New-York tribune., 1907-07-01
THE FINANCIAL MARKETS.
Il WEEK OF IMPROVEMENT IN SECI7RTTJES
IMPROVEMENT
Wall Street VII Take City Bonds at Cent but Not at Under
Eristng COndtion&Bank HOLDINGS Lozc
THE WEEK IN WALL STREET.

THE WEEK IN WALL STREET.
Until the bids for the city bonds were opened
the stock market showed an advancing and
broadening tendency and evidence pre-
sented of a more confident feeling in the Wall
Street community The failure of the city to
float its proposed per cent bonds came as a
disagreeabIe shock to the speculative element
but in banking parlors such outcome had
been expected. and great sympathy was ex-
pressed for Controller Metz, who had been warned
that the time was not opportune for the fiota-
ton of a big municipal per cent issue at par
better. The city cannot accept less than
par. but under a recent amendment to the law
covering our municipal bonds the sinking fund
commission has the power to authorize the Con-
trolIer to offer higher rate than per cent,
and If the proposed securities had been offered
at a better interest yield, investors might have
taken them. despite the unfavorable position
of the general securities markets. There is no
inducement for any one to buy city bond at
per cent when issues equally as safe go a-beg-
ging at cheap prices and high interest returns.
The market is congested with new issues. bank
ing houses are overloaded with stocks and
bonds for which there are no purchasers, and yet
the railroads are clamoring for more money
and are only able to get IT at eXorbitant prices.
The OUTPUT of securities has been greater than
capitals power of consumption. and until
there is q readjustment in this respect munich
palities and corporations VIII not be ap!e 10
finance their requirements at the ngures that
prevailed a few years ago, when there was
more money than securities. The supply of
money has been used up, so TO speak, and 1t Will
require time and a quieting down process in
our railroad and general industrial expansion
before the situation can be materially improved
And It also will require time for the absorp-
ton Of the great mass of new securities that
now press upon the market
outside Of the money market and the tied up
condition Of our bankers and big financial in
e+i+,,tions there are few unfevorable features to
record The intrinsic worth OF securities is as
great if not greater, than at any time in the
history Of the country, and current market val
uations should not be taken as n measure of in
vestment worth Nor should the fact that the
market is clogged with new stock and bond is
sues cause uneasiness over the future New
securities represent the growth Of the Country's
industries, and the insistent demand from the
railroads for funds and their Willingness 10 pay
a stiff rate for accommodation merely reflect
that the nations business Is running ahead of
the transportation onpanes facilities, and that
new capital must be had 20 increase their
ability 10 handle growing traffic. Business
expansion has come in spite Of wars, earth
quases and fires, but the factors named have
been an important influence in the money
market as they have served TO help exhaust
the supplies OF capital at a time when in
dustrial growth has been eating up money at
a rate never before known in history. The ex-
penses Of the corporations and Of the individuals
have grown enormously in recent years. Tho
cost of living is too high in proportion 70 ones
income The price Of labor has reached a point
where st is beginning seriously TO hamper bust
ness operations yet workers assert that 10
live they must have better wages The cost
Of living has been overdone, so also has the ad-
vance in the price of labor. There has been
overexpansion Of credit that has led to imitation
in many instances, and, as pointed out by the
retiring president oS the New York state Bank
ers' Association, when our next financial disaster
comes the present pyramidng Of bank deposits
upon inadequate cash reserves viii cause wide
spread disturbance
The stock market has had a readjustment to a
lower level, though the movement has gone TOO
far and the best thing that could happen for the
.ure growth Of the country would be a read
justment in other lines and the development ct
ouieter tendencies in the business world. Words
Of warning are now heard in high places and hard
thinking is being done by men who are in close
touch with the general situation. Their attitude
ought TO serve the useful purpose OF creating
caution in all undertakings and impress upon
the pooDIc at large the necessity Of moving slow
Iy until the supply Of capital in thes country
increases. There appears to be no chance or
business epressiOn-underlying conditions are
too strong for that-but there Is reason TO be-
develop in the course Of the next twelve months,
rartfcularlv as a Presidential year is approach
ing Money IS dear the world over and condI-
tions abroad in many respects are similar to
those here Too much business on too small a
capital has hurt things, but Il has not brought
This country or any other country to a position
where hard times stare them in the face. There
Will be no business panic. and there VIII not ne
as some old fashioned pessimiSts assert col
lapse in real investment values as a result Of
the tendency on the part OF the people to secure
government regulation Of corporations In
vestInent values that is the actual worth OF
securities have been strengthened as result or
the Hepburn act, and they Will be strengthened
further bv legislation, through which there VIII
be closer cooperation between the railroads anu
the public. Confidence has not been destroyed
as some people appear TO believe because sto'kS
are cheap and the city cannot sell its bonds
IF confidence had been destroyed there would be
a plethora of money in the banks and in stock
ings and other hiding places. Bank reserves are
low because money is actively employed IN the
channels OF trade and stocks are low because OF
overspeculation and the pressure Of new securl-
ties upon the market
In the greater number Of issues prices IN the
last week made material progress toward
higher level the decline Friday following the
city bond sale announcement having little erect
upon net changes, which showed uniform gains
IN all the leading issues. The movement was
due in great part to purely speculative opera
tons in which covering Of shorts played large
part the public taking little interest in the
trading The larger Wall Street operators were
bu!lish for a turn, basinG their transactions on
the theory Of 2 better demand for stocks after
the distribution OF the July interest and dlVl-
dend paynents Upward OF $1S5,0OO,OOO will
be paid out by corporations in July most OF II
I'm the first week. and In view of the attractive
" I 1 hon q ~ IL