness to
the courage of capital, for the PROPOSE
ton was not only absolutely new, but 1t
involved investment of capital in unpre-
cedented amount in the securities or a
single corporation.
Everything that Mr.. Hill says in public
commands instant attention and much of
what he says is of great influence. There
fore his address to the investment bank
ers in which he asserts that the disturbed
condition of business in the United States
and the timidty of capital, so far as
large financing of great undertakings is
concerned can be traced in no small meas
ure to the overissue of bonds, will it is
believed here serve as a most important
monitory lesson. Yet capital has been
secured in recent years in enormous
amounts by those who have sought it
with a view of marketing bonds.
1t has been especially observed in this
city that Mr.. Hill exempts the railroad
companies of the United States from the
criticism which he has leveled against
overissue of bonds. His view is that the
railroad companies have been singularly
prudent, being careful to have behind
every issue of bonds not only adequate
security, but also abundant margin. This,
in his opinion, has not been, on the
whole, the method adopted by many of
those who have been seeking to market
bonds for industrial corporation for
municipalities.
The difference between Mr.. Hills
statement and the one made by Judge
Gary is superficial rather than real. For
Judge Gary merely points out that the
opportunities for material prosperity
are inconceivably great in the United
States and asserts that the chief OBJ
stacles efn the path of realization of
these opportunities is unrest, demagogic
agitation and ill-considered legislation.
Judge Gary Is speaking for the
future. Mr. Hill, on the other hand,
puts his finger upon a tendency which
began as recently as the opening Of
the new era of Industrial connections
II -. NDvN. 70
ton to issue bonds in large amounts
and with due regard to security or the
margin of safety can be traced to the
wonderful utilization of electricity as
an industrial energy. This has led TO
possibly a too rapid development of
trolley lines and other commercial en-
ployment of electricity. There was a
time when the telephone company
sought the assistance of financiers in
| underwriting an issue of hundred and
fifty millions in bonds with intent to
utilize the funds thus received in the
expansion of long distance telephone
lines and especially in the installation
of local telephone systems in the far
west. In that case there was a most
carefully prepared demonstration made
| by experts and actuaries which pro-
! fessed to show that the expenditure of
as much money as this would be almost
| instantly followed by such increase of
business as would enable a reasonable
profit to be earned from the invest
ment. This was in this particular case
an argument which appealed to thesmen
of finance who had been turning down
other propositions for the underwriting
of industrial bonds.
But at that time over issues of bonds
especially by Industrial corporations
and by municipalities had in part con-
tributed to the impairment of conf
dence which was followed by the money
panic of 1907, and the telephone COM
pany was compelled to withdraw its
application.
Both Mr.. Hills and Mr.. Gary's ad-
dresses contain intimations which are
discovered only by reading between the
| lines. Judge Gary intimates that IL GER
| tain obstacles which are represented by
public unrest and demagogic accusa-
| lions are removed then the United
States will be in position each year
to accumulate enormous amounts OF
new wealth. much of which can be con-
verted into capital available for invest
ment Mr.. Hill intimates that If the
bond making hysteria be ended then
credit will be restored so that there
may be wholly reasonable and soundly
economic development of the natural
year in such manner as to create enor-
which will come large quantities of new
capital will be utilized in the exploita-
country, In improving railroad facili-