New-York tribune., 1909-10-04
FINANCIAL MARKETS
STOCKS AND MONEY UP.
Bull Speculation Continues in Spite
of Higher Loan Quotations
Bank Reserves Light.


Speculation in stocks was active last week on
a generally advancing level of prices, new high
records being made in several issues. while the
average for the leading industrial and railroad
securities was at about the best of the year
I Though there was no widespread public demand
the tactics of the dominant party in the Street
encouraged increase in commission house
buying. advantage of which was taken by many
conservative interests to distribute holdings that
had been acquired at cheaper range, this move
ment being especially marked in United States
Steel common the Hartman shares and Read
ing United States steel common and preferred
sold the highest figures ever recorded for the
issues. The common advanced TO point that
suggested a coming increase in its dividend. II
IL generally believed that the directors will raise
the rate TO a per cent basis and in some quar-
it is thought that the large current earnings
OF the corporation and the excellent prospects
for long period of expanding business in the
iron and steel trade viii induce the management
TO declare the next payment at the rate of
per cent year. which, of course. would justify
the extensive Improvement that has taken place
IN the price of the security and warrant par or
better. confidently predicted by the specula-
tive element. The fact that insiders have been
behind the movement in the stock naturally en-
coUrsges the idea of an increase in the dividend
but If action of this sort is not taken at the
next quarterly meeting the Street may make up
its mind that powerful interests have been the
chief sellers on a movement for which they have
been sponsors with the idea of accumulatinG
more of the stock at lower level on the
basis of an increase in the dividend in 1910.
Such operations have been known to occur in
Wall Street. II a larger distribution is not an
IounCed at the next dividend period there will
BE- some bad DAYS for the spectators who have
been buying the stock on borrowed money, es-
peciallv if al that time the necessities of the
monetary situation should require a higher rate
for loan accommodation. Most stocks are sell
ing at a level that fully measures intrinsic
values, but the enthusiastic buyers at prevailing
prices who would not touch the market when
quotations were much lower appear 10 he con-
WINGED that the real top is a long way off.
Bull manipulation of the most fragrant and
dangerous sort was the CHIEF FACTOR IN last
weeks advance. And from all indications tie
character of dealings in the near future VIII
show no material change, unless the banks and
the substantial banking interests take steps TO
check the movement Overspeculatlon always
leads TO a serious collapse, and II is to be hoped
that in the welfare of the business situation the
current tendency Of speculation, which has the
ma king of a stock market riot, will not be al
lowed 10 continue. even though the adoption ot
preventive measures at this time may involve
loss for many traders. Money conditions do not
warrant 4 further extension of loans against
speculative commitments. and the fact that
wall Street has been able to secure vast
amount Of accommodation abroad should not
encourage the expectation Of continuation OF
foreign lending here. There unlnistakable
signs Of higher money rates at London and at
Continental centres while there is the same
rror7ise in the local market There has been
tremendous expansion in bank loans IN this
country in the last year, without an increase
IN cash holdings the recent report of the Con
troller Of the Currency on national bank condi-
tions as of September showing an increase in
loans since the statement of September IS, 1908,
Of S37s. $500, and a decrease in lawful money
of s143322lS. II the same time national bank
note circulation has increased S44314,2oo while
net gold exports have been S60,s07,514. Govern
ment deposits with the national banks have de
/ creased in the last twelve months Stt,66',5A
and the banks cannot look forward this autumn,
as IN many preceding fall periods, for any help
from the national Treasury. Indeed, the gov
ernment may be compelled TO call upon the
money market for assistance though the federal
revenue shows encouraging improvement from
increased customs receipts. There is nothing
IN the sterling exchange market that holds out
the hope of gold imports, but this and other
/ considerations based upon the known condluon
of the banks and the probable requirements in
connection with an active fall trade and harvest
/ needs fail 10 discourage the idea that the pres
ent time is not propitious for the accumulation
/ OF heavy lines of stocks on borrowed funds.
Spectators apparently are counting upon the
formation Of national currency associations and
the issuance under their approval and that Of
the controller Of the Currency and the Secre-
t4rv OF the Treasury Of emergency currency
under the provisions of the Aldrich amendment
tn the national bank laws but there is no sug-
eestion from the banks that anything Of the
kind is proposed. The emergency currency
measure was framed for use in times Of stress
II was passed by Congress for the purpose Of
relieving stringenCy affecting the business sit
uation. but a certain element in Wall Street
appears 10 believe that it became 2 law wholly
for the beneht of the stock market The meas
ure is not popular with the banks, and ii is not
likely that il will be put into actual operation
exCept in the case of the direst necessity. There
Is no reason TO look forward to the development
of situation that would call for the issuance
Of a mass of paper money under the terms of
l.vs hut is O77uh oil
ness IN the current speculation in the stock,
cotton and grain markets to develop 4 strain
71r,o1 The. money market that will exert an ad-
verse effect upon business conditions CAL
money advanced 10 the highest price of the
wear in last weeks operations, and it is not
unlikely that a level of per cent will. De seen
in the near future, bank reserves are at =
low level with all indications pointing 10 Il
heavy withdrawal of funds from this centre in
rhe course Of the next two months for the
count OF interior institutions. The South and
Southwest already reducing balances at
this point while Canada also is drawing upon
New York for funds, gold TO the amount OF
81 300 600 having been shipped 10 Montreal III
tbe last week Sterling exchange is abnormally
strong for this period OF the year, and from the
demand last week for forward exchange at "A
Drice from TO 10 points above the current
market il is quite evident that no material cas-
ing Of rates is expected by foreign banking
interests for a considerable time to come, de-
spite the hope that this country soon VIII enjoy
an active European demand for its cotton and
breadstuffs The demand abroad for our COM
nodities AT present is light and is held in check
by the absence OF industrial prosperity in
Europe and the high prices prevailing here.
s
RAILROAD EARNINGS.
III. -.ri,r,,e has Drinted The gross earnings of