The Helena independent. [volume] (Helena, Mont.) 1875-1943, 1892-01-20
THE FINANCIAL REVIEW
The Past Week in Wall Street Has
Been a Sort Of lest
Period.
The Result of the Test Cannot Be
Construed to Be I'm
favorable.

favorable.
One-Increased Earnings and Improv-
ing Diyidends-Thc,O Outlook.
New YoRM. Jan. l~9.-!Special. The last
circular issued BY the banking house of
Henry Clews & Co., IL. ID and IL Broad
street and IS Wall street, says; The past
week IL Wall street may be regarded az a sort
of test period. It has scored a large advance
in prices, aud operators have sold quite
heavily to realizs profits. During thu pre-
vioua week also there has been considerable
realizing, and the probability 10 that dur
ing the two weeks an important proportion
of the stock held by the influential promo
ters Of the boom passed into new hands.
The way in which the market Inns acted
may be regarded as a fair indication Of the
temper and strength of the situation; and
the result Of this test cannot be construed
unfayorably. If the principal sellers have
peen the class Of large holders, and il to
thair sales there has boon added large
short transaction by the room bears
which appears to have been the faot-it
seems a fair inference that there is an in
creasingly important "outside" element in
the market; and that conclusion is con-
firmed by the fact that, on the whole,
prices have been firm under these
liberal realizations. The market thus
seems to have entered upon
a phase in which it is less dependent than
previously upon large ~manipulators who are
anxious to realize, and more dependent
upon a sanguine class of miscellaneous
operators who have thought stocks worth
buying at current prices and are therefore
disposed to hold them for a further rise.
The course OF transactions has therefore
answered the question whether the rising
movement is entirely due to the manipula-
ton of capitalist holders, who after selling
out would leave the market broken and for
saken; and it is clear that the public at
large are becoming an influential element
on the exchange. If this conclusion be
warranted by the facts, it is an important
one; because it implies that the current
speculative movement is a normal one, in
the sense that it rests upon the public esti-
mates of the value of securities. and that
therefore it is not likely to suddenly col
lapse, with the result of a relapse IN prices
to their former lower level. This means q
broader and moro enduring market; but
one subject to wider oscillations in prices,
owing to the less sober temper of the class
who are entering the arena.
So far, the present condition of the mar
ket may be considered q hopeful one. What
are the probabilities es to its future course?
In answering that question we shall aim to
Indicate what the tendency is, rather than
the extent to which it may be expected to
run. Something must depend upon the
disposition of the commission houses, who
can and do materially influence the volume
Of their customers operations. For a long
period, the business of these houses has
ranged much below it's average amount;
and it is therefore to be expected that they
will encourage transactions up to the limit
of prudence, rather than discourage them.
They are the more likely to pursue that
course because the condition and prospects
of the money market insure their ability to
borrow upon average collaterals to any ex-
tent they may need, Another condition
turns upon the ability of outsiders to pro-
vide the necessary margins-the most
essential factor of all. The spirit and re-
suits of the trade of 1891 may seem to dis
courage the superstition that there is much
u Jus Ou4nAAAc bIouRAkt ' " Ah0u
year available for this purpose; and there is
no doubt some truth in this; but it is neces-
sary to keep in mind the very rapid growth
of business in this country; so that al
though last years rate of profit may have
been lower than the average, yet it is
quite possible that the actual sum may
even exceed hat of past periods when the
transactions at the stock exchange largely
exceeded their now current volume. So
far as the experience of the past two weeks
of the new year goes, it does not suggest
any lack of means on the part of outside
operators; and we incline to think that if a
strong speculative feeling should arise no
inability of that kind would check it. So
far as the intrinsic merits of stocks may
affect the future, there is but one possible
inference. The crops have already settled
that question. The largely increased Darn
ings and the improving dividends of the
last three months are but the beginning of
q year of railroad traffic surprising all
precedent. The augmented business of
the roads is an indication Of what NAV be
expected in the various Industries, and
especially those most dependent upon agri-
culture, SO that as the year progresses the
means available for investment and specu-
lation will steadily increase. The liquida-
ton of farmers loans, which will increase
as the season advances, will release large
amounts of capital, much of which must
find its way to Wall street, either for per-
manent investment or for transient speeu
lation.
II may be said that already prices o.
stocks have advanced sufficiently to dis
count nll these favorable textures. There
is truth in this view, and it would be pru.
dent for those whose accounts show profit;
to realize on them and wait for q reaction
But, at the same time, it may be proporl,
kent i'll mind that, in periods of speculative
activity, prices are not apt to be adjusted
even approximately, to the intrinsic valu
of the properties. The speculative spirit i
the most impulslve and uncomfortable Gle
ment that Influences prices; and, whel
fairly aroused, it does not stop at the lin
of intrinsic value, but is guided by the limi
to which it's own force can carry quotations
Experience shows that, when once the out
side public enters the market in force, tn
line Of real value is easily passed; and, frol
present Indications and tho nature of tn
general situation, it seems not improlabl
that the present campaign may al a late
stage develop into that exciting phas'
That, however, is not the present state {
the market. For the time being, operator
have some regard for the intrinsic value c
stocks. and there is a limit of prices T,
which they are willing to sell; and ther,
fore it il prudent to be satisfied with moo
crate profits and take into account the DO.
sibility of reactions.