The Birmingham age-herald., 1906-12-16
MIR. SHAW'S RELIEF
 |S HOMEOPATHIC Money Released from Treasury
 Affords Small Help WALL STREET IS AMUSED Secretary shaw's Attitude In ReIeas. ing Cash for Relief of Money Mar
 ket Causes Comment In
 the Stock Market
WALL STREET IS AMUSED
BY W. G. NICHOLAS.

BY w. G. NICHOLAS.
 New York December 15.-The secretary of the treasury's homeopathic relief to the money market. which was forecasted in this correspondence last week. gave an immediate stimulus to speculation for the rise, but there has been very evident purpose on the part of large banking in- terests to check any excited speculation on the rather slender relief given to the market by Mir Shaw. Even on our credit system of doing business, by which we make one dollar do the work of five $20,- 100000 is no great sum of money in Wall street, when there are so many million aire spectators accustomed to carrying on margin 250OO and 5G,Oe0 share lines of stock. Then too, the stocks in which the speculation has been most active for a long time are those which are selling at high prices. One day this week there was a purchase in one block of 10000 shares of Reading. This meant that the buyer paid the seller $75O,000. This was only one transaction out of the many hundred in the course of one day It Is no uncommon thing now for speculatcrs whose names
 
 " lines of stock running into the millions of dollars. The big speculative stock for long time has been Union Pacific. The cost of 10000 shares of this stock today is in the neighborhood of $1 1,S5O,000 Two years ago the cost of the same amount of Union Pacific was S1GO0,OO0 less than this. And only a few years ago, at the begiu- hing of the present great rise in security values, 10000 shares of Union Pacific could be purchased for $20000. The speculation in the lowpriced stocks does not now at tract the men who play the market for big stakes. It Is for this reason that Wall street eats up surplus capital very rapidly during period of bull speculation. Only small part of the money needed to finance a bull speculation Is advanced by the spectators themselves, and the great bulk of 1t must come from the banks.
 Wall street is more or less amused at the attitude Secretary Shaw takes regard ing the release of cash from the treasury to relieve the money market Secretary Shaw has political ambitions, and he does not want to have the country think that he Is in league with the money devil.' Mir. Shaw probably unders lands the finan- cial situation well as most bankers here, but because of his fear of public criticism he is extremely conservative
 
 savor of friendliness to capitalistic inter- ests Most men in American public life have this same fear of public criticism and dislike to have their names connected at all with Wall street Effort has been made this month to make the public believe that tight money at this time is all Wall street trick. Nothing could be far ther from the truth. Money is a commod- ity like everything else, and while power ful bankers may for the moment force interest rates out of their natural course, they cannot for any length of time com bat the natural laws of supply and de- mand That cash in this country is act ually scarce today as compared with the amount of credit that commerce demands for the conduct of the unprecedented bus mess of the nation is an indisputable fact The reports of banks from all over the country as made to the controller of the currency few days ago show that the country is doing an enormous business on a limited amount of cash In the banks At this season of the year individuals car " more cash in their pockets than at any other time. In preparation for the holiday buying of gifts, individuals, instead of putting cash in the banks carry it in their pockets. The speculation in mining stocks, which is widespread over the country, also takes money for the time out of the banks. Many men who have long dreamed of getting rich are now making money out of mines, and they are carrying currency in large amounts in their wallets just for the pleasure of having it there.
 The higher rates for interest, as has been pointed out in this correspondence, are one of the natural results of the in- creased production of gold. Several years ago large institutions like the insurance companies were worrying over the de- cline in interest rates and the difficulty of getting adequate returns on invested funds For long period after the bear market of 1908, call money in Wall street was almost given away. The prevailing rate over long periods was per cent. and at times large sums of money were loaned on call in Wall street at less than per cent It is to be recalled that several years ago leading railroad companies, in refundng their bonded debts were able to borrow money at 1-2 per cent, and there was talk of the standard rate Of interest for gilt-edged securities declin- ing to 3 per cent. But now the tide is all production of gold in the great gold camps of South Africa, America and Alaska at first lowered interest rates. but now the later result, as it always has been in the past is to raise interest rates. An in creased supply of gold means increased prosperity, and increased prosperity means the expansion os commercial ventures. This in turn calls for more capital, and this means higher rates of interest. A very notable sign of the times is the an- nouncement by the Bowery Savings Bank, one of the largest savings banks in the world, that next month the interest paid to its depositors will be raised to per cent This institution has nearly sl.Ooo0Oo on deposit, and its depositors number 150,- OOO. This action of the Bowery Savings Bank will probably set the pace for sim liar institutions all over the country. lt is interesting to recall in this connection that many of the old-time bankers were finding fault a year or two ago with the