The Washington herald., 1908-08-24
WEEK Or DECLINE
ON STOCK MARKET
Review Explains Causes of
Repeated Reaction.
FALL SELLING WAS FEATURE
Spectators Suspend Aggressive
Fashion After the DistributiOn
Which First sent Prices Down
ward, and This Causes Sharp Rally
About Middle of the Week.

New York Aug 23--The heavy dis
tribution Of stocks by pools and large in
terests which about ten days ago gave
the market q reacti0nary tendency. was
continued in the early part Of last week.
with the result that prices declined
Sharply and II was necessary 10 withhold
further selling orders until the demand
again overlook the supply, and the opera
ton OF reducing overextended lines could
be resumed with some measure Of sue
cess.
The decline induced selling for the fan
by a E-eat number Of Spectators. and
this was continued IN aggressive fashion
after The significant distribution which
first gave the market its downward ten
dercy was Suspended. the consequence
being that on Thursday the short interest
assumed such proportions that IL was
made the basis for @ sharp rally under the
leadership Of the Hartman stocks. and
an opportunity was afforded 10 those en-
deav-rlnE 10 reduce their commitments
On the long side 10 market considerable
stock % much better advantage than they
could have done tWenty-four hours before
This selling continued until the end of
the week whenever the market was
strong enough 20 take IL
Sufficient commentary on the character
Of the operations which produced Thurs
days sharp decline and subsequent re-
covery was afforded by the fact that
about the only arguments heard in favor
Of q lower or q higher level OF prices was
that this or that interest was selling
stocks OF that certain houses or operators
were ove-extended on the bear side
Handle Stocks Carefully.
Il IS a fact that there was a large Dor
rowing demand for certain stocks but
this by no means proves that the short
interest vas u-wieldy, for It is quite pos
slble thar much OF the borrowing was
done By sellers Of actual long stock. who
could hardly AFFORD 10 deliver certificates
IN their own names until they had fully
disposed Of al they needed 10 sell and
were. therefore. Indifferent as 10 whether
the street discovered the source Of the
selling OF not
Much the same circumstance has been
noted in the early stages Of every con
siderable decline IN the last couple Of
years. large interests filing the street up
with stocks and borrowing for delivery.
so as 20 create the Impression that the
market was technically in q strong posi-
ton and would advance sharply when the
shorts began 20 cover
Il looked as II practically the entire
short interest was driven in on Saturday.
and as the trading element was afraid 10
take the bear side. the market may be
now deprived Of q factor Of strength A
common argument especially al the be
ginning Of the week. was that prices
could hardly decline while money was as
plentiful as Al present. and that as there
was everv prospect .cE a substantial i'm
ur-veuent IN business here were the two
most important factors fo- a substantial
advance
That money Is easy IS certain. but that
there Is the prospect Of a substantial i'm
r-ovsueur N business IS a matter on
which those best qualified 20 express an
opinion are by no means OF one mind II
must be clear that If business improves
in the vigorous way that speculative in
Leres-s IN WEu street predict money
cannot continue in superintendent sup
ply. and the increase Of the one factor
must diminish the force Of the other
The present conditions In the call money
market denote something Ike business
stagnaIion. and while furnishing an i'm
portalJ atc 20 bull speculation are more
likely 70 make investors pause than 20
induce them 20 place their surplus funds
in stocks and bonds when there Is IN
certainty as 10 whether the dividends
on the former may not have TO be To-
5uced and a reasonable possibility that
IN such event the price OF the latter may
5e sympaJhsticaIly influenced.
Demand for Bonds.
That there has been IN the last couple
Of weeks a decided contraction in The
volume OF the demand for bonds both on
The stock exchange and through the deal
srs in inactive issues. very few persons
vestment buying has nearly ceased. but
speculative interests with large lines %
stocks 10 sell must still resort 70 all S0Tcs
Of devices TO induce the public to take
these OF their hands Almost at the
opening OF tie week Great Northern and
Northern Pacific started on a rapid de-
cline. for which there was no other eL-
PLANTATION than the very inadequate one
that the injury suffered by James J Hin
in an automobile accident was serious.
and when stories to this effect were denied
and AIr- Hil was seen attending 10 bust
ness in his usual health, the stocks failed
70 rally from which II was fairly inferred
that there was no real connection between
The selling and the ruuOT which grew out
Of Il. but that distribution on large
scale was accomplished in a way which
took the professional traders entirely IN
aWa-es and lefL them in possession OF
long stock where they had sought for an
opportunity 10 turn profits Of q couple Of
points within as many hours Later in
The week The Rock Island issues went
Gown in the sane way as the FTill stocks
and their course was followed by New
York Central which. ike the others. fail
ed 20 recover from the decline except for
the rally on Thursday afternoon result
Ing from nothing more important than
the squeeze Of a traders short interest
The decline in the Rock Island issues
was accompanied by the usual rTunors-
but in The case Cf New York Central.
whatever might be thought Of the stories
OF a reduction IN the dividend TO be de-
C-ared next month or Of the alleged sell
Ing by UniCn Pacific. there is no doubt
rIar the street was UnfavOTaioly impressed
by -he statement OF earnings for the six
months ended June 30. published last
week. and the first Impressions Of which
were not improved by fuller study Of the
figures.