The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-09-27

In reviewing the situation in Wall street
last week Henry Clews says:
I'm our last advices we called attention
to certain dangers connected with the spec
ulative conditions of the stock market,
especially to the large expansion of pur-
chases and the undue forcing up of prices
arising from the of unrealized profits
Is a basis of margins. The subseqt ent
course of operations has proved that our
warning was not untimely, and that it mas
not been unheeded. Large lenders of money,
and notably certain banks which lend freely
on Stock Exchange securities nave mad their
eyes open and taken means Tor inducing
conspicuous operators, who were carrying
threateningly large lines of stocks, to reduce
their holdings to more conservative limits.
This Intervention was wise, and has mad
the effect of producing healthier diStribu-
ton of securities. Apart from the fact that
the large outflow of money to the interior,
with the apparent certainty of further large
shipments, which suggested the possibility
of coming stringency in the money market
lit was plainly out of the question Tor large
lenders to advance without stint to q few
bold operators who were carrying stocks 10
an overload extent in an EFFORT 10 pro-
prices which they had no means for sus-
tanning in the event of adverse conditions
appearing The banks have been losing
S. COO 900 a week from their reserves in sat
isfying the wants of the interior, and, IN
view of the large receipts of grain and other
farm products, the outflow may easily pc
to come The present amount or the bank
reserves though liberal as compared with
the same QaL6 Oh lOTInGI years 10 Su560 SIlNC
of conservatism in loans; and for that rea-
son, it is equally suggestive OF caution on
the part of operators against overlooking
themselves with stocks.
I'm years of prosperous harvestS there Is
always active speculative buying or
stocks so soon as the harvest Is assured
At the same time there is also an unusual
demand upon the city banks for currency
to move the crops. A point is thus reached
in the early fall at which there comes tsoia
the interior and the demand for loans from
the Stock Exchange interest. The wants OF
the former class must have the preference
and almost invariably the latter class have
to contract their loans at the cost or a
spasm in the stock market. AS usual, this
rule is now being disregarded by stock OPP
orators, and the experience of the past week
has been a reminder of the penalty Of the
lack of circumspection. The period at which
Wall street may hope to reap the ful fruits
of an abundant harvest is when money be-
gins to flow back from the interior. which
probably will not occur this year until ABOUT
the end of October.
The action of the banks has been timed
with much prudence and consideration. Had
it come at a later stage the overlooking by
sanguine operators would nave reached
worse excesses, the contraction OF loans
would have been more severe, and the STOCK
Exchange would have been seized with a
violent CONFUSION, with consequent heavy
losses and more or less shock to general
business. Taken in time, however, this reg
ulatory handling has been administered
when operators were still able to accom-
MEDIATE themselves to it. The large holders
have been able to reduce their holdings
without creating any spasm or distruSt,
and within three or four days the stock
market has been readjusted upon a more
conservative basis with a disturbance of
only few points in prices. SO little has
confidence been affected that toward the
end of the week quotations have in a large
measure recovered. AS the net result we
have a more prudent and conservative po-
stion of speculation. Margins have been
strengthened, holdings have been better dis
tributed and operators have a better UNI
Outstanding as 10 what dealers will expect
in the way of margins. All this may mean
a tanning of the excessive enthusiasm which
has carried the market off it's feet for the
last three months, and it will at least have
q tendency to keep affairs in safer shape
until the return of currency from the in
terror removes the possibility of monetary
pressure In the meantime encouragement
may be taken from the fact that the radical
disciplining of large holders has had such
q slight disturbing effect upon the market.
1t shows not only confidence among re-
sponsble operators, but also that there is
no lack of disposition or ability to take
large amounts of securities on a reasonable
basis of prices, which means preponderant
conviction that values have not yet reached
maximum figures. 1t is to be hoped how
ever, that this confidence may not relapse
into the late excuses. If it does, severer
twist Of the money screw may be expected"
Saturdays Bank Clenrings.