The Cairo bulletin. (Cairo, Ill.) 1???-1928, 1908-05-11


to a still higher level. The query
now is: Will these efforts succeed,
and if so, on what grounds? OF course
the greater portion of this rise the
natural rebound following the panic,
while all securities fell far below
their intrinsic value owing to COM
pulsory liquidation and loss of con-
'fdence. The natural level of prices
to be expected after the panic would
depend upon proper readjustment to
reduced net earnings and to the lower
rates for money which were bound to
follow the crisis. While the general
depression of business was an adverse
factor to stocks, the great decline
in money was an equally bullish fac
tor; and the play for mastery between
these two forces finally resulted In
partiel victory for the latter. This is
the history of all panics, since easy
money is an argument for the rise that
cannot be Indefinitely resisted.
In the present instance the advance
movement has been unquestionably
pt0lrnE5d hy powerful manipulation
no important recession. such as would
have broadened the market and at
tracted an outside interest. has yet
been permitted. On the contrary
prices have been pushed upward with
a persistence that impeded rather than
encouraged a real revival of conf
dence. 1t was evident that the market
was in control of exceedingly powerful,
operators, whose purposes were not at
first very clearly understood. 1t Is
now fully appreciated, however, that
the chief support comes from those in
terested in financing the requirements,
of the railroads and other big corpora
lions during the current year. The ex
of the supply of capital in
1907, and the panic which followed,
put stop TO many of these demands;
but. now that money is easier and cap
ital is coming out of hiding, there is a
rush to secure control of all available
supplies. 1t is estimated that between
$3.50, 10000 to $300,000,000 of note,
bond and stock issues will have to be
taken care of during the remaining
eight months of 1908. One corporation
alone. the Union Pacific, will shortly
finance $50,O00,000 of bonds and has
secured authority for the isue of an
other $50,0O0000 at discretion, This
authorization Is addition to others
previously granted, gives the latter
company freedom to issue some S25s,'
600 goo new bonds and stocks, the
uses for which are just now beyond
the comprehension of the Street.
The most significant feature of these
numerous Issues, however, is not their
necessity-for that will usually be
admitted in view of the demand for
improved railroad facilities-but the
doubt whether the country can raise
this amount of new capital at time
when it is suffering from exceptional
business depression. All new capital
must be provided out Of the nations
profits from industry alone; and, as
such profits or savings are being Sc
verely curtailed, thes upply OF new
capital must be correspondence lin.
tied Perhaps We can draw some
what on foreign markets. Europe took
the Pennsylvania bonds and New
York short term notes very readily;
but these prime offerings, and secur.
tiles of a lower grade would, under
present conditions, find very poor
market abroad. These operations for
The financing of new issues are then
the chief explanation of the prolonged
and artificial rise in stocks. These
ew securities must be distributed,
ia this can only be done in a strong
raket, hence the powerful inside SUI
.art OF the last two months. The ris'
rs naturally been greatly assisted
easy money, by the usual reboun,
fter a pnic. and by the forced cover
ng of demoralized and ruined shorts
As for it's continuance, much depends
on the staying power of the leaders
an dtheir holding together. Prices are
now fully as high as general condi
lions Justify A moderate business
recovery and satisfactory election have
already been sufficiently discounted
for the present, and a partial reaction
would be beneficial through broaden
ing the market and bringing in a new
huying element which now stands
aloof. On the other hand it would be
foolish to ignore the power of the
present leaders With an abundance
Of cheap money in their control they
are likely to carry their advantage
to the limit; and. unless unfavorable
events interfere, it need cause no sur
prise if prices were pushed still higher
IT at least held near present level
until the market leaders have accom-
plished their purpose.
Whether the proposed advance in
railroad rates IS part of the scheme tC
advance the market or not remains tc
be seen. Such an advance under eX
sting conditions would certainly bs
very poor policy. The public hostility
70 railroads is lust beginning to abate
| the eexrtme depression in freights vii
| not last. and the advance would be
burden upon the producer and con
4 gunner Whom no fe least able To hpal