The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-12-12
Views of Henry CIews.

Banker CIews of New York takes a pessimistic
view of the financial situation In reviewing con-
ditons from a WalI-street standpoint, he says:
THE new year now near at hand will present a
more brilliant outlook than almost any previous
one. The disbursements for interest and divi-
dends will aggregate larger than ever before
Railroad earnings, judging from the amount of
material in sight waiting to be moved. will be
equally encouraging. The prospective continued
ease in the money market is also a factor of no
small dimensions. If there ever a genuine
reason Tor January rise in the stock market
it is reasonable to expect its advent at the OPEN
ing of the new year 1t is true a good many
stocks have already scored large advance: but
as during the depression which prevailed for sew
eral years 1t very evident that prices re-
coded much below intrinsic values now with the
reverse conditions which confronts u.s. prices are
not unlikely to reach figures before the end comes
as much too high as they were too low during
our mercantile and financial dark age period from
March, IoS3 to 1886.
49, IN taxing view of the situation our foreign
trade balance-which is constantly increasing
must not be lost sight of. as it is the most re-
markable showing ever made by any country Its
total for three years up to date will be- including
the net exports OF silver, about $976. 600 OOO de-
$780, OOO and $500 600 for debtor items other
than securities, outside of the trade movement,
we should have net balance now in our favor
OF about $500 900. This has been Offset how
ever in some measure by purchase of Sc
curitleS from Europe during the three years. but
exactly to what extent it is impossible to say 1t
is perhaps quite safe to say that the net import
or securities does not suffice offset the credit
balance of 1920 00G COO by considerable sum; SO
that Europe is probably still materially in debt
to the United States; and the Indebtedness still
due US from abroad gives this country a cali on
Europe for more gold than they can spare with
cut inconvenience. When our Securities were do
pressed they were returned to us from abroad
In large quantities instead Of sending us gold and
now the floating supply of our bonds and stocks
on the other side in the hands of people willing to
part with them is comparatively very small With
the improved condition of affairs this side and
urbfo
now possesses with foreigners, those who hold
American securities are not likely to sell them.
future for nations in debt to this country to oui-
date their obligations excepting through gold pay
ments. RMS gives this country the option of
letting this Indebtedness remain at Furopean
centers at high rates of interest, or of drawing
the yellow metal from them at any time il may
be desirable to do So We certainly have now
and will have for some time to come. the call on
and want to keep what they have, but they want
to hold the gold which they too. We are
elther pay as SO much interest on what you owe
us or else settle up.
The movement among the savings banks to
reduce their rate of interest deposits naturally
attracts attention as factor bearing upon the
value of securities In recent years their inter
est allowance mas averaged to Az per cent. 1t
is now proposed to reduce the rate to So per cent
which would represent cutting down of fully
oneelghth or 121s per cent, in the interest earn
ings of these institutions. The proposition is a
marked evidence of the tendency towards a de-
cline in the earnings of capital. which has been
long evident in the interest rate OF the national
banks, as well as in real estate mortgages and
new Issues of railroad bonds The Significance
OF this tendency to the stock market is very evi-
dent. For, so far the rate of interest is re-
duced, the relative value of the principal is in
creased: and thus stocks having fixed dividend
rate, of say or per cent bring higher price
just in proportion the difference between their
rate and the current average interest rate widens
Besides reduction in the interest return of any
given investment has a tendency to induce the
holder to realize upon his security and invest in
something that yields better result and it so
| happens that railroad stocks the principal
making Such rein
Upon the same principle find the current de-
mand for railroad mortgages running largely upon
a grade of per cent. bonds selling at from 10 TO
20 points below par. This drift of reinvestment
has already reached point at which it must tell
favorably upon the value of stock issues, and
look for it's results in the future course of the
market