The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-07-05
WAR LOAN TO FIX
PRICE OF CAPITAL
Bankers Eagerly Waiting to
Learn Rate Britain Will
Have to Pay.
BOND OPERATIONS HALT

The impending issue OF a British loan
In New York Of 800. o00. 900 or more
has stopped operations In the bond mar
ket. Bankers and bond men are eagerly
awaiting the terms Of this loan. as It Is
expected to be the determining factor In
time.
The changing price Of capital a.
brought about by The war has for the
first time been felt concretely during
the last two weeks. The big British
loan and the financial conversion and
readjustment policy OF the entire British
debt nave been recognized as the big de-
termining factor In the price Of capital
the world over. The interest rate the
British Government has found itself
forced to pay has been raised by the
new loan by about u OF 1 per cent.
to nearly n ~ per cent. basis.
The loan to be fioated In this country.
largely as a means Of correcting the ex-
change situation. Is the connecting link
In the relation OF the price Of capital
here and In Europe. The effect OF the
IlSe III u 'dDltdt z btSIS tou'Nu ~
the issue Of the British war loan. II IL
thought. might have been largely sentl-
mental here. had IL not caused further
liquidation OF American securities held
In Europe and especially had there been
by Great Britain no flotation OF a loan
In this country.
Bankers. and more especially railroad
and Industrial leaders. have watched the
steadily rising price of capital In the
last fifteen years with much concern.
The present rate for long term loans
In about the same as during the 1907
panic. On the highest grade OF rail-
road securities from A.. to AZ per
cent must be paid, with a rate OF
5 TO 6 per cent. on securities OF u more
speculative but moderately well estab-
lIslled character.
Bankers are questioning how much
higher the price of capital will go as IA
result OF the war. The conclusion Of
som OF the mos, practi al as well as
the best informed International bankers
In New York is that there can be little
hope of any cheaper price for money
for long investment as long as the war
lasts This country will he doing well
and more than IL expected. they say, II
the present rate goes no higher.
Confidence Returninx.
II there were no war prominent
bankers say money for long term in
vestment in this country would prob
ably have seen its highest price. Con-
fidence In American securities has begun
10 return. they hold.
But with England borrowing at a..
per cent. France paying 5 per cent.
Tor loans In this country and the no,
unlikely possibility that England may
have to pay az high as 6 per cent on
war loans at hon IL the wal continues
long. an entirely different situation in
this country is brought about.
The question of supply and demand
here enters. Though the supply OF Amer
lean bonds OF high grade held in this
country is somewhat low. Il renewed
liquidation from Europe has increased II
In large measure. The price of American
bonds must naturally fall. and the price
OF money for investment will naturally
rise. The ftotation here of a British
bond issue ~ from 800. 600. 400 to s3O0,-
100000. In the opinion OF bankers, may
have the effect Of reducing the supply Of
American bonds being sold by Europe.
This would halt n further decline In the
price OF thes" securities for the time be
ing. say bankers. and In this way Nigh
save American enterprises from paving
IA high "A price for money as Europe
will have to pay while the war con.
tinues.
This, however. in the minds Of bank.
ers, IL involved with the question of
whether the price Of the British loan ia
he fioat-d here Will be so radically