The sun. [volume] (New York [N.Y.]) 1833-1916, 1902-12-15
THE FINANCIAL SITUATION.

of the week was almost entirely stagnant
and most Of those having interests at stake
had settled down 10 the conviction that the
market was In a period Of speculative dead
lock that was likely to last until the end Of
the year. The commission houses reported
that their loans were greatly reduced and
that they were carrying very few securi-
ties; while the "boays" confided ,o their
in;iinatcs that they must hold strictly
in mind the late Mr.. Gould's famous maxim
that ii was never safe to sell duh market. Z"
Il was the general opinion. in other words,
that the market had settled down TO "A long
rest and was. on the whole, in pretty safe
position. In the twinkling of an eye all
this changed. Prices began - sag "A little,
then weakened sharply in one or two stocks
and finally broke with a violer o. approach
ing that of a panic The particular event,
If there was a particular event. that caused
the trouble IL still not clearly defined, The
money situation is the abiding cause, of
course. of the present depression in the
market: but stocks began to decline on
Wednesday while money rates We're yet un-
disturbed, and they recovered on Friday
while these rates were at their highest
point. Some said that the banks were
not satisfied with the partial liquidation
of holdings made by certain spectators
and had notified these operators that they
must further reduce their lines. Others
declared that the whole affair was solely
the work Of tho room trading element, who
discovered that there were many stop loss
orders in certain stocks and that il was IA
comparatively easy matter to go through"
them. The weakness of the Steel stocks
L,.l ..,,nl Il s,,l IL. Il
fall and il was rumored that a very prom-
nent man in the iron and steel trade lad
disposed Of his interest TO the United States
eel Corporation and had ident fled him
self with a newly formed independent steel
manufacturing company. whose rivalry
Of the United States Steel Corporation
was said 10 be formidable. There might
have been some truth in some or all of these
stories; and the selling Of stocks when
once started was undoubtedly assisted
slightly by the Venezuelan difficulty.
Affairs in Wall Stree, Just now may be
compared TO a very tightly drawn string.
There j. always the fear that the string
may break; and when the tension obviously
becomes greater than ordinary. people
rush 10 put themselves in a posi-ion of
safety. Post-mortems are. however.
seldom valuable. even when they reveal
facts. Tn" stock market by reason
Of the excuses of individual specula-
tors and of pools and syndicates. il
and has long been in a dangerous
state; and /, will continue in a danger
Gus state, with sudden drops in prices
sudden rallies. and semi-panics occurring
until one of two things happens. either
an influx ofinvestment buying or Cheapen-
ing Of the value of money. The invest
ment buying may lie stimulated either by
lower prices for securities or 10y de velop-
ments concerning the couutry's legiti-
mate business prosperity which will in
duce posses-ors of money TO believe that
the present range of prices for railroad
and industrial shares is not, after all, too
high. of the two alternatives the first named
is. Of course most likely to occur. TIE
cheapening Of the value of money may
come either from rela nation OF he present
financial stringencv in a normal and proper
way, or from an initiation Of the country's
circulating medium such a. that which
would be accomplished by bank asset
currency system. A cheapcning Of money
due to the latter cause would, of course
bring about a great rise in the price Of all
and potatoes, which money buys. But it
would he the direst evil that could bcfall
our nation.
Tie temper Of speculation in Wall Street
is, despite all that has happened. bullish.
II is realized that the railroads ard the in
dustrial concerns of the land are making
magnificent earnings and that all these
concerns are in far better physical share
than they were. Their value. az measured
by earnings. has increased. subject only
to the as yet undetermined drawback of
the increase in necessary expenses. The
orders ahead" in the steel and other trades
seem to insure another profitable year in
general business Such things a. cancela-
ton of orders when financial clouds gather,
have, however. been known. Conservative
bankers declare that they do not look for any
pronounced ease in money before he middle
of February or perhaps not until the end
of the wu.ter. Wall Street remembers.
however, that many Of the bankers who
are now declaring that they see tight money
ahead for an indefinite period were large
lenders Of funds for six months mt a. per
cent. in July and August and al that time
declared that money would remain easy
throughout the year. II may he these
DdlheTS are TlIrlaktn low a tleE were
before. There are many complications
III the matter that even az ordinarily docelt
guess regarding il, event Is difficult. There
have been some Incidents recently that
have made Il look as though rates for the
use Of money were likely Ia rule high for a
very long time, and fears Of this nat IRE have
been reflected in the current Speculation
When great corporations Of undouhted
credit pay ! per cent, for the us" of money
for year and when very considerable
sums Of money can he placed AZ such a
rate for such n period. il docs not seem
"a though there was going to he any great
rush OF investors to buy 4 per cent railroad
stocks or 3H per cent and even per cent
railroad bonds. Nothing could he more
Illustrative Of the present situation than
the recent sale of the Pennsylvania Railroad
car trust obligations upon a A. per cent
basis. II develops that the issue Of nearly
100000 Of Boston and Albany 81 per cent
refundinG bonds. which were offered last
spring at los. were sold finally, or a greater
part Of them, AT 1929. Here comes, too, the
refunding 81 s2i,O0O,OOO Of the New York
Central first mortgage bonds The new
bonds are TO draw 81, pr cent. interest