August 1,1891





Record   and   Guide.





143





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Dented to I^L Estwe . Builoiffe A^rfiTECTJi^ .Household Deooi^tioiI.
BUshJess AttoTHEMEJi Of Giiitnfl 1;/tei\est

PRICE, PER VEAR IIV ADTAIVCe, SIX DOLLARS.

Published every Saturday.

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Communications should be addressed to

C. W. SWEET,  14 & i6 Vesey St.

J. 1. LINDSEY, Business Manager.





Vol. XLVIII





AUGtJST 1, 1891.





No. 1,2





The publication offices of The Record and Guide have been
removed to Nos. 14 and 16 Vesey street, over The Mechanics^ and
Traders^ Exchange, a few Jeet west of Broadway.

THE bears bad and seem to have control of tbe stock market
and have worked it to tbeir own interest—truly it would be
strange if they worked it to any others' interest—with great vigor
and success. All the old-time depressive measures have been re¬
sorted to, even to the most pernicious of all, the unfair handling
of reputations. It is extraordinary that in the midst of success
this most cowardly tactic cannot be left alone. However, it is use¬
less to talk of it, because Wall street has no bowels, consequently
no compassion. The course of the market has indicated that there
were people hard pressed and battling against the tide, and
a m.ere suspicion of trouble was sufficient excuse for dragging
in some of the best names in the street, the better the name tbe
more effective the rumor. With the declines seen in some special
issues, that there were no failures is a matter for congratulation
and induces tbe hope that we may still escape them, although the
market does not evince very great strength. The buying yesterday
foUowing the raid on Burlington & Quincy, Bock Island and
Atchison had a healthier appearance than any seen for some days
and may augur a substantial rally. Recent advances have gen¬
erally been on buying to cover shorts, and consequently
the improvement occasioned thereby from time to time has
been very short-lived indeed. This buying, however, appeared to
come from organized support to the stocks attacked, and its
influence may be beneficial for a little while. Outside conditions
do not favor a permanent change in the course of prices. Loaners of
money are refusing to make time contracts even on good collateral,
and mortgage issues of standing and worth can only flnd a market
by making concessions in prices. Ths management of Burlington
& Quincy continue to discount the future in the declaration of the
usual quarterly dividend of 1 per cent, only two days after publish¬
ing a statement Bhowing a gain of net earnings made from
economies in operation. At home and abroad there are fears of
tight money, to realize which nothing could be more effective tban
an active and extensive buying movement, if in the present condi¬
tion of affairs such a movement was possible. The best that can be
hoped from the market is a maintenance of such strength as it has
i»t present, though that is not what happens when there is a pros¬
pect of money becoming scarce and, as a consequence, command¬
ing high rates.





THE distribution of the English railways in dividends almost
without exception show for the first six months of this year
a falling off from the rate prevalent in 1890. The Great Eastern
has decreased from 2 to IJ^, the London & Brighton from 41^ (o
3}4, the South Eastern from SJ^ to 2^, and so on. This is not so
much due to a decrease of traffic as to an increase of working ex¬
penses. It is also interesting to note that the scare which the
English banks suffered last fall, and the consequent demand on the
part of Mr. Goschen and the press that they should increase their
cash reserves has been promptly responded to, although the per¬
centage of cash liabilities is still far below tbat which is deemed
necessary in this country. The large joint stock banks
vary among themselves in a quite inexplicable way. The City bank
is content with a reserve amounting to 7}^ per cent of its liabilities,
and the Alliance with one of 9,9 per cent, while the London and
Westminster now holds as much as 1614 per cent, and the Union
maintains a proportion of upwards of 15 per cent. The returns of
tbe Bank of England show that the bankers' balances with that
institution have increased during the past year by from £8,000,000
or £9,000,000 ; and it is considered that this addition imposes a duly
on the Bank of adding about 3}^ millions to its own reserve. Hitu-
erto it has been the custom to look upon a bank reserve
of   £10,000,000   as   a  minimum,   but   the   standard   must   now





be raised, and instead of £10,000,000, between £18,000,000
and $14,000,000 must now bs regarded as a minimum. In Paris
speculation is a little heavy. It is remarked that while tho divi¬
dends of the great French railway companies remain stationary,
or are decreasing, their woi'king profits have continiied to increase.
During the last twenty-flve years the net annual earnings of the
Eastern Company have advaticed from 45 million francs to 56
millions; tbe Lyons from 91 to 191 millions; tbe Southern from 21
to 43 millions; the Northern from 51 to 99 millions; the Orleans from
53 to 83 millions, and the Western from 35 to S3 millions. Tbe in¬
terest on bonds have risen with the receipts, and in some out¬
stripped them. In Berlin the market for funds has continued sub¬
ject to adverse influences. Russian notes, loans and bonds are still
falling. This slow and steady decline is chiefly due to harvest
reports which represent Russia as in a state approaching famine.
Some observers are of opinion that these reports, although correct
in foundation, are exaggerated, but tbe public at large do not in¬
dorse tbis view, and think it safer to sell Russian securities. Dull¬
ness, rather than depression, pervades tbe rest of tbe market. Tbe
state of flnancial affairs in Berlin is very well indicated by the
decrease in new companies started. In the first six months of 1891,
eighty-six of them were founded with a capital of 45.60 million
marks; during the same period of 1890 the number was 123, and the
caoital 134.95 million marks.





THE scandalous exposure o f the Oregon Paciflc Railroad has led to
a committee being forped to take charge of tbe foreclosure
and reorganization of the property. This function should properly
belong to the Farmers' Loan and Trust Company, trustee under the
mortgage ; but the bondholders justly feel under the circumstances
that it is safer to take tbe business in their own hands. The exhi¬
bition made in recent years of tbe pernicious effect of pitching
great railroad trusts indiscriminately into Trust Companies finds a
most striking example in this scandal. Tbe bondholders through
tbeir committee object tbat the lien on tbe land grant has not been
paid and that only about 140 miles of road are completed, tbe entire
$15,000,000 of bonds, nevertheless, having been issued and being in
the hands of the purchasers or pledged for loans. Mr. Herbert B.
Turner, counsel for the Farmers' Loan and Trust Company, is
reported to have made the following statement:

" Tbe bond contains a provision that tbe bonds shall be issued not exceed¬
ing $25.00U per mile; it does not say of completed road. The mortgage
states that the bonds are to be issued to the extent of $ 15,000,000—equal to
$25,000 a mile for the full extent of the projected road. Now, the mort¬
gage contains a provision tbat the trustees shall certify bonds and deUver
tbem to the railroad company ou receiving certain certificates from tbe
Executive Committee that the bonds are needed for certain specified pur¬
poses. The Trust Company, on receiving such certificates, certified all tbe
bonds frora time to time and delivered them to tbe railroad company. The
question is probably made as to the right of tbe railroad company to sell
bonds at tbe rate of more than $25,000 per mile of finished road. I pre¬
sume tbe railroad officials claim that the limit in the bond of $25,000 per
mile did not mean completed road, because if it did then tbe provisions of
the mortgage as to issuing bonds on these certificates would be meaning¬
less, and that reading tbe mortgage and the bond together tbe only con¬
struction that would reconcile them both is tbat the bond means $25,000 a
mile of projected railroad. As to tbe lands, tbe Trust Company holds tbat
it has tendered the amount due on tbe lands, and that the lands, therefore,
have been saved for the bondholders."

Is this not perfectly in the lino with tbe performances of Trust
Companies .generally, as trustees ? How much had their fee of one
doHar a bond for certifying to do with their view of the construc¬
tion of the terms of the bond ? Mr. Turner and the Farmers' Loan
and Trust Company knew perfectly well that every purchaser of
the bonds, reading the provisions of the bond, expected that he
was buying a security issued at the rate of $85,000 per mile of
road i that is to say, of completed road ; nobody invests in bonds on
projected roads secured by mortgages on air. The evil of the mat¬
ter is that in theory the Trust Company is employed as trustee
to take care of the bondholder, but it receives the employment
from the railroad company whom it is always, therefore, ready
and anxious to oblige and meet in all questions of construction,
etc., while as to its beneficiary, the bondholder, widow, orphan or
what not, why—the deuce take them. If anybody can point to a
Trust Company having ever taken any steps to protect bondholders,
except perfunctorily or as an incident to make a show of activity
so as to give color to a big claim for services, we would like to see
it. The Chronicle sa.ys'. "A gentleman representing some of the
dissatisfied bondholders, said that 'out of tbe whole issue of $15,-
000,000 bonds, outstanding, from $9,000,000 to $10,000,000 worth
have been sold, and between $7,000,000 and $8,000,000 cash has
been realized. What bas become of this cash? Five millions of
the bonds have been pledged to secure a debt of about $3,000,000."





NINE times out of ten "public good" spells -private advan¬
tage." The talk of the newspapers at present about the
sacred " freedom of the press " in connection with the recent prose¬
cutions for publishing illegal particulars about the electrocutions
at Auburn is well among the nine.   Indeed tbe editorial indigna-