The sun., 1918-10-21
PROSPECTS OF EARL Y PEACE
ARE BOOMING SECURITIES
Flotation of Government Loan Also Factor in Forcing
Striking Advance in Stock Market-Bonds in
Much Better Request.
ny WILLIAM JUsTUs BoIEs.


years ago. The Government has been
fortunate thus far In placing its bonds
with real investors. This has relieved
the banks from the burden Of tying up
too great a portion OF their assets in
fixed Investments at a time when II
was necessary to finance the country's
business undertakings and provide for
the restoration OF world peace.
The Government has already used up
nearly five-sixths Of the sum to be de-
rived from the Fourth Liberty Loan OPP
GRAFTON through the advance sales OF
Treasury certificates OF Indebtedness
which were accepted in payment for the
loan. The probability is therefore that
the Treasury within a few weeks will
resume the sales OF short term certifi-
Gates In anticipation of the Fifth Lib
erty Loan whenever that should be de-
termined upon. The Government would
have to be large borrower for months
to come even II hostillties should cease
or a peace compact should be decided
upon. There arc large expenditures to
which the Government stands commit
ted irrespective of when the war ends.
and tho task of demobillxing the ar
mics would entail large additional out
lays. II would take at least seven
months to bring over the two million
American troops stationed in France,
and since shipments from this side are
proceeding at the rate Of $4,000
month this total is likely to be greatly
enlarged before the year ends
New Tax BURDENS.
II the amendment to the revenue bill
proposed by the Senate Finance Commit
tee Ia retained the income to be derived
from State and municipal securities will
be exempt from taxation. This would
save the market from the serious unset
Element which would result IL a tax upon
| such income should force the savings
banks. estates and trustees to readjust
the valuation Of the securities that they
hold. II Congress insists upon such a
tax II will work hardship to the very
| .arge class OF private investors who for
years have held on to their STATE and
municipal bonds carrying q low interest
rate In the belief that tho income from
such securities would be free from taxa
| ton. Should the provision OF the House
bill survive and the income of, these
securities be exposed to the tax, several
thousand securities would have to be
valued In accordance with the new ex-
action. 1t Is obvious that the losses Incl
dent to such readjustment of municipal
bond values would moro than offset the
benefits accruins to the Government from
the additional revenue obtained. Ex-
President Taft has pointed out the fall
lacy Of proposing such a tax in the face
OF various judgments by the Supreme
Court Of the United States unfolding the
exemption of such securities.
The whole bond market has been
helped by the successful fiotation OF the
! Government loan and the extraordinary
developments in the military and politi-
cal situatioS abroad. Various railroad
bonds. together with the securities of
foreign Governments and municipalities
touched new high records last week with
a sufficient broadening of the investment
inquiry to indicate that the market was
firmly established upon higher price
level
This Is one Of the reassuring features
Of the investment situation and may be
taken to mean that the public Is at last
recovering II ON the shock Of war and
the uncertainties Of the great military
campaign. In consequence Of this better.
ment Wall Street has to-day the best
bond market II has had since the United
States entered the lists Of belligeren'
nations A large amount OF financing
remains to be done. and the indications
are that the Capital Issues Committee
will, during the next month or two. sane
ton the sale Of large aggregate security
Issues
Investment Opportunities.
High grade bonds are still selling at q
bargain level. Judged by the standard.
OF ordinary years. The turn HAS come
however. and while the pace may be les,
rapid than that OF the stock market, the
next three months will probably witness
further broadening of the investment
demand. This movement will be innu
enced by the development or the aban
,, donment Of peace negotiations and thu
measures taken to repair the damage don't
|, by the war. But the fact that the worlt
is passing from the chaos OF war to thu
security of peace has tremendous sig
nificance to the civilized nations. 1t Il
bullish influence Of the greatest i'm
! portance and must be effective In pro
noting the restoration Of those conditions
making for the enlargement Of securit!
values.
\ World changes are impending AM
> there are interesting markets ahead
! The wealth of the world is here and W
!, have the initiative, the facilities and tn
= intellectual equipment best suited to worl
I out the nations salvation in an unparal
leled world crisis. Uncle Sam and Mar
. shall Foch make a great team. and tho,
I are leading the procession. It will b
. childs play to place the next loan, 10
: II will be a victory loan.