t)ecember 6,1891





Record  and   Guide.





711









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Vol. XLVIII           DECEMBER  5,  1891.





No. 1,238





THREE startling and telling failures, disturbing and menacing
the standing and security of the largest three nooney centres
of the country, give imperative empha.sis to the demand for the more
adequate protection of the credit system. Witbin the short period
of a year the reputation of Philadelphia as the most conservative
aud safe of the seaboard cities, in its financial dealings, has been
shattered; the most astonishing rascality and official indifference
disclosed. Boston, hardly less conspicuous in its conservatism, has
been rudely shaken by tbe failure of one of its heaviest banking
houses. While, close following, a leading New York iiouse has gone
down in disaster and dishonor; its balance represented in $d,OOU
of assets and liabilities of three millions. Financial centres are but
just recovering breath at the natrow escape fiom a serious panic.
Yet neither the wreckage of the Keystone, at Philadelphia; the
Maverick, at Boston, nor the house of Field, Lindley, Weichers &
Co., in New York, are the result of the late stringency nor related
especially to it. In yet another light, if we cousider how slight a
percentage of the immense business interchange of the country is
upon an actual money basis, and how large a proportion rests upou
the credit system alone, the need, the necessity of a better, surev
and sounder basis for the credit system than at present exists
becomes manifest. Whatever be thH objection to governnient
interference, whatever the cry against gro whig socialistic tendencies,
it is evident that the State, represented either in its Jiatuial or loi.ial
functions, must assume a more direct responsibility, with the entail
of stricter and sharper supervision, and complete the work which it
has so imperfectly begun. In the three prominent instances the year
has presented, the fact of inadequate protection of the public against
speculators and thieves has been unequivocally stated. It has
been demonstrated that governmont examiners do not examine,
and thac clearing house associations are no alternative for reUef.
For the immediate protection of public credit a reserve fund col¬
lected by taxation or assessment pro rata upon the amount of
deposits appears the most effective and feasible. Whether this
fund be lodged with the government or with the clearing house
associations it matters little. The one or the other then becomes
a responsible guarantor to every depositor in the land. The direct
responsibility thus entailed insures the most searching scrutiny of
bank affairs possible, while each bank made liable for the conduct
of every other in return for the absolute protection of its own
customers would become not the shield, but the agent for tue
detection of corrupt mstituti jus.





in 1876—very muoh as it is now. Bonds and stocks
were depressed. Investors were scared and would not
buy. Tbese bonds commanded only 85 per cent in the market, and
the effect of using them in lieu of cash for the payment of the divi¬
dends was nothing more than the selling of $3,476,233 thereof to
the stockholders at par instead of to the public at 16 per cent dis¬
count. They are now quoted at above 180. Interest has been reg¬
ularly paid. They have yet fifteen years to run, and there is no
better secured bond in the market. Certainly the preferred stock¬
holders have had no reason for complaint. It is singular that roads
that are in want of cash for the payment of floating liabilities, addi¬
tions to their properties, new coustruction or new equipments do
not adopt the same policy."





THIS is the only way the Commercial and Financial Chronicle,
in its supplement of November 28th, page 67, answers our
questions of November 31st. It says, " In June, lb90, it was voted
to authorize $3,635,000 of second mortgage bonds ($5,000 per mile),
and $1,5x0,000 was afterwards sold, dated June 80, 1891, but the
issue was not known to the public till October, 1891." The sentence
is a little clumsy, but we are glad that at last the Ch onicle states
things as tbey are ; but it should have added, as it is the fact, that'
the stockholders of the Lake Erie & Western R. R. Co. also knew
nothing about the issue until October, 1891, and tfais is the meat of
their complaint, and of this they will ever complain.





THAT expert corporation accountant and write^-, Mr. Cha£>. Bar¬
rett, has in a recent article furnished a strong illustration of
our point in criticism of the financial management of the Lake Erie
& iTestem Railroad Company. " In 1873,1874 and 1875 the dividends
on the preferred stock of tho Chicago, Milwaukee & St. Paul,
aggregating $3,476,333, w ere fully earned, but in lieu of the cash
which was in the company's hands the amount was paid in newly-
created consolidated 7 per cent bonds of 1875-1905 at par. and a
great outcry was raised because the St. Paul was paying
dividends in bonds instead of  cash.   The situation was then—





A NERVOUS inaction characterizes all the exchanges of Europe
at the present time. The panic which took place in Vienna
on November 14th was traceable directly to the apprehensive feel¬
ing with which the Austrian bankers and speculators regiirded
the present political situation. It is known that the German ])eople
are becoming very belligerent about Russia; and it is feared that,
despite the pacific intentions of the Emperor, he may be forced
into beginning the inevitable conflict. This in itself would be
sufficient to keep the markets of Europe quiet; and when, in addi¬
tion to tbis, general business is depressed and credit shaken, the
prevailing depression is scarcely a matter for surprise. Neither
can any revival of business be looked tor until the present situation
has worked itself out. The strain under which the commercial
fabric of Europe is suffering acutely must be removed; and the
many weak issues on the Stock Exchange lists must be either
gotten rid of or else flnd their proper level. Even, however, if
nothing occurs violently to disturb the current of events, no
very great activity can be expected abroad during
the immediate future. In Germany, it is not only the
stocks of foreign' countries which are declining, but the values of
domestic industrial securities are adjusting themselves to what is
apparently to be a seasou of small business, narrow profits and
declining prices. France will during the next year be adapting
itself to a tariff, the schedules of which have undergone consider¬
able alteration, which in itselt will be a task difficult and of uncer¬
tain outcome. England's manufacturing industries are far from
being in a prosperous condition. The exports of that country show
a heavy falling from the figures of last year, and the cotton,
woolen and iron manufacturers are particularly depressed. Ic is,
however, some political thock only which would be likely to pro¬
duce a panic. The depression has come on very gradually and will
not culminate for some time yet.





THE consents of the property-owners along the route laid down
by the Rapid Transit Commission are not coming iu as fast as
they ought to. The refusal of some large owners and the hesita¬
tion of many more mean that these gentlemen do not appreciate
all that the proposed system will do for cheir property. In the
absence of any reliable expert testimony to the contrary efl'ect,
Thf. Record and Guids takes it to be settled that existing founda¬
tions will not be endangered by che tunnel. The guarantee of such
skilled engineers as tnose who have passed on the plan ought to be
sufficient for the most cautious owner of the biggest building along
Broadway. If all possibility of danger from this source is excluded,
there can be no shadow of doubt whether the interest of a property-
owner lies on the side of acquiescence or refusal. A rapid transit
system such as the Commissioners propose for Broadway would
make that thoroughfare to a greatel: extent even than at present
the very heart and core of New York Uity. The fact that the street
runs diagonally across the city at a very long angle has been suffi¬
cient in the past to secure its supremacy over every other thorough¬
fare in the metropolis; but, nevertheless, there has always been
something of a straining co get away from Broadway. Down
town, during the past five years, the capitalists and corporations
who could afford to erect office buildings many stories high, have
built off that thoroughfare jusc as much as they could—mainly
because the present rapid transit lines never ^et nearer to that
screet than a block away. Thus property on other streets was to
some extent more convenient than Broadway property; and hence
it is that, although the value of real estate on that thoroughfare
has been strong, there no longer exists che same difference as for¬
merly betweeu the price which it brings and the price paid for land
on contiguous streecs. A process of leveling up has been going on
whereby Broadway has been gradually losing its marked pre-emi¬
nence. Neither is this true only of the district south of Chambers
street. The last two or three years have seen the transferral of
much business formerly transacted on Broadway, becween Broome
and 14th streets, to the new mercantile district on tbe streets to
tbe immediate west; and concomitant with this, there has been a
rise of values on tbose side and parallel street:! to a level much
more nearly approaching the Broadway standard. A similar proc¬
ess is noticeable in the retail district. The Sixth Avenue Elevated
road concentrated on Oth avenue many of the best retail stores; aiu^