The daily banner. (Cambridge, Md.) 1897-2008, 1911-06-05
THE FINANCIAL SITUATION.
Letter of Spencer Trask & Co. to
Their Correspondents Fur
nished by Geo. H. Daw-
son, Jr., Local Rep
reSentative.

feSentdIlVe.
May, 1911, will go down in the
annals Of history as marking an
epoch in American Jurisprudence,
for during that month the Supreme
Court of the United States has in
two separate cases of paramount inn
portance announced that it stands
squarely for the strule of reason"
and that demagogism has as little
to expect from it as has power de-
rived from unlimited wealth. All
through the maze of legal and tech
meal verbiage surrounding both the
Standard Oil and the American To-
bacco cases, this one fact stands out
with impressive clearness, land that
one fact alone is worth all the mar
ket has suffered while the Court S
decision was forthcoming.
We do not mean to imply that
from now on all will be clear sail
ing, for the United States Steel Cor
poration, the American Wooden Co.
and the American Sugar Refining
Co., to mention no others, are liable
to be investigated by the Courts, but
We do feel that hereafter the bust
ness man and lawyer will be able
to determine in advance pretty we'll
Just how far he can go without com
ing in conflict with the law.
It is as yet too early for the full
effects of the decisions to have
made themselves felt on the coun-
try at large, but we believe that as
time goes on and better under
standing is had Of the reasonings
which led to the ruling of the Court
the value of the decisions will be
more generally recognized. We are
quite prepared to admit that tempo,
rary unsettlement of the market
might accompany the enforced dis
solution of two of the greatest in
dustrial corporations of present
times. On the other hand, the
spectre Of suspense which has been
SO long lowering in the vision OF
the American business man has at
last been removed, and as we have
frequently pointed out in the past,
uncertainty is the greatest enemy
to commercial activity and progress.
Now that these cases are out OF
the way 1t is pertinent to ask, what
next" As we read it, the situation
in general looks favorable. 1t is
true that business shows no marked
tendency to expansion-the recent
cut In steel prices indicates that
At the same time it must be remem
bered that great bodies move slow
ly. and it often takes time for a
better feeling to be engendered in
people, especially after a period
Of depression. 1t must also be re-
membered that we would now be
starting from an entirely different
plane than after the panic of 1907.
Then the mvoyement was a forced
one and had no sound basis; now
merchants have no accumulation of
goods to speak of-indeed, in many
lines the buying for some time has
been of a purely hand-to-mouth char
acter-the stock market has passed
through a period of drastic Iquida-
ton; index numbers show a ma
terial contraction in average prices;
bank loans have decreased, while
deposits have increased, and the
reserves are still large. In addition,
the crops give promise of a gener-
Gus yield, and this is a most impor-
tant point to keep in mind.
On the reverse side of the shield
there is the question of tariff re-
form and of the fall elections. We
do not minimize the effects that
both of these may have, but we do
not expect there ever will come a
time when some cloud cannot be
conjured up on the financial hori-
Eon. and the two unfavorable factors
we have just designated are much
more than counterbalanced, in our
Judgment, by those of a construc-
tive character.
The action of the bond market
itself continues to be favorable, as
ia indicated in the volume of bust
ness done on the Stock Exchange,
which has been exceeded only three
times in over 20 years. This &C
tivity has been coincident with a
further rise in prices, and this in
the face of heavy offerings of new
Issues, which have naturally distrac-
ted attention from the older ones.
Stocks also have been more &C