The Washington herald., 1907-05-06

=
feeling in Wall street regarding the out
look for business and financial affairs,
and hence acts as a cause as well as an
effect Of greater optimism I'm these mat
ters 1t Is fair 10 say, however, that dur
ing the last fortnight there has been wit
messed real improvement in financial
sentiment. and that 10 this the upward
movement in the security market is un-
doubtedly due.
In the first place. although perhaps in
a less important degree than other IN
huences. the rise in stock market prices
has been brought about by the continual
and unbroken ease in money rates. often
times a force Of this nature is rather
slow in producing it's logical consequence,
but the consequence arrives in due course
nevertheless Lenders Of money and peO-
pie who have money lying idle In banks
and similar places at relatively low rates
OF interest became confronted day IN and
day out with the disparity between the
rates of interest thus obtained and those
that might be obtained by an invest
ment IN stocks and bonds whose safety
is beyond dispute: and after a little time
an investment in these stocks and bonds
begins, either by those who buy for cash
or by spectators who begin 70 discount
IN the market the measured outworking
OF the various clements of strength In the
situation that analysis has made clear.
Long-term Rates sdn High.
7 II is true. OF course, that rates for
money for very long periods. that is, for
2 La as
compared with the prices for such accom-
mediation that prevailed two or three
years ago and that although quotations
Tor the different railway short-term note
issues have recently risen. yet borrowings
OF this character have stll 10 be negoti-
ated al rates that no one would call easy.
Whereas, however, three or four weeks
ago many of our leading bankers We're
OF the opinion that a stin per cent
money rate al least would be maintained
for time funds throughout the remainder
OF the year, and indeed, for an indefinite
further period they now say that It
looks as If per cent was about ali that
lenders could expect 10 get, that is TO
say. upon acceptable collateral.
Presumably there viii be the usual
amount Of striugency ia the fan Of the
year especially If in the meantime spec
ulation should be active ia Wall street.
and yet here is where those changed con-
ditions that have come to pass in the last
few years viii BE 0f benefit The city Of
New York is no longer il the degree that
/ it once was the leading financial market
/ of the country. TIE people of the West
are immensely richer pTOportiOnately
Z ~Hr a
with the West thus IN possession Of funds
and with q liquidated stock market in
I Wall street, the crop moving season pos
/ sesses less of terrors for the Eastern
/ banks than IL has done hitherto, Perhaps
Z there has not been proper recognition 0f
T the direct aid To the local financial market
/ from the liquidation Of this character that
/ has occurred. Not only have speculative
} liabilities In the Wall street commission
/ houses been vastly reduced, but these
! commission houses are themselves at the
+ moment small borrowers Of money. The
/ lack Of demand from these sources. aside
+ from the existing plethora OF money itself
/ is one distinct reason for the decline in
money rates
Foreign Outlook Brighter.
Attention must be paid 10 matters Of in
/ ternauonaI as well as Of local finance,
/ and yet affairs abroad seem TO be mend
{ ing no less than they are here. The
/ French bankers. nov that money has be.
/ come easy. are asking their debtors in
/ England, and 10 a less extent in Germany
20 pay them the moneys lent in The last
months of last year. but this repayment
is going on very rapidly. and the clear
/ tendency Of money rates in London and
/ Berlin and Paris is toward lower level
+ The rate for money in the open market
! In London still holds nearly IL per cent
( below that of the Bank of England s
! rate, and it seems almost certain that as
soon as the paying of Of the French
I loans IS concluded as il viii be ID a short
I time, another reduction in the Bank of
England discount figure must take place
] In the second place people In the hnan-
cial district and elsewhere have begun q
entertain the idea that they have beer
unduly scared FOR two or three months
past over the probability of a busines;
contraction Ia the country in the fmme-
date future Indeed for a good dea
longer time than q few months past
! gloomy apprehensions Of this sort have
hung over the general business world
All conservative business men, and espe
ciaily those having recolIectiOns of the
rapid fluctuations in business prosperity
during an earlier period of the country
history. have for a long time back, beer
preaching caution, declaring that tn,
country's extreme prosperity in recen
years could not in the nature of things
last much longer, and predicting, If not {
great business collapse, yeI very serious
check In the progress of industrial anC
mercantile affairs.
Crash Fails 10 MateriaIize.
\ To these forebodings were added IN
voices of Wall street operators, unite,
almost without exception up TO a few
weeks ago in the declaration that sucl
i decline in prices of securities as ha
4 taken place since January 1 must be fol
lowed as a matter of absolute necessit.
bv similar smash in the cOuntry's in
ternal commercial concerns. But. strang
to say, although the hOusetops have bee
covered with watchers eager TO be tn
first to proclaim the onset Of the expects
storm. the storm has not put In an ap
pearance. and the business sky is stil
clear and radiant
For a month large consumers in variou
lines of trade have been delaying par
chases, hoping to get the goods they de
sired ak coucessiohs- Aiils e4toft mas zee
most noticeable as pertaining 10 raw ma
terials, chiefly IN the metal lines. Buy
ers of copper and pig iron have held off,
awaiting - eager competition Of ursen
sellers. but the expected pressure Z
market their wares on the part OF pro
ducers has been absent and the prOba
bilities have begun 10 dawn that instea
of sales Of these materials at lower price
/ purchases of them at higher valuation
may have to be made before long.