The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1900-04-08
Bank Statement Gives a Shock
to Wall Street.
SENDS THE PRICES DOWN
HEAVY ENCOURAGEMENT MADE
BY SPECULATIVE DEMAND.
prosperous Condition of the Country
and S~easonable Relaxation in
Money Markets Underlying Fac
tor IN the Weeks Strength of
Stock Market.

~
New York, April THE speculative
enthusiasm for an advance in prices
OF securities received a decided SHOCK
IN the showing made by the clearing
house banks in their weekly statement
today. The buying demand fell aN,av
ana stocks came upon the market al
declining prices. The most imno-tsn+
part Of the earlier gains were wine5
out. The market closed unsettled and
irregular, prices moving in contrary
directions ir different parts Of tho ,is+
ana net changes being much mixed.
me short session thus ended beean
ausplclously enough. under the inAu-
OF renewed buying orders from
Abroad, which were said +o bo1-a 49,
source in Holland. Bull noots res,,r,od
Iher operations in various stocks and
me continued strength in sugar gave
cne 70 the industrial list. PennsvIva-
ma, baltimore & Ohio preferred Mis-
sour Pacific and Chesapeake e Ohio
VIE conspicuous examples OF strength
me ASt promptly gave way upon an
pedrdhce OF the bank statement upen
GG tape. preliminary estimates Of
cams IN cash had placed ii from "a OOO :
GOO TO $4,000. 900. Operations viii The
sup-Creasury alone furnished an in
crease OF $4,000 0 to the banks. Wall
street Isl IN the dark as to what drain
on tne banks resources has so far Off
set this advantage as to bring the cash
increase down to 81. T3S.4 400.
II was also expected that the contiu-
eed Incubation Of loans for account
rom holders or government bonds who
nave been selling them to realize on
the advance in prices would offset he
of loans on account of stock
marker transactions to a large extent.
me large realizing Of speculative
pronts in the stock market was indi-
catlVe also Of a paying off OF loans TO
some extent. The street was wholly
unprepared for a large increase in
loans. which showed the enormous ex-
pahslon OF l2,954, 800. This served to
swell the reserve requirements TO the
extent Of SO. 1863. $50. and the cash in
crease fell short of this by S1.931 ESQ.
which, therefore, measured the shrink
age on the surplus. The inference is
clear and unmistakable that the en-
croachments made by speculative de-
mand upon the loanable resources Of
the banks have been outrunning their
increase from other sources. A check
Gated.
The week has witnessed the continued
operation of the forces in the stock
market which have been generally
toreseen as the result of the trend OF
events for some time past. The row
ing conviction in the continuance Of
prosperous conditions in the country
n the s~easonable relaxation in the
money markets have been the broad
underlying factors in the strength Of
the stock market. As usual. the pro-
fessiorsal operators in stocks have been
beforehand in buying and thew have
awaited themselves Of the considerable
advance in prices to sell out and take
their profits.
This has caused an irregular market
during the week. prices advancing at
one point while reacting at another.
Best prices have not been maintained
and in many stocks declines have re-
suited 1t was the rule of operations
with dealers in The stock market on a
large scale to sell out their HOLDINGS
and take their profits at a fixed point
IN the advance. while the outside buy
Ing demand is still active and we'll dis
tributeG without regard to the existing
favorable outlook for further rise in
prices.
The process is based on the import-
ance of afording an opportunity for
the digestion of the marketable supply
OF stocks by the investment demand.
which Is the only true final support of
any market. Such a process Of diges-
ton invariably interrupts from time TO
time any long continued advance in
prices. If it is accomplished without
any considerable setback in prices and
the investment demand is unimpaired.
professional buyers come back into the
market. take on large holdings again
and with floating supply of stocks thus
reduced. find it easy to advance prices
10 a still higher level, when they find it
safe TO sell out and take their profits
again.
This sequence Of events may be re-
peated Indefinitely. It is inevitable
that prices should thus be carried above
the level Of intrinsic value, with the
result Of a constantly increasing pres
sure to sell, the inside investment hold-
ers seeing the stock selling for more
than it is worth, joining with the less
INFORMED speculative operator, to I'M
load their holdings.
Then follows collapse, wiping out Of
margins. shrinkage in value Of cOlIat-
eraI, and often panic. When the sell
ing TO TAX profits begins to predomi-
nate over the buying demand. as has
oeen the case in the latter part Of this
week. a period of caution and careful
scrutiny develops to detect whether
the advance in pTices has reached IFS
elimination. Some stocks have given
unmlStakable signs this week Of 2 ton
heaVy condition and are sustained by
palpable man~iDuIatiOns and vague ru-
mora of extraordinary advantages not
defined n not announced. But
whether the general level of prices has
reached or exceeded the point that ade-
quately discounts the present and fu-
ture advantages to accrue to the stocks
~ q question much more difficult to
decide. There is quite an extended list
or stocks which have run above the
high level last q and risen to record
prices.
But practically where all of these
have enjoyed al increase in the actual
rate Of dividends disbursed. or have
approached nearer to dividends by the
satisfaction of prior dividend claims Of
preferred stocks and bonds on which
payment Of incomes is contingent mon
earnings, the only conspicuous stock in
this list 10 which this does not apply
is Pennsylvania. which has risen above !
last years high level. The dividend
rate remains unchanged and the adj
vance in the stock ia based on the large
extension of control of competing and
contributory lines in it's territory by
purchase Of stocks themselves paving
dividends and IN the large earnings of
the company. The stocks which have
risen above last years high level are
all in the railroad list, the industrials
being all decidedly lower. The weeks
actual DEVELOPMENTS bearing on Securi-
ties values have been few, but alto
gether favorable.
Reports of railroad net earnings for
February and Of gross earnings for
March show them to be beyond all pre-
cedent. in spite of the very high level
for comparison with last March's earn
ingS The official reports for March
of the operation Of the new financial
law makes it evident that the banks