The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-23
GOSSIP OF WALL STREET.

tAAS " " w NNNA0
There was. however. no reason and no founda-
ton for the talk OF other failures, for in the
nrst place what actually happened was bad
enough to furnish the bears with a fairly
strong argument against prices. while on the
other hand banking interests said there was
no other weak point that they could discover.
! The Street. bankers said. was in wonderfully
strong condition. for commission houses
apprehensive OF a decline in the country's
commercial activities have insisted on their
customers maintaining very strong margins.
The fear that the present prosperity cannot
continue indefinitely has produced a whole
some conservatism. so that in spite Of the
severe decline in some stocks and emharrass-
ment OF Individual customers the brokerage
houses are now in a position Of almost I'M
paralleled strength.
Formerly when a member Of the Stock -Ex-
change failed his stocks were sold under the
rule. but this Is no longer the case and there
fore 1t Ia not so easy as IL used to be to deter
mine what stocks caused the trouble from
observa ton OF the radinG. In the case OF
the failure announced to-day IL was surmised
that the decline in Reading and the Hill stocks
was primarily responsible.
Brokers looked forward to a quiet session
when business opened for the day, but the
liquidation in Reading and a few other stocks
which Was in evidence almost from the start
ooVh UlOukht COuNJCtlOu t1oI III tTAOluk
was not to be OF a purely holiday characte r.
Many OF the traders remained away, an
ticipating nothing unusual in view OF the
approaching holiday and the fact that Lon
don will be closed on Wednesday as well az
on Tuesday. Had the attendance been
larger the decline in the market might have
been more severe. Those who were away
were m ostly out Of stocks and had they been
present their operations would probably
have been largely on the bear side.
Robert Goodbody. whose on
the causes OF the present conditions in the
money market have attracted wide attention
on both sides OF the Atlantic. writes as fol-
lows: The financial world apparently as
sumes that a principal cause OF the scarcity
OF capital Is Wall Street speculation and
that 1t could be removed. or at all events
alievtated. by some sort OF currency imitation.
Both assumptions seem erroneous. We think
that speculation in Wall Street has been
smaller, not larger. than usual for a year past,
and that this can be easily shown. As to
remedial legislation, any that is suggested
or would be likely to pass appears to us to
be not only not beneficial but even fraught
with great danger. Every scheme involves
the creation OF more paper currency, when
the trouble Is that we have too much already.
IL ie q truth that financial politicians never
seem able to recognize. because 1t Is con-
trary to hazy ideas of their constituents,
that In the mon ey market as elsewhere the
cheapest way to get anything is to buy IL
fairly and honestly, and that therefore all
schemes whose aim is to get capital for less
than its value or for nothing by the issue
OF notes always prove far more costly TO the
nation that adopts them than direct borrow
ing. We therefore think that the only legisIa-
tion that would really improve conditions
would be to have laws passed to call in all
the United States currency afoat and pay
- II - -
unnecessary amount Of currency
now carried In the pockets Of the people
being replaced by gold. which would be too
heavy to carry In such amounts and therefore
would be deposited In banks and so set free
for the purpose of business. national and
international. Altogether We hope that Mr..
Shaw may not attempt any scheme Of dickering
with our currency"
why Is money dear?- This question Mr..
Goodbody endeavors to answer with his
usual argument that while gold, the money
standard. Is growing cheaper to produce.
money ought TO be deer. adding. however,
that there are other factors. which he pro-
ceeds to discuss. as follows: One is that
when trade IL good, l. e., when the profits on
a given amount Of work done are large, there
Is available apparently for the purpose Of
employing labor either In productive or nom
productive work more money than when
| pNulN AIc nla DCAu dBphTSUNN hNdll-
able IL IL naturally used. But its availability
is largely only apparent. because capital is
only accumulated unused work, and the
larger profits do not provide more, except
as they may stimulate people TO work. and
such a form OF stimulus is often accompanied
by extravaganza which more than uses up
the work done. Hence capital il dear now
from natural causes. AMI so far a. the writer
, can see must remain not cheap until circum-
stances mako people more economical.
The reference made above 70 the
unnecessary amount OF currency now carried
in the pockets Of the people draws attention
to a condition which some Of the sblest nnan-
clers In Wall Street regard as one OF the most
important in the whole situation. The prac-
tice Of carrying In prosperous times much
/ more money than ordinarily Ia almost uni
versal, and thus the greatest amount Ia with
drawn at the time when the business Of the
country has the greatest need OF It. The
vice-president Of one OF the largest trust
companies m this city expresses the opinion
that an excess Of t5 per capita Ia now carried
in the pockets OF citizens Of the United States
over the average amount formerly carried.
Rvolvin0 the withdrawal OF about $500. oOo.-
OO0 from active circulation. How TO get this
back is by no means an easy problem.
Possibly a considerable fraction OF the
money recently carried in the pockets Of the
people may De aNdlhDle iOT Duslness puT-
poses after the holidays. The Christmas
| trade has been probably OF lar ger proportions
than ever before. and while no doubt a good
| proportion OF the purchases have been charged
or paid by check. there is no doubt that a
great many people have paid cash. the ac-
cumulations OF weeks OF savings. and that
this money will in the very near future find
its way to the places where il In most needed
and where the best rates can be obtained for
It's use.
The Pennsylvania so per cent. convertible
bonds OF 1918 are now selling on a basis to
yield ~ per cent. on the investment II held
to maturity. These bonds are among the
few issues for which there II a fair demand
at present, the yield on>the market price and
the convertible feature combining to give
them both investment and speculative value
to a degree but rarely found in a single secur-
ity. In view Of the progress which has been
made with the vast Improvement projects
/ OF the Pennsylvania Railroad and the COM
paratively near approach OF the time when
1 fhA Oou1 many will heQin tO receive revenue