Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-02-11
Strong Discrimination to Make Large
Commitments.
CONSERVATIVE BANK STATUS
The Markets Action Has Been Large
~ Reactionary-Recess in
Money Rates.

features. The excited advances or yester-
day in the Hill railroads gave place to
some reaction today and prices fell back
from the lack of the stimulating influence
OF the strength in those stocks. Some de-
preston was reflected from the London
market, owing to a revival of apprehension
over the outcome of the Moroccan confer
ence The narrow professional character of
the market was demonstrated by the de-
mand to cover shorts after the appearance
of the poor bank statement which disclosed
the origin of the early selling Of bear oper-
ators.
Developments in the banking situation In
dictate substantial ground for the conserva-
tive spirit felt in the stock market. The
decrease In the surplus reserves of the
banks by about one-half, to less than
100000, is itself a showing of the narrow
margin for expansion of banking credits,
for which the demand continues, as shown
by the weeks increase in the loan item OF
1852, 100 The decrease in cash of $5,297,-
GOO reflected not only the known move
ment of currency for the week. but the
carry over from the statement of the week
before which failed to show the full de-
crease.
Arrangements have been made already
for the shipment of 81 ,250 600 gold to South
America next week. A deposit of s2,00O,Oo0
at the subtreasury today for transfer to
San Francisco will also figure in the coming
bank statement. The days report of the
proposed $500 900 600 bond issue by the
Southern Railway Company and of the pur
chase by bankers of large block of Amer
can telephone bonds are significant of
tendency which has become a marked fea-
ture of the financial situation.
The expansion of enterprise has resulted
In an enormous Increase in the needs for
capital, and the high level of prices for
securities offers attractive opportunity for
their fiotation. The recent heavy issues OF
bonds and stocks are expected therefore TO
be largely supplemented within a short
time. The irmness of the money market
in London continues, and the recent ad-
vancing tendency of sterling exchange at
Paris underwent reaction today. Reports
that shipments of gold to Europe next week
We're In contemplation gained currency to-
day, but were not confirmed. The stock
market closed irregular
Total sales of bonds, par value, 81, 165, 900.
Showing of Price Movements.
The movement of prices this week has
: shown the effect of the retirement from the
market of large speculative commitments
= in the shrinkage of the volume of trans
actions and the narrowing and hesitating
fluctuations. The speculative spirit has
been quiet and awaiting new developments
to direct new operations. As is usual when
the movement becomes sluggish, certain
proportion of impatient holders have be-
come discouraged from time to time and
thrown over holdings. The pressure of Ii
quotation has not been severe, however,
and only light demand has developed from
time to time, which has made itself marked
only in special quarters of the market.
The action of the market has had little
TO explain 1t in current events, but the
establishment OF a reactionary tendency in
prices has the inevitable effect of bringing
into prominence elements of doubt or anx-
iety in the outlook that would be ignored
In peiod of rising prices. Some of the
discussions of the supposed causes of re-
action has had TO do with factors which
have been In full force and of daily
ord throughout the period of active demand
and rising prices for securities. Most of
the conditions on which the speculative
demand was based have remained in full
force.
The action of the market is taken to IL
lustrate the results normal 10 periods of
great industrial and commercial expansion
and the speculative activity which accom-
pany them. The growth Of prosperity in
variably induces a demand which out
strips the rate of expansion in production
and outmeasures as we'll the rate of con-
sumption, anticipating future needs indeh-
nitely. 1t is only when the perception
emerges that the demand which is carry
ing up prices is beyond consumptive re-
ourements and made up in due proper
ton of intending sellers rather than con-
sumers that the check comes.
A Natural Sequence.
The rate OF offerings of stocks for some
time past has made 1t evident chat the
holdings intended only for reselling were
being distributed in larger proportion than
the new demand. The subsequent irreg-
ular fluctuations followed, accompanied by
the occasional closing up of short con-
tracts put out by bear operators on the
declines The quiet tone of the present
week is recognized as a natural sequence
of this course of things.
The situation has given rise to discussion
of the important question as to how far
the state OF affairs in the stock market
Is an index OF conditions to come In the
general situation A decided effect was
produced by the reviews of the iron trade
by the recognized authorities published this
week. The markets in that trade are pro-
nounced quiet and in some spots easier.
The fact that the tonnage of new orders
placed has grown less is attributed to the
fact that buyers are we'll covered far into
the year and because sellers have con-
tracted for their output. The price of iron
has yielded. Present consumption contin-
ues on an erroneous scale and the unprece-
dented prosperity of the trade Is pronoupc-
ed to be unimpaired But the fact that
buyers have paused in their anticipation of
future needs Is interpreted as lack of
entire conviction of what those future needs
will be- such has carried along the
for a long time past
The important part played In stock mar
ket operations by a consideration of the
future rather than the present course OF
affairs has made this evidence of inform
ed opinion of the future of a great basic
industry patent influence in checking ae-
tivity In the trading in stocks. The threat
of a great strike of coal miners is an ele-
ment of special Importance in estimating
the future of the iron and steel trade, and
the outcome Is awaited for it's bearing on
the general Industrial situation as well. The
pause In the demand for iron Is of added
effect owing TO the parallel conditions re-
ported in the copper market and in that for
some of the other metals.
The Money Market Outlook.
The money market outlook has some in
f,Ience the stock market. although no
immediate pressure Is felt for funds. The
replenishment of cash for the New York
banks Is impaired by the large absorption
By the subtreasury. This is largely on ac-
count of payment of revenue due at inte-
rior points for which drafts are made on
New York deposits by interior banks. The
effect is the same as though the funds were
Withdrawn from New York to the Interior.