246 



FINANCIAL REVIEW OP 1902. 



cline in exchange, and the tone was weak during 

 the first half of the month at a decline of 1^ cent 

 per pound sterling for sight to $4.8C|. There 

 was a partial recovery by the close, due to easi- 

 er money; long bills sold during the month at 

 $4.85J and at $4.84. In June the tone was strong 

 and rates steadily advanced, though they were 

 not sufficiently high to justify exports of gold, 

 and sight exchange did not rise above $4.87|; 

 sixty-day bills were $4.85J. The market contin- 

 ued strong in July, and gold began to be shipped 

 through ' arbitration operations on the '22d, 

 $7,459,506, the largest single shipment on record, 

 going forward by the end of the month. While 

 the movement was in progress sight exchange 

 ranged from $4.87| to $4.88, while long bills 

 moved between $4.85|,and $4.85|. The tone was 

 firm early in August, and $519,445 gold was 

 shipped to Germany on the 7th. Then, however, 

 dearer rates for money and a pressure of com- 

 mercial drafts caused a decline in exchange, and 

 by the close of the month sight bills were $4.86, 

 or about 1 cent per pound below those at the 

 opening; sixty-day drafts fell from $4.85 to 

 $4.832. In September the market was weak, in- 

 fluenced by dear money, and with a view to the 

 relief of the stringent monetary conditions, gold 

 to the amount of $4,250,000 was engaged in Eu- 

 rope for import hither, and included in this sum 

 was $2,500,000, which was procured in South 

 Africa. At the same time about $4,000,000 was 

 imported from Australia. The movement of gold 

 hither from Europe was checked after the early 

 engagements by an advance in the foreign dis- 

 count rates, and also by a rise in the price of 

 gold in the London market. Sight bills declined 

 from $4.86f to 4.85|, and sixty-days drafts fell 

 from $4.84 to $4.82J; the weak tone for these 

 bills was caused by dear money, which induced 

 their sale, and there were also large offerings of 

 loan drafts against stock collateral. The market 

 was firm throughout October, influenced by a 

 demand for remittance and also by a scarcity 

 of bankers' bills, and though commercial drafts 

 were freely offered, they were promptly absorbed. 

 Toward the end of the month sight bills sold at 

 $4.86, and' in the second week in November they 

 advanced to $4.87J. Then a concurrent fall in 

 exchange at Paris on London to 25 francs 11 J 

 centimes made possible an export of gold as an 

 arbitration operation; none was sent at that 

 time, however, because of the prevailing firm tone 

 for money, which caused a decline in sight bills 

 to $4.86|. In the last week there was a recovery 

 to $4.87J, in response to a demand to remit for 

 December settlements, and the tone was strong 

 to the close. 



Railroads. Combinations of prominent rail- 

 road lines, as was the case in the previous year, 

 made considerable progress, though some impor- 

 tant consolidations were held in check by the 

 litigious proceedings instituted to prevent the 

 consummation of the Northern Securities scheme. 

 In December, 1901, the Lake Shore acquired con- 

 trol of the Indiana, Illinois and Iowa road and the 

 Norfolk and Western obtained control of the Po- 

 cahontas Coal and Coke Company, issuing there- 

 on $30,000,000 of 4-per-cent. bonds. The gross 

 and net earnings of the 157 roads reporting for 

 the calendar year 1901 made the most remark- 

 able showing of increases of $138,973,621 in gross 

 and of $64,800,530 in net income compared with 

 the previous year, following successive increases 

 in each twelve months as far back as 1897. Early 

 in March the Pennsylvania Railroad Company an- 

 nounced an issue of $50,000,000 of bonds, $24,- 

 000,000 of which were to provide new equipment 



and $20,000,000 to cover expenditures for the tun- 

 nel extension of the system into New York city. 

 The bonds had the right of conversion into stock 

 of the road at 140 on and after May 1, 1904. 

 Late in March it was announced that interests 

 identified with the Minneapolis and St. Louis 

 Railroad Company had acquired control of the 

 Colorado and Southern. A short time previously 

 these interests obtained possession of the Iowa 

 Central, which enabled them to control the Fort 

 Worth and Denver City. In April the Plant 

 system of roads was acquired by the Atlantic 

 Coast Line system and the Choctaw, Oklahoma 

 and Gulf Railroad was bought by a syndicate of 

 bankers in the interest of the Chicago, Rock 

 Island and Pacific. In May the last-named com- 

 pany acquired the St. Louis, Kansas City and 

 Colorado, enabling an extension to be made to 

 an important section in the Southwest. In June 

 the directors of the Illinois Central recommended 

 an increase of $15,840,000 in its stock to be 

 offered to its shareholders at par. About the 

 middle of July there was a sharp rise in the 

 market price of the stock of the Chicago, Rock 

 Island and Pacific company to 200, against 

 about 152 in January. This was explained by the 

 announcement on July 25 that the property 

 would be reorganized and its securities rear- 

 ranged. The plan provided for the absorption of 

 the companies embraced in the Rock Island sys- 

 tem by a holding company, the stockholders of 

 the Rock Island receiving for each 100 shares 

 of their stock $10,000 in new bonds, 75 shares 

 of new preferred and 100 shares of new common 

 stock; the majority of the stockholders of the 

 Rock Island promptly gave their assent to the 

 plan. At the end of July it was announced that 

 arrangements had been perfected for the taking 

 over by the St. Louis and San Francisco of the 

 Chicago and Eastern Illinois, thus giving the 

 former a terminal at Chicago. With the com- 

 pletion of the extension of the St. Louis, Mem- 

 phis and Southeastern to Memphis, in the inter- 

 est of the St. Louis and San Francisco, this 

 would make an entirely new route between Chi- 

 cago and Memphis, greatly to the advantage of 

 the San Francisco line. With the previous acqui- 

 sition of the Kansas City, Fort Scott and Mem- 

 phis and of the Kansas City, Memphis and 

 Birmingham, the St. Louis and San Francisco 

 would have a line into the center of the South 

 at Birmingham and, with other combinations, 

 extensions to the Gulf of Mexico in one direction 

 and to El Paso in the other. Compilations of 

 gross and net earning of 154 roads for the six 

 months ending June 30 showed a gain, com- 

 pared with the same time in the previous year, 

 or $38,904,639 in gross and $7,722.906 in net rev- 

 enue. The decrease of $19,000,000 in the latter, 

 compared with the first six months of 1901, was 

 largely due to the unfavorable weather in Feb- 

 ruary and to the coal strike, which began in 

 May. It was announced in October that the 

 shareholders of the Atlantic Coast Line would 

 be asked in the following month to vote upon 

 a proposition for the increase in the capital by 

 $15,000,000 and in the bonded debt by $35,000,000, 

 the proceeds to be applied toward the payment 

 for 306.000 shares of the capital stock of the 

 Louisville and Nashville Railroad Company, 

 which were purchased by J. P. Morgan & Co. 

 from the parties who earlier in the year obtained 

 control of the road through speculative manipu- 

 lation, as elsewhere noted. Late in October the 

 Stock Exchange authorized the listing of $42,- 

 316.900 additional stock of the Baltimore and 

 Ohio Railroad Company, making the total of the 



