The Bridgeport times and evening farmer. (Bridgeport, Conn.) 1918-1924, 1918-03-19
The World OF Finance

calculated to delay such a result.
German leaders now are reported to
be willing to consider a peace on the
basis of the status quo ante in the
West and the status quo in the East.
This impossible solution appears all
there is contained in the more recent
press reports of renewed peace feelers
from Berlin.
1t merely is automatic that the long
er the duration of the war the greater
its cost and the greater the addition
to our huge national debt which is so
rapidly piling up. The money situa-
ton already has developed a degree
of strain which calls for caution in
Stock Exchange operations. At the
moment the market is being called
upon to depend almost entirely upon
money accommodation afforded in the
form of demand loans. Funds for fix
ed maturitles are not available. The
near approach of the time when pre-
parations will become necessary for
the new Liberty Loan, which will be
issued April 6, suggests that there is
slight probability of any fundamental
improvement taking place in the gen.
eral money situation during the pro-
gress of the loan. AS in the past
financial interests of New York will
without doubt come forward patrio-
tically and shoulder more than their
share of the loan. New York bank
ing institutions can be depended up
on, with the aid of the Federal Re-
serve Bank, to provide facilities for
making the new bond offering a sue
cess. Secretary McAdoo has very
frankly recognized the financial pa
triotism of New York, which has been
displayed by large subscriptions to
the Treasury certificates of indebted
ness that are being issued in anticipa-
ton of subscriptions to the new loan.
But, admittedly, the underlying none
tary situation cannot be expected to
develop distinct ease during the period
necessary for the accumulation of
funds Sc urgently required by our gov
erfment. Thus market operations bas-
ed too largely upon borrowed money
should be avoided. This is a feature
which does not apply so strongly to
investments where full purchase funds
are available.
From the general investment stand
point there appears no reason to
change views recently expressed in
these advices. On the one hand must
be recognized the competition for the
savings of investors which will &C
company the offering next month of
the new war bond issue. Undoubtedly
the utmost pressure will be eXerted
to make the new offering an outstand-
| ing success. The bonds themselves
will be attractive and will, in addition
have behind them the spur of patrio-
tism to make effective demands up
on the floating supply of funds avail
able for investment. In addition is to
be expected some degree of liquida-
ton having for it's purpose the release
of funds already occupying fixed
channels. But on the other hand con-
ditions have recently arisen as re-
suit of the farsightedness of our Of
ficials at Washington which clear ur
a contingency which without such
action hardly could have failed tC
have eliminated in enforced liquida-
ton of securities in sufficient volume
| to produce most serious results. Rail
road returns which have recently be-
come available for the month of jan
uary-the first month of government
tai control of our transportation lines
convey rather convincing sugges-
lions of what in such circumstances
must have been faced in the case OF
railroad securities. Railroad traffic
it is true, has been of a volume faI
in excess of the railroads capacity
But increases in the cost of labor, OF
equipment, of everything, entering in
to the railroad industry have been sc
great, and such large deficits have
been created in railroad revenues az
to seriously threaten dividends and il
not a few cases interest payments a!
we'll. There does not appear as yet
an adequate appreciation of what rail
road control by the government il
fact means to holders of railroad Sc
curities It would indeed be Difficult
to overstate it's Importance. Instead
of becoming thoroughly discouraged
: by impending defaults, holders are to
day concerned chiefly with the condi
ton, financial and physical, in whicl
the government will release their prop
erty. The Administrations Railroa
Control bill has duly passed bot
Houses of Congress without amend
ment so far as its main purposes ar
|
country are now for all practical pur
poses consolidated. Earnings of indi
vidual systems are not important t
I the stockholders. If net revenues ia
= below the average for the three year
2 Immediately preceding our formal en-
1 trance as a war participant the Treas
ury will make up the deficiency. L
on the other hand, the three-year av
erage is exceeded, then any surplu
must go to the Treasury. This
quite fair since the business formerl
controlled by the individual lines ha
become subject to arbitrary routin
by representatives of the Directc
General. But the plans of the govern
ment contemplate placing the raj
roads of the country on such plan
that they will be able to handle traffi
on a wartime basis. The Treasur
is to lend it's good offices to see thu
ample funds are provided for the pul
pose of enabling the railroads to max
y necessary improvements and exte1
3 sions and to provide new equipmen
This means that funds the absence
which has in recent years been such
handicap on railroad developmel
will become available at rates base
on government credit. Hence thel
seems excellent reason to believe tn;
q when the management of the railroad
"a is returned to the stockholders Il
properties then will be in a much in
proved condition.
TIL. market still is in an attract,