New Britain herald., 1917-09-01
Financial
Henry Cleu,s Weekly Letter
Especial to the IIerald)

New York, Sept. l. 1.-Liquidation in
 the stock market has now continued
 with slight interruption for several
 weeks. This down ward movement
 was based entirely upon disposition
 to discount price fixing; upon the in-
 furious effects of an excessive profits tax. and upon the growing prospects
 of peace. All three of these in- huences mean a reduction, though not
 necessarily an early end, of war profits which had been the principal
 basis of abnormal advances in the
 war industrials. Some idea of the vol-
 ume of these orders will be gained from the fact that during the fiscal year our exports of war materials amounted to $2,127, 100000 of which
 $SO0.0o0,000 was explosives, $751;
 OOO,OoO chemicals, $120,00O,0o0
 copper, and brass, $95,000,-
 OOO ire arms, $90, 0O0,OO0 automob piles, $87,O0o,oOO. horses and mules, $84,000,000 metal working ma chinery, and $27,O0O.oO0 wire. In the fiscal year 1915-16, our total war ex- ports were s1,329,o00,000; the in-
 crease last year being chiefly in ex-
 plosives, firearms, copper and brass
 ~AAANS tAAo "e~A bO6oI1 III LC1f, oOL Co- tai exports of munitions have amount
 ed to $3.S92.000,OO0 last years ship
 ments being about 60 per cent. of that
 total. The profits in these transac-
 tions, as is we'll known have been very heavy, and it is easy to calculate
 in what direction their curtailment
 will be first applied.
 Whether the coming shrinkage of
 hoc f,1111
 not, remains to be seen. For the time
 being the market has been much dis
 turbed by these developments; and
 there is little doubt that the high wa
 ter mark of war profits has been per
 manently passed, and that great
 deal of liquidation has been, resorted
 to by those who foresaw these condi- tions. It will be months, however,
 before any treaty of peace can be
 higned. and months more before dis
 bandment is possible of the various
 armies, which meantime must be fed,
 clothed and equipped. To the pur-
 chases of the Allies must also be
 added our own heavy buying of muni
 tions, which bined with those of
 the Allies will insure high degree
 of activity in the war industries for
 some time to come.
 Much uneasiness attaches to the
 government policy of price fixing;
 also to the extremely radical ten- dencies of the excess profits tax. It
 is but proper to state that the gov
 ernment thus far has not taken ex-
 treme measures in price fixing, and
 shows no such Tadicalism as is ram
 pant in the house in shaping the
 revenue bill. In the matter of price
 fixing, the administration has chiefly
 sought to prevent undue advantage
 being taken of war conditions by un- scrupulous spectators and profiteers Liberal profits have been allowed to both producers and distributors. Of course, concerns which had been mak- ing abnormal profits from one source or another were disturbed. This would have happened in any event when the inevitable reaction arrived from natural causes Nevertheless, government price fixing, however con- siderately enforced, can only be jus tified as a strictly war measure, and should be used as little. as possible, and abandoned as soon as possible. As an economic proposition, 1t Is wholly unsound because there can
 be no such thing as a fixed price when the thousand and one elem ents which make the price are necessarily chang ing. Fixed prices would tend to in- dustrial stagnation; and if rigidly en- forced, would soon be evaded through adjustments at some other part of the transaction. No government can eliminate the bargaining spirit in hu- man nature, which must always ap- pear whenever two individuals meet who have comm modities or services for sale. Besides, if the government fixes prices for commodities, it will eventually and logically be compelled to fix the rate of wages for capital and labor as well. But here again is something the government could not possibly do without invoking failure and disaster. Fixing the rate for capital would inevita bly, lead to it's conf1scation and thus crush enter prise. Fixing the rate of wages is unthiAkable; because the American workman would never surrender the liberty to work for the best wages he can get and for whenever he pleases, well as when he pleases Unfortunately, the war has made it
 easy to launch a great many social istic experiments, from which it may be more difficult to escape than ex- pected Great Britain has already plunged much deeper into this realm of uncertainty than ourselves; and it would be the policy of wisdom on our part to watch results there before following in her wake.
 The radical proposals for taxing ex- cess profits as 70 to 80 per cent also produced a very unsettled feeling None of our large business concerns object to the appropriation of a liberal share of their extra profits to the
 purpose of war taxation. But large
 profits are positiely needed by many of these concerns to offset extraordi- nary risks and to provide capital for