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Show RAPID DECLINE IN STOCKS DESTROYS PREVIOUS GAINS j Production Must Be Increased Before Hope of Relief From Present High Prices Can Be Entertained, Says Banker. By W. S. COUSINS, Editor T"he American Banker. N' ETvV YORK, Aup. 17. Between the first week in February and the corresponding cor-responding period in August, the average price of tho industrial stock Hst of the New York stock exchange advance.! thlrty-eiht points. TiiiH h an extraordinary record, and em-pha.sjzps em-pha.sjzps more clearly than by any other method the remarkable activity In the sto'jk market since the turn in the year. Hut sine- the middie of Juiy the heavy wave of liquidation, induced entirely by uneasiness over the financial and economic econo-mic outlook, has subtracted over twelve rfointw from the advance referred to above. Culmination of this liquidation was caused by the amazing demand of the railroad brotherhoods, being no less a proposal than the confiscation of railroad property for the benefit oL labor and politicians who are its advocates for their own ends. Very little lime and effort was needed to show the average man that the "Plumb plan" was a proposal for the most audacious auda-cious grab by the union railroad men at the expense of the rest of the country, and of other workmen in the country, that has yet been devised. It can now be seen that the liquidation process which has been taking place since tiie middle of Juiy has in reality been one of the most thorough shakeouts that Wall street has had in the war period. As a rule margin accounts have been well protected, pro-tected, but the abruptness of the recent decline has uncovered many accounts and forced them into the seller's column before be-fore anything could be done after the cause of ev-ents. Stocks Decline Rapidly. The following list of prices of active stocks illustrates the extent of the July decline: ITifrh July. Present. Loss. Amprlrnn TVoolr-n 137 110 27 A nuronrla Copper 77 T 10 Atrhison 104 itl 33 naldwln ...lLMy3 105 10 B.'lhiPhPm Steel B 110'.; SS 25 Central Lpnther llf.'i 100 16 Chpsnponke & Ohio US"- lift 12 St. Pnul, common 52 42 10 St. Pniil. preferred 76 61 32 Hock IMnnd 82 Vi 25 1 Corn Products, common 94 7S 0 Cuicible 140 133 16 General Motorn 210 21f 21 Inspirit tion Copper ifiT; 61 7 Marine, common 07 M 12 Lncknwiinrm f3V4 Rl 12 Mexican Petroleum lftS 174 22 Missouri Pnelfte S3 ft 2S 31 Northern Pacific P7 88 11 Pierce-Arrow 63 54 9 Sinclair Oil ; 52 17 fnion Pacific i..l34T 125 9 Sleel lliCj 304 11 Wilson & Co 104ft 81 24 In the language of the street, the market is always held to be in a stronger technical position after such a selling wave has passed, first because of the lower level of prices that has been introduced, in-troduced, and second because of the decrease de-crease in bank loans, which the selling has brought about. Tf the liquidation has been caused by a change In sentiment or by the threat of a coming calamity that does not materialize, the natural sequence is a quick recovery. If, however, prices have fallen and public confidence haa been undermined by a catastrophe affecting affect-ing adversely the real and potential values of the great national instruments of production, there is little hope for recovery re-covery until the effect of such a calamity has been superseded by more favorable conditions. Market Based on Hopes. To a large extent the bull market which has been in development since February 1 has been based upon hopes and expectations ex-pectations rather than actual performances, perform-ances, and there are sure to be disappointments disap-pointments before we have reached the end of the patru So much has been said of the boundless prosperity that America Amer-ica can have for the asking that many visionary people have forsaken ordinary prudence, and considered it hardly necessary neces-sary to exert themselves in order to reap the benefits of this prosperity. In this respect the stock gambler, the promoter, the commodity profiteer and the labor union are all in the same class. Their idea or ideal is constantly for a larger and larger gain for a smaller and smaller contribution to the country as a whole. "Kasy" money, shorter hours, less ' real production is now the goal of an increasing percentage of ou r population, j making more difficult the economic problems prob-lems of the reconstruction period. Even President Wiison, in his message i to Congress, failed to note many of the logical causes of the present scale of high i prices, attributing it entirely to profiteer- ' ing. Wnile it is true that recent star- tliug revelations have convinced the pub- lie that profiteering has been going on j un an enormous scale, it is hardly fair ; to disregard the primary cause of high j prices, namely, the withdrawal of -V,- , 000. 000 men and thousands of industrial plants from profitable employment, to be converted into instruments of destruction. Must Increase Production. The most important remedy for the present crisis is production and more production. pro-duction. Not a decrease of working time ! to six hours a day, but an increase of working houra commensurate with the necessity for more production. We are j facing almost as great a calamity as we j did two years ago, and the same measure ; of courage, fortitude, skill and industry ' are needed to bring the country bacK to the position it occupied in 1914. High prices are not here to stay if we will and work to have it otherwise. This is no time for experimenting with socialistic and bolshevik theories. Intelligence of the highest order is needed to cope with the dangers that confront us. The federal reserve board is to be commended com-mended for having called attention to the shortage of commodities as one vital factor fac-tor in the high price situation. There is a tendency on the part of many people peo-ple to look no farther than to the great expansion of credits and the increase in the volume of circulation as the cause of the present abnormal condition in prices. The fact of the matter is that the present inflated state of credit is merely the symptom of a general economic ill. The disease itself is the failure of the world to replace the commodities that were consumed con-sumed and destroyed in the course of the war. With the removal of the disease In the manner indicated by the federal reserve board, the symptoms will disappear automatically, au-tomatically, since the enlargement of the world's supply of commodities will carry with it the cancellation of an amount of bank credit equal to it in value. Producers Pro-ducers of commodities and services will exchange them for credits now outstanding, outstand-ing, and, Instead of re-exchanging these credits for consumable goods and services, ser-vices, will surrender them to banks in payment of loans they contracted for the purpose of carrying government securities. securi-ties. Outstanding bank loans and credits, cred-its, whether in the form of deposits or circulating notes, will then undergo a corresponding reduction. Financing Awaits Peace. It is becoming generally recognized i that any comprehensive plan for financing fi-nancing Europe is likely to await formal, ratification' of the peace treaty by the United States and others of the allied nations. For the time, because of the unsatisfactory state of the investment market, which has been unsettled by the railroad nationalization plan and other factors in the domestic situation, even the method of doling out credit piecemeal piece-meal to nations seeking accommodations here seems to have fallen into disfavor. However, this condition may change within the near future. The one fact that seems to be pretty definitely established estab-lished is that Germany will be unable to borrow here in large amount until peace between this country and Germany has been formally proclaimed.. At present, pres-ent, difficulty is being experienced in some cases in making financial arrangements arrange-ments for individual shipments. Another important question is that of money rates. Some criticism has been encountered from European borrowers because the rates asked for loans are far above what they ffave been accustomed to pay in domestic money operations. But our investors are not likely to forego the privilege of placing their funds in good paying propositions at home" in order to loan to foreign governments on less favorable fa-vorable terms. |