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prices showed a substantial advance on the year. The war-time prosperity in the United States caused a great demand for American securities held in the United Kingdom and France. European holders were encouraged to sell by the appreciation of the dollar in terms of sterling, which enabled a profit on ex- change to be made. In the second half of the year the British Government bought large quantities of American securities held in the United Kingdom and sold them in the United States in order to provide itself with means of making payment for munitions, etc. (see DOLLAR SECURITIES MOBILIZATION). It is estimated that in this year about 150 millions sterling of American securities were transferred to the United States. Towards the end of 1915 the Government ceased operations in the market, and invited holders either to sell or loan approved securities to it. Thus came into force what was subsequently known as the Dollar Securities Mobilization Scheme. The terms of purchase were approximately the parity of the New York price, and for loan a bonus of 5 % per annum in addition to the interest or dividend on the loaned security, plus a premium of 2 J % in the event of the Government exercising its right to sell the stock loaned to it. The Temporary Regulations were made I more stringent as the war continued, but 1917 witnessed a check 1 to the depreciation of fixed interest-bearing securities for the ' first time since the S. African War of 1899-1902, and also a sus- tained upward movement in industrial securities.

The following table, compiled from figures published by the Bankers' Magazine, shows the course at different important dates of investment values since the calculations were first made. The values relate to 387 representative securities:

Jan. 1907 3,843,000,000

"July 20 1914 3,371,000,000

fNov. 1918 2,822,000,000

Dec. 1919 2,634,784,000

Dec. 1920 " . . . 2,319,777,000,


 * Pre-war. fMonth of Armistice.

The general depreciation was due not only to the exceptionally heavy demand for money to carry on the war, but also to the growing burden of direct taxation in the United Kingdom. For a time the British investor showed a marked preference for industrial securities, on which high dividends were paid together with, in many cases, bonuses either in the form of cash or scrip. Bonus shares were created and issued by a large number of con- cerns. The scarcity of capital caused a steady rise in the rate of interest, and first-class companies found it necessary to pay 8 % and even more on new debentures and preference capital. The Treasury scheme for buying and borrowing dollar securities in 1916 was followed in 1917 by a scheme for requisitioning those which had been neither lent nor sold. This put the finishing touch to the process which had begun in 1915, of extinguishing the American market in London.

Throughout the war period the London Stock Exchange Co. had a very lean revenue. Receipts, which in 1914-5 amounted to 296,757, dwindled to 130,304 in 1917-8; and the dividend dropped to i per share.

A feature of the year 1918 was the advance in foreign Govern- ment securities, especially those of neutral nations. Bonds of the neutral countries were bought for exchange purposes, and they changed hands up to extraordinarily high figures in the first half of the year. Spanish 4's touched 135 at one time, owing to the rise in the sterling value of the peseta, and Swedish 3l% stock rose to 115, through appreciation in kroner.

Calculations made by the Bankers' Magazine show that the values of 387 representative securities fell during 1919 from 2,801,089,000 to 2,634,784,000, a decrease of 166,605,000, equal to 5-9 per cent. (As on July 20 1914, the total was 3,371,- 000,000, the decline in the five and a half years to Dec. 1919 was no less than 736,216,000, or nearly 22 per cent.) At one time during the war the values touched 2,572,000,000. This was on April 20 1918 at the height of the Germans' last great offensive effort. It is interesting to note that in Jan. 1907, when the valua- tions began, the total was 3,843,000,000. The valuation at the end of 1919 showed a net shrinkage of 1,208,000,000, or 313%, of

which 736,216,000 was due to conditions brought about by the war. The war-time depreciation in fixed interest-bearing securi- ties was greater than this. Taking the values of 108 fixed interest-bearing securities we find that the total on July 20 1914 was 1,989,000,000, at the close of 1918 1,575,000,000, and at the end of 1919 1,378,906,000. On the other hand, the value of 279 speculative investments, i.e. the dividends on which fluc- tuate according to profits, was 1,382,000,000 on July 20 1914, at the close of 1918 1,226,000,000, and at the end of 1919 f. 1, 255,578,000. Thus there was a net depreciation in fixed interest-bearing securities of 610,094,000, or 30% in the whole war period, of which 196,094,000 occurred in 1919; while speculative investments showed an increase of 29,578,000 in value during 1919, or 2.4 %, but a net depreciation of 126,422,000 on the whole period, or 9 per cent.

After the War. In spite of marked activity in speculative investments, the year 1919 witnessed a generally downward tendency in prices of securities, with the result that a large part of the appreciation which took place in the closing months of 1918, following the collapse of Germany's war effort, was lost. The reaction was due in a large measure to heavy Government expenditure, bringing with it the pressure of high taxation, and an adverse American exchange, the former involving a continu- ance of heavy borrowing, and the latter a rise in the Bank of England rate from 5 to 6% at the beginning of Nov. 1919. The failure of the British Government's Funding Loan operation in the summer had an adverse effect on the market for gilt-edged investments, and the City of London received something like a shock on learning that national expenditure in the second half of the year was scarcely distinguishable in amount from that of a large part of the war period. Markets, however, presented a generally animated appearance. This was in part due to the return of warrior members. Attention was mainly concentrated on speculative securities, notably oil, brewery, insurance, shipping, S. African gold, and commercial and industrial securities. Fixed interest-bearing securities were persistently neglected, owing to the higher value of money and the competition of numer- ous new issues offering yields as high as 9 per cent. In the sum- mer of 1919, various war-time restrictions were removed from the London Stock Exchange with the approval of the Treasury. The removal of the embargo on exports of capital enabled foreign-held stocks to be realized in the London market; but arbitrage trans- actions continued to be prohibited. Some of the declarations which had to accompany each transaction were abolished, but the temporary regulation prohibiting any but cash transactions was retained.

Gold-mining shares made a substantial advance in the closing months of 1919 owing to the high premium received on gold under an arrangement come to in July for restoring free condi- tions to the market for gold newly produced. This enabled the companies to declare larger dividends in Dec., and rescued a large number of low-grade mines from imminent bankruptcy. Towards the close of 1919 Rand Mines shares were introduced on the New York market, this being the first time that S. African gold shares were listed in Wall Street. The diamond companies enjoyed a wonderful prosperity during the year, the De Beers Co.'s revenue amounting to as much as one whole day's war expenditure at the maximum level. Record dividends were paid, and share quotations reached unprecedented figures.

The year 1920 was the most remarkable of the early post-war period. At the beginning markets in London were extraordinarily active, owing to the boom in trade. The oil market was in a state of ceaseless activity, and other speculative markets felt some of the reflected glory of inflated oil profits. Nomination for membership of the London Stock Exchange rose in price to 650, hut was almost unsaleable at the end of the year. There was a jreat congestion of work in brokers' offices in the early months, and they were kept open until late at night for several weeks. But the introduction of a British budget of 1,200 millions, with !ts unpleasant reminder of the burden of taxation, administered a check to the reckless buoyancy of markets. The collapse of the exchanges of all the countries except the United States