The Washington herald., 1906-11-05
Customers Neither Liquidate
Nor Buy New Stocks.
MONEY MARKET NO BETTER
Bank OF England Is StHI Having
nIglcuIty in Maintaining Its Re-
serve, Despite Advance in Discount
Rate-Indfcafions Seen Of Stronger
American Foreign Exchange.

:
10 the fact that there was no appreciable
liquidation of stocks by their customers
and. On the other hand, very little fresh
buying. so thar it has been evident that
recent advances and declines in security
prices have been caused only by the IN
and out operations Of professional traders,
mostly OF the smaller sort In the fore
part OF last week even these operations
sank 10 a minimum, transactions on the
stock exchange on Tuesday amounting 10
only $4,000 shares. or but 1000 shares
more than those OF July - last. when the
volume OF purchases and sales was con-
tTacted 10 the smallest quantity in any
fuH days business thus far recorded dur
ing the year
ON the succeeding day prices declined
rather sharply. but THAT this recession
was due mostly TO the work Of srecula-
tors for the faH was shown Oh the day
following when al The leading stocks
advanced~ rapidly on the news that the
annual dividend rate on Ihc Pennsylvania
shares had been raised from 8 TO : per
cont AT the end oI tho week the donl-
mating influence OF the market was very
clearly. the fact that indications of the
prospective defeat of the Democratic cam
didate for The eoyernorship iu this state
had become overwhelming.
Pennsylvania Move Questioned.
50 far as the increase in the dividend
rp0n Pennsylvania stock was concerned,
opinions as to the wisdom of the step
taken did not altogether agree. Much
can be said upon both sides Of Jhc ques-
tion whether the directors OF the com
u.ny were or were not justified iu ad-
xancing the dividend rate. The earnings
of the company warrant such a step. and
The company treasury IS IN receipt of
,Seeptioual gains. proceeding not oaly
from the enlargement oi the dividend rate
ou the stocks of many of its controlled
companies such .s the Baltimore and
Ohio and The Norfolk ana Western, Lut
from The sale at large profit OF "a con-
siderable portion of the stock thus held
There is some justice ju the plea tEat the
Pennsylvania stockholders should directly
participate In these revenues
ON the ether hand. everybody Is aware
that The Pennsylvania Railroad COMPANY
has recently incurred "a vast indebtedness
Tor new construction. whose sum total
has by 10 means been yel reached. and
that il viii bc n l0nE time yet hefore
tuis new construction begins 20 bring ln
money TO the road. Ii may be said per-
uars that the increase I'm the Pen0Syl-
vJnia dividend rate is "a matter upon
which the stock market has not yet
passed final judgment.
Tho Chesapeake and Ohio directors dit
not increase the seni-anuuai dividend
rate on their stock at their meeting dur
ing The week. aud although there had
been some talk that such q rise WAS
coming, il was not really expected iu
conservative quarters. One of the feat
uT.s OF the market in the week was the
strength Of al the different Mexican rail-
road securities
Surprised by United states steel.
Oh actual news announcements iu the
week the most important was that con-
tanned in the financial statement of the
United States steel Corporation for Jhe
september quarter, published last Tues
day
Putting the case coHciscly. the earn
ings OF the steel Corporation are such
that if they are continued for only "a
little time Longer the corporation can
easily make al nccdfu appropriations
foT improvements and depreciation. pay
au annual dividend of 4 per cent ON its
common stock. ard pass to surplus ac-
count funds sufficient 20 build the entire
new plant now I'm progress of erection
at Gary without issuing amy bonds there
Tor or in any way adding to it's capataI-
ization.
While confidence as to the general
fu-uTe Of Tie stock market is stiU un-
diminished and is based as strongly as
ever On the immense and substantial
prosperity of the country. present and
prospective. II Is perhaps fair TO say
rIat tlC outlook for the money situation
during the rest ui the year does hot
afford sueh grounds for unqualified op-
upusm concerning financial matters in
IBIS particular period as does the CON
'jition ot political affairs. Ii is etiH the
belief OF our leading bankers that. al
though the usual temporary rise I'm money
-atas attendant upon the end-of-the-
year settlements NAV De expected. and
rlaJ although between now ana Dccen-
oer Il no lowering ia the present price
ui Iuc funds should DO looked for, ao
severe money srringoncF VIII befaU and
no severe decline in prices on this ac-
count viii Ike experienced
Bank Of EnEIant's Trouble.
a disposition is manifest i'm these quar-
tens however, 20 extend longer into next
wear than has previously been the case
tae time when. as calculated. money will
DE- 10 abundant supply AT this center
owing To its return from the agricultural
districts and the difficulty that The Bank
of England is having IN strengthening
its POSITION despite the advance i'm its
discount rate 10 the very nigh figure OF
per cent, is not liked
There were limitations cabled here al
The close of last week that if The bank
did not succeed in charging its reserve
more rapidly, il would raise its discount
rate To pcr cent and such an action
rs this might have an unpleasant effect
upon prices OF securities here.
There are two facts about the foreign
financial situation that stand out rather
prominently. one of these is the curious
unwiiliugncSs Of the Bank Of France 70
give Up any gold for the use OF the Eng
lish market or, indeed. for the use of any
of the foreign markets, despite the high
hid for money now addressed to tht
French bankers practically from an these
financial centers Tho reason for this
hesitation on The part of the French
hank is as yet unexplained
The second salient Circumstance-whicH
IS really, of course. more OF an Inference
han anything else-js comprised in indi-
cations that the position of our country
IN the general foreign exchange market
IS great deal stronger than has of Iats
been commonly imagined Ii does moi
seem possible that If we were debtors ia
England in So large an amount as has
been popularity supposed, the directors oi
The Bank of England should he compelled
20 consider the necessity of forcing their
discount rate 90 per cent or perhaps
even higher figure, in order to obtain
money from Us
Reasons for High Rates.