The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-08-17
THIS WAS THE NATURE OF THE
WALL STREET MARKET
YESTERDAY
STILL HIGHER MONEY
RATES ARE LOOKED FOR
Tone of Transactions Heavier Than
Ever After the Appearance of the
Bank MISUNDERSTANDING and
Philosophy of the Transactions in
Stocks of the Past Week.

local money market. In spite of the re-
lief afforded by extensive transfers of
loans to foreign lenders through the
medium of the exchange market, the
large local requirements have resulted
in increasing the average of bank loans
to the extent of $2,653 900. The stock
market was dull and professional
throughout. IA
There is no loan market on Saturday,
and the practical effect of the bank
statement on the money market must
await the opening on Monday 1t is
clear that higher money rates are in
dicated. There was a continuance of
the aggressive bull movement in the
Ioledo, st. Louis Western stocks.
out they reacted sharply with the gen
orally heavy tone developed after the
pank statement St Louis Southwest
err spreIerred was rushed up to Ia
over last night just before the close.
Southern Pacific and the Western
stocks generally were subjected IN
profit taking. The reported intention Of
the Southern Pacific directors to ask
authority to issue 100000, 900 of bonds
TO improve the, property is given as an
explanation OF the recent strength of
the stock. The market closed heavy.
Weeks Conflicting Influences.
The country's brilliant crop pros
poets. and the danger of a stringency
IN the money market this fall have
been the conflicting influences in the
stock market this week. The week
opened with the latter influence de-
cidedly in the ascendant. The bank
statement published last Saturday.
while the stock exchange was not in
session, revealed so considerable an in
road upon the surplus reserve of the
g galks' alreaays at an unusually low
figure, that a disquieted sentiment
made itself evident in free offerings Of
stocks.
The maximum interest rate. which
had not exceeded 3 per cent for call
loans, ran up to A per cent, and the
majority of call loans have been plac-
ed at that rate during the week. Then
the publication of the agricultural de-
partment's crop report and the expert
estimates based on it's figures turned
the tide of sentiment towards the bull
side. There was some later relief from
apprehension over the. money situation
wrought by the abundant supply Of
foreign exchange bills, indicating new
offerings of foreign capital in the LODI |
money market. Rumors of important
new railroad combinations were re-
neWed and the operations of powerful
speculative pools gave the market some
animation.
m Market Rather Spotty
The appearance of the market has been
somewhat spotty, however, and the ext
ge4nlc 6d 1ef The money market have had
tnuSlasm. The government crop report
seems to warrant the belief that the grain
harvest OF the country will pass the pre-
yious maximum The foreign require
ments are not ets so clear. but tits evil
dent. that We WiArhaNe a very abundant
surplus to send abroad. Railroad au-
tnorltles from all parts of the country
report very large current traffic and a
prospect Of All the business il. the ~
ture they have facilities to take care
of.
The extraordinary demand from iron
and steel continues in excess of the do
nestle capacity, and imports have to be
made to meet requirements The anthra-
cite miners strike, the only seriously I'M
favorable feature of the situation, is a
factor in restricting the output of iron.
Preparations for increased means of pro-
duction will do away with the necessity of
imports of iron before long. Jobbing cen
tiers report a strong inquiry for fall bust
ness, bank clearfngs throughout the coun-
try are very large and all other signs
agree in the promise of unvaring activ-
ity in trade and industry for the coming
season. High money rates under such
profitable use for money in all sorts of
ways.
Why the High Interest?
There are no restrictions of credits or
tons to account for the high interest
rates which money commands. But in
the case of securities, which may be
held at an artificial level by means of
borrowed money, there is the danger that
a withdrawal of credits from the spec
ulators would leave the stock market
without sufficient support for prices and
would lead to collapse Experience abund-
antly proves that a steady interest rate
at not exceeding s per cent in mercantile
affairs is possible while money rates on
the stock exchange for the purpose of
holding securities on margin are soaring
to panic figures
1t is clear that 1the demands upon the
money market this fall will be unusually
large. At the same time the indebted
ness to foreigners is known to be ex-
traordinarily large Syndicate borrowings
abroad early in the year may be presumed
to have. been predicted upon the main
tenance of our favorable trade balance
at last years level. Instead of that the
excess Of our merchandise exports over
imports for the seven months of the cal
endar year is, $133, 1926, 832 less than last
year. There has, in consequence, been
very extensive renewal of foreign Dor
rowing to later maturities This short
interest overhanging the exchange market
has deferred prospective shippers Of mer-
chandise from offering bills against these
covering at a profit when the crops move
is much diminished.
Larger Trade Balance.
But while the trade balance in our favor
has thus materially been cut down, it has
still mounted to the substantial figure of
$191, 455, ISL in the seven months last past,
and is substantially added to with every
passing month. The prospect for the ex-
port demand for the coming crop indi-
Gates that the increase in our trade bal
ance will be largely accelerated.
The growing certainty of this has led
to the large additional borrowings abroad
which have led to the sharp decline in
the foreign exchange market during the
latter part of the week, has checked the
outward movement of gold and aroused
the hope that source of sufficient supply
has been found for meeting the coming
requirements of the West for money and
credits during the crop moving season.
The beginning of this interior demand is
now almost daily expected.
Fears of disturbance of the money mar
ket by the government fiscal operations
is not altogether allayed, although the
continuing deficit in the revenues up to.
this time has relieved the money market
from requirements on that score. The
enumeration of - influences which have
been made to subServe speculation would
not be complete without including the
sailing for home of J. P. Morgan upon
whose return many important projects
are supposed to wait, and the prospective
return of j. r. Ksene, whose speculative
leadership in the practical operations in
the market is sometimes factor in ami
mated dealings.
A few speculative bond issues have
comprised the features in that depart
ment. United States Is advanced Il and
the 3S, new 4s registered and S. IL per
fr1f ceN