The Birmingham age-herald., 1911-06-25
STOCK MARKET |, GIVEN REAL SMASH Senate Realignment Is the
 Cause
 MEANS BUSINESS
 d slsaa8. i.aa4ssas E s5-- E, I'll a{ Cnr4,o
BUSINESS
MEANS
Interests Suddenly Realize That Some Important Tariff Schedules May Be Revised Before the
 Adjournment
By W. G. NICHOLAS

| stock market got a smash in the lace
 when the United States Senate realgned
 itself on the tariff question and brought
 the country face to face with the possi- bility of a reduction in several important
 schedules before the adjournment of the
 present special session of Congress. The
 decision of the United States circuit court l at Wilmington, ordering the dissolution | of the Dupont Powder trust, was another smash, and to make matters still worse the crop experts kept sending in bad re- ports from many parts of the west and northwest, as we'll as scattering bulletins l of the same tenor from the mighty south
 west. Altogether 1t was a bad week for l the bulls, although they have the back 1 ing of unlimited cash which banks and
 trust companies are willing to loan on good
 securities to finance the securities situa-
 ton. Cheap. and abundant money has
 been holding the market steady in the face of disqueting developments in many directions. but now these same banks are
 beginning to draw in their horns and 10
 show symptoms of what is vulgarly
 known as cold feet. The great banking combinations do not altogether like the
 looks of things The old heads know
 what it is to go through a period of acute
 tariff agitation and do not have to be told
 what that sort of an experience means to the business community. The younger generation of spectators only know of these things by hearsay or from impress sions gained when too young to appre ciate their importance.
 Hence it is that the stock market may be entering upon a protracted period of stress. A genuine tariff stock market will be novelty to a majority of the active members of the financial district. Here tofore they have been trying to make light of the issue, but they are in a fair way to have their eyes open and to be given a realizing sense of what it means for manufacturers and merchants from one end of the country to the other to be confronted with all the endorsements and worries incident to forced readjust- ment of prices for practically every line of commodities. whether from the mills or from the farm. A radical reduction in import duties, which is now recognized as possible, if not highly probable, can hard ly fail to be a serious matter to the stock market, for in the final analysis very few things will escape the heavy hand of en- forced contraction. Wages will not have to stand the entire brunt of tariff reduc- | tion by an means. To be sure, the ten | dency to contraction will be met by that
 other tremendous force which is being
 continually generated by the enormous
 gold expansion, but it will take time for tI,4 +La
 contrary currents. Meantime, the stock market is destined to undergo a. new and strange experience. It will be educational in the widest sense.
 The industrial list was first to feel the
 unfavorable effect of the extraordinary political development in Washington. The
 railroad list, however, was quick to fall 1 in step by reason of the flood of bad crop
 news which kept pouring in. Steel stocks were under special pressure. Indeed,
 they had been hammered hard for many days and it only needed a little addition
 al weight to produce quick action on the down side. This was promptly forthcom-
 ing. An impression has been gaining ground in the street for quite awhile back
 that the Stanley investigation might not
 be such a joke after all. For a time the
 street was carried off its feet by the fine display of tact and diplomacy shown by
 Judge Gary But this did not last very long.
 The main supporting force to the stock market for months past has been the superabundant supply of cheap money not only in New York, but in all of the leading fiscal centers of the country. This inn, 11r1a1tl Ia nf had n find employment somewhere and the place in which it could be loaned out to best advantage was the New York stock market. Banking syndicates en- couraged rich friends and clients to buy seasoned stocks, giving them every facil- ity which their bulging vaults afforded. The result has been that the banks and I trust companies at the present moment are overloaded with stock exchange col loteras and on any sharp reaction there will unquestionably follow an important curtalment of such loans. Long ex- | perience has taught banks the hazard of | getting under an unwieldy burden of | that kind of collateral So long as every thing moves smoothly it is the most com l fortable and satisfactory line of accounts that could be desired, but let storms arise and grave reasons exist for look ing for withdrawal of public buying
 
 come drug on the market just as much as real estate. The gravity of the sit uation is not being underestimated by the experienced heads of the great com bination of banking houses in Wall street
 The high priced stocks like Union Pa cific Reading, St. Paul and the Hill is sues were found to be especially vulner- | able. The great volume of speculation | that has centered in this group of stocks | tended to lift them out of line with the | rest of the market. Spectators favor active stocks because they feel sure that | they can get in or out without serious | loss and close to the market They are in no danger at least, of being hung | up with lines of stock and left helpless as might be the case if they got into inactive things. A speculator had about | as leave be loaded up with iron rein deers in a panicky market as with the dead ones on the list. He ties his hands and handcaps himself. To be sure, in the event of a sharp break in the mar ket the active things go faster and fur ther than the slow boys but there is a chance always to sell stuff at a price and that is a great speculative asset in the game as 1t is played on the New York stock exchange
 It came, as something of a shock to discover that the hitherto sacred steel trust was actually under investigation py federal grand jury right here in the city of New York. The inquiry had been going on several days before the fact became known in Wall street. Even vet no authoritative statement has been given out as to just what the grand jury