Daily capital journal. (Salem, Oregon) 1903-1919, 1916-12-09
Stock Market Speculation
Is Gradually Slowing Up

New York, Dec. 2.-For several
weeks past reactionary symptoms have
been developing in the stock market.
Under the stimulus of war initiation
the situation had become very onesided
and the danger of too violent revers-
al was becoming more and more appar-
ent, unless the brakes could be APP
piled with discretion. The first check
came from perfectly natural cause
the desire to take profits. A great deal
of liquidation has already occurred dur
ing the month Just closed, insiders in a
position to know being fully aware
that it was advisable to lessen their
holdings before the movement reached
climax. To this extent the technical
situation has been improved, especially
by this week S decline.
But other influences have also been
at work temporarily favoring q reaction
The first of these was the general up
rising against high prices, especially in
commodities. Dear food was breeding
serious public discontentment and paw
ing the way for further government in
torference with business. Again there
were signs that our prosperity wave
while not ended is approaching, if it
has not reached, its zenith, and that
owing to the greatly increased cost of
doing business there viii be no such
profits in 1917 as in 1916 Labor is
securing a liberal proportion of these
profits, and when the increased costs
of labor, raw materials and distribu-
ton are taken into consideration, the
margin of profits, it will be discovered,
has been materially affected. More
over, high prices are already causing
lessened consumption and increased
production, Thus does natural law in
the. form of supply and demand auto
matically correct abnormal conditions
more surely than any of the fads and
inostrms advanced by those who be-
lieVe in government regulation Natur-
al law is still superior to all human
interference, which usually aEesults in
new set of ills, worse than those at
tempted to displaGe.
Capital Gets Higher
Another cause of reaction was the
/ increased tightness oil money. The ex-
lpansion of credit has been enormous
and in spite of the marvellous growth
of banking resources, the demand for
accumulation was growing at a pace
that rendered a slowing down newt
able. The immense volume Of business
at abnormal profits, the great eXpan-
/ sion of credit, the absorption of for
eign held securities, the huge amount
of money invested in various foreign
! loans and the demands of new enter,
prises at home, all meant heavy de.
mands upon the local money market
! Lenders and investors are consequent
| ly asking and securing better rates; in
other words, capital, like other things
is rising in value because demand is
overtaking supply and owners are en-
ablcd to hold for more advantageous
terms.
Still another disappointment was the
unexpected attitude of the federal re
serve board toward the Forthcoming is
sue of British treasury notes in which
investment was discouraged Concern
: ing the wisdom of this pronouncement
there was a decided division of opin
! ion, there being no question about the
safety of these treasury bills, which arr
simply unrenewable short term obliga
tions of the British government. The
advice to bankers to go slow and moi
absorb these securities in too large am
cunts may have been conservative an,
| timely, but would have done less harm
| if more discretely offered. The natura
effect of this announcement, which wal
not generally understood, was to de
press foreign bonds, and it may tempo
rarily interfere with their marketing
in this country, especially in view ol
the new issues anticipated early mex
year. Should the market for these
bonds here be affected it would als'
tend to check munition orders and sucl
exports as have depended upon thi
method of payment. Thus far during
the war this country has taken Owe
81, 800 600 600 in foreign bonds, an am
cunt much less than the annual re
quirements of American railroads fo
the same period. These sums were no
loans in the ordinary sense of the term
but legitimate payment for munitions
more acceptable to us than gold or Oul
own securities. 1t is not desirable tha'
we take back all foreign holdings Of oul
shares, since a good international mar
ket for them adds to their stability il
times of stress at home. Moreover, it il
well for our own sakes to maintain Z
good market abroad for American Sc
! curities in case this country ever meet,
crisis in which it might be obliget
TO cross the Atlantic for financial as
| sisfance