LOAN PROBLEMS AHEAD
From the Stock Exchange standpoint, of course, this sort of drive to tap the nation's savings brings no grist to the mill, but the City is well aware of the financial exigencies of war. Quite apart from any considerations of patriotism, both the new media now made available can be commended as really attractive investments. What of the broader implications of the plan? Obviously, the Government has recognised the importance of diverting a larger portion of the nation's wealth from non-essential to essential war uses at the earliest possible moment. Taxation helps in this direction, and I am prepared for another really Draconian Budget next April, but this form of diversion of capital and income to national purposes needs to be supplemented by loan campaigns. We must be grateful to Mr. Keynes for his clear exposition of the nation's problem, although I, for one, am not enamoured of his compulsory savings plan. Let us give the voluntary method its chance first of all. It succeeded in 1914-18, and may well do so again.
Gilt-edged stocks have shown precious little reaction the Chancellor's plans, which is only to be expected. Neither the new Certificates nor the bonds are directly competitive with any of the securities quoted on the Stock Exchange, and the market is still left in the dark as to the date and the likely terms of the Treasury's coming loan operations to draw on big investors' resources. As a whole, however, stock markets are keeping up remarkably well. Turnover is not large, but there is just enough investment and speculative enterprise to keep the machine ticking over. Never lacking in optimism, the Stock Exchange refuses to abandon its theory of a short (or shortish) war. On this assumption I see no reason why the rise in gilt-edged prices should not go farther. After all, the Chancellor has told us that he does not con- sider the time has yet arrived for floating a loan in the market, which is a pretty plain hint that he anticipates a higher level of prices. Given reasonable political condi- tions, the weight of funds will tell during the next few months.
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