The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-06-23
THINK BRITISH LOAN
MEANS HIGH MONEY
Vow York Bankers Believe Ef-
feet Will Be Greater Cost
of Capital.
DJyIDED on EFFECT HERE

The rise OF a full | per cent. in dis
.,u,,s In London yesterday as the result
a, the epoch making placing of the en-
,i,. British national debt on a 40 per
-, interest basis through the new war
Ian plan. announced In Parliament on
Monday. convinced bankers and others
n the financial district here Yesterday
,b,, the tremendous expenditures made
necessary u! the war ""u "a"e 'api'"'
more costly.
The FIRST impulse of financiers and
sensational bankers was to applaud
he craftsmanship of the British in
S,,rirs out A loan so comprehensive
~ ~ features and so complete in its
snneal 10 the nation. The bigness of
~ measure. both in the size of the
loan ard IN its provisions for taking
e,rs OF the existing national debt on
air and equable terms. was praised
tv bankers here as placing the loan
an a par with anything that had ever
h.sn done before in financial history
and. in some respects, as exceeding pre-
ylous accomplishments.
The all absorbing topic OF CONVERSE
lion In Wall street yesterday was the
nnpresedentcd and radical departure In
iii the new loan from tHt oiu bTltlSH llSCdl
policy in the jump In the interest rate.
From the -. per cent. rate carried by
consols. the general Government loan.
,he rate has gone to 81. per cent. in
the war loan OF last November and
now TO ~ per cent. for the entire ma
,ional debt. through conversion privi-
leres accorded to the previous issues.
See signal for Higher Prices.
Bankers who have paid close atten-
ton 10 Government finance OF Europe
during the war II to its economic eff
,ects on the rest of the world. and par
icularly this country. saw In this
marked writing up of the price OF capi-
tal a signal for higher prices for money
the world over. 1t has been a subject
O, comment for months in Wall Street
that the discount and money rates in
Ill London should have been so abnormally
low as those that have prevailed. Money
has seemed Utmost to go begging in
London.
Bankers here have warned that il
was only a temporary and artificial sit
uaton and hat as soon as the vast
expenditures Of the war began 20 be
capitalized and long term securities sold
the effect would Immediately be to ad-
vance the price OF money.
This was the result. Discounts in
London on short bills advanced yester-
day from the Is per cent. of the day
before the loan announcement TO 3Is
PEI cent. and I per cent. and for long
bills from 3 and a. per rent. to 4
and a., per cent. This advance makes
the New York market practically the
gteapest money market in the world at
tails time, with acCeptances, the equiva-
EN- " London discounts. selling at 2is
.r cont foo .paYs LsfF- .,l y - o.
tsr bong.
The effect Of the rise in the price o.
money no London upon the countries
silcl with Great Britain. bankers
3.rted. would he that capital would CON-
nand q r!gher price throughout Eu-
lopt. There was divided opinion as 10
las ,c,C. in this marke.. at least pres
rni, but bankers generally believed tina,
when after the war, the belligeren;
.uaUtries started to pay their bills and
c1eck up the state OF heir treasures
nfuona, ana private. this country would
undoubtedly feel the effect OF the high
price OF money abroad.
Some Expect Quick Eject Here.
Some bankers here thought that tn,
history making event in English fnanc,
would be felt here Immediately.
II was felt that there would be onl,
a limited placing OF British war bond
in this market. Foreign Government.
coming here for loans are expected t.
pay high for them. and investors here
do not want the bonds especially. ever
when bearing a 8 per cent. interest rate
Il is true that the New York city bond
10 appear are a AZ per cent. issue
selling Al lo3 l., against a IA per cent
bond Of the British Government to b,
ofered az par. The opinion OF mos
bond men consulted yesterday was thai
the American investor would much pre-
fer the New York city bond.
The war loan announcement in Eng
land caused some scattered selling o
American securities by London in ,hi'
unrket. This effect Of the higher pric.
heing now paid by TIE home Government
'r loans, bankers thought. might b'
continued ard might bring further sell
ing OF American securities, :iost bank
ts doubted whether this effect woul'
operate to any apnrec!able extent, 70
me reason that most British Inventor,
IN American securities are getting a re
turn equal to II not better than that .
he war loan and have tn added ad
vantage Of Investment N a neutra
country which promises prosperity ant
ne safety OF diyers!Hca:ion OF inves;
ment Even II ;here - "A large sellinj
o. American securities, said bankers, !
i much 10 ne desired. Contrary to tn
feeling q? fear tina. prevailed al IN
beginning Of the wa about Europea'
liquidation the American investor II
non hoping that Europe may be per
suaded 20 sell.
The conversion PRIVILEGES in the nev
British Government sweeping plan o
financing were highly praised here. ]
We HrHH 80 -. Nhl a. o.
mem : exchange the outstanding 80
s>Q,boH,oo0 consols bearing 2ia per CEN
Interest sad. selling at about sc for two
ti'ds of their face In the net
man, 3edr.n- a.. per cent, would great
NirB.a'a the confidence OF the BIRTHS
MFes'.tE public In the q reru ment. In
i7Fae-e accorded the holders Of the las
November war loan OF S,15o.OOO,oo
neai.A- -. per cent, interest and sell
ing ~ ~, 20 exchange into the LEI
Bonds ~ a. per cent. interest at pa
80. -'h'Ued the same feeling OF o n
det.n
Tho huge hl cks # Government secur
les '1Is - bee converted, II all are cor
verified. 81. Increase the annual interes
'-". mon the Government ny Sl3
..N' "' In tine case Of the Cousols an
'I'""n nu' .u the carc Of the old wa
r ta' o! s3l. 10000 Increase
..".'s' arg" Win the interest Z
NE .r' N.r loan Of sl,25O,uO0, 0O'
trr4.,n@ 10 $50 100000 annually, Il
'N-'r ru.Ut Of interest that WI
H.', e" N. p.o .dcd hy England amt
"... resent g nditiors will be abol
IT,, ..u. community here wi
''.. .... closely the result OF II
vi .' ''e rcw loan, 1t is ! oke
- H.