Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1899-12-14
THE RECENT STOCK BREAK.

THE RECENT STOCK BREth.
There has been widespread DISPOSE
ton to attribute the recent heavy break
I'm ihc prices Of speculative stocks TO the
war uncertainty abroad, and the blocking
Of the Transvaal gold supplies. The New
York Evening Post admits that these are
incidents of the situation, and discom-
forting incidents, seeing that they cut
off i'm large measure the relief often OBJ
tanned from across the water by the
speculative market But they are Incl
dents only. it holds. 1t finds deeper,
and in a sense, a very encouraging cause
for the break. Whatever may be the
general rule. the violent decline IS not IN
the present instance. 1t argues an lnoeN
IN unsound conditions in finance and IN
dustrv. Quite the contrary. According
to the Post the real and basic cause OF
the break is trade and industrial develop
ment. and the woes of the speculative
element are indicative of genuine pros
perity. Trade and industry, in nearly
every nation Of the world, have, says our
twelve months with such rapidly as 10
REQUIRE for their ordinary exchanges the
greater part OF the unemployed capltai
of the world. Moreover, adds the POST
these agencies have in use "A far greater
percentape than usual Of the worlds
money circulation; for it will be plain
after a moments thought. that with
wages higher for some millions OF labor
ers in almost every country. with more OF
such laborers receiving wages, and with
retail dealers throughout the world selling
more goods. and, therefore, changing more
money daily from hand to hand, trade in
its strictest sense must he keeping In
private circulation a vastly larger sum
Of money than it did one or two years
ago.
Then the Post goes on to say;
unfortunately, this active commercial
use of capital ana currency was imme-
diatelv preceded. notably in the United
States. by wholesale tying mp of borrow
ed capital in doubtful Stock Exchange
ventures. To protect the loans and la
bilities created through these stock EN-
change undertakings. the banks We're re-
CURED 10 hold larger sum IN cash re-
serves But the demands of ordinary
trade. already noticed not only prevented
the New York banks from charging
cash reserves, but reduced such holdings
TO a total 23.0OO.000 less than those of
year ago The inevitable recourse Of the
banks should be plain to everybody.
Loans had 10 be called In from the specu-
lators a prOcess resulting logically. both
IN,
EXCHANGE. and i'm the sacrifice sale of
securities held on borrowed money
OF the soundness of the Posts position
as to trade and industrial progress and
the increased use Of capital and currency
necessitated by that progress, there can
be no question. Nor can there be any
que stion that. i'm explaining how trade
and industrial development operated
through the banks TO produce reaction in
the speculative market the Post further
iustifes its optimistic view-the view that
there is nothing threatening in the situa-
ton to legitimate business interest and
continued commercial and industrial adj
vance. The meat of the whole matter is
that speculative stocks went violently off
because of an imperative and legitimate
demand for the diversion OF money from
feverish into healthy channels-from the
uses of the few to the upbuiding Of the
country and the beneitng of the many.
This demand appealed to the interest ana
better Judgment of the capitalist, and
compelled the banks i'm the monetary cen
tres TO perform, as far as possible under
system. the true and higher functions of
such institutions. The squeeze. the opera
ton of the natural laws of trade. ana the
enforcement OF the moral obligations. so
to speak, of banking TO the business pub
lie were very hard on Wall street. ana
the speculative classes generally. but 1t
would appear pretty clear that the coun-
try at large has nothing to fear or COM
plain OF.