Continued from...Stock Market Movement and Business Predictions
The Market Is Always Right-It will be shown at a later stage that throughout these great market movements it was possible from the stock market barometer to predict, some valuable distance ahead, the development of the business of the country. These discussions would fail in their purpose if they did not make the subject clear to the unfinancial layman - interesting to the man who never bought a share of speculative stock in his life. A barometer is a necessity for all vessels at sea, from the smallest coasting schooner to the Aquitania. It means as much, and even more, to the "Bolivar" of Kipling's ballad, "swamping in the sea," watching, in dispair,
"Some damned liner's lights go by, like a grand hotel"
as it does to the navigating officers on the liner's
bridge. There is no business so small that it can afford to disregard the
stock market barometer. Certainly there is no business so large that it
dare disregard it. Indeed the most serious mistakes in the management of
great business have come from a failure of these navigators of the great
liners of the sea of commerce to take heed when the passionless, disinterested
stock market called their attention to bad weather ahead.
-and Never ThankedWhen, in the United States Senate, the late Senator Dolliver, reading an editorial of, The Wall Street Journal, said, "Listen to the bloodless verdict of the market place," he saw the merciless accuracy of that verdict; because it is, and necessarily must be, based upon all the evidence, even when given by unconscious and unwilling witnesses.
No wonder the rural politician can so easily make
Wall Street the scapegoat for depressing conditions, affecting his farmer
constituents no more than the rest of us. Wall Street is guilty in their
eyes, for they are willing enough to hold Wall Street responsible for a
condition which it merely foresaw and predicted. It was said in a preceding
chapter that the prophet of calamity will make himself hated in any case,
and hated all the more if his predictions come true. But Wall Street's
predictions do come true. Its predictions of prosperity, duly fulfilled
as we have seen, are forgotten. Its predictions of adversity are remembered,
and by none more than the man who ignored those predictions and is therefore
the more bound to find somebody other than himself to blame.
Wall Street the Farmer's FriendWall Street is often called "provincial" by' politicians and others actuated by an unreasoning sectional jealousy of the necessary financial center of the country. The country can have only one such center, although the framers of the Federal Reserve Act, overloading it with sectional politics, tried hard to make twelve. The farmers say, or their political spokesman says, "What does Wall Street know about farming?" Wall Street knows more than all the farmers put together ever knew, with all the farmers have forgotten. It can, moreover, refresh its memory instantly at any moment. It employs the ablest of the farmers, and its experts are better even than those of our admirable, and little appreciated, Department of Agriculture, whose publications Wall Street reads even if the farmer neglects them.
The stock market which began to break at the end of October and the beginning of November, 1919, when the farmer was insanely pooling his wheat for $3 a bushel and his cotton for forty cents a Round, knew more than the farmer about cotton and wheat. And that barometer was telling him then to get out, to sell what he had at the market price and to save himself while there was yet time. He blames Wall Street and the Federal Reserve banking system and everyone but his own deluded and prejudiced self. He thinks he can change it all by getting his Congressman to take an axe to break the barometer. He is trying to break the barometers of the grain trade in Chicago and Minneapolis, the barometers of the cotton trade in New Orleans and New York. Twenty years ago, at the demand of her farmers, Germany broke her grain barometer, with destructive legislation. What was the consequence? She had to construct a new barometer on the old plan, and it was the farmers who paid for it in advance out of their own pockets. The Germans have learned to let free markets alone, a thing the British always knew, and built up the greatest empire, with the wide commerce the world ever saw, on exactly that knowledge.
From The Stock Market Barometer by William P. Hamilton, published in 1922
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