The sun., 1918-07-22

The outbreak of speculative en-
thusiasm with which the security mar
kcts last week greeted the news Of the
brilliant successes achieved by the al
lie forces in their counter offensive
and the splendid showing made by the
American troops gave some idea of the
sensational response which might be
expected later on when Il thorough
going victory was announced. The
quick advances reflected general be-
licc that prevailing pr 'es were very
much below the level OF peace markets
AMI that many seasoned securities
were selling much less than they were
worth judged by the earning power Of
the great properties affected. This
showed that our markets concurred in
the London view that the develop
ments of the last few days in the war
area constituted the most hopeful news
that had been received from the Euro
pean battle fronts for a year past.
The partial reaction which the mar
ket sustained later was to have been
expected after such spectacular gains
Conflicting Factors.
The whole demonstration was sug-
gcstive of the potential buying power
of a market that has been held down
by war uncertainties during a period
when much has happened to advance
prices. War has been the overshadow-
ing influence so long that the markets
have largely ignored the reassuring de-
velopments in the crop situation and
general business conditions. At times
there has been quiet accumulation Of
securities by shrewd investors who be-
lieved that intrinsic conditions were
sound and that much higher prices
would prevail after hostilities ceased
But the public as a whole has kept
out of the market for months past and
until few days ago general investors
had shown no inclination to resume
operations on the buying side. This
renewed absorption Of high grade secu-
rifles represents, therefore. a changed
attitude and may mark the beginning
of a period when war news will be
constructively helpful to the market
instead of disturbing.
Changed Sentiment.
1t is possible, therefore, that the
markets have entered upon a new era
Of war excitement in which the trend
Of prices will be upward instead of
downward. Every setback for the Ger
man offensive will make 1t more diff
cult for the General STAFF to square
accounts with the people and keep its
huge military machine in motion. This
was probably the feeling of those buy
ers who last week resumed operations
on limited scale. with the idea of
testing the market TO see whether
there was a large floating supply
Of securities or whether the in
vestment position was as strong as
1t appeared to be. This question was
answered by the markets OF Thursday
10 the satisfaction of those who haze
taken a cautiously optimistic view Of
the future. 1t would be foolish TO sup
pose that the Entente Allies will con-
tinue their victories without interrupt
ton. or that the American forces will
not encounter setbaCks. But so far as
the military campaign has been a fac
tor at all. 1t may be said that the out
look as the week opens is in various
ways more rcassuring than invest
ment experts have conceived 1t to be
for year past.
Four Years Ago.
In this week four years ago the
markets OF Europe were panic
stricken at the possible consequence
of the Austrian ultimatum to Serbia.
Wall Street was loath to believe that
world conflict was impending, or
that the constant selling here repre-
scented anything more than the trad
ing operations Of bear clique. The
Government July crop report had
given promise OF an extraordinary
wheat yield and everything pointed
to continued prosperity with re-
markable showing by the agricultural
States. 1t was not until the following
week. however. that the seriousness OF
the situation was appreciated, and even
then some of the most powerful tinan-
ciers refused to believe that the great
nations of Europe would fly at one an
others threats. The events which fol-
lowed in quick succession showed how
imperfectly the best known interna-
tional bankers had interpreted the stu
alton and how foolish it was to suppose
that the possibility Of financial ex-
haustion" would he a controlling factor
in ending the war within three months.
Strengthening Americas Position.
These incidents are worth recalling
in an anniversary week when pre-
vailing conditions offer such strik-
ing contrast to the unrest, confusion
and decentralization which nearly
wrecked the international credit sys-
tenn in this week of 1914, The Ameri-
can people were still laboring with a
banking system that was about as
we'll fitted to weather the finnHc.al
storms of n world conflict as would
be a horse car line to cope with the
problems of an important trunk rail-
road The Federal reserve act had
been placed upon the statute books,
but the new system was not installed
until four months after the European