The Washington herald., 1908-01-20

that was carried on, but those iudulging /
/ in criticisms Of this kind admitted in the I
same breath that the action of the mar |
ket was only natural that they could |
do nothing to prevent it, and perhaps |
! that it was not wise To try to prevent /
| it, even if they were able 10 do so.
| The market has plainly been for some
/ time in state OF rccou from the cXag-
gerated depression Of the closing months
Of last year. and it is entirely in accord
with precedent in such matters and in
response TO Well-knowH instincts OF hu-
man nature and the general current Of
/ financial developments that this rebound
should be attended with something Of the
same violence. not TO say extravaganza, /
that attached to the movement in the re-
verse direction that previously occurred.
Reason OF Prices below Value.
After the prolonged downward move
ment in values which ran TO such lengths
and eliminated in such extremes as We're
/ witnessed last year, II Is invariably found
when the market again turns upward.
and as has been time and time again de-
| scribed in this column. that the amount
of stocks sold by people who do not own
them is far I'm excess of aEy quantity
that these sellers can easily deliver, and
/ that the low prices touched when the de-
preston was at fits worst much more
than discounted the adverse effect upon
the intrinsic worth OF the properties CON
Cerued Of any prospective falling of in
business profits.
Panics are usually attended with
boarding Of money and the troubles of
1901 were distinctly and especially due to
this cause rather than TO any impair
meut of the business prosperity OF the
land as a whole. When such storms pass
and people see that the accustomed de-
p0sit0rles OF their money are stiu as safe
and sound as ever there is in the course
Of a few weeks an immense return of
money % the old-time channels. The gold
that has been brought into the land from
foreign countries and the Increase of
bank circulation stimulated by the panic
serve 20 further enlarge the amount OF
money in circulation and aCcumulatiuns
of funds are also immensely assisted hy
the slackeuing Of trade.
Factors in Advance of Market.
From period thus of acute monetary
stringency the financial markets are
thrown iu a short time into a state Of
great monetary plethora. 4 feeling of
uubounded relief spreads over the dir
ferent financial communities in every part
OF the country and no one should he sur
prsed that the financial and even the
commodity markets should Doe the scene
; - exuberaut demonstrations resulting
/ from this feeling TWO other factors
have entered into the advancing move
ment In prices in the last two months.
Not only Was 70 discovered in the after
panic days that short interest in the
b market had been created Of "a size niue.
b greater than most people thought prob
! able. but that stocks had been removed
r from the market in similar uprising guam
titles by the purchases made hy investors
, large and small 1t is difficult to make
estimates i'm figures OF the amount of in-
vestment of this kind that went on
throughout last year but taxing all the
available data into consideration. the
81 statements made bv the Wall street
houses making a business of buying and
% selling shares OF stock in small or old
81 lots and the information afforded SD far
as il is disclosed by the transfer books of
{ the country's large corporations. IL is va
81 riously calculated by those processing eE-
pert knowledge in such matters that be-
tween 1900 coo and 100000 shares of stock
thus passed in the time named into per-
manent hands.
borrowing Is CurtaiIed.
/ II is well known in wall street that six
or seven commission houses that were "a
p year ago borrowing from S-5,ol9.9-0 20 $5l-
, OOO00 each have now cut their loans
: down to comparatively small sums. What
Wall street calls tile floating supply of
stocks in the market has been heavily
, reduced Stocks are scarce and il takes
] much less buying TO advance them than
! it formerly did. in the second place.
, every one familiar with financial matters
j knows that in the dark days Of last Og-
tober and November the banking houses
Of the city that were in a position TO do
- so either voluntarily or involuntarily
- went into the helping business" on a
large scale, that Is 10 say, they either
, took over from various weak firms and
individuals an enormous quantity of Sc
curities that could not otherwise be- mar
] keted or extended credit upon these Sc
curlties that was refused in almost all
other quarters.
{ The Western banks called loans in this
b city to the amount Of nearly S2ooo30,g10
and the New York banks furnished the
money TO meet the call. The inevitable
sequel to this has been that with the sub
sdence of the panic the bankers who as
| sumed obligations of this kind have
sought 10 be relieved Of their burdens;
and the logical and buSinesslike endeaVOr
, they have made has been 10 encourage
such an advance in prices that liquidation
Of securities can take place. There is
not the slightest doubt that one very
strong reason for the striking advance I'm
prices since the last week in December
has its origin in efforts of this kind.
Induces Speculation.
And yet. making all due allowance for
the play of forces Of this character, it can
only be regarded as regrettable that they
should be called into being. They serve
to invest our market with an atmosphere
of extreme specuIativeness that does US
no good in the long run. The American
people are not a nation of gamblers or
Of crackbrained promoters rich one min
, ute and poor the next but the fiuctua-
tions in prices of securities for a year
past have made il seem 90 the careless
eyes Of many foreign critics. nevertheless.
that we We're a people whose first pleas
ure i'm life was to win money and whose
second pleasure was to lose it,
The security market plunges downward
through twelve months I'm a fury Of hys-
terical and absolutely uniustifed selling
that eliminates finally in a general run
upon the banks OF the land. Then at the
. / first signs of returning confidence and of
an accumulation of money in the banks
-