The Birmingham age-herald., 1917-09-23

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 New York, September 22.-(Special) With the cost of living mounting higher and higher each day, many investors are turning toward the short-term foreign war bonds, such as the An3lo-French os of 1920. which at this weeks low price ol- fered an income return of "A per cent The City of Paris 6s, due in 1921, and the British government 51Ass, which ma tured the same year, each bringing III SA per cent The 51h bonds issued by the French government due in 1919, of- fer per cent Income returns as large as the ones just mentioned certainly are attractive in these days when pressing demands are springing up from all sides Investors old in Wall street ways are rightly arguing that if the general fi- nancial situation became so bad that the city of Paris or the French govern ment or the British nation should de- fault on any of the war loans placed in this country, by that time there would be no value to the securities issued closer to home by our government, our cities our railroads orX industrial companies. The point thus made IS that it is the part of wisdom to invest in the. short term foreign war bonds which offer larger income return than can be had on securities issued here at home. But is that true?
 On the surface, simple arithmetic seems to favor the short-term securities.
 No one familiar with financial affairs can think seriously of Great Britain de- faulting on bond issue. Against the SA per cent offered on the bonds of that government, now selling in this market, our own seasoned dividend paying rail- road shares offer only from per cent up. Why not buy the British 511s bring ing in the larger income return?
 But the arithmetic is mot as simple as it seems. On the side of our seasoned dividend paying railroad stocks there IS an element of chance. To find the ex- act income return offered on stock IS easy Take Louisville and Nashville. now paying dividend of : per cent and sell
 ing in the open market at 116. The ln- come return offered, 6 per cent, is ob- tained by dividing l16. the selling price. into z, the dividend rate. In figuring bonds, however. which are redeemable at par, a long and difficult algebraic for mula is used to get the unearned in- crement represented by the difference between the present selling price and the price at which the bond will be re- deemed. Every bond dealer, however, has little book, which shows at glance that the income return on, say the 5h per cent bonds of Great Britain. due November l. 1919, selling in the open market, say, at 944, offers an income re- turn of S.25 per cent.
 To return to the question of invest ments, the S.25 per cent annually, be- tween today and November l, 1919, when the British 5lss will be paid oIf at par, is every penny of return that can be expected on those securities. However. with Louisville and Nash vile and other we'll selected seasoned dividend paying stocks the prospects are quite different. It Is true that pur- chased at 116 Louisville and Nashville offers an income return just now or 6 per cent but stock paying per cent dividends might be purchased at 116 today and inside of a year sell at S140 Louisville sold at $40 only q year ago. A single share bought at $116 today and sold within year at $40 would bring the $6 dividend and an extra profit of SPA That would make the total profit on the invest ment of $116 exactly 25.7 per cent. That would be better than steady 8A per cent for three years.
 It is true, Louisville may not sell at 14O again within year. Nevertheless. the history of our railroad stocks shows plainly that after each sharp decline. such as has been experienced this year, 1t Is only matter of comparatively short time until all or the decline and more has been made up. Louisville. for example. sold down to s7N in the panic of 1907; in 1903 the price was back to 125&, in 1903 to 1621A. Northern Pacific sold at l0O1z in 1907: in 1908 the price was back to 157N; in 1909 1t was 159h. In 1907 Union Pacific declined to 100; before they close of 1908 the price was up to 1S4N: by 1909 it was 219. These re- coveries. after the panic of 1907, were only typical of what happened in all seasoned dividend paying stocks.
 No one knows when the war will end and stocks may not recover until peace Is actually in sight. But in the meantime there will be the, regular in have never been so prosperous. Imn1e- iiately after this country entered the war on April 6. 1917. our railroad men. fearing that the government would follow in the footsteps of England and other European countries and take over all lines. went to Washington and wisely offered to co operate with the xvernment under private ownership. That offer was accepted and on April 21. 1917. the railroad war board was formed. made up of prominent rail- way presidents and members of the Interstate commerce commission. What has been accomplished by that board for the xovernments for the chipping