FUTURE BANKING PROBLEMS 401 



and may be accomplished, provided there is the proper degree of co- 

 operation on the part of the stock-exchange interests, our bankers and 

 our corporations. We must bear in mind that our stock exchanges are 

 working on a basis of minimum prices. We have already seen, in a 

 modified form, the efficacy of this device. A heavy selling movement 

 "will force a stock down to the minimum price, as, for example, was the 

 case on several occasions with Steel common. When this occurs, 

 selling ceases or must be limited to the ability of the market to absorb 

 the stock at the minimum price. In other words, the buying movement 

 determines the amount which shall be sold. The seller can not offer his 

 stock at lower prices and force the financial interests, in self defence, to 

 purchase. It is altogether likely that minimum prices will continue 

 to be readjusted, some advanced and others lowered. The existence of 

 minimum prices will be of the greatest advantage in controlling un- 

 welcome liquidation. Should additional checks be found necessary they 

 can be speedily devised and applied. Stock exchange members could be 

 required, for example, to guarantee that securities sold by them are not 

 for the account of citizens of belligerent nations, that at the time of 

 sale the brokers actually possess or control the securities (which can be 

 made effective by requiring the broker to give the numbers of the stock 

 certificates or the bonds at the time of the sale). Most of these devices 

 are successfully used in London. 



When it becomes certain, as it should speedily appear, that the fear 

 of uncontrollable liquidation of American securities is groundless, so 

 long as we manage our affairs with intelligence, the investment situation 

 in this country will rapidly improve. It is idle to presume that the 

 amount of money available for investment in new issues of American 

 securities will be as great as heretofore. It is altogether likely that the 

 amount of European capital in this country, entirely aside from the 

 resale of securities to us, will markedly decrease. It is estimated that 

 the outstanding funded obligations of the leading railway and industrial 

 corporations of this country that must be met at various dates through- 

 out the next three years are $1,241,573,536, of which $764,424,289, or 

 more than one half, is due in 1915. Our first task is to make provision 

 for refunding or extending these maturing obligations. A certain 

 percentage — no one seems to know how much, although the percentage 

 is probably comparatively small — is held by foreign investors. It is 

 altogether likely that part of the liquidation, so much feared, will con- 

 sist in a demand for the repavonent of these obligations as they mature. 

 Most of them were sold at a price below par. The issuing corporations 

 are obliged to redeem them at par. It is obviously more advantageous, 

 to demand the payment of these securities at par than to sell us other 

 securities at prices much below par. We have already seen something of 

 the working out of this proposition in the recent refunding of the City 

 of Xew York's obligations, where this tendency was strikingly apparent. 



