The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1912-12-17
THAT SLUMP IN STOCKS.

In his current weekly financial re-
view. Heary Clews, the New YORK
banker explains the recent extreme
weakness in the stock market as nav
ing been due chiefly to three causes
tn. supreme court decision regarding
the Union Pacific merger, the investl-
cations of the Pujo congressional
committee into the so-called money
trust" and the unusual STRAIN upon
the money market. So the rather un-
expectedIy heavy liquidations in wan
street do not mean that the business
of the country is going to SMASH al
though there are some alleged econo-
mists still alive who look upon the
ms and downs of Wall street as
certain barometer of the business SIT
uation in the nation. And Mr.. Clews'
also explains Interestingly just why
there is considerable. strain on the
money market and gives other SUD
stantiaI reasons for the decline in the
va1ue of securities, which are conVlnc-
ing that slump in Wall street does not
necessarily mean a slump in business
He writes on these matters, as tolloWs:
"while the recent weakness OF the
market has been chiefly due to local
bapDenings, the worlds money sltua-
ton. however, has played an lnpor-
tant mart in being responsible Ior
much of the decline in securlues'
1,hrouehout the world there has been
a steady tightening of money, of which
significant evidence is found in the
high and advancing bank rates aDroau'
r1,t,is Sc because of worldwide develop
,,,a,+s and activity. England ana Ger
r,auv the two leading commerclal I'D
+;o,s of Europe have been enJoylhS
az, unusual period of prosperity Ger
-, bainp more than once on the
,,a,.e,a of excess, as was shown by hei
inobilitv financially to meet the Moroo-
CON incident. England has been 40
inc an enormous foreign trade ior
several wears, and her home lnous
+ries are still taxed to their utmost 10
,,ae+ growing demands of this chardc-
tar In Argentina, in Canada IN Soutll
Africa and in various parts OF inc
world there has been an excepuohai
con, roercial growth, and in the Onlleu
states there has also been a great TOT
1,,rz movement in the creation OF ne"
Industrial enterprises. All these ue
rnands have meant great increase III
tho innuirv for money. the can 1oi
oa,i+a1 has been extraordinarily heaVy'
hence it's owners have been able 10 Sc
cure better rates, and this explains
,,,,,cr or the relative weakness in hlgh-
-rode securities Another factor Is
that confidence at the moment is upon
. higher plane than usual, so that IN
vestors are willing to take the greater
risks of larger returns, which more
,I-or thew are often compelled to seek
i, order to meet the increased cost OF
living. In the United States the
monetary strain has been intenslhed
nv unusual crop demands and the fact /
that money does not go as far at high
nrices as at low prices. Bank reserves
+,,era low. hence the necessity of llQu1-
dation. not to speak of the unusual
,,aar-end requirements, for prepara-
+ions are now in progress to meet the
heavy disbursements after January l.
E,uropean remittances for which are
already about due.
"Outside of Wall street general con-
di+;ons appear satisfactory November
cIearings at all cities in the United
states showed an increase of SO per
cent. while for the eleven months they
show an increase of 90 per cent. Rail-
road earnings for the fourth week OF
November showed a gain of about IL
ner cent. over last year, chiefly no
doubt as the result of a good harvest