The Washington herald., 1908-01-06
In Spite of Reaction During Early
Part of Week, Notice of Reduction
of Bank of EngIand's Rate from
Z tO g Per Cent Improves Money
situafiOn-Movement Is Growing.

previous TO that time had been made
for window dressing" purposes, and
that after the turn Of the year the in
stitutIons which were required to report
their condition as of December q would
withdraw support, allowing prices TO drop
back to the level from which il was sup
posed they had been artihcialIy lifted
The reaction continued into the first
hour of business on Thursday morning.
the operations for lower prices receiving
the benefit OF the announcement that ap-
plication had been made for the appoint
ment of a receiver for the Seaboard Air
Line and Of the report from Washington
that the Department Of Justice was about
to institute proceedings TO disrupt the
relations existing between the Union Pa
cifc Railroad and the Southern Pacific
Company
Situation Improved.
Substantial Improvement in the money
situation sufheed, however TO counter
act the attacks upon the market and the
unfavorable circumstances from which
these received support, and from about
noon on the first business day Of the
new year the rise IN prices was renewed.
and thereafter proceeded more vigorously
than it had done previous to the holiday.
Probably the strongest factor on the
side of the advance was the reduction
from : per cent 10 S per cent made by the
Bank Of England in its rate Of discount,
as there is no question whatever that
this would not have been done unless the
managers Of the English institution felt
fully assured that the situation on this
side had become so far relieved that fur
ther demands for gold on the part Of
American bankers would not be made in
London.
It seems quite likely, indeed, that the
.6 per cent rate viii not be adhered 10
for any considerable length Of time. for
a decline to per cent has been already
foreshadowed by a further fall in open
discounts. and il not on Thursday next,
then a week later, the Bank Of England
rate will probably get back to what, un-
der present circumstances, should be re-
garded as about a normal figure.
That the English bank was well in
formed as 10 conditions here has been
Of the market for currency and the sub
stantiaI increase in the return movement
10 this center of the funds sent TO out
Of town points during the money panic.
Movement Is Growing.
This movement has now attained such
magnitude that when it is increased-as
it must be substantially increased from
now on by the return to Wall street Of
the money paid out in connection with
the interest and dividend disbursements
at the beginning Of the year-It will soon
restore normal conditions and place Wall
street in possession Of an ample supply
Of funds for speculative and other pur-
poses.
The appointment Of receivers for the
Seaboard Air Line was not wholly un-
expected although only in a few places
was il known a week ago that the ap-
plication would be made at such an early
date The placing Of a large railroad in
the hands of receivers is never q pleas
ant occurrence. but in the case OF the
Seaboard Air Line there were so many
circumstances mitigating the significance
OF the affair as market factor that had
il not been for the pessimistic frame OF
mind of some large operators when the
news was received it might have been
wholly without effect on the structure OF
stock exchange prices.
Not the least important Of the ciTcum-
stances tending 10 lessen the effect Of the
receivership on the local financial situa-
ton is the fact that hardly any of the
securities Of the road are held by the
local banks. The New York interests
which control the company are large
holders Of the securities Of the road, but
their possible losses are personal and do
not affect the banking situation
May Serve as object Lesson,
Another important consideration is that
the troubles of the road having been has
tened by the anti-railroad craze in the
South the unfortunate incident may serve
as a wholesome object lesson 10 bring
about return of sanity. The Seaboard
Air Line has never been a strong system
Before the New York interests took hold
the management of the property was re-
markable for sanguine expectations which
were never realized. because they were
| impossible OF realization.
The New York interests were deceived.
as many others were deceived, by the
glowing promises held, out and supplied
the money which they were Informed was
all that would be needed 10 make the
road a great Garner Only a little while
later however, they were obliged to put
up still larger amount 10 save what
they had, already put in.
The result was that in time the man
agement of the property was split into
two discontented parties-the New YORK
interests, which were disappointed be-
cause their financial aid had not produced
the effects promised, and the former con-
trolling interests. which had apparently
deceived themselves as much as others
by their grotesouely exaggerated predic-
tions regarding the prospects for the