The Washington herald., 1907-03-25

traditional experiences that usually come
as the aftermath of period of extreme
stock market decentralization. Upon the
quick rebound in prices that inevitably
follows after q time of panic in the
market, there is always a great deal Of
backing and filling in security valuations,
caused by the play of a great variety OF
forces that are not at all of mysterious
nature. There is buying of stocks by bar
gain hunters who have been attracted 10
the scene of action. There is selling Of
stocks for the account Of people who
were carried through the trouble by
others, or with difficulty mustered up
resources themselves to weather the
storm. The bear party. flushed with VIC
tory. is usually quick TO attack the mar
ket upon any recurring sign Of weakness,
and for a considerable time the course
Of prices is htful and irregular in the
last degree.
Period of Indecision Follows Panic.
The duration of all this cannot, or
course. be predicted with certainty. but
it is not hard 10 understand that the
tendency of affairs should be toward dull
ness and a state OF market equilibrium.
On many occasions in the past. notably
after the Northern Pacific corner panic
of 1901 prices in this second and final
stage OF disturbance have again fallen
as low as they did in the panic period.
although it has not infrequently taken
them two or three months to do so.
The time is one when the minds of most
people in the financial district are con-
fused over the immediate outlook, and
when the great majority of Spectators
are .endeavoring to get their bearings.
There is no doubt that during the recent
decline very large short interest has
accumulated, and that the contest in the
market for the moment lies between spec
ulators for the decline and holders of
stocks. It will also be freely admitted
that 10 a much greater degree than was
the case a Few months ago people who
hold stocks now are those financially
strong, the so-called big men of the finan-
cial world.
Big Men Among Heavy Losers.
Under ordinary circumstances II could
safely be predicted just what the outcome
of this struggle would be- II would be
the holders Of stocks who would win. But
the trouble about a prediction of this
character now is that these self-same big
men are disclosed as having been utterly
wrong in their views concerning financial
and market conditions during the last
seven months, and as having lost a great
deal of money by their mistake Conf
dence in the ability of these men to judge
the future is not as great as il was. Il
has been proved that they, too. just as
much as the smallest spectators in wall
street. can be grossly mistaken in their
forecasts of the future.
It seems altogether improbable, for one
thing. that financial interests of the first
rank viii be willing TO encourage an up
ward movement in the marke. while so
many state legislatures are stilI in ses-
sion. with their public utility bills. pro-
posed railway passenger fare reduc-
tions and the like stiH pending a sus-
tained advance in the market now would
plainly enough only play into the hands
of those who are seeking TO impose upon
corporate enterprises. especially the rail-
way companies. such drastic and confs-
catory measures. Viewed in this light
sagging tendency in the market during
the next Few weeks might be considered
as that most likely to assert itself.
French Bank Rate Interferes.
The great event of the week Of financial
Importance was the elevation of the dis
count rate of the Bank of France from
to 80 per cent. There were a number
Of specific reasons why this step should
have been taken. but back Of them all lay
the one parent cause, that the demand for
money for use in business all over the
civilized world instead Of diminishing is
gathering greater force. Bankers every
where realize this and seem for several
months back to have united in common
effort TO prevent. as far as possible. with
drawais of gold from any financial center
in cases where the transaction might
prove at all Derturbing.
For a long time sterling exchange in
this market has so ruled as to daily
press with more and more urgency for
gold imports and yet the great banks
OF the country have steadfaStly refused
10 countenance these imports and by
refusing credit TO those who wished to
bring gold over nave kept gold from leav-
ing England for this side There were
during last week some plain indications
that our banks werei firing a little of
this programme. and were inclined to
think that If England could spare gold as
freely as she is doing for South America
she could also liquidate a portion of her
current Indebtedness here.
Little Aid from the Treasury.
II would have surprised no one. If the
directors of the Bank of France had not
raised the discount rate Of their institu-
ton, if gold in considerable quantity had
been bought IN London for American ac-
count in the next few days. The action
of the French bank. however. puts a
somewhat different face upon the maa ter.
Meanwhile all the testimony of bankers
is TO the effect that the mercantile and
commercial interests of the country are
rapidly absorbing every dollar realized
by the liquidation in Wall street. and
those in a position TO be best informed
say they can see no prospects of any re-
Taxation worthy of the name in the de-
mand for money for general use. They
do not, therefore, seem to anticipate any
reduction in the near future in time
money rates; and while this is the case
it is hardly reasonable 10 expect any in
crease of life in the general bond market,
which win be, of course, the first symp-
tom of a substantial upward movement
in the market for securities as a whole.
Up TO the present time the aid extended
10 the situation by the Secretary OF the
Treasury has amounted 10 little Only
a small number of bonds have been Of
fered 10 the Secretary of the Treasury
for redemption under his call. and pay
ments OF customs money are sull covered
into the subtneasuries at the leading
financial centers instead of being returned
TO general circulation there, where they