The Cairo bulletin., 1905-10-23
SIGNALS ARE UP
IN WALL STREET
IN STATE OF BUSINESS PROSPECT
MONEY RATES ADVANCE IN
ALL TS-DEMAND FOR
CAPITAL OVERRUN.

business prospects. Both money an
foreign exchange have advanced, an
firm rates are likely to continue. TIL
significant feature OF the situation i
that this tension in the money MAJ
ket is no confined TO New York n
all of the worlds principal monay maj
Ikels rates have advanced, and thOst
who hold the reins of finance are man
Testing an increasingly prudent spirit
Interests rates at New York. London
Paris and Berlin have practically
doubled since the opening of Septem
Der, and the various international
money markets are showing a DISPOSE
ton to increase their Supplies oil gold al
the expense of each other, Bani;
reserves at New York are at the low
est point within a dozen years, save
! in one or two mOmentary periods,
while reserves of the great foreign
banks are also lower than usual and
their managers openly recognize the
necessity for caution.
| What is the reason for this world.
wide policy of prudence AT time when
| the business horizon seems cloudleas
and all other signs point to continued
fair weather? Simply this: that the
demand for capital has outrun the sup.
ply; reserves are depleted. and 1t IS
at last evident that new important
requirements can only be met at the
expense of those less urgent The
world has been turning floating capital
into fixed form too rapidly, and the
only course open is TO wait for suitable
reimbursement either until it flows
back into its actual reseryoirs-th,
banks-ror else through the unwel-
come process of liquidation. OF course
the chief reason for this state Of strin
gency is the unparalleled and uniyer,
sal business activity which while
most conspicuous in the United States,
extends also to Great Britain. France,
Germany and other great commercial
nations. Added to these demands for
money, which have been materially
augmented by the high level of values
are the effects of the Boer and Russo
japanese wars. These conflicts have
wasted hundreds of millions of capi.
tai which can now be fairly measured
by the enormous national bond issues
Of the last few years. Very likely
these drains upon the floating supply
of capital could have been met with
out difficulty had it not been for the
extraordinary avticity Of business
but the sensititeness of the various
money markets to current operations
connected with the japanese loan ami
preparations for anotner large Russian
loan demonstrates that the worlds
money markets are at present unable
10 respond TO any further large tie
mands of this sort. In all such per
iods as the present, legitimate bust.
ness demands insist upon the first
consideration, and speculative commit
ments have to be set aside or post.
poned This is as II should be al
though the consequences are apt TO be
uncomfortable wherever overspecula
ton exeists. Fortunately, the general
financial situation is sound. Weak
spots could no doubt be exposed here
and there in the course of liquida ion.
but no great OVERRIDING is likely TO be
discovered 50 far as can be ascertain
cd through current developments. II
is extremely fortunate that no hints
OF unsoundness in our great life insur
ance companies have come to the sur
face during the recent melancholy die
closures: which revealed extravaganza
and gross improperly In management.
but no impairment Of financial
strength.
The stock market must, of course.
be chiefly influenced by existing mona
tary conditions IL is very evident
that little money can be had for con
Quoting a bun campaign for some time
TO come. or when many stocks are
selling at record-breaking prices. In
fact. It is more than likely that some
of the funds now employed ia carrying
stocks will have TO be Withdrawn for
the purpose Of taking care of regular
business. Nor should the unusual
temptation for proft-taking De for
gotten. The United States still lead
in point OF business activity; but.
thanks to the cable and the steamship.
other nations are having an ample
share Of prosperity. and the wider its
extent the greater its permanence. In
our case a succession Of good crops
appears to have ben the chief slim
illus. though national growth and the
progress Of invention have had an i'm
pOrtant share in developing prosperity.
especially in Europe As a result OF
prolonged satisfactory conditions
there is buoyancy in the United
States which, If not restrained. might
easily lead 70 excessive speculation
and the Inauguration Of many cues
ti0nable enterprises. Upon the bank
ing community. therefore fall the chief
Obligation Of restraining such un-
wholesome Developments. Many of
our bankers are fully alive TO the ne
cessiiy Of putting On the brakes. and
much has been done 10 this dirncficr