The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-12-13
ADVANCE IN STOCKS
FINANCIAL INSTITUTIONS BEING BEN
Fitted BY THE "BOOM.o
Special to the Indianapolis Journal.

is a christmas movement" In London they
call 1t window dressing" The facts are that
financial and business interests generally are
benefited by an upward movement in security
values toward the end of the year and that
important financial institutions either cooperate
with professional operators TO bring about such
movement or at least encourage the latter TO
bull the market by giving them money on easy
terms Professional traders knowing this to be
true. regularly array their speculations on the
long side Of the market at about this season of
the year. After depression such has been
experienced in Wall street and with the effects
of that depression now manifesting themselves
In industry and trade throughout the country.
nothing can be better calculated TO cheer men
UP than sharp upturn in security values.
The psychological effect OF a rise in prices
der just such conditions as those now prevailing
is very striking. much more potent reason
why financial interests encourage rise in stocks
at the end Of the year is that security holding
corporations. notably insurance companies, who
issue annual reports of their investments and
the state thereof. are loaded with stocks and
bonds that cost them considerably more than
current quotations. II is, therefore only rea-
sonable that they should be interested in seeing
prices advance that the differences between
the quotations at which the securities are figured
in their statements and the prices paid for such
not nearly as great now as they were month
ago. In London. previously remarked, this
procedure is called window dressing"
The sharp upward movement in stocks began
two weeks ago. Operations for the advance
were favored immensely by the existence of
greatly oVerextended short interest, the proper
tions OF which had been overestimated in Wall
street. Successful operators in the stock market
keen students of human nature as they
of the conditions on which values are in the
long run based. An operator such. for example.
James r. Keene, knows speculative human
nature in all of it's contradictions. Mr.. Keene,
by the way. has figured very prominently in the
operations for the advance referred to. After
the rise had gone about per cent. Throughout.
the active list finally critics began to warn their
and to wait until a reaction was effected. After
the rise had gone per cent. further nine-tenths
knowing how highly manipuiative the market
was, declared very positively that prices could
traders began to night the movement Now. If
everybody expects reaction in the stock mark
the professional trading element will sell short
and thereby play into the hands or the bull
/ per cent or so further by sheer force of ma
npulation and the shorts will buy back their
stocks at a loss. This transaction will be re-
peated two or three times until finally Wall
street Is convinced that the movement is genu-
begin to take stocks freely, the market has
great volume on the advanced level and the bull
crowd distributes its speculative holdings at a
profit and stands from under. In other words.
a manipulative movement needs only to be car,
ried far enough for everybody to be convinced
that it is more than manpulative and has the
backing Of important interests. In order to
nIsced inns in tbe bs5Ss Of broers who renresens
big banking interests, and then 1t Is said in
bought by insiders' december booms as a rule.
are more or less artificial and are apt to col
n
AS yet there has been no satisfactory outside
response to the RISE but brokers are hopeful that
the public will enthuse.
January Interest and dividend disbursements is
something to be counted upon. Last year this
investment buying was rather disappointing.
There Is no way OF telling at TINS b time tbr
year than 1t did last year. 1t is customary for
buying of this kind to begin before the dividend
rying the stocks for privileged clients until the
latter get their checks for interest and dividends
and take up the securities they have bought.
The buying power Of the public has been great
ly reduced by the enormous decline that has &C.
Cured in security values. 1t is not lack of
money, but a shrinkage of credit and confidence.
The United States Steel Corporations stockhold-
alone constitute a considerable part OF public
opinion, and with Steel common selling around
those who bought their stocks between 40 and Sc
for the common and 30 and par for the preferred
degree the same Is true Of practically all active
stocks.
1t is generally believed in Wall street that the
dividends IN Steel common will be discontinued
at the next meeting. 1t is also possible that the
dividends on the preferred will be reduced to a
5 per cent. rate. although this has not yet def
initely been decided upon. AS per cent.
stock selling at IS Steel preferred would net the
investor more than per cent. on his money. II
is extremely improbable that the dividends on
Steel preferred will ever be cut below per cent
The corporation ought to be able to pay that
through the leanest of years. The sinking fund
bonds. selling above 20 and paying per cent.
net the investor considerably less ON his money,
and. as for the comparative value of the two
securities. the preferred stock Is practically as
good the bonds, the latter being better, In
fact than first preferred stock limited to 8 pei
cent, whereas the preferred stock Is pei
are never likely to be less than per cent, and
| the other per cent. accumulates 10 the credit
Of the holder Through the conversion opera.
tons. now fortunately terminated. the volume OF
Steel preferred has been greatly reduced, making
It less pnwieldy In the stock market and more
which II was advanced this week against the
| short interest demonstrated this perfectly. Thi:
| advance occurred In the face Of information tina
| the Edgar Thomson and the Joliet works. which
produce about Is per cent OF the companys stee
settlement of certain labor questions The United
States Steel Corporation contemplates variou.
wage reductions. running anywhere from 10 L
| 80 per cent. The services OF many high salareC
| officials are to be dispensed with There cam,
| a time in the affairs OF the United States Stee
Corporation when the conservative interests sai(
| to Mr.. Morgan. in substance: You are a banke
and not steel man. II is time for you Il
i step aside and let experienced steel saw,
/ this business" II was the Standard oil interes
| in the property that made this suggestion
| amounting practically to an rltimatum. to Mr.
/ Morgan. Mr.. Morgan did step aside. His coun
/ sells no longer prevail in the affairs of Unitet
| States Steel Corporation. The energies OF thos
| who are in control of the property are di
| rected to the problem of reducing the cost O
producing seel. The closing down OF the work
is an argument which is calculated greatly to i'm
| press the labor element with which the man
| agement has 10 deal. and Is calculated, indeed
4 to show the ACCESSIBILITY of accepting reduction
\ in wages rather than lose employment altogether
| A prominent authority steel and iron condi
1 tions is privately quoted in Wall street as say
United States Steel Corporation, at least in som
/ instances Is due more 10 the desire OF the cor
poration TO obtain control Of the labor situation
/ than to lack OF orders, Steel and iron interest
| abroad, according TO cabled advices being re
| ceived here, are appTehenstve of invasion 0
| foreign markets by the United States Steel Cor
| poration scale never before attempted b.
| American manufacturers Of steel and iron prod
| ucts.
| One of the most interesting Of economic the
| osies is that the consumption OF foodstuffs
| rapidly outstripping production as shown by III
| increased value OF increased crops. and further
that the areas yet available for growing food
stufs are definitely limited. whereas the cor
sumption will 20 on increasing progressivel
without Limit. The truth herein involved hs
been strongly illustrated this year in the cotto
| market The price cotton has been steadil
| cd u N