Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-01-13
Apprehension Caused Sharp
Depression During Week.
PENNSYLVANIA A FACTOR
Prospect of Enormous New Stock Is
sue Arouses Fears.
MONEY MARKET CONDITIONS
Bank Statement Shows Expected
Gains in Case-Harriman Inquiry
Feature in Weeks Business.
MONEY MARKET CONDITIONS

NEW YORK. January 12.-There was
Continuance today of the recovery in stocks
from, the weakness caused by the Pennsyl-
yania plan for new capital issues, which
was already in evidence before the market
closed Yesterday. Pennsylvania was not
fully abreast of the front rank in the re-
Covery, in spite of its severe decline yes
terday There was a calmer feeling, how
ever in regard to the contemplated capital
issues by the Pennsylvania railroad.
The indefinite future for which the issue
Is left had something to do with this feel
ing. Another consideration was the large
portion of the proposed issue which Will be
reqiired for practically funding capital ex-
penditures already made. Included in the
estimates of these are $5o00o.o0o of notes
maturing later in the year, SlSb0OGOo 10
cover new cars already ordered and prob
ably S40oUDGoo for carrying on the terminal
Improvement work in New York.
The principal strength today, however, re-
CURED in previous speculative favorites, es-
pecally the Hartman Pacitics, st. Paul
Northwestern and Reading. There was a
residue of uncovered shorts as a cOnse-
uuence of so considerable a fall in prices as
occurred yesterday, and the necessities OF
these in Il rising market dccentuated the
recovery There were uncunfrmed rumors
in connection with the strength of the Har-
riman PaCitics of intended testimony to be
offered TO the interstate commission by the
principal Witnesses to be called, which
might cause more favorable impression
on the public mind toward the corporations
The Bank Statement.
The bank statement showed all of the
expected gain in cash, which practically all
accrued to the advantage of the surplus,
as the loan account was decreased. al
though by a small amount. The days re-
port of subtreasury operations also showed
CD hinh
did not figure in the bank statement. Dis
counts rose again in London. There was
some profit-taking in the late dealings, but
the gains were very well maintained. To-
tai sales of bonds. par value, S99i,oob
Speculative confidence has been Jared by
q number of events this week and sharp de-
preston in the stock market has been the
consequence. The elimination was reached
IN the unexpected announcement by the
Pennsylvania railroad authorities of their
intention to offer S1Oo,0O0,GOO of additional
stock and l0o.O00OO0 of additional bonds.
Coming on top of the huge issues already
authorized by the northwestern railroads,
the effect to cause fears of an ag-
gravation of the glut in the securities mar
ket and continued scramble for available
capital. This discouraged the hopes that
began to be entertained of an effective re-
Taxation of the strain in the money mar
kets.
The prospect of such a prodigious body of
new capital issues argued badly for the
chances of an active demand or any adj
vance in prices of existing issues. Recur-
rent requirements on the money market
already outlined for installments of sub
sCriptons of stock already issued promised
an extension of the strain on money re-
sources for many months ahead.
The Money Market.
Last weeks bank statement showed the
loan item had practically exhausted the
credit resources of the New York banks and
left the reserves at a lower figure than
has been seen at the period of the year in
q generation. A large proportion of the
banks in the clearing house association
were below the legal reserve requirement.
and calling of loans was a consequence.
This induced a Hurry in the call loan market
and 10 per cent rate on Tuesday. This
disturbed the confidence that felt in an
early effect from the usual refiuX of funds
from The interior after serving to move the
crops.
Coupled with the continual evidence of
waiting demands for new capital to take
advantage of any real relaxation in the
money market apprehension grew that
stringent conditions would be carried over
into future money markets. Later in the
week there was an easier tone i'll the money
market ana some evidence of growing
Willingness Of lenders to place funds. This
was especially true in the time loan depart
ment of the money market. Some of the
additional offerings in that market were of
the proceeds of call loans recalled from that
form OF credit HIS accounted pdIllS lOI
the aEgTaVatiou of the strength in call
loans. even while rates for time loans were
declining.
II was evident that lenders were DESTROYS
of placing their resources in time loans to
forrstaI an expected decline in rates, while
borrowers, for the same reason, were will
ing To continue their reliance on call loans.
even AT the high rate. believed to be tenn
Israry. The strength OF the 'ocal money
market had the effect of easing the foreign
exchange market to take advantage of the
easter tone OF foreign money markets fol
lowing the turn of he year. But this course
of our exchange market helped to arrest
the downward course of foreign money
rates. and 1t became evident again that any
withdrawal of gold from London for this
market would threaten an unssttement
that might be reflected back here.
Demand for Gold.
\ heavy demand developed also on Ion
don for gold for South American account.
the weeks outgo to at point amounting
10 81 $4,000. This and the movement on
the change constrained the Bank of Eng
land , Hcials To- retain the u per cent dis
count e.. and the effect was manifest on
all the worlds money markets. Sentiment
over the future of the money market was
affected also 10y sales of notes by railroads
and corporations, most of them running for
q period of three years, and understood to
have been sold at a price to yield per
cent, thus indicating the difficulties of md
ing market Tor more permanent securities
and the desire To postpone their sale where
possible.
The Hartman Inquiry.
romplcating factor in the weeks de
preston grew out of the activities of the
Interstate commerce commission and the
facts ELECTED in its investigation into the
operations and inter-relations OF the Harri-
man railroads. The extensive inquisition
OF holdings of other railroads by the T-nion
Pacific was a surprise in itself and aroused
Nneusuess as possible ground for hostile
action by the government This was still
more marked in the case of some of the
financial operations disclosed. especially a
sale followed by a repurchase of great
block of Southern Pacific at period when
AN Injunction was sought TO prevent the
voting OF the stock in the interest of the
Union Pacific.
The effect of this situation in speculative
sentiment was increased by the prevalence
OF rumors of the departure. or the intended
departure, beyond the jurisdiction of the
government of some of the capitalists from
whom Information was sought in the prose-
cution of the inquiry. Measures of prose-
CutiOn by several of the state governments
against railroads were additional factors in
the formation of sentiment regarding the
position of corporations. Railroad officials