Daily capital journal. (Salem, Oregon) 1903-1919, 1916-01-03

especially to the British Empire, which
last month absorbed nearly one,half of
our exports. Europe will draw upon
US heavily for food supplies, irrespec-
tive of war or peace, for some time to
come; but, as to munitions it is. very
possible that the zenith in the matter
of orders has been passed so far as the
United States is concerned. Additional
contracts will of course be- received
but from now on their, volume, may he'
expected to decline; since the allies are
better prepared to supply themselves,
and repeat orders coming here will have
to meet the competition of foreign
plants which are turning out explosives
and guns at greatly reduced cost.
Henceforth the big profits on munition
contracts may have to be sharply cut,
and it is fortunate that the early orders
were usually accepted upon basis cove
ering not only liberal profits, but en-
tire cost of plant }and machinery In
many cases the latter could be scrapped
and the companies left far better
financially than before the war. So if
speculation be kept within rational
bounds, there is little danger Of diff.
ficulty from reduction of this busi
ness.
The arrangement Of our foreign
trade, however, imposes one restraint
upon speculation which cannot be ignor-
ed. We must continue. ready to give
credit and take back our securities in
payment of the surplus merchandise we
sell abroad. Great Britain s mobiliza-
tion of her American securities has rem
dered such action both safe and easy.
By thus marshallihg This item of her
resources she has tremendously enhanc.
ed her credit in the United States and
put within her reach the only collateral
that we care to accept. One important
advantage from this operations is the
successful stabilizing of foreign ex.
change, which removes all doubt. as TO
Great Britain Is ability to finance her
share of the war and with it the most
serious uncertainty facing this market.
AS an outcome Of this operation we
must expect a firner money market
should business activity in the United
States continue upon the anticipated
scale, or should Great Britain apply for
further credits in this country, which is
probable since that was one of the OBJ.
iects of the financial mobilization re-.
ferred to. Another effect will be the
continued sale Of British holdings of
American stocks and bonds in this mar.
ket. During the last month or two these
sales have been very heavy and have
been a potent factor in offsettng the
international trade balance. Immense
sums in securities have been returned to
this market since the war and more are
coming, which shows remarkable invest.
ing power on part Of the United Stntess
On this account the new domestic flota.
tions have been smaller than would 9th.
erwise have been the case. The January
investment demand is close at hand and
II remains to be seen how far IL has
been anticipated. The January disburse.
ments are estimated at over 100000,
900, an increase Of more than 100000.
900 over q year ago. Congress has ad.
iourned over the holidays, and thus far
has shown very conservative tendencies.
The presidential campaign however, has
already begun and more or less excite.
ment is almost inevitable. AS a, rule no
important legislation is attempted III
the last year Of q presidential term and
the effect Of such campaigns is usually
out Of all proportion to the excitement
created The chief issue Of this cam
paign however, promises to be prepared.
ness on which q hot contest is in pros.
pect Other issues may also he formu-
lated as q result Of the war y frt.,.
The year closes with trade in general.
ly good condition. There Is no abate.
mcnt of activity in thocsto industry
and the railroad outlook Is better than
for several years, not only as TO traffic
but also as to the attitude aof public
opinions The big trunk lines are report.
ing large earnings both gross and nei
aud their chief problem now Ia to re.
move the embargo on traffic caused by
the congestion of'export freight at The
EASTERN seaports. Our second note ia
Austria though firm In rs demands Il
pacific In tone and should pave the way
FOR a satisfactory final adjustm
Needless 10 say q lessening or remdva
Of international friction would have u
stimulating influence upon the stocl
market. The collaps- OF Villa In Mexi
co is also d favorable factor, and remty
es long threatened disturbance. Ash
result, an early revival In Mexican en-
terprises may be looked forwdrd TO.
HENRY CLEWs. !.