companies in Denmark and in Egypt, in South America and in Spain; and the only one not paying a dividend is the one wireless company represented! Striking is the spread of the telephone from nothing thirty-three years ago, and from only a minor position as recently as eleven years ago, until to-day the wires for telephones are about nine times those for telegraphs in America. Within two years a single company, the American Telephone & Telegraph, has raised more than $90,000,000 on good terms, and through J. P. Morgan & Co., a firm not given to financing the obsolete. There is a Bell telephone to-day for every twenty people in the United States. The earnings of the company last year were $140,000,000, exceeded by few industrials, or railroads even. Such an aggrandizement points to public regulation, and therefore frightens some stockholders. They can observe, however, that the present management of the Tel. & Tel. has expressed itself as favoring supervision, if intelligent. It is freer with publicity than most corporations. It has made and announced a valuation of the company's physical property; the items added up to $547,000,000. With cash, securities, and supplies owned, etc., the total exceeds the company's $592,000,000 capitalization by some $85,000,000. Such "physical " physical" items as State authorities have checked up have proved to be conservatively appraised. And no capital whatever is made of good-will, patents, or the rights of way for which the company actually paid some $8,000,000. THE CONTROL OF BILLIONS "IT will center the control of our money in the East." This comment upon the "central bank" plan, as brought before the public by Senator Aldrich's speech-making trip, was to be found last month in many Middle Western and other news papers. Only a few days later came a striking illustration of the way money is being concentrated under the banking system we have at present. A $90,000,000 trust company, the Guaranty of New York, was purchased by a syndicate associated with members of the banking firm of J. P. Morgan & Co. A few days after that the news appeared that Mr. Morgan personally had bought the majority stock of the Equitable, a life insurance company, whose assets of $472,000, ooo include the control of two more trust companies, the Mercantile and the Equitable, resources $68,000,000 and $63,000,000, respectively. The newspapermen fell busily to work figuring up how many financial institutions were now being managed in some degree of harmony with the very powerful Morgan banking firm. Following are the names widely mentioned in this connection. Some of them, at the head of the list, are under direct "Morgan" control. Others, nearer the end, are discussed by the financial community and its press as more or less "associated with" or "influenced by members of that firm: Equitable Life Assurance Society. chase National Bank. Mechanics' National Bank. Astor Trust Company. National City Bank. Total Just to realize what the figures amount to, suppose it were decided to cash in " these resources, now largely in stocks, bonds, mortgages, and notes. All the cash in all the National, State, and private banks of America and all the trust companies, as reported on the close of business April 28, 1909, would equal only two-thirds the necessary amount. In fact those assets and resources exceed by about $670,000,000 the coin and bullion which in November, 1909, could have been furnished by the combined central banks of England, France, Germany, Austria, and Belgium. It happens that Mr. J. Pierpont Morgan has been for many years one of the greatest constructionists in the material development of America. Indeed, he is the man to whom in the disaster of two years and two months ago the financial community looked for leadership, and got it. Therefore the feeling expressed last month was one, not of alarm, but of added confidence, in that the banking power of this firm and its friends had been further extended. But if one group of men can obtain such power why not some day another, and possibly less trustworthy, set? Certain great railroad and manufacturing corporations are also accustomed to obtain their funds through the Morgan banking firm, which has a prestige enabling it to recommend successfully large issues of stock and bonds to the financial community. The companies more or less mentioned in this connection are: Southern Railway.. Cincinnati. Hamilton & Dayton. International Mercantile Marine. U. S. Steel Corporation. Erie Railroad.. Pullman Company. General Electric Company. American Telephone Union Telegraph.. and Western United Dry Goods Company. Public Service Corporation. Group of railroads, including New Total $466,609,877 104,766,015 more than ten years ago, eggs twice as much, butter and potatoes half as much again,— these represent price inflation and the necessity of readjustment right down the line, just as truly as the most sensational movements on the New York Stock Exchange. 66 Last month Secretary James Wilson's annual report on agriculture appeared and re96,348,000 vealed that without exception every crop 82,369,000 was worth more to the farmer than the five120,000,000 year average." The volume did not always 1,497,001,500 increase in proportion. In fact, in the case 414.256.417 of cotton, hay, barley, flaxseed, and rye there 80,101,600 were decreases. 180,265,361 100,000,000 515,073.200 66,500,000 57,374,000 A one-dollar "farm price" for wheat per 20,000,000 bushel, as in November, has not been equaled 169,192,000 since 1881. Tobacco has been as high per 125,000,000 pound only two or three times since 1865. Every business profits when crops are large. When the farmer raises his prices, however, 3.559,104,636 the consumer has to pay or else do some rais$7,653,961,606 ing himself. Secretary Wilson's report puts It is not a theory; it is a present condi- a sharp weapon in the hands of the railroad tion, the tendency toward centralization of men and the manufacturers, even some of the banking power, as of many other kinds of tariff-protected ones. power. The only question is: Should there not be a centralized institution more power ful than any other, on the board of which representation shall be given to the people of the United States? The year or more before legislation to this effect can be proposed may well be spent by good citizens in selfeducation. The Monetary Commission at Washington has prepared some useful monographs for distribution. Your publisher can furnish a list of books by financial authorities that explain why European countries are with central banks and without panics. ENVIOUS OF THE FARMER strike were to succeed. Mont., the Boston & Montana Mining Com- pany ordered closed its mines and smelter A "WALL STREET" newspaper was the mines and smelters. much disturbed last month over the the miner only while he has work. "affluence of of the agricultural classes." Georgia farmers, for instance, got $50,000,ooo more this year than last for a crop of about the same size. There is joy in Georgia, but not in Fall River and the other centers of cotton factories, many of which have lately been striving to curtail spinning operations to keep the price of the finished product up along with the price of raw cotton. In Minneapolis the flour mills closed. Thirty-five hundred employees were idle. It was estimated that another fortnight would have introduced a coal, grain, and food famine throughout the entire Northwest. Such reflections, however inspired, are economically correct. Horses and mules in Kansas at $10 and $11 a head more than last year, steers in Chicago at $9.50, the highest price since Civil War times, milk a quarter The railroad company is under a disadvantage. The law compels it to perform the service for which it is chartered. The employee, on the other hand, is at perfect liberty to refuse to work. About the middle of last month it was expected that trainmen and firemen, too, and even the more conservative engineers might put in demands early in 1910. Able railroad men like President Brown, sions in heading off such stock and bond isof the New York Central, did not seem in- sues as are improper in purpose, bringing inclined to consider the employees' demands sufficient cash to the company or representunreasonable. They did, however, emphat- ing simply a scheme for "company officers to ically declare that there was no money to enrich themselves at the expense of innocent meet those demands unless railroad rates and confiding investors." could be raised. A careful study of the latest available figures from the Interstate Commerce Commission reveals that the wages of to-day, together with the other railroad expenses of operation, cost the roads 67.5 cents out of every dollar they take in, and of this 67.5 cents, 61.3 per cent. is paid out in wages. Simple arithmetic will demonstrate that in the case of many railroads a 10 per cent. wage raise would cut into the earnings now available for interest on bonds. In other words, the roads would find themselves brought down to bare rock from the surpluses they have won since the depression of 1908. Most people on salaries need more money to meet the higher prices of commodities. If the railroad men can demonstrate a reasonable need, the financial safety of the railroads will depend on the adoption of some plan like that which Chairman Knapp, of the Interstate Commerce Commission, is quoted as favoring, that the railroads should make more money and that the Government should control them more stringently. PUBLIC CONTROL, NOT MANAGEMENT IN N effect, the New York Court of Appeals The commission had argued that the Hudson Valley Railway, to pay for which the Delaware & Hudson had proposed to issue certain bonds, was an unfortunate purchase for the latter's system, the price paid too high, and so on. Here was an attempt of the commissioners, declared the court, to "substitute their judgment for that of the board of directors and stockholders of the corporation as to the wisdom of the transaction." And such action the court held to be outside the purposes of the law. This removes one scare for investors and workers in railroad and other big interstate corporations. Regulation within these limits may halt ambition, but it does not confiscate. The court took occasion, however, to point out the usefulness of the New York commis For instance, only a week previous the New York commission had created a big commotion by the restrictions which it im- . posed on the New York Central Railroad in granting an application for the issue of $44,658,000 new stock. Not only must the company swear to use the money for certain refunding and improvements alone, not only must it promise not to charge certain discounts and bankers' commissions to capital account, but it must report monthly to the commission every detail of the transaction up to completion. For the wisdom of such restriction, take the matter of discount. When the Atchison Railroad got in trouble in 1893 the investigating accountants found that 42 per cent. of the theoretical "cost of road represented nothing but discount on bonds, the amount which the road would have received if the bonds had been sold at par,-in other words, nothing at all. So the submission of the New York Central to the recent restrictions will raise its credit by so much. In the long run, what is good for the investor is good for the corporation. THE IMMIGRANT, THE AUTOMOBILE, AND N calculating just how prosperous this nation was during 1909, two of the most picturesque signs also prove to be two of the most significant. These are the movements of immigrants and the imports of automobiles. The more work in America the more immigrants, and vice versa. For the first eleven months of last year there were 879,401 new citizens coming in at New York and only 257,223 going out,-nearly the reverse the same months the year before, when only 373,292 arrived, while 631,795 were departing. Foreign automobiles entered New York during the first eleven months of last year to the number of 1881. During the same periods of 1908 and 1907, respectively, there were only 1548 and 1338. The new high records " handed in as the year closed by the farmer and the stock broker, the corporation, and the Government hint at good prospects for 1910. Running the Government, paying off pub- in the annual balance sheet to sellers, lic debts, and building the Panama Canal whether of railroad traffic, manufactured have been losing Uncle Sam less money. The products, magazines, or what not. ThereTreasury made a better showing for Novem- fore the biggest single factor of the stock ber with a deficit of little more than $7,000,- market of next year is unknown still. 000. Counting November and the four pre- Beware the prophet. ceding months of Uncle Sam's fiscal year, the deficit is only $44,000,000, as compared with $93,000,000 for the same period a year before. The 3000 manufacturers who are members of the National Association reported uniformly, last month, increases of business during the year past. As shown by the table following, based on percentage of replies, everybody looks forward to good future prospects," except the food products manufacturers. Under this heading come the big breweries and distilleries, whose business has been so crippled by the prohibition wave: 66 Good present Good 100 85 76 Drugs and chemicals. 94 Food products.. 87 78 100 With bonds there is a difference. True, this difference is less pronounced with bonds that have less earning power behind them in relation to the interest they call for. Glance down the bond list of the New York Stock Exchange, find the issues which are actually dealt in, but return as much as 6 per cent. even in the present year's market, and you will have bonds that will fluctuate in the main along with stocks. But the high-grade issues, the kind that now pay less than 4 per cent., can be considered for investment more scientifically than stocks. Their safety being beyond question, they rise and fall pretty much with the rates for money. This money rate, as it affects bonds, seems 100 steadily increasing. Calculations were made 97 in last month's circular from one of the most 97 frequently quoted dealers in government and 100 other high-grade bonds, covering typical gilt 100 edge 32 per cent. railroad bonds at their 98 three high points of the last twelve years, made in 1900, in 1905, and in January, purchaser but 3.20 per cent.; at the second 1909. At the first point they returned the 3.60, and at the third 3.85. 97 97 92 The imports of precious stones promise to break all records. The first ten months of 1909 had brought in $34,000,000 worth. In the entire fiscal year of 1906 there had been less than $42,000,000, and in 1907 less than $30,000,000. Already stockholders are beginning to reap the reward of so much prosperity. The dividends of the big industrial corporations for 1909 were $22,000,000 more than the year before. Total, $137,899,000. The railroad increase was not so great, less than $14,000,ooo, but the total amount reached $257, 242,000. STOCK PRICES AND BOND PRICES WITH record-breaking crops at record breaking prices, the recent unprecedented rise in corporation shares is seen to have had a solid foundation. The sharp-eyed crop experts employed by the big brokerage firms and others interested in the stock market had been sending encouragement to their principals ever since the spring. The producers of the crops are paid the enormous sum they represent within a single year. This item means more than any other These bonds have grown in safety each year, as the conditions have grown more stable. Yet they continue to fall in price. One influence, little appreciated among investors in general, is the rapid increase in the world's production of gold. It is now about $450,000,000 a year, some four and a half times what it averaged between 1860 and 1890. The more gold, the higher the prices for any given quantity of goods or service. The effect on high-grade bonds is, of course, a lowering of their price, since they call for only a fixed sum. The effect on some stocks is exactly the opposite. Most "industrials,' industrials," especially such as manufacture proprietary articles on which the price can be raised at pleasure to meet the higher expenses for supplies and labor, will benefit. But most of the railroads, street railways, and other companies restrained by law or public feeling from raising their rates keep pace with the higher prices, will suffer if the gold flow continues to wax greater. REPRESENTATIVE FICTION OF THE SEASON 66 For the first time, we believe, the life, ideas, and aspirations of a modern English girl, who is also a typical product of our own day all over the world, has been told with perfectly calm, unreserved frankness in " Ann Veronica." 1 Mr. H. G. Wells tells the story of the vague, restless wanderings, of a revolting daughter who, "desiring to realize herself," runs away from home and tries to make her way in London. She joins the advanced set, studies biology in its frankest aspects, is arrested and imprisoned for participation in the suffragette demonstrations, and has various unpleasant experiences because of her belief in the possibility of a friendship between men and an unmarried young girl. She finally marries a man whose own past had been very checkered, and it all turns out exalted and beautiful in the end. Mr. Wells knows the workings of the modern mind in both man and woman, and his style is masterly. Despite, however, her courage and modernity, it is not possible to greatly admire Ann Veronica because Mr. Wells has made her (to quote the words of an English reviewer) "such a willful exaltation of the importance of the temporary satisfaction of the passion of the individual over the welfare of the whole community." A three-volume novel, which contains a great deal of history and at times very stirringly set forth, is the love story of Alexander the Great, by Marshall M. Kirkman. Under the volume headings Alexander the Prince, Alexander the King," and "Alexander and Roxana," Mr. Kirkman weaves a fairly good plot, and reproduces with considerable success, it seems to us, the spirit of the Greece of Alexander's time. 2 Much material for good fiction undoubtedly exists in "Canada in the Making." That popular if somewhat hasty story writer, Ralph Connor, has taken for the subject of his recent novel "The Foreigner,' the career of a Russian exile, and his in the end successful attempt to carve out his fortune and win the hand of his Canadian sweetheart. 993 In David Graham Phillips' latest novel, "The Hungry Heart," we have the problem of an American wife of the most modern type who wants to share her husband's life work and is not permitted to do it. While he experiments in his chemical laboratory she drifts into an "affair" with a man who seems to understand her and supply her "hungry heart" with the companionship, intellectual appreciation, and affectionate demonstration for which she yearns. The tragic outcome of it all, inevitable from the first, the divorce, and the future of the child, are all treated powerfully and with a keen per1 Ann Veronica. By H. G. Wells. Harpers. 377 pp., ill. $1.50. 2 The Alexandrian Novels. 3 vols. By Marshall M. Kirkman. Chicago: Cropley Phillips Company. 1200 pp.. ill. $4.50. 3 The Foreigner. By Ralph Connor. New York: George H. Doran Company. 384 pp. $1.50. 4 The Hungry Heart. By David Graham Phillips. Appletons. 502 pp. $1.50. "The Hungry Heart," certainly makes "good reading." In all of Mr. Robert Hichens' novels (note especially "The Garden of Allah" and "The Call of the Blood") we find alluring, seductive descriptions of the Orient, with its romance and wonderful pictures of the desert wastes. Another desert Oriental region, this time northern Africa,-if Africa may be included in the Orient, is the scene of his latest novel, "Bella Donna." This is the story of the love conflict between an earthly woman and a man of high ideals. Opening in London, the story moves to Egypt and the scene is laid in the valley of the Nile. Through the mazes of the plot move Occidental and Oriental characters, and there are many bits of fine description of Egyptian scenes and customs. Mr. William de Morgan is coming to be remembered for the humor, humanity, and optimism of his novels, for their length and for their odd titles. Having given us Alice-for-Short and Somehow Good," he now presents "It By Robert Hichens. Lippincott. 66 5 Bella Donna. 537 pp. $1.50. 66 |