Next chapter of The Stock Market Barometer
WHAT REGULATION DID TO OUR RAILROADS
A SWEEPING assertion requiring no qualification would probably be one of two things. It would be an axiom, self-evident and containing its own proof; as, for instance, "the sum of the angles of any triangle is equal to two right angles." Or it would be a truism not greatly worth stating. I have said in previous necessary criticism that tabulated business records, however presented, are at best records, and only in a minor degree forecasts. But that is a statement which requires at least some qualification, because the youngest but most scientific of our business records embodies a quality of forecast. This is the service of Harvard University's Committee on Economic Research. Its index chart does offer a method of forecasting business, for the good reason that it adapts the idea of the stock market barometer, which has been in successful use by The Wall Street Journal and its allied publications for the past twenty years.
A Chart With a Forecast
Those familiar with the Harvard economic service will recollect that it uses three lines in its business chart a line of speculation, a line of banking and a line of business. It commits itself to no floundering attempt to show that "action and reaction are equal." Its service dates from after the war; but it publishes a chart from 1903 to 1914 inclusive, which is a most valuable confirmation of what has been here laid down in the discussion of the stock market barometer. Its line of speculation, during those twelve years, uniformly precedes the lines of business and banking. In other words speculation anticipates the developments of business, which is exactly what these chapters have been directed to prove.
The Harvard Committee on Economic Research takes the average stock market prices for its line of speculation. It recognizes how completely the war threw many such calculations out of gear by breaking up the very foundations upon which they were based. Harvard, therefore, does not publish any chart of the years of the war. I find, in looking back over my records and newspaper comments, that conclusions upon the stock market movement and its prophetic relation to the business of the country were dropped almost entirely for the same reason. We have seen that when the government took over the railroads on a guaranty we had remaining merely the speculative movement of the industrial stocks, without any corresponding movement of the railroads to check and confirm it. We have seen also, in analyzing the war period which the Harvard service not unwisely ignores, that the stock market did, in a most valuable way, act as best it could in holding before the public mind the possibilities of the war itself, notably in the bear market of 1917, and that it also foreshadowed the war in the line of distribution for the three months preceding its
outbreak.
A Movement Greater Than the Major Swing
But there is another indication given by the averages which, while of the greatest importance today, has been largely unrecognized. We have seen that the railroad stocks, where there was a free market for them, in the years under private ownership, shared the major swings; and that we had a bull market culminating in 1909, a bear market determined in the following year, a greatly restricted and hesitating bull market, especially in the railroad stocks, carrying into the latter part of 1912, and another bear market culminating immediately after the reopening of the Stock Exchange in December, 1914, following eighteen weeks of war.
There is a historical significance a lesson and warning of the very first importance in the general trend downward of the prices of railroad stocks from 1906 to June, 1921. This is a movement not only wider than the major swings but even more considerable than any of these assumed cycle periods with which a previous discussion dealt. It has extended nearly sixteen years. It is not only likely but as nearly certain as anything merely human can be, that the railroad stocks on the average will improve in the coming year 1922. But there is a radical reason why they will not, in any near period of time, attain the old freedom and buoyancy which they enjoyed in the later lifetime of great railroad builders like James J. Hill and Edward H. Harriman. A condition for railroad enterprise has been established which has not only taken much of the speculative value out of the stocks but much of the permanent value as well. It is a condition which has left the railroads themselves emasculated and weak, with their virile creative power removed.
Roosevelt and the Railroads
If Theodore Roosevelt could have foreseen the deadly consequences of the agitation against railroad corporations which he inaugurated; if he could have realized that he was not applying temporary checks to temporary evils, that his policies, so called, carried to their logical conclusion, would cripple railroad enterprise for incalculable years to come, and perhaps forever, in order to punish a few who had abused the power which necessarily accrues to successful enterprise we may be sure he would have acted far otherwise. The public power to reform has been construed, in the past fourteen years, as the power to destroy. Railroad development, which in the past has not only accompanied the increase in population but, on this continent at least, has preceded it, is now moribund or dead. No new capital has been forthcoming for the greatly needed extension of railroad facilities to parts of the country which do not enjoy them, to say nothing of greater terminal facilities. Lines of communication are the very arteries of civilization. But the adaptation of the Roosevelt theories or rather the misconception of those theories, the ascription to Theodore Roosevelt of ideas he never held has resulted in a hardening of those arteries, in a weakening of the 'great central heart which pumps the lifeblood through them.
An Arrested Development
We can see the fact for ourselves in the mileage of the United States taken contemporaneously with each ten-year census. If we had two hundred and forty thousand eight hundred and thirty miles of railroad in 1910 an increase of nearly 25 per cent since 1900 and more than double the railroad mileage in 1880 we should have had a continuing increase, shown in the census of 1920, of as much as ninety thousand miles. We have not had one-sixth of it. The increase has been less than fifteen thousand miles, the irreducible minimum, just enough to keep the railroads alive. A "craven fear of being great" has possessed our politicians. They have paralyzed the growth of our most important industry rather than permit a few conspicuous individuals to grow rich by the turning of great ideas to great needs. Harriman and Hill were rich when they died. I knew them both, and I know that their wealth was almost fortuitous. They were rich because they could have done nothing creative without the necessary financial strength to make them independent. But Harriman never controlled the stock of one of the railroads he directed. He was implicitly and deservedly trusted by the stockholders. He never had a voting majority in Southern Pacific, Union Pacific or even Chicago & Alton. He and Hill, incidentally to their own wealth, brought comfort, competence, affluence, to millions of Americans they never saw. The period of railroad development so clearly set forth in the record and chart of our barometer from 1897, the end of the reconstruction era, to 1907, the beginning of the destruction era, was upon the whole the greatest, most deservedly successful and most creative period in American history.
A Cycle of Human Folly
We have seen and proved the correctness of Dow's theory of the price movement. We know that the stock market has simultaneously a major swing upward or downward, a secondary reaction or rally, and a daily fluctuation. But might we not almost go further and establish a sort of cycle of our own, not related in the least to those cycles which we have previously considered, with their imposing and instructive lists of panic dates? The Harvard University chart ventures as far as is wise and profitable. Its series is "Depression," "Revival," "Prosperity," "Strain," "Crisis," without assuming absolute length for any of these states, and even taking "Strain" and "Crisis," or "Crisis" and "Panic," or "Strain" and "Panic," as in some cases coincident. But there is another cycle which we can deduce from our records of the averages, which could almost be called a cycle of human folly.
It could only occur in a democracy such as ours, where a people with the power to govern themselves too rashly assume and misconstrue the greatest privilege of such a democracy the power to make their own mistakes.
Coxey's Army
It will not be difficult to show what I mean. In the year 1890, with a Republican President and a Republican Congress, the air was full of uncertainty and sectionalism; and legislation, which is always in some degree a compromise, had become an immoral compromise. A true statesman can compromise successfully on non-essentials with no real sacrifice of vital principles. But the Sherman Silver Purchase Act was a sacrifice of principle which brought about the gravest consequences, because it adulterated the very lifeblood of our financial system. The great and inevitable panic, due to consequent inflation and overspeculation, might well have come in 1892 had it not been that, in that year, we had an extraordinarily large wheat harvest coincidentally with a complete failure of the crop of Russia, our only considerable international competitor. The panic came, therefore, in 1893.
For four years after the country was full of very much the same kind of Populism which is so rife at present. Coxey's Army started from Masillon, Ohio, to march on Washington in 1904. Coxey's main postulate that prosperity could be restored with the unlimited issue of fiat money was marching all over the United States. The Middle West was rotten with it. The turn of the tide was marked by William Allen White's celebrated editorial, "What's the Matter With Kansas?" Railroad managers, during those dreadful years, were in the last depths of despair. All but a few strong and sound roads went into bankruptcy. As much as 87 per cent of the country's railroad mileage in 1896 was in receivership. Only with the first election of McKinley did the country emerge into a state of sanity and light.
Ten Prosperous Years
It had tried out the Populist follies -free silver and all the rest of them and found that they pointed in the direction of national bankruptcy. Politicians were terrified at the results of their rash enactments. For ten years, between 1897 and 1907, the paralyzing hand of politics was removed from the business of the United States. We never had such a period of prosperity, before or since. The railroad development in that time was greater than it had ever been before. It was a decade which saw the broadest and most beneficent industrial amalgamations, of which the United States Steel Corporation is the outstanding example. It was a time when the cost of living was upon the whole low, although it was rising in the latter part of the ten-year period. It was a time when wages were good, not merely in their amount as expressed in dollars and cents, but in their purchasing power.
"And Jesurun Waxed Fat, and Kicked"
But "Jesurun waxed fat, and kicked." Can it be that democracies cannot stand prosperity ? Or is there still no need to make so wide an assumption? We have seen that labor agitation reaches its maximum, not in the lean years, when unions are impotent or non-existent, but in the fat years, when labor is at a premium and the leaders have at their disposal more union funds than they can wisely spend. Agitation is not, as so many of us have assumed, the result of trade depression. It is, indeed, the kicking of the national Jesurun when he waxes fat. The dangerous foundation of the Populism which ineffaceably marked the nineties had been laid in the years before. We seem to be running into such an era of Populism once more. The war has, of course, thrown any possible "cycle" out of kilter, but the evil fertilization of the impressionable public mind, implanted by the agitation against personal property, is bound to bear its noxious fruit in the years to come.
Public Opinion's Second Thoughts
It would be extending the purpose of the stock market barometer, and the design of these discussions beyond their proper field, if I ventured upon a forecast based upon this cycle of popular folly. We can see how far behind us the golden ten-year period of true prosperity is. We can name the peak of it. We saw its sudden and dramatic collapse in 1907. The feverish productive activity growing out of the war is no fair test, just as it is no sound basis. Before another ten years like those between 1897 an d 1907 can be inaugurated, must the country go through a period at the end of which it will ask itself, not "What's the matter with Kansas?" but "What's the matter with America?" I would be a poor American indeed if I did not believe that the good sense of the American people can find the right answer when that day comes. There is no weaker fallacy of democracy than the one which assumes that public opinion is always right. It depends on what you call "public opinion." Such opinion, as represented by the voice of the noisiest, in its first expression is generally wrong, or right for the wrong reason. But the second thought of the great American people, as history shows, is usually right.
Recalling Lincoln
Annually we repeat to each other the great words of the Gettysburg Address. Lincoln declared that what was said there and be it remembered that he was not at the time considered the principal orator of that great occasion would bear little place in men's memories compared with what was done there. He underrated, with characteristic modesty, the imperishable quality of a great thought greatly expressed. Lincoln's words in 1863 at Gettysburg will be remembered by millions who will hardly know the conditions of that battle or which side won it, except to assume that the imperishable Union was there sustained. But if, at that time, there had been in operation a federal law to "recall" officers federally elected, it is well within the bounds of probability that Lincoln might have been recalled and not re-elected. It was not until the following year that his re-election to the presidency was a certainty, and there are readers of these discussions old enough to remember the moral depression of 1863 and its effect upon the public mind.
Paying for Government Meddling
It can be seen, from this instance of many, that the second thought of the American mind was right, where its first impression may well have been wrong. Look at the enthusiasm recently created in the Middle West by the Non-Partisan League, with its half grain of truth and its bushel of quackery or fraud. Dare we assume that we have extruded that poison from our system? Hardly a week passes that a bill for the creation of billions of fiat money, under one pretext or another, is not introduced into the Congress of the United States.
If there is one lesson which should have been burned in upon the public mind in the past decade, it is that when government interferes with private enterprise, even where that enterprise is directed to the development of a public utility, it can do incalculable harm and very little good. The people who develop the railroads and the natural resources of the country are only ourselves. Railroad ownership is, in a way, more representative than ever Congress can be. It includes every depositor in the saving banks, every holder of an insurance policy, and, indirectly, every holder of a United States bond, so long as the interest on that bond is dependent on taxation largely derived from railroad enterprise.
Legislating Everybody Poor
It must be admitted that this chapter is less about the averages as a barometer than as a record. But our discussions would be incomplete if the most important lesson of that record were overlooked for the easily understood psychological reason that it is written in such large letters across the sky. Look at the course of the railroad averages on the twenty-five-year chart. More than sixteen years ago the twenty active railroad stocks made the highest point on record, at 138.36, on January 22, 1906. They never saw that figure again, but came within less than four points of it in August, 1909, at 134.46. The next high point was in October, 1912, at 124.35 more than fourteen points below the record. On the next advance the net recession was still further, while the railroad average reached only 109.43 on January 31, 1914, the top of a half-hearted rally. Even the next recovery, in the first bull market of the war, only carried the railroad stocks to 112.28, on October 4, 1916. They did not share the bull market of 1919, as we know, for we have devoted an earlier chapter to the study of the reason.
To-day the price is fifty points below the record, and less than fourteen points above the low figure of July 25, 1898 more than twenty-three years ago. Analyze this steady decline over a period of sixteen years, sufficient to include the simple cycle of the Harvard University Committee on Economic Research at least twice over more than long enough to exceed the period between two of our greatest panics those of 1857 an d 1873 covering a time 60 per cent longer than the Jevons ten-year cycle. See how the steadily declining line of values mocks and belittles the assumed medial line of growing national wealth postulated in some of the better-known business charts. Can the richest nation in the world afford to allow its politicians to run its greatest investment and its greatest industry into the ground as steadily and stupidly as this? Are we throwing away the thing our fathers built, or allowing politicians to squander it, from some idea that the ruin of the railroad stockholders will make other people richer and happier? We know, or ought to know, that we cannot legislate everybody rich. But here is one more example added to that of Russia, of how it is possible to legislate everybody poor.
A Chart With a Forecast
Those familiar with the Harvard economic service will recollect that it uses three lines in its business chart a line of speculation, a line of banking and a line of business. It commits itself to no floundering attempt to show that "action and reaction are equal." Its service dates from after the war; but it publishes a chart from 1903 to 1914 inclusive, which is a most valuable confirmation of what has been here laid down in the discussion of the stock market barometer. Its line of speculation, during those twelve years, uniformly precedes the lines of business and banking. In other words speculation anticipates the developments of business, which is exactly what these chapters have been directed to prove.
The Harvard Committee on Economic Research takes the average stock market prices for its line of speculation. It recognizes how completely the war threw many such calculations out of gear by breaking up the very foundations upon which they were based. Harvard, therefore, does not publish any chart of the years of the war. I find, in looking back over my records and newspaper comments, that conclusions upon the stock market movement and its prophetic relation to the business of the country were dropped almost entirely for the same reason. We have seen that when the government took over the railroads on a guaranty we had remaining merely the speculative movement of the industrial stocks, without any corresponding movement of the railroads to check and confirm it. We have seen also, in analyzing the war period which the Harvard service not unwisely ignores, that the stock market did, in a most valuable way, act as best it could in holding before the public mind the possibilities of the war itself, notably in the bear market of 1917, and that it also foreshadowed the war in the line of distribution for the three months preceding its
outbreak.
A Movement Greater Than the Major Swing
But there is another indication given by the averages which, while of the greatest importance today, has been largely unrecognized. We have seen that the railroad stocks, where there was a free market for them, in the years under private ownership, shared the major swings; and that we had a bull market culminating in 1909, a bear market determined in the following year, a greatly restricted and hesitating bull market, especially in the railroad stocks, carrying into the latter part of 1912, and another bear market culminating immediately after the reopening of the Stock Exchange in December, 1914, following eighteen weeks of war.
There is a historical significance a lesson and warning of the very first importance in the general trend downward of the prices of railroad stocks from 1906 to June, 1921. This is a movement not only wider than the major swings but even more considerable than any of these assumed cycle periods with which a previous discussion dealt. It has extended nearly sixteen years. It is not only likely but as nearly certain as anything merely human can be, that the railroad stocks on the average will improve in the coming year 1922. But there is a radical reason why they will not, in any near period of time, attain the old freedom and buoyancy which they enjoyed in the later lifetime of great railroad builders like James J. Hill and Edward H. Harriman. A condition for railroad enterprise has been established which has not only taken much of the speculative value out of the stocks but much of the permanent value as well. It is a condition which has left the railroads themselves emasculated and weak, with their virile creative power removed.
Roosevelt and the Railroads
If Theodore Roosevelt could have foreseen the deadly consequences of the agitation against railroad corporations which he inaugurated; if he could have realized that he was not applying temporary checks to temporary evils, that his policies, so called, carried to their logical conclusion, would cripple railroad enterprise for incalculable years to come, and perhaps forever, in order to punish a few who had abused the power which necessarily accrues to successful enterprise we may be sure he would have acted far otherwise. The public power to reform has been construed, in the past fourteen years, as the power to destroy. Railroad development, which in the past has not only accompanied the increase in population but, on this continent at least, has preceded it, is now moribund or dead. No new capital has been forthcoming for the greatly needed extension of railroad facilities to parts of the country which do not enjoy them, to say nothing of greater terminal facilities. Lines of communication are the very arteries of civilization. But the adaptation of the Roosevelt theories or rather the misconception of those theories, the ascription to Theodore Roosevelt of ideas he never held has resulted in a hardening of those arteries, in a weakening of the 'great central heart which pumps the lifeblood through them.
An Arrested Development
We can see the fact for ourselves in the mileage of the United States taken contemporaneously with each ten-year census. If we had two hundred and forty thousand eight hundred and thirty miles of railroad in 1910 an increase of nearly 25 per cent since 1900 and more than double the railroad mileage in 1880 we should have had a continuing increase, shown in the census of 1920, of as much as ninety thousand miles. We have not had one-sixth of it. The increase has been less than fifteen thousand miles, the irreducible minimum, just enough to keep the railroads alive. A "craven fear of being great" has possessed our politicians. They have paralyzed the growth of our most important industry rather than permit a few conspicuous individuals to grow rich by the turning of great ideas to great needs. Harriman and Hill were rich when they died. I knew them both, and I know that their wealth was almost fortuitous. They were rich because they could have done nothing creative without the necessary financial strength to make them independent. But Harriman never controlled the stock of one of the railroads he directed. He was implicitly and deservedly trusted by the stockholders. He never had a voting majority in Southern Pacific, Union Pacific or even Chicago & Alton. He and Hill, incidentally to their own wealth, brought comfort, competence, affluence, to millions of Americans they never saw. The period of railroad development so clearly set forth in the record and chart of our barometer from 1897, the end of the reconstruction era, to 1907, the beginning of the destruction era, was upon the whole the greatest, most deservedly successful and most creative period in American history.
A Cycle of Human Folly
We have seen and proved the correctness of Dow's theory of the price movement. We know that the stock market has simultaneously a major swing upward or downward, a secondary reaction or rally, and a daily fluctuation. But might we not almost go further and establish a sort of cycle of our own, not related in the least to those cycles which we have previously considered, with their imposing and instructive lists of panic dates? The Harvard University chart ventures as far as is wise and profitable. Its series is "Depression," "Revival," "Prosperity," "Strain," "Crisis," without assuming absolute length for any of these states, and even taking "Strain" and "Crisis," or "Crisis" and "Panic," or "Strain" and "Panic," as in some cases coincident. But there is another cycle which we can deduce from our records of the averages, which could almost be called a cycle of human folly.
It could only occur in a democracy such as ours, where a people with the power to govern themselves too rashly assume and misconstrue the greatest privilege of such a democracy the power to make their own mistakes.
Coxey's Army
It will not be difficult to show what I mean. In the year 1890, with a Republican President and a Republican Congress, the air was full of uncertainty and sectionalism; and legislation, which is always in some degree a compromise, had become an immoral compromise. A true statesman can compromise successfully on non-essentials with no real sacrifice of vital principles. But the Sherman Silver Purchase Act was a sacrifice of principle which brought about the gravest consequences, because it adulterated the very lifeblood of our financial system. The great and inevitable panic, due to consequent inflation and overspeculation, might well have come in 1892 had it not been that, in that year, we had an extraordinarily large wheat harvest coincidentally with a complete failure of the crop of Russia, our only considerable international competitor. The panic came, therefore, in 1893.
For four years after the country was full of very much the same kind of Populism which is so rife at present. Coxey's Army started from Masillon, Ohio, to march on Washington in 1904. Coxey's main postulate that prosperity could be restored with the unlimited issue of fiat money was marching all over the United States. The Middle West was rotten with it. The turn of the tide was marked by William Allen White's celebrated editorial, "What's the Matter With Kansas?" Railroad managers, during those dreadful years, were in the last depths of despair. All but a few strong and sound roads went into bankruptcy. As much as 87 per cent of the country's railroad mileage in 1896 was in receivership. Only with the first election of McKinley did the country emerge into a state of sanity and light.
Ten Prosperous Years
It had tried out the Populist follies -free silver and all the rest of them and found that they pointed in the direction of national bankruptcy. Politicians were terrified at the results of their rash enactments. For ten years, between 1897 and 1907, the paralyzing hand of politics was removed from the business of the United States. We never had such a period of prosperity, before or since. The railroad development in that time was greater than it had ever been before. It was a decade which saw the broadest and most beneficent industrial amalgamations, of which the United States Steel Corporation is the outstanding example. It was a time when the cost of living was upon the whole low, although it was rising in the latter part of the ten-year period. It was a time when wages were good, not merely in their amount as expressed in dollars and cents, but in their purchasing power.
"And Jesurun Waxed Fat, and Kicked"
But "Jesurun waxed fat, and kicked." Can it be that democracies cannot stand prosperity ? Or is there still no need to make so wide an assumption? We have seen that labor agitation reaches its maximum, not in the lean years, when unions are impotent or non-existent, but in the fat years, when labor is at a premium and the leaders have at their disposal more union funds than they can wisely spend. Agitation is not, as so many of us have assumed, the result of trade depression. It is, indeed, the kicking of the national Jesurun when he waxes fat. The dangerous foundation of the Populism which ineffaceably marked the nineties had been laid in the years before. We seem to be running into such an era of Populism once more. The war has, of course, thrown any possible "cycle" out of kilter, but the evil fertilization of the impressionable public mind, implanted by the agitation against personal property, is bound to bear its noxious fruit in the years to come.
Public Opinion's Second Thoughts
It would be extending the purpose of the stock market barometer, and the design of these discussions beyond their proper field, if I ventured upon a forecast based upon this cycle of popular folly. We can see how far behind us the golden ten-year period of true prosperity is. We can name the peak of it. We saw its sudden and dramatic collapse in 1907. The feverish productive activity growing out of the war is no fair test, just as it is no sound basis. Before another ten years like those between 1897 an d 1907 can be inaugurated, must the country go through a period at the end of which it will ask itself, not "What's the matter with Kansas?" but "What's the matter with America?" I would be a poor American indeed if I did not believe that the good sense of the American people can find the right answer when that day comes. There is no weaker fallacy of democracy than the one which assumes that public opinion is always right. It depends on what you call "public opinion." Such opinion, as represented by the voice of the noisiest, in its first expression is generally wrong, or right for the wrong reason. But the second thought of the great American people, as history shows, is usually right.
Recalling Lincoln
Annually we repeat to each other the great words of the Gettysburg Address. Lincoln declared that what was said there and be it remembered that he was not at the time considered the principal orator of that great occasion would bear little place in men's memories compared with what was done there. He underrated, with characteristic modesty, the imperishable quality of a great thought greatly expressed. Lincoln's words in 1863 at Gettysburg will be remembered by millions who will hardly know the conditions of that battle or which side won it, except to assume that the imperishable Union was there sustained. But if, at that time, there had been in operation a federal law to "recall" officers federally elected, it is well within the bounds of probability that Lincoln might have been recalled and not re-elected. It was not until the following year that his re-election to the presidency was a certainty, and there are readers of these discussions old enough to remember the moral depression of 1863 and its effect upon the public mind.
Paying for Government Meddling
It can be seen, from this instance of many, that the second thought of the American mind was right, where its first impression may well have been wrong. Look at the enthusiasm recently created in the Middle West by the Non-Partisan League, with its half grain of truth and its bushel of quackery or fraud. Dare we assume that we have extruded that poison from our system? Hardly a week passes that a bill for the creation of billions of fiat money, under one pretext or another, is not introduced into the Congress of the United States.
If there is one lesson which should have been burned in upon the public mind in the past decade, it is that when government interferes with private enterprise, even where that enterprise is directed to the development of a public utility, it can do incalculable harm and very little good. The people who develop the railroads and the natural resources of the country are only ourselves. Railroad ownership is, in a way, more representative than ever Congress can be. It includes every depositor in the saving banks, every holder of an insurance policy, and, indirectly, every holder of a United States bond, so long as the interest on that bond is dependent on taxation largely derived from railroad enterprise.
Legislating Everybody Poor
It must be admitted that this chapter is less about the averages as a barometer than as a record. But our discussions would be incomplete if the most important lesson of that record were overlooked for the easily understood psychological reason that it is written in such large letters across the sky. Look at the course of the railroad averages on the twenty-five-year chart. More than sixteen years ago the twenty active railroad stocks made the highest point on record, at 138.36, on January 22, 1906. They never saw that figure again, but came within less than four points of it in August, 1909, at 134.46. The next high point was in October, 1912, at 124.35 more than fourteen points below the record. On the next advance the net recession was still further, while the railroad average reached only 109.43 on January 31, 1914, the top of a half-hearted rally. Even the next recovery, in the first bull market of the war, only carried the railroad stocks to 112.28, on October 4, 1916. They did not share the bull market of 1919, as we know, for we have devoted an earlier chapter to the study of the reason.
To-day the price is fifty points below the record, and less than fourteen points above the low figure of July 25, 1898 more than twenty-three years ago. Analyze this steady decline over a period of sixteen years, sufficient to include the simple cycle of the Harvard University Committee on Economic Research at least twice over more than long enough to exceed the period between two of our greatest panics those of 1857 an d 1873 covering a time 60 per cent longer than the Jevons ten-year cycle. See how the steadily declining line of values mocks and belittles the assumed medial line of growing national wealth postulated in some of the better-known business charts. Can the richest nation in the world afford to allow its politicians to run its greatest investment and its greatest industry into the ground as steadily and stupidly as this? Are we throwing away the thing our fathers built, or allowing politicians to squander it, from some idea that the ruin of the railroad stockholders will make other people richer and happier? We know, or ought to know, that we cannot legislate everybody rich. But here is one more example added to that of Russia, of how it is possible to legislate everybody poor.
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