Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-07-01
Congressional Finale Sends
Bears to Cover.
LONDON GOLD A FACTOR
Downward Movement Despite Very
Heavy Liquidation.
BANKS ANTICIPATED RESERVE
Call Loan Rates Will Go Higher Next
Week, It is Confidently Expect
ed-Real Estate Speculation.
BANKS ANTICIPATED RESERVE

NEW 1cRh. JUNE ot-I1c iAlSisAAN 4"f' -
securities was continued today with the re-
suit OF forcing prices still lower am aao-
Ing to the number of stocks to make low
records for the year. The liquidation was
somewhat spotty, and few stocks showed
evidence OF good support OF of relief from
pressure by the extent of the LIQUIDATION
already effected There is no borrowing or
money on the stock exchange on Saturday
30 that the market was free from that IN
fluence but the appearance of the bank
statement was the signal for fresh selling
and fall in prices TO the loves of the day.
Only part of the per cent in cash was
reflected in the statement, and loan con-
traction of less than million, following
the severe liquidation which has been going
on in the stock market, increased the feel
ing of anxiety over the apparently lnsat-
able demand for credits. which keeps pace
with every addition to banking resources
and with every reduction of accommo1a-
lions TO speculative borrowers. Uncovered
shorts showed an alert tendency to cover
at all available declines, AMI this kept the
tone of the market unsettled and irregular
between the periods of d1c.Anes The iac!i-
nation of the bears to cover was stinulst ted
by the prospect that MONDAY would md
Congress adjourned. Some account was
taken also of the prospect o. securing gold
in London for import to New York next
week. While the prevd".ng level OF @H-
change is as low as ma. during the last
gold import movement 1t is pointe1 out
that the banks al nit idly counted the IRE
vious gold enga gems1ts in their reserves as
soon secured abroad even before the
Secretary of the Treas l.y allowed advances
Of government deposi S when gold was en-
gagged. At the presen7 Il ne the banks are
enjoined from adopting this measure. The
banks have already received an injunction
from the controller to restrict loans to in
dlviduals to amour: rithin &c per cent
of their NIT al md Sll.DluS and x
coed In any event 20 per cent Of their capt.
tai This is in accordance With the new
law. which extends me limit of permissible
loans beyond the old restriction to 10 per
cent of capital. But The old restriction has
been, In effect, a litad letter 90 long
time, and 1t Is belieted that the IN: ended
enforcement of the mo-a liberal new J,ro-
vision will neeessita-e. nevertheless, some
scaling down of present loan accounts with
individuals. The MAJ ,et closed slightly ir-
regular at rally due to covering by room
shorts. Many prominent stocks, however,
show notable net losses on me day
Total sales of bonds, par value sos, coo.
There has been heavy liquidation in the
stock market this week and prices have
been carried downward notably. In a few
cases the level touched was lower than
that on the decline after the San Francisco
disaster but the average level of the mar.
ket did not approach the point reached at
that time. The motive of the liquidation
is open to some dispute and is obscure in
some points, but the fact of It was obvious
and was of decisive effect in shaping the
sentiment of depression approaching de-
spondency which had prevailed in specula-
tive circles dependent for profits on the
maintenance of values. Professional bear
operators have followed the market freely
and their requirements to cover short con-
tracts have afforded the only apparent
support and basis for occasional rallies In
prices. Such rallies have invariably been
availed of for fresh liquidation. The same
is true OF all occurrences of favorable i'm
port TO values and such as might be calcu-
lated to inspire demand for stocks Divi-
dend increases, cheerful reports of trade
conditions and estimates of favorable out
come OF the crops with large yields have
been met alike with pressure of stocks for
sale The consequence has been the
growth OF speculative party in Wall
street which dwells upon the term 'apex of
prosperity and sees evidence of over
extension and coming reaction In the gen.
eral situation OF affairs.
Evidence of over-extension is not lacking
in the conditions in the money market
These conditions are the key to the imme-
date situation In the stock market where
vulnerable speculation commitments are
open TO the first pressure toward retrench-
ment and building UP banking reserves
Many stock market polls of long standing
have found themselves obliged to reduce
their lines and have found difficulty In SELL
ing TO advantage AT the high level OF prices
10 which their operations had advanced
their specialties. These high prices had the
effect of throwing the rate OF income re-
turn on the stocks affected out of relation
with the prevailing interest rates for money
and or putting them into disfavor with the
Investment class of buyers. who must he
relied upon TO form any substantial basis
for the maintenance of values. MANY high
class railroad stocks have been selling at
prices which reduced their dividend return
to per cent basis or lower and where
even dividend increases which are counted
upon would fail to raise the income return
TO the level OF existing rates for money on
time loans.
These rates have advanced during the
week to 5A per cent for periods of seven
months and upwards carrying over the end
or the year, and speculative borrowers are
reported TO have bid considerably higher
rates without securing accommodation Of
ferings are scarce in spite "a the hvh rstes
bid and the demand has been largest for
the longer periods Lenders have been dis
posed nevertheless to keep their funds avail
able by placing them in call loans This
explains the comparative ease OF call money
and the slight effect caused by the prepara-
lions for the unusually heavy requirements
of the july settlements. These have not
been entirely without effect on call loans
towards the end OF the week and anxiety
has been felt that call loan rates would
work higher next week.
The obligation of New York trust COM
panies 10 increase their cash reserves on
July l are a completing factor The re-
quest OF San Francisco financial interests
for deposit OF government funds with their
banks - taken an indication that the
return row or the cash accumulated there
after the fire is not likely to reach the fun
amount OF the resources then collected The
treasury Department has decided to with
draw Si0Oo0Oao OF government deposits
from national banks according to notice on
July 10 to secure means for the intended
deposits in San Francisco. \ recurrent fac
tor in the money market is the dissolution
of syndicates by expiration which have un-
derwrtten capital issues and the Necessity
OF taking up large unmatched residues OF
these holdings lnstallments OF subscriptions
new stock issues come due at intervals
In the coming weeks and resources will have
to be found for meeting them Further cap
itaI issues are also looked for 20 provide
means for the large enterprises of corpora
tons already undertaken. Real estate spec
uiation and outlay east and west is known
TO be on an enormous scale. and there IS
much discussion OF the extent to which
credits are tied IN in this field
In presence of these conditions the extra
requirements OF the fall money markets are
looked forward to with apprehension and
the advancing rates for interest are the
measure Of this apprehension. With securi-
ties stu selling at prices where the rate of
return is lower than that for money a
natural disposition to convert holdings into
money IS in operation. The same Influence
Is observable in the absence OF the geinvest-
meht demand for bonds which usually