America's Money Machine

The Lapping at the Dikes 19
On Monday the market opened weak, but there appeared little strain,
and call money-funds borrowed to buy shares, repayable on demanddropped
to the low for the year-3 per cent. The apathy of the market
was indicated by the low volume of transactions-some 38 1/2 million
shares since the first of the year compared with over 60 million for the
same period of the previous year.
This was the lull before the storm. On Tuesday came the deluge.
Suddenly, unexpectedly, without warning, a flood of sell orders, mainly
in "Harriman" stocks, demoralized the market. The New York Times
gravely recorded that "the report that Mr. Harriman will retire from the
world and enter a Trappist monastery has not bet;n confirmed," adding
that he did, however, call on the Interstate Commerce Commission,
which was "a pretty prompt going to Canossa." The following day, a
rumor that Harriman was buying control of Reading caused quotations
for Reading shares to rebound ten points in ten minutes, carrying the
whole market with it. Harriman also announced an end to his policy of
silence in regard to railway affairs, declaring that, "the most important
duty now confronting the managers of the railroads of the country is the
development of more friendly relations between the railroads and the
public and the government, and for my part I mean to devote myself to
that work."
Liquidation continued, however, throughout the week and Harriman,
in a further effort to restore confidence, gave an interview in his library
in which he pleaded again for respite from government attacks on the
railroads and for better understanding all around. Harriman's plea was
now seconded by the bellwether ofWall Street,J. P. Morgan. On Monday
the great financier himself went to Washington, going directly from his
private car to the White House where he remained closeted with the
President for two hours, urging him to take some action to "allay the
public anxiety now threatening to obstruct railroad investments and construction."James
Speyer, another leading figure in Wall Street, following
up Morgan's cue, hurried to Washington the next day.
These moves had some influence in steadying the market, but on
Wednesday the avalanche began again, with the market in the greatest
crash since the panic of 1901. Call money went to 15 per cent while
leading shares plummeted. Toward midday support appeared in the market
but as the afternoon wore on selling resumed, and the day closed with
stocks at their low. Nevertheless the decline was orderly, the total volume
of sales falling short of the previous Wednesday's total. Monetary stringency-the
need offunds to meet the first installment of the $60 million
Pennsylvania Railroad issue and the $15 million Standard Oil dividend