Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1913-05-06
MARKET CONDITION.

The process OF REIMBURSEMENT ana
%nouidatiOn in the stock market SILL
goes on, the growth Of tn" snort II
terest being the principal source Of
occasional recoyeries. Conditions III
the money market are still unsaiIo'
factory. On the surface rates H"e
easy and loanablc funds fairly aJuni
ant, and are likely to so conrinn" Nn'
til the fall, when crop and trad" de-
mands again assert themselves. But
SO far as investments are concerned
the reverse is true. Capital cannot
now be had for new enterprises, *
cept upon almost "Xorbitant terms =
6 per cent and Owe being paid Tor
short term Obligations by some of our
largest and strongest railroad and in
dustrial corporations. Even hiSn-
grade bonds are selling on a ) per
cent basis and over, And Ne" York
state is contemplating a loan upon
which it will have to probably nay
4 IL per cent. Somewhat similar con
ditions prevail abroad, so that ,hc
phenomena is world wide and not 10,
rious attention and must have far
reaching effects. The three great com.
mercial nations of the world, the Unit
ed States, England and Germany. have
been investing enormous sums Of
money during the last few years in
new developments. The supply Of can
ital, though by no means exhausted,
has consequently greatly diminished
and are enabled to cXact
much more Onerous tearms. IT is
safe to say that interest rates on per,
manent investments have risen - 10
80 per cen in the last four or tiv"
years. Such a striking change mNst
have a marked effect upon values, and
this Imperative REIMBURSEMENT is II
of the important elements in the pres
ent market situation. Whether the
decline on this account has reached
its limit or not it is premature to say.
So far as high-grade bonds are con-
cerned, the rise in interest rates
would appear to have been nearly dis
counted, but owners of high-grade So
curities are not infrequcntly eXchang-
ing a portion of the latter for the
new high interest rate issues.
This partial exhaustion of the sup
ply Of capital Tor the advance in in
terest rates) has also a secondary eff
feet, the outcome of which is as yet
to be seen. 1t means the postpone
ment Of many loans and issues, which
in turn will cause delay in a number
of important new enterprises. Such
delay will affect the demand for con
structive materials, especially iron
and steel; and a general slowing
down Of business must follow, which
will in due course Of time lessen the
demand for labor. AS to how far this
tendency will go, it is also premature
to predict. Fortunately. a slowing
down process is self-curative. 1t will
offset any congestion in securities;
weak spots will be eliminated; the
country will have a chance to grow up
to any over-eXpansion, and in due
season the way will be paved for a
substantial recovery.
A further complication in the in.
Vestment situation is the danger of a
fresh outbreak in Europe through the
Intervention of Austria in Montene-
gro. There is reason to hope that
this cause Of excitement will sub
side. The Balkan war has cost the
various combatants more than $780,
100000, and this sum does not take in
to account the loss of property. 1t
is estimated that pending issues al
ready awaiting a market in Europe
aggregate more than $500, OOO, 900, SO
that congestion is quite as apparent
in the European financial markets as
in the United States. At home it is
known that some of the new issues
have not gone as well as expected,
and r still largely in underwriters
hands. In consequence the new is
sues during April were estimated at
$4,000 900, compared with $2GS, OOO,-