Los Angeles herald., 1907-11-21
A BUSINESS PROPHECY.

PAOphoCy4 But as a result oI - SOiiS-
what careful observation for some
years past of the conditions which cul-
minated in the late financial panic in
New York, with the reflex action of
which the country has been more or
less concerned for the past few weeks,
and of study of the probable finan-
cial developments of the immediate
future, The Herald desires to make a
prediction which it hopes its readers
will observe and note for future ref
erence.
First. we will give the result Of some
observations upon which the prediction
is based. The only serious financial
trouble with which this country has
had to reckon since it's present wonder
full period of prosperity began about
ten years ago can be trace6 directly to
the actions of desperate spectators in
the stock market of Wall street.
The first manifestation of this oc-
CURED in 1908, when the struggle for
supremacy over the Northern Pacific
between the powerful Hill and Harri-
man factions, in the midst of most
prosperous times, precipitated serious
panic in Wall street, for the relief of
which the intervention of the treasury
of the United States was necessary.
The second manifestation of this be-
gan last March, when, as a consequence
finance as applied to American railroad
stocks by Mr.. Hartman and his par
ticular coterie resulting from the in
.vestigation of the Hartman companies
by the interstate commerce commission,
a slump in railroad stocks began which
eventually carried with it other stocks
and securities dealt in in Wall street,
and eliminated in tine recent panic i!
the financial interests having their
center in New York city.
These periods of acute financial de-
preston and the difficulty OF properly
dealing with them only furnished adj
ditional proof of what hasN so often
been demonstrated before, to wit, that
the financial system-or rather lack Of
financial system--of the United States
machinery for promptly meeting and
controlling such disturbances.
For long time it has been fact,
patent to every student of finance, that
the national government which controls
the finances of the country has not
provided proper mechanism in the
form of flexible currency for meet
ing and dealing with periods of un-
usual and acute financial distress. In
fact it has become notorious among the
students of economics that the greatest
commercial nation of the world has
been less provident in its legislation in
this respect than any of the important
countries of Europe, and foreign stu
dents of finance not acquainted with
our national politics in its peculiar
developments and ramifications havo
often wondered at and speculated upon
the reasons for this
To Americans who have been ac-
/ quainted with the divers and irreconcil-
able financial theories which have been
for many years past political raliying
cries and leading planks in the plat
forms of various parties the explana-
ton is more simple.
Until within the past half dozen
years, during which time the financial
principle of the single standard has
become fairly well settled and crystal
lized as a part of our financial life, the
country has been divided politically on
the lines of greenback and fiat money
ism, free silver and the double stand
ard, and gold and the single standard,
to such an extent as has prevented that
sort of concerted action among our
national lawmakers necessary to the
enactment of a comprehensive and
effective scheme of financial legislation.
Now that these troubles have been
removed by the final triumph in ma
tional politics of the single standard
theory of finance, this deterrent to ap-
propriate national legislation may also
be considered as out of the way, anc
there would appear to be no adequate
reason why congress at it's approaching
session should not supply the country
with legislation in the form of a care
fully wrought-out financial system
which shall be the result of the best
Intelligence and highest statesmanshir
among our honest financiers and law
makers and which shall provide that
sort of fexibility to the currency sys-
tenn of the country necessary promptly
to meet and cope with periods of acute
financial stringency.
There would also appear to be nc
reasonable doubt that congress at its
approaching session will pass laws that
will effectually take railroad stocks out
of the realm of speculation. BY this
we mean that congress will enact legis-
Ilation, already recommended by the
Interstate commerce commission and
President Roosevelt, which will give to
the interstate commerce commission
practically the same sort of supervision
over the issuance of stocks and secur-
| tiles by railroad companies and the use
of foosa comnanies of their assets as