The Bridgeport evening farmer. [volume] (Bridgeport, Conn.) 1866-1917, 1916-12-04
HENRY CLEWS
!: WEEKLY LETTER

For several weeks past reactionary
symptoms have been developing in
the stock market. Under the stimn-
lus OF war imitation the situation had
become very one-sided, and the dan
ger of too violent a reversal was be-
coming more and more apparent, I'm
less the brakes could be applied with
discretion. The first check came
from a perfectly natural cause.-the
desire to take profits. A great deal
OF liquidation has already occurred
during the month just closed, insiders
in a position to know being fully
aware that it was advisable to lessen
their holdings before the movement
had reached a climax To this extent
the technical situation has been i'm
proved, especially by this weeks de-
cline
But other influences have also been
at work temporarily favoring a reac-
ton. The first of these was the
general uprising against high prices,
especially in commodities. Dear food
was breeding serious public discon-
tent and paving the way for further
government interference with bust
ness. Again there were signs that
our prosperity wave while not ended is
approaching, if it has not reached, it's
zenith, and that owing to the greatly
increased cost Of doing business there
will be no such profits in 1917 as in
1915. Labor is securing a liberal
proportion of these profits and when
the increased costs of labor, raw ma
terials and distribution are taken into
consideration, the margin of profits, it
will be discovered, has been material
" affected. Moreover, high prices
are already causing lessened con-
sumption and increased production
Thus does natural law in the form Of
supply and demand automatically cor
rect abnormal conditions more sure
ly than any of the fads and nostrums
advanced by those who believe in
government regulation. Natural law
is still superior to all human inter
ference, which usually results in
new set of ills, worse than those at
tempted to displace.
Another cause Of reaction was the
Increased tightness Of money The
expansion of credit has been enorm-
Gus and in spite of the marvellous
growth Of banking resources, the de-
mand for accommodation was grow
ing at a pace that rendered a slowing
down inevitable. The immense vol
urne OF business at abnormal profits.
the great expansion Of credit, the alb
sorption of foreign-he1d securities, the
huge amount Of money invested in
various foreign loans and the de-
nands Of new enterprises at home, all
meant heavy demands upon the local
money market. Lenders and in
vestors are consequently asking and
securing better rates; in other words,
capital, like other things is rising in
supply and owners are enabled to hold
for more advantageous terms.
Still another disappointment was
the unexpected attitude of the Federal
Reserve Board toward the forthcom-
ing issue Of British Treasury notes, in
which investment was discouraged.
Concerning the wisdom Of this pro-
nouncement there was decided divfs-
ion OF opinion. there being no qestion
about the safety OF these Treasury
bills. which are simply unrenewable
short term obligations Of the British
government. The advice to bankers
to go slow and not absorb these Sc
curftfes in too large, amounts may have
been conservative and timely, but
would have done less harm If more
dfscreet1y offered. The natural eff
feet of this announcement, which was
not generally understood. was to de-
press foreign bones. and 1t may tenn
porarf1y interfere with their market
ing In this country, especially in view
OF the new issues anticipated early
next year. Should the market for
these bonds here be affected, it would
also tend to check munftfon orders
and such exports as have depended
upon this method of payment. Thus
TAR during the war this country has
taken over $1,000, 100000 in foreign
bonds. an amount much less than the
annual requirements of American rail-
roads for the same period. These
sums were not loans in the ordinary
sense Of the term, but legitimate pay
ment for munitions, more acceptable
to us than gold or our own securi-
ties. It is not desirable that we
take back all foreign holdings of our
shares, since g. good International mar
ket for them. adds to their stability
In times OF stress at home. Moreover
1t Is we'll for our own sakes to main
tain good market abroad for Ameri-
can securities in case this country ever
meets a crisis in which it might be
obliged to cross the Atlantic for finan-
eia1 assistance.
The. money market continues to
show q hardening tendency, and as a
result funds are flowing more freely
in. this direction from the interior.
Gold imports from Canada were re-
newed. about SIS 100000 having ar
rived with prospects of more follow
Ing. December disbursements were
estimated at nearly $170,000,00O, or
about 20 millions more than a year
ago. This increase is small coTnpar-
ed with the known profits Of many
concerns, but proves that abnormal
earnings are to a large extent being
wisely devoted to reducing fixed OBJ
legations, improving plant, building
extensions and otherwise putting our
Industrial concerns in a stronger posi-
ton for meeting contingencies. jan
uary disbursements will also be heavy,
and a good investment demand for
better grade securities Is to be antici-
paced during the next few weeks. The
disposition to "salt down. recent gains
q becoming more and more evident
among conservative investors
war focfo,r ovor+od 1;+f1o