The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-01-03
THE OUTDOOR FOR 1905.


country TO continue, or are we on the
verge Of hard times?" This is a sub
ject that is being again discussed with
the coming of the new year.
Henry Clews. the Wall street financial
authority. is inclined to take q some
what pessimistie view of the situation.
He believes that period of financial
reaction is at hand, but ne does not
think it has yet set in. In discussing
this subject he says:
THE present upward wave has been
in progress since the panic of 1898.
Judged by ordinary standards of meas
urement. reaction is already overdue,
and the tide should be turned in the
opposite direction. Already there are
symptoms Of the boom having reached
its zenith. For instance, a speculative
fever is rising IN real estate; money sup
plies are running low and firm rates are
ruling throughout the world, and we are
also in the midst of an epidemic of loose
and fraudulent business methods which
often accompanies the climax of pro-
lOnged upward movement. Real estate
is generally the last market to feel the
stimulus of a boom, either because It has
become the safest form of investment,
or because prosperity induces many to
buy their own homes, or because devel-
Opment of new industrial enterprises
stimulates land values. Money supplies
have already been much exhausted 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 public IN these re
spects it appears that we are near If
not al a period of reaction"
But Mr.. Clews' views are confined
To fI,a l,77eieaee. v4rr,r-l1 tt is
dent from what he says further that
his prophecy of a reaction chiefly con
Germs Wall street and investors in the
stock of trusts and manufacturing con-
Germs. After speaking of the initiation
of 'industrials' the stocks of corpora
tions like the steel trust, he continues:
Many of the industrials are still in an
intrinsically weak condition. They are
heavily overcapitalized and have not yet
stood the test of adversely. New COM
petition from more modern plants is
constantly growing, and their ability to
control the market-one of the prime OBJ
jects of the trust Methods likely TO
be seriously disputed when the reaction
comes and when the modern establish
ments prove their superior competitive
abilities This initiation in the stock
market is really the weakest spot in the
whole situation Credit has in many
our banking Institutions are loaning too
heavily on questionable collateral. Bank
loans in New York stand at about ST.
0O0 900. 900, which is practically double
their amount ten years ago The diff
Guilty is Wall street has overdiscounted
the situation; and it would not be sur
prising if some degree of contraction or
readjustment were enforced during 1906,
the speculative situation on the stock
exchange being anything but satisfac-
tory"
The real prosperity of the country de-
ponds upon the prosperity of the farm
ers. The wealth of the world first comes
from the farms and the mines. Its value
is greatly increased when it is put
through various processes of manufac-
ture, but primarily it must come from
the earth Prosperity that is not based
on that of the farms or mines must
therefore be fictitious and unhealthy.
Wall street is continually losing sight
of this fact and it sees only the in
dustriaT' portion Of the country, but
when it goes back to the source of
things it comes to the farms and mines
as is indicated by these conclusions on
the part of Mr.. Clews:
While these are the facts which sug-
RESL EtdGlAOl anu tO4AoC4lAIA ~ NACAA1Nf
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 antlcl-
pating a continuation of present COM
mercial and Industrial activity, at least
until the next harvest. In the first place
it must be remembered that all reactions
or panies have had their beginnings in
overproductiOn. Not until there has
been an overproduction of securities, Of
merchandise or of the mass of utilities
which go to satisfy human wants is
there any reason to fear permanent re-
action. When overproduction becomes
general then readjustment must also be
come general; but where are the symp-
toms of general production? We
have not built too many railroads dur
ing the past decade nor issued too many
securities Good investments are very
scarce. Stock market conditions dem
onstrate that Railroad managers know
that our railroads are overtaxed; that
old sections of the country are badly
in need of enlarged facilities, and that
new sections are greatly in need of ad-
ditional mileage. All indications point
to a renewal of railroad building, par
ticularly west of the Mississippi, where
present facilities are Inadequate In this
decade there has been none Of the ex-
cessive railroad building which precipi-
| tated previous crises. The railroads
therefore must be eliminated as an ele-
ment of weakness when in fact they
were never in stronger position.
IF we consider the iron trade, which
is very properly accepted as our best
signal barometer, we find that the coun-
try is producing iron products with mar
velous freedom; and yet there are no
signs there of overproduction. On the
contrary. the nations demand is still far
ahead of capacity and the entire product
of our mills is sold ahead for months to
come The principal demand for metals
has come from the reconstruction of our
! railroads and of our cities, rendered inn
perative by the growth of the population
and traffic; also by the progress of in
vention and the necessary adoption of
modern business methods, which have
| played a highly important part in our
| Industrial activity. These reconstruc-
/ tive demands have been largely satisfied,
/ but their end is not vet in sight and