New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-02-21
Finance - Economics

When the stock market, approach
ing a million shares, reaches the
greatest activity since the beginning
of the year; when Steel common gets
to 81, the highest price in month;
when automobile and oil and tobacco
atocks make gains reaching at times
to from to 6 points, even the most
skeptical begin seriously to talk of
the durability of the present rising
market and Of public participation
The copper stocks, on news of
further declines in the price of the
metal, were the only weak group.
A favorite explanation for yester-
days strength was the announce
ment Of the coming government
issue But it may be questioned
whether there was anything new in
this, or even that the news is very
favorable. Authorizations are not
issues, and the expenses of the gov
eminent remain the same whether
$7,000,000, 200 or $10,000,000,000 is
the maximum amount authorized.
Nor is the short term feature new.
1t had been intimated for weeks
that the coming bonds, or "notes," as
they are now called, would not run
for more than five years. 1t may be
contended that the short term re-
moves them from competition with
existing bonds, both government and
corporation, and to some extent it
does, but the Importance of that may
easily be exaggerated. If it were
intended to pay these notes off at
maturity it would mean exception
ally heavy taxation for the next few
years. If they are refunded it will
doubtless be by long term issues,
though probably at lower rate than
that obtainabe now. The most
favorable aspect is the indication
that the issue will be put out in a
form to insure its success, especially
when the tax exemption features are
, considered.
1t is the stock market rise for the
last ten days rather than the ad
vance OF to-day, which requires
eXplana zee the market has
risen it ha d to create its own
atmosphere. A rising market manu-
features optimism, just as falling
market leads to dependency; so a
small rise in itself accounts for
larger one. But it had seemed clear
during four months Of falling prices
that the stock market was going too
far in rejecting reimbursement
which, up to the present, has not
been so bad after all, and prices
probably contained expected calam-
ity which so far failed to come. In
the reimbursement stock prices have
been the first to fall. They are en-
titled to be the first to stop falling.
Even further reductions in steel
prices or a slightly further decline in
copper prices need not necessarily
find reflection in fall in stocks.
The stock market has expected them.
1t is the theory of Professor Dav-
export, expressed in a recent article
for The Tribune, that for short
i period We shall do a heavy export
trade with Europe because Europe's
needs are pressing, and as she will
have comparatively little to send us
the trade will be financed by loans to
her or by taking her securities.
After these pressing needs are met
our trade with Europe will be much
smaller than before the war. Eu-
rope is poorer than then, her pur-
chasing power smaller; her produc-
! ZION Will NC IllOlc llCCQCb III 4lOlllC
consumption. She is only seven
eighths of the Europe that entered
| the conflict.
This theory seems to overlook an
! important factor. Granting that the
war absorbed current income and
kept that current income from going
into the form Of capital, and grant
ing even that Europe's fund Of CAPT
tai is smaller now than in early
1914, there is yet to be considered
| the most important item of all-Eu-
ropes productive power. The out
standing factor of the Europe of to-
day is it's industrial change from the
Europe Of four years ago. The
growth Of factories has been amaz-
ing. Men with no prior industrial
training have received that training.
Hundreds Of thousands Of women
have entered industry, have become
productive, and are reluctant to go
back to the old ways. Even Russia
was on the verge of great indus
trial awakening before the Bolshe-
wiki seized control. If the present