Evening star., 1912-09-15
CALL LOANS
Kidding Themselves of Volume
of Undesirable Collateral.
SOME BROKERS CRITICISED
Companies Formed and Stock Is Not
Considered Secure.
MEXICO ATTRACTS ATTENTION
Belief in Some Quarters President
Will Be Compelled to Intervene
Before Election.
SOME BROKERS CRITICISED
MEXICO ATTRACTS ATTENTION
BY w. g. NICHOLAS.


NEW YORK, September 14-The stock
market is going through a mild case of
''housecleaning' The banks have been
calling leans and ridding themselves Of a
considerable volume of undesirable col
lateral. OF the class dsrespectfully de-
scribed as eats and dogs" Masses of
this kind Of stuff have been accommodating
in Wall street for a year or more, until
the burden became too great for safety.
Banking houses and brokerage firms got
behind underwriting and promotion syn
d1cates which have been engaged in the
organization of numberless overcapital-
lied enterprises of one sort and another
until the situation became veritably
rotten" Times were SO dull that the
nDanclers and brokers of Wall street
were willing to go into almost anything
to make money. The result has been
that promotions of doubtful character
have come into being with the indorse-
ment of reputable concerns in good
standing and the certificates have found
their way in increasing volume into the
envelopes filed with banks and trust
companies as collateral on the daily
routine loans. The certificates thus be-
although they may have little or no
value the fact that they are mixed with
stocks and bonds of merit give them un-
consciously certain standing which they
40 not deserve. 1t takes something of a
shock to open the eyes of the banking
community to the danger of trifiing with
tnat KIND or truck. Latterly, in making
preparations for an unusual demand for
money during the next few months,
banks have found themselves embar-
rassed by the accumulation of doubtful
coiiateral and they have been calling
upon their customers to weed out the
envelopes
To such an extent has this been carried
mat alert traders have realized that
something unusual was going on behind
tne scenes, and they wisely kept away
from the stock market. They were per-
s1stently deaf, dumb and blind to the al
lurements of a perfect deluge of sensa-
u1nally bullish news. The market be-
came stagnant and the public grew sus-
was being concealed from its knowledge
Pr1ces receded instead of advancing
There was bull news enough in circula-
uon to put prices up to 10 points on
the general average, instead of which,
quotations fell away . to points thus
intensifying the distrust and adding to
the apparent mystification The light is
now dawning, and the mystery of the
market stagnation is being uncovered A
peep behind the curtain discloses the real
source OF the trouble. Underwriters and
banks are Juggling along a great mass of
undigested securities that the public will
have nothing to do with The collapse of
ballooned industrial and, other enter
daily chronicle. and the incidental con-
nection Herewith of big names and big
firms opens the eyes of the traders and
investors to loose methods practiced by
hs,,~
men of high reputs in whom the public
had placed confidence. To such an extent
had this gone as to become a public
scandal The worst of it is that the dam
aging facts are only just beginning to
find their way into circulation.
Effect Is Uncertain.
How far the collapse of unsound f1ota-
tions will affect the general stock market
situation is one of the uncertainties of
the hour A good many believe the de-
velopment is not serious. and that the
housekeeping, which now seems to be
under way. will not last long, and when
completed will be a great good thing for
the market. They anticipate break in
prices before the readjuStment Is COM
plete, but that worry over, a bull move
ment should begin. Fundamental condi-
tions have rarely been better han now.
in every department Of activity. The ag-
gregate of crops and crop values breaks
all records Railroads are making money
in spite of themselves md in the face
of general wall about poverty and oppres-
sion Wall street is the sore and putrid
spot in the whole situation. The sins of
the great leaders and their intimate fol-
lowers are coming back to plague the
financial community.
Unfortunately for the great stock mar
T. ;,,&a hnra nj
the so-called leaders of large affairs have
been more or less mixed up in fiOtatiOnS
and promotions which have cost the pub
lie immense aggregate sums. The public
has been cultivat1ng long memory, and
has learned that the only sure way to
protect itself from being burned is to
keep away from the fire. 1t is not of
record that the multi-millOnaires who
profted by such promotions have been
growing any poorer or that they are los
ing either flesh sleep. The fact is that
they are not getting any fresh blood, and
that is about as far their punishment
goes-that, and little undesirable noto-
riety. Personally, most of these rich and
successful men are agreeable land honest
in their relations with the people they
come in contact with. The defect is that
they look upon the public as great i'm
personal proposition. as something they
can prey upon without violation OF any
Of the rules Of honor or business tnteg-
reservoir of money upon which anybody
has the right to draw who has the gift Of
making entree. In this impersonal sense
it is as moral to take money from the
public as to dip water from the ocean.
The public, however. is beginning to take
a different view Of the case, and that is
one of the real causes of present mar
ket distrust and dullness.
The market also has taken notice of
the commotion over conditions in Mexico.
The very evident intention Of powerful
interests to compel this government to
intervene for the protection of American
capital and American lives in Mexico is
producing an effect that cannot be ig-
nored The disposition to blame the poll
ticians and filibusters for the agitation is
not as fixed as 1t was. and the feeling is
gaining ground that the President may be
forced to take action before the election
What the result of special session of
Congress and a move for the military oc-
cupation of Mexico would be is one of
the questions that deeply concerns the
banking and stock brokerage elements as
well as investors and spectators. Dis
cussion also turns on the possible effect
of an early move against Mexico Opin-
ions are as varied as the individuals who
express them. There is no concert of
view as to which candidate for the pres
idency would be the chief beneficiary at
the polls.