New-York tribune., 1909-10-18
NFv.yoRK pAuY TRIBUNE MONDAY OCTOBER 1909.
FINANCIAL MARKETS
SPECULATION ACTIVE.
Bulls Aggressiue, IN Spite of Money
Conditions s-Period of Easy
Interest Rates OUer.

position of the money market opstatois 'V'
higher prices being helped by the free onerihs
OF o,,t-of-town funds which have been attracteu
10 this centre by the higher quotations for ioai'9
and by the discountng OF American finance oi'''
abroad The latter movement however Is 'es'
active than reported few weeks ago. OWN -
the advance in money at the foreign capi'ais an"
the growing disposition of London bankers ~
check the demands upon the British capi'al y.
connection with the requirements OF NC" -,
SPECTATORS. The trust companies -,
nlaced large amount of FUNDS on can 40. -, -
account Of correspondents in other parts Oh ~
country hut this money is subject 10 Wl'h-
drauaI when crop demands become more utsenr
and n Is expected that within the course OF tns
next two weeks there will be little lenolhs "e'
by interior institutions. as cohse9ue
t,.-,a d.r,snds which proynise to become urgent.
0r the general movement of currency WIN the
interior and the Sub-Treasury the lScal "ai,H
show a debit balance, but this fact appaIe en''H ~
does not discourage the idea IN spscul".'
quarters that prices for stocks can oe IIio.eu
a much higher level before the end OF the moh'n'
bull traders evidently assuming tnat "it.'i' q"
short time new banknote circulation "uI ~
issued under the provisions OF the AloIiC!i e'iT
gency currency measure. Notwithstanding M ~
Sact that no steps have been taken by the pshNs
"a form, currency associations through which @ aP
,Iicst,on must be made for new money ne
aro.ndnoent 70 the rational bank act permltths
the issuance of emergency currency uhuel Co'
tain conditions is not liked by the banks lot the
good reason that the tax on the notes 70
great 20 make them attractive, and IL Is h0t
IiIselv that a practical test of the measure VIII
he made except in the event of acute strlhsehCE
which might be brought about by reckless epet
rlation on tho Stock Exchange Ihe AiuIi'"
sr,endr,ent was framed and passed on the the
orv of extending assistance 20 the business
community in case OF an actual emergency, put
bull SPECTATORS appear 80 be under the impreS-
sion that their needs must receive the nrst con-
siderstion and that the banks are under ooIss-
tion TO them 20 take out new circuiation I wIieI
ever they may demand such action. Sterling
exchange is strong in spite OF high rates Tor
money and any increase in our supply OF paper
money will tend 10 drive gold from this country
Powerful speculative interests undoubtedly are
behind the movement in United States Steel,
Reading and the Hartman shares. and through
their command of the money market and their
ability 10 advance prices by manipulation quo
tatious may be carried TO a more advanced plane
in the face Of 6earer loan quotations throughout
the world Transactions OF this character now
ever. contain elements that later on must be
reflected in sharp declines and heavy losses 10
the traders who are following the speculation on
borrowed funds at a time when the money re-
ouirements OF legitimate business are becoming
more urgent and when the lending institutions
are loaned Up 20 about the limit OF their re-
serves Conditions governing the intrinsic
worth of securities are Inherently sound. EX-
pansion is reported in all lines Of industry, the
iron and steel trade is back TO the basis or the
most prosperous times in the history OF the
country, the railroads are increasing their earn
inss at rapid rate. dividends that were re-
duced following the panic OF 1907 are being re-
stored 20 the level prevailing in the autumn OF
that wear our foreign commerce shows signs OF
growing exports Of domestic and manufactured
products and the volume of payments through
clearing houses in all cities attests the remark
that has taken place IN general
business in the last few months. These factors,
however. mean a larger demand upon capital
and dearer interest rates. and they should sug-
gest a slowing up in the machinery OF the stock
market especially the quotations for the
great majority OF securities have fully meas
ured the improvement that has been recorded
in actual values. Commodity prices show an
advancing tendency and the general cost Of liV-
ing is higher than at any time since November.
1907 the advance from June 1, 1908. amounting
20 no less than lS per cent. This phase Of eco
nomic affairs is characteristic Of the times but
it presents food for serious reflection in cOnnec-
tion with the money market, though 1t is not
likely that II will interest spectators who in
their mad desire for profits operating on
lines that mean collapse unless a halt is called
in the near future.
There practically is permanent investment
buying in the current market. Bond houses re-
port an absence of public demand. and the chief
part OF the daily transactions in mortgage Sc
curities on the Stock Exchange is of a wholly
speculative nature. Prices are too high to at
tract investment money. The loan market pre-
sents 2 better opportunity at the moment for the
investment of idle capital than the bond mar
ket and this situation is likely to prevail for
some time 10 come. probably until the end of
the year. In some quarters 1t Is believed that
the advance in the Bank of England's minimum
rate Of discount from TO per cent last week
and the marking up of the German bank rate
10 per cent establish the high level by those
inst he while n also
thought by certain observers that call money at
New York will not go above the per cent rate
recently recorded and that there will be enough
money at home and abroad for the needs Of a
large bull speculation in securities and for the
harvest and general trade requirements. II IS
TO be hoped that rates will go no higher but
from the course of the stock market in the last
days Of the week just closed there is reason to
believe that the very interests that are counting
upon no further increase in loan quotations may
be the instrument OF still dearer rates and the
indirect means OF a strain upon credit that may
seriously react upon the country's business sit
uation. The Bank of England raised it's rate
because OF its loss in gold TO other countries
and It's declining proportion of reserve 20 liza j.
bility al time when heavy demands were be-
ing made upon general bank funds against
speculative commitments. The per cent rate
is danger signal and the end of the long
period OF ease in money in the markets of the
world should TO create greater conserv-
atism and caution in the speculative markets,
which for many months have had the advantage
Of large supply of capital for which there was
no use in the channels OF trade Wall Street
bull speculation cannot run under full steam
when it's fuel supply is being drawn upon for
other purposes.
The prospects favor large corporation fnanc-
ing at no distant time. while the gradual decline
in the federal Treesury's working balance sug-
gests that the government before long will be
compelled to put out short term certificates in
the open market. Spectators will not be upset
by call upon the money market for funds for
rnvernuent account. as they are unite sure the