The Washington herald., 1913-04-12
CHICAGO PRODUCTS,
WHEN the FLOODS
BREAK LOOSE

Copyright. 1878 by O. NJ Keys, New York;
During the time that the great floods
in the Middle West came up, did their
work. and subsidized. 1.-The prices OF stocks
on the New York Stock Exchange ad-
vanced from two to five points. During
this same time estimates were being
published that the loss of life would
range from 1.e0 to 10000. and that the
loss of property would range from $50,
900. 900 to $l00.00O.00O.
This is a peculiar phenomenon, but not
at all uncommon. The prices in Wall
Street discount future events perhaps
better than any other human institution
can discount them; but when the specu-
lative market comes suddenly face to
face with something new and wonderful
and startling, it does not reflect imme-
diately even the obvious result of that
new thing.
For instance. when one morning the
city Of San Francisco was wrecked by
an earthquake, there was only, as It
were, a momentary hesitation In stocks,
and then the market resumed Its course,
swinging upward in the face of state
ments and warnings of the terrific cap
ital loss that had to be made UP by the
financial world at some time or another
in the future. The Titanic disaster illus
trated, to some extent, the same appar-
ent apathy toward current events. ex-
cept that the trading dropped of to
small proportions, because great many
men who had been accustomed to trad
ing heavily, were too much interested
in the news to pay attention to business
When one comes to analyze the facts
in this most recent case, the attitude
Of Wall Street seems to he astounding.
Everybody knows that when there Is
complete destruction of property 1t
amounts to practically the destruction
of that much cash. Its restoration,
therefore, entails a drain to that extent
upon the cash resources Of the nation.
People often argue that II will not really
amount to much, because 1t will give
more work to the steel mills, the lum-
Der mills, and other activities1on ac-
count of the rebuilding of cities that
are destroyed and the replacement of
bridges. railroads, &C., that have been
swept away. Every economist knows
that that Is absolutely a failacy. % far
az the effect upon the immediate future
of the financial world Is concerned. It
is a loss just about as complete as
though some one had stolen that much
money out Of the. business treasures Of
the nation and had thrown it into the
sea.
Sometime somebody has to make good
that loss: 1t may be spread over such
a long period that it will not make any
very great difference in the financial
affairs of the country. 1t might, on the
contrary, be the last straw; just as the
San Francisco earthquake in its
after-effects, undoubtedly had something
to do with the creation of a great
scarcity of money in this country which
eliminated in a panic more than a year
after the earthquake had passed into
history. These are economic and busi-
ness questions the answers to which are
too deep for ordinary observations and
must be left for times own settlement.
One little point comes out most clearly
in the study of financial affairs at this
time 1t has often been asked why 1t is
that the securities of American railways
of the standard classes sell at so much
the securities of public utilities and in
dustrials of good character, or even
mortgages on good real estate.
One very important reason lies in the
fact that bond or a stock based on a
railway system Is perhaps the most
divided sort Of risk that can be dis
covered A railway, by its very nature,
spreads over an enormous area of coun-
try. and only a relatively small part of
1t can be destroyed. at any one time, by
any one catastrophe. A happening like
the Baltimore fire, the San Francisco
earthquake or the Dayton flood can con-
ceivably wipe out local power or street
railway entirely, or wash an Industrial
OF the map It can only injure rela-