Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-12-15
Financial News Letter
BY W. G. NICHOLAS.
Special Correspondence Of The Star.


Special Correspondence Of The Star.
NEW YORK, December IA. 1907.
The inopportune bulge in the stock mar
ket checked investment buying and has
engendered a feeling of distrust as to the
genuineness Of bull sentiment in Wall
street. The misuse of banking resources
for speculation in stocks was followed by
a general and emphatic revolt on the
part of the business community and there
came a reflection of the same protest
from Washington. 1t was made known
to the banking interests that the Treas
ury looked with disfavor upon Wall
street activity at this time, following so
close on the heels of extraordinary gov
ernmental efforts for relief from financial
construction. A STILL small voice of warn
ing was heard and Wall street was adj
monished that it was in extremely bad
taste to use the money and credit adj
vanced by the government to stimulate
and encourage stock gambling. The hint
was broadly given that it would be the
part of wisdom for the New York banks
to retire their 500 100000 or so clearing
house certificates before turning their
real money into the stock gamble. Blunt
ly stated the admonltion was to sober
up and not to prolong the drunk with
money obtained under stress as sort
of compulsory loan on the credit of the
government.
+
Not that many stocks are not dirt
cheap at current quotations, but conserv-
ative sentiment is at this time strongly
opposed to artificial efforts to mark up
prices for apparently the only purpose of
enabling overloaded banks and trust COM
wit lac hal hyy
them as collateral on loans, and for win
dow dressing that insurance companies
and other institutions might make Ia
vorable end-of-the-year reports OF con-
dition. The program mapped out weeks
ago was to give the market such sup
port as might be necessary to prevent
panicky slumps, but to discourage spec
ulatve expansion. The unwiSe bull move
ment around the first of the month was
a departure from this plan and the re-
suit has been unfortunate. 1t has filled
the public mind with open dlstrust and
has seemingly postponed the time for a
healthy beginning Of permanent improve
ment. A genuine bull campaign cannot
be engineered on clearing house certlfl-
Gates described previously in this column
as an issue of currency based ON the
equities in unredeemed pawn tickets Gun
paid bank collateral in the hands or
banks) BY others it is disrespectfully
called Roosevelt currency" At any rate.
business men are fully minded to con-
tinue energetic protests against the use
of money for stock speculation on which
they should have the first call.
X X
Money continues to be the controlling
factor in the Wall street section. Funds
are slow in accommodating, and the return
flow from the interior has not yet set
in enough to be noticed. Interest rates
oI>v 11vyh {u1
in the hope of attracting funds from
the outside, but this is one of the times
when the magnet does not seem to work
right. The higher the banks mark UP
interest the more distrustful the OUTSIDE
seems to get, the action being construed
seemingly as an indication that the new
York bankers fear more trouble and are
trying to fortify themselves against 1t
witt, outside help. This being the view
taken, interior money, instead OF being
forwarded to this center. Is held tighter
than ever by the owners most en-
barrassing situation for the big money
city Of course, this sort of thing will
not last forever, and there will ere long
be a return to the normal. Meantime
banks everywhere are Strengthening their
reserves and putting off as long as pos
sible the day for an unrestricted return
to cash payments. The fear among them
is widespread that the opening of the
doors to resumption Of business along
normal lines will be a signal for a
wholesale withdrawal Of funds. They are
keeping their hands on the pulse of pub
lie feeling. and at the right time there
will be a simultaneous resumption In the
large communities. 1t may be that this
hoped-for day will not arrive until after
the turn of the new year, now only two
weeks distant.
Great confusion exists as to the indus
trial and business outlook. There is SEEM
irgly large amount of substantial testi-
unony that many important industries are
Juggling at the leash ready to resume
full activity as soon as permitted. On
the other side there is a well-def1ned
skepticism. Specialists in the various in
dustries are saying among themselves,
Eyes, there Is apparently q lot of bust-
ness in sight, but how can we do the
business unless we have money to swing
it, and how can people pay for our goods
unless they can command the money, and
how Is there going to be money unless
affairs resume natural position?" There
seems to have been formed circle, and
eve rybody is travelling around and around
in their speculation as to what Is going
to happen. Doubtless the fundamentals
are continually hardening and conditions
becoming more healthy, yet visible evil
dences thereof are not overwhelmingly
conclusive at the moment.
X X
Nine out Of ten men you see expect mer-
camille depression after the first OF the
year, and further slowing down and
economizing wherever possible. A drop
ping off in railroad earnings is one of the
things looked for, accompanied by a let
ting off of men. Dividends, unless earned,
will not be paid because of the difficulty
in getting money. There will doubtless
also be a sudden disappearance or reduc-
ton in many Of those fascinating paper
SURPRISES which have been adjoining the
annual reports of Observation-Disclosures
which represents triumphs of bookkeep-
ing, but which have little more than junk
heap value.
The action Of the Western Union Tele-
graph Company in substituting its stock
dividend Of ~ per cent for the usual cash
dividend may be the beginning of SIM
liar movement on the part Of other cor
porations. At the present market price of
Western Union the stock dividend is equiv
alent to a cash payment Of about five
eighths. The action has aroused consid-
cradle criticism and has provoked the
sneers Of the unrighteous. Every increase
in the volume OF a stock which is not
earning its dividends thins the substance