Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-12-08
TIGHT MONEY CAUSE
Principal Reason for Break in
the Market.
MERGER DECISION EFFECT
Disappointment to Financiers Back
ing Big Combinations.
INTEREST IN TARIFF REVISION
Traders Give Attention to Impend-
ing Changes-Railroads Do
Big Business.
INTEREST IN TARIFF REVISION
BY w. G. NICHOLAS.

NEW YORK. December 1.-On the break
| in the market this week prices at the
extreme low point reached were ) to II
points below the high levels established
around about the LIST of October. and
| about midway between the high and low
for the year. Tight money has been the
principal cause of the decline, although
there have been occasional scares Gen
uine uneasiness has been the after result
of the Union Pacific-Southern Pacific
merger decision by the Supreme Court.
AS explained by Attorney General Wick
ersham, the decision is strictly along the
| lines of the Northern Securities decision
! and is in undertaking confirmation of the
broad principles therein laid down.
This is something of disappointment
to the heavyweight financiers who are be-
hind the great combinations of capital in
vested in railroad and industrial enter
prises They had thought from the Su-
preme Courts use of the ''ase of rea-
| SON. in previous decision that the tend
| ency of the tribunal was toward leni-
ency in the management of the big COM
bines but such seems not to be the case
and once more the kings of finance and
industry are brought face to face with
the cold fact that they owe duty to the
general public which cannot be avoided
and which they must hereafter observe in
their managerial capacity.
See Litigation Ahead.
They see ahead Of them continued and
persistent litigation by the government
to bring everybody in line and to compel
obedience to the overwhelming popular
demand for fair play. Great combina-
lions of capital for the purpose of exact
ing exorbitant profits from the pubic
are to be discouraged. Men invested with
the responsibilities of conducting cOrpO-
ration affairs face an inevitable read
justment of management. along what
might be called more humane lines. They
are learning the distinction between mo-
nopoIy and size. The collection OF huge
capital behind large enterprises does not
in itself constitute monopoly, but the
temptation to abuse the power that is
lodged in such combina tons is in process
Of being humaniZed.
A great many men who have large
sums of money invested In corporations
which will have to undergo revolution
iZing process are getting out OF stocks
which will be directly affected by the
changes which would have to be made in
policies of control 1t looks very much as
though two or three years would be occu-
pied in this REIMBURSEMENT of stocks and
unrest and trouble threatened under such
circumstances.
In reducing their investment in that
particular class of securities they are
only following the dictates of prudence.
They must put their money somewhere.
however, and the shifting about of in
vestments on that account may not be
such disturbing factor as many fear.
Went Below Surface.
The furry this week was more than
mere surface demonstration occasioned
by the wholesale calling of loans by New
York banks, which had too much money
out on speculative collateral That of it.
self was, of course, an important fea-
ture, as it compelled the marketing OF a
mass of securities, for which there was
small demand. In distributing these
stocks pools and underwriting combina-
tions had sold the bulk of their stuff to
speculat tors instead of to investors. The
result of this was a thin market, and
the accumulation of the stocks In the
hands of banks on loans. When the pinch
for money came this stuff had to be un-
loaded by the banks and trust companies.
and the action resulted in a harsh decline
in prices. The severe losses. however,
fell upon the gambling community.
The general situation has not been i'm
| paired, and. as matter of fact, good
| stocks which were forced upon the mar
| ket have. in large part. found Judgment
| in safe and strong hands. The specula-
| tive securities are still afloat and for that
| class of securities still lower prices may
| be found before the money market per-
| mits of a resumption of active specuIa-
( ton. That period may not come untif
| after the turn of the year. although there
| is likely to be sharp recovery from this
| weeks break. due principally to the fact
| that the short interest has again become
| overeXtended. Such occurrences are the
almost inevitable result of drastic uqui-
dation such as we have witnessed.
| Interest in the Tariff.
Traders have been giving rather more
serious attention of late to the possible
market effect of the impending tariff
revision, singing out the stocks that
will be most directly affected by the
promised cut in duties. and acting Oc-
cordingly. That earnings will be i'm
paired in many cases is certainty,