Evening star., 1923-06-30
Entire Years Stock Advances
Are Wiped Out u, Market Drop
Wall Street Professionals Spread Pessi-
misn, in Face of Many Encourage
ing Financial Signs.

ment of the last few months. 1t has
lost sight of everything on the other
side Of the picture. No really hard
time for industry and finance has oc-
Cured in the past that has not been
introduced either by overspeculation,
price imitation and consequent credit
overstratn. or else, by an overpro-
duction of goods with subsequent fall
in prices and more or less violent
curtailment of productive activities.
Three months ago there was dan
ger that merchants and manufactur-
~"s in thalr eagerness to replen1sh
their supplies and provide for the fu-
tu.'c. would force prices up unduly
and bring about an excessive pro-
duction. But this danger has passed:
Prices have ceased going up. and
since April have been slowly coming
down. The average price index. COM
a decline of per cent during May
and the first three weeks OF June:
1t does not need more than casual
reference to the federal reserve
statements to dispel any notion about
the suf1iciency of present credit re-
serves or to get rid of any idea that
the business increase of the last year
has involved strain upon bank re-
sources.
Absence of Speculation Stressed.
On the question of whether there
has been an over production OF
merchandise the week end rerlew or
r. G.. Dun and Company makes the
following statements, which may be
taken as authoritative.
"A favorable aspect and one that
is being rather widely stressed. Is
the absence of speculative excesses
stocking of merchandise. The heavy
demands OF the first quarter OF the
year were almost wholly to cover
definite needs, and the outlook now
Is the more reassuring because OF
this fact"
The shortage of labor. for which
the i'll advised immigration restric.
tion laws are wholly responsible, Is
perhaps the most serious factor In
the situation. This is tending to
force up wages and in certain lines
to reduce seriously the profit margin
available for the reward of capital
investment But the fact that COM
modify prices have been coming down
removes the argument of rising cost
! of living which was the main stay of
! the labor demands three years ago.
The one danger, as 1t appears at the
present writing, is that the business
community will take what has been
happening in Wall street too serious
| ly. If they construe the stock market
| decline as a forerunner Of business
depression and begin to cancel orders.
then the Wal street psssir,ists '~av
! see accomplished the end which they
! pretend to believe is in view.
New Securities Big Factor.
! But so far there has been no sign
IT. at the stock market turmoil is re-
acting unfavorably upon trade condt-
/ tionS except that 1t may have con-
! firmed the natural inclination OF busi-
ness men, after the overactive buying
movement in the first three months Of
the year, to go slow with present pur-
| ChaSeS.
The analysis briefly made of the
fundamentals shows that there Is no
weakness in the industrial structure.
The elements which have produced
depression in the past are not here
now. 1t remains for the country's
business leaders to recognize this and
not to be carried away by recent
events in Wall street.
When 1t has come time to write the
final history of the 1928 stock market
it will undoubtedly be found that
much of the trouble lay, as was the
case two decades ago, with the excess
stve output of new securities, tying
up much capital and overtaXing the
normal buying power.