August 14, 1909





RECORD   AND   GUIDE





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Vol. LXXXIV.





AUGUST 14, 1909.





No. 2161





ACCORDING to every indication, business has now com¬
pletely recovered from the panic of 1907 and the de¬
pression whicii succeeded it. In the short space of less than
two years the country has passed through one of tbe worst
financial crises in its history, and an equally acute shrinly^-
age in the volume of trade, and has recovered therefrom,
whereas both in 1873 and in 1903 the period of recovery
required some four or flve years of economy and business
re-organizatiou. The whole episode has constituted an ex¬
traordinary instance of flnancial and industrial vitality; and
yet there can be no doubt that we have not exaggerated the
facts, and that the recovery is real and sufficiently stable-
The prices of leading railway and industrial stocks have
reached a level much higher than the highest one, which was
reached in 1906; and they are being advanced still higher
without any apparent strain of credit. Railroad earnings
are in many cases going beyond those of 1907. The steel
manufacturing industry cannot keep up with its orders.
Labor is being better employed all over the country; and
tbe usual cry'is being heard of tbe dearth of men to harvest
tiie crops. The railroads are giving out large orders for new
equipment in aiiticipation of an unprecedented volume of
business. Tbe crops are all that the most enthusiastic farmer
could desire, and they will be sold at high prices. The tariff
bas been revised without bringing in its train any radical
transformation of the situation confronting the average
American manufacturer. There seems to be no Immediate
fear of an acute revival of anti-corporation legislation; and
tbe bills looking towards railway regulation, which the
administration will urge upon Congress at its next session,
will apparently ameliorate rather than injure the legal stand¬
ing of large railroad and industrial combinations. Just at
present there does not seem to be a serious cloud in the
sky; and the average American business man is indulging in
glorious anticipations of expansion and prosperity.





THE QUESTION which should be seriously considered by
everyone who is capable of influencing the future of
American flnance and industry is the course which should be
steered in order to prevent this industrial and commercial
expansion from (raveling too far and too fast. No business
man in his senses wishes to repeat very quickly tbe experi¬
ences of 1906 and 1907; and it is into a condition of this
kind which American buoyancy and optimism is always
pushing tbe industries and the finances of tbe country. One
difiieulty both in 1903 and 1907 was that the country was
trying to do too many things at tbe same time. It was
trying to contluct an enormous and expanding business, im¬
prove its manufacturing plant and its transportation facili¬
ties, put up the prices of stocks and bonds, digest enormous
issues of new securities, augment the speculative value of
rea! estate, and increase iu every part of tbe land the rate of
wages and standard of living. It is desirable uow as it was
in 1906 or in 1902 that all these objects should be accom¬
plished; but tbe amount of capital and laBor existing at any
ane time even in the United States is limited, and it is not
euough to carry on every kind of development all at once.
A selection bas to be made or .else tbe prosperity of the
country turns sour in the mouths of its supposed benefi¬
ciaries, antl tbe wholesomeness and comparative permanence
of any period of business prosperity depends upon the fact
of such selection and the intelligence which guides it. Un¬
less the current business expansion is to be soon checked or
distorted, such a selection must soon be made; and there caa





be little doubt as to the class of business development which
should be temporarily sacriflced for the good of tbe whole
movement. The period of speculative increase in stock
values must cease for a while, and the credit of the country
must'be used for other purposes. During the past eighteen
months there bas been a more or less continuous bull mar¬
ket, w^bich has almost doubled the value of the great major¬
ity of stocks. This market bas been justified, and has not
only anticipated the business revival of the country, but bas
effectively contributed to that revival. It was absolutely
essential that the credit of tbe large corporations should be
restored before they could resume a policy of expansion.
But the purpose of the upward movement in stocks bas now
been accomplished, and in case the movement is continued
much farther it will become a hindrance rather than a
help to additional business expansion. Stocks cannot be
continued to be put up without an increasing use of credit;
and tbe credit of the country will be needed for otber pur¬
poses. It will be needed above all by tbe railroads for tbe
purpose of making their facilities equal to the demands
which business expansion will put upon them. During the
past year they have been raising funds chiefly in order to
liquidate expensive loans contracted a few years back; but
hereafter tliey must resume their work of improvement,
and will require several billions for the purpose. The credit
of the country will, of course, also be needed by manufactur¬
ers and merchants for their own legitimate purposes. It is es¬
sential, consequently, that a period of rest should supervene
in Wall Street, and that tbe attention of financiers should
be directed not towards increasing the prices of old securi¬
ties, but towards tbe issue and digestion of tbe new stocks
and bonds which must soon he issued.





PUBLIC SERVICE COMMISSIONER MALTBIE confirmed
during the past week tbe recent intimation that tbe
official plans of the Commission would include a lower West
Side route. About a month ago it was announced that tbe
contractors Interested in the Broadway-Lexington avenue
route were prepared to bid on a West Side extension; and
it is now definitely stated that tbe plans for such an exten¬
sion win be submitted to tbe Board of Estimate early in
tbe Fall, The fact that the Broadway-Lexington route is
to include such an addition very much diminishes tbe force
of the objections previously made thereto; and tbe Manhat¬
tan resident and business man will have the comfortable
assurance that in any event tbe contracts given out next
year for tbe constructiou of new Subways will uot neglect
such an important centre of business and traffic as the Penn¬
sylvania Terminal district. The acceptability of the proposed
addition to tbe Broadway-Lexington Subway depends, bow-
ever, to a considerable extent upon tbe route which it
follows. The line originally suggested extended merely from
Seventh avenue and Thirty-fourth street down Seventh ave¬
nue and Varick street to Cana! street. At Canal street it
connected with the Broadway and Brooklyn lines, and at
Thirty-fourth street it connected with Lexington avenue.
Such a Subway would have its value; but its value would
be much reduced by the lack of an upper West Side connec¬
tion. A much better route would be obtained in case the
proposed Subway were extended along Seventh avenue to
Pifty-ninth street and there connected with tbe Lexington
avenne Subway. Tbe additional mile of tunnel to be con¬
structed would pay handsomely for its cost, and it would
encrmous]y increase the value of the extension. It would
give tbe Pennsylvania Terminal a much needed connection
with Times Square and the theatre district. It would
give the patrons of the Lexington avenue Subway a much
needed connection not merely with the shopping district, but
with the theatres and restaurants north of Thirty-fourth
street. Finally an extension north to Fifty-ninth street
could be ultimately continued westward across Fifty-ninth
street and under Central Park West, and would serve that
part of the West Side now most in need of express tracks.
It is very much to be hoped, consequently, that the pro¬
posed extension will not terminate at Thirty-fourth street,
but will be continued up to Central Park,





THE INTERBOROUGH COMPANY certainly seems to be
beaten in tbe competition for new subway routes.
The only explanation of tbe attitude of the'Public Service
Commission is that the Commission is trying to construct
an independent system, which will compete with tbe existing
Subway, and which will be leased to some powerful cor¬
poration, such as the New Haven Railroad Company. The
attitude  of tbe Commission .is inimical  to the  Interborough