FUNDAMENTAL CAUSE OF WAR 335 



In this connection, the fact must not be overlooked that the war has 

 practically brought to a standstill, for the present, in many parts of 

 Europe, any saving of capital for investment. If the war should soon 

 end, and the men now employed in trying to kill each other were able 

 to return promptly to the ranks of industry, a considerable stimulus 

 would be given to the renewal of effective production, and a margin 

 of savings for investment might emerge. On the other hand, there 

 will be delay and considerable cost in re-establishing the important 

 textile and other industries of northern France, of Belgium, and of 

 other sections which have been the victims of hostile armies. 



This great demand upon the world's saving for investment will make 

 it difficult to obtain capital for industrial purposes except at a high 

 rate. The credit of the strongest governments is usually at least ^2 

 per cent, higher than that of private corporations. While England has 

 succeeded in borrowing at a rate slightly under 4 per cent., Germany 

 is paying 5 per cent, and France practically the same. The most severe 

 pressure upon the market for capital is likely to be felt, however, after 

 peace is made, during the distribution among investors of the large 

 amounts of the loans which are being carried temporarily by the banks. 

 This demand for capital will proba:bly reduce the price of even the best 

 bonds to the level of the new rate of return. Bonds might have a pref- 

 erence in certain cases over stocks, but, on the other hand, only those 

 corporations which were able to pay a high return would be able to issue 

 additional stock for the extension of their plants. 



A high rate of return upon capital will not in itself be inconsistent 

 with great industrial activity and certain types of commercial expan- 

 sion. It is usually the experience after a war that the efficiency of 

 labor is increased by the disposition to repair the waste of the conflict, 

 and that the return of many thousands of men to peaceful industry 

 not only restores, but increases the previous capacity for production. 

 The prevalence of unusual economies also, both in Europe and the 

 United States, will probably do something to offset the abnormal de- 

 mand for investment capital for war purposes, and aid in the restoration 

 of industry. 



THE PREVENTION OF THE FUNDAMENTAL CAUSE OP 



WAR— DISCONTENT 



Bx BYRON W. HOLT 



OF WAEEEN W. EEWIN & CO.^ NEW XOEK 



"DECAUSE of the very brief time (only two days) that I have been 

 -^-^ able to devote to this address, since I learned, on December 20, 

 that I was expected to make it, I can do no more than to suggest, or 

 outline, what if I had had sufficient time to prepare might have taken 



