Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-01-02
FARMING CLASS PRESENTS A
REASON FOR HOPE
STANDARDS MUST BE
RAISED
Well-Known New York Banker Re-
views List of Things Which
Must Be Done During
1908,


under date, of December 70. Security
values have shrunken at least one-third.
and in many cases more than one-halt
of the figures quoted a year ago.
While the causes of the panic are now
generally understood, it may be well in
taking account of the past twelve months
to briefly cite the chief reasons. Among
these causes were general OVERRIDING,
overextension of credit; overspeculation;
overissue OF securities; great indus
trial expansion; excessive underwriting
schemes; excessive mining and real es
tate speculation; earthquakes at home
and abroad; Japanese and South African
wars; general public extravaganza; ex-
haustion of floating capital; distrust in
duced by corporate management, ana
finally the hostile attitude of political
leaders and legislative bodies at home,
stimulating erroneous prejudice against
wealth. These conditions, however, are
now matter of history and of little in
terest except for the lessons they con-
vey. 1t is of first Importance to recog-
nize that complete change of base has
taken place and that the business world,
whether 1t likes 1t or not, must now be
actively concerned in adjusting itself to
new conditions. We have been suddenly
precipitated from a high level to lower,
and the sooner this vital change is ad
mitted and conformed to, the prompter
and sounder will be the resumption OF
business activity. Fortunately the panic
fell with greatest severity upon those
best able to bear It, wealthy institutions
and the rich men being the chief suffer-
ers. Upon the industrial, mercantile and
laboring classes the shock has been much
less severe; a distinction that it is i'm
portant to bear in mind. 1t would be
folly, however. to indulge in decisions
as to the final effects of the panic. In
greater or less degree the consequences
will be distributed over all parts OF the
country, and 1t Is not unreasonable tor
be prepared for at least year of COM
parative depression, certainly in the east,
where commerce and industry are most
concentrated
There is reason to believe that the
worst consequences of the panic have
been limited to financial circles. Burt to
gain some idea OF the future in this re-
spect 1t is necessary to inquire into the
condition OF our chief industries. First
comes the American farmer, who last
wear raised crops valued at S7,400. 000, 900.
much the highest figure on record. His
condition must be highly satisfactory;
for after seven or eight years of unin-
terrupted prosperity he is now out OF
debt and so well situated financially as
ing any business recession in the United
States Should he fail to secure good
prices at home he is almost certain OF
obtaining them abroad. When It is fully
appreciated that according to the cen e
sus about 80 per cent of our working
population is engaged in agriculture. l.:
will be readily recognized tha' the far
mer is still the backbone of the country
in spite of the fact that the growth of
l. /.
the population, and is still producing less
than one-half the amount turned out by
our manufacturers.
Industries Grow Enormously
Our growth In manufacturing is enor-
nous, and in 1907 our products must have
considerably exceeded SIG, 00O. 100000 in
value, but owing to the extensive use
of machinery only about % per cent Of
the country's hand labor is thus en-
ployed. The manufacturing division of
industry will, however, feel the panic
much more severely than agriculture.
General retrenchment necessarily follow
ing financial disaster will restrict demand
mot alone for luxuries. but for many
staple products, and lower prices must
follow. 1t Is plain also that the pur'
chasing power Of the public at the form
err level has been exhausted and costs
of production must be reduced to lower
and more normal level in order to cheapen
the cost of living. Labor may choose to
resist this tendency by holding UP the
rate Of wages as long as possible, but
natural law Will assert itself in the end.
and both commodities and wages must
accept their snare In the inevitable re-
adjustments as capital has already done.
Industrial reaction, therefore, has not yet
run it's course
1t is worth while, however, looking still
more closely into the industrial situation.
The most important division of manu-
features IS that OF food products, of
which we produce over $500, 900 an
nually. This trade with few exceptions
is in very sound condition, owing mainly
to growing consumption and the absence
of any overproduction. In the next inn
portant division of manufacturing-that
of clothing of all sorts with product OF
nearly 81, 900, 600, 000-there Is also an alb.
sence of general overproduction; and the
great majority of our textile mills are In
an exceedingly strong financial condition,
q result of the unusual profits of the last
two or three years. There has been con-
siderable overexpansion in the retail
branches of the dry goods trade, but the
condition of the latter as a whole is
sound Values have been abnormally
recession is to be anticipated. Otherwise
there is no reason for apprehension from
this division of industry, save what may
come from curtailment of credit and
forced liquidation.
In one other great division of industry.
that of mining, there has been marked
and to some extent serious contraction.
Last year our mineral products were val
ued at nearly $1,000, 100000. Copper felt
the reaction more severely than any
other commodity. largely because of the
overspecuation and overproduction which
eliminated last August.
Construction Work Immense
These three Observation-Disclosures food
and clothng-wil of course somewhat.
feel the effects of any curtailment in de-
mand, but being necessities to a less de-
gree than some others. The Industries
likely to most severely feel the recent
collapse will be those engaged in con-
struction work. including iron, stee.
copper and Az building materials. These
industries have enjoyed abnormal pros
perity during the past few years, owing
largely to the practical reconstruction OF
our railroads and the rebuilding OF our
great cities. The growth OF railroad
traffic ard population is marvellous and
must be attributed to the wonderful de-
in our mineral and Industrial
all of which have grown with
vastly greater speed than agriculture
In the iron and steel industry. which last
year turned out s2,250,00O.OOO of products,
there has fortunately been no overpro