The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-10-29
THE FINANCIAL SITUATION.


values from an entirely speculative point
of view. Prices rallied very sharply on
Mond1y from their violent break in tho
last two days Of the preceding week and
moved upward a little further on Tues
day. But this seemed to exhaust the
buying power ~ the market so far az "A
desire to purchase stocks on a rising scale
was concerncd; and when the market
closed on Thursday afternoon quotations
we're back again nearly to the point at
which they left OF az tho end Of the previous
week. On Friday prices were lower still,
rallying. however, later in the day on what
seemed to he a retirement of commitments
for the fall; and on Saturday the advance
wa continued In a moderate way, stim-
ulated, a. seemed, by a bank statement
which was decidedly Of the class known
as more favorable than expected. The
loans Of the Clearing House institutions
decreased over $40, 900, 900. whereas a con-
siderable enlargement Of these obligations
had been locke for Nv ing to the known
fact that there lac Eeen during the week
a heavy shifting Of speculative accounts
from London TO this side. Possibly the
rising tendency in the market at the end OF
the week would have been more pronounced
had it not been thought that the bank
position as reported in the Clearing House
exhibit Var only specifically instead OF
actually stronger. There is no doubt that
there has been in the last six days an ex-
pansion rather than a contraction Of loans
here and that the reason why this Is not
shown is that the new loans have been
taken over by trust companies and other
private lenders. At the same time the in
ference necessarily follows that this ability
to shift loans attests the presence of distinct
avenues of relief in the local financial situa-
ton that may, indeed, be opened wider as
the year progresses. The general impression
appeared to be, 40 far as the daily and weekly
circular letters of the large commission
houses and other indicia of the sort Afforded
any idea OF the prevailing feeling. that for
som time to come the market would he
subject to the same Influences, making in a
greater or less degree for inaction, as
those which have for several weeks been
exerted upon 1t. The most encouraging
development of the week, according TO
technical standards, was the fact that
before the market opened on Monday
orders were received by Stock Exchange
houses in larger volume than has been wit
messed in Wall Street for a long time TO
buy stocks at or a little below the average
range of prices quoted on the Saturday
before. The fall in the market instead
OF inducing further liquidation seemed to
provoke buying on the part Of the public.
On the other hand, it appeared clear that
the public for the time being was not will
ing to follow the advance" in the market
when prices rallied vigorously and that
as soon as the short interest had been
eliminated prices were inclined to recede.
There was nothing of a particularly ad-
verse nature during the week in the unfold
ing OF the money situation. Six per cent has
been bid for all grades of time money since
the advance in the Bank of England's dis
count rate, and for time money for ninety
days, that is to say. for "over the end Of
the year" @ per cent. and a commission
amounting to about y per cent. extra are
generally paid. At the same time brokers
in Wal Street are not rushing very eagerly
TO secure money on these terms. as many OF
them are we'll provided with furds for
several months ahead. and are. according
to all Trustworthy information. carrying no
large lines OF stock for their customers.
Call money rates we're distinctly weaker
from one end OF the week to the other.
bank renewals being made On Stock EX-
change loans each day usually a little lower
than on the day preceding. Secretary
Shaw's action in allowing the national
banks to substitute other security than
thai Of Government bonds for SIS, OOo, 900
OF public money now held by them. upon
the condition that they will increase their
note circulation in like amount by means
Of the Government bonds thus released.
will no doubt be helpful to the money
market. Ardent spectators for the rise
would hsve liked it better, OF course, il the
Secretary had taken SIS. 900 900 from the
Treasury outright and placed it in a block
with the big banks at this centre. But
money rates here are not yet 50 high as
10 justify such a procedure. and this action
would, moreover. in the present state Of
the sterling market contribute to such a
rise in sterling as TO lead to talk of gold
exports. IL was the consensus among bank
ers here that Secretary Shaw acted wisely
in not putting money in the banks directly
and in keeping the Treasury hoard intact
for use in a possible later emergency. BY
means OF his action SIS, 900, 900 will be added
to thu amount OF money available for the
country's use; and the step taken is a very
creditable one on the part of Secretary
Shaw. Is it, however, equally creditable
to the countTy? Does it not pass a most
serious reflection upon our currency and
general ~fnaucial system that the head Of our
national Treasury must have recourse to
such ingenuities "a these in order to estab-
lish a normal basis for the transaction of
financial business throughout the land?
And beyond this, az every person familiar
with the subject is aware, il is not 10 the
exercise OF ingenuities merely but to an
absolute strain of power that the Secretary
of the Treasury has been pushed by the
public necessities. Never before in our
history has the need of a %remodelling Of our
currency system and for a strict legal def
milton Of the authority vested In the Secre-
tary Of the Treasury been more strongly
emphasized than at the present moment.
It is utterly wrong and exceedingly dan
gerous that in only one man should he in
trusted such discretion as the Secretary of
the Treasury has in tho last -four or five
years been forced TO assert and M and It
il no less reprehensible that conditions
should la We arisen which made the exercise
Of such discretion necessary. Three simple
measures would suffice to remedy all these
great evils: One, a law removing the