Daily capital journal. (Salem, Oregon) 1903-1919, 1916-12-16

Jus WaAh ufoh SuA boHAAAH iSctuAOcc
the supply of loanable funds have been
issued in the United States to the ex-
tent of nearly $l,400,0Oo,OOo while the
new capital applications reported by do
nestle railroad and industrial corpora
tions aggregated 100000 600, total
of $3,450, 900 600, or about $3.50, ,000, 900
more than in the first eleven months of
1915. These figures cover only the
principal states and do not include the
loans put out by municipalities or the
states, nor the innumerable issues by
smaller concerns, Of which it is impos-,
sible to keep close track, nor the mil
lions of repurchased foreign holdings OF
Americans. In addition to these de.
mands upon our supply of capital, there
has been the enormous drain upon bank.
ing resources arising from the extraor-
dinary activity to trade and the high
prices of commodities. The consequence
of these demands is now being felt in a
diminished supply of loanable funds and
the resultant possibility of too large an
expansion of credit. 1t was these condi
tions that doubtless induced the federal
reserve board to issue notice of eau.
tion against too free absorption by
banks of foreign loans and notes; and
the situation was further aggravated
by the low condition OF bank reserves
at New York, the total surplus reserve
of the New York Clearing House bank a
week ago being only Sal 100000 or
$13S,000, 900 less than q year ago. This
decline was partly due to the absorption
nf nv ha far4a 10,
various parts of the country, these in.
stitutions holding $598i000,000 of the
precious metal December /, an increase
in IL months Of over $10O,000,0O0. The
clearing house banks held $326,000 900
in specie, an increase Of $63, ,0000 900
compared with year ago; which loans
stood at $3,370,000O00, or $230,0OO 900
more than last year at the same date.
A Wise Move.
The wisdom of preventing a too rapid
absorption of foreign obligations is not
therefore questioned; although, on the
other hand, there was no indication Of
excess in this direction as yet, especial
ly as the security was prime and the
placing of British treasury notes would
have proved a protection of our own
gold supply in event of smaller exports
and larger imports making it possible
for Europe to recall our gold later on.
If caution were needed anywhere, it
was in the flotation Of a number of in
dustrials of questionable character,
especially those based upon present alb.
normal profits which cannot be perman.
emily sustained. Eveutally losses from
such ventures will far exceed those upon
best government issues; some of which
will later on provide good profits at
present prices. Another complication in
the monetary situation was the neces-
sity Of the British government main
tanning sterling exchange. Great Bri.
tain is particularly interested in pre-
venting dear money at New York, and
to aid in this direction another consider.
able amount of gold has4been engaged
for this market of which over $35,000,,
600 has already arrived from Canada
During the latter portion of the week
the money market showed an easier ten.
| dency owing to gold imports and par
tial return of funds from the interior.
Message Reassuring.
Congress opened on Monday and the
president s message proved decidedly re
assuring. His appeal for justice to the
railroads will receive the approval of all
falr-minded people. His declared resist
ance to the demands of small BODY OF
organized labor who would paralyze the
whole railroad system of the country tC
secure their wants was also in the line
OF safe and sane policy. His recon
mendatlon of an enlargement of the in
terstate commerce commission was wise
and necessary. The compulsory investi
CATION of railway labor strikes, which
has worked well in Canada, is also a ster
in the right direction. So, too, was his
support of the Webb bill, designed tC
facilitate American exports. Happily
the president avoided any recommenda
tion regarding the high cost of living
which is a problem congress intends t(
investigate, although legislation can dt
little toward solving what is really &
worldwide economic problem Deal
food, clothing and shelter are almost en-
tirely due to the war. Supplies have
decreased; waste has increased Their,
is no cure for such conditions excep
increased production and economy
which results will naturally follow higl
prices quicker than any artificial regu
lation or legislation. Speculation may
IN some instances have aggravated thu
situation, but in other cases it affords
relief by carrying over the surplus Of
one period to meet the famine of an
other. Extremes Of speculation or hold
up of supplies should be restrained, bu
an actual suppression of speculation
whether for the rise or the fall, woulC
result in more harm than good. Their,
is no more efficient stabilizer of yalue
than reasonable and intelligent specula
tion.
High Cost of Living.
The increased cost of living is alread,
becoming subject of serious agitation
end public investigations are to be an
ticipated. The great danger is that con
gress may be stampeded into some sor
OF rash legislation. All sorts of nos
trums will be proposed and pushed hard
The present drift is toward more ant
more government interference, thus in
ereasing such dangers. Wage advance
are numerous, and will do much to al
leviate the situation; but more or les
unrest must be endured until the natiOl
has adjusted itself to the high level O
prices, which is worldwide as a result O
the war and likely to be more or les
permanent. Some reaction is to be ex
peeted when peace comes; but scarcit'
of materials and labor coupled with ad