The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1910-05-17
LATEST LETTER
Of HENRY CLEWS
NEW YORK, May Z, 1910.

A decided reaction developed on
Wednesday from the pessimistic tenn
per which had dominated the market
for several weeks. This recovery was
based upon the rumored successful
negotiations for placing important
American bond issues abroad, and may
have been accelerated by the cover
ing of q too extended short interest.
Such a practical display of European
confidence in our securities could not
but have a stimulating effect; mas
much as it at once lifted a heavy load
of doubt from Jnose responsible for
the financing of our large railroad en-
terprises, and paved the way for re-
newed activity. Just what these Ell
ropean takings of our new railroad
bonds will amount to is not yet dis
closed; but they are known to be large
in the aggregate, some estimates
reaching as high as 120,0OO,OOO, AMI
this relief will have a far reaching eli
feet in several directions.
Its immediate influence was most
noticeable in foreign exchange, which
declined sharply under the anticipated
freer offerings of finance bills. Lon
don led the advance, New York
promptly following; though some ct
the gain was subsequently lost ow-
ing to the illness of King Edward All
apprehensions of a further serious
loss of gold have disappeared; the
probability being that the gold efiux
has enoed for the present season. Our
foreign trade has now been abnormal
Tor more than a year, and the con-
tinued deficiency in exports could only
be readjusted by shipping either gold
or securities or merchandise. Enough
gold had already gone, considering the
present home demands upon our banks
and the possibility of further large
shiI /lents caused an undercurrent Of
uneasiness in banking circles. At
natural outward movement of mer-
chandise had been rendered impossi-
I BILE by the holding back of our, prfil-
cipal exports for high prices, the only
alternative was shipping securities,
the obstacle to which had been the
high level of this market. European
purchases We're doubtless encouraged
by the recent decline in security va.
lues and the test which it imposed.
One good ecect of this expression of
European confidence will be the indus
trial stimulus it VIII afford here Our
railroads are being driven into very
heavy OUTLAWS for handling rapidly
growing traffic, and this large influx
of foreign capital will inevitably in
crease the demand for railroad mate
rial and afford much added employ
ment to labor.
In business circles a cautions feel
ing wisely prevails. Commodity prices
are declining, and there has been q
lessened demand for iron and steel
for textiles and for many other pro-
ducts. The decline in commodities
has been partially due to approach Of
a new harvest and to the consequent
check upon speculation; and the fact
that prices are receding naturally
! causes buyers to hesitate until salts.
! fed that reaction has reached its limit
April probably witnessed a climax il
the high price movement. No doubt
as soon as confidence returns in re.
, gard to values orders will come IL
more freely, but it must be remem.
bered that the recent agitation against
the high cost of living has had NOR,
or less effect in restraining consump'
ton. The business situation, how.
ever, is generally sound. There is lit
tie or no serious over-production, and
prospects are that as soon as a rea.
sonable rea0justment has taken place
in cOmmodities-somewhat similar L
that which has been accomplished IL
stocks-a fresh forward movement
will be initiated. Much depends upol
the crops. They are the key to thu
entire situation, financial, industra
and commercial. Thus far the out
look in this respect is fairly satisfac
tory. Damage reports have mques
/; tionably been greatly exaggerated
and there is every rason why farmer
should bend every effort this season t,
obtain as large a yield as possible
Crop failures would of course, be
( disastrous this year. But if the coun
try, only secures nothing better thar
full average yields, we may be sur
of another prosperous year,
Que effect of the decline in price
will be to stimulate exports and chez
imports, thus restoring our foriegl
} commerce to a more normal basis. Gu
formers being financially strong, he'll,