The times., 1901-05-07

( points Later Northern Pacific began to
squirt in a way that makes an entirely new
record Tor wldness, gaining from the low
! price of Saturday % points. Money rates
| advanced. however, and during the later
hour of the day there was a considerable
! exhibition of tiredness The rate on call
loans was advanced to 10 per cent at one
time Prices receded from a fraction to
512 points before the close. The final busi-
ness of the day showed no particular
feVeTiShncSS or weakness however, and
as the prices were in general better than
those Of the close on Saturday there was
| little on which TO found a beariSh opinion
as to the immediate market. AS a mat
ter of fact the level of prices, the furry
of money. and the immense amount of
business done. evidently largely represent
ing liquidation by insiders, are the
only things that give the bears any show
Of reason on their side.
These three matters however are of
the utmost Importance. When prices adj
! vance - points in day it is evident that
the same thing cannot continue for long.
And when prices are higher than they
! ever were before and on a basis at which
the investor realizes only per cent on
ms money, it is reasonable to suppose
that there will be a break in the near
future. And when the insiders are liQui-
dating millions Of shares of stock and
the buyers are the greenest of the public.
and the most reckless of the gamblers
II Is evident that the people best able to
judge wish 10 get out. and that the stories
of various kinds should be taken with
grain of salt. 1t is also evident that the
people that are buying are not the people
that know best how to sell when they are
forced TO sell. and that when the break
docs come 1t may be a sensational one.
AS TO the new tightness of money the
1 effect of the advance to S per cent for
cali loans on last Friday may be rernem-
hered with profit by those that are con-
templating purchases at the opening to-
day.
The process of reasoning that the pub
ne mas been using recently that stocks
nave advanced, and therefore are certain
10 continue to advance, is quite as good
as 1t was yesterday or last Saturday
Nothing yesterday gave any momentary
feeling Of uneasiness to the people that
reason In this way. But to the conserva-
tive element that wishes more than the
rahkest Kind of gamble when il makes
purchases there are the best of arguments
why stocks should not be bought and why,
on the contrary. any long stocks held
SIouiu be sold out as soon possible.
The advance may continue today, and af-
ter the experience of the past two weeks
1t Is impossible to say with any show of
tinue for several days longer The
decline is overdue, however, and is
certain to come soon. When it does
come ii Will be unexpected by the
public If II comes as declines usu-
ally DO II should be remembered always
that the opinions of nine men out of ten
regarding the stock market do not neces-
sarily tell the truth about the situation,
but that on the contrary the opinions of
these nine are almost sure to be exactly
wrong instead of exactly right. The fact
that everybody" is advising the pur-
chase of stocks means simply that the
people that usually lose in the market
are now bulls.
The Flowers, Mr.. Gage. Mr.. Hous-
man, Washington Connor. and other
people of like standing in the stock
market are all bears in the pres
ent market. In other words, they con-
slider prices too high and believe
that decline is inevitable. As against
the opinions OF these people, among the
professionals there is only one of opposite
tenor. that of Mr.. Keene. The showing is
not very re2ssuring one. These people
have all made their wealth not out of
commissions, but by being on the right
prices are too high except Mr.. Keene and
his Judgment may be supposed to be very
much biased He is in the employ of Mr.:
Morgan, and Mr. Morgan paws him well
for being a bull Eight months ago when
conservative people We're advising the |
of stocks with no uncertain tone |
when prices were from 20 to so share |
lower than they are now, when there were |
bargains everywhere, Mr.. Keene was a |
pessimist OF the worst kind. He came out /
with an interview to the effect that prices |
must go down, no matter how the cleo
tion should go. Prices are too high" he |
said. Now he comes out with another in |
terview In which he says that prices are |
too low and must advance. Meanwhile |
railway earnings are not increasing any J
more rapidly than they Were eight months |
ago. and the exports of the country, of |
which he speaks, are not making a show |
ing quite as good as they did, relatively |
speaking. Business conditions are good, |
but they are not bit better than was ex- |
pected.
Northern Pacific opened at ia and ad- |
vanced to l33 yesterday. II sold on Sat |
urdsy at 10s and closed at 10. The gain |
from the low price TO the high in the fun |
market day was, therefore, 25 points. |
The best previous record for a similar |
period was made by Union Pacific last |
week and 1t fell far short OF the Northern !
Pacific EpuFt II will be noted that the |
stock sold exactly as high as Union Pa
cihc did on It's boom-133. This evidently |
was the aim of the manipulators. Later
the stock broke TO l2I1e the closing price
The rumor that accompanied the advance |
Of the stock was that the preferred |
Northern Pacific is to be retired and the |
common put on q or per cent basis.
that such plan Is under CON |
sideration, which is not likely, It is not |
easy to see why this should cause an |
advance Of = points in the common stock. |
The preferred has never received more |
than per cent in the past. and if 1t is TO |
be replaced by common stock the new |
issue will be in no better position. If on |
the other hand. ii is TO be replaced by a |
bond the saving of interest. even on a 3 /
per cent bond, would not be so tremen- |
dous. The advance of 25 points means an |
increase Of 600 in the value of the |
$50 000 600 Of common stock now outstand- |
ing in three market hours. 1t is probable |
that the sharp upward movement was |
made chiefly by raid on the shorts, who |
have been particularly active in this |
stock The bears have been right in |
their position that Northern Pacific Is not |
worth its present price by many dollars |
a share, but the insiders have been sue |
cessful. which is better than being right |
in the stock market.
It is a curious coincidence that while |
Northern Pacific was on it's wild boom
Burlington yesterday was weak for the
first time in many days. 1t made a lower
went above 1875 the first time. The low
price reached was 1861, and the close was
at 1863 Liquidation In the stock was
evident There was little disposition to
sell II short, however. owing TO the cost
Illness Of experiments on the short side
heretofore. The bull argument on Bur
lington is that per cent bond Of the
Northern Pacific and Great Northern !
should be worth 100 and that therefore
stock TO be turned in for 5000
Of these bonds should be worth at least
212
Canadian Pacific had little boom. The
story circulated was that the Canadian !
Pacific and Northwest have made an ''ar- |
Northwest refused to boom |
to any extent, either on this news or on |
the other story that the Vanderbilts have |
come 70 an agreement with Hartman re
gardinR the Z 1ion Pacific New York |
Central went up points. and then lost |
point Of its gain. Union Pacific was buoy |
ant at the opening getting as high as |
l27A4 but Il sold off later to 12fj4 below |
the opening level.