The Richmond Virginian. (Richmond, Va.) 1910-1920, 1914-11-02
EFFECT or GREAT WAR;
ON RAILROAD RATES
Transportation Expert Points Out Both the Direct and lndiret
Effect of World Conflict Americas Carriers and as
Their Financial Condition s

fall of prices OF securities to 4 fOWoe
level are facts which are appafsnf1y
inevitabl II should be possible. hOWs
ever. to SO distribute the shock OF The
descent that quotations on the e&&
changes should oscillate around thles
new center-of gravity instead Of piuno.i
ing violently below II even temp0r@
arily
Leaving aside the question OF avere-A
ing panic. the most important Queo~s
ton involved in the return OF Am9f3e
can securities held abroad 10 the mani
ner in which II will diminish the fun4
of capital which IL normally ayailabfe
for new investments. In this dtrsc-
ton the effect Of the European waT
loans will be acuteiy felt in this cousi-.
try even II not dollar OF American
money appears as a bidder for the
new loans. ss4.
1T has been recently calculated BY
Sir George Paish. the economic sd
wiser of the British Government, THAT
the total amount of foreign capit1t
invested in the United States IL &S,-
100000 He also estimates that for
eign ca pital, chiefly British, 10 inveef-
ed in Canada to the amount OF shout
S3,5o0, 900, 600. and in other American
countries including all Latin Ameri.
can to about 10000, 900, 900.
1T 10 these enormous sums In for
eign holdings which represent the most
serious menace to the American mar
ket and to the possibilities OF our ~.
ture financial development THIS
money has been advanced TO US from
| time 70 time over lonx period. be-
cause there was not a sufficient FUND
| in America TO meet the rquirements
OF our development.
THE newer States OF the West could
1 49, L.
ways, banks. grain elevators. barns
and homes. il foreign capital had NOT
been poured into them in hundreds
of millions after eur Civil War. What
will he involved. In effect, II Euro
pean investor. undertake to market
large part OF their holdings Of
| American securities in New York, VIII
be the conversation OF this gigantic
time loan, payable only over lont
terms of years, into call loan. pay
able as rapidly as the securities can
be sold on the New York stock En-
change 1t would hardly be within
the range OF the capacity OF the bank :
! ing system OF the country to abUOrD
the entire, amount Of 5000, 0V0, 0eVs
estimated by Sir George Paish 70 rep--
resent foreign investments in the
/ United States,
I The amount in such securitie4
| which Is returned to the American
market will influence directly tbs
amount Of investment capital remains
ing In the United States available for
other purposes II il at this point
| that the problem comes directly home
Ito American railway managers ana
/ their bankers.
"If the country In subjected to =
severe strain in order to take back
| from European holders an amount OF
securities representing the fund usual !
! ~ available for Investment for one
year. or for several years, there viii
be practically no surplus left for in-
vestment in new railway issues
Here again quebtion OF vital
Importance will be how far the issue
can be made attractive, not only in the
rate Of interest paid. but in the SUR
plus OF earnings above the operating
expenses and existing fixed changes
OF the issuing company, which Will
give complete guaranty OF security
| to the new Investments