The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1909-10-24
BREAK CHARGED TO
FOREIGN SITUATION
Conditions Here Are Sound.
Liquidation Clearing
Atmosphere.

q week ago. buE the increase III the
Bank of England's discount rate at that
time was supposed to mark the climax
of contraction. That another 1 per cent
should be added to the rate on Thursday
surprised the world. Yet another in
crease this week would jar confidence
in foreign conditions
No one on this side of the Atlantic
has attempted to solve the riddle as TO
the cause of this scramble for gold.
We only know that the great state
banks OF Europe are fighting to
strengthen their reserves, and one spec
ulatiOn on the why and the wherefore is
as good as another,
It is unfortunate from a wall Street
standpoint that this contraction OF
credit discloses a balance against the
United States; that il has brought the
country face to face with great proba-
bility OF gold exports at a time when
the flow of the yellow metal should be
the other way; at a time when the sur
plus financial energies are directed 20
ward the movement TO market OF the
immense grain crops Of the country
also at a time when Wall street and its
following is engaged in great bull
movement in securities. carried on IN
a few stocks with great vigor As a
result, we were heavy borrowers abroad.
American loans have been called, re-
newals have been refused, ana as a
result our securities have been freely
marketed in London Our English ana
continental friends admit that "Ameri-
cans are about the best collateral that
they have, the easiest 10 sell, and there
fore thsy are the first 20 90.
A Peculiar Situation.
AS a natural reflex of these condi-
lions we are brought face TO face with
a peculiar situation. Everywhere our
business and industrial life is employed
10 capacity. Idle cars have practically
disappeared. Shortages are reported on
many systems Iron and steel mills
are sold ahead for months. and it is
expected that the quarterly report of
the Steel Corporation 10 be made pub
lie on Tuesday, viii indicate untitled
orders OF practically 100000 tons once
more the conditions prevalent in the
steel and iron markets in 1S00-1903 are
here. We hear OF special demands, Of
faVors being urged where few months
ago il was fight for trade and cut
ting Of prices.
Railroad earnings are making salts
factory increases, the equipment and
tTackage Of many roads attract att3n-
ton in anticipation Of the increasing
volume of business.
And yet with these conditions We are
forced 10 see declines Of 21z TO rs points
in investment securities. Union Pacific,
the Hartman favorite, despite its cX-
cellent showing its great earnings, 3
per cent over and above demands OF
dividends, and enormous cash and Sc
eurity assets, making rs points net
Despite the activity in steel and iron
mills, United States Steel common broke
81 points. The Hill shares, Z per cent
dividend payers, held by many inves-
tors as gflt-edge and good for the div
blends year IN and year out, dropped
BIS on Great Northern and 61a on North
ern Pacific.
Local Bankers Cautious.
Our bankers, questioning the under
lying cause of contra elton of credit
abroad. wisely undertook TO greatly
strengthen their own resources. The
liquidation followed.
For the greater part or the week the
bears did not dare to make any play
for the advantage and made little prof
II from the slump, but on me short
this with the catching OF stop orders
and the liquidation Of tired holders
gave prices jolt for the weakest kind
OF a closing.
Some conservative traders have been
unfavorably impressed by the fact that
One-third of the business on the EX-
change. 1856 600 shares out Of a total Of
1852 for the week, was in one stock,
Steel common. Much Of the liquidation
in this stock has come from the COntl-
nent and I.OndOn-much from specula-
tors and investors who accumulated on
the road up from s..
What of the Future?
Brokers, commission houses and room
traders are at sea as TO the course OF
prices during the current week. They
can see little in the situation to justify
a continuation OF the weakness nor just
where movement is likely TO develop
70 cause an up-turn. unless through the
covering OF shorts
The masters Of the market are ap-
parently undecided about giving the
necessary support to bring the lquida-
ton to a quick halt and some gossip is
20 the effect that two Of the great
AZ a.. - -
support.
With conditions as satisfactory as
they are IL does not seem as II the trend
toward lower figures could be continued
much further large market follow
. ing sold out on the advice OF
their brokers nearly i've TO ten points
above present levels. They are waiting
the word to get IN again. There are
many holders Of securities at hVe 70 ten
points above the present levels who are
waiting and hoping Tor rise 70 en-
able them to get out They are nervous
and idgety as well as tired and furtheI
calls for margins may decide them 81
let go. The bears are likely 10 help
along this movement and II they show
the same confidence that they cid on
SATURDAY when they made practically
no effort TO cover. we are likely 10 see
still lower values, frequent prOnt-tak-
ing and erratic price movements.
our own commercial and manufactur-
ing affairs are all right, the foundation
satisfactory. We cannot anticipate trOu-
BE an home. There may be something
Ia the nature Of disagreement among
the railroad magnates Of the country
but this does not seem likely The de
velopnent Of the European situation
viii be closely watched. A let-up In
the demand for gold will be reflected IN
our own money market.
The declines Of October. have been
severe when considered sepaTately-but
when compared with the extent of the
upward movement, with but temporary
checks. they are not as important
Moreover. the establishment Of a large
short interest win help check extended
weakness.
J. Pierpont Morgan has always beer
looked upon as the one man TO check
mate overextended bear operations. II
there Is nothing wrong IN the European
situation his fine handiWork may be
seen in the near future 10 the discOm-
future of the bears. AS stated before. al
unexpected increase IN the dividend or
Steel common would Surn the position
OF speculative stock from an overloaded
bull account to more highly favored
investment security. It has been th'
weight on the market from S4M down
vet always capable Of a quick rally.
With conditions here as favorable az
they are there is nothing 10 cause
any anxiety on the part Of actua
H..