The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-08-12

In week when developments in the
war area have been thoroughly re-
assuring to the American investor our
own security markets have not re-
f1ected the enthusiasm witnessed at
London, where prices advanced sharply
in response to larger public buying.
There was nothing In the movement
Of Stock Exchange prices here last
week to indicate that military sue
cesses of great importance had been
achieved by the Allies, or that Ger
man man power was visibly on the
wane. Wall Street followed the re-
ports with keen interest, but appeared
to be more impressed with the changes
in the money market, the extension Of
Government control of private busi-
ness and the labor complications incl
dent to the getting together within q
year OF an army Of 100000 men.
Financing an Army.
The investment outlook therefore IL
extraordinary. and must be judged
| with reference to the working out Of
| various movements of great impor-
| lance with the efforts to finance the
world war. War expenditures are just
now at high level, which is not sur
prising In view Of the intensive fight
ing that Is in prospect. The allied
forces. we'll organized. have entered
| upon an offensive campaign whose
| success must DO largely dependent
| upon the steady arrival Of American
troops. This means that July's record
| shipment Of 100000 American troops
was only an incident in Tho develop
ment Of the most Interesting long dis
| lance transport service that the world
has ever seen. The financial burdens
involved are very great. but the Gov
eminent has abundant resources with
| which to put through this movement
and TO supply the greater army. pro-
vided the American people curtail their
borrowings in accordance with the
hard and fast economies proposed by
the Capital Issues Committee. This Is
| no easy task, but there Is no alterna-
tive II the banks are to assist the Gov
eminent in its work Of winning the
war in as short a time as may be re-
quired for permanent results.
Restricting Credits.
The work Of this committee Of seven
members, three Of whom must be on
the Federal Reserve Board, is Of much
greater Importance than the public has
yet realized. The committee exercises
To-
issue OF 100000 or more, for while 1t
does not possess legal power to hold
up a security Offering which 1t disap-
proves, the refusal OF the Stock Ex-
changes to list securities not sane
toned by this committee really makes
1t the arbiter in such applications. In
its instructions to applicants the Capt.
tai Issues Committee says bluntly lin
all cases. except for war work. explicit
reasons must be given why the pro.
Eosed issue cannot be postponed until
after the war. or why the necessity of
the issue Is greater than the para
mount need OF the national Govern
| ment to conserve the financial re-
country for the prosecution OF the
war"
The Vital Problem.
This then Is the real problem which
! the financial markets will have to
solve before anything Is done either
toward promoting a resumption OF
bullish activity in the security mar
kets or toward an expansion of in
! dustry not directly related to the war
enterprise. Should the committee as
sumo the right to subject to such
test loans made by a bank direct
| to a corporation, or to veto those
made for purposes which 1t did not
consider essential to the work Of win
ring the war, an extraordinary stu
alton would result. 1t is understood
| that the committee holds that borrow
ing for all capital purposes. even when
done through bank loans. advances,
short term notes, or other means falls
within its jurisdiction. The invest
ment community was a good deal up
set toward the close OF last week by
the suggestion that the committee
might pass upon bank loans as we'll
as the larger corporation issues. The
law Is clear. however, in stipulating
that the committee shall not have au-
thority to pass upon "any borrowing
by any person. Arm, corporation. or
association in the ordinary course Of
| business as distinguished from bor-
rowing for capital purposes"
Commercial Borrowing Not Re-
stricted.
There Is nothing In the law. there
fore. which would justify the COM
mittee. even II its members were in
clined to adopt a radical attitude. to