Investment Suggestions

On request we will be glad to advise investors in regard to their investment holdings in connection with obtaining a well-balanced investment.

In view of the present economic changes there are great opportunities for investors who take advantage of low prices of certain classes of securities. Write for our circular S8, showing the ideal distribution of investments, combining security with income.

But the statement ignores the qualifying consideration-most carefully observed in conscription of men for army service-as to limitations of age, occupation, or physical ability. Conscription of income has equally to observe such limitations as will insure the desired results without injury to the ordinary financial interests of the people or the state.

PRECISE

Prices

CISELY as our participation in the war has confronted this country with new and extraordinary problems in taxation and in public credit, so it has confronted us with very unusual war-time problems in the shape of high cost of living, high prices for the Why Some government's war materials, Have Risen and possible restriction of abnormal advances in such prices. What has perplexed the average householder or business man in this rise of prices is not the rapidly mounting cost of such articles as steel, which every one knows is in utterly abnormal demand for the making of war material, or wheat, of which Europe needs to buy exceptionally large amounts of us because the war itself has reduced production of European farms.

The real puzzle has been why cotton should be so high when Germany, to which in time of peace we export one-fifth of our entire crop, is cut off by the blockade; why coal should rise to almost prohibitive prices in our markets, when our mines are producing more than ever before; why fruit, coffee, milk, butter, garden vegetables, the demand for which is not affected by war, should move up similarly. Why, in short, should everything which a householder has to buy stand at the highest prices in his memory? The commodities just mentioned had risen 30 to 100 per cent in the twelve months ending with last July, on top of a rapid and continuous advance since 1914.

These perplexities have always arisen in time of war. It has always been the more difficult to remove them because of the multitude and complexity of causes at work on the advance of prices. It used to be roughly estimated that, of the invariable rise in prices during a great war, about 60 per cent was due directly to the influence of war and about 40 per cent to the influence of depreciated currencies. It was so in our Civil War; an investigation, subsequently conducted by Congress, showed that, whereas average prices during the five-year period prior to 1860 were the same in gold and in paper money, the average in gold during the next five years was higher by 22 per cent than the average in paper. But even the increase of 216 per cent between 1861 and 1865, in average prices reckoned in current money, was caused partly by the huge

of labor to the army-which, along with other causes, raised the average rate of wages 40 per cent. Blockade of the South put up the price of cotton in Northern markets from 13 cents a pound at the time of the battle of Bull Run to $1.54 in the middle of 1864. It was on top of all these influences that the depreciation of our currency operated-gold being quoted at. 185 per cent premium in 1864-which immensely increased prices, especially for imported goods, which had to be paid for in gold.

THESE influences are readily visible in

the case of Europe to-day. It is not difficult to understand the rise in prices on the belligerent European markets, reflected. by an average in England, computed on August 1 by the London EconEnglish and omist as 30 per cent above that American of the year before and 112 per Prices cent above that of August 1, 1914. Not only had these markets been confronted with shortage in their own production of grain and manufactured goods, because of the turning of labor and productive facilities to war purposes, but the importations which were necessary to make good this shortage became increasingly expensive. That resulted primarily from the shortage in shipping facilities and the risks of ocean transit, with a consequent rise of freight rates to ten, twenty, and in some products one hundred times what they had been in 1914. But it also resulted from the state of the currencies of the European belligerents, the depreciation of which, though not expressed in a premium on gold at home, was reflected by diminished purchasing power of such currency, when goods were purchased from foreign markets.

Even a draft on a London bank, with which an English importer pays for wheat or steel or cotton bought from America, is valued in New York at $4.75% to the pound sterling, whereas it would be worth $4.86% or thereabouts in normal times. If such an importer were buying $1,000 worth of merchandise, at the same New York price as was quoted in times of peace, he would still have to pay about £5 more in English money than he would have paid before the war. That alone would amount to some 2 per cent increase in the necessary English price for the American goods. The case of Russia is much worse; a draft at Petrograd, which at the rates of 1914 or 1913 would have been worth in New York 514 cents per ruble, would lately bring no more than 181⁄2 cents. This means that the New York price for copper or cotton bought by Russia might be just what it was three years ago, and yet that the buyer Financial World, continued on page 68

Write today for Booklet 28-B which explains thoroughly our method by which you may purchase Stocks and Bonds in small amounts. A small first payment is made and the balance is paid in convenient monthly installments. Dividends on stock and interest on bonds are credited to you while completing payments. Should you desire to sell your securities, you may do so at any time.

You may divide your investment among several dividend-paying securities under this plan.

Free Booklet 28-B "Partial Payment Purchases"

sent upon request. It explains this simple
plan which is being followed by carefu
investors in all parts of the country.

SHELDON-MORGAN

& Company

Financial World, continued from page 67

at Petrograd would have to sell it to the Russian trade for considerably more than double his price of 1914, in order to cover the difference in exchange.

Yet these facts hardly explain the rise in American prices. The difficulty about applying either precedent from our Civil War or the example from contemporary Europe is that the American currency is not depreciated, that we are far less dependent on importations now than in the sixties, and that, taking the necessities of life and the general run of our materials of manufacture, we are not only producing vastly more than either Europe of to-day or our own country during the Civil War, but are turning out at home much more than enough for our own uses. But the influence of a great war, even on the affairs of neutral nations, cannot be judged by that criterion alone. commodities in which even a self-supporting country trades with the outside world are bound to be influenced by the forces at work on its customers.

THERE

All

No Mystery About Wheat and

HERE is no mystery about the high price of wheat or of steel products in our markets of 1917. Last year, as every one knows, the world's production of wheat decreased nearly a thousand million bushels from 1915, or more than 20 per cent; and if Russia's crop, which cannot be exported, is excluded, then the whole Steel world's crop of 1916 was much the smallest in sixteen years. In 1914 our own wheat harvest had been so unprecedently large as to offset a decided shortage everywhere else, and in 1915 the United States and Canada and Argentina and India all raised bumper crops. Food products sold at reasonable prices in this country throughout both years. But our harvest of 1916 was one-fourth smaller than the year before and far below the normal average. In Canada, Argentina, and India the crop ran short, while, directly because of the war, the harvests of western Europe showed progressive decrease.

Only because of the large surplus left over from our billion-bushel wheat crop of 1915 was the United States able to supply at any price the needs of western Europe during the season past. When the American wheat crop of 1917 began the season with even more unfavorable promise than that of the year before, and with no surplus at all left over from the crop of 1916, such panic seized the European graincarrying states that their bids against one another in our markets drove prices to the wildest heights and compelled the government at Washington to interfere.

So with the steel trade. Europe's requirements for manufacture of munitions

creased, and so urgent for speedy delivery that the bids of the governments carried the price in that market also to an all but unheard-of level. Wheat at $3.50 per bushel and steel at $100 per ton (as against 95 cents and $19 respectively in 1914) were easily explained. But how about the rise since a few months before the war, even in the wholesale price, of coal from $2.80 per ton to $6.50, cotton from 14 cents a pound to 28, corn from 80 cents a bushel to $2.45, potatoes from 80 cents to $2.50, coffee from 74 cents a pound to 10%, shoes from $2 a pair to $3, oats from 44 cents a bushel to 93-with a host of similar advances in nearly all other articles, and with the advance in retail prices very much greater?

THER

HERE are some rather obvious explanations. One is that cost of labor-in agriculture as in manufacture-had gone much higher, long before we ourselves entered the war. Last autumn a 10-per-cent increase of wages occurred in High Cost perhaps the majority of trades, of Labor on top of a much larger rise in the preceding twelvemonth, and in many industries the rate has risen further this present year. The Department of Labor at Washington has lately estimated that, as compared with January, 1915, the average daily wages per man had increased 38 per cent in the cotton-manufacturing industry and 53 per cent at the iron and steel mills.

These industries were typical in this respect of many others. The country's production of war munitions on the one handan entirely new industry in this country on the scale pursued-had of itself created demands on labor similar to those existing abroad. Although we were not, until the past few months, losing able-bodied workmen to the American army service, we were losing them by the thousands to the European armies, whose call on their reservists all over the world brought home so many of our own foreign-born laborers that, in 1915 alone, arrivals of European aliens in this country, immigrant and non-immigrant, were exactly 16,900 short of departures, whereas in 1913 the excess of arrivals was 843,000.

But the labor cost is a prime factor in prices. A further influence, in the case of commodities whose production requires foreign materials, came in the higher price fixed on such materials by the blockade of some countries and the expense of war-time transportation from all. Imported articles like coffee felt this influence to the full. With corn, oats, and other food products, the excessive advance during the season past was immediately occasioned by the fact that the high wheat prices had turned Financial World, continued on page 70