Evening star., 1909-08-22
RALLY CLOSES WEEK
Entire List Yields to Reflex
Price Movement.
SHORT COVERING A MOTIVE
Many Commission Houses, However,
Report Purchases.
HORT COVERING A MOTIVE
CONTRACTION OF BANK LOANS
Curious Exhibit of Loan Items in
Bank Statements-Money Move
ments Ran Counter.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, August 2f.-The stock
market was brisk and buoyant in the
short session today, the rally which set
in yesterday afternoon continuing to the
close. The nervously excited trading oI
previous days of the week was not ut
all I'm evidence. but that excitement was
reflected in most of the price movements
of the day. 1t was a natural reflex
that those stocks should advance in the
rally most actively which In the reac-
lion had been depressed most heavily,
and thus the gains in Union Pacific,
Southern Pacific, Reading and New York
Central. which were more conspicuous
than most of the others, attracted no
greater attention than did the strength
of the entire list.
In these stocks the short selling had
been most determined. and the covering
by operators short of them was natu-
rally more extensive and influential. There
is no doubt that short covering, both In
these and other stocks, was the princi-
pal motive underlying most OF the pur-
chaSeS. but many commission houses also
reported extensive purchases by custom
ers who We're Of the opinion that the
reactionary movement was over. and who
Lad recovered a composure sheltered I'D
the nervous market Of the previous DAYS
The range at the close SnOWel ldiI
recovery from the reaction. with Steel
common. for instance. but 212 points be-
low its high-record prices and most OF
the other standard railroad and industrial
shares not more than 212 points below the
close last week. There was no news OF
market Importance. and the trend or
prices seemed entirely governed by the
natural reflex movements.
Week of Declining Prices.
In week of declining prices it is nat
ura, TO expect a contraction of bank
loans. for the purchaser at lower prices
can borrow less than the holder at the
higher prices. Accordingly. the loan
items In the two bank statements aroused
a good deal of curiosity. The average
statement of the clearing house banks
showed a decrease of IS, $4,000 in the
loan account; that of the state banks
and trust companies showed an eNpan-
sion of s12, ,2.:S9 900 in loans.
The net result, an expansion OF 3d.
10000 in loans. indicated that these
money movements ran counter to the
customary trend in a declining market.
But in this connection it must be ap-
rreciated that an important accumula-
tion of stocks in the weeks prior to the
reaction should be by men of consdera-
BILE wealth who bought them for a long
pu, and at prices well below those pre-
vailing even at the bottom of this week s
reaction.
Most of these holders OF large blocks
OF stocks financed their purchases per-
sonally at the banks rather than through
brokers' and If they had sold al the high
prices last Saturday and Monday. or
even at the lower prices in the follow
ing days, the purchasers would be able
- borrow more on the stocks than
could have been borrowed by these large
holders at the time of their purchases.
Profit-Taking Movement.
In accordance with this course of rea-
soning 1t was pointed out early in the
week that the best indication of a profit
taking movement among those men who
had thus taken on stocks at long pull
weeks or even months ago, would be
found in a big expansion in the loan
account.
Now, IL is we'll known that customers
OF commission houses have sold this week
q large total of stocks carried in bro
kers' loans at higher figures prior 10 this
week. and that this liquidation has had
4 tendency toward loan contraction. And
the question naturally arises as to wheth-
- II is the liquidation by the big holders
leferred to, in very broad and ex-
tensive way, that has more than offset
the contraction naturally resulting from
the other liquidation.
Thus the bank statement provoked an
Interesting and perhaps an important dis
CusSion on the always pertinent dues-
Ion as to the locality of the stocks