New-York tribune., 1921-02-06
" orking Of Speculation

have previously analyzed the extent
Of the speculative activities that mani
fest themselves in a period of an up
ward trend of prices, as also the fun
damental and inevitable reversal Of all
these activities whenever, for any rea-
son, this upward movement seems on
the point of halting- specially if it
is halted by q banking control that
replaces its earlier i'll policy of un-
duly low interest rates by the rates
that, forbiddng the further expansion
of currency and the derivative further
rise in prices, further increase the cost
Of carriage on all speculative absorp-
tions and withholdings of products. l
pointed out that, during the period of
the rise, there was a general spread
of speculative activity-a speculation
essentially turning on the instability of
the standard of deferred payments and
centering in the markets of durable
goods, especially in the raw material
markets, like wool, cotton, silk, sugar,
wheat, speculative supply men,
speculative accumulations of manufac-
turers stocks, wholesalers buying
heavily for the rise, retailers filing
their shelves against still further
rising prices, speculative consumers
buying in advance of need-all the
seeming of desrth-all the supplication
QGUunClaIlOQ
of soldering laborers and profiteering
middlemen-all the work-and- ex-
hortations-all the silly looking away
from the actual causes of the actual
situation.
And | pointed out the meaning Of
the reverse process, when once the con-
yictlon that prices were further to ad-
vance was weakening and the interest
costs OF carrying were being advanced;
the avalanche of goods from out of
their speculative hiding places; the
newly emerging surpluses of supplies:
the scaling down of prices of wool and
cotton and wheat and silk and leather,
to induce the manufacturers to take
them; the furore of falling prices that
warned the wholesalers not to buy but
to clean up; the outlook for cheaper
buying by waiting. that advised the re-
taller not TO absorb the wholesalers
stocks, but to clear his shelves; his
conviction that he had only to wait to
do better-and his waiting; the retail
er's inability to find a market; his fur
ther suspension Of orders because the
consumer would not buy; the whole
saler's lack of need for requirements
from the manufacturers; the manu-
facturer's inability to clean up even on
what stocks of raw material he had; his
resulting necessity of making for
stock in face of falling market or of
closing down; his decree of unemploy-
ment for his operatives, and their can
celled ability to purchase commodities
even if they would
And I pointed out the methods of
repercussion by which the disappearing
markets and the revisions of inven-
tories and the falling margins were
affecting the market trend Of securi-
ties, and were prompting the specu-
latiye pressure to sell at precisely the
time when the investing public and the
speculative buyers were holding off for
still further concessions, and waiting
for the decline to reach its limit. In
the industrial and commercial fields, at
any rate, it would reach its limit only
when the general fund of products
should be running low--only when So
ciety was approaching poverty-pros-
perity changed by monetary policies to
connote not welfare but want.