Daily capital journal. (Salem, Oregon) 1903-1919, 1916-01-12
Conflicting Tendencies Mark
Opening of Year, Says Cle,Os

New York, Jan. Especial. THE
year opens with an extraordinary group
of conflicting tendencies. Our home
conditions are exceedingly satisfactory
and thoroughly justify reasonable opti
mism If we had nothing further to
calculate upon than the effects Of a
good harvest, a satisfactory bank posi-
tion and substantial recovery in do
nestle trade, the outlook would be com
paratiyely clear and even the doubts of
presidentian year would not be over
whelmingly serious. But the great con-
flict across the sea is still raging and
remains the one great dominating fac
tor, injecting series of grave uncer-
tainties which unavoidably modify all
other expectations.
1t is automatic that war invariably
creates new activities, high prices and
general initiation. We are in the midst
of just such movements as these at tine
present fine, and tncy create a sense
of prosperity which is not only transi-
ent but somewhat misleading and full
of pitfalls and dangers. These dangers
must be assiduously watched, if we are
to escape them or minimize their penal
ties. Initiation is really by far the
the greatest Of these hazards, and as a
rule is based upon either unsound eX-
pansion of credit or exaggerated profits
Credit conditions in the United States
alredy show an enormous expansion,
though so far the danger limit appears
to have been avoided because our
bankers have been fully alive to the
risks in this direction The chief source
of initiation has been the bulging profits
of few industries whose earnings were
enormously swollen by highly profitable
war contracts. Fortunately, this dan.
ger seems to have been fully realized,
and strong efforts have been made to
restrain any further unwholesome spec
ulation in these specialties. When the
facts are taken into consideration, it is
remarkable that serious collapse has
been so successfully averted, and this
must be credited to the wide margin
of safety with which many of these war
order enterprises have been financed
Judge Gary recently issued q timely
note of warning which was directed in
another direction than war industrials,
and that was our foreign trade. Here
indeed is a field in which prudence and
thoughtfulness will be greatly needed.
The war has profoundly disturbed our
foreign commerce, stimulating il intcns.
ly in ways never anticipated. When
peace comes, if not before, some Of this
activity will cease. There will be no
more munition orders, and the problem
then will be how far can we retain the
regular trade gaineo from other coun.
tries during the war. Germany will un-
doubtedly make a heroic struggle for re.
covery, but her ability to export will be
handicapped for an indefinite period by
heavy taxation, by the loss of many
skilled hands and by general initiation
within her own territory. France and
/ Belgium will be chiefly occupied with
reconstruction. Great Britain win be
better prepared for foreign trade than
any other country, unless il be 0ursel..
YES. The chances are then that for
some time after peace is declared we
will be able to hold our own in the OK.
port trade, especially if our bankers
and industrial leaders succeed in pre-
venting domestic initiation, which would
close the door upon exports and invite
serious home arrangements. OF course
when peace does come, our foreign trade
win have TO 60 through another period
Of adjustment, but that should be les,
violent than what accompanied the op
ening Of the war, and will be more cas-
lily met for the reason that the crisil
will be over and all energies will bt
bent toward reconstruction. To Ger
tain. extent therefore Judge Gary il
unduly pessimistic, and does not tax,
into sufficient consideration the grow
ing ability Of the United States Il
meet foreign competition. Our indust
ries are no longer in a state Of infancy
and the corporation over which Judg,
Gary presides happens TO be one Of th,
greatest industrial giants the world ha
ever seen
Congress has reasscmbled and will
il comes the somewhat enhanced risl
Of excitement in our foreign relations
; Unless undue pressure IA placed upoi
the administration, II would look as /
our government will be able 10 main
tain friendly relations with all the be
ligcrents. Our disputes with German
and Austria are in fair way Of bcin
adjusted. and IL is hoped that th
hands Of the president win not b
} forced by any unwise or hastv actio
in congress. The Iusitnnia incident m
pears TO be nearing settlement. 81
too, are our other differences with Avs
trin and Germany. In view Of the fac
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