Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1906-01-01
SEES DANGERS AHEAD
Henry Clews Somewhat Pessi
mistic in His View of
the Future
REVIEWS THE PAST YEAR
Says 1t Opened in Doubt, But Closes
With Almost Dangerous Optimism
Believes That the Prosperity Wave
Has Reached Flood and Tide is Duo
to Recede.
REVIEWS THE PAST YEAR

his weekly financial letter, reviews the
conditions which prevailed in 1905 and
discusses the outlook for 1906. He
says:
The year just closed has been one Of
extraordinary business activity. 1t OPP
ened in the spirit of doubt; it closes
in a spirit of almost dangerous optim-
ism. In both volume and profit the
trade of the past year has been much
the largest ever experienced - farmei,
miner, mechanic, merchant and finan-
cier, each having had their full share
Of the proceeds. In short, our national
prosperity during the past year has far
exceeded all previous records.
The most striking fact in the situa-
ton has been the farmers remarkable
prosperity. He is pre-eminently the
principal factor in the national bust
ness activity of today. The country
has been favored by series of sue
cessful harvests, but that of 1905 sur
passed ALL Secretary Wilson of the
department of agriculture estimated
the wealth produced on American
farms this year at S., 100000, which
is S256,000,000 greater than 1904 and
S49S,000,000 in excess of 1903.
Concident with the succession of
good harvests we are experiencing a
most significant industrial develop
ment. This must be attributed partly
to the rapid growth OF our population,
which is now estimated at S3,000,000;
partly to new inventions and new bus
mess, methods, and partly to the re-
vival of enterprise. which has been
thoroughly aroused by continuance
of good times.
The Future.
What are the prospects of 1906? That
is question more difficult to answer
than usual. The present upward wave
has been in progress since the panic
of 1898. Judged by ordinary stand
ards of mea surement a reaction is all
ready overdue, and the tide should be
turned in the opposite direction. AL
ready there are symptoms of the boom
having reached it's zenith. For in
stance, a speculative fever is rising in
real SSldle, LioiICS ooPpAANS sei ~ NAA
ming low and firm rates are ruling
turnout the world, and we are also in
the midst of an epidemic Of loose and
fraudulent business methods which
often accompanies the climax of a pro-
longed upward movement. Real estate
is generally the last market to feel the
stimulus of boom, either because 1t
has become the safest form OF invest
ment, or because prosperity induces
many to buy their own homes. or be-
cause development of new Industrial
enterprises stimulates land values.
Money supplies have already been ex-
hausted by the too rapid turning OF
capital from floating into fixed form,
and an era of loose practices seems
unavoidable at time when all sorts
of get rich-quick schemes prosper and
are easily foisted upon an innocent
nublic. In these respects 1t appears
that we are near if not at a period or
reaction. But this is not ALL Many
securities are selling at excessively
high prices and yielding about 10 =
per cent at present prices. A high de-
gree of imitation exists IN
MANY securities, and particular
Nv in the industrials, the COM
mon stocks Of which frequently repre-
sant nothing but water and yet are
selling all the way from 30. 40. 80 and
inward. Under present exceptional
conditions these concerns are often
able to make exorbitant profits, which
renders it easy to see how the pubic
are deluded into relieving original
holders Of their surplus stocks. For
holders of these industrials would be
obliged to retain them permanently
and 1t is a mater of regret that pres
ent conditions now favor their d1strl-
button among the public. Many OF the
sindustrials are still in an intr1nsically
weak condition. They are heavily oV-
ercapitalized and have not yet stooa
the test of adversely. New competl-
ton from more modern plants is con-
stantly growing. and their ability 10
control the market-one OF the prime
objects of the trust meth
cd = is likely to be serl-
ously disputed when the reaction
comes and when the modern establish
ments prove their superior competitive
abilities. This imitation in the stock
market is really the weakest spot III
the whole situation. Credit has 10
many cases been unduly extended, and
some of our banking institutions are
loaning too heavily on questionable
collateral. Bank loans in New York
stand at about 81, O0o. 100000, which is
practically double their amount ten
wears ago. The difficulty Is Wall
street has overdiscounted the situa-
ton: and 1t would not be surprising II
some degree of contraction or read
iustment were enforced during 1906,
the speculative situation on the Stock
Exchange being anything but satisfac-
tory.
Contraction Not Begun.
With these are the facts which sug-
gest reaction and consequent prudence
there are elements in the situation
which do not yet support the theory
that contraction has begun. On the
contrary. there are many good reasons
for anticipating continuation of pres
ent commercial ard industrial activity
al least until the next harvest In the
first place it must be remembered tina
all reactions or panics have had their
beginnings in overproduction. Not I'M
til there has been an overproductlon OF
securities. of merchandise, or of the
mass of utilities which go to satisfy
human wants is there any reason to
fear permanent reaction. When over
production becomes general then re-
adjustment must also become general.