Evening star., 1939-12-31
Sharp Rise at Start
OF Conflict Defies
All Predictions
Setback Now ToIked,
But 1910 May Bring
Fresh Surprise
BY ARTHUR H. NORRIS,

then as a reality. and finally as a
"phoney," was by all odds the domi-
mating stock market influence in
1899. The course of its development,
its duration, its character, and its
implications promise to dominate
the markets of 1910.
Nonetheless, the stock market pre-
served its reputation in 1899 for
doing what 1t has done in practically
all recent years-doing the un-
expected. In January and in April
the market reacted quite severely
and the reasons commonly advanced
had almost wholly to do with the
imminence of major war in Europe.
In each case, however, war failed to
appear on schedule and the markets
rallied as the threat of immediate
war subsided.
During each of these war scares
and during the several months OF
tension in midsummer leading up
to the actual outbreak of hostilities,
emphasis was placed on the probable
enormous liquidation OF domestic
securities to which the American
market might be subjected immedl-
ately after the declaration of war.
During the early part Of 1899, prac-
tically all leading economists and
business commentators qualified
their expectations for gradual re-
covery in business and earnings
with the statement that if war de-
yeloped their calculations for re-
covery would necessarily be null and
void.
Simultaneous Action.
With the actual declaration OF
war, however, it would seem that
almost every one in business and in
the security markets suddenly
changed his mind and decided to do
the same thing every one else was
doing. AS result, instead OF wide
spread liquidation, the thin, sold-out
markets were treated to wave OF
buying orders that marked the
biggest scramble for stocks since the
first 90 days of the New Deal in 1888.
Very soon after the nearly vertical
3O-point advance in the well-knoWn
industrial averages, there began the
correctioniary movement which con-
tinued to the end of the year. Ihe
two weeks vision of war boom
which fired the speculative imagina-
ton early in September faded into
the background as the much-her-
aided blitzkrieg, so often pictured by
the prophets, faded before the stale
mate on the western front.
Although business, already in a
recovery trend when the war began,
spurted to the highest rate OF &C
tivity, particularly in the heavy
goods industries, since 1929, the
stock market reflected the general
disappointment of spectators to the
stimulus which war might afford
our domestic business and earnings
picture. The market became sensi-
tive only to talk of "phoney" wars
and peace scares, ignoring the ex-
eellent earnings reports and divi-
dend payments in the final quarter.
Certainly as the stock market stands
on the threshold of 1910, the volume
of public participation reflects little
enthusiasm over the outlook.
Normal Correction Period.
While this lack of enthusiasm has
been variously explained on the basis
of expanded inventories, reaction
in business after the turn OF the
year, as a reflection of European
liquidation. etc, these "explana-
tions' during what appears to be
normal secondary correction in a
bull market trend, are probably OF
no greater importance than the rea-
sons advanced during similar inter-
mediate declines in the present and
past recovery periods. 1t is not i'm
probable, therefore, that business
and the markets will again do the
unexpected in early 1910 by rising
when the majority are quite con-
vinced that decline will be in
order.
Probably if the market should rise
above it's 1889 highs, much of the
current encouragement, disappoint-
ment and distrust of security prices
would evaporate in a rather gen.
orally hopeful atmosphere. At such
advanced levels, however, there are
many deep forces in world events
and in the political sphere which
must be given increasing weight in
surveying the 1910 outlook and aft
erwards.
Capitalism's Battle?
Although the prosecution of this
war going on around the world may
be depicted as moral crusade
against aggression and for liberty,
we cannot avoid the unmistakable
implication that the hard-pressed
capitalistic economies outside the
United States. chiefly represented by
Britain and France and their stale
lites, are involved in death strug-
gle with areas of the worlds popu-
lation and territory which have
abandoned capitalism in favor OF a
socialistic, state-controlled form OF
economy, wherein individual initia-
tive enterprise, and the profit mo-
tive play distinctly secondary
part. 1t is doubtful If these two sys-
TENS can for long, compatibly so
exist in the world. Certainly, the
capitalistic system of international
trade based upon gold balances, can