Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-01-04
THE HOLIDAY WEEK.
Henry CIews 8 Co. Say the Old Time Feeling
Has Set in-The Recovery Per-
manent-Money Easing Up
Weak Spots Eliminated.

rPECIAL TELEGRAM TO THE DIsPAroHl
NEW YORK, Jan. 3-Henry Clews & Co. say:
although the past weeks business has been
interrupted by the holidays, 1t has shown a dis
tinct improvement in activity and confidence on
the Stock Exchange. It has been. in fact, the
only week since the middle of October that has
shown anything like the old-time feeling.
1.-The causes Of this recovery have not been
trivial, nor or they likely to prove entirely
transient. The last bank statement showed an
unexpected improvement in the bank reserves;
the surplus over legal requirements being
81, 700 O0O compared with So 400 900 for the same
week of last year. 81 600 in 1888 and s9 900 900
in 1887; which shows a fully normal condition of
this important factor in the financial situation.
These figures indicate that, at last. reaction
in the currency movement In favor of this city
has fairly set in; and. judging from all prece-
dents under like circumstances, the ref1ux is
an actual plethora of money, with con-
sequent low rates Of interest. Another
cause Of the Improvement is the important
fact that about SIPS 600 600 of interest and divl-
dends is payable at the beginning of January.
An unascertained but undoubtedly large por-
ton of these payments is always devoted to re-
investment, which creates special demand
for bonds and the better class of stocks at this
season. Ordinarily this demand Is forestalled
by speculative buying early in December, but
this year that buying has not been forthcom-
advance from this cause and being exception
ally low, there is the more probability of a rise
during the first half of January. Another
cause of the better tone has arisen from the
oversold condition of the market and bhe un-
willingness of the 'bears" to face the special
demand from investors that may be reasonably
expected during the next two weeks. There
has also been a feeling that the present extra
ordinarily low prices, coupled with the easier
condition of the money market, may induce q
certain class of investors to devote portion of
their January income from securities to the
purchase of stocks as transient investment.
This immediate recovery in the tone of the
market will probably prove to be the beginning
of more important later Improvement. The
future ease in money is likely to be as decided
as the past stringeney has been. Under circum.
stances such as have recently occurred, the
money market always quickly reacts from the
one extreme To the other. Business becomes
more or less restricted throughout the country
and prices of a wide range of properties de-
cline; and as less volume of circulation is
therefore needed, surplus of money ,accumu-
lates in le banks, which, in their desire to keep
their funds employed have to reduce their rate
of interest, When such a state of the money
market as this arises and there exists at the
same time market valuation OF stocks some 30
TO 40 per cent below their normal value, an out
burst of the speculative spirit becomes newt
able. 1t is an unfailing experience that when
securities have touched the lowest possible
point of depression, it is entirely safe to buy
them for rise, the only condition necessary to
such an advance being an abundance of loan
able 1unds. Wnlcn, In the present case, ID GER
tainly assured. AT present, there are
these factors in favor of recov-
ery--the weak spots among dealers have been
eliminated from the market, which gives con-
fidence to lenders of money; and the class of
inflated stocks have had the element OF water"
squeezed out of them. Another very import
ant consideration in favor of railroad stocks is
that the great Southwestern systems, either
with or without the proposed combination of
managements, may be depended upon TO i'm
prove upon their past destructive cutting of
rates; while the Granger States show marked
disposition both in their Legislatures and their
railroad commissions. to relax the past severity
of their interference with the management of
the railroads; from all OF which it is reasonable
to expect an Improvement in the net results Of
railroading from this time forward. Under
all the circumstances it seems reasonable to
conclude that average advance of 8 to 10
points upon the present prices Of stocks may
be realized before any question can be reason
ably raised as to their market price exceeding
their intrinsic value.
The banks are meeting literally the demand