The Indianapolis journal., 1903-09-06
They Are Holding Large Amounts Of
Securities That They Cannot Rid
Themselves of and Are Timid.
WEST is A HEAVY CREDITOR
MUCH EASTERN PAPER Is LIKELY
TO BE CALLED SOON.
Secretary Shaw Relieves Apprehen-
sion i'm Wall Street, but S4O,OOO,OOO
May Not Give Full Relief.
pecial to the Indianapolis Journal.


by Secretary Shaw that he is in position
TO release $40000,000 to relieve financial
stringency has done much to inspire conf
dence in the speculative markets. 1t is ar
gued that the deposit of this sum would be
equivalent to an influx of $160 O00, 900, every
dollar in cash representing 81 in credit,
cording to accepted theories. Mr.. Shaw
holds that the government can get along
with a working balance of $4,000, 600, and he
is clearly of the belief that the treasury
should not lock UP any more funds than
is necessary. Should the demand be suffi-
cient TO call into use the $40,000,OoO which
Secretary Shaw says he can spare the ma
tional bank repositories would then have
nearly S2OO, 100000 of government cash. This
amount is SO large that Congress will un-
questonably be tempted to require the pay
ment of interest by the banks having the
use of the money, and it is not unlikely that
legislation to that effect will be enacted, if
nothing else is done at Washington.
XXX
1t is by means certain, however. that
even the promised S4O,0OO,OO0 will give as
much relief as the business interests of the
country require during the autumn and
early winter months. The banks and trust
company filled with great masses of
securities for which there is no present
market. and they will have to carry this
stuff indefinitely. Much as they would
like to see a bull market, ii Is to their in
terest at this moment to discourage specu-
lation. Their power is being quietly ex-
erted to repress speculative enthusiasm.
They frankly state that they have no money
TO finance a bull movement and that IL is
the part of wisdom to keep prices down and
prevent undue activity in securities. The
newspapers, commercial agencies and brok-
ers are having good deal to say about
the prosperous condition of the Western
banks and theorize from that fact that there
Will be slight demand upon the reserves
in Eastern banks for crop moving purposes.
This idea may prove to be correct, but
there is one point which seems to be gen.
orally overlooked. namely, the immense
amount of money loaned in the West
Eastern paper. These loans are made out
OF local funds and as local demands for
accommodation increase it is inevitable that
these loans will be called The effect will
be the same as though bank reserves i'm
Eastern repositories were drawn upon di-
rectly as Eastern borrowers will have to
secure cash at home TO meet their Western
notes. There is hardly an important bank
ing center in the West that is not carrying
Eastern paper-Some of IL commercial paper
and some of it collateral notes. This is
a feature which is understood by bankers
but not by the community in general. That
is one reason why the bank rates hold so
strong in the face of apparent assurances
of a plentiful supply OF currency. New
York banks are making ii as hard as pos
sible for mercantile houses TO secure time
money. They loan grudgingly even to their
best customers. 1t is related that one of
the largest mercantile houses in New York
went to its bank for money and was met
with n refusal. 1t went down the line, ap-
plying at other sources, but without sue
cess. Whereupon il returned to its own
bank and made peremptory demand for
money. The firms credit being gilt-edged
the bank was obliged to surrender, but il
did so only under pressure and exacted 6
per cent with a small commission. This
incident illustrates the prevailing situation
and affords a basis for bearish argument
against stocks.
Loud denunciation has been heard on
every hand of the manipulation Of cotton,
but 1t is beginning to be reluctantly con-
ceded that the high prices now prevailing
are attributable as much to conditions as
| to speculative operations. There is no get
ting around the fact that the visible supply
of cotton is the smallest in a number of
years. On account of the high price reached
| by this staple conditions are now becoming
| deplorable. New England mills have been
| closing down, thousands of employees have
been thrown out of work, and cotton goods
| in cotton is cheerfully predicted by the bull
party now active In the market between
| now and the appearance of the new crop.
! The most bitter denunciation of the manip-
ulatiOn of cotton has come from the New
| England mill men. but they themselves
| went in for speculation and sold their actual
supplies on the rising market, and to this
| fact no doubt, is partly due their high feel
| ing. They have been waiting e-er since for
| a collapse in the corner, and are beginning
now to realize that they miscalculated not
A IONS n
| strength of the successive bull cliques. On
| account of the high prices reached foreign
buying has been restricted to considera-
BILE extent, and, as cotton constitutes the
| principal item of yearly exports, our
| balance of trade has been suffering in con-
| sequence.
Evidence does not accumulate in support
of the claim that business at large is
1 showing decided reactionary tendency.
1t is true that there is a prospect Of a let
ting down in the demand for some Of the
products of the iron and steel mills, and 1t
is also possible that the buying ambition
Of consumers is slightly dulied. but there
is still an almost universal state of great
| industrial and commercial activity. Mills
| and factories of almost every kind are still
greatly behind in their orders. In many
| branches of industry it is impossible to get
| work done without delay of weeks and
months There is a strong likelihood that
| the demand for steel rails will experience
| a sharp falling off after the turn of the
year, as railroads generally are entering
| upon policy of economy in construction.
The railmakers, particularly the United
| States Steel Corporation, are not alarmed at
! this outlook as they are equipped to re-
| enter the foreign field with their goods
| should the home demand fall off and the
| need arise for an old world market Mr.
| Schwab is in evidence saying that steel
| rails can be made at profit should the
price go down TO sl5. Ii is notorious fact
| that America can undersell the mills of
Great Britain and Germany.
Wall street is experiencing what is called
a weather market. Attention is being con-
centrated largely on the crop situation. and
| the subject OF greatest interest is specula-
ton on the possibility Of destructive frosts
I'm the corn belt. Several weeks of irnmu-
nifty from frost will be necessary for the
maturing of the corn crop. and with the
dawn OF fall apprehensions increase on that
score. The weather reports show hot day:
I through a considerable part of the coun-
try but also make note OF the fact that
the nights are getting cold. and i'm
| many cases the tempera ture very nearly
| approaches the freezing point. This condi-
! ton has stimulated bullish sentiment In
| corn and the feeling extends also wheat.
! The alarm as to the cotton outlook is not
| so keen although that crop. too. Is late.
| Those who count with confidence on i'm