CONVERSION " TALK."
There is another circumstance, too, which helps to explain the abnormal character of markets at the present time. It is not an uncommon experience for one country to be suffering from influences causing local trade depression and cheapness of money. At the present moment, however, trade depression and cheap money are almost world wide. Nor does this even quite complete the picture or offer the full explanation of the expecta- tions in the stock markets at the present moment of a continuance of the rise in long-dated British Government stocks. Rightly or wrongly, it is believed that the Central Banks of the world are likely to co-operate for some time to come in keeping money rates as low as possible at the various centres, and, so far as this country is concerned, it is believed in these same quarters that the cheapness of money will be sufficiently pronounced and last for a sufficiently long period to enable the British Chancellor of the Exchequer to convert the 5 per cent. War Loan into some stock giving a con- siderably lower yield than 5 per cent. In view of all these present facts and future possibilities, it is argued that the prospects of converting_ the 5 per cent. War Loan are sufficiently promising to make it desirable for holders to take time by the forelock and exchange into a longer-dated Government stock even though by doing so they obtain a yield -of only about 41 per cent., as compared with the present yield from the 5 per cent. War Loan of a little under 5 per cent.
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