New-York tribune., 1918-05-01

1t cannot be said that Wall
Street was surprised by the Steel
report any more than by the dec
laration of the usual extra dividend
of per cent; but net earnings
were, to say the least, fully up to the
most optimistic forecasts. After de-
ducting more than $31, 100000 for
war income and excess profits taxes,
there remained balance of nearly
S57,000,000; and after all charges
for depreciation, sinking funds and
dividends, SIS, 100000 was added
to the corporations surplus. 1t is
true that the net for the quarter
was slightly smaller than that for
the last three months of 1917, but
1t must be remembered that operat-
ing conditions in January and the
first half of February were the
most unfavorable ever encountered
IN the history of the steel trade.
Production and deliveries both were
practically halved by severe weather
and transportation shortage. That
earnings were so we'll sustained un-
der extremely adverse conditions
speaks we'll for the future, now that
plants are again producing at close
to capacity. The speed with which
the industry recovered from the
blow received at the beginning Of
the year is shown by the fact
that earnings were more than
twice. as large in March as in Jan
uary. The very sharp decrease in
deduction for taxes was probably
due chiefly to the drop in earnings.
Whether or not the amount set
aside to meet the excess profits I'M
post includes allowance for higher
rates the report does not DISCLOSE;
but that was the policy adopted by
the Lackawanna Steel Company and
it is not Impossible that the United
States Steel directors have pursued
the same conservative course.
The American Exchange National
Bank takes it's stand with those
banks which oppose the insidious
propaganda for unlimited imitation
to finance the war. In it's monthly
review of business conditions Il
says:
whenever the currency and
credit of a country are inflated
prices Of commodities rise, and la
Dor demands, and usually receives,
higher wages. Money depreciates in
value when measured in terms of
prices of necessities of life and
wages. The dollar, or other none
tary unit, will buy less wheat or
cotton or labor. The more money
in circulation the less it's buying
power, is an economic rule that has
governed finance in all ages.
"a strong and wealthy nation like
the United States can maintain its
currency at par in domestic money
markets by accepting it in payment
of all taxes and other revenues
but cannot stabilize it's buying
power In commodity markets, ex-
cept by price regulations, which up
set commerce and industries. A glut
of gold would cause more danger
Gus imitation than any other form
OF currency, because it would be
practically impossible afterward to
reduce the volume outstanding
Gold would remain at par as long
as 1T was the standard of value.
but commodity prices and wages
would advance in proportion to the
increase of gold in circulation. It
is common error, born of our ex-
perlences during and after the Civil
War, that imitation of the currency
necessarily depreciates it below par
in money markets. It is in COM
modify and labor markets that the
depreciation in buying power oc-
ours. A debtor can liquidate his
obligations in inflated legal tender
at par, but the same legal tende,
will buy less wheat and pay for less
labor. The real measure of values
IS the labor cost of production. All
the real wealth in the world con-
sfsUs of what comes out of the
ground and the sea, and the labor
expended in fitting it for human
use. Prices and wages NAV not
keep exact step with imitation al,
the time, but the rule holds good.
and sooner or later the balance is
struck.
"When banks and bankers warn
the public against the dangers of
imitation they do not do it for selfish
reasons. They can make larger