The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1902-11-23

4
rican account? That is a pertinent
question, and we do not pretend to be
in a position to answer it categorcally.
We make one suggestion, however. The
| banking situation of New York is large
| ly controlled by the fnanciers who have
negotiated the present heavy floating
| Indebtedness of this country to Europe.
| 1t may be suspected that in an emer-
| gency these men would be given a pref
| erence in dispensing accommodation. In
short, the thought naturally forces itself
upon the mind of one who has followed
the situation carefully, that perhaps the
recent selling in the stock market by
the big, irresponsible gamblers has been
the forced result of calling loans, in or
der to provide funds to take care of the
maturing loans in Europe Of our real
"barons of finance" This view is of
| course, advanced in a purely conjectural
manner. One generally does not see
smoke unless there is a fire, and the
| financial community of the United States
| has not listened for weeks past to all the
| talk regarding the desire of Europe to
see once more the money loaned on short
| time bills to the United States without
a deep-seated suspicion that some one
must be RENTING rather heavily about
| this time.
burden ON LEADERS OF FINANCE
| Apropos of our previous remark, that
you cannot keep up steam after your
| fuel is exhausted. one can reflect very
| profitably for a few moments on the
recent Trust Company of the Republic
episode. We need hardly recall the facts.
| 1t is sufficient to say, that certain Paris
| underwriters of 81, 250, 900 of the capitali-
zation of the steamship building trust
declined, at the last moment, it is al
| legged, to pay up, and the Trust Com
| pany of the Republic, which seems to
| have been closely identified with the
promotion of the combine, had to step
| forward and put up the cash, in order
| that the scheme might go through. The
| result was witnessed in a drop of the
shares of the Trust Company of the Re-
public from 355 to 10, and it was found
necessary, recently, to organize a syndi-
| cate to relieve the trust company of the
burden thus acquired. A good many in
| teresting points arise in ones mind in
| connection with this affair. In the first
| place, it was apparently found necessary
| at the start to invite Europe to take a
| large part in the underwriting, which
| establishes the presumption that capital
| for such purposes was growing scarce
| in this country. In the second place, the
fact that the promoters selected as
French underwriters men who deliber-
ately went back on their word, seems
| to indicate that reputable European
| fnanciers some time ago may have con-
| Guided to have nothing more to do with
"recapitalizing the future of American
| industry. In the third place, it looks
as if even those European inanciers
whose word is not "as good as their
| bond have at last become conservative
in the matter of putting up money on our
combines" And in the fourth place,
| the fact is emphasized anew that Akneri
can investors have had practically no
desire to relieve trust underwriters by
absorbing the securities which they have
| had to take so unwillingly. This par
ticular instance illustrates perfectly our
| theory that you cannot keep up steam
after your fuel is exhausted. But just
| here an interesting question arises:
What will happen if our "barons of
finance" do not keep up steam? That
| is really an exceedingly disagreeable
| question We have pretty tangible evil
dence that the underwriters have prac-
| tically all the securities of the ship
building trust But Mr.. Morgan has also
| his ocean steamship trust to float, and
| there is little doubt in any ones mind
| that the securities of this combine will
have to be laid on the shelf besides
those of the ship building trust. How
many more trusts there are whose Sc
| curities are reposing on the shelf, it
ho INN
accuracy; but the number is probably
very large indeed. This is a very serious
| matter; for it implies the locking up of
a great amount of the available re-
sources of our "barons of finance" which
they may need now, or a little later,
| for the purpose of bostering up the
general stock market. Heretofore, the
| market has relied on the ability of a
coterie of great financiers to come to its
rescue whenever the Sky became black.
These men have had almost unlimited
credit at home and abroad. and it is
to them that our thoughts instinctively
| turn when the gain from more perfect
mobilization of capital is talked about.
But if these people are going to have one
unstable combine" after another come
back on their hands, does it not follow
IldI GNtHbudiiy IHSii cAbiilIJ " NNiiAS ~
the rescue of the financial situation in
critical moments must be greatly i'm
paired? The immense financial activity
of this country in the last few years
has been largely built up on name,
and it is highly important that that
name should lose none Of its prestige.
HOW THE END WILL BE REACHED.
We might go on multiplying reasons
why a recession in our industrial pros
perity may be looked for, but those al
ready mentioned are sufficient. Prices
of commodities have outstripped pur-
chasing power, and the supply of capital
for huge enterprises has been practically
used up. The one cause ought to be suf-
fcent without the other to produce
certain amount of economic revulslon.
We have already very clearly implied
that neither cause can be easily got out
of the way. There is bound to be a fall
in commodity prices, rather than rise
in incomes. And as regards the supply
OF capital available for large schemes,
it will be necessary for our financlcrs to
wait for new wealth to be created, be-
fore embarking on any more schemes