The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1901-05-05
wall STREETS anom

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cannot but be ranked as an economic
phenomenon OF the first Importance.
/ Prices, though they have scored extra
ordinary advances. have not mounted as
| high as they did 10 the often-cited south
Sea craze, or indeed as they did in the
days Of our deprecated paper money.
| The general public has been contributing
literally 10 the buying movement. vet it
has not-at all events until this week
/ been plunging into the market with the
blind fury which characterized its ac-
tons Of lST2s or even. perhaps. OF 1880
/ Recklessness there has been, ana a dan
/ gerOus cutting loose from the sound
! and time-honored principles OF invest
ment- But the noteworthy part OF the
| whole movement has been the indica-
/ ton, up 10 the present moment. that the
! governing force behind the rise in prices
was a force of enormous power, and that
a process OF something like continuous
/ absorption was al work. This has been
/ shown, in the most striking way, by the
! fact that a continuous rise of four
/ months has failed 10 strain and upset the
( money market. Money rates have. in
I fact, remained almost normal, in the face
! OF repeated shipments of gold 10 Europe
and of large subscriptions by American
! capital 10 a foreign public loan
Mr.. Citizens theory. set forth in his
study OF the laws Of stock exchange
! fluctuations, twenty-five years ago. was
that three main Influences. apart from
actual change Of intrinsic values oper-
ate 10 alter investment values; the
amount Of real money in a country. the
supply Of securities offered 10 investors,
and the change in facilities Of credit.
OF ali three Influences. none Is more po-
tent than the contraction or expansion Of
credit-the factor vaguely described in
the financial world as confidence.
Confidence. in this sense. means not
only willingness Of the community 10 Dor
row for investment in securities, but wiz
ingness of the banks 10 lend. Both de-
pend on the view entertained OF the Il
nancial situation generally, and there can
be no doubt that the present eXtraOrdi-
nary situation of the markets chiefly re-
suits from the almost unprecedented op-
timism, accumulated from the events Of
the last three years. In foreign trade in
domestic gold supplies, in production Of
grain and iron, in railway profits, IN
banking operations. all records in our his
tory, and IN some cases all records OF
any history, have been surpassed. 1t
was not alone or chiefly the tangible re-
suits of this accruing wealth which have
lately been forcing up investment prices;
that movement took place before 1901 be-
gan. Tt was rather the Inference,
spreading among lenders as we'll as Dor
rowers, that the position was too strong
to be shaken or impaired by ordinary ac-
ci0ents, and that the future was abso-
luely safe. This is d dangerous belief
10 use as the basis Of financial policy.
Exactly the same unqualified optimism
has worked the gravest mischief with
similar movements Of the past. and will
undoubtedly do so. sooner or later. with
this movement. But so long as such con-
fidence is unimpaired, capitalists VIII in
dulge in daring plans for the future, and
banks viii freely back such undertakings
with their credit. Both capitalists and
banks, moreover, will proceed with COM
plete assurance when they trust TO the
indications that. If they have to sell
back the securities created or acquired,
the public, equally confident of the fu-
ture, will pay for them.
That the buying Of securities should
have broken all records-running 10 two
or three million shares per day. when q
quarter Of million was called a heavy
days business four or five years ago,
and 100000 was the high record until
this ears no more surprising in itself
than The fact that in ali other branches
Of finance and industry new high levels
have similarly been fixed. The serious
danger of the situation is that all this
may come TO be looked upon as perma-
nent. That it should be so is Of course
wholly impossible, until human nature
and the caprice OF weather ia the farm
country become something different from /
what they have been since civilization !
began. A structure built mp on conf |
dence and credit is the most vulnerable /
Of all human edifces. it may not rest |
on the quicksands Of 1870 and 1890. but !
its own materials are destructble, and !
the higher it rises. the more violent may |
be, and usually is, its ultimate collapse. [
There will, of course, come a time when ]
the financial future is suddenly over !
A. e-rf-
TO realize but when the public VIII not /
bid for their holdings. No one can be 4
quite safe In watching these revels of 4
successful speculation without some such /
mort at his side.
It should be needless to say that the /
foremost danger of such a situation as
now exists arises from the belief that all /
IRE made to keep. II this were soft a 4
mass Of unemployed capital. Of a mag
litude hitherto unprecedented, were seek
ng lodgment IA investment securities
with which II does not mean 10 part
hen il IS possible that the high price
evel, too. would be permanent. But this
S something which never yet happened
n the history Of a Wall Street boom.
That enormous purchases of railway I
shares have been made. throughout the
season. IN order TO acquire control OF
properties and force through financial
leals and consultations IS perfectly well
snOWn. Uutl such schemes are perfect
d, the securities must be held back from
he market When the deal" is closed
With the seal Of an irrevocable corpora
lon contract the situation Is wholly
hanged The capitalist Is at liberty %
ell Holding his shares. as he does. with
he aid Of extensive banking credits. he
VII sell If he is wise When he does so
Is apparent enough what viii be done
y the army OF small spectators, with p,
heir thousands OF shares bought only 20
ell 10 the large capitalists al the ex-
ected higher prices.
This reckoning may be far OF. OF It
nay be very near AT hand There viii ,
e no lack Of moralizing when 4 comes.
wen then. however. IL viii be possible to
raw some more cheerful differences from
be movement. In so Tar 90 the stock ,
larSet Is an index % the Industrial To- ,
ire the pulse" as MacaClay described I ,
= which has Tor FIVE generations con .
nVed 70 indicate the variations % the
ody politicT-it IS IN some ways. 10 O.
ouut. happy omen. IL certainly fore I
aacows American prosperity - much az :
reflects q Whether 10 may not also \
lreshad0W the spread q speculation IN =
, all other branches ~ trade ard indus :
y. is a more unpleasant question =
othing IS ever more rIinoUs 70 the per- :
lament welfare - community than its 4
lFrendEr, after witnessing such cI- =
oits IS the past month in Wall Street =
; The belief thar patient industry. with / :
ow gain in material welfare. IS poor / Z,
destitute for quick ventures. with =
nance Of sudden wealth
The Perfect Woman. 3
CFroun Auswers.} =