Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-01-06
GOOD EFFECT OF INQUIRY
Active Tendency Fostered by Relaxa'
ton in Money Market.
CAUTIOUS SPIRIT PREVAILS
Reports of Unprecedented Prosperity
Cause Fear That Reaction is Near
Uncertain Feeling Prevails.

revival which developed yesterday In the
stock market had the effect of bringing In
a large additional participation today Inc
transactions for the two hours were largely
in excess of the recent averages Tor 1uii
days business. Prices wavered when the
complexion of the bank statement became
known, and a sharp reaction followed i'S
publication. The late rally in the market
did rot carry prices back to the previous
high point, but the closing tone was strong
The greatest speculative activity CEN
tered in the Hartman group. especially
Union Pacific. The disclosures of yesterday
at the inquiry by the interstate commerce
commission of the wide scope of the actlVl-
ties of it's executive in the purchase Oh
stocks and the requirement o. voice III
the control in other railroads came as II
surprise to most of the stockholders them
selves The exhibit of the power thus CEN
tered in their property apparently pleased
, them and there was no sign of the anxiety
recently shown for the consequences OF tins
inquiry In the possible disclosure of "a con-
dition in the affairs of the Hartman COM
panes that would make them amenable TO
legal process by the government.
Relaxation in Money.
The speculative spirit was fostered also
by the quick relaxation in the money mar
ket which has occurred during the week.
Confidence on this point was somewhat
shaken by the showing of the bank state
ment the net result of which was cutting
down of the surplus to Il nominal figure.
The large loan increase was readily at
tributed to the financing of the January L
statements. The decrease of 4O2. 100 In the
cash item instead of an estimated gain OF
S3OOOUDO had more influence on sentiment.
The failure to take account of the needs
of the trust companies in the provision OF
the final l per cent nstalment of the .
per cent of the cash reserves, which came
into requirement on January l, probably eX-
plains the discrepancy. The course of the
money market, however. is evidence of the
actual strengthening of the money position
and it was this consideration that induced
the later support and the rally In the mar
ket Rates for time loans for all PERIODS
have declined to per cent basis. There
was notable expansion also in the buying
of bonds at the stock exchange and general
hardening of prices. Total sales of bonds,
par value, ,4Si 900.
Sentiment of Caution.
The action of the stock market with the
opening of the new year indicated a spirit
of caution in speculative sentiment and a
degree of hesitation and uncertainty in the
opinion held over the outlook. The universal
testimony to the unprecedented prosperity
of the present conditions is accompanied,
almost without exception. by tone of
questions of it's maintenance or of ex-
pressed fears that reaction is at hand. The
existence of this spirit seems to be RESPONSE
BILE for the air of constrant on speculative
operations which characterized the first
transactions Of the year. in spite of the
satisfactory working out of some of the
immc diately uufaVorabe factors in the sit
uatiOn.
The action of the money market. owing
10 the strains of annual settlements. showed
none of the violent unSettlement which had
been feared on account of the very large
volume of the settlements and the existing
expansion of credit resources. The high rate
of Wednesday, the first business day of the
year. in the call loans market was ~ per
cent and on succeeding days there was pro-
sressve recession in the maximum and the
ruling rate. Compared with the first week
OF last year the contrast striking, last
year opening with a 60 per cent call loan
rate, with 80 per cent in the second day of
the year.
The unexpected tranquility of the money
market was due. of course, to the prelim-
mary precautions, which were prompted by
the abundant warning given of the probable
strain on the situation. Prepayment of
large sums in interest and dividends not
due until the first of the year We're made
by number of corporations. The conSerVa-
tive course of the speculative operations in
the stock market itself for some time past
also aided to ease the strain. Important
liquidation must have been effected in the
stock market to afford the relief which was
demonstrated by the ease of the large Janu-
airy settlements. The relation of the money
market following the first of the year has
been Unexpectedly prompt and marked.
Feeling of Uncertainty.
There remains a feeling of uncertainty as
to how much further this relaxing tendency
OF the money market may be expected to
go and how long it may persist. The pres
ent condition is seen to have been secured
TO a large extent by anticipation of re-
sources which cannot be relied upon again
for future effect Stress is laid upon the
plan of the governments financial opera
tions as threatening a renewed strain.
Thus the 100000 of government inter-
est due up to and including May / has been
already paid. The s10,OO0.OO0 of government
funds deposited with the national banks In
December was with the stated provision
that half was to be returned on January 20
and the other half on February l.
or the S26,OoO.OOo deposited in September
II was intimated also that installments
would be called for repayment, beginning
on i oruary /.
The National City Bank estimates that
excess If government receipts over expen-
ditures between now and July l probably
will amount to $36,OO0oOO The maturity
of that date of the SLID 900 of 4 pei
cent bonds of 1907 and the likelihood of q
fresh issue OF Panama canal bonds are
pointed out as additional complicatng fac
tors in the governments financial opera.
lions. Another surprise in the financial
markets OF the week has been the violent
rebound In the foreign exchange market
away from the gold import level below
which 1t had sunk last week.
II was canVassed possibility last weel
that with the easing of foreign money
markets with the turn of the year golC
might be released for shipment to New
York. On the contrary, the demand fol-
remittance from New York to cover ma
turing obligations carried the price of de
mand sterling cents in the pound over
that at the close of last week The prompt
aad effective easing of money rates abroad
had no apparent effect in diminishing this
demand for remittance. There are larg,
recurring requirements on the domestic
money market already outlined in the paw.
ment of installments on subscriptions tt
the large new stock issues made in the lat
ter part OF the year.
The Railroad Situation.
Growing attention is given to the effect
on net earnings of railroads of the rise In
operating expenses. The general advance
which is going on the wages of employees
Is not expected to show its full effect unit
the reports of earnings for the months Of
the new year begin to appear The re
ports for November, which have come tC
hand this week. already show a uniform
tendency toward reduction In the proper.
ton OF gross increase in earnings saved
Tor net, and a substantial prODOrtion of TN,