Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-04-02
MONEY CAUSED
STOCK SLUMP
Prominent Berlin Banker Points Out
the Trouble Here.

NEW YORK, April 2.-Hans Schuster a
director of the Dresdner Bank, one of the
largest banks of Germany, and the repre-
sentative of that institution in the negotia-
tons which resulted in the formation last
year of a close working alliance between
that bank and ]. P. Morgan Co. ex-
pressed the opinion yesterday that political
conditions, including the agitation for closer
government control of the railroads, really
have had nothing to do with the decline in
prices which has taken place in recent
months in the New York stock market.
Expansion in commerce and industry be-
yond the ability of capital to finance 1t has
been the fundamental cause of the disturbed
condition of this market, according to Mr.
SchuSter. He made it clear, speaking Tor
foreign investors, that they have no dread
such as had been expressed in some quar-
tiers here. of closer government control or
the railroads or even of government owner
ship. though he admits distrust has been
created abroad by the manner in which the
agitation for closer government control has
been carried on in this country. This dis
trust has been increased, he says by such
incidents as the Hartman dividend declara-
tons. In discussing market conditions here
and abroad he drew an interesting parallel
between speculation here and that which is
carried on in the German markets.
Prices Have Reached Bottom.
Mr.. Schusters position makes him one OF
the best-informed of European bankers on
American affairs. and his views of condi-
lions here have special value on this &C
count In his opinion prices in the stock
market have seen their lowest level,
though some contraction in trade seems to
him inevitable. Probably two years, he
thinks, will be needed fully to restore the
equilibrium in the relations Of trade and
capital.
This is Mr. Schusters statement:
ut is a most interesting situation which
you have here at present. My present trip
to this country in fact. was largely for the
purpose of looking into conditions here and
of learning at first hand what people here
thought of the situation, particularly in the
matter Of the movement toward greater
control Of the railroads by the government.
This is matter that we view abroad
very much more calmly than you do here.
This for the very good reason that we have
gone through all this, and gone, in fact,
much beyond. In Germany. Italy and some
| other countries on the continent we passed
through the period of government control
of the railroads. and finally came to the
purchase of the railroad lines by the gov
eminent. In France, in cases where the
government does not already own the rail
roads. arrangements have been made to
take them over at the expirations of their
concessions. In Germany Itself the idea OF
government ownership mas gone MUCH ne
yond anything proposed here There is
scarcely municipality that does not own
its water works. and many own their tram
ways their electric light plants and other
public utilities.
Cause of Foreign Distrust.
1--WE We're prepared. therefore. for the
coming of the time when the public in the
United States would demand more rail-
road laws and closer supervision of the
railroads But the way in which you went
about this work is what caused alarm
abroad The placing of your best people
on the witness stand, the way the press
handled the matter, and generally the lack
of calnness in dealing with this question
of government control, caused distrust on
the part of the public abroad. Even
among our bankers the view began to pre-
vail that the situation was radically UNI
sound. They knew, of course, that this
country was wonderfully prosperous, but
they began to think that its development
was unsound, that everything here was