Los Angeles herald., 1907-10-10
UNCERTAIN FUTURE
FACES BUSINESS
SITUATION STILL DOMINATED BY
STRINGENT MONEY
One of the Worst Features Is UnwiI-
ineness Of Some Great Corpora
tion Managers to Obey
Law

Once more the stock market has fallen under
the domination of stringent money market.
Business in the interior is active, crop de-
mands are asserting themselves and the au-
tumnal demand for currency has set In with
It's usual vigor Coming at time when our
bank reserves are low, and when our credit
facilities abroad have been curtailed, the nat
ural result says Henry Clews is high rates for
money. with consequent depressing effect
upon securities. Secretary Cortelyou has ar
forded considerable assistance having thus far
deposited about Sc, 900 900 with the banks with
In the time limit, which expired this week.
Whether he will still further increase these
deposits Is not known; but the treasury bal
ance is now $65, 600 600 and much depends upon
the emergency.
All indications point to high rates for money
during the remainder Of the year. Credit Is
still much extended and bankers show gen
eral inclination toward contraction. In previ-
ous years we have placed loans abroad to the
amount of $500 100000 to s400 900, 600. This year
1t is doubtful II we could place more than
fraction of that sum. The export season IS
now on and Europe is sure to take our wheat
and cotton with increasing freedom and at good
prices. Under ordinary conditions we should
be able to count upon considerable inhux OF
gold, but the great banks of Europe are almost
sure to resist any important movement Of tho
precious metal in this direction at this time.
President Roosevelt's several speeches this
week contained little new regarding his atti-
tude toward corporations and railroads. and
they asserted nothing calculated to disturb the
stockholders OF honest and law-abidng corpo-
rations One of the worst features of the situ-
ation is the unwillingness of some Of the great
corporation managers to obey the law. For all
concerned 1t would be far better II our corpo-
rations would adopt compliance with rather
than resistance to legal requirements Public
opinion would then be pacified, just and rea-
sonable reforms would be possible, and there
would be much less hostile federal and state
activity. But so long as some Of our ablest
lawyers devote themselves to legal evasions, TO
hos
high sums for such services, just SO long Will
public discomfort continue. Corporations have
their political future very largely in their own
hands, and resistance to present legal restraint
Is likely to result in increasing rather than
diminishing government interference.
The business situation is now becoming more
of factor in the stock market. No one anti
cipates any serious reaction; yet day by day
IL becomes more and more evident that COM
modify prices have reached an almost pro-
hibitive level and any further rise must result
in decreased consumption. Outside of metals
there has been no decline of consequence in
the commodity markets. Many articles OF food
are relatively scarce or certainly not abund-
ant and as a result growers are in position
10 exact unusually high prices. We nothing
In sight to check this tendency. except either
lessened consumption or increased production.
The stock market has received its worst
shocks from liquidation, and doubtless some Of
the better class Of railroad securities have now
about reached point where they are selling
below their intrinsic value. 1t remains to be
seen however, how the industrials will stand
any business reaction. Many OF these have
been making abnormal profits which must
shortly decrease. Dividends have been paid on
securities which represent nothing but water,
and when these begin to disappear the eject
on market values will be anything but stimu-
lating Some of these corporations have wisely
pursued the policy Of devotng a large portion
OF their unusual .pTohtS to extensions and Inn
provement Of plant; to this extent giving their
common stock an added value. Nevertheless.
the industrials are much more likely 10 feel
the effects Of business reaction than the rail-
roads. and as no great reaction has yet fallen