Febmwy 20,1899





Record   and   Guide.





2T7





r                 \             KTABLISHED-SSÍMARCH 211!^ 1868.'





^                 ^             ESTABUSHED-^MARPH 211!^ 1868.'^

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VoL. XLIX,





FEBRUARY  20,  1892.





-Mo. 1,249





JUST before the announcement of the Reading deal the stock
market had drifted into a condition of irregularity tending
towards dullness. Now that the feverish excitement caused by the
deal ia over it may be supposed that unless some other important
and unexpeoted combination is aiinounced it will return to ita for-
mer uninteresting and irregular condition. Specialities of course
excepted, there are several reasons why the general market is
unlikely to be a broad, advancing one. Stocks are now selling for
just about all they are worth considering the dividends that they
yield, and as the crop year is getting pretty well along
speculators are beginning to look ahead, intent upon
seeing whether the sucoeeding crop year wiU be equally
fruitful. They cannot be getting very much encouragement from
the prospect, which suggests at all events that during the coming
year prevailing conditions may be reversed. Our winter wheat
crop is not up to last year's standard, while that of Europe looks
fairly well. This is not conclusive; but it is suíBcient to make men
wait upon developments. It really seems as though Wall Street
does not contain as many "lambs" as foroierly. Certainly,
although the news of the past six months has frequently been of a
character to make weak-headed operators loae their wits, and rueh
wildly after stocks, never for more than a day or
80 have there been any signs of a loss of speculative
equilibrium. Prices, in other words, have as a rule responded
moderately and continually to the conditions that altered
their value. With such an element controlling the move-
ment of values it seems natural that the market should now relapse
into its former waiting state. Although there are several ways of
scaring the holders of stocks, no reason exists for a retrograde
movement of prices. Gold exports, silver bills and legislative
investigations will be used for trading purposes, but with railroad
earnings still on an increase and money as cheap as it is, marked
concessions in prices need not be feared. What bankers think of
the future may be judged from the factthat recently time loansfor
four and six months have been made at 3 and S^í per cent, and
that call loans can be had in unlimited quantities at 2 per cent. In
some cases we know that money was borrowed on call aX\% per
cent. With money as cheap as that and confidence not lacking,
stocks may not go up very much, but they are not going down.





AS an additional illustration of the misfortunesof English invest-
ors, it is interesting to note that Melboume has recently
passed through a severe financial crisis. The underlying cause cf
the trouble was over-borrowing. This over-borrowing has assumed
two forms, viz., issues of public loans more quickly than they could
be profitably utilized, and the pushing beyond healthy liniits of the
system of obtaining deposits in tlie United Kingdom by financial
institutions. Of the free borrowings of the latter little has been
employed in the promotion of undertakings making a return in
any sense corresponding with the average rate of inlerest
oiîered to the depositors. Nearly the whole of the
money so obtained was iutrusted to speculators, and went directly
or indirectly to promote and afterwards to uphold an iníiation
of real estate values. Irrespousible gamblers in the stock markets
were also loaned money on security valued at market quotations
rather than upon their actual or even prospective intrinsic worth.
While the colony has been borrowing money recklessly, it has been
guilty of great personal extravagances. For the last five years it
has been importing at the rate of .$50,000,000 more a year than it
has been exporting. What, then, with public borrowing on a heavy
scale, the return iipon whicli is at present wholly inadequate;
what with the employment ot large British deposits
in the promotion of speculation; and what with a
decaying export trade and a rapidly expanding volume of imports,
a day of reckoning could only be postponed.   The culmination was





hastened, however.by the difficultiesof British investors who lately
have been curtailing their loans, and the colony will have to take a
bitter medicinal dose of slow economy and recuperation. In France
just at present the industries of the country are laboring to adjust
themselves to the new tariff : in Germany there is a temporary buU
campaign,, touched, however, with an inevitable ephemerality,
while in Austria the rise due to the expected resumption of specie
payments still continues. In considering all movements in the
exchange market for the coming months it must be
remembered that Austria-Hungary is picking up gold when-
Boever and wheresoever she can, and that her requirements
will amount probably to $100,000,000 more. It is announced how-
ever, on good authority, that all her stock]of silver will be retained
for subsidiary coinage. Austria is not the only foreign country
seeking gold. Russia, also, is making calls on Paris for that metal,
which can be done because the proceeds of the Russian loan, paid
at the time in warrants, are now being demanded by the Finance
Minister, whose needs are imperative. With these two countries
seeking the metal, and with the fact to be considered that the next
8ix months are normally months of gold export, due to the tourist
expenditures, etc., people need be neither surprised nor alarmed if
we export between $15,000,000 and $30,000,000 during the spring.
No such movement, however, as that which occurred last year is
to be feared, while we are stiU selling weeHy 5,000,000 btishels of
wheat, every one of which represents something like a doUar—a
process which wiU be continued for six monthB.





THE new Reading combination has been received by the intelli-
gent portion of the public with very general approval, and
the objections to it have been conflned to loose and reckless news-
papers who make any combination of capital the signal for some
demagogical ranting. Never was there a clearer case of a com-
bination which will benefit all the parties to the bargain. It is
admitted that the consolidation of the three roads will permit the
introduction of economies in their operation which will largely
increase the iiet return to the stockholders. At the same time
consumers of coal will be assisted by the change, because the price
of thatcommodity will not in the future be subject to spasmodic
variations. Relative permanence in the value of such a necessary
commodity will do much to make the conditions of other industries,
which consume large quantities of coal, permanent also. The pro-
phets are equally agreed that no unreasonable advance in price is
to be feared, because the combination will not dare to face the
storni of opposition which such a proceeding would occasion. AIl
these advantages have been claimed for tbis " deal" by journals
who are not ordinarily backward iu denouncing any industrial
combination which is designed to shut off competition. It
would seem as if the advantages of combination among
railroads is so very evident that even people who
ordinarily opposethis industrial tendency are obliged to admit that
at least in all natural monopolies combination is, on the whole, pre-
ferable to competition. Very certainly it is the ruling tendency
which legislation can perhaps impede but which it cannot prevent.
The next important example of it may not come for a number of
years, but come it surely will, and the rumors about some great
alliance of Western roads, little founded as it may be in fact at the
present time, is, at all events, directly in line of the developments
of the last thirty years in the transportation industry of this country.
If the Reading deal proves to be as successful in reducing opera-
ting expenses as its projectors claim, and if the securities of the
corporation attain a permanently higher level, the large profits
thus made by insiders will be very tempting to the controllers of
railway companies that also have much to gain by a like consolida-
tion. This gain, it must be remembered, is not confined to a reduc-
tion of operatiug expenses; it means also. in time, a reduction of
fixed charges. Large corporations can, if they are conservatively
managed, always borrow more cheaply than small ones. As the
outstandingobligations of the Reading system mature that can be
refunded at lower rates of interest, and the capital needed for
extensions and improveraents can be obtained with a like degree of
saving. As the oountry grows the capitalization of theae large
companies increases, and as their management obtains the investor's
confidence their first-mortgage bonds ought to be as good as the
bonds of a city like New York.





WHEN the application of the Rapid Transit Commissioners for
the appointment of commissioners to pass on their plan
came up before the Supreme Court on Thursday, the property-
ownei's on Madison avenue made a very formidable showing. What-
ever their arguments against the commission's plan as a whole were
worth, and however groundless their fears may be respecting the
danger to their own property from a tunnel under Madison avenue,
it ÍH obvious tliat Buch a general opposition from the owuers of
property over so long a portion of the route cannot and sliould not
be overridden in a hasty aud slighting way. Indeed,
unless the persuasive attorney of the Commissioners
can  convjnce  these  objecting  owners  that  their mterests are