'tine 7, 1902,





RECORD AND   GUIDE.





1035







DE/oTfl) TO R^M E:st«e . Bui Loif/c ApctfnzcniRE ^OJSEHom DnKHpltiH,
BU31t/ESS AJbTHEilES Of Gei^I^. iKtERpST.

IPRICE PER YEAR IN ADVANCE SIX  DOLLARS

Toblished eVery Saturday

Oommualoattona should be addressed to

C. W. SWEET, 14-16 Veaey Street, New YorK





?. V. UNDSEY, BuBlness Manager





Teleplioijo, Cortlandt 91117





"Entered at the Post Office at N'ew York, JV, Y.. as second-class matter."





Vol.  LXIX.





JUNE  7,  1902.





No. 1786





THERE is no doubt that professional Wall Street -was dis¬
appointed by the action of the security marlcets both here
and abroad this weelt. It was expected, erroneously as we
pointed out last week, that the signing of the peace agreement
in South Africa would be followed by a pervading advance in
security prices. As this did not take place disappointment fol¬
lowed, which was expressed by an open attack on prices in the
latter part of the week. The bulk of the news was fairly good,
but the untoward possibilities of the strike in the coal trade
are too apparent and too serious not to override everything else.
The least and best that can be said of this striite is, that even
if the possible consequences are not accomplished to anything
like a maximum degree, the signs point to a long and bitter
fight, which cannot fail to bave its effect upon the general busi¬
ness of the country. Current crop news, while on the whole some¬
what more cheerful, does not remove the fears aroused by earlier
reports; that is it does not show that the land is recovering now
what it lost in previous months. Some weakness in stock prices
is, therefore, not surprising, though the agencies that have sup¬
ported the market hitherto in spite of abnormally high quota¬
tions, are still present and ready to act as soon as short con¬
tracts appear in volume. These agencies are the confidence and
tenacity of holders of securities, continued prosperous business
and cheap mouey. They will not, however, prevent, in the long
run, the return of prices to a nearer parity to real values than
they have approached for a long time. Nor does their continued
presence remove our opinion that we saw the culmination of
the stock market boom last year, and that this year we have
seen the reaction from the depression that followed it. We have
now to add that the market has resumed the process of natural
decline which the circumstances call for. Heavy selling unac¬
companied by liquidation would produce a quick rally, but all
the same, those who are awaiting the return of the boom move¬
ment are simply lingering around the ashes, though perhaps
still glowing, of a. fire that is spent.





ONE of the things upon whicb the expectations of a rise in
this marketwas based was theassertionthatas soon aspeace
was arranged, London would buy Americans. The futility of
this hope is shown by current comments upon our securities by
the local flnancial press, a characteristic example of which is the
following: "The stringency (in money) appears to be largely due
to American operations on this side, securities being o.°fered for
loans here in order to carry over liabilities imtil the opening of
the export season shall adjust the balances between here aud
New York, It is scarcely necessary to add that bankers here
can hardly be too cautious as to the extent tbey are willing to
make advances on American securities, their value being a very
uncertain quantity from day to day, and almost from hour to
hour." In due time the new conditions in South Africa will
work benefit on all sides, but they have not had time to play
yet, and, meantine, there must come the curtailment of govern¬
mental disbursements for war purposes and the release and re¬
placement of the capital employed to meet the government's
wants. The flrst beneflts will be felt by the best issues such as
government bonds. The advance in Consols has been checked
by realizings, but the resumption of purchases for the Sinking
Fund will practically insure current quotations, so that when
outstanding speculative contracts have been adjusted the upward
movement will be resumed. Another government bond to which
attention may be drawn is the German Imperial 3s. It is con¬
fldently reported tbat a new issue will be made in a short time,
and this will afford an opportunity to buy the bonds cheaply,
as the depression of British Consols just prior to the last issue
did to buy them. Last year a lot of Imperial 3s were issued at
871/0; this year an issue was made at S9.S0, and the bonds have
since advanced to 93, and would have Dten higher but for th*"





superior attraction of Russian 4s to the German investor. No
part of either of these issues was placed officially in this market,
but some were sold by bankers having foreign connections, and
the results have been satisfactory. Not only aoes this bond sell
lower and pay more—3 per cent, as compared with 2'^ per cent—
than the Consols, but interest is subject to no deduction for
income tax as income on the latter is. As to safety, for prac¬
tical purposes, one is as good as the other.





Recent  Tendencies of Railroad Control.

T X 7HEN, as they have been doing lately, any of the great





VY





railroad men have appealed for the release of the rail¬





roads from control by Federal or State Commissions, tbey have
apparently not been aware of bow pureiy personal their appeal
v.-as in a sense. The whole tendency of the railroad develop¬
ment in the past three years has been to throw the control of the
railroads of the country into so few hands that none of them can
make such an appeal as that previously referred to without the
personal motive being, in appearance at least, revealed to the
hearers. Within tbe consolidation movement there has been
another and corresponding action which reduced the number in
control as the number of the independent companies was re¬
duced. The attitude of the ordinary shareholder in this coun¬
try toward railroad government has been similar to that of the
ordinary citizen towards civil government, i, e., to consistently
leave it to the professional; his proxy has gone to elect a ticket
composed for him in the office of the railroad manager, as the
citizen's vote has been given to elect a ticket in whose compo¬
sition he has had no share. The result has been the same in
both cases; it has produced the institution best known by the
undignified term "boss." Railroading has perhaps been more
amenable to this influence than any other of our affairs, for not¬
withstanding the vastness of its extent and the enormous
amount of capital involved, it is at present dominated, if not
entirely controlSed, by just five men oply.

It is during the present boom—whicb,bowever,if the coal strike
is prolonged and extended, will have soon to be referred to in the
past tense—that this concentration of railroad control into few
bands has made the greatest strides, and this has been effected
not by purchase of stock for individual account, but by the em¬
ployment of the credit of companies ah-eady controlled to acquire
by their issues of bonds other companies, thus enlarging the
mileage included within one system without in any degree en¬
larging the control. In this way, to quote the most prominent
instances, tbe Union Pacific obtained its control of the Southern
Pacifle and Northern Pacifle, and the Great Northern their con¬
trol of the Burlington. The process employed is, however,
best illustrated by the case of the New York Central. Up to with¬
in a recent period, the New York Central, the Lake Shore and
the Michigan Central were independent systems; though, as is
■(lell known, Vanderbilt interests dictated their policy and man¬
agement. Each had stock out in the hands of the public by
which control could be changed if that were expedient. The
mileage of all was in the neighborhood of 6,000 miles, and the
capital secured and unsecured amounted to about $440,000,000,
the stock alone being about ?183,000,000, or 40 per cent, of the
total. The stock of the New York Central then amounted to
$115,000,000—we are speaking of a time prior to the latest issue—
which was, say 26 per cent, of tbe total capitalization. By con¬
solidating the "Lake Shore and the Michigan Central with New
York Central through the agency of bonds, the entire control,
whicb had previously lodged with the 40 per cent, of capitaliza¬
tion, became concentrated in the 26 per cent. Nor does this
represent the whole of the case, because actual control is -with
any majority of this 26 per cent, which would reduce it by any¬
thing less than half. It would be even possible to show, that
in an extreme of the case, a comparatively few millions of
dollars could, if the credit of the individual employing them was
sufficient to bring the facilities to borrowers offered by our
banking system into play, control the whole of this system of
6,000 miles of railroad which bad cost $440,000,000 to create.
Moreover, the proportion of capital controlling could be reduced
by continuing the process of acquiring new properties by the
issue of bonds, and the percentage of the total capital, on which
the whole fortunes of tbe system depended, reduced to very
small flgures indeed.

In this latest tendency of raih-oad control—this moving
towards a railroad dictatorship, for tbere Is no more reason why
the five should not eventually become one as the 50 of not so long
ago became five, raises two questions, one more Immediately ad¬
dressed to the investor, and the other to the public and the
government. In the process of consolidation there has been a
return under tbe spur of expediency to the flxed income security





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