The sun., 1901-05-09
The Turn OF the Tide.

OF course any such break as that which
happened In the stock market yesterday =.
has long been overdue. The great truth
that action and reaction are equal Is eSpe-
cially applicable to the operations upon
any financial or commercial exchange;
and IL may be doubted If there has ever
before occurred in the financial history
Of any nation such prolonged upward
movement OF stock values without reaction
a. that which eliminated. for the time
being, at least. in Wall Street yesterday.
Nobody will have any particular SYM
pathy for the professional gamblers WHO
lost money in yesterdays smash. 10
endure smashes il part Of their business.
II is to be feared however. that it was not the
professionals who were hurt in the break.
! These people have long been fearful OF the
present stock market and have greatly cur
| tailed their operations. The people who were
| hurt were the small and comparatively
! innocent spectators all over the country.
many Of them dealing In bucket shops
| and similar institutions, who have Tor n
! considerable time based their operations
upon the confident belief that what went
up would never come down.
The exact cause OF yesterdays reverse
was according to trustworthy authority, the
struggle for control Of the Northern Pacific
! Railway system by two great financial in
teres4 Each Of these interests believed on
Monday that the control was theirs that is,
each OF them had sufficient number OF the
stock certificates OF the railway company,
added 20 contracts for the delivery Of other
certificates TO them. to insure their owner
ship, some time hence. Of a majority of tho
stock That each Of the contestants should
really own or have itls' calm 10 n ma 'Orlty
Of tho stock was, ot course, impos-
sibe And 1t was speedily revealed that
there was outstanding a quantity of sales
for short account. that H. sales by per-
sons who did not own the stock they had
sold. but had sold il intending to borrow
II for delivery to the actual purchaser at
some future time, which in addition To the
quantity of actual certificates physically
in the possession of the two cOntcndlng
interests, amounted To more than the total
number of shares OF the railway in exist
encc This situation in turn produced a
very real even II somewhat unpremeditated
corner in the stock, so that on Monday
night the persons who had sold it, not
having II. had TO pay at the rate of 500
per hundred shares for the privilege Of
borrowing it for delivery on tho succeed
ing day. Last night this premium mounted
TO 5000 per hundred shares, undoubtedly
the largest ever paid in Wall Street.
Exactly how this condition of affairs
will finally settle itself is a mystery. The
course Of Northern Pacific stock Yesterday
showed that neither Of the two great flnan-
clal powers in question was inclined 20 let
go its grip upon its holdings. and there
were indications, moreover, that both
of them were disposing Of other securities
in order to provide reenforcemcnts Of addl-
tional supplies Of cash for their battle
What really caused the break, however,
was the fright into which the great specu-
lative element known as 1.-The public" were
thrown by the anomalous situation that
had occurred In addition, heavy sales OF
stocks were made by spectators who were
short Of Northern Pacific and were forced
70 sacrifice other holdings 10 protect
this account \ corner in a market is
always a dangerous thing, because II lifts
the stock which * the subject Of the corner
10 a fictitious price and this price sooner or
later suffers q very great decline which,
ever party 10 the corner wins. The decline
Is usually sudden and It invariably affects
the price Of other securities besides the
one Immediately involved Hence specula-
tive holders of most securities are natu-
rally inclined to lei some one else own
them for the present until the Northern
Pacific struggle is over