One of the consequences to America of being forced to play the role of
money lender and one of the consequences of the rise in the rate of
interest here, or what amounts to the same thing, the fall in the prices
of bonds, will be an increased difficulty of financing our own
enterprises. Only the most promising enterprises will be able to sell
their securities. This means that we shall be neglecting, to some
extent, our own enterprises, to finance the European war instead.
This general depreciation of investment securities will doubtless lead
to many bankruptcies, if not to a genuine crisis. It will also give
tempting opportunities to investors. The likelihood of a genuine panic
is lessened by the fact that every one recognizes the real cause of the
disturbance and that insolvency is not suspected. According to the best
commercial observers, the previous liquidation had been fairly well
completed. Unless they are mistaken, disaster will not be likely to
follow.
We repeat that since the necessities of Europe have forced her to buy
our food in return for her investments, it is evident that during the
war food prices will be high and security prices, especially bonds, will
be low.
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