Daily capital journal. (Salem, Oregon) 1903-1919, 1916-08-24
Stock Market RecoUers
on Heavy War Demands

$3.50, 900 to the United Kingdom is
an important financial development
from two viewpoints. Or the 100000,
900 of securities that are to constitute
the collateral for this large transaction,
one-third, or approximately 100000,
t000 represents high-grade American
bonds and investment stocks that have
been accumulated by the British treas
ury in pursuance of its mobilization
plan. These securities will now neces-
sarily be removed from probability of
sale during the two-year period that the
new notes will run; they will no longer
constitute threat to the general stock
exchange price level. The loans sec
ond influence, to which reference has al
ready been made in these advices, con-
templates the favoring results to the
market that are not unlikely to accrue
from the efforts of the large financial
interests who as underwriters have such
practical incentive to make il sue
cess. The efforts Of such interests un-
der these circumstances are very apt to
be encouraging and promote a favor
able speculative and investment atmos-
phere in the general market for securi-
ties
The remainder of the 100000, 900 col
Lateral in the new British issues will
consist in round numbers of $l00,000,-
900 of Canadian government and Can
adian railway bonds and an additional
$780, 100000 will take the form of bonds
and other obligations of Argentina,
Chile, Norway, Sweden, Switzerland,
Denmark and Holland Aside from the
similar class of securities contained in
the collateral for the more recent $780,
100000 French loan, the distribution of
bonds of foreign governments and of
! bonds representing foreign activities, is
a new and important development for
American investors 1t is, however,
merely a beginning that means furth
er active broadening of New York as
world market for finance. Other loans
are to be raised in our own country by
the entente allies. Their number and
volume will be limited only by the dura-
tion of the destructive conflict and by
the final volume of the supply available
of American capital A clear indica-
| tion of this is contained in the revision
of the British chancellOr's mobilization
plan. AS modified, the English treasury
is to receive on deposit for a period of
five years u new list embracing securi-
ties $4,000. 100000 in value, the list com
posing 10 high-grade foreign bonds, in
cluding among others those that are to
constitute part of the collateral for the
new loan that has just been arranged
here. Thus it is obvious that the
British government has ample collateral
readily available to seek additional fin
ancial accommodations in America.
Crops 10 Per Cent Off.
Henceforward, financially speaking,
we must look out and not in, and ac-
custom ourselves to larger TRANSACTIONS
than have hitherto been the rule. To us
the $3.50, 100000 loan appears to be a
matter of very considerable importance,
yet is small compared with Great Bri-
toin's total borrowings which, since the
war, have reached nearly $l5,000,000,-
900. The loan recently granted in New
York would only pay Britain's war ex.
penses for about eight days. Instead of
| thinking in millions, we are obliged to
thing in billions.
Following the recent rapid rise in a
few shares some reaction resulting from
profit-taking may occur, but the general
undertone is good and based upon gen.
eral industrial prosperity, which seems
quite adequate to offset poor harvest.
The general results in crop yield, not
value, are expected to be about 10 per
cent below last year; and yet in spite
of this drawback the railroads are an
ticipating a car famine owing to the tre-
mendous pressure of industrial traffic.
With big exports ahead, active business
east of the Mississippi, easy money ev-
erywhere and generally sound business
conditions there is little to interfere
with stock exchange activity. The la
Dor situation is still regarded as serious,
and much will depend upon the outcome
of the presidents s efforts to prevent
railroad strike.
! HENRY CLEWS.