The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-17
TIE FINANCIAL SITUATION.

While there were many features OF strength
In the stock market last week there were
other decided features of weakness; violent
declines were succeeded by equally violent
rallies and the entire movement OF prices
was 10 unsettled M irregular as to con-
fuse the Judgment OF ordinary observers
concerning the real tendency Of values. For
several days previous to the beginning OF
the week the most potent influence OF mar
ket nature that was exerted was the money
stringency and the varying views as to
when and how, IL at all, the Secretary OF the
Treasury proposed to do anything to relieve
il. The bank statement OF the preceding
week had disclosed a deficit OF over %, $780,
600 in the surplus reserve, with q large
drain from the local banks 10 the Sub
Treasury still In progress. The market,
therefore, was strong upon the ground that
a situation so bad as this must be quickly
remedied; that In TO say, that II was such a.
to call for immediate relief action by the
Treasury Department; and last Monday
the market held firmly. although the Secre-
tary Of the Treasury did not make any
announcement during usine hours as It
was expected he would. Late in the after
noon on Monday, however, came the news
that the Secretary had decided to put
$40, 900, 900 in the banks over the country
in various ways in addition to the si2 .0oo, 600
to be disbursed On December is in antici-
patton of interest money on the Govern
ment bonds due early mex year,; and the
market on Tuesday rose rapidly. On the
succeeding day Wall Streets joy over
the relief" OF the money situation became
somewhat qualified. Impatienoe was
manifested over the delay that would
under the most favorable circumstances
take place before the aid could become
effective. while questions were raised as
to the exact amount OF money disbursed
by the Government that was likely to be-
come available for use at this centre.
Later in the week other matters began TO
occupy Wall Streets attention, money
rates in the meantime, although ruling
lower than previously, still being such as TO
check speculative operations for the rise.
announcement by the Great Northern
Railway Company OF its purpose TO issue
$50, OOO, 900 Of new stock to shareholders,
and the expectation.of a similar
ment involving, as was believed, an issue
Of something less than 500 1000, 900 by the
Northern Pacific Company, occasioned a
sensational break in the prices OF these
two stocks: and as this event was accom-
panied by a rise almost as extreme in the
price of the St. Paul common shares, the
general market was thrown into more or less
disorder. Business conditions throughout
the country, of course, continued to main
tain their splendid progress. Various rail-
road companies, particularly those occupy
ing a subordinate position in the great rail-
way organizations, raised their rates OF
dividend and in some cases increased their
stock capitalization. The improvement in
financial affairs in Europe went on I'M
interrupted, the Bank Of England exhibit
ing a proportion of reserve to liabilities
in its statement in the middle Of the week
that was very high for the season OF the
year. The strong condition Of the bank
has, indeed, led TO an impression in certain
speculative quarters here that exports OF
gold from England for our benefit may be
again arranged in the near future. These re-
ports are discredited, as il is almost needless
to say, by high banking interests. While the
~situatian is such apparently that this coun-
try cantake gold from England il IL wishesto
do so, such a policy would manifestly react
unfavorably upon lis in many ways. The
whole course Of international relations at
the moment Is so delicate and involved that
any mans prophecy is worth very little
as to how soon or in amount gold
will be sent either from England to the
United States OF from the United States
to England.
Upon all these last named matters, how
ever, the thoughts Of Wall Street during
the week converged but little. As bearing
upon the money market. which is still and
must be for months to come the one main
subject Of financial consideration, IL is
certainly a matter for congratulation that
the fact has at last obtruded itself upon
public attention that a financial system
In a country which requires constant and
direct meddling with it by the Secretary
OF the Treasury, and a stock market SO con-
stituted that the most important influence
in it is guesses as to the overnight action
likely TO be taken by the Secretary OF the
Treasury regarding the money supply.
represent arrangements OF the kind that
are not highly desirable. There is no dis
position here to c~riticise the so-called relief
measures recently put into force by Secre-
tary Shaw, although occasion for criticism
might easily be found in the act OF the Sec
rotary in anticipating without any rebate
whatever the payment OF interest money
on the Government debt. IL is very doubt
tlI ii any WdTTduL "a Jaw IA DC hisCON-
cred for such a course; but the people OF
the country have been so accustomed to
the strainings of law and the findings of
new law by the present Secretary Of the
Treasury, and have also, as it must be adj
mitted, found these policies 80 grateful
in various emergencies that they are not
disposed to be faultfinding on the present
occasion. Presumably the steps that have
been taken do not yet exhaust the power
Of the Treasury in the matter, although
they will il they are entirely carried
through result in taking s32, 900 900 out
of the Treasury vaults and in diminish
ing the surplus reserve there to a point
hat will exceed but slightly he working
cash balance that the Government has
usually been disposed to carry. The point
that stands out clearly In the matter is
this: The continual interference with
the money market by the Government
il getting to be a nuisance. Why cannot
the seeming necessity for such interference
be obviated? Why cannot all the money
OF the Government az it accumulatee be
placed-compulsorily and not at the mere
discretion Of the Treasury Department
with the national banks upon payment