War-time financial problems

8 THE OUTLOOK FOR CAPITAL

wants for Ms comfort is probably not greater, and
very likely rather less, than the power which he got
in 1896 from his 21 per cent. One of the few facts
which seem to stand out clearly from a study of the
movement of the prices of securities, and conse-
quently of the rate of interest to be derived from
them, is that the rate of interest is high when the
price of commodities is high, and vice versa. So that
the answer to the question: What is the rate of
interest likely to be after the war ? may be given, in
Quaker fashion, by another question : What will
happen to the index number of the prices of commo-
dities? It seems fairly probable that both these
questions may be answered, very tentatively and
diffidently, by the expression of a hope that after a
time, when peace conditions have settled down and
all the merchant ships of the world have been
restored to their peaceful occupations, the general
level of the price of commodities will be materially
lower than it is now, though probably considerably
higher than it was before the war. If this be so, then
it is fairly safe to expect that the rate of interest, as
expressed in money, will follow the movement of
prices of goods. But it must be remembered that
by rate of interest I mean the pure rate of interest,
that is to say, the rate earned on perpetual fixed-
charge securities of the highest class. It may be
that, owing to the very large amount of gilt-edged
securities created in the course of the war by the
various warring Governments, the rate of proli^to
be earned by the man who takes the risks of industry
from dividends on ordinary shares and stocks will