The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-05-07


In tho open market, A 9 or Q per cent.
time money rate held for Q fow months Ia
not n serious matter; but the prospect Of
u 6 or o per cent. money market for a year
or more suggests to the holder Of q stock
yielding only az OF 4 per cent. the idea OF
selling the security and lending the pro-
ceeds. This, therefore, was another adj
verse element In the security market. And,
finally, the extent TO which the development
Of speculation In other lines than In the
stock market was cutting down reserves
Of liquid capital rendered II doubtful
whether a long time would pass without
a further advance, even, In the price OF
time funds. The situation was such as
not to be serious possibly for the time
being: but how would 1t stand in the fall
Of the year. when the drain Of money from
the Eastern centres for the annual crop
moving set in?
II certainly seems, on the other hand,
as II the decline In the market, amount
ing to nearly Is points In the price OF the
active stocks, has more than discounted
all that can be urged against the market
at the present time. Over $40, 900 900
has been taken in q little more than two
weeks from the banks Of the East, where 1t
was available for business uses, and sent to
San Francisco 80 as to max the banks
strong there against the time when they
opened their doors 20 their depositors. The
indications are that the movement Of
money Westward on this account is
about over, and it appears TO be the judg-
ment Of people who ought to be we'll posted
that within a few weeks at the latest the
c. ill A-tr
to return here; since il experience is any
guide In thess matters it points to the prob
ability that the banks on the Pacific Coast
will find in a little time that they have
drawn more money from the East h they
ave any need for. Such, at least, was
what happened after the great conflagra-
tions in Chicago, Baltimore and Boston,
In the meantime the flow Of insurance
money from Europe to this side will begin;
while there are indications, that are very
welcome to the financial district, tina the
era Of crazy real estate speculation that has
used up so much money in various quarters
Of the country is closing. There is reason,
therefore, for believing that, for some
months to come at any rate, money in New
York will be easy. There has been, un-
questionably, a very large investment for
foreign account in the course Of the break
in the market in our own securities, one
international banker of eminence placing
the value of the stocks and bonds thus
taken at as high as SIS, OOo. 900, 1t is urged,
Justly, that there is still a discrepancy
between the interest return on many Of the
leading stocks and the prevailing rate for
the use OF money; but it should be recalled
an fhia no;nt th,t thapa ~ nfhar onnaiInr-
atoms thar the money rate affecting the
market valuation OF stocks. Bank antitrust
ompan stocks and all high grade invest
ment securities of every description almost
invariably sell "helow the money rate
yet why should they, il the money rate is
the controlling factor in fixing their price?
Stability of yield for a long time is thus
an element in the value of securities. Still
another matter having a direct bearing
upon security prices is an equity and earn
ing power of stocks that may be 80 divided
as to increase the interest return Upon
them. At the low level of prices last week
Atchison preferred stock sold so as to yield
S per cent, Louisville and Nashville SIS,
Southern Railway preferred $40, st. Paul
common As. Union Pacific common 43,
htchison 40, and so on. This was not so
very much below the money rate as the
bears in Wall Street were e~ndeavoring to
make out; and it is, moreover. a certainty
that within n year, and perhaps within six
months, the Atchison comman's dividend
will be raised to 5 per cent. the Union
Pacihc's and the Louisville and Nashville's
to 7 per cent, not to mention the strong
chances that other advantages will accrue
- tl.~ l11lors - ithaca otnoLa in tho n,non-
time. 1t seems, indeed, a proposition
hardly open to dispute that last weeks
prices for these and other stocks that might
be named were actually cheap. Business
in the country is still superb, the only flaw
in this respect worthy Of mention, now
that all disputes in the coal mining regions
are practically at an end, being the tieup
of on the Great Lakes, owing to
the longshoremen's strike; and it is an old
adage in Wall Street that no money was
ever made by selling stocks because of
labor troubles. The May day disturbances
abroad are now matters of ancient history.
The outlook for our crops at this season of
the year was never better than it is at the
present time, and everything presented in
the world of general business is such as to
inspire holders of securities with confidence
as to the future. The Garfield report on
the dealings of the Standard Oil Company
with the railroads and the Presidents
to Congress on the same subject
were not regarded last week as having any
direct stock market bearing or, rather,
they proved adverse influences Of small
account rs exerted against a natural rush
upward in prices following the extremely
-:.I.-A Ie.Iiao 80 Tha arana1tn~ forfn;-ht
The permanent effect Of such promulga-
tons is. however, something for Wall Street
to think Of.