Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-10-11
Bad Bank Statement Causes
Slump in Stocks.
BEARS IN CONTROL
PROSPECT THAT CONDITIONS
WILL GROW WORSE.
Heavy Liquidation Absolutely Necso-
sary to Relieve the Finan-
cial Situation.
Special Dispatch TO The Evening Star.

Special DisDatch TO The Evening Star.
NEW YORK. October 11-wall street
banks continue to lend money in excess Of
the amount returned through stock liauida-
ton. Whatever relief has been granted by
the treasurys efforts is Of a transitory
character. and leaves the main defects In
the situation unchanged. It Is becoming
more and more evident that wholesale
liquidation must be esorted to in order to
relieve the real difficulty
The fashionable argument at the mo-
ment In discussing the coal strike Is that
the controversy would have ended long ago
mad there been outside Interference
Similarly. 1t may be said that the banks
would have taken smaller risks had It been
certain that the federal treasury would
refuse to supply expedients in emergeu-
cies Conservative banking Is pushed aside
so long as remedy for the first half dozen
attractions of the safety rule is assured.
New York financiers during the boom
period made loans on the theory that the
interior would not want to withdraw its
deposits for personal uses.
The idea that the men who owned the
money would demand 1t from the men who
were buying stocks was at best but A
vague prospect. When this perfectly nat
ural assertion of the right of ownership IS
made Wall street Is indignant and asks
that government deposits be relieved of the
reserve obligation. that the treasury antici-
pate interest and buy bonds. Faults in the
banking system are numerous, and defects
in the governments financial policy have
long been recognized. but the present sit
uation among the clearing house banks
indicates that the best use was not made
of the fundamental facts at hand.
When the record Of the past two years
is made up 1t will require long column for
OVERRIDING. for mistakes and the disregard
ri
from to Is per cent. with call money ruling
around 10 per cent, and time loans refused
regardless Of the character OF the colater-
ais. tOday's bank statement reports an In
crease of s., 344, 200 In loans. The surplus
reserve Is reduced to 81. 527. $50. or Is in
creased to 81 .6S5. 700 If the % per cent Is
waived on the deposits Of government
money.
The selling which followed the publica-
ton Of this statement was vigorous and
effective Prices declined from l to 81 per
cent. and apprehension as to next weeks
market was unmistakable. The coal strike
remains to aggravate a bad situation but
its settlement has been desired largely as
a cloak for pending liquidation. Rallies for
the present can scarcely run beyond the
limits Of traders movements. There is a
well organized bear party at work and de-
clines will be arrested by coming move
ments. Commission houses will probably
have an increased volume of selling orders
during the coming week. and the predic-
tons OF higher prices attract little atten-
ton.
At lower level there will be some new
money come into the market. but the
shrewdness which has kept 1t out thus far
may be relied upon to keep 1t out until
figures are produced to show why the
situation has improved. The owners OF
per cent common stocks may not regard
them with much favor in the present state
of the money market, and per cent stocks
of this character should react from par
and above to a AZ or per cent basis be-
fore any really substantial readjustment
Of values Is had.
The industrial shares are doing a well as
ST. Paul, Missouri Pacific. Union Pacific
and numerous highly recommended issues,
and they will undoubtedly find a good mar
ket at concessions. especially the per cent
preferred shares. The closing level today
emphasizes very clearly the expectation OF
bargain prices before substantial relief is
had. The storm signals are set and none
but the foolhardy will disregard them.