The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-06-15
THE FINANCIAL SITUATION.

Tho rebound in prices in the security
market which occurred in the last days
of last week was, Of course, inevitable
sooner or later and 1t might almost be
said that a day Of market generalization
like that seen last Wednesday was newt
able likewise. There we're a few hours
on Wednesday when things looked pretty
black The persistent circulation by the
bearish element of stories that firms and
individuals we're in trouble and that there
was something dreadful overhanging the
market. taken in conjunction with the
uninterrupted fall in prices. had worked
the public mind into fever OF uneasiness
and uncertainty, which verged dangerously
on the delrium OF a panic. The great
banking interests, who knew better than
anv one else how untrue all these stories
we're. did consider for little while the ad-
visibility of making some sort OF iorhal
denial of them, which should also assume
the form of a proclamation that the nhahc'a'
situation was sound. They finally con-
Guided no doubt very wisely, that WINE
such statement might do good II IL
was read only in this country, 1t might
be misunderstood abroad. Ihey con-
tented themselves, therefore, with privately
assuring their friends in Europe as well
as at home that there was nothing 10 DC
afraid Of, and perhaps too, they oough'
stocks on Thursday morning in LONDON
and in this market on little larger scale
than they had previously done.
There is a great deal of dispute as 70
whether the fall in prices was principally
caused by liquidation or by bear sell.
ing. Both causes seem to have played
a part. 1t became obvious in February
after the rally which followed the de-
cline in the preceding fall and early WIN
ter months, that investors were demand
ing n higher interest return on their pur-
chases of stocks than that afforded TO
them by the market; they would not
buy stocks, in other words. at preVali-
ing quotations. The holders OF securities
declined on their part to dispose OF their
properties at concessions. Therefore,
deadlock interviewed, which lasted long
time and might have lasted longer but Tor
one fact, namely, the necessity imposed
upon various syndicate promoters OF raising
money. These syndicate schemes, or many
of them, turned out failures The oollga-
tions Of the underwriters fell due, and those
making them were forced to procure funds
by sales OF stocks for the purpose OF taxing
care of their contracts. These sales again
in their turn might have produced no ex-
ceeding trouble in Wall Street; but the
great body OF professional speculators
became aware OF what was going on and
began to sell stocks heavily for the short
account. Aided by the labor troubles,
some unfavorable crop developments and
few other untoward happenings, the specu-
lators succeeded in unsettling public conf
dence to such degree that genuine liquida-
ton of investment and speculative holoihgs
entirely disconnected with any syndicate
misfortunes took place on a large scale.
The important question now IL, Does tho
advance in prices which began last Thurs
dav mark the beginning OF new and gen.
eral upward movement in the market, or
ia il merely a rally after q fall in prices
which was more severe than the occasion
warrantedp There is to be noticed, first,
the curious deusion which has prevailed
in 40 large a portion Of the financial COM
munity that the decline in values has oeen'
simply, the result OF a deliberate plan on
the part OF some great unknown market
mower for some great unknown market
purpose About half the people IN wall
Street seemed to have this idea last week,
md no remark was more commonly heard
there than that in little time the purpose
NJ the successful effort to depress prices
would be revealed. The notion was, OF
course, a vestige Of the superstition which
was 40 powerful two years ago that the
oorrse Of the market depended wholly
mon the desires Of the big men, and
that It was idle for any student OF financial
conditions to acquaint himself WIN the
forces Of supply and demand. and the re-
wards or punishments that nature held
IN store for obedience or disobedience OF
her laws. The decline in the market has
not been in execution OF any human 'pur-
nose." 1t has been brought about solely
nv the operation OF natural causes, and
there never has been time In the history
NJ Wall Street when human efforts designed
Ia either delay or hasten the operation OF
natural causes we're more helpless than
thew are at this hour. The general problem
Of the financial situation just now is diff
cult. One thing that seems certain-and 1t
is the only thing that does seem certain-is
that it will be long while before there is
a market again for railroad stocks yielding
only 4 per cent, and that, on the other hand
there is a very fair market now for estab-
lished railroad stocks-not those OF the
reorganized companies, like Atchison-
Welding S per cent. The reasonable infer
ence from this is that while business and
AGRICULTURAL conditions hold as they do.
stocks of this character will, in general
way, keep within the price range indicated.
There are stocks, OF which st. Paul per-
haps is a good example, which may not be
held down to strict per cent. basis be-
cause Of their well-known excess OF earning
power, their accumulated cash surpluses
and the conservatism OF their management.
There are stocks, OF which Southern Pacific
stands as a type. which do not return the
present investor anything, but which will
in time pay handsomely and 80 will be
bought and sold according to their prob
able future value. But the broad rule az
stated is apt to be controlling.
Taking a general look at the future, 1t
seems impossible not to regard it-not
with buoyant and entire conference.-the
with greater hopefulness than could have
been entertained at this time last year. OF
course, every American observer must be "a