Daily capital journal. (Salem, Oregon) 1903-1919, 1918-02-02

initely known. OF course, this means
that the untry will have practically
no surplus savings for new enterprises
for some time to come; and the govern
ment is already considering steps to-
wards discouraging investments in other
directions; this being in line with the
policy of the British government adopt
| ed early in the war. What the rate will
be is not yet divulged. Sound banking
would dictate either a liberal rate or
a slight discount in view of the paices
at which the two previous loans are now
selling. Such policy would encourage
a wider public distribution than special
privileges, which would appeal chiefly
to big investors who would turn over
large proportion as collateral to the
banks which already hold large sums Of
these bonds. Or if such terms are not
practicable, then / would renew my pre-
vious suggestion of 3.65 per cent three.
year-treasury note bearing interest at
the rate of l cent day, such notes
being convertible into 4 per cent at ma
turity.
Popular public opinion is, of course,
adverse to high interest rates; but, If
guided by disinterested advisers, the
WOutu pIOUdDly DlOu6IdJG lJS OU-
lection. The loan would certainly be
more popular if the direct returns were
sufficiently liberal; and there are many
sound reasons, political and economic,
for securing as wide and as permanent
a subscription as possible. It is certain
ly good policy to have these bonds wide
ly scattered and in the hands of the
general public, rather than concentrated
in the hands of large investors and
big financial institutions; although in
any event the latter can be depended
upon for doing their full share in sup
porting the loan.
Aside from war influences, the bust
ness situation is considerably confused
by the coal crisis the serious conges-
tion of freight and the great expansion
of government control over industry; an
iexpedient that is not always working
as successfully as desired. The price fix
ing programme, for example, has not
been a success, exceI that it has some
what restrained protiteering; the old
established law of supply and demand
still being the dominant factor. Scarcity
is the rule in nearly all products and
instrumentalities, and high prices are
inevitable while the war lasts. Readiust-
ment to such conditions is unavoidable,
and is already developing in the form of
economy among nonessential products.
Our government is also urging economy
in food, fuel, clothing, wool, and MANY
other articles. Great Britain is in the
meantime economizing ON meats, fats
and bread, and urgently appealing to us
for more wheat. These calls are imper-
alive, and they unsettle business On
the ether hand the high prices which
such articles command, and the activity
OF the steel and munition industries, are
bringing to the interior a hign degree of
rosperlty, which promises to last for 4
some time to come, because long per-
I'D -nGst elapse before productica
catches up with consumption. even
When peace comes. Both the agricultural
and the industrial outlooks, so far as es-
sentials are concerned, are encouraging;
and cur farmers and industrial workers
are seemingly assured of another PROS
ferrous season. The chief draw! acss will
be the almost complete postponsmsnt Of
new enterprise, the stoppaga &C b1ild-
ing. and the lessened demand for many
luxLries. The spirit of extravaganza has
beeL sensibly moderated by a keener
realisation of the war an1 its eOnse-
quenees. Upon the whole, therefore, the
business outlook is encouraging, al
though facing certain adjustments that
cannot be evaded, and certain pitfalls
that will have to be skillfully passed
over. So far as the stock market is con-
eerned, much the same must be said.
Many securities are selling at very at
tractive prices; but all purchases, whe-
ther for investment or sDecu1ation
should be made with particular scrutiny
and confined to the better class of con
Germs. There is a considerable short in
terest n this market, though good buy
ing usually develops on all sharp de-
elines, and the result is frequent flue-
tuafiOns within comparatively narrow
limits. The exigeneies of war leave the
market exposed to sudden movements
at any time.
HENRY CLEWS.