New-York tribune., 1902-11-09

The Financial World.

the Street on the subject Of changed Conditions
Right at the opening decentralization was soraad
through the list by sudden drop Of a co,,rI
of points in the Steel stocks. Five points derira
in any other stock would have had less r,o,.,,
effect than this two point drop in Steel pra'
ferred: because these pre-eminently Morgan
stocks have been steadily and stubbornly d.
Tended against all raids and raiders from what
ever quarter; and had come to be regarded as a
rock of defence. Therefore when on a. sudsan
drive at them, both common and prefarraa
broke it seemed as if the key Of the uosIfIon
had been taken. and the whole line gave wav
AS the selling movement went on the markat
became alive with rumOrs The first and uost
natural was that the trust company which eba
Street has been talking about for ten days had
gone at last. Wild reports had it that the com
panys doors We're closed with a crowd Of re-
pOrters outside trying to get details. In the
curb market. it was said there was no bid at
any price for the company's stock. However
this may be, it is certain that the company was
doing business as usual up to twelve O'Clock.
and prominent people connected with it. while
animadverting severely on the kindergartan
financing which had got the company into difs-
culties. declared positively that it's affairs had
been Strengthened out and that the concern
would be kept going.
The other rumOr that went round the Street.
was that Mr.. Keene had changed his position.
and taken his stand squarely on the bear side
The selling was said to be his first demoustra
tion of his changed position. If this be true IL
must be conceded that the demonstration was
a decidedly striking one. Mr.. Keene himself did
not talk bearish yesterday. He seemed to be in
excellent humor. and disposed to joke. after his
grim fashion. This was in much contrast IN
what he has been of late. his temper for some
weeks past having been what might be called
cantankerous.
Whether Mr., Keene has changed his position
not, il was almost certainty that break
In the market was not far away when it utterly
failed to rally after the election. 1t will be re-
membered that Mr.. Gates. almost single handed
rallied it strongly on the coal strike settlement;
but he had to give up the effort and probably
was left with a goOdIy quantity OF stocks on
hand. Prices receded, and it was said that the
election would have 10 be waited for when if
things went all right. there would be big rise
The election went right. the market refused to
rise. seemed as heavy as lead; and at last came
the break of yesterday.
Doubtless there will be a rally Monday OF
Tuesday. such as usually follows a quick break
The general speculative position. however, seems
to be more correctly seen by the bankers than
by the railroad men. In last weeks article il
the market was largely due to the divergent
views OF bankers and traffic managers each
representing their own circle Of the speculative
community. The railroad men the immense
amount OF business pressing on their lines. and
the amount in prospect, and they were bulls.
The bankers. looking at their books. saw the
enormous expansion OF credits over all the coun-
try with the comparatively small basis Of cash
which it rested. and it seemed TO them the
financial structure had become an inverted pyra-
mid. They. therefore, we're bears The railroad
men talked Of big earnings. the bankers replied
this time to expand credits.
The action of the stock market seems to show
the bank men be in the right. No one could
approach the average banker any time lately
without getting a warning against spreading
out Such warnings. when once or twice re-.
peated. suggest something more than the mega
tive. No spreading out is done, but actual con-
traction begins. This applies to big operators
as well as small Bull operations on large
scale necessitate borrowings. If the banks re-
fuse new accommodations to the big operator;
II they go farther. and contract those already
given-distinctIy on the ground OF the inse-
curity of the financial situat;on-it is very likely
that the bull operator is converted by pressure
to the bear side
In the bankers view of it, credit expansion
has also gone it's limit in relieving the money
market All that it could do 10 obviate the in
cOnveniences which it's crude and cumbrous sys-
tenn occasionally works, has been done. After
this. We are confronted with the fact that the
money market is working closer, and that
outflow OF money TO Europe is Immediately
ahead of us In itself. this would be nothing;
but it is something in that it goes out in dis
charge of borrowings which we have made on
the other side. confessedly for speculative pur-
poses; and thus furnishes another proof of that
great expansion of credits which is so disturbing
the banking fraternity. We have expanded TO
the limit abroad and at home. The lender is
calling FOR his pay. The Treasury Department
says no more help is due from its direction.
There is nothing in this situation cut of which
to work up bull movement in stocks from the
present level of prices Railroad earnings are
all right. but the higher cost of money makes
the carrying OF stocks more costly. Either
money must become cheaper. or dividends be
increased, or there must be decline in prices.
The demoralizing effect of the quick two point
break in the Steel stocks has been noted Pre-
ceding this a prominent stock like sugar had
dropped some eight or nine points in three days
without apparent effect the list. This was
because the reason for the decline lay the
surface-a struggle between the cane and beet
sugar producers for control Of the Eastern mar
kets. In such fight the public at large has not
much interest. as il means more than the
selling of sugar a fraction less per pound to the
consumer, When the steel stocks broke. the
picture presented was very different. The street
saw in il confirmation of the reports that the
iron and steel trades were already showing signs
of decline; that cutting of prices in variety
of the products Of the Steel Corporation had