The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-05-04
THE FINANCIAL SITUATION.

prices after these prices have already fallen
over 30 points. and the chances OF profit
are further diminished when it Ia known that
the prosperity OF general business is as great
as ever, that there can be no fears over
tightness OF money. and that there is all
reasonable assurance that nobody In Wall
Street is ain trouble" and that there is moth
ing unsound in the speculative situation.
Prices under such circumst are en-
titled to good full rally, at least The up
ward movement is very often slow in start
ing, for tide Of pessimism once set in Is
hard to turn. The time comes, however
when the leading bears" begin to con-
fess, variously. that the decline in prices
has discounted very many unfavor-
able conditions, that there is 'too much
company" on their side, and expressing
many sentiments Of like nature. to admit
that they no longer wish to sell stocks. al
though they are not yet ready to buy them.
A better demand for securities Of a strictly
appearance. 1t is observed that prices in
the general list do not decline under bad
news, as they did formerly. 1t ia discovered
that many stocks are sci ling away below
their real value, and that a large portion Of
the scares that affrighted spectators were
without reason. One or two active stocks
advance sharply, finally, because Of what
are asserted to be special reasons
Then the trading element ascertains
that it is easier to put the market up
than down and all Wall Street turns to buying
stocks, the former prominent "bears" lead
ing in the operation, having accumulated
their lines" when they were bewailing
the duness of the market and cautioning
their intimates about making ventures.
So the day of depression ends,
The first part of this programme is now
being performed in the financial COM
munity. and there is small reason to doubt
that the last part will also be carried out in
due course of time. Last weeks market
was extremely dull. changes in prices of
the active stocks being very slight; it was
the typical market of convaescence and
hesitarcy. Still, as the week moved on
the hesitancy gradually faded. The de-
cis!on of the Court of Appeals in the fran
chise tax cases announced last Monday
ended the uncertainty in regard to that mat
ter which has hung over the market for
years and has been an acute source of
dread in the last six months. Wall
Street is not at all unhappy over the
upshot of the affair and its counsel to the
companies concerned is to obey the law,
pay the taxes and not carry the fight
into the Supreme Court of the United
States on a slender chance Of success.
Sometimes the advice of Wall Street in
these matters proves, in the long run,
TO be better than that of corporation law
yers and somehow the finely spun subtle
I los hni na1 y,1a line &c :;
lawyers are not now in as great repute
as they once We're. The list Of May came
and went with fewer strikes Of laboring men
seen at that time than for years, largely,
Of course. because Of the compromises
between employers and men that had pre-
viously been arranged. The whole labor sit
uaton seems now to be great ly improved
1t will take little time to find out just how
much the winter wheat crop has been dam
aged by the abnorma! cold wave that swept
over the West and South on Thursday, but
all trustworthy reports are that while fruit
and vegetables have been hurt a good
deal. winter wheat has been injured b,t
little. The growing grain has not yet
" jointed' on any considerable scale: that
is, is still in a condition largely similar to
grass and while the grain is in this state it
can freeze to tho ground without hurting.
The real feature of the stock market
last week was the demand for bonds and
investment securities. The demand, was
not of rushing order and it was dscrim-
mating. Yet it was steady and it came
not only from all parts of our own country,
but from Europe. 1t was based funda-
of course, upon the cheapening
Of money in this market There are those
who think that the rate for call loans here
will fall to ~ per cent. within a few days;
while money can now be borrowed at "a
per cent. for almost all of the longer periods
except for a time extending over the first
makes gold exports probable,
only moderate shipments are
Gold exports under such cir
are healthy, normal, and in
every way desirable. Why should banks
keep their money here when there is 90 little
local demand for it and when they can use
it to so much better advantage in E,ropey
And why should any one think that the
partial settlement Of our foreign balances
IN cash al a time when we cannot use the
cash ourselves is a bad thngy As matter
Of fact. gold exports are only now rendered
possible by the needs of England in oonnec-
ton with the Transvaal loan, and this loan
will be out of the way, i. is believed, within
en days. Then the Bank of England dis
count rate will fall.
There is another great reason for the
strength of the bond market besides the
lower rates current for the Use of money.
During the last two or three years money
has been diverted from bonds and invest
nent stocks by the desire Of people possess
ng funds to buy shares of corporations
hat were. 1t was supposed, about to be
taken in to various mergers and CONSOLE
cations at very large advance in price
Good bonds and the like yielding from
to "a per cent. were passed over for stocks
which had been bid up so high that they
we're yielding from to IA per cent =, but
which still offered alluring chances of specu-
ative profit. The decision in the Northern
Securities case, and the determination Of
great banking interests as well, settles It
hat for good while to come there will be no
more mergers either Of railroad or industrial
Hence ~ per cent stocks are no
onger attractive, and good and ~ per
cont, bonds are sought after The whole
security market, in other words, has re-
urned to normal, regular and old-fash-
oned investment basis. The Wall Street
mind, when once IL has rraspnd tbic fact