The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1902-09-28
WEEKLY REVIEW
OF WALL STREET
Heavy Liquidation of Securities
Forced
SHAWSB BOND BUYING SCHEME
BANKS HAVE BEEN COMPELLED
TO CALL IN LOANS
sHAWSBORD BUYINGSCHEME

New York, Sept, 27.--Heavy liquida-
ton OF securities has been forced in
The stock market this week by the
calling Of loans by the banks 10 make
10 the deficiency in their reserves re-
yealsd by last Saturdays bank state
menL The market steadied and re-
covered somewhat in the latter part
OF the week on the hope that the loan
contraction had been carried as far as
Is Immediately necessary and the Of
Ter OF the secretary OF the treasury TO
pay now all Of the government inter
est due for the remainder Of the fiscal
year less a rebate Of "a per cent ana
10 purchase bonds. would relieve the
money stringency. The strlngency OF
the money market WAS solely respOn-
sbir for the weakness OF stocks. and
this was In part due TO the large re-
ou.rements for currency and credits
which are an incident OF active bus
mess. Warnings have been uttered by
aI competent authorities OF the con-
dIl0ns which were precipitated this
week. and the lack OF sufficient re-
serves TO carry through the large spec
uative commitments in the market has
been clearly foreseen, without affect
ing. however. the confidence or the
speculative contingent that means OF
relief would be forthcoming.
This contingent has claimed that the
United States treasury would be
bound 10 afford ample relief 10 the
money market, that rise In the money
rate would Immediately bring In god
or that the supply Of money in the
country was already so great that the
usual demand on New York 10 move
n a EHa4 rnr
The fact was ignored that all legal
means Of returning government bonds
10 the money market require the Sc
curlty of government bonds and that
the available supply of government
bonds has become so depleted that the
banks are not able TO increase their
holdings for the purpose Of placing with
the government as security. The well
advertised fact was also ignored that
the obligations OF American borrowers
To foreign lenders were already so great
that imports Of gold must be made.
The one point Of view OF the sDecu-
latOrs was thai the country was in
a condition Of unexampled prosperity.
which promised a continued and IN
creasing value Tor securities. Powerful
combinations of spectators, some OF
them commanding all the way from
SIS. 200. 900 TO so. 900. 900. according to
competent estimates. have long been
engaged in taking on all the stocks
they could carry with all the money
they could borrow. The cheapness of
call money pending the season of ac-
tive demand for funds, stimulated this
disposition. although this eheapness
was In itself due to the expectation OF
a rise Ia money rates for long periods
and the desire OF bankers to keep thelI
resources in readily available form.
The holdings Of stocks thus taken
on had the natural effect of lifting
prices OF the securities. but they were
not taken with the purpose OF perma-
nently holding. but simply held on
margin to feed the more substantial
Investment demand expected 10 de-
Velop. So long as the banks left the
credits undisturbed with which tbs
pools held their stocks. this condition
might have been maintained indefinite
d. but the deficit In bank reserves de
yeloped last Saturday and the inabiht!
20 replenish the cash 50 as 20 max
good the deficiency left the banks n
alternative but 10 demand the repay
ment OF loans. The high money rate
which resulted tempted depOsitors o
all classes 10 draw their deposits Z
place them In call loans, instead O
accepting the comparatively meagr
interest paid By the banks on deposits
The banks were thus compelled Q
extend the process OF calling loans an
the money market was thrown int
disorder.
The procession OF actual depletion o
reserves has meantime continued
though In diminished degree. The GOV
ernmeuJs customs returns have con
tnued 20 run over $1,000, 600 a day
practically all OF which is payable di
rect from the New York banks int
the sub-treasury. and the demand
from the interior for purposes OF tn
circulation have continued. Only IN
ttrnal revenue and miscellaneous re
ceipts can be legally diverted into banl
deposits. and these are running light
The stringency OF money has caused
some weakness OF foreign exchanges
but has not depressed the rate again
% the sold import point. IL has beel
me experience with former offers b!
The treasury department to Anticipate
government interest that they brough
little response from bOndhOlders. i
Is considered improbable that IN
banks viii put again Immediately il
The stock market the loans which havl
been recalled from there this week
For these reasons, the opinion over IN
future ot the money market and III
effect on the stock Is stn uncertain.
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