83

profitable  investment  may  be  said  to  rest
on  the  following  law  :—The  realisable  values  of
all  securities  whose  market  lies  chiefly  in  any
one  country  are  under  the  dominant  influence
of  the  trading  conditions  of  that  country.
We  commenced  this  explanation  by  quoting
the  price-movements  of  the  London,  Brighton
&  South  Coast  Railway  4|  per  Cent.  Perpetual
Debentures,  which  fell  from  180  in  1896  to
134  in  1904,  although  no  alteration  had  taken
place  either  in  the  capital  safety  or  in  the
dividend  productiveness  of  this  security.  The
explanation  of  this  apparently  inexplicable
price-movement  is  now  simple,  and  this  stock’s
serious  depreciation  was  solely  due  to  the
external  influences  obtaining  on  the  London
Stock  Exchange.  These  external  influences
dragged  down  the  price  of  every  English
security,  beginning  with  Consols  and  going
down  to  the  shares  of  industrial  trading
companies.
The  annual  totals  of  the  average  annual
prices  given  at  the  foot  of  the  chart  of  British
securities  give  a  very  complete  picture  of  how
all  investors  who  had  invested  their  capital
solely  in  British  stocks  have  fared  between
1893  and  1906.  These  figures  teach  the  valuable ­
  lesson  that  :—Every  investor  who  'places
his  money  exclusively  in  the  investments  of
D  2