The evening times., 1911-08-07
GENERAL BUSINESS CONDITIONS

the stock market reached high rec
ord prices and became top-heavy,
money sought other means Of en-
ployment, turning to the more spec
ulative forms Of investment. In or
der to analyze the present situation
1t is necessary to revert to condi-
tions year ago. The country had
experienced condition Of almost
unprecedented prosperity in the agri-
cultural districts. Crops for several
years had been bountiful and prices
owing to foreign conditions and to
waste and increased consumption at
home we're high.
This Injured to condition Of
wealth and luxury in the farming
communities, and naturally stimulat-
ed prices of land to such an extent
that interest in the cities was attract
ed to the broad acres of the west. In
the more settled communities farm
ers added to their holdings while
land promotional companies parcelled
out their lands on contracts and
mortgages, much of it going to those
inexperienced in farming So quiet
ly and steadily did this land specu-
lation and activity spread over the
country that it had absorbed an i'm
mense amount of money and credit
before bankers and business men
realized its extent
Over. Expansion of Productive Capac.
ity.
In addition to this, those who fa-
vored other forms of investment had
been attracted, possibly because of
the high cost of living and prices
generally, to the large yields prom
ised as investment returns on irri-
cation bonds and the less seasoned
utility issues that were being freely
offered. This absorbed an additional
heavy volume of money and credits
and these and other immobile invest
ments swallowed up an enormous
volume of liquid capital. Many busi-
ness concerns, believing that there
was long period of prosperity ahead
invested heavily in plant extensions,
tying up a considerable proportion Of
this liquid credit in brick, mortar,
machinery and other more fixed
forms of investment
Banks and Business Men Heed
Warning.
When the warning came through
ed by the revelations Of the statistics
from the comptroller's office. con-
servative bankers set about to put
their banks in order to meet the
forthcoming demand for the harvest
ing and moving of an immense crop.
Under pressure, naturally the most
liquid forms of credit yield first and
when the pressure in the money
market came, the business world
which had been going along at a
rapid pace, and was still mindful of
the unpleasant developments of a
few years previous, began to slow
down, contracting its obligations and
credit requirements.
Business Slows Down; Money Accu.
This slowing down process was
only fairly we'll under way q year
ago when the Continental and COM
mercial National Banks annual crop
review made it's appearance. The
banks at that time, as result of the
conservation of funds yielded up by
commercial enterprise, found them
selves we'll supplied with money
! with which to care for the crop re-
quirements. Had it not been for an
| unfavorable International trade situ-
alton, doubtless the land speculation
could have been checked without SER
iously interfering with general busi-
ness. But the balance of trade was
heavily against this country and
bankers on this side of the Atlantic
were compelled to rely in largo
measure upon their own resources to
finance their necessities and care for
the crops.
| Necessity of Liquidation of Debts.
! With loans at an extremely high
aggregate it was matter of self
preservation and the protection of
the business world that there should
be period of steady but quiet liqui-
dation. The bankers and the busi-
ness community faced this RESPONSE
bility courageously, the former ex-
tending assistance where legitimate
| ly it could be given; lending support
to over-extended concerns, thus en-
abling them to avoid the rocks and
to work out of their difficult posi-
tions. Even these conditions alone
would not have been sufficient to
have caused such a wide and extend
ed reaction in the business world,
had it not been for other collateral
influences at work.
! BACK FROM BISMARCK