The San Francisco call., 1904-07-24

crisis suddenly developed in the rela-
tions between Russia and Great Brit
ain over the seizure of vessels in the
Red Sea revived all the worst poten-
tialities Of a spread to the great pow
ers Of Europe Of the armed conflict in
progress in the Far East At the meet
ing of the Northern Securities directors
the unceremonious refusal to even con-
slider a conciliatory proposition looking
to a settlement Of the dispute between
stockholders out Of court gave strong
ground for an assumption that the is
sue between the two parties for the
control Of Northern Pacific and Of the
Northwestern railroad situation can
only be settled by the success of one
or the other party.
There is no question in American
financial circles which has caused so
much dread and anxiety as this. Yet
this weeks incident had stimulating
effect rather than otherwise upon the
market. The blunt assertion by the
leading organ in the iron trade that
the Improvement had been taking place
chiefly in Wall street did not prevent
United States Steel preferred from sup
plying one of the principal sustaining
influences in the market The damage
to the wheat crop in the Southwest was
similarly ignored on the Stock EX
change In looking back over the re-
cent upward movement ii is easy to
perceive what a dominant influence has
been played by Union Pacific. The di-
mensions of the transactions and the
extent Of the movement in this stock
carry conviction that the insiders and
banking interests in the property were
concerned in the dealings. This involves
one of the principal groups of capital
lists which make uD the dominant con-
troll Of the great railroad and financial
institutions Of the country. So signal a
demonstration Of confidence in future
values as was implied by this opera
ton undoubtedly did more to instill a
feeling Of confidence into the general
temper than any independent study of
conditions and the drawing of infer
ences could supply. The advance has
proceeded under the confident assump-
ton that it was following well-informed
leadership.
The plethora Of the money market
has been a contributing cause. Some
anomalies in the money situation have
not escaped discussion, however. The
congestion in New York is seen to be
largely Influenced by conditions in the
local banking situation which are the
outgrowth Of the prosperous period of
the last few years and the large in
crease in banking competition. Induce
ments to deposit both by outside banks
and trust companies and by individual
depositors remain in force in the pres
ent stagnant money-market and throw
the burden upon the New York banks
Of finding employment for idle reserves
in order to meet the charges for inter-
est allowed, while also increasing the
obligations upon them for meeting ulti-
mate reserve requirements.
Obligations by New York banks to
other banks and bankers are larger
even than usual, so that interior needs
for the crop movement will enable out
side banks to draw more freely than
usual on New York reserves. The large
increase in the taxes of Government ex-
penditures over receipts has led to a
semi-official intimation that the treas
ury will not be able to afford relief to
the money market this autumn and the
depletion Of the Governments avail
able cash balance even leads to the dis
cussion Of a possible necessity of with
drawal of Government deposits from
the banks. The war scare has also led
to a hardening Of foreign exchange.
But the significance Of the accompany
ing news Of the shipment OF million
dollars in gold from Australia to San
Francisco is not to be lost sight of.
The demand for remittance from New
York may be regarded as based in part
upon the expected receipt at San Fran
cisco of this gold.
There has been occasional hesitation
manifested in the bond market, but the
tone has been good. United States
bonds are unchanged on call from last
week.