The Washington herald., 1906-10-20
LONDON JARS MARKET
Unexpected Advance in Rates
Is Easily Weathered.
NEW YORK CAN STAND ALONE
Action by Bank of England Meant
to Prevent Drain Of Gold 10 Egypt
Rather Than 90 Cheek Flow 10
America - Union Pacific Is Made
Object Of Bear Raid on Change.

AEHtEAEsA - mon tAEAaE - 9N@t1N
Object Of Bear Raid on Change.
New York, Oct 19-When THE Old Lady
Of Thrcadnecdle Street" pulls her purse
strings hard the strain is felt in every
market Of the world. This has become
such a fixed article Of faith among fnan-
eiers that q severe jolt must now be dealt
TO established convictions by the fact
that the effect of the advance in the Lon
don discount to 6 per cent has only pro
duced an advance Of L of a cent in the
rate Of demand sterling at this center
The fact is. that London had totally I'M
derestimated New York's financial
strength.
The present position is complete re
versal OF that witnessed thirteen years
ago, when gold was shipped abroad By
almost every steamer in spite of a rate for
call money as high as 50 and even 100 per
cent. Now the movement is the other
way and the Bank Of England might as
well try TO make water flow up hill TO
stop the flow of sold to New York under
existing conditions in the exchange mar
ket
American exports have not only cOun-
terbalanced American borrowing, but ere
ated balance in cur favor, and until this
is satisfied it win be useless to try TO stop
the current offering Of sold that still sets
toward this country.
Egypt Demands Gold.
There is no question that the action 0f
the Bank of England in raising rs rate
OF per cent was hardly a protective
measure designed to check the new de-
mand from New York for gold and the
drain of the metal TO Egypt caused by the
speculation In cotton, which has run 10
very. considerable lengths in that country.
in addition there was the supposed tying
M of q great deal Of English money in
American stocks, the belief being enter
tanned that spectators on both sides Of
The Atlantic were carrying larger lines in
London since the time when rates were
much more favorable abroad than they
were here.
K Is possible that but for the latter
consideration, the directors of the bank
might not have taken any action until
next Thursday, and the fact that settle
ment day intervenes seems to have been
considered with the demand for gold as
Il reason for the unusual course followed
in raising the rate on Friday after ii had
been left unchanged at the regular Thurs
day meeting Il may be- found however.
that the directors were as much mistaken
about the speculative positions in AmeTi-
can stocks as they were in those affect
ing cur positions.
Russia Not 10 Default.
Rumors that the resignation Of the
French cabinet had something to DO with
Tpnrt1- T-vuTsuT-~ goffor 1r1-cf0T-
lied with the report that the Russian
government would default on its Novem-
her coupons. The story was sufficiently
Tefuted by the comparative strength of
Russian bonds on the European bourses.
even if the fact was entirely ignored
that the last bond issue made provision
for a years interest on all outstanding
issues. and that this covers the next in
terest day. The probability is that AZ
later interest periods Russia viii make
strenuous efforts 10 pay the interest on
her foreign obligations. whatever may
happen in the case of international loans.
HEAVY sales Of stock by London re-
suited from the changed money condi-
IiGus over there and as one member of
the arbitraec houses expressed it. The
gentlemen who were requested by the
old Lady to please liquidate proceeded
to dc so With a galantry quite touching.
The Union Pacific post was one of tls
storm ccntcrs, and around this the liqui-
dation and bear selling swept with ;Te-
mendous force, although at no time sufEi-
Cient to overcome the support lent 20 che
stock between ~ and M SupeTnCially
reviewed. the buying was not influential,
but the fact that Il not only stayed thu
price when the pressure was greatest, but
50 far overcamc this that there was "a
fair recovery toward the old position. in
dicated that the outward appearances
were deceptive. and that what looked
like very ordinary buying was really OF
the very strongest quality. Londons
sales were large, but were absorbed
without difficulty, and traders who sold
early in the day admitted that stock did
not come easily in the afternoon.
southern Pacific Active.
There was good buying OF Southern
Pacific on the general ground OF cheap
ness rs d > per cent stock. hacked uD by
the belief that the statement OF earnings
for August. which is overdue, viii show
m increase Of slightly more than S7a2.eO
IN net earnings.
After opening with transactions Of p
600 shares. which were grouped together
ON the tap from Hi1a down To ia this
stock found good support at the latter
figure. There was large volume of
what the traders called good buying. bus
this did not follow the stock on the adj
vanccs. although it was always met with
on reactions
The traders as a rule showed little in
cHnation to buy on the ground that the
London selling of the stock, which was
quite heavy. might continue until the SCI
Element affording opportunities to buy -
somewhat lower prices
There was disposition TO believe that
large interests i'm the company had an
ticipated the action of the Bank of Eng
land. being eognizant of the demand Cor
sold which was the principal cause Of
the advance in the rate. and had sold
stock freely both before and after the
dividend WAS announced If this belief
is well founded. il is more than possible
mat The buying on decline was not sup
port. but the repurchasc of what WAS
sold on account of outside considerations
Currency has again been given 10 the
rumor that the Standard oil interests,
having pat Amaleamated Copper up to
the highest point consistent with the
trade conditions and the earnings of the
company. VIII sell the stock and retire
leaving the company in the hands OF
practical copper men.
The story IS nearly two years old, hav-
ing originated in Boston when the inn
pr0vemeHt in the trade began to make
itself felt by lifting the price OF the stock
considerably above the low record level
of a35s made in the preceding year. OF
course If the report was true at that time
it may bc t-uc now. but there is no sub
stantial reason Tor believing that it was
True then.
Fail TO Deny story.