The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1906-05-06

Healthier Situation Following
the Big Decline in
Stock. " - ..-s.f.:

I
"a New York, May 5.-The consensus Of
! opinion in the stock market is, that
! while the decline in prices was helped |
| by the aggressive tactics OF the bear
party, large lines Of stocks were thrown
over by wealthy men. Many, OF these
near future, but they are hoping to do
SO at lower level. The decline great
ly weakened large number of margin
accounts, aud it Is understood that
nearly every house in the street sent
out calls for additional margins from
1nittedly some very good buying, prom
jnent operators express the opinion that
the technical position of the market has
been weakened by the impairment, OF
margins. The heavy liquidation has
greatly strengthened the money posi-
houses reported that their loan ACCOUNTS
had been reduced from % to rs per
cent.
To the careful observer it was plain
that the pools and big speculative
plungers, operating to 9nduly yo. Initiate ate
s gar dies Of al the dictates Of conserv-
1atism, were at last paying the penalty
for their rashness. What the abnormal
spring money stringency was unable to
accomplish, since, undaunted, they con-
tinued to foster an April boom, the I'M
cisco calamity brought about. 1t may
not be generally realized that since, the
first of the year the process of readjust-
nlent has caused such declines in the
higher grade stocks as 81 points in
,1fNorthern Pacific, "a for New York Cen
dated Gas and 81 for St. Paul. In other
words. issues which have been selling
on a 3 or per cent basis are being
bought more nearly to the current
money quotations. With bonds unmar-s
ketable at even a AZ per cent basis:
loans by the railroads on a 6 per cent
basis, 1t is not surprising that the stock
market has finally been given drastic
treatment.
sit is said that the deal between the
Great Northern and the Steel corpor-
ore lands, is Off This may be true.
Two months ago the deal was almost
eomplete-so much so that semi-insi ders
thought the terms would be announced
at once. Since then it has been thing
hoped for. but without, definite idea
preferred stock pays dividend which
would warrant a price Of from $50 to
ITS. 1t has ruled in recent years at a
great premium. first because the book
value of the property is worth much
which equals the yearly dividend, and
secondly. because there are frequent
t.rights' which have made the equiv
alent of the annual dividend about
double the cash rate.
The Union Pacific railroad, which a
year ago was about the largest holder
Northern Securities deal, sold out as
the market rose: From these sales a
large and semi floating interest was
built up. The stock has been more &C
L. @,o4h 4% how, ~
has ever been before. It has been &C
tive enough so that any Speculation
could handle 5000 shares without be
coming target. It has been only s
question Of enough margin. A fluctu
alton Of Is per cent is no more to {
stock Of this sort than auctuation q 2;
3aper cent in a stock like Southern Rail
way common. Very few conservative
brokers would carry the stock withou
considering that at least 80 per cen
margin dad been set aside for it. Spec
inlative holders Of probably. $500
shares h1 IKE 9 agSr. BEEN
not figure on the per cent Of decline o
advance on the actual amount Of prop
erty, but he figures on the number 0
points up or down. He. chooses Grea
Northern because he gets quick results
Commission is small figure. He GO
quick results this time beyond a doub
sThe moderate rates for call none
can only be attributed to the accuml
y lation Of funds against requirement
from San Francisco, these funds bein
ST. 900, 900 being engaged last weel
while the Bank Of England condition
che poorest in many years, the Bank {
France, now that it is relieved fro
the incubus Of the Russian loan, is di
posed to afford some assistance. -
. The San Francisco fire and cart
quake wiped out an immense amount {
pToperty and compelled many people
convert securities into cash, but II
general position of affairs in the Unite
States has not been affected, and the
is. no reason to suppose that the indu
tries of the nation are about to suffer
change from their present prosperit
asperiod Of extreme selling pressure,
Is reasonable to believe that a raj
soon will develop. AS matter of fac
the greater number of people in tn
country have their funds so well Ell
ployed in legitimate business operation
lures in the stock market under prese
conditions, tho it is not improbable tn
In the event Of a further material I
duction in quotations the larger inves
Inent interests in the country will q
ctmulate frst-class stocks and bono
Were the market to 60 on expand,
asst threatened to do last month, W;
street would use every penny viii
could be secured. It is asserted NJ
that when the SECRETARY of the treasu
agreed to advance money without int,
est on security against gold in trans
he secured an agreement from the pr
cipal banks concerned that they wor
cut down their own volume Of loans a
act really 4as a damper on speculate
expansion The secretary interest
aamatter of this sort is the preservati
pf the legal bank reserve, securing
the same time insurance against MOI
terry stringency in general business