Tim INVESTOR'S DILEMMA.
Frankly it is becoming very difficult to advise the genuine investor as to whether British Funds and other gilt-edged securities are or are not too high at the present level of prices. The difficulty lies in the fact that for a long time past the con- ditions of the investment markets have become artificial, owing to the amount of control exercised by the Treasury through the Bank of England. Apart from patriotic appeal, the success of the War Loan conversion was largely due to the threat of credit expansion by the Government, if necessary, to repay all those holders of the old War Loan who declined to convert. Fears of huge credit expansion and a rush up of prices in the gilt-edged market caused holders to hasteft to convert. Since that time there has been a steady control placed on all new issues of capital, very largely to the detriment of investors seeking a fair yield on their capital, though admittedly helpful to those who desire to see capital appre- ciation recorded in market values of their existing securities. We still have a position where the great rise in banking Deposits suggests that there are many millions awaiting in- vestment, but on the other hand we know that the joint stock banks during the past year have added about £175,000,000 to their investments through sheer inability to employ their resources in trade advances. Thus there is the possibility of a rise in money rates, following trade expansion, resulting in steady sales of long-dated investments by these banks.
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