The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1925-11-14

workers realized that the goings-on
there had an intimate relationship
with themselves, with their wages
and working conditions, and with all
the struggles now going on within all
their organizations. Let us see if we
cannot trace the forces at work, ex-
tending from those dramatic ups and
downs of the stock exchange, right
down thru industry to the pay envel-
ope and to the struggles within the
labor organizations.
prosperity" Caused the Panic.
DROFITS are increasing with un-
believabIe rapidity. This is the
basis for the great boom in security
prices with industrial securities in
creasing in price every day for TWEEN
ty days on Wall Street, up until No
vember 10, when the little panic oc-
Cured. This prosperity" was also
the cause of the panic.
Every time the rate of profits in
crease a dollar, it is the tendency of
security prices to increase from five
to ten dollars. Earnings Gas they
are jokingly called and prospective
earnings are capitalized; that is,
the market value is advanced to make
the percentage of return normal"
Thereafter, super-human efforts must
be exerted to keep profits at the new
high level and prepare for new adj
vances-otherwise the new capital
ization," the new but fictitious
wealth, would vanish. But in the
eager grasping for this new wealth"
created on paper, in the expectation
that the increased exploitation of la
Dor will make it real, the spectators
on Wall Street overdo the thing a lit
tie. This is the natural tendency of
speculation, and it also gives the OPP
portunity to shear the sheep" of pet
ty spectators.
It was this last fact which operat-
ed to produce the small panic the
other. day, The increased values" of
the industrial securities had exceed
ed for a time the base in visible pro-
fits. The sudden decline was then
precipftated by the mechanism of the
stock market; the Boston branch of
the federal reserve bank raised its
rediscount rate, tightening up the
available credits; some impetus was
given thru the newspapers, which
published a flood of financial COM
ment" from the money markets of
the world, predicting a break in the
New York market; the news of the
new agrarian troubles came in the
failure of several agrarian banks in
Nebraska. Conditions were ideal for
shearing the sheep. The sheep we're
therefore, sheared.
The security market will not go
very low. Already, the day after the
shearing, it started to recover. There
is such a tremendous mass of pro-
fits squeezed out of industry this year
that capitalism would not be capital
ism if it did not breed a lot of new
paper wealth. The market will stay
high.
The Golden Flood of Industry.
TT will be interesting to take just
i a little glance at the flow Of earn
ings" that is at the bottom Of Wall
Streets feverish activities.
The United States Steel corpora
ton increased its earnings" steadily
thruout 1925. The first quarter it
earned $2.93 per share Of common
stock; the second quarter it earned
$3.06 per share; and the third quar-
ter $344. This is an increase Of more
than II per cent. Production is in
creasing steadily, being now well over
80 per cent of the tremendous capa-
city developed during the war, and
promises to continue upward. Condi-
lions for big profits in the future are
favorable"
Railroads are enjoying the era of
greatest prosperity known. Just a
few examples; The Pennsylvania rail
on~.1l Z.