Evening star., 1915-07-04

Although a number Of railroads
showed reported increases in gross
earnings in April. there was a loss OF
2.7 per cent in revenues as compared
with the gross Of April, 1914.
In January of this year there was a
loss of 2.3 per cent in net earnings in
| comparison with January figures in
! 1914. February showed a wonderful
pared with the same month in 1914.
made from a gross decrease Of 1.9 per
cent. March likewise showed a net
gain Of IL per cent from a gross loss
Of 7.3 per cent.
New British Loan Likely.
It is reported that large banking con-
Germs in New York city have been ap-
preached concerning the private 1ota-
tion of a three Observation-Disclosures dollar
loan, although no definite proposition
has been made as yet.
Terms as follows were suggested:
British treasury bonds, free OF income
tax in Great Britain, bearing per cent
per annum interest, three to ten years
maturity. with the guarantee that no
future loan shall be made at higher
rate of interest during the life OF the
proposed loan.
Another one-hundred-million dollar
loan has reached the conversation"
stage.
May Be Billion.
The National City Bank in its July
circular says that it is not improbable
that the warning countries will estab-
lish credits amounting to $1,000, 100000
in this country.
After gold shipments and the return
Of our securities, the alternative is the
placing OF loans In this country, ana
the most promising suggestion as to
these is scheme for borrowing Amer
lean securities owned in Great Britain
and France, and pledging them here as
the basis of an issue OF notes. This Is
being done in France, and If the securi-
ties can be obtained the policy may be
largely extended. That loans of this
character can be placed in the United
States. the proceeds to be expended for
our products. admits of no doubt.
There Is SO much idle money in this
country that 1t does not seem tmprob-
able to say that billion dollars Of
grade railway and municipal bonds of
American issue are available for the
purpose.
Discussing the effect of the war upon
nations, the circular says in part:
aside from the difficulties Of trans
portation, the allied countries are nat
urally reluctant to reduce their stocks
Of gold, which are the basis Of their
currency systems. but it is not likely
that the governments will discontinue
the purchase of war supplies, or of
such necessaries as food, in order to
retain gold. The need for these things
is imperative. and the gold was accu-
mulated largely for just such an emer-
gency. It is. moreover, a mistake to
suppose that the domestic currency
systems will collapse unless there Is a
given percentage of gold behind them.
An irredeemable paper currency will
fiuctuate in value. and hamper trans-
actions with other countries according
to the degree of the fluctuations. 1t is
misfortune for any country in this
age Of international trade to be off the
gold basis. but whom a country is en-
gagged in war smaller misfortunes do
not count.
"The fact is that q currency fixed upon
a gold basis is luxury that only
few countries have been able to afford
sia and Austria-Hungary established
gold payments in 1897 and Italy since
then. Few countries have gone through
a great war without suspending specie
payments. The Bank of England was
of the gold basis throughout all Of
Napoleon's time, and our own civil war
experience is familiar. It is safe to say
that none Of the countries will hesitate
to use their gold as long as 1t lasts.
for governmental purposes. although
ations of exchanges in ordinary COM
mercial transactions.
The Bank Of France holds about
$7s0.oo0.o00 of gold. which constitutes
it's note circulation outstanding June l..
The Bank of Russia holds $855, 100000.
which nearly amounts to so per cent Of
its outstanding circulation.
The discount of approximately 2 per
cent on the pound sterling in convert
ing London credits into dollars, while
extraordinary il Judged by normal con-
ditions, Is not SO In comparison with
all the other abnormalities of the pres
ent trade situation. such as the fluctu-
commodity prices. 1t Is very small
conversion cost compared with that on
other European units.
The cost of converting francs into
dollars is 10 per cent, of converting
marks IL per cent to Is per cent, and
Of rubles 20 per cent to IS per cent.
Under present conditions such dis
counts do not necessarily mean that
the currencies of these countries are
in the home markets to any
such degree. OF course, II goods are
Imported and paid for at such rates.
the prices of such goods must be
affected accordingly. but unless import
ed goods are large factor in the mar
influence upon other prices is per-
ceptible."
Changing Value Of Capital.
Under this caption Bache & Co. of
New York have this to say:
'It is perhaps unfortunate, from some
points of view. that the New York
city loan could not have been brought
out before the English loan had au-
thoritatively marked up the price of
capital for the world and had forcibly
revealed the great changes which ten
months of destruction have made in
the outlook for money.
1T can, of course, be said that II this
had been done and the loan had been
subscribed for around 103h (the price
which the curb first appraised), that
1t would have been SO subscribed on q
false estimate of the situation of capi-
tai in the world-an estimate which
the figures of the English loan would
have corrected. Then the correction
would have meant loss to the sub
scribers. instead of to the city, and
disappointment would have been all
the greater. In other words, 1t Is bet
ter to know the truth and base action
upon 1t. than to have an inflated op-
timism prevail for a short period, only
to fall the harder.
I'VE are arriving now only at what
was expected from the very start
namely, that the demands of an i'm
mense war for immense volumes of
capital was bound to elevate interest
rates. 1t will be remembered that 1t
was a great surprise to find the earlier
- Itoh loo nut o,,t AZ rat o11y