The Birmingham age-herald., 1907-07-07
Distribution of S20O,OO0,OOO in Dividends During Week
GOSSIP FROM WALL STREET
New York Comptroller Learns Not to Try to Sell Bonds Without Assistance of Wall
 Street Houses.
BY w. G. NICHOLAS.


 make 1t plain that they have no money with which to back q speculative bull
 campaign. Their position in this mat
 ter Is logical and is well understood by
 everybody with reasoning faculties. The
 banking institutions and trust compa-
 nies have enormous aggregate amount of money loaned on stocks and bonds.
 Their endeavor Is to keep themselves
 perfectly safe by compelling borrowers
 to keep well within the Hints; in other
 words, by maintaining a big thick mar
 gin of good collateral between the amount
 borrowed and the market price. In a
 sense, therefore, the phrase is always
 correct that ::the banks are carrying
 the stocks," or the banks are under
 the stock market" The banks are not
 actually 'carrying" the stocks directly,
 but they are nevertheless just back of
 the firing line and are always keenly
 interested in fluctuations and in the long swings.
 When q situation gets shaky they com
 pei borrowers to either pay off, reduce their obligations or reinforce their secu- rites. Where the borrowing class Is found to be over extended, liquidation becomes compulsory and prices break. After very severe liquidation there are left with the banks large numbers of favored ac- counts which cannot we'll be closed out, yet which come distinctly under the head of 'undesirable." The customers are in most cases solvent and their collateral gilt edged, although oftentimes of kind that finds SloW ma rlfat in pariods of dio tress. Since the March panic the banks have been unusually full of these ac- counts, and 1t is, therefore, pleasing to them to see quotations advancing.
 At the same time they are lending noth- ing but their moral support to the sit nation, leaving the burden of manipula- tion to few leaders Who have cash to risk and whose special interests favor the bull side. In the present instance it has been to the advantage of several over burdened cliques and pools to shove up prices in the hopes of being able to distribute their surplus merchandise. In some cases a demonstration has been considered essential to the later nota- tions and to give an appearance of re- turning buoyancy and confidence The | appearance was in a large degree de- captive, for the public has not come into the market, and trading has been large | ly professional and saturated with man. | ipulation.
 | Capitalists back of and identified with the management of leading railway and industrial corporations have control of most of the banks and trust companies | either directly indirectly, and have | first show at whatever surplus money may accumulate. The demands from this source will absorb every dollar that may come in sight for the next year or two | and there will be little left for stock mar 1 ket speculation. For this reason, opinion
 which is inspired by the known banking | position and the exigencies of the money market, inclines to the theory that we are in for considerable period of dull ness. Of course, there will spring up l seasons of enthusiasm and rising prices, but soundest judgment must continue to | antogonize speculative expansion in secu- rites.
 | There is and must continue to be, 1 drug of bends. The gold imitation is an | ever present bearish influence on invest ments having fixed returns. This condi- | ton Is reflected in the increasing difficulty
 
 | issues, and in the entire wi4lingness of | private corporations to pay d greater
 rate of interest for money. Railroads | have within the last year put out more | than s, GOO 000 900 in short term notes ex- | tending over periods of one to five years, and as this paper natures it is the hope and expectation of the borrowers to be able to convert the obligations into fund | ed form.
 | It is to that end that every effort is | beig strained and every policy of the I money market shaped It is in this sit
 uation that explanation is found for the 1 belief of important banking interests that | there can be no expansion in any di- | rection where fresh capital will be need | ed. We have, without a doubt, entered l upon season of enforced contraction l It has not yet made itself felt to any seriously embarrassing extent In the in l dustries-that Is, not In the discharge of armies of men and wholesale cutting down of wages or anything of that sor.. But | new commitments are entered into only with the greatest reluctants and the order | books for remote delivery of goods show 1 marked letting down in volume. 1ndi- cations are that there will be no im- l portant depression In the manufacturing l trades until next year.
 1 Inded thls thing of depression has in 1t | some of the elements of locality. The 1 view and colorng is different In different | sections of the country. Reports from the west reflect a very general spirit of hopefulness and disnclination to be- leve in gloomy prophecy or any estimates based on anticipations of hard times, whereas the east turns a willing ear to that sort of thing, fully believing
 that the country Is in for years of reac- ton. In the east the belief Is far more prevalent than anywhere else In the coun- try that Wall street Is an infallible baro- meter of business and that 1t has first insight into and understanding of the great movements of trade and finance. Wall street may not be first to reflect improvement In the general outlook. but 1t is more often right than wrong in JUS judgment of unfavorable developments. Among the many things which happened | in money way in New York the first week in July was the distribution of the big end of s2oo. .oo0, 900 in dividends and in- terest among more than one million bond | and stockholders The clerical work in- cident to thls task has been almost De- yond the comprehension of the layinan. | The savings institutions of the city have been entering to the credit of about one and a half million depositors little mat 1 ter of 2o,oO00o0 representing seml-annual | interest at tho rate of per cent per annum. The sub>treasury In New fork 1 contributed actively to the redemption or | the S36 OO0,O00 per cent bonds which ma l tured the first of the month, This lapor will not be completed for month or | more, It may never be completed. for la a raeord that ayAry tmpOrtant bond