Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-01-03
BULLS AND BEARS

Special Dispatch to The Star.
NEW YORK, January 3.-It would seem
quite likely that some of the stock bought
last week to sustain the market through
the stress Of stringent money rates should
come out now that the credit situation Is
on its way to easier conditions. That there
Is likely to be any immediate attempt to
accomplish an extensive distribution Is.
however, doubtful. Leading financial in
terests consider that the outlook for 1905
does not warrant anything but confidence
in the Industrial situation, and In the pros
poets for securities.
Really cheap money, such as obtained
in 1904 and in the early part Of last year.
will probably not be seen for two or three
years at least. but sufficiently easy money
to assure the satisfaction of all iesitl-
mate needs is reasonably to be expected.
broad money situation seems to be i'm
proving. judging from the indications al
ready given In a slightly easier tendency
in discounts and a slight rise In Berlin
and Paris exchange on London. With no
war cloud gathering and II the situation
in Russia tends to better It would seem
likely that credit In Europe would relax
materially.
The financial situation over there has re-
hscted capitals lack Of confidence and fear
OF the outcome of the Russian civil strife at
a time when Industrial requirements were
large. Here there has not been a lack
OF confidence, but a tremendous demand
for cash and credit In all the lines of trade
and industry which has slashed with specu-
lative demands
There was no more suggestive address on
financial subjects made last year than that
delivered by Dean Johnson OF the New
York University School of Commerce and
Finance on the Influence of the Increas-
ing Gold Supply on Prices and the Rate OF
Interest" Among other things which he
said in the course Of 1t were:
During the first fifty years Of the nine
teenth century the total output of gold was
only $SOO,0CO,00o, whereas in the last four
teen years the output of gold has amounted
to nearly 3,500. Goo, eco. Modern credit In
stead of lessening the Importance of each
ounce OF gold in the world has greatly IN
creased It; for every ounce of gold can now
be made the basis for credit transactions
much exceeding in volume the value Of the
gold. We need not expect a steady and
gradual advance of prices (of commodities
as well as other things. the speaker meant
to result from the present outpour of gold.
I'VE may expect spasmodic upheavals OF
the price level and their periods OF depres-
sion. In a country like the United States.
where business is done largely by the aid
of banks, the credit system being highly de-
veloped, an increase of the volume of gold
affects, first the prices of stocks and bonds.
TIL prices of speculative commodities are
affected almost as quickly.
After a time it will affect the prices OF
most commodities, touching first wholesale
prices, then retail. Since 1895 the gold
holdings OF the great banks Of the world
have increased by over s1.0o0, 100000. but
much of this new gold has been boarded in
banks to provide for the extraordinary con-
tingencies OF war, both actual and possible.
Not until the worlds peace Is compare
lively assured will credit take wings and
bring all the new gold into potential con-
tact with goods and securities. Concerning
the precise effect upon price and the rate
o. interest we can only speculate. but that
prices must tend upward and the money
market be subject to violent disturbances
we can be reasonably certain