Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-08-20
Financial News Letter
,orrespondenee Of The Star.
BY w. G. NICHOLAS.

Special Correspondence Of The Star.
NEW YORK, August 10. 1905.
Every time the stock market has started
strongly upward 1t has been met with free
offerings OF long stock. In most cases the
selling was for account of spectators. who
had bought very much lower down and who
were simply taking advantage of the situa-
ton to realize profits. The effect has been
to check a growing fever on the part of the
outside public. which is precisely what the
big banking interests and the conservative
element wanted. The fundamentals con-
tinue bullish. and every indication points to
an advancing market during the last part
Of the year, but the more important inter
ests are openly averse to getting the big
broad public into the play too soon on
too large a scale. The records of 1902 and
1908 telling of the calamitous results of too
much miscellaneous company are freshly in
mind. and the market leaders have no de-
sire for repetition this early in the day.
4 II
OF course immense lines Of securities will
be for sale on any sensational advance
which may occur. and 1t is equally certain
that there can be no such market rise with
out q public enlisted in the speculation.
Usually a bull movement climaxes with a
public wild to buy. and 1t is just at that
psychological juncture that by common i'm
pulse the great banking and investment In
terests unload their speculative lines and
take their profits Some times the momen-
tum carries prices up after the rich men
unload, but eventually the absorptive power
of the market becomes overtaxed and the
long decline sets In. Eventually prices get
far enough down to attract the bargain
hunters again. and the period of accumu-
lation begins. The great market move
mi yuif n 10
larity. one differing from the other chiefly
in the extreme levels reached AS the
country increases in wealth and the railroad
and Industrial systems work into the stand
ard classes the average of prices becomes
established on successfully higher planes.
~
1t would appear that the situation at this
time justifies belief that we are in for
another upward movement of considerable
Importance. The public Is being discour-
aged by the leaders. but later on the glad
hand will be extended and invitation issued
to get aboard. That will mark the ringing
up of the curtain on the concluding act of
the play. Weight at this time should not
be attached to the frequently heard state
ment that holders of stocks working
for a rise. because they will have property
for sale when the movement gets under
way. This feature Is always present, and
as argument against improving prices
IS hardly worthy or consideration.
+
Despite the supposed quickenng Of con-
science In Wall street, due to the publicity
scandals. the millennium period has not yet
arrived In which directors and other corpo-
ration insiders do not take advantage of ad-
vance knowledge officially obtained With
the chance always before them for making
market turns on inside information men
would rightfully be entitled to place in the
angel host II they did not avail themselves
Of facts coming under their observation in
advance Of the general public or the gen.
crafty of stockholders. This Is one of the
things which no amount Of preaching or
conscience awakening can change. 'And
after all. where does the real harm come in
II directors and insiders buy stocks for
speculation in their own companies" is a
question often asked? When they go into
the market to buy the proceeding affects
the entire capital stock, and every holder
OF share benefits by the uplift.
X Il
Not every shareholder even IL fully ad-
vised of the facts known to the insiders,
would care to take a market chance-prob-
ably not one in ten-yet they have no OBJ
lection to seeing the value of their hold
ings increase. 1t Is urged on the other
hand the real injury to the shareholders
the selling of securities by directors on in
side fore knowledge. There are two sides
to that feature as well as the other 1t Is
highly improbable that any amount of dis
man nature or convert railroad and indus
trial directors and managers from human
being Into saints or give birth to an era
of publicity for the promotion of town
meeting speculation for the benefit OF pix
ing take players.