New-York tribune., 1918-10-10
WALL STREET OFFICE:
Mills Building, IS Broad st.

Under pressure Of heavy selling,
the so-called war stocks slumped
sharply yesterday, while the peace
issues again exhibited considerable
strength. The interesting part of
the selling, which apparently came
largely from professional specula-
tors, was the unanimity Of opinion
indicated thereby as tc the charac-
ter of the Steel stocks. All Of these
were weak, and sustained losses Of
from to 2l4 points. Some of the
equipment issues we're equally weak,
with losses ranging up to 6ss points
during the day. Whether traders
are showing good judgment in their
selection of stocks that may suffer
from peace time alone can tell, but
some of the shrewdest observers in
Wall Street are of the opinion that
any attempt at all to discount peace
is likely to prove disastrous for the
speculator, for the reason that no
one can forecast after-war condi-
tions with any degree of assurance.
It is not impossible that the steel
business, for example, will continue
active enough to warrant the main
tenance of dividends on the present
bases, especially considering that
peace will relieve industry from a
part Of the burden Of taxation which
it must face if the war goes on. The
demands for reconstruction in
Europe are certain to be large,
while the enormous deferred de-
mand for steel at home will also
have to be supplied. The only ques-
ton is as to how large the demand
from these sources will be as COM
pared to war business. No one ex-
poets that production will be main
tanned on the present enormous
scale, but there might be very con-
siderable reduction without Destroy
ing the prosperity of the producers.
In its statement concerning cur
rency expansion the Federal Re-
serve Board shows that, despite the
very large increase in the volume of
Federal Reserve notes outstanding,
the net increase in the amount of
currency in circulation between Feb
ruary /, 1917, and September /,
1913, was only $636,000,O00. And
in endeavoring to refute the theory
that this has been partly responsible
for the imitation of prices that mas
taken place during the period, it
states that "even from this figure
deduction should be made if a full
statement of the situation were to be
attempted, because. of the increased
activity of industry, measured not
simply by value, but also by physi-
cal volume" That is an assertion
which certainly is open to question,
inasmuch as it is by no means sure
that the physical volume of bust
ness has increased as the board i'm
plies. Considered in connection
with the index numbers Of commod-
ity prices, bank clearings are per-
haps the best available measure.
What do they show? Clearings were
18 per cent larger in September,
1918, than in February, 1917. But
in the period between February /,
1917, and September / last COM
modify prices rose 80 per cent on
the average. In other words, clear
ings in February, 1917, recalculated
on the basis of prices prevailing on
September last, would have been
II per cent larger. We do not pre-
tend to assert that this is conclusive
evidence that the physical volume of
the turnover in February, 1917, was
Il per cent greater than the turn
over last month, but, to say the least,
the calculation tends strongly to
show that the boards statement was
not well founded. But, after all, the
important thing is that the imitation
has taken place, and whether or not
currency expansion is partly respon-
sible is relatively unimportant
question. The principal cause of