The morning news. [volume] (Savannah, Ga.) 1887-1900, 1893-05-08
BANKER cLEws' VIEWS.
The Financial Outlook as Seen From
Wall Street.


lated elements of distrust have culmi-
mated in a crisis on the stock exchange.
1t could hardly have been otherwise. The
steady drain of gold from the treasury
and the banks extending persistently
over the last four months, was, apart from
other adverse influences, sufficient to
strain severely the ability of speculative
holders of stock to carry their loads
That strain has been borne, with compar-
| atively little yielding through a reduc-
ton of some So. 900. 600 in the loans of the
associated banks which has been an evil
! dence Of the intrinsic strength of the mar
| ket but, in the absence of any signs of
| immediate relief of the pressure, the
/ banks and the holders of stocks have
| alike yielded to their fears, the former
calling in loans and the latter unloading
/ their holdings, until virtual panic has
| seized the market.
As might have been expected, the Sin
dustrials" have proved to be the chief
point of fracture. Those tissues have
| constituted a large proportion of the
! speculative transactions on the exchange
! during recent years and have been inflated
/ by manipulation UNNECESSARILY beyond
/ any conservative estimate of their in-s
/ trinsic value Owing to the unSOund
/ basis of their organization, they have
| found little Judgment among investors,
! and have been principally an instru-
ment of speculation as between
/ the original holders and out
| side spectators. Under these circum-
| stances. they have always been treated as
/ unsatisfactory market collateral, and,
1 consequently, the recent calling in of
! loans has very sharply Disseminated
/ against them. The EVENTS nothing more
! than has been expected in the event of
! such conditions as have now happened,
/ and among conservative men the event is
/ viewed rather as a drastic form of relief
/ than as a real disaster. The break elimi-
/ mates a leng-fet element of danger from
/ the market, and gives TO securities of
/ higher intrinsic merit a fair chance for
realizing their true value.
| Outsdeithe "industrialsn the market
! has stood up remarkably well. The en-
| tire list has been sympathetically affected,
| but there is good reason to hope those'de-
| rangements will prove only temporary.
| The railroads are conceded to be in eX-
| Celient condition and the market is by no
means oversupplied with that class of
| stocks. They have had to contend, at the
moment, with a supply coming from NOR
/ camille borrowers, who under the con-
traction of discounts. find it convenient to
realize upon this class of assets; but those
sales are a comparatively unimpOrtant
factor. In fact, the ordinary run of
/ securities are regarded as in a sound
and satisfactory condition and, at the late
! current range of prices, have been readily
! accepted as collateral. They have for
some time suffered in sympathy with the
distrust existing against the 'industrials,'
which has spread a paralysis of distrust
/ over the whole market; but now that the
trust bubbles have exploded the
market will naturally assume a healthier
tone and railroad shares may be expected
| to find fairer recognition of their special
merits. In fact, the break puts the whole
market in a sounder and safer condition.
The general financial situation has not
been injuriOusly aggravated by the crisis;
on the contrary, it has rather been i'm
! proved through the elimination of an elG-
| ment of disturbance and distrust in the
loan market The banks snow less APP
prehensiOn of arrangement from gold ex
ports and from the position of the treas
ury, and seem disposed to act with pru-
dent liberality to their commercial Gus
toners. Indeed, the curtailment of dis
counts appears to come less from the city
banks than from New England and other
country banks, who have taken the situa-
ton with more alarm than the condi-
tiOns really warrant. This, however,
is an error which further reflec-
ton may easily correct. The demand
on the treasury for gold for export
has abated, and at the moment shows no
marked tendency toward a revival, and
the gold reserve is consequently better
maintained than has been expected. Still,
however, the exports of produce fall much
below the requirements of the foreign
exchanges and, so long as that continues,
there can be no assurance of escaping
further shipments of gold 1t would seem
/ reasonable to expect that the destructive
effects of the drought in Great Britain,
France and some other parts of Europe
will cause an advance in breadstuffs and
a consequent revival in our exports, which
is the thing above all else needed to ad-
Just the abnormal condition of our foreign
trade balance.
What has befallen the industrials, and
the smaller declines that have occurred
on other stocks in sympathy, must, of
course, leave the market in a disabled
condition, and operations will naturally
center chiefly upon the better class of
stocks, which, at present prices, afford
very tempting investments. At the same
, time it is very important that the real
significance of the crisis be not Overesti-
mated. The break has come mainly from
sudden exCiteInentS and unrefecting fears
, caused by the general collapse of the
speculative industrials. This crisis has
comparatively little to do with the gen
eral condition of business, which is
sound and. up to this time, has been UNI
: usually prosperous. There has been no
; undue imitation of enterprise in any direc-
| tiOn, but rather an exceptional exemption
5 from it. Credits have been kept in a
healthy condition There is no serious
: European financial arrangement, and, in
brief, there is Il comparative freedom
5 from most of the abnormal conditions
= that usually lay the basis for panic.
Being thus limited as to its causes. the
crisis will be correspondingly helped in
the stage of recovery from its effects.
: Having made securities cheap, one
l of its results viii be to draw
out stream of orders for invest
+ ment, both at home and abroad
? and it would not be surprising should il
I be found to result in an outflow of securi
t ties to Europe that will materially con
l tribute toward rectifying the strained
condition of our foreign exchanges. II
: will be found to open up many forms OF
I relief to the transient monetary derange
T ments that have arisen from other causes
d. There are now many securities that
may be bought fol~prices that will YIELD
within a few weeks more than usua
profits.
"a Ocala Chips.
~ To,