The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-11-04
PUBLIC BUYING OF STOCKS
AND BONDS ANAL YZED
Efforts to Restrict Credit Facilities Lead to Forced
Liquidation Revival Due to Increased Out
side Support-Peace Possibilities.
ny WILLIAM JUsTUs BoIEs.


The stock market situation is more
interesting than 1t has been at any time
since the world war began. This Is not
because of the unusual efforts put forth
to curb speculation and to restrict the
volume of loans to borrowers upon
speculative collateral. But II Is clear
that the country has entered an era OF
readjustment wnere the factors con-
trolling speculation will relate chiefly
to the task Of changing war industries
into peace enterprises and preparing tho
way for the resumption OF business along
normal lines.
This process Is well under way in
many industries and must develop I'M
usual problems, Irrespective Of when the
world war actually ends A peace COM
pact may be many months off. or II may
be achieved within a few weeks. But
the work OF preparing the country for
the far reaching changes incident to the
unemployment Of hundreds OF thousa nds
now engaged in military service. the nu-
milton plants and enterprises vital to
war making must claim the attention II
thou htful Americans at once. This
transformation represents the greatest
industrial problem the world has ever
had to solve. and although the United
States Is the best off OF all belligerent
nations to finance tho restoration of
peaceful activities the task will not be
an easy one.
Resignation Of Peace.
The cancellation OF the Governments
100000 contract with the Bethlehem
Steel Corporation -ssas only an incident
In the dava1nnpaent ~ ha c.,
was the action OF the United States Steel
Corporation directors in cutting the ex-
ira dividend from 5 to per cent. Every
important industry In one way or an
other has similar problem to solve
for while many have not profted at all
from Government contracts they have all
been exposed to the hazards OF a war
market as emphasized by high raw ma
terial and an utterly abnormal wage
scale These are the governing factors
affecting manufacturing costs which
must react from sky level to an earthly
basis IL ordinary mortals are to do busi-
ness again in the old way of making
both ends more than meet.
II this readjustment is carried through
successfully-and II Is inevitab!e-all
war stocks will become peace stocks
ard the fool will be parted from his
war profits unless he has put some o!
his earnings into Liberty bonds, which
would be an unnatural investment for a
fool to make. This has been SO long a
"blllionized country" that It Is difficult
for its citizens to accustom themselves
to the mathematics OF the days when
the average business man had a whole
some respect for a thousand dollars
But the change is coming. and the coun.
try will be all the better for It, not
outstanding TIE heartrendings of those
who never realize that It takes a sea-
son OF tempestuous weather to make
blue sky really attractive.
Repairing the Damage.
The probability Is that when hostil.-
ties cease our steel plants and kindred
industries will find plenty TO do in re.
pairing the frightful damage that wal
has done to Europe's Industrial mechan.
ism. This will be the greatest piece OF
repair work that the world has ever
undertaken, and since the United States
will have the only available equipment
with which TO turn out the material In
the required time the chances are that
most OF the orders WILDE given "a
American plants. 1t may be necessary
to float a series OF foreign loans In
order to establish here the necessary
cedits for foreign buyers. The demand
will be for immense supplies OF our
rev material merchandise and other
commodities which can be scarcely paid
for through the shipment OF Europe't
products to US, for the reason that Eu-
rope OF late has been producing mostly
war material. The flotation Of foreign
loans here would be OF direct benefit
therefore. In broadening the European
demand for American products. just az
the sale of Treasury certificates Of In
debtedness and Liberty loans, as wei
as the creation here of large credits
for the account OF the leading Govern
ments, have made It possible for the
Washington authorities to give out inI
mense orders for war material. supplies
o. nd foodstuffs for shipment abroad.
The period OF industrial reorganization
which has already set in is likely t,
prove much less drastic than It woult
be were this country's foreign trade
position less favorable. The United
States for months has been doing bust
ness on a hand to mouth basis. will
careful regard for the war hazard ant
| the complications incident to the short
age OF labor and raw material. Thii
conservatism has been the saving factol
| In a situation that has been fraugh
with many dangers which in war time,
| might have developed far reaching dis
turbances. In the light Of what hal
| happened, therefore, II Is fortunate tina
the Federal Reserve Board last Apri
asked the banks to conserve credits anc
by distinguishing between essential ant
non-essential enterprises to prevent suci
undue expansion as would lead
inevitably to unsafe economic condi
tons. This move was followed II
August by the more specific instruc
tons given in Gov. Harding's letter 4
the various Federal reserve bank!
stating that the staying power of thu
country in this emergency depends upoI
the extent Of It's resources In men
goods and gold" and urging the bankers
everywhere to exercise great dlscrimina
ton In granting credits to the end tina
these should be diverted more and NOR,
into productive fields
Increasing of Margins.
II was in furtherance OF this plan tina
the new system which goes into effec
to-day of increasing margin require
ments on loans secured by Stock Elk