Daily capital journal. (Salem, Oregon) 1903-1919, 1916-05-20

| tHdt lAt great cIAnlh luIOuSu VINCE
W" are now passing would not eEd
without some disturbance at home
These fears had their inception in the
war and our relations with Germany
and Mexico and certainly had good
foundation. As regards Germany, tae
outlook mas been much improved by
the frank admission of responsibility
for sinking the Sussex and the prom
Use of reparatiOn. The promises of
Germany to also modify her subma-
rine policy in accordance with the
wishes of the American government are
also encouraging, and if fulfilled
should insure friendly relations between
the two countries. The situation was
immensely clarified by President Will
son s decisive note last week which was
/ practically an ultimatum. There is
every reason to hope that Germany will
avoid rupture with the United States
since we are really her best remaining
friend among the neutral powers and
can be. of valuable service when peace
negotiations actually begin The de-
| sire of Germany to end the war is un-
questionable. Peace feelers have been
repeatedly put forward, and the be-
| lief in its curly coming strengthens
daily. The greatest hindrance to peace
now is the strong inclination of the
allies to push the war to final con-
clusion. The final struggle between
the armies of the central powers and
the entente is probably yet to come; as
yet neither side has conquered, and no
satisfactory or LISTING peace can be
established until one side or the other
has been forced into submission. Thus
while peace is in the air, and while
the mad thirst for war has been super
seded by sane longing for peace, there
is no immediate prospect as yet for any
such conclusion. The war promises to
continue for some time yet, unless some
thing happens whica will compel con-
cessions on both sides. Meanwhile.
peace talk will grow, and all rational
efforts to that end should be encour-
eyed for the good of the belligerents
in particular and the benefit of man
kind in general. The Mexican outlook
is far from satisfactory, and the dan
ger of our becoming more deeply in
yOlved in that quarter is constantly
increasing. We are certainly threat
ened with a long and costly difficulty
the outcome of which cannot at this
time be foreseen.
How long is the feverish business ac.
tiyity of the last few months to con
tinue' During the first four months
of the current year, bank clearings
reached the tremendous total of $78,-
000, 100000, or nearly As per cent more
than the same time last year, Making
allowance for the rise in values-and
an increase of nearly 60 per cent in
New York 3 clearings which were more
than nalf the above total and swollen
by unusual financial operations-it isl
evident there has been very consid- |
cradle inerels in the volume of Amer
lean business. Perhaps railroad earn
ings are better indication in this re-
spect than bank clearings. The rail
roads have earned about 20 per cent
more so far this year than a year ago, !
and the gain is only partly due to bet
ter rates, traffic having made most en-
gains Exports for the last
nine months were about so per cent
ahead in value Of last year and i'm
ports showed an increase. of about 20
per cent over year ago. New cnar-
ters OF concerns with not less than q
million capital amounted to over ST.
900 900, 900, or five times what they |
were year ago. Such evidences Of ex'
activity could be multi
piled indefinitely, and encouraging 1s
they may be they unavoidably raise
the question, when viii halt be due
Optimism continues on the flood tide,
and there are no signs Of weakness in /
the industrial fabric; albeit there are
certain changes in tendencies and con
ditions which should not escape notice.
First, commodity prices have risen to
/ point that not infrequently arrests
new business The index number of
the London Economist stood at 4,l9O
on April 3rd, compared with 3.3337 a |
year ago; rise of about 25 per cent in
V vllues, chiefly in minerals, timber and
beef. The rise in American markets
was probably not quite so extreme as
this, but it has been very considerable
and is now exerting its effect upon
credit The great expansion in loan
ing capacity of the banks brought
about bv large gold imports, the new
bankinu law and other circumstances,
especially The war, produced the much
expected initiation. Bankers are now
scrutini2ing loans more carefully since
credits have been greatly extended and
much larger sums are required to fl
nance a given amount Of merchandise
than formerly With commodities at
such dizzy heights and exposed to
reaction, bankers are justified in OK
ercising greater discrimination. Fur
ther, the cost Of doing business has
been tremendously enhanced by the |
rise in raw materials and the elevation
of wages, Such developments mean
that the next twelve months will not
see a repetition Of the bulge in profits
of the last twelve months. Again, for
eign munition orders, which did much |
to swell both profits and exports, may !
be repeated, but on a decidedly small |
er scale with the prospect of almost
vanishing when peace comes. In many
cases new enterprises have been de,
fcrred until costs Of building declines. I
Not few concerns, notably in the
steel industry, are sold ahead so com.
pletely as to be unable TO take fur
ther orders, or at least until the out. !
look for raw materials is more set |
tied While the prospect for peace, as
said above, is not vet in sight, il isl
certain that cessation of |
hostilities is not very far distant, |
when both domestic md foreign trade |
will be demobiliged or readiusted upon
a peace basis. IL would be decidedly |
erroneous to eKpeet tO return IN TIM