SINCE October 1923 there has been an upward movement in securities, and especially in stocks, remarkable in extent as well as in duration. It has already advanced the prices of railroad and industrial stocks, with two substantial recessions, both in 1926, to figures, in the industrial group at any rate, far beyond any level previously attained, while the upward movement has persisted for nearly twice the average length of time of such major 'bull' movements, counting seven of them from and including that which began with the reëlection of McKinley in 1900.

What is equally remarkable to the experienced observer is the breadth of the public interest. At the beginning of this century it was impossible to find twenty really active industrial stocks from which to construct a dependable average of daily fluctuations. Up to 1914 the well-known Dow-Jones average contained only twelve stocks. The difficulty in the twenty stocks used to-day is in selection. There are scores of such securities of at least occasional activity, compared with the meagre dozen of even twenty years ago. The holding of these securities, moreover, is widely distributed, not merely in stocks of a reputation established over a long period of years, like United States Steel or Pennsylvania Railroad, in which the average holdings are probably less than fifty shares. The extent of popular distribution is remarkable in practically all the great industrial group, while the railroad common stock has become a welcomed medium for investment for people of relatively

It is this popular confidence which is the underlying strength of the stock market nowadays. There have been bull markets, as, for instance, that of 1908-9, in which the real public interest was almost negligible. In the absence of any attraction for the small investor, the facilities for distribution at the end of the upward movement then were so poor that there was an ensuing period of four years of dullness in the stock market, during which time seats on the Stock Exchange sold at less than one fourth of the price they command to-day. Conditions as they are now could not have been anticipated during the severe liquidation and deflation of 1920-21. The present era of confidence seems exactly to synchronize with the return of the railroads to efficiency, after government ownership, with government direction of management, had cost the taxpayer, exclusive of what the stockholders lost, $1,600,000,000 in twentytwo months. There has been, at the same time, a development of mass production never seen in the world before, accompanied by wages which are to-day, on the average, above the supposedly artificial levels established during the war. This is widely true of all the greatest industries, including transportation.

In analyzing this, some of the old measures and economic rules do not help us, because, while wages have advanced, the tendency of commodities has been downward. The decline in the cost of living inevitable after a great war, but recurring at intervals of a quarter of a century or more, increasing as it does the purchasing power of the worker's dollar, has not had the

customary effect of reducing the number of those dollars. It might almost be said that in America the worker is his own best customer. I am inclined to think that the demand for luxuries may have been carried too far, especially in view of the facilities afforded by purchase on installment. It may even be true that a large part of our people are living on next year's income. Certainly they are extending their ideas of saving far beyond the simple methods of a generation ago, and this influence is undoubtedly felt in the great stock market which has, on numberless occasions, been to SO important an extent a barometer of business.

What is still more significant, as affecting our national life, is that in this widely extended public confidence in the country's financial centre the political influence of Wall Street, for good or evil, has steadily declined. I can remember a day when Wall Street maintained something suspiciously like a lobby in Washington. In the earlier stages of the railroad recovery which culminated in 1907 such a machine seemed, if not indispensable, at least serviceable. Of course politicians regarded such activities with dislike and distrust, and

I am glad to think that I have always condemned them. It is true that at Albany in the nineties the introduction of strike legislation, aimed at public utility companies and the railroads, was a regular business, amounting virtually to thinly disguised blackmail. It was the inevitable reprisal for privileges which a certain kind of capital had sought and bought almost openly from the leaders of the great political machines. Practically no state was free from it and Wall Street was always on the defensive, the good suffering with the bad.

There is no Wall Street lobby at Albany, Harrisburg, Trenton, or Washington now. Wall Street asks to be let alone, and vindicates its right to be let alone by the fullest publicity for

everything in which it deals. The strength of the security market, the breadth of legitimate interest in it, may be largely ascribed to the confidence which has been established. Crooked finance, and there was plenty of it thirty years ago, in traction franchises and the like, is an easy mark for the crooked politician. He has no such opportunity where the fullest reports of the management of all corporations are forthcoming. It is true that regulatory legislation for the railroads has not always been well advised, or even sincerely directed to the consideration of all interests in the production of transportation. But it can no longer be said that the railroads have no friends, even if there are still plenty of politicians willing enough to impose impossible restrictions on earnings to conciliate the farmer vote.

I am convinced that this is a matter which is mending itself, and one of the greatest safeguards is the wide distribution of ownership. In cities and states where the gas, electric, traction, and other companies are locally owned the politician finds corporation-baiting poor politics.

There is a corollary to this investment by the small capitalist at high prices. It is that when stocks become widely distributed after a long advance, in the present instance extending over three and a half years, the market becomes vulnerable, not to say top-heavy. A great deal of the buying has been speculative, although if the brokers' loans are set against the total stock ownership of the country there is no alarming comparison. But no tree grows to the sky, and when deflation is forced in one part of the national business something has to be turned into cash to protect the position. People sell what they can secure a market for at some price, in order to protect commitments they cannot liquidate at any price. The condition now is one which seems to call for more than ordinary caution.