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Show SUBSTANTIAL BUSINESS NOT " AFFECTED jSTPEA(c SCARE Trade in Munitions Becoming Decreasing Factor in Economic Situation; Railroad Position Generally Gen-erally More Substantial and Satisfactory. By W. S. COUSINS, Editor The American Banker. Nl-JW YORK, Dec. The speech of David Lloyd George in the British house of commons on Tuesday, though not Implying a direct rejection re-jection of the German overtures for peace, left much to be desired by the advocates of an early peace. For this reason the so-called war stocks held quite firmly, notwithstanding the progress of a heavy selling movement which was successfully engineered at the strategic moment by the bear operators. The opinion is held in conservative circles that whatever decline lias been brought about In the stock market this week was not entirely due to the Influences of war or peace, but to those which have their origin in domestic factors. It fa well known, for example, that the commercial banking institutions in New York have been anxious to clear up the misconceptions misconcep-tions that many speculators have entertained enter-tained with reference to their paper profits, pro-fits, and the only effective way in which this can he done is to put the brakes on speculation in general. This has been accomplished ac-complished quietly but firmly, to the evi- dent advantage of all concerned. Extremes Meet in Street. Wall street has become so accustomed to the extremes that it has learned to regard violent fluctuations and reactions 1 in the security markets as distinctive incidents in-cidents unrelated to the general business and financial situation. It is rather unusual, un-usual, for example, that a panic in the stock market should exist simultaneously with the announcements of extraordinary production, of almost inexhaustible sources of commercial credit, of unprecedented unpre-cedented liberality to employees in the shape of royalties and bonuses, of a general gen-eral though gradual adaption of our commercial com-mercial activity to the productions of commodities of peace instead of war. Very- many people still cling to the absurd ab-surd idea that the industrial equipment of the United States lias been devoted almost exclusively to the nroductfon of , munitions for the European nations and that the slightest reference to the termination termi-nation of hostilities is synonymous with the complete paralysis of these industrial plants. The almost complete failure of the "war brides" to make good the vaunted promises of their sponsors for big dividends and many of them Is conclusive con-clusive evidence of the unstable character charac-ter of a large proportion of the war business: busi-ness: , Peace Panics Senseless. The "peace" panics may therefore be considered entirely apart from their relation re-lation either to general business or credit conditions and. in fact, they have been characterized as (he, most senseless and illusionary upheavals that the market has had to contend with in many a day. Just as no banking institution, no matter how sound or how solvent, could pay at once all of Us deposits on demand, so no speculative spec-ulative market can make good its "paper" "pa-per" profits to every one at the same time. Thus a speculative flurry, like a run on a bank, will defeat its own object; ob-ject; and as far as can be summed up the country has sustained no losses, nor even been put to inconvenience because of the fact that hundreds of millions of dollars of paper profits have been wiped out. Peace may mean the collapse of the j war brides, which, by the wav, are few I In number, but it will mean the ushering 'in of a new era of commercial activity ; and industrial progress not only for ; America, but for the whole world. As ; previously pointed out in this review, we, with the rest of the "civilized" world, have adjusted our economic position to 1 war conditions, and will have to accommodate accom-modate ourselves to peace conditions, but since this readjustment has been seriously serious-ly going on lor a long time it is not necessary nec-essary that further adjustments should jar our economic machinery perceptiblv. What has happened in the stock market will happen many times again in the next two years, and the effect thereof will he wholesome rather than prejudicial to our best interests. There has been entirely too much speculation and a lessening of the speculative pace will be of great bene-; bene-; fit to the country. Munitions Trade Decreases. It will be remembered that about nine months ago a prominent steel manufac-; turer and an international banker created a sensation when they stated that the European nations had made themselves Independent of America in so far as munition mu-nition supplies were concerned and would thereafter buy sparingly from the United States. For the past eight or nine months orders for munitions, such as shells, guns, etc., have been conspicuous for their absence. ab-sence. When Kurope started to place munition orders in this country, such contracts con-tracts were made up largely of small-sized small-sized shells. The Bethlehem Steel corporation cor-poration had on its books at one time war orders, made up largely of shrapnel shells, amounting to between $250,000,000 and $;soo,ooo,ooo. Today its war orders, unfinished, aggregate aggre-gate a total of approximately $50,000,000, while its commercial steel bookings are In the neighborhood of $150,000,000. It is evident from this that the claims made by the authorities referred to that few additional munition orders would be placed in this country were well founded. The decline in munition stocks simply reflects re-flects the falling off in the demand for munitions for export. The independent position of the allies In the matter of munition supplies has been followed by an extraordinary demand for American steel and iron products for export. Hundreds Hun-dreds of millions of dollars are being spent for billets, bars, plates and other classes of steel for export, and no material shrinkage is in sight for a long time to come. Railroad Position Improves. While railroad securities have long been regarded as the substantial background for a well-balanced security market, it is significant that because of the comparatively compara-tively limited fluctuations in these standard stand-ard stocks they are apt to be neglected in times of active speculation. This is the explanation for the rather modest turnover of railroad shares in recent re-cent months, and it also .explains the steady tone of the market for these shares while their industrial brothers have been ascending and descending the scale of prices. Bankers and railroad executives have been calling attention to the fact that many of the American railroad shares are comparatively cheap and afford an excellent excel-lent medium for the employment of funds, not on a war, but on a peace basis. Irrespective Irre-spective of the ultimate outcome of the European war commercial conditions in this country are most satisfactory, and are likely to continue so. Some of the railroad companies have resumed dividend payments while others have increased their rates in this respect and there are strong Indications that further fur-ther developments of this character will take place in the coming year. Purchases Extensive. In iron and steel circles, as well as the equipment markets, it is stated that the railroads are making more extensive -purchases than for several years. During the first three weeks of November the purchases pur-chases of cars and locomotives, both for domestic and foreign account, were larger than for any full month of November during dur-ing the past twelve years. Considerable significance attaches to this development, because November is always the largest month in the year in this respect. Another element in the situation situ-ation which Is particularly significant is that the prices paid for rolling stock purchased pur-chased this year in November ranged from 75 to 150 per cent higher than those ordinarily prevailing. Railroad earnings continue large and would be much greater were it not for the shortage of cars universally throughout the country. The lack of rolling stock has acted as a restraining influence on business activities generally, because an adequate" supply of rolling stocft: at all times would have permitted manufacturing manufactur-ing operations on a more extensive scale, while deliveries of finished products would have been greatly facilitated. These are all factors which are of prime Importance Im-portance to the railroad situation. |