New-York tribune., 1904-10-19
THE BUSINESS OUTLOOK.
VANDERLIP TO BANKERS.
Prophecy of Good Times and Warn
ing against ReckIessness.

stood 10 De expressing the views or the power
fu financial interests represented by the Ma
,joual City Bank. He took conservativeIy Op-
,imistic view OF the situation. No change in
she administration OF the government was ex-
pected. he said; the country a sound
fnancial basis, its wealth and commerce were
growing rapidly. and crops were abundant.
ON the other hand, business was not In
m entirely satisfactory condition. The chief
danger. In Mr. Vanderlps opinion. lay In
e revival OF wild and reckless speculation.
AGAINST this he warned his hearers, and he
limited that il a speculative boom should go too
far the great banking interests would find
wav 20 check IT, He summed UP his remarks
IS follows:
believe that the conditions are again favor
able 10 A return OF prosperity. believe II is
time for optimism. So long as we remember In
hulnbleness our mistakes and hold close TO
proper conservatism. the course of financial
events seems likely to follow only general
direction, and that is toward improvement.
toward expanding business and toward better
times.
Nr. NanderIip's speech to-day was in marked
contrast with the one he delivered on October 81.
1902 at Wilmington. y. c. which attracted wide
attention and in which he expressed decidedly
psssimistic views OF the business outlook The
wilmington address was almost coincident with
the end of the great bull market which had pre-
vailed for the preceding four years.
MR.. YANDERLIP'S ADDRESS.
After a few Introductory words OF compliment
20 the Illinois bankers Mr. Vanderlip spoke as
.olows:
I, has seemed to me specially fttng-consider-
Sng ctr surroundings hereto attempt TO re-
view. in the briefest manner, a few of the hsures
illustrative OF our material progress and TO Try
20 draw some deductions from them
In order TO get setting for our comparisons
iet US for a moment glance back at conditions
during the last ten years We will remember
that we were, ten years ago. just eEneTgllg from
fhe depression of the panic year Of 1888. and
That we were facing q great political and eco
7lofnic conflict over the silver issues. The whole
world filed with distrust in regard To the
future Of our standard OF value and the chllllng
shadow Of that dIsJrust was falling heavily on
our commerce and finances
Then came the definite verdict Of the people.
declaring for a sound currency. and following
ihat began an unexan'plei era OF prosperity such
s. no other country. IL any age, mas ever KNOWN
The expansion went beyond all the experiences
Of men Of affairs. We had learned lessons OF
economy. Of careful management and of cheap
production in the depression which followed the
panic Of 1893, anG now We suddenly walked 10
the fact that We had obtained a grasp on the
1narkets Of the world. our exports OF manu-
Sactures ran up from S1S3000 00n 20 S453 O01.000
in half 4 dozen years. and this increase of S2JO
0ooGop in the annual average Of our exports CT
manufactured products made Europe stand
aehas- at what was denoninated the American
commercial invasion. Our general foreign trade
fdl1Hte assumed such totals as 10 cause econ
0mists seriously TO consider what was 10 hap
Ien 10 the rest OF the industrial world if this
1uarch of progress went on. In half dozen
Years We piled up against other countries
trade balance in our favor OF more than 81, ,G00.-
NfeH9@ trade balance far larger than the net
tcade balance had been from the beginning OF
our government down TO the time when this re-
Iarkalie expansion started.
MISTAKES OF THE PAST.
AHd then we made mistakes We were In the
midst Of prosperity so great that II went be-
send the experience Of the most experienced.
fba Of re. ring
nll Of the old landmarks. il was small wonder
That there we're biuni made in steering the
tFaIJ OF business We ran into eXcesses. eX-
hafaSances ana miscalcuiations. Capital made
mistakes Of overcap- talization: labor made mis-
takes - arbitrary and unwise demands; every
todE made mistakes OF extravaganza. Pro-
cucers made errors IN estimating the demand
and made miscalculations IN the multiplication
oi their productive capacity. Those errors Of es-
Innate We're almost unavoidable There
surplus demand above our productive capacity.
and that demand went knocking at the door Of
nFst one factory. then another and another, pro-
oueing the impression on the mind Of each indi-
hioual manufacturer that the demand legiri-
Iialely pressing upon him warranted him in
doubling his plant. and when every one started
70 douhle his productive capacity. capacity soon
ran ahead of demand.
The railroads were caught In much the same
situation They made huge engagements for
expenditures. which they felt we're necessary
~ order 10 handle the traffic that pressing
on them For the time being far 100 great
Soiton OF hquld capital was absorbed INTO
1lNed forms Of investment. Directly and indi-
'f-tN- bank credits which We're payable de-
mana were IN q dangerous proportion converted
mo new manufacturing plants and into new
EalToad tracks. equipment and terminals. Bank
reserves fell until TREY were "A danger signal,
pointing with certainty 10 the need for more
Conservative administration. Banks applied the
financial brakes Of higher and higher interest
rates Stock market values, unduly inflated by
me spirit Of optimism which was all-pervading,
began TO melt.
Just two years ago this turn came The de-
cline which followed cut S1OOOO00OOO off the
falue Of securities in a few months The vast
readjustmenf which such a change in values
mace necessary was accomplished. however,
without panic without great failures, and with
5@w Of those disasters which usually are the
features Of such a period. The way the country
met the situation stands to-day as the most
striking monument have vet reared to our
Increasing wealth and financial strength
CYCLES OF EXPANSION AND DEPRESSION
We have grown used to cycles in business; 10
regular periods Of expansion followed by years
eI depression. These cycles have been of vary
l'!s length, but generally speaking. a decade
would measure the time from one upturn to the
next Men Of experience. therefore, expected
nat the depression which started tHo years ago
would have 10 run something like the usual
oafse, ahd would last at least for three four
stsFS before We had again learned lessons OF
te9nomy and had settled down TO a solid basis
agon which TO rear a new structure Of pros
FeElty. ! have said that the experience of the
1sost experienced had been set at naught by the
rising tide that had marked the last great wave.
5oxperience proved a poor guide in measuring,
ne upturn; viii il likewise be at fault in meas
cfliiS the period Of depression? Is the depres-
hicn 10 be OF shorter duration than in former
business cycles? Have we already reached. after
t@o years Of doRngT-lde a level from which we
- again start up 10 new heights Of business
expansion?
1 cannot answer these quest ions but / want to
present. a feW statistics that believe have some
bearing upon them.
ahat have nOw TO say has absolutely no ap-
pncstlon to the immediate course Of the stock
market Whether stocks win be higher or lower
,,y-inorlow, next week next month. I do not