The Washington herald., 1907-09-02
MARKET HOLDS WELL
Complete Liquidation Proves
Favorable Factor.
BOND SALE AIDS CONFIDENCE
Disposal of Large New York City Is
sue Not without Good Eject on
SituatiCn-NOtabIe Feature OF the
Week In Wall street Was Urgent
Demaad for ShOFt-term Notes.

DemaAd for ShOFt-term Notes.
New York, Sept 1.-Two important new
facts lent their influence TO the side Of
improvement in the stock market last
week. and while the gain in prices was not
great. it was sufficient to allay the dis
turbed feelings which pervaded tbs whole
financial situation until comparatively
recently.
One Of these facts was demonstrated
70 an absolute certainty. and the other
was announced in a way which, while not
official, was yet sufficiently definite to
satisfy the street as to its real impOr-
lance. The first was the completion of
liquidation in the stock market, and the
other was the plan attributed TO private
banker 70 subscribe for a new issue Of
New York City bonds in such a way as to
insure the unqulihed success Of the city's
financing.
AS TO the Importance Of the first Of
these facts there can only be one opin-
ion, and In regard to the other opinions
can only differ as to the degree of i'm
portance which should be attached to 1t.
The more the subject is considered the
stronger becomes the conviction that the
matter is Of first Importance at this juno
ture.
Bond Sale Important Factor,
OF the many discouraging conditions
which prevailed in Wall street a week
ago, none was more discouraging than the
inability of New York City 10 meet ma
turing bills In cash and the necessity on
the part OF contractors doing business for
the municipality to take bonds at par
and afterward convert them into cash
en- the curb at considerable discount.
By casting a cloud upon the credit Of the
first city in the nation these transactions
were the means Of disturbing sentiment
TO a far greater extent than any other
factor engaging attention at the time,
and it would have been idle to attempt
to restore confidence without striking at
the very root Of the trouble.
Not the least noteworthy Improvement
shown recently in the security market is
the better demand for short-term notes,
prices ofwhich were a week ago depressed
to even a lower level than at the ZINE
OF the panic in March last. This applies
TO the notes of New York Central Lake
Shore. and Pennsylvania, which weak
ago sold on a basis to net the in
weston more than 6 per cent, but which
have IN the last few days shown consid-
cradle above price appreciation.
Banks in Need Of Cash.
One reason for the decline that in these
Issues reached its elimination about the
middle Of the week was selling by out
Of town banks which needed the money
in order TO take care Of the crop NOV
ing and mercantile demands in their ter
ritory. Another was that the notes, rep
resenting in effect time loans. were in
huenced by the market for time funds;
Of the two the former was probably the
more important. Out OF town banks which
in other years sent their available funds
10 be put out on call IN Wall street, find
ing the rates very unsatisfactory in the
present year, bought railroad notes on 6
basis to yield high rates Of interest and
when they needed money they used these
as collateral for loans.
RumOrs Are Premature.
During the week there was a recurrence
OF the rumors frequently heard within
the last five or six months that the di-
rectors of New York Central would de-
eide to reduce the dividend to the pei
cent basis from which it was advanced L
per cent nine months ago. Such TumoI s
there IS every reason to believe, are en-
tirely premature. Whether the directors
would have voted to advance the dividend
at the end OF 1906 if they could have fore
seen what was to follow is another CUES
ton, but il is evident. that the road ha'
suffered greatly from the advances II
wages which 1t was obliged to make al
the beginning Of the present year. from
the deterioration in the quality Of labor
which has been even more adverse fac
tor. and from the high prices Of all kinds
Of materials and supplies.
Short Interests Not So Large.
a great deal has been said recently
about the existence Of an enormous short
interest in the market, but it may well
be doubted If this Is as large as might be
supposed from the extent of the borrow
ing demand for stocks There can be
hardly any question that a large part OF
the demand for stocks in the loan crowd
comes from brokers who are carrying
time loans beyond their present require
ments and need the stock for use as col
lateral
Recently certificates Of stock have ap-
peared in the street bearing influential
names, but this Is not necessarily a bad
sign While large interests were liqui-
dating, they borrowed stocks instead o.
delivering their own certificates, and the
fact that they ere no longer unwilling q
let the names appear Is a fair indication
that they are no longer concerned about
holding UP prices. The natural inference
IS that their liquidation has been COM
pleted and that the market is holding W
on account Of its own inherent strength
and without the aid of manipulation. In
fact, the appearance Of certificates bearine
prominent names might mean, as has
certainly been the case at times in the
past, that not only had liquidation been
completed, but that substantial interests
had begun 20 buy back stocks and were
willing that the public should have an
incorrect idea as to their position while
their buying was In progress.
g-o...