The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-07-22
RAW MATERIALS
MUST COME DOWN
Shrinkage in Speculative Sc
curitieS Has Occurred
to a Great Extent.
SUPPLY OF MONEY SHORT
SUMMING UP OF FINANCIAL
SITUATION.

New York, July n.-The stock market
of the past week has revealed the cross
currents of speculative sentiment run
ming, on the one hand through the chan
liels Of the Northwestern and Pacific
railroad stocks, where efforts centered
Tor an advance in prices and a stimuIa-
ton of speculative interest, and on the
other hand in the industrial group, where
evidences Of trade reaction caused some
depression and hesitation. The easing ten
dency of the money markets has been a
feViVlng influence on securities, but this
was under the restraint of the dubious
Interior prospect and the short time re-
naming before the strain of the interior
demand for currency to move the crops
may be expected to draw on New York
banking resources. The stirring of spec
ulatiVe interest in a limited group of
stocks has not proved convincing of any
revival of substantial investment demand,
which must be relied upon for any con-
the scanty available supplies of capital.
The indications of trade reaction are in
accordance with the expectation general
ly felt ever since the disturbance in the
securities market first gave warning of
the forces at work to that end. Never
theless, the extent to which those forces
which may operate as a check and to eff
rect recovery, are so far undiscloSed as to
leave opinions unsettled and capital still
doubtful about embarking in investment.
Expert French Opinion.
recent article by NJ. Paul Leroy
Beaulieu, the distinguished French econ
Omlst, analyzing the problems of the de
cline in investment securities and the
prospects for their recovery, is given re
spectful attention amongst students of
conditions. His conclusion that a period
of initiation has led up to the present sit
uatiOn commands general attention The
course of events bears out the assump
HOn that bank liabilities cannot expand
Indefinitely, bank reserves cannot fall off
continually, nor can business perpetually
support high money rates"
There must come, first a shTinkage in
speculative securities next fall in
prices of raw materials of manufacturers,
notably metals Real capital, he holds,
presents an insufficient supply for ma
lions whose spirit of enterprise is so far
stimulated as to lose sight of all limita-
tons, as he maintains has been the case
both in the United States and Germany.
He calculates that the United States has
undertaken to spend in a single year for
all industrial and financial purposes two
billion to two and one-half billion dol
lars while the annually accruing capital
of the United States probably does not
reach one-third of that sum.
Prices Must Come Down.
Meantime. foreign supplies of capital
were absorbed In unusually large home
enterprises and were depleted also by the
destruction of capital in war loans and in
the San Francisco earthquake. From
which it has followed that users of capt.
tai must pay more for it in higher in
terest rate and they will have to postpone
or extend for several years many enter
prises for which preparation had already
been made. Industrial and financial mar
kets must. in a measure, reduce their
scale of prices and, In some proportion,
the price of raw material must come
down. Events have too far proved the
opera ton of all these forces TO leave room
for disputs. The Journal of Commerce has
made compilation of new securities Gre
ated in the United States during the first
half of 1907. which show total of 81, 27S, 72S,-
500, with issues since Jan. l of S799 442, 100.
of this amount, s503, 651, 200 has been in
short notes at high interest rates, re-
flecting the urgency of the requirement
Opportunity for investors.
The summing up of NJ. Leroy Beaulieu
is that ''the existing situation in the
financial markets offers to capitalists and
investors generally the opportunity of
which they have been deprived for nearly
twenty years of securing a suitable re-
turn on their invested capital" Never
theless. investment demand in the New
York market still hats. One of the prin-
cipai restraining factors during the past
week was the declining tendency in prices
of the metals. The copper market re-
manned in unstable condition after the
reduction made previously by the prlncl-
pal producers and sales made below their
quotation.
Reports from the iron and steel mar
ketS were or raining OH IN orders Tor
finished products and condition of COM
plete dullness in the iron market. with
fears of "a possible deadlock between buy
ers and sellers such as characterized the
copper market. other metals at the same
time are declining in prices. Authorities
I'm the iron trade have fOreseen this re-
suit and have expressed satisfaction over
the prospect. promising 8 return to more
normal conditions with an assurance of
a waiting demand on a readjustment price
basis sufficient to afford a continuance
of highly prosperous conditions
Markets Unsettled.
But the time of reimbursement is. inev-
itablv. a time of unsettlement The sus-
tanned activity in the branches of the iron
and steel trades is admittedly due to the
working off of accumulated orders and TO
the completion of plans Of construction
partly entered upon before the shortage