Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-09-24
THE INSIDE OF
WALL STREET
BIZ EDWIN LErEvRE-

WALL 81 kEE / I
BIZ EDWIN LErEvRE.
This is the time of the year when money
always means good deal to Wall street,
and sometimes everything. This is not
money In the sense of the public with some
thing to invest or speculate with. The out
slider prefers to stay outside at present. any,
way. It Is money in the wider sense, that
which involves exchange. discount rates,
gold imports, outward movements of cur
rency for handling the crops. and all those
various conditions normally developing in
the fall Of the year, which make rates
tight or easy.
In some senses Wall street has very
long memory and in some ways 1t has a
very short one. There were certain occa-
sions when it was badly caught by the de-
velopment of financial conditions 1t had
failed to foresee, which stick in its mind
and tend to cause extra caution even when
the circumstances which made those condi-
tons no longer obtain. Wall street always
remembers the rich mans panic" of De-
cember, 1889, when money ran up to 20U
per cent on call. The circumstances are
not In the least likely to repeat themselves,
but ever since that time the brokerage
houses have usually begun the month of
December considerably overprovided for the
stocks they are carrying.
December is still some distance away, but
Wall street also resembles among it's Sc
verest lessons brief but glorious five days
In September, 1902 when John w. Gates,
John Drake and number of western mil
Honaires whose money was burning holes
in their pockets, carried the market up In
the face of - per cent money. rate. They
never knew what hit them, and spent the
next three months lauidating their specu-
lative commitments at a heavy loss Fate
really treated them better than they de-
served They got out OF the market sub
stantially poorer, but were probably not
hit in the long decline of 1903 The rapidly
made fortunes of the past few years have
brought into existence a class which plays
the stock market exactly as it would play
poker, and believes that there are, snbstaH-.
tally no conditions in which weff-con-
Quoted bluff will not go.
: AS the market stands at present its most
remarkable feature Is that the banks are do
ing all they can to keep call money as cheap
as possible. It has not really hardened be-
yond 3z per cent without finding one Of the
larger banking interests willing to lend on
call until the rate eased off to nearly the
nominal figures prevailing during the sum-
mer. The banks also are doing what they
can through the easily manipulated bank
statement, to make money market condi-
lions look as easy as possible for as long as
possible. On September last the trust
companies of New York had on deposit
with the banks something like $50, 600, 600.
In the last two bank statements loans have
been reduced by about one-third of this
sum. There Is every evidence that part OF
the enormous loan account has been trans
ferred to the trust companies in order that
the surplus reserve, which the banks are
bound in law to show, NAV not be en-
croached upon. That reserve is now very
near the danger point. When once the sur
plus is wiped out the margin for manipu-
lation in the bank figures has practically
disappeared, even after allowing for all the
advantages which the preposterous system
of averages gives in deceiving (for their
own good, of course) the public as to the
real condition of the banks.
When the money market in New York is
no longer in a position where it can be
manipulate by the greater banking inter-
ests 1t becomes necessary to give imme-
date and practical attention to the inter
national money market. This is very rarely
in-a position where it can be manipulated,
by New York at any rate, at ALL Some
little time before this date New York be-
gins to talk Of gold Imports. We are sell
ing goods abroad all the time to say
nothing CO cotton or grain and the cotton
bills in particular place Europe substan-
TALLY in ou. debt. Europe occasionally sells
our own railroad bonds back to u.s. or does
something else to lquidate it's indebtedness
without losing its gold, but generally in the
last three months of the year we are in a
position to draw some gold from London,
and even, in exceptional cases, from this
continent.
Here is where the Wall street prophet gets
in some of his finest work. He predicts
how much gold shall import from Lon
don with a certainty which is really i'm
pressive, especially to people who have not
remembered his previous predictions Guess
ing the weather two months ahead is simple
cen pared to making such a forecast The
man who is willing to bet on his forecast
OF the bank statement does not look such
a monumental fool after all. There are so
many influences which can effect our power
to draw gold from Europe or the willing
ness of the London market to part with it
that no one need be surprised when the
people who know most about it, and have
the best reason for hoping for such re-
Hef commit themselves to nothing more
than the statement that I'VE shall probably
be able to get gold if we want it, or that
Something will turn up to make the i'm
port necessary"
1t is related of a financial expert in Wall
street with rather good sources of Informal
ton that he sat up on Friday nights for
ten years guessing the Saturday bank state
ment TO his own intense establishment he
az last succeeded in forecast which was
substantially correct. The performance
seemed so marvellous, after such COM
naratively short time spent in practice, that
he went over his figures again. He found
thai he had made an error of $4,000 900
In the addition of the most important item
Co impaired with the man who estimates the
pre- bable gold imports in the fall his re-
suits were worth betting on.
4.
X X
The Bank of England usually advances
It's minimum discount rate in the fall. There
has only been one year Q904) within the
memory of the present generation in Wall
street when it was not necessary to do
Everybody had overprovided himself then
with money on account of the war in the
far east The bank vaults in London, Ber-
lin and Paris were strained to hold the gold
which had been accumulated against pos
sible financial disturbances. The outward
movement of currency for the crops from
New York entirely failed to disturb the
money market here. Curiously enough, be-
cause everybody would have been glad to
send us gold, we did not want any. We
took a little, but it was only because sur
rounding conditions made it cheaper for our
foi eign creditors to pay for the cotton they
had taken from US in cash.
This wear conditions are different Money