The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-01-16
rHE FINANCIAL SITUATION,

THE FINANCIAL SITUATION'
Il cannot be said that there were any
really striking developments In financial
way last week and the stock market until
toward the end Of the week tended to the mr.
rowness that has come to be normal at this
season Of tho year. Talk naturally sub
sided somewhat over the unpleasant and
disturbing National City Bank and Atohison
rebate scandals, and with the action oil the
Official Of the bank concerned in the hrst
named affair In taking upon himself all
responsibility for the matter, and In resign
ing his place in tho institution that inci-
dent may perhaps be considered as closed
so far az its influence as stock market
factor is concerned, although the disgrace
Of Il IL lasting and its memory ia likely 20
be poignant for a long time. II seems In
order To say IA word about the practice OF
-overcertifclton' of brokers checks which
was illustrated in this case. and which
was made the subject OF much uniformed
criticism IN certain quarters Overcertlh-
cation Of this kind, however technically
illegal Is not in itself blameworthy anair
from the Wall Street point OF view. II a.
In fact, an absolutely necessary adjunct OF
the credit operations by which business IN
Wall Street ia now conducted; and II 1t
were to be stopped II would come to pass
that all business relating to the buying and
selling of stocks in the financial district
would have to be conducted on a strictly
cash basis. which would mean. OF course
that about half the quantity OF business
that Ia now transacted would have to cease.
The reason why overcert ihcation IL neces-
sary is--as people convorsant with wall
Stree, affairs do not need TO be told-that IT
very often happens that stock commission
houses do not have the cash In their imme-
date possession with which TO meet the
checks drawn by them IN payment for
securities purchased. unless they reckon
as cash the sums that they expect to re-
ceive in the due course Of business before
the end of the day The bank carrying
a brokers' account is thus compelled. II
II desires TO retain the account at ALL TO
certify that a check by its clients is good
even though the specific quantity of funds
called for may not be present in the bank
at the time. The bank must rely upon
the faith and integrity OF its client in max
ing good the deficit before the close OF
business hours. IL is the rarest thing
In the world for such confidence TO he
misplaced. and the fact that in Wall Street
history there ia only a modicum OF In
stances where banks have. lost money
by the custom described Is the beat
proof OF its efficiency and harmless
ness Tho essential thing about It is, how
ever. that the bank overcertifying shall
do so for depositors whom it has tested
and approved and shall not extend the
xlat al, 70 tp no
sons. II was in violation Of this well known
rule that the Nervousness of the City Banks
offence consisted The credit man Of the
bank was Interested in putting out the
banks money for the purpose Of I'M
loading upon the public the stock OF
mining scheme of most doubtful merit,
and he caused 70 be extended for this end
the Same generalization of creditor
what was such in substance-as was
allowed to reputable commission firms
In the ordinary conduct of affairs There
were collateral circumstances. which now
need no further emphasis, making the
transaction peculiarly abhorrent. II has,
however, served TO impress needed
lesson, and good rather than evil viii
probably come from it, Regarding the
Atchson matter. it must be said that the
withdrawal Of the requests made by the
high officials OF the Atchison company to
the Interstate Commerce Commission that
hey be allowed 10 give testimony oontrO-
verting evidence previously introduced and
which consisted of IN admission in terms
10y the general freight agent Of the com
pany { hat the Atchieon had granted rebates
in certain instances to one large shipper
can only be taken as proof positive that
there is no defence TO the charge that can
be held worthy the name Butitis believed
TO be the general truth about this matter
that, deporable as the facts are that have
been revealed, they are exceptional and
isolated rather than typical and common
That which justifies a sounder confidence
than has ever before been felt regarding
tho position Of railway investments in this
country il that while vestges Of the old
abuses Of freight rebates, &c, may per
haps exist, they only live as remnants and
relics of former times. The wasting com
petition that led 10 the eScesses in railroad
const riction. 10 the wild rate cutting per-
formances and other manias which often
served only as cloaks for dishonesty on the
part of the railway officials Themselves
has gone. The chief difficulties the rail
roads now have 20 contend with are those
attending he problem of the mere physical
handling Of the stupendous business that
our great country offers 10 them. and is
bound to offer in even larger measure in
the years 10 come.
The varying news from Washington each
day regarding prospects for legislation
upon the tariff and she railroad freight
rate questions were, on the surface, the &C
cirrences that influenced stock market
prices more than others last week; this being
the case because in duh market attention
"a apt to be focused on matters that ordina-
rily would be thought Of little importance
Substantial financial interests have not
and never have had the slightest fear that
any action viii proceed from the present
Congress or the next one that will seriously
disturb business affairs and "A the week
ended this conviction was, 1t seems getting
70 be pretty general The tari1 revision idea
Is as dead as a doonil for twelvemonth.
and the truth ia that popular sentiment re-
gnrdng The matter seems 20 have been
wrongly interpreted Despite a great deal of
newspaper representation to the contary, It
does not appear that there IS any general and