The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1902-05-04
BUY STOCKS TO
STOP SLAUGHTER
Brokers Find it Necessary to
Protect Their Holdings.
&--
LOANS TO BE PAID MONDAY
RULE OF THE EXCHANGE HELPS
TO AVERT FAILURES.
LOANS TO BE PAID MONDAY

of the feVerish nervousness Of the two
hours trading. When the market
closed yesterday there was little real
izing Of the nature Of the financial
troubles reflected in the collapse yes
terday Of the so-called Webb group Of
stocks on the stock exchange and in
the curb market. Every opportunity
had been given to avert the threatened
failures and to provide for a support
in the stock market. The fact that no
stocks are deliverable on Saturday
under contracts, according to stock eX-
change rules, and that loans made on
Friday carry over to Monday. helped
the efforts to avoid trouble. There was
threatening break in prices at the
opening Of the stock market in spite
Of a strong upward movement in Louis
Vile g. Nashville and Pennsylvania.
These advances were lost. however. and
supporting orders at weak points were
found necessary to check indiscrimi-
nate liquidation. When St. Paul was
selling in 10O-share lots at 10. there
were bids in the market for 1000 shares
at 170A. The centralized buying was
not followed up when it was seen that
the selling was checked After the
bank statement appeared the buying
was renewed in a more aggressive
manner. and the market developed
fairly buoyant tone, with the close
active and strong. Earlier losses were
generally wiped out and net gains were
quite common at the close. OF the
stocks supposed to be Immediately con-
cerned in the disturbances. Rutland
preferred fluctuated between 103 and
80. with the last sale at 100, compared
with 102 last night. st. Lawrence &
Adirondack was variOusly quoted at
80 bid, 120 asked. and IS bid and 120
asked, with the closing quotation so bid
and 100 asked. The increase in cash
shown by the banks was total sur
prise. as the heavy sub treasury alb
sOrption during the week indicated a
loss of more than 100000. The re
lief thus afforded was a welcome one.
in view Of the loan expansion of more
than SO. 900, 0O0 The sharp liquidation
in the stock market, it is hoped. has
served to relieve the tension Of the
money situation, although an active
money market is expected next week.
Declines in speculative interests has
been shown in the stock market this
week. and efforts at supporting prices
have not met with entire success. The
month end requirements precipitated a
stringent condition in the money mar
ket which was aggravated by the coli
lapse I'm International Power, and the
distrust engendered in some of the
other industrials supposed to have af-
filiauons with that company, or whose
conditions are equally shrOuded in
mystery. This undoubtedly led to some
discrimination by the banks against
industrials as collateral ia loans. The
ingenious admission by one of the prin-
cipals in the power episode that the
slump was due 10 the neglect of his
patron to put i'm a buying order at the
same time as his selling order was inn
pressive as an example Of how some of
the recent unexplained advances in
prices might have been brought about.
The most striking fact In the Power
episode was the lack Of a general mar
ket for the stock, IN spite of its daz-
cling rise of over 100 points. when at
tempts were made to effect real sales.
Entire collapse was the result. The
episode invited attention to the recent
course of many other stocks. Even
among the standard railroad stocks
there are instances where the market
turnover has amounted to several times
the outstanding capital of the company
I'm the course of a few days, with a
resulting price change of only a few
points. Taken I'm connection with COM
plants Of commission houses of the
scarcity of orders from the general
public these facts awaken distrust Of
the genuineness of some of the price
movements in the market Day after
day new high record prices are estab-
lished I'm many standard stocks. to say
nothing Of the large crop of new and
untried industrial securities Of which
the recorded price movements in the
market. It is almost an invariable rule
that declining money resources is the
instrument for disclosing the weak
market position of securities. Stocks
whose high prices are due to buying
with borrowed resources with a view
20 only temporary holding must be
thrown over when loans begin to be
called in.
A deeper impression than is super
fcialiy apparent has been caused by
the action this week Of the New York
clearing house authorities The de-
cision to require institutions to be ad-
mitted in future TO clearing house priv
ileges to maintain a cash reserve j.
their own vaults commensurate with
that required OF members themselves
IS interpreted as a note Of warning
against the present rate Of credit eN-
pansion. This action is primarily and
ostensibly directed against the rapid
rate Of increase of new banks and
trust companies. Tt is also the out
growth Of much serious discussion that
has taken place regarding the growth
Of the deposit banking business and
trust companies without any such legal
restrictions upon them to maintain
cash reserves as are enjoyed on the
banks. The trust companies retain
only an insignificant proportion of the
money in their own vaults at any time
Their cash IS on deposit with the
banks and figures there as cash re-
serve. 1t is at the very time when
demand for credits or diminution Of
cash in the banks has run up the
money rate that the trust companies
are attracted to put out loans at the
high money rate prevailing. Relief is
nOminally AFFORDED TO the banks by this
shifting Of the demand for cash on the
trust companies. but the effect is like
" to be an expanding volume Of credit
on shrinking cash reserves The last
published statement OF the condition
OF trust companies for New York state
showed loans on collateral Of $50 20S.
206. and 1921 045.797 of cash on hand
Of which. however. an but So. S5S 702 was
on deposit with banks. There have
been heavy loans since the first OF the
year by the trust companies. The
weekly bank statements reveal that the
banks are down 70 near the legal re-
serve limit. which is thus seen TO figure
not only against their own deposits.
but those of the trust companies and
many interior institutions who also
keep deposits in New York banks.
The varying weather news IN the
crop belt has been an influence on the
market and the delay in settling the
anthracite coal miners wages is an
other matter Of holding back the mar
ket
The bond market has been affected
BIZ the late Weakness IN Stocks. and