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fi .— | FINANCIAL AND CLASSIFIED r———--=r
News of Markets < Classified Ads Pages 1 to 4 | _Pages 4 to 12_ m___— — — ■ ■ ' 1 ■. —. , '=3 Part 6-12 Page. WASHINGTON, 1). SUNDAY MORNING, MAY 22, 1932. PLANS FOR COMING Collins, Former Treasury Ex pert, Added to List of Con vention Speakers. ATTENDANCE EXPECTED TO EQUAL 1S31 MARK Peoples Drug and Safeway Stores Vote Dividends—Potomac Bank 29 Years Old. BY EDWARD C. STONE. Charles W. Collins, authority on the Federal Reserve act. former adviser to the Bureau of the Budget, lawyer and author of many books on finance, will be one of the leading speakers at the convention of the District Bankers' As sociation at Hot Springs. General Chairman Claude H. Woodward an nounced yesterday. Mr. Collins will discuss “Recent Legislation and Its Effect on Business.” He will be one of the three spegjal Buest speakers, the others being Harry J. Haas, president of the American Bankers' Association, and Merle Thorpe, editor of Nation's Business. Very active in Government service for years. Mr. Collins had much to do With drafting the original Federal Re eerve act. He was legal adviser to Sen ate and House Committees on Revising the Budget, drafted the McFadden Pepper national bank bill in 1924 and ts generally recognized as an authority on branch banking. Among his books are “The Four teenth Amendment and the States,” • The National Budget System," “The British Budget System” and “The Branch Banking Question.” A former deputy collector of the currency, he is now practicing law', with his office in Washington. He is a member of the National Press Club. University Club, National Metropolitan and Riding and Bunt Clubs. Convention Plans Pushed. The Importance of local bank officers and directors attending this year’s con clave was stressed at the meeting of all committee chairmen Friday with C. H. Pope, association president. The chairmen present included Charles H. Doing, Program; Thomas J. Groom, Hotel; Barnum L. Colton, Entertain ment; Sidney F. Taliaferro, Sports; Frederick H. Cox, Transportation, and Eliot H. Thomson, Press. All the officers of the association ■were also present as were Robert V. Fleming and Thomas W. Brahany, ex perts, respectively, on programs and en tertainments. The opinion was ex pressed that this year's meeting will be of exceptional value on account of pre vailing banking and business problems. Much will be said of vital import. It is intended to make the discus sion cover suggestions that can be ap plied directly to local banks. While the outing features will be jfiven their usual attention, the morning (sessions are expected to hold the financiers to business for three hours each day. The committee chairmen were in formed that special efforts are to be made during the coming week to assem ble all the requests for reservations. It is believed the attendance will be normal, that is, about the same as last year. Reviews Savings Banks' Growth. Howard Biddulph, president of the national Association of Mutual Savings Banks, said at the recent convention: "The organized efforts of this associa tion and of its close allies, the State associations, during the past 12 years have greatly increased the effectiveness of mutual savings banks. At the time of our first meeting in Boston in 1920, the savings bank movement had been under way in America more than 100 years. Aggregate deposits then amount ed to about $5,000,000,000. Since that time this sum has Increased to $10,000, 000,000. Yet the average savings per Individual and the number of deposi tors in our banks are still far less than will assure financial security to those whose livelihood depends upon their daily wages. "Throughout this depression the value of the savings bank dollar has remained at par and so long as savings banks maintain their present ideals of finan cial strength and liquidity, they will furnish a dependable depository which the masses of wage earners may and will continue to patronize.” Gleaned In Financial District. Directors of Peoples Drug Stores. Inc., have declared the regular quarterly divi dend of 25 cents a share on the com mon stock, payable July 1 to stock of record June 8. and the usual quarterly dividend of $1.62 on the preferred, payable June 15 to holders of record June 1. Safeway Stores, Inc. with which the Sanitary and Piggly Wiggly stores are affiliated, has declared the regular quar terly dividend of $1.25 on the comm:n, $1.75 on the 7 per cent preferred and $1.50 on the 6 per cent preferred, all payable July 1 to stock of record June 17. Employes in local broker offices are much interested in the petition circu lated in New York to declare a holiday fn the New York Stock Exchange on Saturday, May 28. preceding Memorial day. It has already been signed by 321 members of the exchange. The Potomac Savings Bank ended 29 years' successful service on May 18. the officials receiving many congratulations on that day. Henry W. Offutt is presi dent of the institution. United Business Service. Boston, names four fundamental developments as prerequisites of recovery—"further reducti:n in finished goods prices, cut In Government expenses, reduction in tariff barriers and a solution of the International debt dilemma." Wholesale Prices Lower. For the eighth successive week Brad etreet s weekly index of wholesale prices registered another new low, falling to $1.65 during the week ended May 17. Since the normal expectation is that prices should remain stable at this time, this decline cl 1.2 per cent from the previous week brings Bradstreet’s ad justed index of food prices down to 52.7 per cent of the 1928-30 average, as com pared with 53.3 last week, 53.4 two weeks ago and 70.6 for the same week a year ago. • Foreign Selling. NEW YORK, May 21 (Special).— More foreigners are selling their secur ity holdings here—not at a specified price to limit losses, but "at the market" to save "some of their principal." Their fright, of course, is due to their ex periences with “unbalanced budgets" in their own countries—experiences which originally caused them to place their savings here lor safe-keeping. Bankers Join Gas Board DIRECTORS ELECT TWO LOCAL FINANCIERS. To give the management of the Washington Gas Light Co. a more local flavor, although the majority of the stock is controled by out-of-town interests, Corcoran Thom, president of the American Security & Trust Co. (left), and Sidney F. Taliaferro, trust officer of the Riggs National Bank, have been added to the directorate. Mr. Thom is a former member of the same board. Mr. Taliaferro is a former District Commissioner. _ j YOUNG PLAN FOR AMERICA SEEN IN NEW CREDIT MOVE Restoration of Buying Power in U. S. and Neighboring Countries Declared Nec essary for Economic Revival. J Special Dispatch to The Star. NEW YORK. May 21.—Desire to set the vast hoard of money flowing into productive enterprises has dictated the formation cf the new body, headed by Owen D. Young, chairman of the Gen eral Electric Co., and comprising a num ber of the Nation’s leading financiers and industrialists. It is hoped that this imposing committee will draft a pro gram that will carry out the recovery campaign set in motion in Washington. What form the work will- take has not as yet been announced. In any event, it looks as if the United States is to ob tain a Young plan similar to the one given Germany some two years ago. It is sincerely hoped that the Young plan for America will prove of a more last ing character at home than did the Young plan abroad. Observers in close touch with the committee feel that its organization constitutes a step in the right direcion, since the release of funds awaiting em ployment may conceivably bring back to work hundreds of thousands of unem ployed. It is, of course, to be expected that provision will be made for the placing cf the additional output which will re sult from an increased industrial ac ent crisis. The world-wide collapse of credit and the steadily growing number of countries and political subdivisions which find it necessary to default have so greatly reduced the purchasing power of the masses that, despite the prevail ing low price levels, buying has been seriously curtailed. It has become apparent that some thing will have to be done to restore the buying power, not alone of the American people, but of America's neighbors. Unless this is done, plans, no i matter how carefully prepared, are not | likely to bring about more than transi- j tory improvement. The ides of June are drawing nearer. Theoretically, the United States is not interested in Lausanne, but if nothing is done by the United States in regard to the problems scheduled to be taken up there the international cutlook will continue as clouded as before, and the effects upon America's own economic struceture are not likely to be very sat isfactory. Is it possible that a far sighted administration is already devis ing a plan to neutralize the adverse ef fect which is bound to be created should the powers fail to reach an agreement in June? (CopyriaM- IMS. by the North American Newspaper Alliance. Inc 1 WINTER WHEAT YIELD FORECASTS REDUCED Crop Is Expected to Total Only About Half of 1931 Harvest. BY JOHN P. BOUGH AN, Associated Press Market Editor. , CHICAGO, May 21.—Suggestions came today from authoritative trade ' sources that the United States 1932 Winter wheat yield will amount to only about half the 1931 harvest. The prospect of such an abnormally curtailed output of Winter wheat is as sociated with what happened in pre vious years when conditions were simi lar to those which now exist. On this basis, a crop is reckoned of somewhat under 13 bushels an acre, and would mean roughly 400.000.000 bushels, a total 40,000,000 bushels less than the latest official estimate. Compared with a week ago, wheat prices this morning showed 1 \,a3 cents a bushel advance, with com '4al::8 up, oats unchanged to 18a'4 higher, and provisions at a rise of 7 to 12 cents. It is pointed out that normally, when there has been big abandonment of Winter wheat, the crop condition in May will average somewhat better than in April, owing to disregard ot poor acreage. However, such was not the case this season, the May condition being practically identical with that of April. A parallel state of affairs de veloped in 1904, a year in which April and May reports showed the crop con dition at 76.5 per cent, or slightly bet ter than this year, and the harvest was 12.4 bushels an acre, a rate even less than is now’ suggested for 1932. EFFECT OF TARIFFS ON IMPORTS SHOWN i Little Change in Commodity Move ments Caused by Rates on Various Items. By the Associated Press An analysis by the Commerce De partment of foreign trade imparts dur ing the first quarter of 1932 discloses that tariff rates had but little effect on commodity movements. Imports during the first quarter of the year had a total value of $397,800, 000 as compared with $568,300,000 dur i ing the corresponding period of last i year, or a decline of 30 per cent. Imports of commodities’ which were on the free list amounted to $267,700, 000 as compared with $387,400,000 dur ing the three months last year, or a de cline of 30.9 per cent. On the other hand, the dutiable merchandise incom ing during the quatter this year amounted to $130,200,000 as compared with $180,900,000 during the same period last year, or a decline of 28 per cent. Free imports during the first quarter this year were responsible for 67.3 per cent of all incoming shipments as com pared with 68.2 per cent last year. During the period this year a total of 207 dutiable articles for which both quantity and value are available showed increases in quantity as compared with 1931. while a total of 324 showed de creases. -. California Oil Production. NEW YORK, May 21 UP).—'The daily average crude oil production in Cali fornia for April was 517,481 barrels, compared with 502.449 barrels in March, according to the American Pe troleum Institute. COTTON HOLDS STEADY I DURING PAST WEEK Irregular Movements Character ized Trading, but the Price Range Was Small. By the Associated Press. NEW YORK, May 21.—The cotton market has been more or less irregular during the past week, but prices have held fairly steady within a range of some 25 or 30 points. A slight advance early in the week was attributed to trade buying and covering accompanied by rather a less favorable view of weather conditions in the South, but the bulges met increased offerings, which may have Included a little selling for Southern account as well as real izing or liquidation. A sufficient demand developed from the trade on the declines or scale-down orders to steady the market, however, and prices stiffened up again toward the end of the week on renewed cover ing promoted by reports of a better tone in the stock market and announcements that a committee of banking and in dustrialists had been appointed to co operate with the Reconstruction Finance Corporation in the credit expansion program. The buying, however, was by no means active or general, and according to local brokers, the market appeared to be awaiting the further progress of legislative uncertainties in Congress. The weekly report of the Weather Bu reau read rather less favorably, indi cating that warmer weather was needed in most sections and that moisture had been deficient in many places in the Eastern belt, but was followed by re ports of rains in the Southeast, with clear and warmer weather in the West. Private advices reaching here from the South had been regarded by the trade as indicating that aside from minor drawbacks, the crop is getting a fairly favorable start, although the re duction in the use of fertilizer and the possibility of boll weevil damage have yet to be reckoned with. PLANT CLOSING IS LAID TO CHEAP FOREIGN COSTS Special Dispatch to The Star. LYNCHBURG, Va„ May 21—Cheap er production costs, which are the re sult of foreign nations dropping the gold standard, are given as the reason for the expected closing of the plant of the Southern Mineral Products Cor poration at Piney River, Nelson Coun ty, June 1. Charles Reed of New York, repre senting the company, appeared before the House Ways and Means Committee in Washington last week and asked for a tariff adjustment to prevent unfair competition of titanium ore from India with similar ore being mined in Nelson County. Indian ore producers now are able to sh'n titanium to the United States at a lower price than it can be produced in this country, it was said. Biltimore & Ohio. NEW YORK, May 21 (Special).— The authorization by the Interstate Commerce Commission of loans by the Reconstruction Finance Corporation to the Baltimore Sc Ohio covers the ma turities of that road for this year and extends for a period of two years from August 10 its "'essing obligations. This should give t.ie company a breathing spell in which to prepare for the financing of its 4>2 per cent convertible bonds in the amount of $63,250,000 which mature next March. Under the loan the company practically pledges its interest in two of its subsidiary companies, as well as 400,000 shares of Reading common stock. INFLATION IS HELD NECESSARY AID 10 SECURITY MARKETS Method by Which It Will Be Used Is Point at Issue. CO-OPERATIVE EFFORTS HAVE SHOWN RESULTS But Steady Shrinkage in Values Has Undermined Confidence of the Public. BY CHARLES F. SPEARE. Special Dispatch to The Star. NEW YORK, May 21.—The problem now of the several public and private agencies that have been set up in the past seven months to check the processes of deflation in securities and in com modities is to protect the remaining values or equities in bonds and stocks, to expand the credit facilities of the banks and to cultivate a growth of con fidence in business communities that are today in a depressed and hopeless mood. All of the co-operative measures, from the National Credit Corporation pro moted last October during the banking crisis to that of the New York Commit tee of Twelve Organized at the end of this week, have done much good in holding together situations that were rapidly disintegrating. None of them, however, has yet succeeded in perma nently damming up the streams of liquidation or starting industry on an upward trend. What is needed today are results that are positive instead of conciliatory or, to employ the expression of Gov. Har rison of the New York Federal Reserve Bank in describing the work of his committee, to be ‘ useful affirmatively in developing business," Extent of Deflation. The deflation has carried common stocks to a level representing only 10 to 15 per cent of their 1929 prices. Junior railroad bonds this week were quoted at an average between 20 and 25 per cent of 1931 high figures. Bil lions of dollars of publicly distributed real estate mortgages are selling from 10 to 20 cents on the dollar. The latest report of brokers’ loans indicates that only about 5 per cent of the amount in September. 1929, is now outstanding The loans on securities by member banks in the Federal Reserve System have dropped 62 per cent from their high of $13,205,000,000 at the peak of the boom. The iron and steel industry Is operat ing at 25 per cent of capacity. Current car loadings of the railroads are a lit tle over 50 per cept of normal. In the bui dlng industry, in ftttWRdfeUe manu facturing and in the distribution of merchandise, the record is one that conforms to the general picture of a country whose business life is from 50 to 60 per cent of the average of the years prior to 1930. A few commodities have shrunk in price more than the average for securities. Most of them have made a better showing. Com modities as a whole, while sinking a little from week to week, display more firmness than securities and are not af fected like the latter by a wide distribu tion among investors. Money Markets Clogged. Some way must be found to preserve the remaining 10 to 25 per cent of mar ket values of securities and to inject into the industrial bloodstreams of the country a powerful enough serum to counteract the effect of commercial neuresthenia. The money markets are becoming as much clogged with idle funds as were the grain elevators last year with wheat, the Southern ware houses with cotton and other markets with copper, coffee and sugar. Excess bank reserves must be made productive rather than remain in a static condi tion. The leaders on whom the respon sibility falls for directing this move ment must be the bankers who control the money supplies. It is now obvious that the situation cannot be brought under control with out a certain amount of inflation. The point at issue is the method of infla tion and the degree of it; whether it is to be supervised by the Federal Reserve Board or is to grow out of one or more of the proposals in Congress for bond issues directed to relief for the unem ployed or to the stimulation of Enter prises of a productive character. The latter resort has been gaining converts among those who would have been will ing earlier to see the inflation program limited to Federal Reserve buying of securities, but who now realize the in effectiveness of this campaign. The immediate test of the use of banking funds "affirmatively” in devel oping business is of immense impor tance in determining the subsequent attitude of Congress toward schemes for more direct inflation through legalized channels. AII Eyes on Congress. The entire world is watching the move that this country is making to counteract the effects of deflation and in working its way toward a balanced budget. Unfortunately, little progress has been made in either direction this week The reaction of this on foreign sentiment is indicated in additional and substantial shipments of gold. Confi dence has been further unsettled by intimations that Congress will not com plete its labors and adjourn early next month, though there are compensations in a longer session, in which it is rea sonable to expect that a number of im portant pieces of unfinished legislation would be completed to the general ad vantage of the country. The share that Congress has had in disturbing confidence among investors and business men since the early part of March is perhaps overestimated. While the security markets might im prove if Congress were to retire for a time from the center of the national stage, it is doubtful if this would effect much change in industry, whose slug gishness is the result of deeply rooted economic changes that are world wide in their destruction of values. German Problem Pressing. As the date of the Lausanne Confer ence approaches there is less hope ex pressed here that it will arrive at a conclusion and vote for a program sufficiently generous to relieve Germany of her overhanging war debts. There is a growing feeling in international banking circles that a moratorium in Germany will be in effect by August 1. This has been reflected in the Increased pressure during the week on all Ger man dollar obligations. On the other hand, the imminence of such a postponement of debts and the deferring of interest on both long and short term credits has long been recog nized and gradually discounted both fit the prices of securities and in the prep arations made by creditors to adjust themselves to it. So it may not be as (Continued on Third Page.; DON’T FORGET THE REST OF THE CREW. WOW THAT -YOU RE SATE i you might throw us l ONE OR TWQ/_ New Record Low Mark Is Registered in Steady Liquidation. Special Dispatch to The Star. NEW YORK. May 21.—In spite of another governmental move to bolster the falling markets, the investment list dropped to a new record low during the past week. No existing index of prices Is thor oughly reliable over a long period, but apparently no parallel for the present level of bond prices has existed in any year since the early 1870’s. Certainly neither the panic of 1907 nor the mar ket slides of 1920-21 and of 1929 had the depression effect on seasoned in vestment issues and the more specula tive second grade railroad and indus trial bonds that 1931 and 1932 have had. Since March 10. this year. Standard Statistics' index of 60 representative is sues has declined 17.2 points to its present level just above 60. Since the peak of the 1930 bond market, the same index has dropped 41 average points. Translated into terms of the total mar ket value of bonds traded on the New York Stock Exchange, this means a depreciation of nearly $10,000,000,000 since March and more than twice that amount since the 1930 high. The market responded only briefly to the announcement this week that a committee of 12 bf.nkers and industrial ists had been formed at the instance of the Government to aid the Federal Reserve Board’s credit-easing policy. The market opened strong on this news Friday, but almost immediately prices of United States Government bonds broke and before the day was out the general list had reached a new low for the bear market. treasury ana Liberty Donas, as a matter of fact, have now declined 4 to 6 points from their recent highs. Most of this drop occurred just as scon as the Federal Reserve gave the slightest sign of a letdown in its weekly pur chases of Government bonds. One week the Reserve report showed $100,000,000 bought by the banks and the market for Governments held firm. The next week the banks’ purchases aggregated only $81,000,000 and Governments re ceded 1 to 2 points, in spite of an an nouncement by the Federal' Reserve Board that its policy had not been changed. It is not hard to understand the sit uation. Although the Government Is still borrowing money at record low rates for 90 days, it could not in the present market raise the long-term money it needs, in order to bridge the deficit gap, for anything like the rates currently prevailing for Treasury and Liberty bonds. And the market's tech nical position is unfavorable, since banks, for months now unable to find secure employment for their surplus reserves, are well supplied with Gov ernments and hence unwilling to take the losses that will surely ensue when the new Treasury financing program eventually brings Government bends down in price. Meanwhile the new Issues market continued at about the same pace, with $17,236,000 of new municipal bonds put out. against $15,302,000 in the previous week and $87,994,000 in the same 1931 week. Municipals at present are trav eling entirely alone. Their tax-exempt feature has brought them into favor, even though municipalities the country over are still having a hard time to make ends meet. The situation looked no better in Europe this week, with hopes for a favorable result from the coming Lau sanne reparations conference fading rap idly and with admissions from the Cen tral European countries that, falling immediate aid, moratoriums will be the order of the day. Consequently there was pressure on German government issues all week and the bonds of the Eastern European countries declined steadily. (Copyright. 1932.) Willy* to Start Home May 30. WARSAW. Poland, May 21 CP).— John N. Willys, retiring United States Ambassador to Poland, yesterday indi cated he would leave Poland May 30 for his home in the United States ... Trading in Stock Market Reveals Heavy Shrinkage Total Transactions to Date This Year Only 145 Million Shares. BY GEORGE T. HUGHES. 8pecl»l Dispatch to The Star. NEW YORK. May 21.—Any analysis of the present state of the stock market which fails to take into account the low ebb of speculative activity is in complete. In round numbers, trans actions for the year to date total 145 000,000 shares. Up to the same time in 1931 the amount wc: 260,000,000 shares, or, roughly, a falling oil of 45 per cent. In part, at least, this falling off in volume is responsible for the fact that the market has made such poor re sponse to what seemed to be on the surface constructive developments. There is an almost entire absence of public interest, as any tour of brokerage of fices will demonstrate; professional trading has decreased in quite as large proportion and the daily transfers are predominate! yof the in-and-out va riety. What the market needs is more speculation, for a recovery cannot be initiated or even sustained by invest ment buying alone. Of course the reasons for this lethargy are well known. The short side offers little attraction with prices as low as they are. An increase in the short interest would help because it would involve large-scale covering on the appearance of any such an nouncement as was made yesterday regarding a concerted movement to free banking credit. On the other hand, operations for the rise have been checked almost invariably by the ap pearance of liquidation, unexplained and unexDected. The attitude or the banks is anotner deterrent. So far their one ambition has been to liquidate loans collaterally secured. The suggestion has been made that some of the surplus credit now in superabundant supply should be used to provide means for investment pur poses in sound stocks. This would be a complete about-face on the part of the banking element, but there is no rea son why, under proper restrictions, it should not be adopted. Nothing would serve to restore market confidence more 'than a liberal policy along this line Still another reason for market in activity is the Stock Exchange investi gation now in progress in Washington. No one denies that the practices re vealed, as for instance in the notorious Radio pool, should be made impossible in the future, but discussion of them now is no help to recovery in prices. (Copyrinht, 1932.) COTTON EXPORTS SHOW CONTINUED INCREASE By the Associated Press. Cotton exports continue to be the brightest spot on the foreign trade horizon. With exports of 87,736 bales during the week ended May 13, the present season's total was brought to 7,541,845 bales, or approximately 1,500.000 bales inexcess of exports during the corre sponding period last season. Exports to Japan and China totaled more than 3,000,000 bales, compared with slightly less than 1,400,000 bales for the same period of 1931. Ship ments to Great Britain and Italy were slightly larger than for last season, while exports to Germany were about 100,000 bales smaller. Exports to France totaled but 425,576 bales, com pared with 912,455 bales exported dur ing the same period last season. —- ' • POTATO MARKET. CHICAGO, May 21 (JP) (United States Department of Agriculture).— Potatoes, receipts, 72 cars; on track, 173 old; 77 new; total U. S. shipments, 593; old stock, steady, trading slow; Wisconsin round whites, 75a85; Minne sota, North Dakota Irish Cobblers. 75a 80; Idaho Russets, 1 15al.30; new stock, | firm on best stock, trading light; Ala bama, Louisiana Bliss Triumphs, 3 15a 3.45; small, 1 Vi-inch minimum, 2.65a i 2.75. | SECOND MOKE MONEY IS SCARCE Prohibitive Charges for Use *f Funds Handicap Home Owners. BY CHAS. P. SHAEFFER, Associated Press Business Writer. The President’s conference on home building and home ownership declares that second mortgage financing is a “real problem" that confronts the home owner. Asserting there is not only a scarcity of second mortgage money, but the home owner often is compelled to pay bonuses of 18 to 20 per cent for the use of this money, the conference said there are good reasons for believing! that the greatest hindrance to the j sound development of home ownership in this country is the lack of a well organized second mortgage service which can be offered at a reasonable cost. The salient reason offered by the conference as to why capital does not flow into the junior financing field was the hazards incident to this type of investment. The interest of the pur chaser of the second mortgage always is junior to that of the first and in the event of trouble, the conference point ed out, the second mortgagee is apt to find himself in the situation where, to protect his investment, he has to keep the first mortgage in good stand ing, pay the taxes and carry the prop erty until he can dispose of it. men. too. 11 saia. in ine event oi ] a decline in real estate values for: various reasons, such as a change in the type of people living in a neigh borhood or general economic conditions.! the indebtedness might exceed the de creased value of the property, and again i the junior mortgagee has the property on his hands if he is going to protect what remains of his investment. The usury laws were also cited as a con stant threat to many potential in vestors, even though they are circum vented continually. As a result of these and other haz ards. capital is timid about going into the second mortgage field, the confer ence declared, and when investors are willing they insist upon a return which they consider commensurate with the risk. A great many second mortgage com panies which were operated on a purely commercial basis were found to have failed to weather the economic strain. The companies which have survived ap pear to be those which do not as a rule lend above 75 per cent of the appraised value, it was said. "It is plain that whereas the ex orbitant rates paid by home ow'ners for junior financing are imposing an undue hardship upon them, they were insufficient to insure the success of second mortgage companies generally,” the conference concluded. TWELVE BANKS CLOSED IN WEEK; THREE REOPEN — By the Associated Press. NEW YORK. May 21.—Bank suspen-I slons during the past week numbered 12, compared with 15 in the previous week, according to the American Banker Three banks reopened during the period Total suspensions for the year are now 653, afTecting deposit liabilities of approximately $287,255,000. -• DIVIDEND CHANGES. NEW YORK. May 21 UP).—The num ber of unfavorable dividend changes rose slightly in the past week, totaling 50, against 47 in the preceding week, the Standard Statistics Co. reports. There were 6 favorable changes, com pared with 14 the week before. Appliance Sales Gain. ^EW YORK, May 21 UP).—Whole sale dealers in household electrical ap pliances report a slight gain in orders during the past week. Electric fans, irons and toasters, made especially for sale purposes, were ordered in substan tial volume, according to the dealer#. TRADE RINGED ON Default in Political and Com mercial Debts Would Affect All Industry. INTEREST REQUIREMENTS ARE ABOUT $260,000,000 Favorable Trade Balance Indicate! Payments May Be Continued. Problems Analyzed. BY DR. MAX WINKLER. Special Dispatch to The Star. NEW YORK, May 21—With sub stantially more than $1,600,000,000 of American funds Invested in Germany and its enterprises. the question whether the Reich will default on both political and commercial obligations is of more than academic interest. Re gardless of the wisdom of fallacy of having staked such large sums in that country, American investors, both indi viduals and institutions, are vitally af fected by Germany’s attitude toward her contractual obligations. Is the situation really hopeless, or is it still possible to remedy (Conditions and avert a crisis of serious proportions, which might conceivably lead to the bankruptcy of most of continental Eu ropean countries which have, so far, somehow managed to service their for eign debts? Or, shall the United States adopt a policy of aloofness, consoling itself with the thought that America can continue to prosper regardless of what happens to the rest of the world? Debt Status Analyzed. What is the real debt status of Ger many? Germany’s foreign long-term debt may be estimated today at about $2, 000.000,000. of which the Dawes and Young loans account for about $525, 000,000. The remainder is represented by mortage and municipal issues held abroad. Principal due this year is placed at $57,000,000, in addition to w-hich several medium-term issues and aggregating about $190,000,000. TTiis amount Includes a credit of $125,000,000 which has al ready been extended until November. 1933. Necessity rather than choice is responsible for the postponement of this credit, which was arranged, to a very large extent, in the American market. Interest and sinking fund on the long-term foreign debt should not ex J160.000.000. The service on the short-term commitments under the standstill agreement may be placed to day at not more than J100.000.000. tak ing into account large repayments al ready made and the decline in the value of currencies in which part of the debt is payable. In other words, total debt requirements for the current year should approximate $260,000,000. or ma terially less than is generally believed. The favorable trade balance for the first four months of 1932 amounts to about $116,000,000, indicating that con tinuance of payments on account of German external debts is not at all im probable^ The discouraging aspect is the sharp setback in the figures for the past month. The excess of exports for April was only about $10,000,000, com pared with about $40,000,000 In March. There Is, however, a redeeming fea ture in the German trade statistics for April. Total commerce showed an in crease over the March figures of 120, 000,000 marks, or about $30,000,000. an advance of materially more than 13 per cent. Pew allegedly more prosperous nations can point to such results. To students of international finance, the Reich’s fiscal problem, while extraor dinarily difficult, is not of such nature that a solution is impossible. What Germany really needs, besides elimina tion cf the political debt problem, which to many seems the sine qua non to a German recovery, is greater free dom of commerce with the rest of the world. Superficial observers and pseudo economists. among whom politicians predominate, hold that the collapse of the mark has freed Germany of an enormous internal debt. To begin with, this is only partially true. According to the revaluation law of July, 1925, German internal loans, scheduled to be payable in marks, were revalued, and their service today absorbs a consider able part of the country's revenues. Of greater significance, however, is the fact that the collapse of the paper currency resulted in the destruction of Germany's working capital. The Reich had to start all over again. While its plants and fixed assets were in fairly good physical condition, there was nothing to put them into action. Ger many had to go out and obtain funds. Thus began the country's borrowing in foreign countries. In other words. Ger many is really paying today for the havoc wrought by the deterioration and eventual disappearance of the mark. Those who claim that Germany has benefited from the debacle of her cur rency display complete ignorance of the actual state of affairs. New Crisis Looms. It is becoming increasingly evident that something will have to be done to prevent a new crisis on the continent, which is likely to spread over an already harassed Europe and eventually oveT the entre world. Pew nations are in, a better position to assume leadership than the United States. Will America be able to rise above politics and take a role which she is eminently qualified to play? Events in the past two and a half years should have been sufficient to prove the fallacy of isolationist views, irrespective of how enticing they might appear to some on purely sentimental grounds. The time within which steps can still be taken to avoid the continuance of the economic crisis is dangerously short. To wait until it Is virtually too late may neutralize the effects of whatever constructive measures may be adopted. Lausanne must not be permitted to fail. Let us hope that it won't! (Copyrl2h». 1932. by the North Amcrltan Newspaper Alliance. Inc.) Oil Stocks. NEW YORK. May 21 (Special)—In the midst of the general bearishness on nearly all industrial stocks, there is a moderate degree of confidence in the shares of the oil refining and produc ing companies. Incidents that have been developing this sentiment ars the resumption of dividends by Ohio Oil and Seaboard Oil, reports of small profits in the first quarter of the year by some of the companies, the decision of the Supreme Court sustaining the Oklahoma prorating law, and the con ference now being held in New York by international leaders in the petro leum industry. The fact also that regu lar dividends were declared last week by Standard of New Jersey and Stand ard of California has encouraged hold ers of oil shares to stick to their Investments.