Daily capital journal. (Salem, Oregon) 1903-1919, 1916-02-12

i
seems to me, is entitled at the present
time to be encouraged by q more liberal
government policy. There is one other
business stimulant that should not be
overlooked, and that is the plethora of
loanable funds. Our banks are over
burdened with funds which they cannot
profitubly employ Herein lies one of
the greatest advontogevs; also one Of
the greatest dangers in the present sit
uaton. The greatest menace 10 our fu-
ture is initiation that may leave us upon
q dangerously high level unable to com.
pete with Europe after the war. For
tunately the danger is appreciated by
our bankers and capitalists who can pre-
vent such catastrophe by refusing aid
to enterprises of doubtful nature.
The chief uncertainty ut home, out
side of our foreign relations. is the con
tinued agitation for preparedness, the
prospects Of new taxation, the revival
Of tariff agitation and the launching
of the presidential campaign which was
vigorously opened this week by Mr.
Wilson Our relations with Germany
though strained are improving, but as
long as the war continues there is dan
ger Of surprises. and as President viii
son pointed out no one can tell what a
day may bring forth Hence justifica.
ton for reasonable If not n liberal
degree Of preparedness; not forgetting
that when this war is over none Of the
belligerents viii he willing or able to
attack the United Statca.
,n,,, ~
sight; not even the exhaustion on which
the end viii seemingly depend. The
strain upon the financial resources Of
those involved is beginning to tell.
Nearly all the nations which formerly
went to London, Paris or Berlin for
funds are now coming here. At the
present time Great Britain. France. Rus
sia and ITALY are each negotiating for
credit or loans aggrcgating several hun
drcd millions. But some of these na
tionS are finding considerable difficulty
in financing such loans notwithstand-
ing they would be followed hv further
large munition orders for American
manufacturers. The most important
operation is another large British loan
which may he placed this month. the
proceeds Of the glo.Freneh loan being
about exhausted The amount and date
are not vet known, but it will probably
be collateral. ana not n credit loan
like the Anglo French issue. 1t is I'M.
derstood the British government would
put up as collateral some Of the Amer.
lean securities which it has modified
but not soldSthc recent sales of Amer.
leans being private holdings If these
surmSos are true Great Britain will
nave no difficulty in raising the loan
here, provided the rate is made satisPac.
tory as it undoubtedly will be- France
is also rumored to be seeking loan of
S3OO,OOOOO0 Russia wants 100000. 900.
and Italy too is knocking at the door
for considerable sums, not to speak Of
smaller issues wanted by other nations.
What the effect of these operations
will be upon the security market. il is
difficult to estimate because Of the in.
Vulnerable cross currents Ordinarily
II would be depressing. But the British
loan will prevent the sale Of mobil.
iled Americans, and may thus discour.
age the liquidation of our securities
privately held abroad Bankers inter.
estcd in floating the loan are likely to
support the general market for obvious
reasons, There are enormous reserves
OF available funds in the United States
aud well backed loans viii no doubt be
readily taken. Thor first effect win
be to stiffen interest rates, and divert
capital from home investment into for.
cign channels. This in turn will place "A
restraint upon too rapid development
at home. though nobody enjoys seeing
capital diverted from profitable en-,
ploymeut ON this side of the Atlantic
to wastage on the other. even if the
proceeds are largely spent here.
The technical condition Of the market
was improved by tho January decline.
Any permanent upward movement. how.
ever has to contend against uncertain.
ties connected with the war. the opening
of a presidential campaign, the discus.
sion OF preparedness and the possibility
Of future foreign liquidatiou.- HENRY
CLEWS