New Britain herald., 1916-01-08
INFLATED STOCKS
 DANGEROUS GAME
Must Be Closely Watched-Home
 Industries Thrive
Especial to the Herald.)

1 ficting tendencies. Our home condi- I tiOns are exceedingly satisfactory and 1 thoroughly justify req easonable optim- 1 ism. If we had nothing further to 1 calculate upon than the effects of a good harvest, a satisfactory bank posi- 1 ton and substantial recovery in do- mestic trade, the outlook would be comparatively clear and even the doubts of a presidential year would
 not be overwhelmingly serious. But the great conflict across the sea is still raging and remains the one great dominating factor, injecting a series of grave uncertainties which unavoid- ably modify all other expectations. It is automatic that war invariably
 creates new activities, high prices and
 general imitation. We are in the midst
 Of just such movements as these at
 the present time, and they create a
 sense of prosperity which is not only
 transient but somewhat misleading
 and full of pitfalls and dangers
 These dangers must be assiduously
 watched, if we are to escape them or
 minimize their penalties Imitation
 is really by far the greatest of these
 hazards. and a rule is based upon
 either unsound expansion of credit or
 aggerated profits. Credit conditions in the United States already 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 in f1ation has been the bu1ging profits of a few industrials whose earnings were enormously swollen by highly profit able war contracts. Fortunately, this danger seems to have been fully realized, and strong efforts have been made to restrain any further un- wholesome speculation in these spe- cialties. When the facts are taken into consideration, it is remarkable that a 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.
 Gary's Warning.
 Judge Gary recently issued a time ly note of warning which was direct ed in another direction than war in dustrials. and that was our foreign trade. Here indeed is a field in which prudence and thoughtfulness will be greatly needed. The war has pro- foundly disturbed our foreign com IllGICe, IL lnIellSely III 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 gai:ed from other countries during the war. Germany will undoubtedly make a heroic strug- gle for recovery, but her ability to ex- port will be handicapped for an in definite period by heavy taxation, by the loss of many skilled hands and by general imitation within her own territory. France and Belgium will be chiefly occupied with reconstruc- tion. Great Britain will be better prepared for foreign trade than any other country, unless it be ourselves The chances are then that for some time after peace is declared we will be able to hold our own in the export trade, especially if our bankers and industrial leaders succeed in prevent ing domestic imitation, which would close the door upon exports and in vte serious home Arrangements. Of course, when peace does come, our foreign trade will have to go through period of adjustment, but that should be less violent than what accompanied the opening of the war, and will be more easily met for the l reason that the crisis will be over and all energies will be bent toward re- To a certain extent. 1 therefore, Judge Gary is unduly pessi- l mistic, and does not take into suf l ficient consideration the growing abil- l ity of the United States to meet for ] eign competition. Our industries are 1 no longer in a state of infancy, and 1 the corporation over which Judge | Gary presides happens to be one of i the greatest industrial giants the 1 world has ever seen.
 Congress Rcassembles.
 Congress has reassembled, and with 1 it comes the somewhat enhanced risk 1 of excitement in our foreign relations. Unless undue pressure is placed upon the administration, it would look aS if our government will be able to maintain friendly relations with all the belligerents. Our disputes with | Germany and Austria are in a fair way of being adjusted, and it is to be hoped that the hands of the president | will not be forced by an unwise or nasty action in congress. The Lusi- | tania incident appears to be nearing a So, too, are our other ! with Austria and Germany. | In view of the fact the principle of our contentious have been acknowledged and agreed to as a basis of settlement, similar occurrences, which may be many before the war ends, should not cause serious alarm as we now have 3 precedent for their settlement angry discussions relating | to such matters should now be n1odi- fled in tone at least. We must re- nenlter what General Sherman said during our own Civil war that War is He'll"
 Home Conditions.
 Business conditions at home are satisfactory The trade re- viVal. Whicc began after the harvest