The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-07-27
EFFECT OF FRIDAYS FAILURES
SEEN In NERVOUS AND EXCITED
SATURDAYS MARKET.
Bank Statement Shows Some Unex-
pected and Disquieting Features
Other Market Notes.


firms yesterday and the dread that those
failures would have a sequel in the suspen-
sion of other embarrassed firms. Through
out the wild fluctuations in prices of special
ties, the standard stocks showed evidence
of the same kind of absorption and compar-
ative stability which characterized the mar
ket most of the week, before yesterdays
failures had excited and upset the market.
The day passed without announcement of
additional failures. No deliveries on con-
tract required on Saturday, and loans
made on Friday carry over until Monday,
thus giving a breathing spell for hard
pressed firms. The absence of announce
ments of failures was not entirely reassuring
as to the adjustment of difficulties. That
such difficulties exist is now pretty well TN
derstood. But the general knowledge of the
existing difficulties and OF their location
seems to deprive the situation of much of
the disturbing power which the previous
mystery possessed and did not prevent the
absorption alluded to. Part of this buying
is by shorts seeking profits, and it is prob
able that part of it is also by banking in
terests who are concerened in sustaining
values. But it is reported that there is also
some evidence of investment demand both
from domestic and foreign sources, i'm the
belief that the abnormal speculative situa-
ton here has resulted in forcing prices to a
decline as artificial in its way as was the
infia ton which preceded it and largely had
caused it.
The general market sold off again on the
bank statement. The report of an actual
increase in the loan account in view of the
weeks violent liquidation is considered
nothing less than astounding. The pressure
for credits which could have produced such
, a result must have been enormous, although
1T is recognized that the situation of the
banks must be strengthened by the addi-
tional collateral and the Improvement in its
character which has undoubtedly been
exacted. The bank statement was neverthe-
less sufficient to make the closing in stocks
weak, and there was late pressure also on
bonds. The convulsive contraction in prices
of many specialties was recognized as be-
ing due in many cases to closing out of col
lateral for loans of the failed firms and some
of the stocks affected confirmed the plant
of the prominent operator connected with
yesterdays principal failure, that even In
vestment stocks are unstable In the present
market. Some Of the other cOllapses served
other troubles toward which struggles are
making. A considerable list of declines
| ranging from to 231a points could be COM
piled.
PERSISTENT SELLING.
There has been a continuance of liquida-
| ton in the stock market this week, but it
has been more scatteSed and irregular than
in the preceding period. The active divi-
dend-paying railroad stocks have been less
| affected and have shown resistance to the
| depression. So far as they were offered
| there was a better demand for them and
the market has been without the entire ap-
| parent lack of support which characterized
| it at times during the present liquidation.
| A large part of the buying was from the
! short interest which has been accumulated
during the long decline, and which is
prompted to cover by the evidence of a
| tightening pressure to sell stocks News
| from the business world at large has con-
| tinued highly favorable and until Fridays
failures of Stock Exchange firms nothing
appeared to account for the shrinkage of
security values, aside from the announce
| ment Of the failures In the building trades
| after the middle of the week which served
| to renew the nervous tone of the specula-
ton. The precipitate decline in the iron
and steel stocks. and especially of the
| United States Steel stocks, to a point below
| that touched in the panic of May 9. 1901.
was another dsqueting influence. Stats
| tics of railroad traffic have shown the
| movement of merchandise on an unprece-
denied scale and railroad officials profess
an expectation of all the business for the
| rest of the year that their expanded facili-
| ties will be able to take care Of In some
| quarters there is even some fear of car
shortage and freight bockades, in repeti-
| ton of last years experience. Reports of
| railroad earnings have been generally "a
vorable and the action of the Erie direc-
tors in advancing the dividend on the first
| preferred stock from to per cent
basis was accepted as an expression of con-
dence in the maintenance of the level OF
earnings. The condition of the crops has
| warranted the hopes of a large yield OF
wheat and corn, although the Weather Blu
| reau's bulletin for the week was not entire
| ly reassuring as to spring wheat and a re-
| port of hot winds in the corn belt made an
fact of the urgent liquidation was obvious
| and the mystery of its sources and causes
| added to it's influence in unSettling conf
| dence.
That unwieldy commitments in doubtful
| enterprises, in face OF the necessity for
| the employment of large funds i'm active
| business and in railroad betterments and
improvements are at the bottom of the
| trouble. is generally recognized. But the
fear has grown up that the shrinkage in
securities values and the difficulties of the
| money market will themselves react on the
general situation and prompt the abandon.
| ment of enterprises which are relied or
to keep up the demand for commodities
Such tendency is suggested by the init.
| nations that various railroad companies
| are modifying plans for betterments OWNS
| To the difficulty in securing money for Their
prosecution. The possibility of a contrac
ton in the consumption of iron and stee
products from these cases has played an
the steel stocks.
| FINANCIAL ASPECTS.
The financial community has been be-
wildered in the effort to find basis for es
timating a normal limit for the decline
but has received no light in the develop
ment of any considerable investment de-
mand, such as looked for at level of so
called intrinsic values. This has led to ,
series of conjectures whether the pel
cent rate ruling in the money market fo
| any longer date than six months is to b,
| looked to as the basis Of return for invest
ment in securities With per cent
rate for long time money there is undoubt
| eddy some conversion of securities int,
funds for placing in temporary loans Blu
IL does not follow that this process wouI,
| be pursued down to price level for high
| grade securities that would yield only
| per cent. Very few railroad bonds of T,
| high grade yet down to even a 5 pc
| cent basis. 1t is To be considered whethe
| the ruling per cent rate for money is du
| to such active and profitable business con
| ditions as to offer nm assured margin n
| profit in its employment at s per cent
| interest rate, how far, the othe
hand urgent emergencies based on pre-
| vious commitments and involving credi
| OF ca pitalists the saving of greater loss
ga have saved the, present money rate
! Many examples are known and others ar
| suspected where the liquidation is forced 4
| snve the loss of more. The fact that eren