The Washington herald., 1915-04-16
Causes of Wall Street Optimism.

Without entering upon any detailed examina-
ton of the subject, may point out few sources
from which, perhaps, the judgment of the present
stock market that has dictated higher prices for
securities has been drawn One OF these is the
fundamental if generally unappreciated fact that
during prolonged period of hard times great
country accumuates riches. This is because hard
times are period of general economy. Lavish
expenditure stops. There is cessation OF the
production OF things not absolutely necessary.
Railroad companies find out that they must and
can cut down their operating expenses. reign
of general saving takes place, and when this rule
has been in force for as long a period as 1t
lately has been in this country the country as
whole accumulates by saving vast store of poten-
tial capital which is none the less real because it
is merely potential and not active Some day
something happens to tap the hidden store of
wealth that has been hived and the golden stream
pours forth. Its force is all the greater because
economic wants that have long been suspended
are found to require repenishment in an extra
ordinary degree When the process OF rcplen-
ishment is at work under full Roadway, there IS
said to be a boom in the country. Later on the
boom eliminates in another period Of extrava>
gance and lavish expenditure similar to that which
preceded the hard tunes.
In the second place, after a prolonged period
OF depression for internal causes, eliminating per-
haps in some such episode as the unexpected
breaking out of war in Europe last summer which
threw the finances of the world into dsarrangc-
mcnt and almost despair it is usually discovered
that while the depression in prices that resulted
was not unnatural, all things considered, yet that
it was carried to an unwarranted degree. SO far
tI,o M he | 'uited
a few months OF actual demonstrated that
the low prices OF securities recorded last
were due more to fright than any other cause.
Liquidation OF American stocks and bonds had,
when the war broke out, already been carried
pretty far for justitiablc home The war
caused further fright and when the fright sub
sided it was found that the prices OF many stand
ard American securities were level which
really represented a valuation OF about so cents
on the dollar. With this discovery and the further
discovery that business in the United States in
certain lines was really being stimulated by the
war instead OF depressed by it, recovery in prices
vas as inevitable as gravitation.
Now thirdly it is a curious fact that a recovery
IN general business after OF these prolonged
periods OF depression usually starts IN ways that
no orc ever dreamed OF. Who imagined that the
war in Europe would turn d yearly trade balance
that was actually against this country TO tho
largest trade balance in favor OF country that
has ever been seem that the economic prestige OF
New York would almost in a single night become
greater than that OF any other financial capital OF
The world; that the cotton industry which at the
beginning OF the MAT was somewhere near the
! nadir point. with raw cotton selling below the
cost Of production would rise by leaps and bounds
and that imports OF gold into the country would
J. Ill. a. L..
Again. the situation has been helped, VIC
have previously taken occasion to point ont, by
the evidence from every side of a recession OF
radicalisn. The last testimony the point is
that given by the result OF the mayoralty election
in Chicago. The campaign was fought there
on an appeal 10 the voters by the Republican
candidate from the FULL dinner pail" point of view
and the demand that the city raise its voice in the
great chorus that will be heard in its fullness in
the Presidential campaign next year In great
| Democratic city the Republican candidate was
elected by overwhelming majority. Finally
! time has demonstrated the tremendous stimulus
given to business confidence by Federal
reserve banking law. The bankers and cuisines,
men OF the country feel and know that new
financial machine OF power which is almost i'm
possible 10 calculate or even to cNaggerate has
been given to them to use The financial resources
OF the United States at the present moment
in the same condition that the farms OF the coun
try were when the improved harvester and reaper
was set to work upon them. The adverse effect
upon our industries OF the Underwood tariff re
mains to be dealt with, but it is becoming clear
on this point that business men believe thai
the blow given by the great war to the force o.
| European business competition will hold thi:
competition in check throughout this year ant
/ tho next, or until our unfortunate Underwood
tariff can be changed, as it surely will be within
a short time.
! Wall Street is the place where the first ray:
OF this sunlight have begun TO fall.