[Volume XXVII
THE CHICAGO BANKER
18
SINCE THE YEAR ’51
This institution
has been attending to the financial requirements of many of the oldest Mercantile houses in the country.
IRVING NATIONAL EXCHANGE BANK
NEW YORK CITY
LEWIS E. PIERSON Prest.	BENJ. F. WERNER Cash.
JAMES E. NICHOLS V. Prest.	DAVID H. G. PENNY A. Cash.
ROLLIN P. GRANT V. Prest.	HARRY E. WARD A. Cash.
CAPITAL & SUR. $3,000,000 TOTAL RESOURCES $28,000,000
The LIVE STOCK Exchange National BANK
of CHICAGO
Volume of Business for Year 1908 Exceeded
One Billion Two Hundred Million Dollars
Bankers Interested in Experts’ Letters of Advice
In a general way we look for the next general upward move to come in the industrials. When the turn comes to buy we snail call attention to the best; also to some bargains still left among the rails—like the Eries, Rock Island, and probably the new Great Western issues.
Corn products, beet sugar, the equipments, coppers and steel issues will also be good, many of them can be bought on a scale-down with safety, but we advise waiting at present.
Chicago Markets
The crop report issues yesterday promises a yield of nearly 700,000,000 bushels of wheat. In our judgment this promise is not likely to be realized in full. It looks as if the estimate on spring wheat—just short of 300,000,000 bushels—was too large. We believe that 25,000,000 bushels less would be nearer the mark. Average yields per acre are gradually growing less in the Northwest as the land wears out and is not fertilized, hence this deduction. The one serious danger is black rust. Conditions are right for it. The news should be watched closely. Prices will shoot up if it develops.
We see nothing in the crop report to change our advices given for the past month, and would sell September and December wheat on all good bulges. The low reserve of only 15,-000,000 bushels shows the danger of selling July. A wet harvest might prove serious. It also justifies our bullish position of last winter, and in March, in the face of the obviously exaggerated estimate on reserves then.
Crop news from abroad is not favorable. Europe will need our wheat and we shall have less than 100,000,000 bushels to spare. There is no low-priced wheat in sight. On good breaks it will be an investment purchase for the long pull, but the time to buy is probably several weeks away. It is unless conditions change.
There is little to add to our recent advices on coarse grains. Corn promises three billion bushels and, with promise nearing fulfillment, the old corn will come to market. September has broken sharply since we advised sales. It should rally a few cents. Sell it when it does but keep one eye on the growing crop.
Three weeks ago we advised taking profits on provisions. The price is justified by conditions and we may see some further advances, but the technical position is not good and we prefer to take the handsome profits in sight and wait developments for a week or so longer.
cause of those very conditions. We shall probably be able to advise by special letter or by wire when the top is about reached, but some stocks are likely to be on the down turn by that time.
We do not advise short sales. This is a bull market and will sell very much higher within the next year. Unless unexpected bad news strikes it, there will be a series of fairly sharp bugles before any bad break comes, and this preliminary warning is given now only to enable our subscribers to take advantage of such moves to take profits. The above defines our position. Bullish for the near future, unless the unexpected happens—then bearish for a turn—but not bearish enough to sell short, and very bullish for the long pull.
There is nothing in the general business situation this week calling for special comment. A careful examination of the copper situation reveals the fact that one of the largest consumers of raw copper has become satisfied that the producers’ reports have been falsified and that the surplus a few months ago was much larger than there shown. The same authority, however, believes that consumption is now greater than reported, and that the “error” will be corrected in the near future—all of which is bullish on copper for the long pull.
The tide of exchange has turned against New York during the past week. From 50 cents premium it is now at a discount here. This will tend to change the anomalous condition in the money market to which we called attention last week. The movement should turn to an outflow to the country soon. This, in turn, will bring firmer and higher interest rates and possibly furnish an excuse for a break in stocks.
In this connection, we want again to urge our subscribers to sell out their high-grade railroad and municipal bonds on this present market. The price has reached top. In some cases a decline has begun and there will not be a time for years when better than present prices can be obtained. We repeat again: Sell out your high grade bonds now or you will see them decline on your hands.
The vital cause of this is the depreciating standard of money due to rapidly increasing supplies of gold. Our Outlook of December, 1908, treats on this subject. If you have not read it send for it.
Bankers do not care to receive letters of advice from brokers with something to sell. They willingly pay for expert opinions^ upon crop and market conditions and many losses are saved, or turned into a profit by advance information. The Market Chart Company, 259 La Salle Street, Chicago, has an army of money-making clients who rely upon them for daily or weekly advices. We quote the following from one of their recent confidential letters to indicate the wide range which such a review can be made to cover. The letter, in part, reads:
The condition of business to-day is too good. The crop report promises a yield this year worth more money than ever before. The tariff is very near settlement. The Iron Trade Review estimates 90 per cent of the steel capacity of the country in operation. Pig iron production in June averaged daily 64,331 tons against a daily average in 1908 of 43,663 tons. General business conditions in all lines are showing favorably. If there is a weak spot it is the copper market and the producers report there shows rapidly increasing consumption.
We have not turned bearish on the market but it is about time there was a good reaction —something more than a little shake-out of three or four points—an average decline of say 10 to 20 points, which means perhaps 30 points or more in some of the high-priced leaders.
It does not look as if this break was due just now, and unless some very bad news strikes the market some new, high records are very likely to be scored before it comes. We write in this way to-day simply to warn our subscribers to get ready for it. At a guess we should say that it was likely to come sometime in August, and, in the meantime, Union Pacific is as likely as not to sell above 200 and other stocks make similar moves. For eight months we have in these advices urged only buying—and right here we want to say that purchases made on these bulges will pay a profit within a year if protected, but nearly every market sign tells us that there will be a better time to buy stocks than the present.
We now advise taking profits on long stocks on good bulges, and waiting a big reaction before taking them back. This we advise in the face of the most bullish conditions we have seen for over three years, and we do so be-