Evening star. [volume], May 22, 1932, Image 53

About Evening star. [volume] (Washington, D.C.) 1854-1972

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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.