dation there could not be effected without breaking prices here, and, perhaps, inviting a panic. For fear, then, of disturbing the status quo, which, burdensome as it is to all sides, yet seems to be the only modus vivendi which is at all possible, bankers here and abroad have found it convenient to disregard profits to be made in foreign exchange operations, and it is my belief that the situation must be a serious one to keep any of our bankers from taking a profit that offers.

One of the considerations which has induced the financial leaders to be wary of rousing the wrath of the Bank of England has been the necessity of providing the huge sums asked by our leading railroad corporations for extensions and improvements. Last month I stated that, in addition to the sums already asked for, during the last months of 1906, more than $300,000,000 had already been spoken for for the year 1907. This prediction has since, been verified by the announcement of the Pennsylvania Railroad that it would ask stockholders to authorize $100,000,000 in bonds and the same amount in new stock. In addition, a new issue of securities by the Chicago and Northwestern is about to be brought out, while the Chesapeake and Ohio has been negotiating with bankers for a capital issue of some size. There is also some talk of a new issue of capital by the Amalgamated Copper Company. These new securities should be sufficient to set aside the argument which has done duty for several years in order to explain the high prices for stocks, namely, that the floating supply was small. The flood gates seem to have been opened wide and the timeworn jokes about the water rising high in Wall Street are again being heard everywhere. But these ancient jests bear one important truth and that is that such apparently reckless and unrestricted use of the printing presses cannot but affect the market price for those securities already existing more

or less unfavorably, especially in these times, when all acts of corporations are closely scrutinized, and when anything that savors of the fraudulent in the large semi-public corporations leads to the most rigid inquiries.

For

The investigation into the affairs of the Harriman lines so-called has brought out two things. It has demonstrated the utter disregard for the law held by Harriman, except in so far as it concerns the other fellow, and again the wonderful constructive genius of the man. In other words, it has disclosed what is not frequentjly offered for public scrutiny until after death, namely, the workings of a great mind. The Harriman investigation ostensibly brought for the purpose of determining whether or not the control of the Southern Pacific by the Union Pacific was in restraint of trade has broadened and it may be said that the success of the Harriman method is on trial. contemporaries it is generally difficult to gauge the relative value of rights and wrongs committed by the great or to decide whether a man's achievements should be ascribed more to his surroundings than to his nature. So far as can be now foreseen, the character of the financial coups, upon which Mr. Harriman based his fortune and his reputation, will not be looked upon with favor by future generations. I do not believe that the buying and selling of railroad stocks on a large scale would be so severely condemned, but the method of turning a fiduciary trust into the means for a speculative debauch, and the utter disregard for any but the law of egotism will go far toward diminishing the fame of the reconstructor of the Union Pacific Railroad.

While the conflict between the political and the financial powers of the country is at its height and is temporarily frightening investors away from the securities markets into other fields general business activity contin

ues unabated. Great manufacturing industries are filled up with orders, and in many cases factories are unable to fill orders for immediate delivery, or even for some time ahead. The steel industry especially is rushed with the demands of the car builders, the railroad contractors that are engaged in adding extensive mileage to the country's systems, and the building companies that are rebuilding not only San Francisco but other cities as well. In some respects the rebuilding which is going on in New York City with its skyscraping structures equals, if it does not exceed, the work now under way on the Pacific Coast. Prices are high and the index number of the cost of living is at or near the highest ever reached. Collections in the West are good, and it is especially in the country west of the Mississippi, where the business activity is largest and apparently still on the upward swing. In the East, however, there is a slight hesitation, noticeable in certain directions, which is beginning to make itself felt in bank clearings. Compared with the previous year, the exchanges during the last week of the old year and the first week of the new year showed rather severe decreases. The decline in stock exchange speculation may explain these decreases in New York City clearings, but this explanation will not serve for other cities, where a similar tendency is being observed, as for instance in Chicago.

"

The action which has been taken by the Southern Cotton Growers' Association against the New York Cotton Exchange has evoked a lively discussion of the rights and value of exchanges. In so far as such associations exercise a control over the doings of members they are unquestionably to be commended. But in so far as they tend to create a monoply in the market for certain commodities they are to a cer

tain extent against public policy. Such monopoly tends to produce arbitrary restrictions and rules which in the nature of things are likely to favor most the man who avails himself most of the facilities of the exchange. Only too often this means that the gambler, rather than the actual commission merchant, makes the rule to suit his Own convenience. The tendency of some exchanges to narrow the market of the commodities, in which their members deal, rather than to widen it, is due entirely to the efforts of the gambler to keep the market from getting so large that he will lose his control of it. The thing applies to cotton, grain, metal and securities exchanges alike. The fact that the New York Stock Exchange is a voluntary association which claims special privileges for its members under the protection of the law is a most unfortunate characteristic of our leading stock market. It seems certain that with the present tendency against all special privileges and for greater public control of all institutions in which the public is largely interested a change in the organization of the Stock Exchange is bound to come. That under the constitution of the State of New York such a regulating and restricting law could be passed legally is certain. It would certainly seem that the foreign idea of an exchange is better. In London, any one can become a member of the Stock Exchange on the payment of the annual fees, while in many cities of the continent access to the bourses is open to all who want to trade. The latter plan would hardly work, except in small communities, but the London plan, like many other features of London business methods, would appear to be much superior to the organization of the security markets on this side of the Atlantic.

EDWARD STUART.