The sun., 1918-07-22
QUICK STOCK MARKET RESPONSE TO THE
FAVORABLE WAR DEVELOPMENTS.
SHARP the Achieved the Allied
Striking Influences Work in a Market Which
Real Buying
BY WILLIAM JUsTUS BoIES.

war began. Europe had immense
holdings Of American securities which
1t proceeded to sell at whatever price
our demoralized markets would bid.
London and Paris were calling upon
New York for large shipments OF
gold and immense consignments had
to be sent in settlement Of a matur-
ing indebtedness which could not
BIO financed through the foreign ex-
changes. Although this nation did
not Join the list of belligerents until
three years later. our markets were
exposed to a variety of unsettling in
complete decentralization had not the
Stock Exchange ceased trading.
Constructive Developments.
No nation can contemplate the
changes Of the past four years with as
great satisfaction as the United States
Is able to do Notwithstanding the
stupendous financial burdens incident
to this Governments active participa-
ton In the world war. We have
bought back the securities of American
municipalities and corporations which
Europe formerly owned, we have be-
come creditor nation instead of a
debtor nation, we have received on
balance more than one billion dollars
of foreign gold. we have built up an
Immense trade with nations which
never before purchased American
products, and we have readjusted our
business to a war basis. The produc-
ton of immense crops has given us a
vast amount OF new wealth at a time
of worldwide demand for grain and
foodstuffs. Prevailing conditions Of
fer such a striking contrast. therefore,
to the situation OF four years ago as
to provide grounds for taking a hope
full view Of the benefits that are likely
to accrue to this country during the
restoration period after peace has been
declared.
Rise in Foreign Bonds.
The broader inquiry in this market
for foreign Government bonds and the
issues Of French municipalities indi-
Gated the quick response of the bond
market to the favorable developments
In the war situation. Nearly all the
foreign issues were helped by this
movement, and the steady absorption
of the better known foreign issues had
beneficial influence upon war loans.
This improved inquiry for high grade
foreign bonds was natural in view Of
the fact that many Of these issues
were selling at prices returning from
6 to per cent. on the investment.
Since the United States entered the
war there has not been any large
foreign loan floated in this country.
But large aggregate loans, represent
ing the issues placed here during the
first three years Of the war. are being
constantly traded in on the Stock Ex-
change and over the counter. Heavy
accumulations Of these bonds have
been made by important investment
interests, which base their operations
on the theory that foreign issues o.
this class viii enjoy sharp advance
in prices as soon as peace is in sight.
New Federal Taxation.
Action by various corporations In
arranging to set aside a very large
fund to cover new Federal taxation
shows that these appropriations will
have an important influence on cor
porution finance for some time to
come. The financial community has
accepted the situation philosophically.
however. and individual taxpayers as
well as large corporations are acting
On the theory that the new schedules
will disclose sensational advances in
irc nrnfta
and war profits. In this way the
large monoyed interests are preparing
months ahead to meet the burdens of
the new fiscal year, and the probabil-
ity is that there will be IA surplus left
over after the appropriations have
been made. Agitation Of these bur-
dens has been effective in forcing
economies which neither corporations
nor individuals would have introduced
had not necessity arisen.
Banking Caution.
II is probable that the rise in stock
market prices would have gone a good
deal further had it not been for the
continual conservatism of bankers
about increasing their advances upon
STOCK 1IxCnanPe COlldleTdl. L lie nedNy
payments for the Third Liberty Loan
instalment and the further purchases
of Treasury certificates of indebted
ness made it ineXpedient for the banks
TO extend their line of call and time
loans. The huge payments of the
week were financed without difficulty,
and except for the meagre offerings of
time money and the firmness of call
loan rates around 6 per cent. there was
nothing in the movement Of money
rates to suggest disturbance. The
bankers have exercised a CommendaOle
caution and 10y refusing to enlarge
their investments in Wall Street loans
they have protected the bank position
AT time when unprecedented Gov
eminent borrowings were in progress.
Buying Short Term Notes.
The broadening demand for high
grade corporation note issues was re-
Elected in the continued absorption of
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