Los Angeles herald., 1907-11-07
ACUTE STAGE IS
PASSED IN CRISIS
HENRY cLEWs SAYS RECOVERY
WILL BE SLOW
Reinvestment of Funds by People Who
Withdrew During Recent Scare
Will Help Investors
and Public

Under date OF November 9. Henry Cews
has the following to say. regarding the pres
ent financial situation;
1.-THE acute stage of the financial crisis has
passed; hysteria has subsided and the situ-
alton now appears well under control. This
does not mean that immediate recovery
is to be expected Recuperation will be slow
and irregular; the for the recent col
lapse being too deep seated and complex to
indulge In any false hopes in that respect.
1t is now fully recognized that the crisis was
chiefly due to the exhaustion of floating capi-
ta Additional sources of weakness were the
overextension of credit, the overproducton of
securities the impairment of confidence by
corporate mismat agement and the occasional
Interference of national and state governments
in corporation affairs. Wall street has now
amply discounted all of these drawbacks, hav-
ing done so in three successive stages by
means of the breaks in March. August and oc-
tober In the financial district the situation
is gradually righting itself After liquidation
on tremendous scale the surest and most
natural relief cane through gold imports Tha
other form of relief-that of clearing house
certificates though artificial, was equally ef-
ficient. This latter sxpedent has been re-
sorted to in many Of the leading clearing
houses In different parts of the country, and
has done much u restore the equilibrium; so,
too. has Secretary Cortelyou's prudent and lib
era1 action. as well as the generous assistance
Of leading bankers.
Economy Will Follow
Economy in management will have 70
be enforced; many hands VIII necessarily be
discharged, and with the purchasing power of
the people thus impaired the consumption of
staple goods will surely decrease. This turn
in the tide comes in many respects at an op-
perfume time, since there are few markets
which are burdered with an oversupply of
merchandise. Nevertheless. any material de-
crease in consumption would soon lead us into
a period of overproduction with It's unpleas-
ant consequences, and II is here where lies the
point Of weakness in the merchandise markets.
Lower prices for commodities however, Will
bring us to a more normal and healthy stu-
Ntion. stimulate consumption and encourage n
fresh forward movement. Lower prices for
wheat and copper have already greatly stim-
ulated the export of these articles Cotton has
been held back by high prices; but monetary
pressure is likely to have the same effect in
this in other markets.
Europe must have our wheat, our cotton
and our copper. From these three articles
alone we have been able to materially increase
our imports of gold. Another important source
of relief has been the freer buying by London
OF American securities which now at
ceedingly attractive prices to European in
vestors The stock market certainly offers
many very unusual bargains to the outright
buyer of securities.
Reinvest Funds
People who have taken their funds out Of
the banks during the recent scare should re-
invest them in sound interest paying securl-
ties. BY this means they will be perform
ing service to themselves in securing profit
able investments and a service to the public
by returning money to the channels OF circu-
lation. The recent disposition TO hoard money
was of the most dangerous elements in
the panic, Money was Withdrawn from use
at the very time when 1t was most needed;
more frequently from senseless fear than for
good reasons. From now on conditions in the
money market will gradually improve. and
borrowers with good collateral will ind little
difficulty in securing accommodations.
There may be some trouble in renewing ma
turing obligations, but these are matters
which Will come up for adjustment with the
progress Of time 1t Is well to recognize that
ia general business we have turned the-corner;
that commodity values must recede. Economy
must be practiced not only In business. but
in private affairs. II these facts are recog-
nized the process OF readjustment can be ac-
complished in a gradual and orderly fashion.
and in due time the foundation will be laid
for renewed activity and prosperity.
Rest Is Needed
''F,or some time to come an irregular stock
market must be anticipated Such rallies as