The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1899-11-05
WEEKLY BANK STATEMENT
TIE wIPING OUT OF THE SUR
PLUS RESERVES.
Loss In Cash Greater Than Was Ex-
pected Growing Ease In the
Money Market = Demands From
the Interior Growing Lighter
Policy of the Railroads.

mid-September the professional trad
ers in stocks have looked for a deficit
in the required cash reserves of the
banks almost every week. The wiping
out of the surplus shown today was
therefore NOT a surprise. The weeks
events made the stock market peculiar
ly vulnerable in spots and the slump
in prices of q few stocks gave an ap-
pearanee of decentralization TO the mar
ket. Leather especially. which touched
40 at the opening and was above 80
when the bank statement appeared,
slumped suddenly to %, the breaks be-
tween transactions reached as high as
3 points. Marginal accounts in this
speciality were wiped out right and left
and then the price was bid up again
TO &c, at which it closed.
Sugar and Brooklyn Transit were also
losers to the extent of over points.
A number of other prominent industri-
ais lost between 1 and , points but the
general list reacted only a fraction.
There were some violent recoveries
from the low level and the closing was
feVerish and greatly excited at net
losses all through the list The specu-
lative excitement was increased by the
fact that the bank statement was with
hello. until ten minutes before the close
of trading. Efforts 70 close accounts in
the short time remaining made the
market furiously active.
The loss in cash shown by the state
ment is somewhat greater than was
expected, which is doubtless brought
over from last weeks condition by the
average system of computations. The
trivial contraction in loans of less than
a quarter of a million dollars can only
be explained on the assumption that
the wholesale calling of loans by the
banks early in the week was Offset by
a subsequent very liberal extension of
credits. The growing ease in the
money market goes to confirm this
view. Such extension of credits must
be based on a faith of the bankers that
the current drain on their cash re-
serves is soon to be relaxed. The up
ward tendency of New York exchange
at all interior points during the past
week indicates the ground of the faith.
The weekly bank statement of the
New York clearing house institutions
has not SHOWN a deficit since 1893. For
six weeks past. however, the surplus
has been near the vanishing point and
at least half and sometimes more of
the Individual members of the clearing
house have been below the legal re-
serve limit. They nave not been able
TO build up surplus in that time, but
have apparently been content to dis
criminate in the calling of loans against
collateral which did not please them
and with their security thus improved,
take up their funds loaned to the limit
of the legal allowance. The average
cash holdings now fail of the legal re-
quirement by s33S,350. The amount of
loan contraction necessary to bring the
of reserve back to the legal
requirement would therefore be s1,353,
400
The manner in which the stock mar
ket took the reyerses of the earlier part
of the week and the operations of ag-
greSsive bull pools and powerful inside
interests in various proportions during
the latter part of the week have deep
ened the apprehension of the unwieldy
short interests and they have bought
very heavily to cover contracts.
The bear party has been very per-
sistent and confident up to this time,
basing its confidence on the higher rate
for money, which is likely TO continue
as long as the present unprecedented
activity in business lasts. Higher in
terest rates, they argue, should bring
lower prices for securities on which
returns are fixed. The bears point to
the failure of attempts to launch new
lndustrials and the admittedly made
quate measure of value behind many
industrial stocks which have already
been widely distributed at prices far
above those now ruling in the market
The continued discrimination against
these doubtful securities by money
lenders and the growing inability of in
siders TO support the prices constitute
4 continual threat to stock market val
1es, argue the bears.
But this plausible argument loses its
iorce in face of events like those of
he week. On Tuesday the money mar
get had developed conditions of severe
;tringency, the call loan rate mounting
o 80 per cent, and large amounts be-
ng sought at the high interest rates. AT
he same time London. in the first
alarm over the disaster at Ladysmith.
brew upon this market nearly $4,000
shares of various stocks. Nevertheless,
m that day the opening prices were
the lowest. and seemed to be
made to avoid offering foreign sellers
90 good a bargain as much as for any
,ther cause. The recuperation in prices
Turing the remainder of the day was
marked The bears accepted the ad-
and proceeded to cover. Their
Efforts were met by opposing factions.
which bid up prices where they saw evil
iences of short interest The result
vas some violent recoyeries in some of !
he industrials, which have been most
vulnerable to recent attack. 1t was
equally evident that with the short in
crest satisfied the tendency in the
anne stocks became reactionary again. |
The conspicuous tendency in the later
rading of the week was to keep up
ow-priced non-dividend paying stocks
md hitherto unexpected in an active |
peculation. Dealings in some few of |
hese have been on an enormous scale. |
n the standard dividend paying rail- |
oac stocks, there has been little trad |
ng. The impression has been created |
hat the general policy of the great |
is TO be continued investment !
t SURPRISES, and in putting the road |
ways on more permanent and sub |
tantial basis, and in improving the |
quipment with a view to increased |
economy of operation This is the con- !
erVative note of preparation of the
,reat financial entities, whose interests |
re permanent and continuing against |
he period of reaction from present |
prosperity. which all believe to be even
ually inevitable. Conspicuous exam
les of this tendency are seen in the
Jew York CentraPs extra stock issue to /
rovide extensive new equipment. and
4 the st. Paurs continued heavy OUTLAY
rom current earnings for operating ex-
enses- The chairman of st. Paurs d.
ectors says, significantly:
I'VE are spending a great deal of |
money for betterments, for which the
ost constantly increases The money
or the improvements comes out of |
arnings. 1t is not surprising that our
ct earnings should be materially re-
uced."
The same policy is manifest through
ut the railroad world and is intimated
/ relation to some of the great indus
rial combinations. This work is more
dvanced in the case of some railroads
'hich have passed through bankruptcy
nd reorganization than in that of rail-
dc tuhfa1, /