New Britain herald., 1916-11-18
Henry CIeus
 Weekly Letter
Especial to the Herald)

important factor in the security mar kets. Great Britain, France and
 Russia are each standing at the door
 carry on the war. Great Britain has
 just completed a $500, 100000 col lateral loan, and another big loan
 probably on a credit basis is not many
 months distant. France recently ne-
 gotiated a s50,Oo0,ooO credit in this market, and both these nations are said to be considering the early feasibility of selling exchequer and treasury bills, which American bank
 CTS would undoubtedly be willing to handle The Russian government
 will also Issue next week about 25,000,000 OF its new S5O,000,O00
 loan. These operations are not loans in the ordinary sense of the term, and
 are small operations compared with the huge war bills of these nations, being chiefly utilized to pay for the immense quantities of munitions or
 dered in this country. The latest
 British transaction is another col
 lateral loan which will probably tie
 up large blocks of foreign owned American securities for a considerable
 period, thus lessening foreign Hquida-
  to be a strictly credit operation
 These foreign demands for loans bid fair to continue, since there is no sign
 of an early termination of the war, and both sides are displaying more and more resolution and preparing for an even more desperate conflict with the opening of spring. War contracts, for which this country is the chief outside supply, must continue; and payment will have to be made in bOr
 rowed money. If we want the con- tracts-and we do-we will be obliged to accept the loans; and the effect of these continued huge demands upon our capital market must be taken into serious consideration when forecast ing our financial future Home re- quirements for capital it should be noted, are increasing prodigiously; our industrial plants and railroads needing large sums for imperative improvements and expansion. A great deal of new capital is already being furnished out of current large profits, although in many instances these cannot be depended upon for meeting such demands, especially in case of railroads and other corpora tions which are not profiting ab-
 
 vast amounts of capital seeking 1n- vestm ent but the com bined require- ments of domestic and foreign origin are far beyond all precedent and must soon tend to reduce our supply. In- evita bly, capital will ask and obtain better terms, and interest rates must consequently rise in due course of time Such a movement will natural ly be slow and it's workings cannot be always discernible, but the trend in that direction is unmistakable and unavoidable. One result of these con- ditions is the weaker undertone of foreign bonds owing also to continued enormous offerings.
 Stock market conditions are great ly confused by the variety of extra
 ordinary movements. There is no doubt about there being considerable liquidation in some of the industrials which have risen to dizzy heights, or
 that stocks are steadily passing from strong into weaker hands; also that the technical position Of the market
 is not so invulnerable as it was six
 months ago. On the other hand
 there is no abatement in industrial activity; demand for commodities in almost all directions exceeding sup
 ply as a result of the waste of war
 The scarcity of food is emphasized by
 efforts of European governme ents to control supplies to keep down prices and to avert consequent public dis content. In our own country the in- creased cost of food threatens social and political disturbance: and no re-
 lief can be anticipated until the next
 harvest. It matters little whether the farmer or the middleman is gaining most by high prices. The consumer Is paying the bills and relief can only be obtained by increased production
 or decreased consumption, the latter
 merely a partial means of relief
 through economy or substitution. The same condition of scarcity exists in other divisions of industry than agri- culture, even in a more marked de- gree; though the effects are less dis turbing than when the human stOm-
 ach begins to suffer. Steel prices have again been advanced and steel
 rails, which nobody eats but every body uses, touched $40, rise of $5, AS a result the upward movement in steel shares received a fresh impetus. Copper also advanced into higher al- titudes; cotton followed in the same track, and so the circle continues it's ! unbroken swing. As before said, l there is nothing yet in sight to stop l this rise in commodities except ex- hausted buying power or increased l supplies, neither of which are much i in evidence at this time. Neverthe- 1 less reactionary symptoms are not | wholly absent. Increased costs are | already having the double effect of | emphasizing economy among consum- 1 CTS and diminishing producers re-
 turns. In all probability abnormal
 profits have reached their zenith; the | increased costs of labor, materials 1 transportation, etc., being an offset | of growing importance A fresh com- nlicatiara da1zala1aod taiS 1.znel1 in he