Evening star., 1920-11-20
nv STUART p. WEST.

NEW YORK. November 2e.-whns
the Wall street decline. taking this
weeks low prices, a. compared with
those Of a year ago. has gone ~ TAR
or approximately as far a. those OF
panic periods Of the past. banking
opinion Is unanimous that the credis
situation Is fundamentally SOUND anu
that business is simply passing
through necessary readJuatmehe
which will come out all right IN the
end and leave clear skies ahead.
In other words there is to pc no
panic in the old-time meaning wnere
productive enterprise Is paralyzed ana
where credit is refused indiscriml-
nately because of an insensate fear
that everything Is going to pieces.
What has happened 10 that the slump
in commodity prices once started mas
gone on more violently than expected,
entailed, no less than their magnitude,
has for the time being taken the
nerve Of part Of the business COM
munity.
Whatever hope there has been early
in the week that the strain was pass
ing was shattered when the country
read on Wednesday morning that q
group Of the biggest bankers had met
in conference and had allowed II 10
become known that while they saw
nothing vitality wrong with the SIT.
uation. LIQUIDATION of securi les ana
1t was granted that stocks were
for the most part as much below their
true value as twelve months ago tney
had been above 1t. Still the selling
movement must continue with no
limit set upon either its extent or 1ts
duration.
Selling Waves Unfortunate.
Whatever view may be taken as TO
this public expression OF bankers
judgment at such a time the results
were most unfortunate. A new wave
CT selling swept over the stock, the
grain and the cotton markets more IN
tense by far than anything previously
witnessed. Buying orders which had
been placed with a view to taking
shares on a scale down and Which
might have been effective in stopping
the decline were many Of them Wltn-
drawn. A state of complete demoralt-
cation was thereby produced. conoi-
tion where stocks were thrown over
regardless Of what they were worth
or what they would bring, rejecting
either the wild desire of those with
heavy losses to get out or else the
necessity of people hard pressed Tor
cash to realize upon their holdings.
The present disorders differ radical
1y from those of 1907, which was
financial panic pure and simple Win
it's effect upon the trade movement not
much apparent until later. In the
latter part of October and the hrst
half of November. 1907, money on -
stock exchange commanded exorbi-
tant rates and there were times When
1t was virtually unobtainable. Hoard
ing of gold went on, accompanied by
runs on numerous banks, with the re-
suit that gold went to premium. The
present situation is absolutely ar
ferent from this and If further proeI
were needed it was given this week.
when call money rates dropped sharp-
ly at the very height of the selling
movement in the share list and when
lenders of time funds began to press
their offerings in increasing volume
upon> borrowers without encounterlhg
much of a demand. With all slgns
pointing to much easier money mar
ket in the near future, STOCKS olo hee
respond and the plain Inference iroM
this was that high money mas not
been the factor which many critics
have claimed for it in the great oe-
cline of the last few weeks.
Crisis Of 1907.
Where the crisis of thirteen years
ago was essentially a money any
now is commercial. A radical dena-
ton in prices to get from q war TO
peace basis was an economic neces-
sity. In it's early stages last summer
and through September and most OF
October the process was fairly orderly
and it looked as If the read1ustment
would be completed without any very
unpleasant results. But gaining mo-
mentum and increasing greatly IN
violence the downward movement
finally upset calculations. The losses
inflicted upon the business COM
munity by a slump in prices that was
altogether too rapid for them to get
out at length reacted upon the entire
structure of business and finance.
The stock market, which in August
and again in October had seemed 10
have measured the worst, had TO sue
cumb to the strain. Predictions as 70
when the torrent would be checked
have proved quite valueless. All we
do know is that the pendulum Is
swinging as far in it's downward
sweep as it swung upward in 1913.
1916 and again last year. Prices OF
securities and commodities were e1-
cessively high then, and the excess
had to be and finally was corrected.
Prices of securities and commodities
are Just as excessively low now ana