The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-10-22
rHE rENANcIAL sIruArION.

nd1 pecn curing inc Week no DTNdh III III
almost absolute calm maintained by the
security market. Prices of stocks rose a
little one day and fell the next. and the
market was Of a sort that seemed heavy to
those who had bought stocks and exceed
ingly strong to those who had sold them.
Its firm undertone was not changed in the
slightest degree and good judges declared
:. ~ ~ their belief that nine-tenths of the
dealings in stocks were caused by the opera
tons of professional room trading s~pecula-
tors. Yet IL there we're no indications
hat great financial interests were busying
themselves in any effort to advance the
market, there were no signs, on the other
hand. that any liquidation was going on,
and it was the general testimony OF the
large commission houses that they were
in no way overburdeued with stocks carried
speculatively for the rise. Uncertainty as
to the nature of the quarterly dividend
likely to be declared on the stock Of the
Amalgamated Copper Company no doubt
helped to place an additional restraint
upon the market. 1t was realized that the
Amalga mated directors could easily place
their company's dividend rate once more
on the highest plane that it had ever pre-
viously touched. and would be amply
justified, considering the immense profits
OF the copper mining business at present.
In even charging the dividend distribu-
ton beyond past records; yet the course
Of h1aalS = mated stock in the market did
not clearly suggest that any increase in
the dividend upon it was impending. and
II was known that the Amalgamated di-
rectors did not propose to order any dis
tribution that they were not certain could
be indefinitely maintained. When it be-
came known that Amalgamated shares
had been placed practically on an 8 per
cent. dividend paying basis the stock market
betrayed no strong tendency to advance.
/ and when on the succeeding day the Bank
Of England's discount rate had been sud-
denly advanced to Q per cent. the stock
market. of course. declined rather heavily.
The money situation has thus once more
become the main factor from a Wall Street
point Of view. Signs were not wanting
earlier in the week that the downward
swing in money rates that had been
going on uninterruptedly for some time
past had e continued as far as il was
likely to be. The opinion wac freely ex-
pressed in the large banking houses that at
81 per cent. for call money and from 5 20
So per cent for time funds stock commission
houses were getting their financial supplies
more cheaply than actual conditions war
ranted, and two or three laws before the
Bank OF England raised its rata money
rates here began to stifen. What was dis
closed in the English market was, of course,
that, whether or not by reason Of any ex-
ceptional circumstances in the case, the
sank of England's discount rate Of 5 per
cent, as fixed week before last, was not
effective in preventing the export Of gold
from London; and as the banks financial
condition, although it had improved. was
still weak for the time Of the year, the
directors Of the institution had. no recourse
but to take a further step for the protection
OF their money. This step was admittedly
OF a very drastic nature. Only a few times
in the last forty years, and then only
in what was felt to he an extraordinary
emergency. has the English bank rate been
placed as high as 9 per cent. and at an es-
pecially convened meeting Of the directors
| OF the bank It seems TO be the prevailing
sentiment that the directors Of the Bank Of
England rave during the year bungled
their management Of matters not a lit
tie. Obviously they have for some time
kept their rate Of discount too low. II
| is clearly true, however, that recent events
that could not be ~foreseen OF measured
! earlier in the year nave exercised an
important influence in English financial
matters. For one thing, a series OF dis
asters have happened to the cotton crop
in this country. 50 that the promised crop
at present is certainly Of a yield not greater
than will be adequate for the needs of CON-
sumers throughout the season. Cntaught
by the lesson Of the -Sully corner" in cotton,
whose memory IL might i've supposed would
be still fresh in their minds, the English and
foreign cotton s~pinners rave allowed their
stocks Of cotton this year to fall to a very
low point, calculating upon an enormou
crop Of the staple in this country to furnish
them their supplies Of the article at low
prices. This hope has been dispelled and
the En- glish merchants have been compelled
to buy cotton here on a rapidly rising mar
ket. As luck would have it, these purchases
OF cotton served to bring sterling bills into
the foreign exchange market right at a
time when large remittanoe s Of money to
the other side in payment Of maturing
finance bills drawn by our bankers had
left the sterling market in a relatively
weakened state. The result was that
the Bank Of England's 5 per cent. discount
rate ced a week ago did not avert
such a fall in the price Of sterling exchange
here as led inevitably to a resumption Of
negotiations for gold in London for the
account Of American importing houses.
Added to the force Of this cause was the
sale Of a fairly large quantity OF exchange
here caused primarily by the drawing in OF
money by Canadian banking institutions
on account Of the bank trouble in Toronto.
IL is stated that the Canadian banks drew for
this money to some extent directly Upon
London, but even il they had done so the
stimulus to the money market here given
by the shipment u funds 10 Canada in
turn exercised a depressing influence upon
the price Of exchange. Aside from all
this, the speculation for the rise. in cotton
which hiss started every where has been
very vigorously carried on in Egypt and
has caused the drain Of money from
London TO Egypt, always acute at this
season, TO be greatly intensified. 1t appears,
moreover, that Argentina and Brazil are
also asking the London market in more or
less peremptory fashion for funds.
Reviewing the entire case as il stands.
A,.- - 1noo MT aoano ElaINy that Al.