New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1917-10-06
Henry Cleu's
Weekly Letter
Especial to the Herald)


Liberty bond offering, has this week
Influenced still further depression in
the general price level of securities
An added influence appears in the
form of the final steps in the enact
ment of the new war revenue bill
through which there has developed a
more general and popular apprecia-
ton of the financial burdens that must
be borne in order to assure a. prompt
and victorious settlement of the war
With the large taxes provided in the
new law upon excess profits and upon
war profits, and with the curtail-
ment OF the profits which necessarily
must accompany the governments
plan for price fixing, it Is desirable to
recognize frankly that the era of re-
markable revenues our great indus
trial plants enjoyed before we became
a participant in the war is not likely
to indefinitely continue. Neverthe-
less our manufacturers are assured of
a steady business, sufficient to keep
their plants running under full pres
T,1'~a and at prices that still are profit
able.
The establishment Of fixed prices
contains of course the possibility of
1t means that domestic orders-those
of a non-war character-now may be
executed Construction in various
directions may proceed on a reason-
ably safe basis. That is to say, indus
trial and other enterprises which pru-
IDENTIFY declined to undertake new ex-
tensions when it was reasonably GER
tain that cheaper basic materials
i1oI> 10 r~,i11 80
they can proceed without this antici-
pated loss of capital. But with the
present high scales of wages in in
dustrial circles, and with the ad-
mitted prosperity in the agricultural
sections, theere seems no reason to
believe that we are to experience in
the immediate future any substantial
reaction in domestic business An
other phase Of the price-f1xing prob
lem concerns the railways, which are
among the largest consumers of many
of the articles upon which the gov
eminent has established arbitrary
figures. The reduction in the price of
coal must, for instance, involve a sub
stantial curtailment in the operating
costs of the transportation lines. So,
too, the reduction in quotations for
copper and, especially for iron and
steel products, of which the railroads
are, as is well known, by far the
largest domestic purchasers. It is es-
timated, for example, that in the year
1913 the purchases of iron and steel
for account Of our own government
and for that of our Allies will not
much exceed 100000 tons. This will
leave about 100000 tons for home
nf1nn Inv 1Iyinc o.
which may be placed on the same
terms as are available to the govern
ment.
This situation applies in measurable
degree also to copper. Hence the re-
duction in prices of materials can
we'll provide greater confidence on
the part of important interests iden-
tilted with the development of home
enterprises. Within the last few
weeks especially there has been
noticeable reduction in the creation
of new enterprises. In September the
total interpretations in the Eastern
states covering concerns with an in
dividual capitalization of $1,0O0,OOO
or more aggregated only 1902, 100000,
which compares with $382,1OO,0OO in
August and s416.35o,ooo in July
The general money situation may
be regarded as among the most unsat-
isfactory Of the. immediate Influences
Bank officers at this center are CO.
operating with the Federal Reserve
bank to prevent distressing strain
during the period that subscriptions
to the new war loan are being filed.
A special committee comprising these
bank officers has received pledges
that very large sum will be provid-
ed (of which $2OO,00O,000 is immed-
lately available) to be loaned out at
the committees discretion as needed
for the purpose of stabilizing the
money position. 1t is expected that
by this means the credit resources of
made available as needed. The an
nouncement of the committees plans
which was published early in the
week was responsible ffr an easier po-
sition for demand loans. 1t is, in my
opinion, however. not an altogether
adequate form of relief. If funds
should be made available for fixed
maturities, If time money should be
freely obtainable for periods of three
months at say, about per cent this
would constitute a more direct source
of relief. It would carry over to the
New Year, thus enabling the success
full negotiation of a period when the
strain, even in more nearly normal
times, is usually such as to suggest
caution.
The almost uninterrupted decline in
quotations appears to be producing
some degree of unnecessary nervous
ness. While our government is re-
quiring such large sums for war pur-
poses other financial requirements
must not unnaturally, be restricted
correspondingly. Washington has
first call upon our financial facilities
as we'll as upon the products Of our
agricultural, Industrial and other
activities. That such is the case no
one will complain in view of the great