The sun., 1918-12-30

issues are urgently necessary Tor the
establishment of local service. trade and
industry upon a peace basis" In Eng
land the committee has moved with
great caution. approving only losns for
public utilities. hospitals and roads.
Here the situation is more urgent, since
the railroads must prepare to refund
next year $3.50. 900, 900 Of maturing
loans. against S25s. 00o,0 o which had
to be provided for this year. The COM
mlttee warned the public against invest
ing in unsafe securities and asked Con-
gress to safeguard the situation hat the
holders Of Liberty Bonds might not be
imposed upon. The committee adds that
schools are being established In some
parts Of the country to drill statesmen in
the art OF p%ersuading investors to sub
scribe for unmeritorious or worthless
securities"
This is an extraordinary disclosure
and calls for quick action by the aH
thorities, for the possibility of doing in
jury TO the 30. 900, 900 little holders OF
Government bonds, who rendered I'M
portant financial support 70 their Gov
eminent during the period of urgent
financing, makes II necessary TO protect
their interests without delay. Any one
familiar with the security market knows
that the committee Is not overstating
the case In saying that enormous losses
are Sustained by the nation every year
through the saie OF worthless or fraudu-
lent securities and that there is urgent
need for quick action by Congress.
Paul VI. Warburg. who has gone
further than any one else in suggesting
a remedy for this situation. said III
we are to be a world centre Of finance.
as l am profoundly convinced we shall
be, | believe we ought 10 take steps
that will give to the American pros
pectus the standing and prestige en-
joyed by leading European markets,
| can well imagine that by common
and voluntary agreement some sort OF a
future capital ISSUES committee might
be organized in each Federal Reserve
district to stamp approval TO every pros.
pectus before the quotation on the STOCK
Exchange be granted or the offer made
Such approval would not signify the
! passing upon the intrinsic merit OF the
! security involved. but give assurance
that all essential facts, and nothing but
authentic information. be contained ir
the prospectus and that they be stated
over the signature OF the borrowing
Government or corporation and the issu'
ing house"
1t Is 20 be hoped that Congress will
give heed to the suggestions. so thai
the operations or fraudulent promoter:
be nipped In the bud. The country is or
the verge OF heavy security issues BY
, corporations which have a just claim
upon the investment markets. New
security issues were held up during thu
period OF heavy Government financing
so that compared with normal years thu
output OF 1918 will show n falling on
ranging from 20 to 30 per cent. VIII
the disbursement this week and mex
OF the lions share OF the semi-annua
dividend and interest fund. there will bt
a material broadening OF the investmen'
inquiry. The situation Is peculiarly IA
vorable for the investor, because oI
sharp declines that v X place
in high grade bonds, Hundreds OF per
fectly safe securities are available to
day at prices which show an income re
turn that Is far in excess Of that II
ordinarily offered by such securities a
this eaSon Within the past few week;
there has been a sufficient expansion
OF the investment inquiry TO indicate
that the signing OF the armistice will
the cessation OF hostilitles brought hun
drcds OF investors into the bond marke'
with orders for purchase OF seasoned
securities.