The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-05-24

long plunge toward war was looked
upon as likely to lessen the chance Of
change in our neutral status through
any failure OF effort abroa to keep
us neutral. Otherwise there was no
question that 1taly's preparations to en-
ter the war on the side OF the Allies
contributed to the reasons for a feel
ing OF confidence here regarding the
outlook for values.
1taly's participation in the struggle
suggested some probability of shorten
ing the war. especially II IL should be
followed by similar action on the part
of other countries which might Join
forces with the Allies. particularly in
the Balkan area. Meanwhile the po-
litical and military developments OF the
week in Europe seemed to offer a pro-
s~pective increase OF business for Ameri-
can Industry. on which Europe must be-
come more and more dependent with the
spread OF warfare.
Or the other hand calculations OF this
sort were modified by the thought OF
the augmented economic loss, waste and
exhaustion which must inevitably re-
suit from the wider scope OF the war,
to say nothing of the larger hazard
which our neutrality must risk with
the addition of nation after nation to
the belligerent list. The arrangement
VI ofItlt ~ WV 80
communication could not help but be
extended. and NAM observers were not
able to lose sight OF the further flu
ture In consideration OF the nearby
gains. Nor was the cloudiness or the
remote prospect at all relieved by the
evidences OF the growing desperation
OF the war. Occurrences In Great Brit
ain emphasized this. in no particular
more than by the reconstruction OF the
British Ministry, forced on the party In
power by unmistakable partisan poll
tics. The Cabinet reorganization falls
in the category of swapping horses
while crossing a stream" and. though
doubtless required by the conditions In
the United Kingdom, was persuasive
testimony Of the strain which the war is
causing.
A.pects Of Foreign Exchange.
In still another direction strain was
eyinced and In a direction which had a
further SOLDERING effect on sentiment
here. This was In the proof OF the for
elgn exchange market OF the feartul
prostration OF tho old World to when
the war Ia leading. Although ~ nao
: been for some time foreseen that az the
war went on the foreign exchanges must
turn more and more tremendously In
our favor their course which now de-
I monstrates the international ascendency
OF American finance brings complica-
lions with II.
sterling bills sold last week below
as. the lowest level since the ont
break OF the war. Francs went TO the
unheard OF price OF 5i5 for checks ana
rubles sold were quoted on a similar
nIane of These facts are
evidence OF a gradual breaking down OF
foreign financial systems, and while they
promise large profits for the new world
/ money market which has been estao-
lished at New York they denote a grow
ing burden which II being thrown on the
new international financial centre II II
is TO perform It's duties TO our own couh-
try as we'll as to others. .
More gold came In In quantity ana
4, was manifest that our reserve basis
OF banking activities would be vastly
strengthened during the months ifnme-
diately ahead, as necessity compelled
foreign debtors to settle with gold pay
ments the obligations incurred or
financed here. but II was also manitest
that before long our market for cap'tai
and credits must prepare to cope WIN
Increasing offerings OF foreign securi-
ties. Probably on some terms bellig-
erent as well as neutral borrowers can
place bonds and notes with our investors
and lending Institutions, and II We ar.
going TO maintain the external traoe
which We can do during the wal ana
afterward much OF IL will have to he
financed by the absorption OF securities
in some form. But this proposition mas
a corollary OF dislocation which Is per
hans being already witnessed in the
heaviness OF the domestic market fo'
securities of fixed yield.
In the main the foreign and domestic
facts of the week did nothing to impair
fundamental confidence in the prospect
for values, and In some respects they con
duced TO a strengthening of confidetce
New factors may have to be- iccoinmo'
dated. but the economic forces which vii
exercise prevailing control are still those
which worked TO bring about the sprire
rise In stocks and the forward endeavoi
witnessed In the field OF general bust
ness.
AT the worst nothing seems likely &
occur which can so alter The country's
neutral status as to prevent persistent
ard great Increase OF the command whicl
We have acquired over ~ernation
finance and trade and through whIci
a future of remarkable domestic exptn
sion seems 10 be preparing. VIA W.
have been seeing in the foreign trade
movement and in the foreign exchange
market has been the token OF a tide OF
foreign capital which has set towar'
American shores Through a half centur,
and more Il has been the influx OF foreign
capital which stimulated the marvellou
growth OF American economic enterprise
but a great deal of this capital cam
here only as money loaned. The capita
which has been coming In from abroad
lately. and Is TO come IN still large
volume. is being acquired outright. II
view OF the effect which the receipt o
foreign capital In quantity has produces
in the United States in the past. tn,
inference seems warranted that a new
stimulus is being supplied now 70
American economic activities,