The sun., 1903-05-25
TIE FINANCIAL SITUATION.

events In the security HiATAet az '"o "ooA :
end that the murky atmosphe. % that had
hovered over the market had cleared q
little bit. Many stocks had sold down TO
q point where they looked cheap as COM
pared with the figures asked for them eight
months ago and the circumstance had
tempted little investment buying. A
GOOD many weak bull accounts' had been
liquidated and several large holders OF
stocks, some willingly and some unwtll-
lngly, had laid down part, II not all, OF their
burdens. The spirits Of our English friends
have been greatly encouraged by the over
subscription to. the .Transvaal loan, with
its demonstration Of the amount OF money
available to their hands for investment
and they seem inclined to buy our stocks
on a fairly large scale. How much 81 TINS
buying has been genuine-that ID TO say
not originating on orders from this side
or how much OF 1t, even II genuine, repre-
sents merely speculative purchases which
may he again sold in our market at any
time remains, Of course, an open question.
But II became clear as the week advanced
that liquidation iI the market was not over.
After brief rally in prices stocks sold on
again to their lowest point. The PROOF
was again clear that public interest in specu-
lation and investment alike was almost
absolutely lacking and that stocks must
be offered at lower quotations than had
yet been seen II this interest was to be
stimulated The general feeling was on
Saturday that severe fall In prices would
have then occurred II it had been possi-
bic to transact a full days business and
the sentiment was not in req iently OK
pressed that the best thing that could hap.
pen to the market woud be for it to take
its purging in short and sharp fashion and
have 1t done with.
Attention has been called in this column
for two years back, with unpleasant
frequency and emphasis as many friendly
critics have thought. to the general causes
which have resulted in the present ltua-
ton. The stock market boom In the period
has not been caused by the forces OF ordi-
nary investment, that is to say by the pur-
cha Of stocks on the basis OF their safe
and fair interest return or upon the reason
able prospect of such return in future. but
has been brought about by deals OF one
kind or another in the railway and indus
trial world which served temporarily to
establish abnormal standards OF property
valuation. The deal period has run its
course and the market is now returning,
penitent, to the old fashioned way of look
ing at things. symptom rather than q
cause the readjustment has, Of course,
been the selling OF Pennsylvania stock by
shareholders who either did not care to SUBJ
scribe to the company's new 10000, 900
bond issue or who were confident that at the
time of the issue they could rebuy their
stock at lower prices, and by bankers who
saw an "arbitrage" profit in selling the
stock and buying the rights" to subscribe
to it, The fear that the stock might fall
below the subscription price, and that
therefore no one would care to subscribe
when the time for doing so arrived,
has been removed, apparently. by the
formation OF large syndicate to UNDER
write the new issue. The Pennsylvania
started out with the idea that
the service Of an underwriting syndicate of
this kind would not be needed. They were
forced to abandon this idea. In plain
words. their whole financial plan ap-
preached shipwreck 1t was evident a
few months ago from the declaration made
in the annual report OF the Pennsylvania
Railroad Company that no further large
struction and similar enterprises would be
entered into, that what might be called
the first volume Of the history Of the I ew
Pennsylvania Railroad finance had been
written. The second volume Judging from
the chapter submitted for Wall Streets
per,lsal last week. will be no less interest,"
ing than the first.
The extent to which the speculation, in
cotton has affected the stock market has
been popularity exaggerated. The stories
that one or two very large socs market
operators were forced to sell their stocks
because they had been trading in cotton
and had become financially embarrassed
thereby. we're wholly unrounded. The real
injury done by the speculation in cotton
was OF moral and sentimental character
1t made it appear to conservative people
and TO prospective investors all over the
country that another great gamble was
being conducted n the financial district in
this city, whose ultimate consequences no
man could foresee. 1t cannov yet be said
that the cotton speculation has collapsed.
but most people think that the excitement
has pretty we'll subsidized and that the high
prices for cotton have been reached The
truth is that therehas been substantial reason
for good share Of the rise in cotton prices.
For nearly year back, almost everything
has happened that could happen to make
cotton scarce. and the outlook for the next
cotton crop is not at all bright. Under
similar circumstances in the great days OF
cotton speculation twenty or thirty years
ago, the advance in prices would have been
far greater than that which has been now
accomplished. Veteran observers of the
cotton trade, who are in position to take
an unprejudioed view Of the matter, hold
that the price Of cotton is not now more
than half a cent pound above what is. all
things considered, moderate figure for It.
All this may trouble the textile trade, and it
tends, Of course. to reduce the consumption
Of cotton goods. The matter is one, how
ever, OF simple supply and demand that
will have to adjust itself in the ordinary
way.
Turning from cotton to tho other great
agricultural staples. the prospects, for the
winter wheat crop still are that a record
crop will be harvested. All other crops,
are. however, very backward, corn planting
especially being from two to three weeks
late. so that the danger to corn from frost
at harvest time is considerably increased.
The prolonged drought over the Eastern
part Of the country Is making the farmers
in this section look pretty blue. 1t has. 80
experts say, made good hay crop