MERRILL

LYNCH & CO.

Members N. Y. Stock Exchange

7 Wall St. New York

Penobscot Bldg. Detroit

A Growing,
Nation-wide
Business

Thirty-four years ago the first McCrory Five and Ten Cent Store was opened in Scottdale, Pa., less than $2,000 comprising the original investment. Today 115 stores located in over 100 carefully chosen and growing cities, from Massachusetts to Florida and from Nebraska tothe Atlantic Coast, are operated by the McCrory Corporation.

Prosperous,
Diversified
Territory

Statistics show that be-
tween 1900 and 1910 the
population of the cities
in which the 115 stores
are situated increased
more than twice as rap-
idly as the states in which
the cities are located,
and that 65% of the
stores are in cities whose
population grew three
times as fast as their re-
spective states.
each additional new
store the business of the
chain becomes more di-
versified and conse-
quently the earnings on
both the Common and

With

Preferred issues become more uniform.

Efficient
Management

Sales of $5,613,987 in 1915 represented 43% increase over sales in 1911. For October the sales exceeded those of 1915 by 17.34%. Profits in 1915 were over 60% greater than those for 1911, and comparisons of the percentage of gross profit in 1916 with 1915 show that in a rising market this company not only maintained the percentage of gross but slightly increased it. That profits have increased faster than sales demonstrates the efficient management of the McCrory Stores Corporation.

McCrory Stores Corporation has no funded debt.

Earnings:
The Basis of
Dividends

The margin of safety with which the 7% Preferred Dividend is earned is indicated by the fact that average net profits for the years 1911 to 1914 inclusive were equivalent to three and one-half times dividend requirements and net profits for 1915 were equivalent to more than four times Preferred Dividend requirements. Strict conditions surround the Preferred Stock in order to secure stability of investment.

Recommended for Investment The McCrory Stores Corporation Preferred Stock possesses sound investment qualities. The company is not affected greatly by periods of depression. The stock is marketable and the dividend yield is satisfactory. At the present market price the yieldisabout 7.2%. The latest financial reports and other data will interest you.

operation would have been recognized without dispute as normal, logical, and altogether desirable.

Few New But the circumstances un- Domestic der which our huge "trade or Foreign Securities balance" of 1915 and 1916 was built up, made that impossible. Except in the case of neutral states, there were few new securities being put out by private foreign enterprise. Railway and industrial companies of foreign communities were not large borrowers in the United States. The enormous purchases from America were made by belligerent governments. They were paid for, in so far as shipment of gold and return of our own securities were inadequate, in bonds of the same belligerent governments. But the facts that these governments were struggling at home under a quite unprecedented financial burden to conduct their war, and that their whole economic structure had been shaken by the strain, gave voice, in many quarters, to a different inference from what accompanied England's loans of the past century to the outside world. Whenever the theory that the American market could not safely spare such amounts of capital had spent its force, the suggestion was revived that belligerent Europe would not be able to repay these prodigious foreign borrowings after the war.

I

HAVE already reverted briefly to that argument in these articles. But the large additions in the foreign. borrowings from America since that time, the increased economic tension in Europe itself, and some Will particular incidents of the America day, make re-examination of "Aid in the matter advisable. What Footing the even some European individuals imagine may be judged from the German Crown Prince's interview of two months ago with an American correspondent. Commenting on our people's sympathies in this war by the remark that "where the treasure is (Continued on page 48)

Bill"?

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(Continued from page 46)

there the heart is also "-not a particularly high-minded effort to account for the thought and motive of a nation which also showed its sentiments by feeding Belgium while the German generals extorted blood-money from her-this titled philosopher expressed his regret for unhappy America as a country "which has invested in the Entente's chance of success," and which therefore "will have to aid in footing the bill."

The ideas of Crown Prince William on such a question are not likely to be taken seriously. But he was probably repeating what he had heard some German statesman say; and, indeed, the general notion of the economic collapse of the Allied Powers after the war, with a huge war indemnity on their back, has been set forth even in Cabinet speeches to the Reichstag. What, then, is to be said of this imaginable result, and of its effect on the status of the bonds of belligerent Europe held by our investors when the war ends?

THE

Some Gov

HERE are instances of repudiation of a government debt. Austria ceased to pay interest on a loan contracted by her in the Napoleonic wars and guaranteed by Great Britain; but the incident was complicated by political dispute ernment regarding terms. Greece, Debts Turkey, and Portugal-not Have Been Repudiated to mention numerous Central American states-have on occasion announced their unwillingness to continue paying interest on their public debt; at least at the contracted rate. These, however, were weak countries with neither financial nor commercial standing of any high order. All of them had assumed debts beyond their reasonable ability to provide for; many of them merely repudiated a debt fastened on them by a dictator or a revolutionary government.

Beyond these not very closely parallel instances, there is little in point

bankruptcy of the French Government of Louis XVI in 1788 was in fact the recourse to paper money for payment of ordinary public dues; a recourse familiar on many other historic occasions, not least notably in our own wars of 1812 and 1861. But this is not what is meant by "debt repudiation" in the current discussion. As for the debt of the Confederate States, the English holdings of those undoubtedly repudiated obligations are still faithfully reported on each year by a London organization known as the "Council of Foreign Bondholders," with accrued interest scrupulously computed up to date. But since the Confederate Government, as such, expired in 1865, with nothing or no one to succeed it and administer its effects, the fate of its debt can hardly bear on the present controversy.

of Modern

the United

States War Debt

N short, there is no valid analogy whatever to the present situation in the debt repudiations of the past. What we have now to consider, in the main, is the case of the most powerful financial and commercial Comparison states of the world; counDebts with tries whose credit, three years ago, was absolutely unimpeachable; which borrowed then on much the same footing as the United States Government; whose income from taxation in the future is as certain, judged by all reasonable criteria, as in the past. The enormous increase in the public debt of all of them, and therefore in the annual interest charge, is unquestionable. For this, however, we have at least one very close historical parallel. The principal of the interestbearing public debt of the United States in 1860 was $64,842,000; in 1862 it was $365,304,000; in 1865, $2,221,311,000. With all the astounding increase of indebtedness among the present belligerent states, no ratio of increase has yet been presented even remotely comparable to this.

(Continued on page 50)