The Washington times., 1912-06-16

the sluggishness Of the market for
railway bonds. for It appears to be in.
creaslngly difficult for the large trans
porting corporations to procure the
capital necessary. for, the maintenance
OF ways and equipment, to say nothing
OF extensions and improvements,
through the old methods of financing.
Short term notes are still the recourse
OF the corporations when hard pressed,
but II Is an open secret that even these
nave become very slow of sale, except
with the best corporations. and the
manner in which the railways will pro-
| cure needed capital is one of the most
perplexing. problems Of the future.
or course things cannot continue as
they are Indefinitely in the market for
Investment capital. Some day the short
term notes viii have to be funded into
lons time obligations. and the volume
OF temporary borrowing has become so
enormous that 1t seems unlikely that
the corporations can take them UP ex-
cept at higher interest basis than
the past. 1t Is not difficult to imagine
than formerly through new issues of
a permanent character brought out by
| old concerns. They would simply de-
press further the vast volume OF out
standing obligations of these corpora
tons and effect every savings bank,
| insurance company, trust estate, and
endowed charitable or educational body
IN the land. Naturally It is the fear of
this that has influenced the slow but
persistent liquidation which is In evt-
| dence In the bond market.
Congestion of Capital Abroad.
This condition is by no means pecu-
liar to this country, but is practically
| or worldwide application. To cite but
one instance. British consols declined
during the week to rs 3-16. establishing
new low record for the world g
| premier security" since they became
"a per cent issue At the same time
| new bonds have become virtually un-
| salable In the London market, and the
| cables conveyed the information that
the underwriters of the s22 500, 900 New
Zealand per cent loan-a trust invest
ment in Great Britain-were compelled
to take 81 per cent of the Offering. AS
matter of fact the congestion in the
| investment markets Of Europe appears
to be. II anything, more pronounced
even than In our own. 1t Is manifest ed
| In the sagging tendency of French
rentes, as well as consols, and Il is
ahecting the national and corporation
| tunds or Germany, Austria, and Italy
| as well.
| On the surface this phenomena Of
world wide change in established stand
ARCS or the worth Of investment capital
| appears without Influence in the marke I
| Tor temporary loans; that is, time and
call funds, dis counts and rates for com
mercial paper rule easy pretty much
the world over: and the Imperial Bank
its :ninin'um discount rate from S to
~ per cent But this action seems 10
have been distrusted even in Berlin,
and that IL marks no definite change in
t@s, -
| pears {" he the least satisfactory Of
eny abroad, is indicated by the fact
that the reduction was immediately col
lowed lowed by purchases Of gold BY Ger
he critical period in the GeIman mon
ev market Is July l, and until that da to
| Is safely passed international bankers
| Will not be wholly free from a feeling
| Of apprehension.
Is Foreign Adjustment Pending7
The situation in Germany has been
compared 20 that which sometimes pre-
wallis in the Alps. when tourists are
] cautioned against blowing Il horn lest
they bring down an avalanche. The
| customary explanation is that the
heavy production of gold in recent years
has ovcrstimulated industry. and that
| capital Issues have multiplied faster
than the absorbing power or investors.
That an adjustment must come Is re-
garded as inevitable oy those who have
studied the situation. and It is assert
ed by them that in such adjustment
rests the correction of high prices and
the lika but the authorities differ on
whether this correction will be brought
about by the shock Of liquidation or by
slow and orderly retreat, such as
marked our own experience after 1897
| What effc t IN adjustment abroad
| would have upon our markets is mat
ter OF conjecture. Germany undouhted-
ly Is n heavy borrower in the local
\ money market. but these loans are TO
the strongest borrowers and are amply
| secured and they are not likely to
thher our bankers. AS TO other mat
| ters as this country started its liqui-
dation first in the panic of 1907 and fol-
lowed It by slow adjustment in bust
ness thereafter. II probo biy is in the
best position Of any to stand a stain
II anything should 20 wrong abroad
Today's bank statement reflected large
increases in loans and deposits. which
were not explained by any known op-
crations of the week. In consequence.
| however. Of the dullness OF business on
| the Stock Exchange and the ease of
money, the sta atemen. attracted no par
! ticular attention.