The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-07-26
Pressure of Liquidation Results in
Violent Declines In the Prices of
Leading Securities.
EFFECT OF FRIDAYS FAILURES
SEEN IN a NERVOUS AND EXCITED
SATURDAYS MARKET.
Bank Statement Shows Some Unex-
pected and Disquieting Features
Other Market Notes.

NEW YORK, July 25.-To-day's short
session of the Stock Exchange was feverish
and excited throughout, as after effect
of the failure of two important exchange
firms yesterday and the dread that those
failures would have sequel in the suspen-
sion Of other embarrassed firms. Through
out the wild fluctuations in prices of special
ties, the standard stocks showed evidence
of the same kind of absorption and compar-
alive stability which characterized the mar
ket most Of the week, before yesterdays
failures had excited and upset the market.
The day passed without announcement of
tract are required on Saturday. and loans
made on Friday carry over until Monday,
thus giving a breathing spell for hard
pressed firms. The absence of announce
ments of failures was not entirely reassuring
as to the adjustment of difficulties. That
such difficulties exist is now pretty we'll un-
derstood. But the general knowledge Of the
existing difficulties and of their location
seems TO deprive the situation of much OF
the disturbing power which the previous
mystery possessed and did not prevent the
absorption alluded to. Part of this buying
is by shorts seeking profits, and it is prob
able that part of 1t Is also by banking in
terests who are concerned in sustaining
values. But 1t is reported that there Is also
some evidence of investment demand both
from domestic and foreign sources, in the
belief that the abnormal speculative situa:
ton here has resulted in forcing prices to a
decline as artificial in its way as was the
imitation which preceded it and largely had
caused it.
The general market sold of again on the
bank statement. The report of actual
increase in the loan account in view of the
weeks violent liquidation is considered
for credits which could have produced such
a result must have been enormous, although
il is recognized that the situation OF the
banks must be strengthened by the addi-
tional collateral and the Improvement In its
character which has undoubtedly been
exacted The bank statement was neverthe-
less sufficient to make the closing In stocks
weak and there was late pressure also on
bonds. The convulsive contraction in prices
of many specialties was recognized as be-
ing due in many cases to closing out of col
lateral for loans Of the failed firms and some
of the stocks affected confirmed the plant
of the prominent operator connected with
yesterdays principal failure that even In
vestment stocks are unstable in the present
market. Some of the other coilapses served
to direct conclusions to the neighborhood or
other troubles toward which struggles are
making A considerable list of declines
ranging from TO 231a points could be COM
piled.
PERSISTENT SELLING.
There has been a continuance of liquida-
ton In the stock market this week, but it
has been more scattered and irregular than
in the preceding period. The active divi-
dend-paying railroad stocks have been less
affected and have shown resistance to the
depression. So far as they were offered
there was a better demand for them and
the market has been without the entire APP
parent lack of support which characterized
it at times during the present liquidation.
A large part of the buying was from the
short interest which has been accumulated
during the long decline, and which is
prompted to cover by the evidence of q
Tightening pressure to sell stocks. News
from the business world at large has con-
tinued highly favorable and until Friday
failures of Stock Exchange firms nothing
appeared to account for the shrinkage OF
security values, aside from the announce
ment of the failures in the building trades
after the middle of the week. which served
to renew the nervous tone of the specula-
ton. The precipitate decline in the iron
and steel stocks, and especially of the
United States Steel stocks. to point below
was another disquieting influence. Stats.
tics of railroad traffic have shown the
movement of merchandise on an unprece-
denied scale and railroad officials profess
an expectation of all the business for the
rest of the year that their expanded faeili.
ties will be able to take care of. In some
quarters there is even n,o some e. fear OF can
| ton of last years experience. Reports OF
railroad earnings have been generally ia
vorable and the action of the Erie direc
tors in advancing the dividend on the frs
1 eft 2 to- "a A
| basis was accepted as an expression of con
| dence i'm the maintenance OF the level OF
earnings. The condition of the crops ha.
| warranted the hopes of a large yield OF
wheat and corn. although the Weather Blu
] reau's bulletin for the week was not entire
| ly reassuring as to spring wheat, and a re
| port of hot winds In the corn belt made ar
impression on stocks at one time. But tn,
| fact of the urgent liquidation was obviou,
and the mystery of its sources and cause,
added to its influence in unsettling conf
| dence.
That unwieldy. commitments in doubtful
| enterprises, in face of the necessity fol
! the employment of large funds in active
business and in railroad betterments anC
| trouble is generally recognized. But thu
| fear has grown up that the shrinkage IL
securities values and the difficulties of tn,
money market will themselves react on tn,
general situation and prompt the abandon
ment of enterprises which are relied OF
to keep I'D the demand for commodities
| Such tenCenCy Is suggested Dy the init
| nations that various railroad companie,
] are modifying plans for betterments, OWNS
| to the difficulty in securing money for thei
| prosecution. The possibility of contrac
ton in the consumption of iron and stee
products from these cases has played M
! important part in the weeks pressure OF
the steel stocks.
/ FINANCIAL ASPECTS.
The financial community has been be
wildered in the effort to find basis for es
timating normal limit for the decline
but has received no light in the develop
ment of any considerable Investment de
mand, such as looked for at level of so
/ called intrinsic values. This has led TO
series OF conjectures whether the pc
cent rate ruling in the money market 70
any longer date than six months is to b
looked 10 as the basis of return for invest
ment in securities. With 6 per cent
rate for long time money there is undoubt
eddy some conversion of securities int
funds for placing in temporary loans. Blu
it does not follow that this process woul
be pursued down TO a price level for high
| grade securities that would yield only
| per cent. Very few railroad bonds Of
| high grade are yet down TO even pc
cent. basis IL is to be considered whethe
| the ruling per cent. rate for money IL du
| 20 o,tcb active and profifahla buafpacs o,v,