NOTES AND MEMORANDA

THE DEPRECIATION OF BRITISH HOME

INVESTMENTS.-II.

THE tables published in the ECONOMIC JOURNAL of June, 1912, are brought up to date below by the addition of the figures for 1912.

TABLE I.-(Line A of Diagram).

Dividends and Mean Prices. BRITISH RAILWAY DEBENTURE STOCKS.

2. Birmingham Corporation (1947)

3% Stock

31%

5. Glasgow Irredeemable 3

6. Liverpool

34%

7. Manchester

4%

8. Newcastle (1936) 31%

9. Nottingham Irredeemable 3%,, 10. Bradford (1945)

31%

100.87 91-87 8. Bristol Irredeemable 34% Stock 132.75 114.25 104.50 97.75 94.25 4. Cardiff (1935) 122.31 106.75 101.37 97.00 95.00 135.25 118.75 107.37 102.12 100.00 136.75 117.75 108.12 100.50 98.87 151.12 132.06 123.56 114.69 111.75 121.37 106.50 101.25 97.37 95.75 100.37 90.44 87.87 86.44 109.31 101.75 97.75 96.87

TABLE III.-(Line C of Diagram).

Dividends and Mean Prices. BRITISH RAILWAY ORDINARY STOCKS.

TABLE V. (Line E of Diagram).

Dividends and Mean Prices. FOREIGN AND COLONIAL RAILWAY
ORDINARY STOCKS AND SHARES.

A slight error in the 1911 figures in Table V. has been corrected. The diagram which appeared a year ago is brought up to date on p. 287.

The added figures in no way alter the effect of those which precede them. British Railway Debenture stocks and British Municipal stocks have continued their decline, and there is still no sign of any change for the better. British Railway ordinary stocks have likewise continued to fall in price, though, through strikes having reduced dividends in a higher ratio, "years' purchase of dividends" in their case shows an increase. Foreign and colonial railway debentures have declined, but to a smaller extent than the corresponding British stocks; while the rise in "years' purchase of dividends" observable in foreign and colonial railway ordinaries is due more to rise in price than to fall in dividend. Thus the problem remains a double one-we have not only to deal with a movement adverse to British home investments, but with one in which foreign and colonial investments share, if at all, only to a less extent.

34

British Railway Ordinary Stocks.

The effect of "redemption" upon the averages shown in the tables, and therefore upon the lines in the diagram, has been carefully looked into. Some of the investments in Tables II. and IV.-British Municipal securities, and foreign and colonial railway obligations-are either in process of redemption or liable to be redeemed at future dates. A comparison of the prices of these with the prices of the others in the same groups shows that the effect of redemption is not, in any case, great, and as it operates in both directions-in some cases raising, and in others depressing, prices-the net effect upon the averages, and therefore upon the lines in the diagram, is negligible. So also as regards the matter of "rights" to new issues (to which reference was made on page 224 of the former article), an examination of the effect of not taking account of them in the tables has been made, with the result that it is clear that to include them would be extremely difficult, and that, even if it could be satisfactorily accomplished, it would merely widen to some extent the space in the diagram between the lines C-C and E-E. No alteration of the diagram, therefore, is called for on account of either "redemption" or "rights," and its lessons remain unimpaired.

Professor Cohn, in the ECONOMIC JOURNAL of December last, mentions the previous article generally with approval. He finds it "very justly maintaining" that the price movements of our home investments cannot be attributed to the fortunes of our political parties; "on the right track" when it says that the Colonial Stock Act is not the cause of the depreciation, and when it draws attention to the flow of British capital to other countries; and of the movements themselves he says, "these movements in the various kinds of investments are accurately illustrated by means of instructive tables." But he complains that the parallel which he sees between the movements of British Government securities and those of the securities of foreign states has not been noticed by the writer.

Professor Cohn finds "the pith of the matter " in the "identity of the fate of German, French, and English State securities. The writer, on the other hand, finds it in the "exceptional" fate of British home investments when compared with similar foreign and colonial investments. Which field offers the better chance of finding "the pith of the matter "-the "State" or the "other" investment market-is no doubt open to discussion. Admitting the great importance of the market for State securities, is it not at least possible that the other markets, with their superior facilities for grouping, and their comparative remoteness from political