FINANCE AND INVESTMENT
SOONER than most people expected the Treasury has embarked on the requisitioning of dollar securities. Admittedly this first move is only a very modest beginning, covering a limited range of stocks, but it is significant as a guide to the method which the Treasury intends to use. British holders are to be paid out in sterling at current market prices while the Treasury takes over the securities to be liquidated as suitable opportunities arise. Obviously, this must bear hardly on investors who have bought at prices substantially above current levels, and their feeling of aggrievement will not be diminished by the arbitrary choice of securities which has been made. Why, for example, does this first list exclude railroad stocks like New York Central and Pennsylvania and include Atchison and Southern Pacific? If, as seems likely, Wall Street stages a recovery those whose securities are called up now will have made a big sacrifice. In war we must not expect anything more than very rough justice, but whenever sacrifice is involved it is desirable that it shall be imposed as equitably as circumstances allow.
Wall Street's reaction to the news of ,requisitioning has been extremely mild. The American market has its own problems, and the trend is not likely to be influenced very greatly by the fact that Britain has stock to sell. In any case, it has always been a safe assumption that the British Treasury would not press its sales, but would take steps well in advance, as it is now doing, to buttress sterling's defences and ensure an orderly liquidation of dollar securities. Much more important is the effect of this call-up on markets here. Whatever the sum involved—estimates range between £30,000,000 and £4o,000,000—it is clearly an addition to the volume of funds seeking investment, and is thus an in- fluence making for higher prices. In anticipation of a rein- vestment demand from the sellers of the called-up dollar securities buying is already in evidence in gilt-edged and front-rank home industrials.
Previous page
