Omaha daily bee., 1918-10-04

the result or the study OF CndftS OH DOlid prices
in connection with the historical Developments
OF the civil war He finds that the quotations of
six standard railroad bonds, figured in the
equivalent Of their gold value, began to discount
the end of the conflict six months before Gen
eral Lees surrender at Appomattox. About half
the decline OF prices suffered in the earlier years
of the war recovered in this period. Subsequent
to May, 1865, when the confederate army was
disbanded. bond prices f1uctuated narrowly, and
; it was not until 1860 that average quotations
passed above the average for the same bonds in
1861.
In drawing a comparison between military
developments in the civil war and those which
have appeared so far in the present struggle,
Mr. Mott points out that the gold value OF bonds
reached their lowest levels in 1864 after the
battles of Gettysburg and Vicksburg had indi-
Gated that the struggle could have but one out
come. This was caused, he says, partly by the
fact that the strain on northern resources con-
tnued to expand after the high water mark of
the war had been reached and also by the Sc
we're defeats which the union army met, in the
Wilderness and at Cold Harbor. The fall of
Atlanta in September, 1864, caused brief up
turn, which was followed later by another de-
cline that carried prices close to the bottom
again. At the fall of Savannah three months
later, the market began to move forward and
continued until the end of the fighting.
"Any effort to relate the course of bond
prices during the civil war to that of the pres
ent," says Mr.. Mott, must necessarily take
cognzance of the military situation in each case.
1t is now evident that July, 1868, was the turn
ing point of the civil war The south's greatest
offensive was checked at Gettysburg. 1t never
made good the men lost there, or at the fall of
Vicksburg. Yet the greatest depression in sent-
ment and in bond prices occurred in the follow
ing year when the south was purely on the de-
fensve.
Certain elements of the military situation
in the European struggle obviously favor a COM
parison of 1918 with 1868 in the civil war Nine
teen eighteen has been the year of the enemy's
maximum offensive. Until the last couple of
months, Germany has never been really on the
defensive. While the attempts of the allies l.
drive the Germans from France were being
'smothered in mud and blood Germany was
conquering the east. This year. however, prac-
ticay all of its power has been concentrated in
the west, and manifestly that power has been
decisvely checked and reduced
1T may be that the victorious reaction Of the
allied armies has begun continuous offensive
which will shortly end the war, but the proba-
bllities run counter to so fortunate an event
Practically never has it been true that the de-
sruction of great army or OF a military power
has followed defensive victory within COM
long period of hard fighting before the beaten
enemy yields Napoleon's grand army was de-
stroyed in Russia in 1872. In the following year
he was completely defeated in the battle of the
nations at Leipsic Yet he was not driven to
abdication until the campaign of 1914 had been
fought in France, during which campaign he
won several striking victories.
"In the event that the present war does not
proceed to a triumphant conclusion in the man
ner which hope generates as a result of recent
successes, it seems not unreasonable to expect
one or two years of the bloodest fighting of
the war, and enormous losses may be the cost
of progress to the Rhine. In such a case, de-
pressed sentiment similar to that of the north
in 1864 may hereafter exist, even though our
hearts agony may never persuade us to accept
defeat. The only implication it could carry as
related to the prices of bonds, would be pro-
longatlon OF the war, while national debt null
tlplles, taxation increases. and the purchasing
power of the dollar continues to fall. Such
events conceivably would bring about lower
bond prices.
There is no doubt that government regula-
ton of commodity prices-that is to say the
liking OF maximum prces-has operated dur
ing the last year and half to keep the general
level OF commodity prices somewhat lower than
would have been the case without regulation In
the civil war there was no regulation of COM
modify prices. Leaving aside any question as
10 the erect or hX1ng maximum prices on pro-
ducton of goods, it is fair to conclude that to
the extent that the rise in commodity prices has
been restrained by government regulation the
effect has been to keep the purchasing power of
fixed income somewhat larger than it would
have otherwise been. Conversely, should COM
modify prices hereafter get out of hand and rise
through the levels fixed by regulation, the pur-
chasing power of fixed income will decline fur
Their, and it would be logical to expect that fact
to operate against the prices of bonds.
Defeat left the south utterly PROSTATE The
German people have no wish to be destroyed
Germany does not yet admit defeat. and no
doubt it will take hard fighting to convince it
that the game is up 1t may be that Germany
will recognize the inevitable sooner than a mere
military analogy might lead us to expect In
any event, judging by the civil war comparison,
Bond prices, should discount peace by at least
six months