The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-05-18
THE FINANCIAL SITUATION.

A~SA
bv the securities most actively dealt ir
upon the Stock Exchange to the low price,
reached by the same securities six week.
ago there was a fall Of over &3O share. Ao
count Is taken In this computation not, as II
usually tho case. OF the closing prices Of q
days trading, but OF the highest and lowest
prices actually recorded by the different
stocks at different times: this shows the full
decline that has taken place. The view
entertained by the heads Of the great bank.
ing houses and large commission houses
has been that upon any theory OF
market movement or business conditions
that might be adopted. the fall in prices
that had occurred was all that should be ex-
pected, at least for the present. 1.-THE gen.
eral tendency of the stock market was still
upward, recovery was obviously and In the
, highest degree probable and even upon
the assumption that the general market
( movement was downward and that Wall
Street had entered upon period OF diges-
ton OF securities accompanied by lowering
prices and contraction Of business all over
the land. prices were entitled to good
round rally. The likelihood of this event was
held to be the more probable in view of the
: rosy outlook for the crops and the promise
OF good prices for them, the ease OF the
money situation, the large railroad earn
ings and continued evidence that what
ever might be the trouble in purely specu-
lative circles legitimate business was very
prosperous. It was considered possible,
though, that this recovery in values might
be only moderate and that 1t might cul-
inmate, perhaps, in the early summer. 1t
is still not safe to say that this diagnosis
of the situation has been disproved; but it
must be admitted that the rallying power
displayed by the market has been small
In spite Of all the known factors making for
an advance. the market has not advanced
but after a long period OF ifelessness, in
which spectators for the rise have become
thoroughly discouraged, quotations have
declined. The feeling is natural. there
FORE that there ia some unknown factor
of evil influence at work or that by reason
of the financial sins and folcs of past years
the spirit of speculation and investment lies
more PROSTATE than has been supposed.
Perhaps one explanation of the matter
may be the opinion held in so many high
quarters that the prevailing ease in money
is only temporary. All the bankers and
eminent financial men with whom one
talks say that the demand for money to
move the crops this year is going to be
very large and that 1t ia not at all too early
for Wall Street to begin preparations for
meeting 1t. They see nothing in the situa-
ton making Immediately for lower prices.
but they are greatly impressed with the
fact that the last report Of the condition of
national banks throughout the country,
made TO the Comptroller Of the Cur
rency. showed that while the banks In
the Eastern cities are in little better shape
than they were last year. comparison.
likewise, Of the condition Of Western insti-
tutions is unfavorable Taking the banks
of the country as a whole, the cash held is
less and the loans are greater than they
were at this time last year. There is
great change in feeling over this matter
from that which has been customary
at this time in the past. Almost invariably
our leading bank officers have
been profuse in their declarations in the
spring that the West would not call on the
East later in the year for money for crop
moving purposes. and they have been
willing to lend money freely upon specu-
lative collateral Now the idea that only
close management can avert serious trouble
because OF the drain of money that will
set in from the West in September seems
to be the one thing that is talked about
in bank parlors. Assuming that there is
no crop failure, at least as much money
as was taken in 1902. and probably more.
will he wanted to move the crops next
fall. and unless there is an influx of
money into the country the necessary funds
will have to be provided by liquidation
of loans. While for eight months past
this liquidation has gone on in this
city and In what may be called the
stock market centres Of the country,
loans on account of new business enter
prises and for similar purposes have greatly
increased in the West and Southwest
1t will be difficult to suddenly call in loans
of the latter description and the fear is,
therefore. that the brunt of whatever
liquidation ia enforced will again have
to fall upon Wall Street
Another explanation, and it is, OF course,
corollary to the one already stated, may
be the conviction, which has now become |
widespread, that the business and specu-
lative boom in this country cannot pro-
coed further until the circulating medium |
of the country is enlarged or the prices for !
labor and materials are reduced. very
large volume might be written with this
as a text. II seems almost in
credible that there should he any genuine
demand for more money in this country
after the enormous and almost unprec-
edented increase in the actual money
supply that has taken place in the last
six years, enlarged as it has been nv means
Of credit instruments and by the ingenious
and not altogether wholesome devices for
putting money in circulation used by the
Secretary of the Treasury There are
those. indeed. who hold that while we I'M
do need more money now for
he improvement of railway properties
and for the development Of our indllst ries
we would have plenty and to spare for these
purposes If Wall Streets variou schemes
IF new promotion and inflated capitaliza-
ion had not already taken the lions share
If the country's funds; and these critics
,ver that any new financial legislation for
he ostensible purpose Of affording 1relief'
which would be in fact, nevertheless, mere
scheme OF currency imitation, would be the
,reatest financial crime Of the century. Be
his as it may, the fact remains that we have
'ome to point where trade expansion in our
and. and the fair amount Of speculative
Ictivity that is its legitimate concomitant.
las had to stop because, although money
FEEL II. u