The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-11-16
BANK STATEMENT FAVORABLE
HEAVY SELLING MOVEMENT OF
PENNSYLVANIA SET IN,
Which Cost that Stock the Greater
Part of the Gains 1t Made the
Previous Day.

to offer anything of representative char
acter. There were a few points of strength,
including Chicago e Alton, on a revival of
rumors OF its possible absorption as con-
Meeting link in a larger system. Southern
Railway advanced in response to rather
vague assertions that the Seaboard Air
line was in a way to be brought into the
Southern community of interest. The up
ward movement of Manhattan continued
on the score OF the increase in earning
power through electric operation, as re-
vealed by the last statement.
One or two minor stocks rose without
explanation. The market as whole
failed to show n continuation of yester-
days movement to cover shorts and prices
drafted rather aimlessly. The bank state
ment proved decidedly more favorable than
the forecast had indicated. but nevertheless
it's publication was followed by a brisk
selling movement, which conferred upon
Pennsylvania, costing that stock the
greater part of yesterdays gain. Reading
and Amalgamated Copper also lost more
than a point and the whole list receded
to below last night. The decline in the
cash reserves of the banks proved to be
only s2,9S.2Oo Yesterdays estimates indio
Gated an out-go for the week of $4,0O0,0O0
without allowance for yesterdays arrival
of foreign gold to the amount of nearly
fU Inc h deposit h la .la sss so OF the
cipally through the loan contraction Of
$40, 240.500. The reserve requirement is thus
ing an increase in the surplus of s744,2OO
With the falling off of the movement or
currency to the interior which has oc,
afioat for this port, the money market pros
pect seems to offer occasion for un-
easiness, without counting the likelihood
of a considerable further movement OF gold
this way.
RESISTED FOR A TIME.
The market closed dull and heavy. Enor-
nous selling of the United States Steel Sc
curities, followed by selling of a similar
character of Pennsylvania, has disturbed
the stock market during the week. The
sympathetic effect of the weakness of these
stocks was resisted for a time, and the
general market showed a degree of firm
ness. but ultimately succumbed and yielded
to a lower level. The source and the mo-
tives of the selling have been subjects
Of wide conjecture, much Of which appeared
in the form of assertion of facts that could
not be verified. The diligent activity of
a large and well-organized bear party
counted for some of the rumors set aftoat,
and a large part of the dealings In the most
prominent stocks was evidently for profess
sional account In the form of trading in
and out for short turns on the movement
without affecting the actual holdings of
stock permanently. But the success attend
ing these professional operations and the
steady downward course of prices pointed to
a process of actual liquidation and of i'm
polling causes for IL, which undermined
Speculative confidence and weakened the
whole market The course of the United
States Steel stocks had for the most obvious
explanation the depressed condition of the
iron and steel trades, now freely acknowl
edged.
The professional leaders of the campaign
against these securities apparently fixed for
an objective the price of 50 for the preferred
and 10 for the common, and those points
were touched by both stocks and overrun
by a by the preferred Large covering OF
short contracts then followed, and rallied
both stocks. The covering movement was
encouraged by the formal announcement Of
the decision to cut prices no further than
had been done i'm contradiction to numerous
rumors in persistent circulation. But senti-
ment over the further developments in this
important index trade is still much unset
tied and doubtful. The effect upon con-
sumptive demand on the new basis of prices
is awaited. Continued discussion of plans
of economy by reduction OF wages outlay
and agitation for reduction of freight rates
on iron and steel products are accepted as
indications of further contraction in the
trade.
RESTRAINT HAD NO EFFECT
The developments have indicated the
futility of the United States Steel Corpora
ton as a device for maintaining stability
in the trade as had been hoped for it at
its formation. The restraint which the cor
poration had been able to exercise upon the
rise In prices during the period of active
demand was proved Intellectual to conserve
that demand and the present cuts in prices
point to the necessity of old methods to
stimulate demand afresh. The result has
bpau IN former
of an interval of extreme depression in the
trade must be faced. Greater confidence is
not felt in the power to restrict production
and prevent the Improbable accumulation
of stocks.
But the effect Of this process upon earn
ing power and dividend payments is dreaded
Account must also be taken of the effect
of the operations of the preferred stock
conversion syndicate. 1t is made occasion
for criticism that while this syndicate is
under contract with the corporation at an
agreed compensation of 4 per cent. on the
par value of preferred stock converted, the
heavy decline in prices of the corporations
preferred stock is made by force of circum-
stances 20 increase the profit on the syndi-
Gates operations. On Tuesday of this week.
when United States Steel preferred touched
49,. the low price for the second mortgage
bonds was s., thus offering a margin Of
Isl. points of profit on the conversion Of
preferred stock into bonds, besides the
per cent. commission TO the syndicate. The
syndicate was a large buyer of the pre-
ferred stock Tuesday and this helped to
rally the price. No authoritative informa-
ton can be had as to the syndicate opera
tons remaining to complete the conversion
of the available stock. The depression in
the iron and steel trade had direct bearing
on the movement In Pennsylvania. owing to
the large tonnage Of iron and steel products
carried by that road. The falling off in the
coal trade by both anthracite and bitumin-
also offered factor in Pennsyl-
vanias weakness. But the principal cause
of the selling of this stock was believed TO
be the large expansion in the capital of the
system which is in progress.
SUBSIDIARY COMPANIES.
The increase in the capital stock OF the
company itself of s75.OO0,O0O par value ear
ler in the year has been followed in the
last few weeks by the issue Of upwards of
$50 100000 bonds and stocks by subsidiary
companies of the system. The increase in
earning requirements for fixed charges and
to maintain persent dividend rates thus
comes into consideration. The proposed
outlay of large sums of this capital for
doing away with grade crossings and for
terminals. Is the subject of estimates as TO
the increased earning power of such i'm
of the liquidation In the company's stock
new bond issues. II is intimated that large
foreign subscriptions have been made 20
the new bonds and foreign selling of Penn
sylvania stock during the past week has
been reported on large scale. The eff
feet of the foreign bond subscriptions on the
international exchange situation has been
partly offset In this way. Other offerings