Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-07-22
Sources of Added Strength to
Banking Obscure.
LOAN INCREASE AN INDEX
Weeks Closing Irregular With Few
Gains Retained.
PROFESSIONAL TRADERS BUSY
Strain of Russian Situation Told on
Berlin and Paris Markets-Large
Diversion Of Capital.
LOAN INCREASE AN INDEX
PROFESSIONAL TRADERS BUSY

NEW YORK. July 21.-The bank state
ment today showed that there had been
substantial ground for the hopes of a strong
bank return which lay at the bottom of
yesterdays upward movement of stocks
and the improved feeling over the money
outlook. But the sources of the added
strength OF the banking position were OBJ
scure. An estimate of a 100000 cash
gain. based on the known movements OF
money. was realized by almost double that
amount. Commentators were perplexed to
fnd an explanation and were driven back
upon the old assumption of operations with
trust companies allied with the banks to
account for this great increase in cash.
The SO 435, 800 loan Increase was taken as
an intimation of stock market needs and
gave point to some of the weeks rumors
OF large borrowing for account ofrinterests
closely related to some OF the great ran
roads whose stocks have figured In the
weeks revived strength. Quotations OF
short time loans. although nominal on a
Saturday. were substantially reduced TO-DAY,
the bid rate for sixty days falling to three
per cent with offerings at four per cent. "A
good effect Is looked for on the money mar
ket from the deposits of Panama canal
bond subscriptions which are offered for the
Secretary of the Treasury. Hopes are also
entertained Of securing part of next week
$1,000 900 gold arrivals expected In London
Money lenders are inclined to look for cas-
fer money rates In consequence. Foreign
exchange rates. however. were advanced
sharply, with possible effect upon New
Yorks command of the London gold sup
ply.
II appeared that most OF the speculative
buying based on the favorable bank state
ment had been anticipated and prices ad-
vanced for only half an hour. After that
they lost ground and the demand was IN
sufficient after the bank statement to aD-
sorb the traders profit taking The clos
ing was irregular with only part of the
early gains retained.
Total sales OF bonds par value s651,Ooo
Pressure of Liquidation Lifted.
The pressure of liquidation was lifted
from the market again this week and the
movement of prices left to the devices OF
the professional traders almost altogether.
This movement reflected an extremely I'M
certain frame of mind on their part prices
backing and filling continually, but with
an average tendency upward. 1t was the
commonly accepted opinion that the buy
ing came to a large extent from the un,
covered short interest, and any material
rise in the level of prices led to a marked
subsistence OF the buying. without. however,
any notable Increase of the selling pressure
The feeling over the money situation was
more confident. and this was the substan-
tial factor in the better tone OF the stock
market and also operated to give play TO
some OF the Influences from the highly
prosperous conditions OF trade and indus
try Money on call ruled decidedly easy.
and there was some ultimate effect also
on the rates for time loans for the shorter
periods. This was the normal effect OF the
passing OF the July settlement period and
between-seasons period in the active de-
mand for money in circulation But the
firm maintenance OF the rate for time loans
for six months. carrying over the end OF
the year was a measure OF the solicitude
10 a
through the croD-moving season. The re-
straInt upon the demand for stocks, even
with the depressing influence removed Of
immediate money necessities. was thus ac-
counted for. Government operations play
cd an important part In the weeks money
market and their course gave rise to con-
fidence that helD, rather than detriment, to
the money situation was the result
Large Treasury Disbursements.
Large disbursements were made by the
Treasury Department on account OF mail
transportation and other contracts and also
pensions. and there helped to offset the
preparations for the return OF SiO,Oo0.000 of
government deposits called for the Goth in
slant Offers were made OF the redeposit
OF government funds with banks subscrib-
ing TO the Panama canal bonds to the ex-
tent OF one-third OF the subscriptions, and
this also helped to ease the strain of the
withdrawal OF deposits secured by state
and municipal bonds.
1t was assumed also that there would be
important Increase of bank note issue
through the added supply of government
bonds available or that purposfe. Gold was
secured for New York In London early in
the week and engagements were also made
IN Australia for shipment TO San Francisco
without carrying the foreign exchange rate
away from the level OF profit on gold i'm
ports. This kept alive a belief that next
weeks large arrivals OF gold IN London,
estimated at $5,O0OOOO. would yield further
supplies for the New York market.
The withdrawal OF gold from London was
not achieved without evidence of opposi-
tion In that market TO the movement. For
egn markets have their own requirements
and their own troubles to consider. The
growing strain Of the situation In Russia
has told on the Paris and Berlin markets
and has forced sterling exchange in Paris
to a level that makes that center COM
petltor with New York for gold in London.
Anxiety Is manifest over the speculative
position In London. ana there has been
liquidation of accounts that had to be
helped through the last stock exchange set
tieuient there, the trouble being aggravated
by the death OF capitalist largely con-
cerned in South African properties. Ad-
vices from the domestic interior fore
shadow early start OF the periodical
money requirement St Louis and Chicago
banks report Withdrawals OF deposits by
their correspondents. and the state of their
own reserves does not allow the hope that
the usual demand upon eastern banks in
response Will De WitnneiO. MS outlook
keeps attention fixed upon the large capital
requirements before the market and does
not permit the spirit OF caution to sleep.
Capital IN Fixed Investments.
The enormous amount OF capital going
into fixed investment commands growing
attention. Economists recognize the
tendency OF large diversion OF capital sup
piles into fixed forms to encroach on the
available supply OF circulating Of liquid
capital Heavy outlay for construction,
equipment, buildings. machinery and such
more permanent forms may pinch the needs
for capital which circulates quickly on pay
ment OF wages. material for productive
consumption, ordinary mercantile transac-
tons and the like. Moreover, capital re-
produces Itself with an Increment In q
brief period in the latter way of employ
rnent, while in the fixed form Its renewal
Is more gradual In the form OF deprecia-
ton charges each year in q small proper
tion 10 the total outlay.
Published plans OF railroads snd great
Industrial corporations make clear the
extent TO which capital has been going
into nxed form. and helped to explain the
straitened condition OF the money market
and It's repressive influence upon the mar
ket for securities. In spite OF the high tide
of prosperity in the country. This week s
items Of the exhibit OF prosperity Include
the fiscal years record, showing for both