New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-08-07
Monday, August Z, 1916.

Capital operations of heroic pro-
portions on account Of the war are
impending. There must presently De
an internal war loan in England
Since the second loan at Az per
cent. the British Chancellor Of the
Exchequer has been meeting the war
budget by means of temporary short
term securities, called a floating
debt" the aggregate Of which now
is nearly s5,50O,OO0,000. That is
more than the proceeds Of the two
regular war loans combined. More
than half the cost Of the war in Eng
land to date is represented by such
floating debt. 1t is argued, on one
hand. that the British preference Tor
this method Of financing and the ex-
tent to which it has been carried IN
dictate official optimism as TO the end
Of the war. 1t is said, on the other
hand. that the government defers
bringing out a third war loan be-
cause of its undertaking toward the
holders of all previous issues to raise
the rate of interest in the event OF
successive loans bearing more than
Az per cent. Thus, il the govern
ment had to make the interest rate D
or 51z per cent on third loan 1t
would be obliged at the same time to
paw the higher rate on the old loans
Opinion among British economists
is much divided. Francis w. Hlrst,
formerly editor of "The London
Economist" represents the pessi-
mistic school of thought. I'm my
view" he said recently, 1.-THE imam
c;al fabric of Western Europe is in
imminent peril, and in few more
months il will be no longer possible
TO disguise the bankrupt condition OF
several great nations" On July rs,
in a message to The New York Trib-
me. he said: Perhaps the most
extraordinary phenomenon OF Par
lament is the absence of competent
financial criticism, although there
are a dozen highly capable business
members" At the other extreme is
Sir George Paish, editor of The
Statist," temperamentally an opti-
mist, who writes in his paper, July
%:
Til. investors Of foreign coun-
tries as we'll as Of our own coun-
try are we'll aware that the credit
of the British government ls OF the
very highest, in spite OF the deDt
that is now being created. They
know that the peace income OF
Great Britain Is some s2,4OO,VO0'-
600, and that the interest on the
existing debt including the war
debt. is a bagatelle in comparison
with the income and wealth Of this
country. Consequently, all that
needs 10 be done to obtain large
amount Of foreign investment
money is to offer q loan with
fairly long currency and giving
WELD that compares favorably with
the Yields afforded by other high
class securities.
There is now arising in England
a popular demand that the govern
ment shall repudiate its obligation to
scale up the rate of interest on all its
existing fixed debt in the event of
having to pay higher rate on new
loans. or, as a compromise, that a
limit Of per cent be placed on the
rate of interest the government will
paw for loans. If people will not
lend money TO their government at D
per cent, then let capital submit to
"conscription." Thus, it may be that
the rate of interest on the third war
loan. when it is reached, will not be
a fair indication of the price Of capt.
tai in the world. It may be an arbi-
trary rate. But the rate of interest
on another American loan, secured
or unsecured, would be significant
This transaction will be deferred, nc