The Montgomery advertiser., 1903-03-08
WALL STREET REVIEW
BANK STATEMENT DEMoRAL-
 IZES THE MARKET
It Discloses Fact That the Surplus Reserve of the Clearing House Banks is Almost
 Wiped Out.

New York, March 7.-The stock market was thrown into a condition of demorali- Zation today by the disclosure of the fact that the surplus revenue of the clearing house hanks was practically wiped out. Excluding government deposits this item is now S665.9I5 compared with $3,95S. .425 at this time last year and SlO,7l7,215 two years ago. The severe loss In cash re- serves was about as much above the pre- liminary estimates as last weeks loss was below it thus discussing the rectifca- ton by the average system or computa- ton of last weeks discrepancy. The $10.- WOOO0 loan contraction fulfilled the eXpec- tations that the stock market liquidation of the week and tse shifting loans to foreign money markets would be reflected in that item. but the loan contraction must have been nearly $40 900 to keep pace with the rate of depletion of cash reserves. No reader of the bank state ment could be left in doubt that fur ther calling of loans would have to be resorted to by the banks next week and operators threw over stocks in all direc- tlonS to prepare for this emergencyq some futile efforts were made to check the decline by supporting orders, but these proved too flimsy for the purpose and prices broke through violently to the low est of the week. Prices were Crumbling dangerously when the market closed at about the lowest and on very active deal Ing. Fierce raiding tactics by the bears were a factor in the slump. The declining reserves of banks and the loan contrac- tion which resulted were the determining factors in the situation. But up to this week this factor has not been largely ef- fective in shaking the confidence of a large speculative party in spring ad- vance in prices. Selling has been grudg- ingly done and only when forced by re- striction of credit facilities. Sentiment this week has changed and has become bearish, as shown by the ready attention given to all unfavorable developments and the entire lack of consideration given to any thing of a kind promising all for values. Great disappointment was caused by the showing of net earnings by such railroads as reported during the week for January The December showing had been better than that for November and the fact that many advances in freight to the hope that the inroads upon net earnings due to increased operating ex- penscs would be corrected during Jan nary. Owing to freight congestion. storm | blockades and the high phices of coal for | fuel. the January returns show that in- creased gross earnings of railroads are generally almost wiped out by added ex- | penses.
 Union Pacific showed a decrease of over l 20 per cent in net earnings in January and | for St. Paul the gross well as the net I earnings fell off. The gross earnings for | February on the contrary showed some | handsome increas as. New York Central % per cent gross The average ~ate of in-
 
 | for February reached to nearly r per l Ccn-. This showing failed to reassure holders of stocks. The wholesale expend- | itures contemplater for increased facili- | ties and betterment and the enormous capital issues projected to provide means | are given gloomy reception in the | financial world. The promise of an in- l crease of earnings stuff clently to pay charges on these issues is not effective in relieving the fears caused by the rapid | absorption of available capital, the glut | of nev securities and the slow market 1 for them and the dread of money strin- gency during the coming autumn. The 1 failure of the Aldrich financial bill em- l phasized this feeling as some relief from | the drain of surplus revenue collections l from the money markets had been hoped l for from this measure The decision of l the United States Steel Corporation to proceed with it's projected bond issue and preferred stock conversion as the legal | obstacle to it were removed, was followed l by a drop in the price of new bonds when l issued from above @ to below SS. This in-
 cidont had a notably disquieting effect upon the financial sentiment. There has been recurrence of uneasiness over the
 labor outlook, due to the dispute between
 the Wabash and its employees. There
 Is dread that the dispute may spread and | involve other systems. The judicial in- junction issued against the labor union has come under interested discussion on
 account of its far-rea ching scope and the | | with lively interest. The slump in cotton | was not without it's effect upon stocks l owing to the liquidation for the purpose
 of protecting interests in the cotton mar
 ket. The money situation from day to
 day was reflected in the advanced inter-
 est rate. With surplus reserves of | the banks last Saturday at the lowest
 for a dozen years. with loans practically
 at the highest record figures for the New | York associated banks with the sub-treas-
 ury with drawing nearly a million a day | from the money market and with interior
 exchanges holding against New York il
 Is not surprising that loan contraction by
 the hanks has been followed and that
 money rates have run up. notwithstanding
 resort to foreign money markets for very
 large loans. No accurate estimate of this
 foreign borrowing can be made, but the
 break in foreign exchange and the rise
 in interest rates at Paris and Berlin with
 the necessity for the Bank of England
 to retain its per cent minimum discount
 rate to protect London are all un-
 mistakable indications that 1t has been
 large.
 Bonds have suffered in common with
 stocks in the weeks selling movement
 United States 2s. coupon and 3s, coupon
 advanced IA and the 2s. registered. de
 clined IA per cent. as compared with the
 closing call of last week.