The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1906-03-04

NEW YORK, March at is often
open to question whether the cours,, Of
the stock market is to be judged by wide
fluctuations in certain highly manipu-
lated stocks. and such questions have
been very freely asked during the past
week. The importance of correct
view of the bearing OF stock fuctu-
ations upon business conditions is al
ways emphasized In such times of re-
dictionary markets. and the well-known
tendency OF stock markets to anticipate
business conditions makes a review of
that phase of the situation most profit
able at present.
The fact that impresses the investment
interests of the country Is the fact that
there has been but little decline in the
prices OF investment stocks. There ha s.
however, been a substantial setback il.
speculative securities. and in a number
also of securities which have an invest
rnent standing, but which have lately
lent themselves to speculative trading
to an unusual extent. Hence Wall
street people, who see only the surface,
are rendered nervous FIR the future over
a condition that rc~I not necessarily
have any bearing upon The business out
look
Investment Versus Speculation.
To understand the difference between
a decline that Is purely speculative and
a decline that involves investors, and
finally business interests, it is neces-
szry to recognize how the investment
position has been built UP, and how
stable ii has remained since confidence
was first restored There frequently
occur periods in a ceuntry's history,
like 1903, when investment faith is at
low ebb, and wnen in consequences fail
ures occur where strength had been sup
Dc sed TO exist Then follows q long
period Of the reconstruction Of credit
and the upbuilding OF confidence, such
as we witnessed during 1904 and 1905.
Renewed confidence raises the prices OF
investment securities and enables the
sale of new bonds and the obtaining OF
fresh capital.
1t is only after this process has been
completed and every industry has felt
the influence of restored credit, that the
Spectator in MS constant search for
opportunities. has to make them where
they do not exist. There have been
plenty of 7ecuIative opportunities dur
ing the rise IN Investment issues but
when that is over. new ventures have to
vestment level that the supeFstrueture
of speculative origin is raised. often TO
fall again. but as often TO be restored.
so long as the investment foundation
remains sound.
Thus far in our stock markets II is
to be doubted II We have witnessed any
thing more than the collapse of a num-
Der of speculative undertakings. to be
followed perhaps by further similar
speculative attempts as long as the
strength of business conditions shall al
low In the spring of 1903. when the
investment situation had not recovered
its full equilibrium. the collapse or
number of speculative enterprises caused
some hesitancy In business and was al
most severe enough to do permanent
harm. But industry rallied until now
the bulk of the business Of the country
is being transacted upon a prosperous
and stable basis. Anything better than
this partakes Of the nature Of boom.
Just as any speculative imitation in Sc
curity prices is OF the same nature And
speculation can rise and fall above and
back to the level that represents good
business. without any great significance.
unless the measure OF the country's
business is enlarged or reduced by out