The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1901-05-13
As CLEWS SEES IT.
Noted Wall Street Authority Reviews
the Panic

Noted Wall Street Authority Reviews
the Panic
New York, May 1s-Henry Clews in
review of last weeks stock movement
says:
The long expected reaction in Wall
street arrived. It came, too, as usual. at
a time and in a manner least calculated
upon. A corner in Northern Pacific, the
like of which has never been seen, was
the test which developed the breaking
point. All prolonged movements in the
stock market are generally checked by
some incident that may have no direct
bearing, yet is sufficient to disturb the
balance of power and compel q read
justment of speculative forces. These
adviceS, while admitting the unprece-
dented influences supporting a bull mar
ket, repeatedly contained warnings of
what was surely coming at no distant
date. The shock has come and it has
been well met. That the market could
stand a loss of 20 to so points in the
short space of two hours is astonishing
testimony of its inherent strength.
Scarcely a sign of weakness appeared
in responsible quarters, and losses were
faced in fashion that was surprising.
In previous panicS of smaller dimensions
serious disaster has invariably accom-
panied such a break but nothing of this
sort was heard on Thursday when the
cyclone was at its height. What the re-
suit of this crash will be- it is difficult
to forecast. It is quite likely to afford
a very effective check to crazy bull
speculation. Prices were too high, and a
more moderate reaction would have
been highly beneficial As it is it seems
improbable that the bull leaders will be
able to carry their campaign to the e2l-
tremes that appeared easily attainable a
week ago. The corner in Northern Pa
cific proves that friction exists between
some of the big financial magnates, and
that the Harmony theory upon which
such extravagant hopes were based has
been worked to its full value. It is now
quite evident that prices will receive
strong support until a good recovery has
taken place in the market. Conditions,
however, are changed from a week ago,
which should cause more conservatism
than heretofore. Harmony, the back
bone of the bull movement, has been
weakened, and in struggles between
giants little men must keep out of dan
ger. Moreover, the bears have been anx-
iously waiting for just such a turn, and
a battle royal may occur again at no
distant day. It was chiefly a railroad
panic; in spite of the fact that the rail-
roads are still enjoying record breaking
prosperity, with no prospect in sight of
Its diminution. The induStrialS were
comparatively steady. Apparently the
community of interest idea was being
carried too far; it threatened to soon be-
come unmanageable and was sure to
create intense public opposition in the
future and probably stimulate a new
and undesirable duplicating of railroad
systems at lower costs and smaller fixed
charges than borne by some of the re-
cent creations.
On Thursday, the climax was reach
ed and Northern Pacific touched 81, 000
and prices shot doWnWards 10000 points
within couple of hours. This rupture
among the supporters of the largest
Lot
ing open of the whole market There
was plainly no possibility of arresting
the break of confidence and holders uni
versally gave themselves up to a furore
of liquidation. Among the stocks most
affected during the melee were those
which have been under the manipulation
of spectators more or less connected
with railroad affairs
These were the beginnings of the
violent disentanglement Of the con-
fusion into which Wall street interests
have been wrought. The process in
volved some immense losses on the cor
ner." To some, they could be counted
by Jumps of millions, and the total is
estimated at 40 to 20 millions of dollars;
but they were chiefly borne by million
aires and therefore involved no import
ant failures. To the rank and file of
minor operators the losses of the first
day Of the reaction were not in them
selves very serious, and might, under
less deranging conditions, have been
easily repaired. But credit was ire
parabIy broken, and margins were shat
tered. For some time past the sole
stay of the market had been a gauzy
and highly strained confidence, which
Wednesdays violences had torn to
shreds. What remained then to shield
the fortunes of the local minor specu-
lators and of the still more numerous
outsiders of the interior who had al
ready exhausted their resources in mar
gins and had no means of self-protec-
ton? This Corner came too at a mo-
ment when the money market was be-
coming sensitive; loans on the street
were at the moment being made at
20Q40 per cent; foreign exchange was
admitting of free exports of gold; brok-
ers were demanding an increase in mar
gins from the standard rate of 10 per
cent to 20 per cent; and the banks had
become really apprehensive about the
aspects of the situation. Moreover, the
Corner had started alarm in every di-
rection; and, in the face of such condi-
lions, an element of 80 to 80 per cent of
fictitious value in the current prices of
securities had to be maintained upon
an already violently strained credit.
The market is now in a fair way of re-
covery, and higher prices generally may
be expected for the coming week at
least
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