The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-06-10

New York. June 9-From the point Of
view of close and habitual watchers of
the security market, the fact that one
lay last week the average price Of the
active stocks fell once more 10 the low
point touched by it in the panic days
IF March was not without a good deal Of
significance II has long been noticed
that an upward or declining movement
IN market prices follows along certain
if general lines.
Particularly, long-continued declining
movement almost invariably eliminates
IN a few days of great activity and ex-
IRENE depression. perhaps deserving the
name Of a panic" although this term.
ls historically applied, refers 20 a state
IF financial affairs far different from any
that has been seen in Wall street in
recent years.
Following the panic or AZ least a period
IF excited selling Of stocks without regard
10 values, there comes a violent upward
rebound in the market in which within
a short space Of time a very considerable
portion Of the entire previous fan in
values Is recovered. this rebound being
lue, OF course. to a practically uniform
desire on the part OF sellers for the de-
cline TO retire their short contracts, TO
arge buying Of stocks by bargain hunters,
and 10 a general exhaustion Of the selling
power that has previously been at work.
But after this rise is over another phe-
lomenOn almost invariably occurs.
How the Market Rocks.
The market On such occasions eyInces
a strong tendency 10 decline again slowly,
until the low prices of the previous move
ment are once more reached; and this fall
Is due to no hocus pocus Of any sort,
but "a a mere profit taking on the part
Of recent buyers. to what is called a
'wreckage" selling Of stocks representing
The liquidation Of weak accounts that
either through the kindness Of stock com
mission houses or various circumstances
We're carried through the break in the
market, and to the fact that the market
no longer receives the support Of formerly
vigorous spectators for the rise whose
fortunes have become depleted.
When all this circle Of market fuctua-
tons has been completed. experience
proves that there is one interesting de-
Iuction that can fairly be drawn. This
Is that stock market conditions have
been restored once more TO IA relatively
H.. Il 81
her or may begin once more long
continued upward movement; but the
bid forces behind Il have spent them
selves. and the next decided change i'm
me market is apt 10 be as a result Of the
development OF entirely new financial
forces. II is usually the case. too. that
his development is Of more or less grad
Ial unfolding and that at the bottom
prices which IL has for the second time
touched the market halts and shifts back
and forth in an aimless and uncertain
manner.
stocks bought for Rise All sold.
What the next main movement in our
security market may be IS matter con-
'erning which every individual inter-
isted must decide for himself But con-
sidering the prodigious decline In the
prices Of standard securities. the fact
that the earning power Of all these
stocks has vastly increased from that Of
b few years ago. when market valuations
II the stocks We're no higher than they
are now. the manifestly 'liquidated" con-
Hilton of the leading commission houses
ard a great variety OF other evidences
hat present themselves. the presumption
Is not unfair that the next wave Of sell
ug that appears in the stock market If
lne occurs, must represent a liquidation
IF stocks by investors as distinguished
from those who have only made pur-
shases on margins II seems indubitable
IN other words. as If the purKing in Wall
street Of stocks held speculatively for
The rise had been pretty thorough and
hat a further decline in the market can
]nly he brought about through a forcing
lut Of securities that are now locked up
IA the boxes Of people who own them out
right. If this is so. no great argument
s needed 10 establish the probability that
such sales Of stocks by investors Will not
AXE place unless these investors feel
hat dividends on their securities are i'm
'eriled. Mere declines in market quota
ions. while they may be sagreeable
'entimentaIly, will not produce a sell
ne of stocks of this character unless an
actual curtailment of revenue from the
Investment occurs
Indications of Business Barometers.
There have been no bank failures. no
suspensions, and none Of the
Of a slowing up I'm business
that were displayed even in 1903. when.
rs was discovered in due course, it was
purely financial rather than business
troubles that were besetting Wall street.
The most sensitive barometer of trade
conditions. the first department of indus
try to evince in any way signs of busi-
ness contraction, is the iron and steel
trade; and yet. according to every trust
worthy account, the iron and steel bust
ness was never more flourishing than it is
at the present moment
Cotton manufacturing is in the heyday
IF prosperity, and the copper trade. that
has now come to occupy a far more
prominent place in the country's business
life than it did a few years ago. is still
Duoyant. The copper trade is, of course,
enjoying certain especial and peculiar
conditions, whose force does not vet seem
TO be duly understood in the financial dis
.riCt. II has been commonly said in re-
cent months that the present price of cop
per is abnormal and that some material
in it must occur. owing to the
production of the metal that
will come as the result of the high prices
obtained for the commodity.
Argument for Copper.
What appears to be forgotten is that a
est Of exactl.- the sort described has been
going on for several years, and that
throughout it all the price of copper has
advanced. Copper has been
Using steadily in price for a long period.
wing, primarily to the increase in the
of the metal arising from
he great development of the uses Of cleo