Omaha daily bee., 1899-12-21
TgE SpEcrt,Arve gEaC7r,y

THE SPECULATIVE REACTION.
The speculative reaction which ap
pearcd TO threaten serious consequences
to the financial and business interests
Of the country seems to have spent its
force, at least for the time being, due
to the prompt action of the banks and
the disposition of the national treasury
to aid the money market 1t was not
an unexpected revulsion. conservative
observers have seen that Il reaction from
/ the stock speculation of the past year,
much of ii in securities without any
! substantial basis of value, was ineyita.
! bic and If II came somewhat sooner
! than was anticipated the explanation
is easily found in conditions abroad
which make an extraordinary demand
| for money and otherwise disturb liran-
clal affairs. The Trnnsvaal war has
already taxed the financial resources of
England to an extent compelling the
Bank of England to seek the replcnish-
ment of its gold supply, while Germany
is in not much better situation. Such
a state of affairs abroad and partiCu-
larly in England could not but exert n
decided influence here, so intimately i'll
terwoven are our financial opera tions
with those of England. A vast amount
of American securities are held in that
country and the danger of these being
thrown back upon our market would
under any circumstances have the cf-
feet TO dcpress stock values here This
would necessarily be intensified when
such values have been carried up OK
ccssively by speculation, large part of
which has been in securities not having
a substantial basis of value as is the
case with some of the so-Called indus
trial stocks
The reaction, while undoubtedly has
tened by the disturbed financial condi
tions abroad, was mainly due to the
fact that our speculative operations
were not upon an entirely solid basis
and the experience should impress this
upon the public mind. Especially should
the lesson be well learned by those
who speculate in the "industrials.' 1t
is said that during the present year
there has been "A loss in these securi-
ties from the highest price their shares
commanded on the market to their pres
ent market value of over S4O0.OO), 0UO.
When the pinch in money came these
stocks were the first to feel the effect,
but they could not suffer without un
favorably affecting other securities. so
that the reaction struck more or less
severely the most legitimate and the
SoundeSt securities as we'll as those
which are doubtful. 1t was Il most
instructive demonstration of the dan
gerous character of the speculation in
the industrias and it is to be appre-
hended that there will be further cvi
dence of this. The experience, how
ever. should certainly warn the public
against buying these securities at fig
ures plainly excessive and it should also
warn financial institutions to use ex-
traordinary precaution and discrimina-
ton in l0aning money on these securi |
ties. Tie dispatches of Tuesday say
that they We're not acceptable by the
banks as collateral and money was not
easily procured for the purpose of sup |
porting them in the market. If this |
policy should be adhered to the weak
or worthless industrials would soon be |
eliminated and while this might be a |
hardship to the holders of their securi- |
ties it would be for the general good.
The prompt action of the New York |
clearing house banks averted what |
to develop into panic of
wide-reaching effect and the offer of
the secretary of the treasury to increase
deposits of public funds in the banks
has had reassuring effect. The coun-
try is in perfectly sound condition
financially and the speculative reaction
will do no harm to legitimate business.