Daily capital journal. (Salem, Oregon) 1903-1919, 1916-01-26
Wise Restraint Evident
In Stock Speculation

New York, Jan. 26-The abatement
in stock exchange activity so noticeable
] in December has continued thus far
throughout January. The principal rea.
sons were twofold first, the wise res
traint upon speculation imposed by
bankers in order to avoid dangerous
initiation, and second, the continued
influx of securities from aboard which
fully taxed our absorbing powers. The
necessity for checking hazardous advan-
ces in the war industrials was beyond
dispute, especially in those solely de-
voted TO munitions, whose values had
in some instances risen utterly beyond
reason. Weeks ago the rush of war or.
ders moderated because tthe demand
was largely satisfied by early orders,
and the belligerents themselves are now
equipped for production at much lower
prices than American makers care to
accept. As to the return of American
securities, that has proceeded upon an
increasing scale ever since announce
ment of the British mobilization plan;
each mail steamer bringing large guam
titles of former foreign holdings, gcner-
ally sold on private account. How
long this influx will continue is impossi.
bic to determine; but the control of
selling on British account is so highly
concentrated that the market for Am
ericans will be thoroughly stabilized,
and no sacrifices need be expected by
those in control of British holdings.
The most significant result of this
movement will be the permanent de-
cline of London as market for Am.
erican shares, for the bulk of those re-
turned will never go back. The United
States will, in all probability, pcrman,
emily retain the railroad bonds and
stocks purchased from Great Britain,
Germany and Holland, also large por-
tion of the industrials which are being
returned. This does not mean that fore.
ign capital will permanently desert the
United States, but it will be long
time before Europe has money to spare
for investment here, and it is cues.
tionable if it will ever come with the
same freedom as in the past. As a re.
suit, much of the interest and divi.
dends formerly sent abroad will stay
here, and be utilized for home develop.
ment. 1t should be borne in mind that
this homeward movement of American
investments occurs at a time when we
are turning our attention to the oppor-
tunities abroad. We are displaying
great anxiety for larger foreign trade
and to secure it we must be prepared
TO buy as well as sell, to lend and in
vest our funds abroad much more freely
than we ever contemplated before. The
/ united States has met q turning point
in its career, the importance of which
is not yet sufficiently appreciated by
American investors. This turn in our
foreign development was bound under
any circumstances to occur in due
course of time, but the war materially
hastened the date and greatly enlarged
the opportunity. So, if New York de-
sires to raise its prestige as a foreign
financial center it must prepare to take
more active interest in foreign in
Vestments, in foreign affairs and in
cultivating foreign trade; not by force
or antagonism, but by creating friendly
and mutually profitable interchanges.
Hesitation in the stock market was
further encouraged by threatened diff.
tlcultles with Mexico and the fear of
, prolongation of the war, and some dis
turbing discussion may also be precip.
} itated should England declare a block
= ade.
Another factor which prevents a full
revival Of confidence is the uncertainty
OF the action of congress in regard to
Mexico, preparedness, public revenue,
shipping and other Legislation. So far,
however, it must be acknowledged that
congress has kept remarkably cool, con.
sidering the intensity of present day
problems; and up to the present time
the administration has experienced lit
Tie embarrassment from congressional
opposition.
General business continues fairly ac.
tive and satisfactory. The revival
which began in October and November
still continues. 1t is illustrated by the
extraordinary activity in the steel in.
dustry, which seems unchecked by the
prolonged rise in prices. Concerning
the universal prosperity of this indust-
ry, it is unnecessary to repeat familiar
facts. Such of the regular industries
as are in the way Of securing war con
tracts, continue making large profits
and speculation in these shows con-
siderable activity. 'rIle railroad situa-
tiOn is steadily improving in various
respects, and the freight embargo is in
fair way of being broken. Forty.six
roads reported earnings of $s4,O00,O00
in December, an increase Of $20,000000
over last year. The disposition to af-
ford the railroads fair play on the part