New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-03-26
CHEAP CONS0LS.
Il Glut of Borroring and What
Comes of 1t.

@AC N~UNAONS5 Ola IdSHlOUeQ 6AttoA OSS~ -
gard consoIs as a barometer. The metaphor
has lost much of it's force when consols nave
been falling steadily for a long period and have
reached this week the lowest level ever known
IN time Of peace There is not cloud anywhere
In the European sky. and national industries
are well employed under commercial conditions
which are highly favorable for general eXpan-
Sion OF prosperity. Yet consols have fallen oe-
low 80 for the first time since 1866, when Prus'
STA and Austria Hungary were at war and there
was bankers panic; and to find lower quota
tions than this weeks for the premier security
one must go back to the revolutionary cyclone
Of 1S4S or to the period OF 1892 With con-
soils at S4A. there is no visible centre OF fnan-
cial disturbance. unless it is Wall Street. and
the experts do not pretend to know what is
going on there whether there has been
marked shrinkage of American credit in London
The so-calied barometer has been artifcially
changed during the last twenty years, so that
comparisons of values and conditions cannot be
effectively made. Consols bearing per cent
interest. as they did before 1888. were a differ
ent instrument for financial measurements from
consols at pa per cent. the rate for fifteen
years or at 21a per cent. which is now carried
by them. 1t is like testing temperature or air
pressure by instruments with altered graduated
scales.
Political partisans naturally take advantage
OF an opportunity for attacking the govern
ment. They assert that cheap consols indicate
the demoralizing effects Of Radical administra-
ton. Consols have gone down. as Kafhrs have
dropped because there is distrust of a govern
ment which is Indifferent to the interests of the
empire. That is the charge; and it is followed
with assumptions that brewery stocks have de-
preciated because hostile legislation is antici-
pated that English railway securities have
shrunk because Mr.. Lloyd-George is plotting
against them. and that all classes of home in
vestments are menaced by the governments
dalliance with the Labor party and with so
cialsm. The readers OF THE Daily Mail" must
be both ignorant and credulOus il they are inn
posed upon by partisan vapOrng OF this sort
IL Is not lack OF confidence in a government
that IS now cutting down rational expenditures
that explains why consos are low and other
securities depressed. 1t is the surplus of In
vestments entering into destructive competition
with oldtIme consols that has sent them down
point by point; and the Conservatives have had
moro TO do with this Increased supply than the
Liberals. 1t was a Unionist government that
was responsible for the financial management
OF the Boer War and the Irish Land act. and
tho increase OF the national debt has helped 20
cheaper consols. The expansion OF municipal
indebtedness during the last decade has tended
TO depress consols by multiplying safe invest
ments at higher rates OF interest. and outside
London the majority OF the councils have been
controlled by Conservatives. The partisan dia-
tribes against tho Liberal government pad
ded out with exaggerated estimates OF Progress
sve liabilities which have not been incurred
by the London County Council and by forecasts
of loans for old age pensions. which have not
been sanctioned. The Liberal government is
carrying into operation the wyndham act FOR
land purchase IN ireland. but otherwise ~ is
not increasing the national debt. Mr. Asquith
is compelling the Admiralty and other depart
ments to pay as they go. and the Prime Minis
ter insists upon having retrenchment OF current
expenditures.
These partisan methods OF accounting for the
depression OF consols are unsclentihc as the
search for water with witch hazel divining rods
The world is borrowing money on a large scale
and consols at 2Is per cent have lost their at
tractive power when more remuneratye invest
Tnents be made with adequate security. One
has only TO compare the prices OF consols with
japanese Chilian 5s. American As or
Canadian 3s, or French rentes. as they were
four years ago and they are to-day, IN order
TO understand why English investors are put
ting their money into foreign issues The re-
markable activity OF all the principal industries
Of the kingdom has created a ceaseless demand
for money and London banks have been called
upon to finance large operations for foreign ac-
counts. Money IS too valuable to be locked IN
in consols when large masses Of II are wanted
at home and abroad and good rates are paid for
it, So much capital is needed for current trade
and international operations that there is no
money for Stock Exchange finance. The stock
brokers are left to complain Of bad business and
investors TO watch with dismay shrinkages OF
values With all the heavy borrowing at high
rates. consos go begging This is the natural
explanation Of the depression OF all securities
which yield either low rates OF interest or un-
certain returns in dividends. Certainly It Is
more convincing than Trades against "beggar-
my-neighbor" finance in America, with high
class stocks on the bargain counter for clear
ance sales, or than the partisan indictment Of
the Liberal conspiracy against English invest
ors. by which more money has been lost In de-
preciated shares during fifteen months than
was expended in the Boer War INF
ENGLAND To HAVE A CApDTNAT