The sun., 1905-12-18
THE FINANCIAL SITUATION.

all indications pointed TO the probability
| that this strngency would be somewhat
nit gated early in the ensuing year, and
that II speculative stock market interests
and others came to believe that 4 ch was
likely to be the ca o they would not be
apt TO delay their purchases Of securities
until the ease in money actually arrived,
As the weeks have worn on the indications
referred to have become 80 strong, or were
at least so strong at one time, that specula-
tors began to discount the expected "Janu-
ary rise" in the stock market in very lively
fashion. Probably n fortnight ago the rank
and file OF observers Of the stock market held
that what would be a normal course Of the
market would be for it o remain re atively
dorman until the close of the month and
then to advance brskly, even although
money at that inc nigh range very
high figures High rates or even abb
norm lily high rates for the Use of mo ey
just before the end of the year would be
willingly paid by those who desired to buy
stocks either for investment or spcoula-
ton because it would be realized that an
acute tightness of money that might then
occur would be merely temporary. But
what has happened, however, or what did
happen was that the "discounting" proc
ess involved in all this was begun by our
spectators at an early date Confident
that a period of ease in money was in
srht, although perhaps a month and
half removed they started in to anticipate
its coming long before the usual time at
which such anticipations become effective,
and they have done So in a bold and. as
many people think, a reckless fashion.
There are two conclusions which must
rather obviously be drawn from the violent
upward movement in security prices that
took place during the greater portion OF
last week The first is that the move
ment testifies TO the inherent strength
of the stock market and to the optimism
regarding the business and financial future
that undoubtedly prevails among all classes
Of our citizens. The fee ling is general
that n stock market that has withstood
almost without turning hair such shocks
as ours has within the last six months must
rest upon a very substantial basis, and
everybody is impressed with the immense
and solid prosperity of the country and
the vast distribution Of wealth in all its
forms that is going on within our national
limits. A second inference that seems just
as necessary, however. is that the recent
rise in prices has been of an ultra speculative
order. There is not only proof. but proof
directly to the contrary that the movement
has had the active support of our Leading
bankers and financial magnates. These
great powers have probably figured only to
small extent, if at all as sellers Of stocks in
tine last ten days, and they are all OF them
confident as to the happy future of the mar
ket "for long pull; but they have, or most
of them have, been very conservative re-
Gently in their financial transactions What
appeared to be the case regarding the stock
market last week was that 1t was almost
absolutely in the hands Of large professional
speculators; and a striking feature OF the
market was as it longhas been, that neither
advances nor declines in prices managed
to extract stock from investors hands.
There were many stories ,as there always are
on such occasions, set afloat to explain the
sensational advances III certain stocks
but few people who were buyers Of stocks
seemed to pay any attention to such tales.
They only appeared to regard the tips
which filed the air as to the high prices
that this or that stock was likely to touch
in the near future. The reason, undoubt-
edly. why attention was paid to these tips
by the smaller spectators was that in many
instances in the last few weeks they have
proved surprisingly accurate; and even
among observers strongly inclined to scep-
ticsm as to the character Of the buying
movement that was in control OF things
there were not many who could be found
who were willing to say that the advance
might not go very much further before it
ended.
There was, however, as the week ended
some slight modification Of the buoyant
speculative feeling in Wall Street, caused
by the raising Of the question as to whether
boom in prices now would also be followed
by the expected boom after the first of the
year; or, in other words, whether it might
not be- found when the ease in money in
January put in an appearance that the
| market would decline or at least might
not advance because Of realizing sales
made by those who had purchased stocks
! in December. The past history of the stock
market on this point is, OF course, very sug-
gestive. 1t has been found to be true on
many occasions in former years that when
stocks have been carried or even pushed
upward through period OF high money
rates they are offered in the market when the
stringency in money relazes. The answer
to this by those who were buying for the
rise last week was that in the course Of the
| last two or three years one venerable wall
Street precedent after another has been
demolished and that there was no reason
why the one that was now referred to should
not also be found TO be outworn. The
possibility was adverted to, however, by
critics, who were inclined TO temper their
general optimism regarding the situation
with caution, that money rates might not
after all in January be so easy as was now
looked for; first, because it might be found
when that time arrived that the advance
in the stock market had so enlarged loans
as to make demands upon the money sup
plies greater than had been looked for, and
secondly because the pressing demand for
money on the other side of the Atlantic
might result in gold exports from this
side as soon as money rates here show any
decided weakening. There are few people
so ignorant Of conditions in the sterling
exchange market as not to be aware that
had it not been for the high bids made for
call and time funds for Wall Streets Use in
the last thirty or sixty days which led to
the negotiations Of sterling financial bills
here on such a scale sto depress the price
of exchange below the gold export point,
gold would have been sent abroad in this