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Their value as collateral is uncertain, they are looked
upon with suspicion by the conservative, they are taken
at the banks with caution and held only on sufferance;
and whenever the money market suggests to bank managers
the necessity of a contraction of credits, they are the
first to be thrown out of loans. In this we have all the
elements which go to make up a highly speculative class
of stocks, liable to extreme fluctuations in price,
violent movements up and down, in short all that the
industrials have been in the market.
If we go a step further, and ask why is their value
uncertain, a variety of causes may be cited: but chief
among them is that the general public have not that
information about the working of the properties the
securities represent which they have about the working
of railroads. Some of the companies make very full
reports; but most do not. If all did, it would still be
true that the speculative and investing public would be
comparatively in the dark, because of the variety of
trades. Wall Street has had thirty years education in
the one business of railroad transportation, and is
familiar with all the problems which make for or against
it. It knows more about railroads than anything else;
and yet with its thirty years' education acquired at the
cost of many disastrous experiences, it makes mistakes
and will continue to make them.
How, then, is it likely to know much about sugar
refining, about rope making, about lead, rubber, starch,
tobacco, &c., which have only just come before it. When
a railroad company makes a report, a thousand eager
minds dissect it. But put before the same people the
report of one of the industrial companies, and unless
the inquirer has technical knowledge of the trade his
opinion on the report would be of little value. Until,
therefore, the speculative and investing public becomes
more familiar with the working of the various properties
which the chief industrial stocks represent, the values
will remain uncertain.
The knowledge will certainly be acquired. The
industrial stocks are not on Wall Street from caprice,
or from ephemeral causes. They are there from necessity,
as the effects of industrial development. The causes
which have brought them there will keep them there; and
the knowledge which is now the property of the few will
be diffused and become the property of the many. It was
just the same with the railroad stocks.
The centre of the late storm was the Cordage Company;
the prominent figure in the general speculation was Mr.
S.V. White. The failure of the Cordage Company started
the demoralization, the failure of Mr. White was the
climax of the panic. Mr. White's methods of speculation
are tolerably well known. He is at his best in
adversity, and his worst in prosperity. The courage of a
man who could try to corner the corn crop of the United
States with $400,000, is beyond question. The incidental
fact that he failed, does not detract from the boldness
of the conception.
In his recent speculations he seems to have undertaken
to run Manhattan, Sugar, and several other properties.
It is understood that Mr. Sage has acquired his
Manhattan, and the Havemeyers his Sugar. The failure of
the house of Henry Allen & Co., was due to the collapse
in Cordage, the main speculative accounts in the stock
being with that firm. It is understood that the losses
of the firm will be made up by the customers through
whom they were incurred. The heaviest sufferers by the
failure of the Cordage Company are its own officers.
They were firm believers in the property, and heavy
holders of its stock when the crash came. This places
them in a better position before the public than if they
had run and left others to suffer.
Their mistake as managers was in trying to do too big a
business on insufficient working capital. They borrowed
until borrowing became impossible, through the general
contraction of credits forced on the banks, and then
came the crash. The past is gone, and it is no use
weeping over it. The future is the consideration. These
gentlemen are rich; they have large resources. The
stockholders and the public will look to them as honest
men, desiring to retain their high standing in the
community, to do all that lies in their power, at
whatever cost of personal sacrifice, to put their
company on its feet again, in a sounder position, and to
conduct its affairs on surer lines guided by the bitter
experience of the past. They can do this. The future of
the company is with them.
As to the general market, the usual experience is that
after such a convulsion it settles down slowly into a
condition of rest and recuperation. There is no reason
to expect it will do otherwise now. The strong can stand
and the weak have been sided over. Liquidation has been
very thorough, and what is yet to come will doubtless
come slowly. There are not a few stocks on the list
which are very low, and these may be expected to work
upward even if the general list continues flat.
It is gratifying to state that the brokers, those of
the commission houses specially, express themselves in
the most favorable terms of the way the banks have acted
in the time of emergency. They treated their customers
with a prudent liberality worthy of all praise. To this
may be added also, the foreign banking houses. they may
export gold, but they know how to take care of customers
in a time of distress.
[END OF ARTICLE]
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