New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-05-16
FINANCIAL MARKET
United States Borrowing Money
at Foreign Capitals.

lions would be allowed to seek ma
teriaIlv lower level at present. The So
called money power Of Wall Street Is
in absolute control Of the stock market
and in view of the fact that the inter
ests represented by this power are en-
gagged In financial operations the sue
cess of which depends upon advancing
prices for securities, it is quite evident
that in the absence of disturbing de-
valonments substantial operators will
direct their efforts toward bringing
about q higher level for stock and bond
issues. At the moment general con-
ditions favor speculative transactions for
the advance. but a big bull movement at
this time. nevertheless, doubtless would
place q strain upon the money market
that eventually would lead TO a serious
Wall Street collapse. The crop outlook
is promising, the railroads are return
ing large gross earnings. though net
receipts are not so favorable as recently
reported. bank clearings are heavy, the
iron and steel trade is making salts
factory progress, despite the fact that
the steel mills are not operating to full
capacity, and curtailment in pig iron
production is exerting a beneficial infiu-
ence upon the market for iron.
The weak features in me situation are
not pronounced enough at present to
induce pessimism in financial circles. but
the fact that our railroads are adding
enormous obligations to their capital
account and are compelled to go abroad
for their money contains possibilities Of
future developments that may weaken
the position of affairs in this country. The
willingness of Europe to finance our cor
poration needs at a good price for the
accommodation is heralded as great
bull factor on stocks, as 1t serves to
Offset our unfavorable trade balance and
reflects confidence abroad in our credit;
but by the sale of big blocks Of Ameri-
can securities to bankers in Paris and
at other foreign capitals Europe
STRENGTHENS its hold upon our gold SUP
ply. II is extremely unfortunate that
this country is compelled to go to
Europe for funds at this particular
period. and in the minds of many
thoughtful people 1t is believed that the
excessive issuance of new securities by
our railroad corporations ultimately will
result in serious trouble at this centre
unless there should be a tremendous
increase in our exports Of general mer-
chandise, the prospects for which are
not promising.
The United States is borrowing abroad
beyond the limits of safety, and in ad-
dition our people are spending enormous
sums in Europe and are bringing in
luxuries. as reflected in our import trade.
to an extent that shows gross extrava-
gance. The factors enumerated cause
no uneasiness among the larger number
of people, but a day of reckoning will
come, when the cost will be a burden
under which we may fall in no easy
manner. AS the larger part of our
wealth comes out of the ground, which
contains inexhaustible sources of supply.
present financial indiscretions, over
speculation and overextension Of credit
will not drive the country out Of bust
ness, but they may, however, cripple lis
for a time and lead to a general re
adjustment in all markets to q safer and
saner basis of operations. The imme-
date outlook is rosy enough, but long
distance view of the situation does not
warrant the accumulation of stocks
upon borrowed money for a long pull
We are proceeding faster than our CAPT.
tai warrants. but just as long as we
can borrow abroad our enthusiasm
doubtless will run along at top notch
speed. A little more caution at this
time may prevent trouble later.
When Wall Street is trying to make a
market for its overstocked shelves it is
rank heresy to give voice to words Of
warning, and the people who do make
hold to point out the probable result of
current tendencies will not be acclaimed
by the general financial community.
Europe is lending US money, but the
minute conditions abroad demand the
liquidation OF these loans or conditions
develop here that cause alarm at foreign
financial centres our collateral will be
returned and our gold will be shipped to
pay off our Obligations Even with
| large crops in this country our ship
ments Of foodstuffs and cotton cannot be
counted upon to expand materially. for
the good reason that home CONSUMPTION
is increasing heavily every year, while
other countries are increasing their acre
age TO agricultural products If the peo-
pie Of the United States would spend
less money abroad there would be a vast
change for the better in economic con-
oitions here. We make big profits and
dig gold out of the ground, spending a
large part Of it in France and other
countries. France produces no gold. vet
it is the richest country in the world in
cash resources. We produce gold and
spend it in Paris, and when our extrav-
agance has eaten up our ready funds we
borrow from France, which is the
banker for all nations. The securities
that we sell TO Paris are not being alb
sorbed for permanent investment by the
French public. They are held as col
lateral against loans made by Paris
bankers who have become our pawn
brokers.
The market for established railway
mortgage issues has not responded to
the announcements relative TO the plac-
Ing Of new bonds abroad. and both on
the Stock Exchange and in bankers
offices the inquiry continues extremely
limited Short term notes are in better
demand than lone torn, booJs l,,,s o,-o,,