The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1914-05-09
WHEN WAR COMES.

So far as the security markets Of the
United States are concerned. this country
was at war with Mexico for a week be-
fore Vera Cruz was seized. II is inter
esting to note the effect Of this condition
upon the various classes OF securities in
which people invest their money: for the
investor. putting away money in times
of peace. feels that he ought to be get
ting ready for war or for any other dis
turbance that may happen to arise He
wants to be immune from risks OF an
accidental or incidental sort. and 10 be
quite certain that he Is going to get his
revenue and have his principal safe when
the drums of war are beating. as well as
in the fighting times of peace.
Starting at the top. how did the begin.
ming OF this ENHANCEMENT affect the best
and safest classes of security in which
men invest? What of the government
bonds. State bonds. prime municipal
bonds. and very high-grade railroads:
The United States government bonds
were quoted before the Tampico incident
at about IS. At the end of the first week
Of real hostilities they were quoted
around 9Sa. The bonds of New York
State. considered by all critics to be very
high-grade indeed. slipped of about FER
cent in value during the same period.
The issues Of New York City. of which
Hdppcncu 10 ne lfI IN
the market at the time. had a corre-
spending decline. and it was again illus
trated that a syndicate does not always
have an easy time earning its alleged
profits. The best railroad bonds stood
firmer than the municipal issues, partly
because the municipal issues were at the
top of long rise and partly because peo-
pie who held the high-grade municipals
sold out in expectation of finding a safe,
and bfitable use of their money in buy
ing some war bonds from Washington be-
fore long.
Here one can get a snapshot of the
meaning of an outbreak like this in the
very highest grade securities. decline
of SO on a thousand dollar bond is not
what one would call astonishing or dis
turbing. 1t is. in fact, about the fuctua-
ton that one looks for day by day In
stocks and in speculative bonds. 1t is not
thing to disturb any one unless he is
man easily disturbed and prone to become
frightened a shadows.
What happened to the next grade Of Sc
curities the fairly safe and eminently
respectable and extremely popular issues
Of bonds and investment stocks that con-
stitute perhaps the bulk of the business
OF Wall Street week by week and that
pass to and fro from hand to hand quite
freely In the markets? They slipped OF
rather more easily than the high-grade
bonds. Declines of one, two and even
three points were not at all uncommon.
The real investment stocks broke more
than the bonds. Where markets were
very narrow and demand comparatively
light, bad breaks of four and five points
took place. The average decline in the
first ten days of the disturbance was
about half a years income. one might
say.
That. in itself. is nothing to worry
about. 1t sc happened in this case that
in addition to the complications in Mexico
there was bad financial position in
Berlin, with the usual uneasiness over
the continent of Europe, which. consid-
cred as financial individual. has a much
more highly developed nervous system
than the United States. A small pain
in the vast interior Of Europe
creates more disturbance in all the capt.
tails of that continent than we can man
age to conceive Of in this country where
pains are apt to be localized. TherefoIV.
Europe sold and sold heavily, even of t,ss
investment issues which 1t holds.
Turn. then. from the pure investment
market to the stock market, where men
put their money in the belief that they
are buying safe securities and where
tremendous number of people put money
year by year ir stocks yielding all sorts
of incomes and selling at all sorts Of
prices and showing all sorts Of security.