The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-02-09

currency System can mako a vast COntfl-
button TO the accommodation Of All eH-
tended position In TRADE and industry and
help TO support IN expansion OF credit
and capital engagements over the whole
world. Nevertheless. emphasis deserves
to be laid on tho Immediate idlences Of
money rather than on !ts ease. on the
recent withdrawal of much OF Il from en-
ployment rather than on It's increased
supply
TASTY expansion of general bushes. OF
values and prices can quickly absorb
available funds and bring on again TIN
strata which has Just been relieved.
vast amount of the money now in Sigh
Is not liquid capital which can be locked
up by Investment. II Is money which Will
DO needed by business when Il turns from
slackness and contraction TO activity and
| expansion 1t Is very largely money
which has been rendered idle by tho
forced depression OF commerce and manu-
featuring. 1t Is money which is, % to
say. eaiTnarked for business purposes
whenever business requires IL. An awk-
/ ward juncturc would be prec.pisated IL
business should ask for II only TO find
that much OF Il had been tied ZIP IN opera
tons in tho capital market represented
| by transactions In securities. new and old.
Accordingly it would be OF much impor-
/ tance to know whether tho current alb
sorption OF securities a. rising prices rep
resents chiefly purchases by their ultimate
! consumers, that IL. by investors OF by
| merchants IN securities who buy them
only 70 sell again and are taking advan-
| tage Of the foodtide Of credits to borrow
| tho funds with which TO carry the securi-
| ties until sold.
| This classihcA alton OF merchants In Sc
| curities Is Intended to include financial
| Institutions which more or less commonly
make temporary employment Of Idle funds
In their possession by temporary invest
| ment In bonds. notes and stocks. relying
| on their profitable disposition whenever
| the requirements for money Increase and
| earning all interest or dividend return In
! the meanwhile 1t IL this practice, by the
way, which has more than once led to
| complications because IL involves de-
parture from tho sound theory that bank
| Ing institutions should not finance bust
ness needs OF fixed capital sort 1t
| tends TO make banks investors In general
business instead OF lenders TO II, and II
leads II an ENCOURAGEMENT or trade and
industry to seek 10 do too much business
| for the capital actually owned by mer-
| camille and manufacturing concerns or
| supplied TO them on long term agreements
to which the legitimate grant OF credit
| could not be properly stretched. The re-
| suit IL that the quantity OF securities
| owned by banking institutions has only
| margin OF fiexlbil!ty. The permanent
| amount OF them Is growing all the time
| and does not represent such readily con-
| vertible assets as, strictly speaking.
should be possessed by those whose func-
| ton II is TO purvey temporary credit for
| the accommodation OF business Ia moving
goods and commodities Into consumption.
The very comfortable and encouraging
| fact OF the whole nLancial situation e.
| that a difficult and dangerous corner has
| been turned IN money. but how long Is
the lane which lies ahead OF business ard
what kind Of going is to be encountered
| In the near future are not by any means
| certain. Moving with much the same
| unison as has characterized them for
several years past. the principal stock
\ markets of the world have, save toward
| the end OF last week. been displaying
pronounced strength on expanded deal
| ings As in the case OF bonds. there has
been substantial public absorption OF
| stocks. but II seems to be true both of
| bonds and stocks that much %: their
| strength and activity have been owing
\ To the transactions OF professional deal
ers. Strength and activity can never be
! loag sustained on a basis Of professional
| ism and while the shrewd an,iclpatiuns
| or the professional class usually give
security markets start IN the right
| direction. that is. In the direction o. the
| underlying trend OF values. II often turns
| OUT that they have caused the market 10
make what looks Tor u while like {, false
start.
| Ii 1914 should have record OF more
! than one false start In the direction OF an
| improvement anticlpatory of general bust
| ness recovery and renewed economic
progress the record would not be out OF
| line with the previous initial years OF Il
new constructive epoch. II 1914 should
contain more or less disappointment Of
the most hopeful expectations lately en-
tertain.d. just as 1913 disappointed the
gloomy apprchensions OF extreme pessl-
~ ANr y 500 - ~
there was no occasion IN the early part
! u the present year for u cautious nlodi-
1catlon OF sanguina views. Such a period
as that which seemed 70 terminate last
year does not usually evolve instantly and
completely into Hu era OF broad business
enterprise. Usually Their. h,,s TO be an In
| 'erval OF housekeeping. OF further liqui-
! latiun. The time for Conyulslve llquids-
\ tion has passed. but this may be followed
Icy an aftermath OF rather tedious occu-
patton with the removal OF wreckage and
| iebris scattered through the business and
financial world. There We're some large
| foreign failures in the las. few days
which testified tn the damage that flnan-
| claI storm had done, and in most coun-
l tries, not excepting our OWL. n process OF
| rather painful debt making Is still under
| way,
| II IL OF paramount Importance that the
| long range vista seems to 10 4 picture
| OF construction. not OF destruction, COM
| pared with the seni-deCade since the last
| ;reat panic disturbance IN our own land
l AZ Wall Street would put IL. II man who
! bought securities impulsively during the
! last hye years whenever the prospect
| seemed fair was apt TO md that he had
| bought into Il decline. The present out
| ouk - that the man who parts readily
| ~ith securities during the next five years
| when circumstances look dubious Is more
| likely 70 lind that he has sod into an I'D
| vance. Il has 10 be taken into conside ri-
| ,ion, however in contemplating the near
1 by prospect that depression and recovery
| merge into each other as "a rule without
| differences distinctly apparent until after
ward. There are often close resenblances
between the last stages OF destructive
period and the early stages OF CON
structye period, ana the tablishinent
| OF prosperous general activity cannot be
artihcialiy FASTENED.
There was. last week. further lower
| Ing Of credit rates, domestic and foreign.
Commercial paper was bought hero at
| SO. per cent, for six months and the Ber-
| lin bank rate went to 4 per cent, while
official discounts were again reduced at
Vienna. Stockholm and Copenhagen. but
something more Is needed to accomplish
the establishment Of prosperity than
OH rndi TIC MI nd tna III, %.