The Bridgeport evening farmer., 1916-10-27
=. Finance. Real Estate insurance =.
World of Finance
lns.ress Races After the War.

:, MenpA1A Tenn.. Oct, 27--Discus' haas the possibility of an increase 1T .antsrest rates in the money market o' iiths world after the European war IIroI. o. M. Sprague, of Harvard Uni Nsrstty, in an address here to-day, be- lHpre the annual convention of the NArm Mortgage Bankers Association
 ve America outlined the reasons fo,
 tho general expectations of the in'
 dreas rates. Among these factors he
 mentioned the indebtedness of the
 helligerent countries, destruction o1 ;property and loss of capital, prob ably decreased demand for capital
 and a likelihood of heavy taxes te
 meet the interest on government
 debts.
 Prof. Sprague also touched on the probable financial situation of the i United States and in the non-Euro- pean countries.
 -sThe destruction of European capi-
 tai occasioned by the War will of
 course, tend to bring about an ad-
 vance in interest rates," said Prof.
 SpragueI .sbut it Is possible that this
 tendency may be offset by some I shrlnkAge in the European demand
 for capital. The >anere fact that the total of capital after the war will be smaller than 1t would have been had I there been no war, is not sufficient In itself to >br1ng about an advance In 1 interest rateG. There must be an in- tense demand for capital.
 K Conditions must be favorable Tor .the employment of something like the same amount of capital as was being used before the war began That 1 - much capital can be profitably used seem improbable. There will not be i 70 many people especially skilled lWorkefs, to make use of 1t.
 | '.Some of the debts incurred by the belligerent countries represent the proceeds of securities sold back to neutrnl countries. A part represents sayinxs which would have been in vested in industry had peace contin- ued, but which have gone into the government loans. A very large part of the debts, however, represents saw ings which but for the war, would not have been made at all.
 .-The loss of capital caused by the war Is limited to the extenth by which plants and equipments and goods are in smaller supply now in Europe than ; they were before the war, or would have been had the war not taken place. Up to the present only 9 small area in those parts of Europe in which capital is much employed has been overrun by hostile armies The ex- tent. to which there has been failure to maintain plants and equipments is probably exaggerated in neutral coun- tries Many plants have been con- verted to war uses, and with return of peace 1t will be necessary to recon vert these plants to peace uses, but the capital required will be far less than would have been needed if the plants had been left, idle.
 4 By far the most potent influence tending to weaken the demand for capital on Europe would seem to be the uncertainty as to the character and effects of the heavy taxes which must be imposed to meet interest charges on the huge government debts he burden of taxation win be far moro operous than the people of any coun- try have hitherto borne It is not im- possible that class antagonism may develop, even to the point of revolu- flonary outbreaks."
 s'Coming to the situation ih the Uni- tod States and the other non- European countries after the war Prof. sprasue said:
 Europe win certainly have no great surplus funds to invest in other parts of the world. The United States de- pending on it's own capital to meet do- mestic requirements, would not seem likely to cause any appreciable ad- vance in interest rates. For some years before the war our requirements seem to have been entirely met rom home sources of supply and one effect of the war surely has been to increase our ability to supply our own capital requirements" e,
 Most of the other non- European countries during the years before the war had been secrr'-- much capital from Europe. The United States will be the only Important market to which these countries can turn. Moreover, Europe itself may seek to secure capi- tai from us. Tho demand for cap1- tai fin the non- European countries gen erally does not however, seem likely to be as considerable and as 1nsistent as ft was- before tho War.