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financial Volume 135 New York, Saturday, November 12 1932. .4 Number 3516 The Financial Situation In that sense the outcome must be regarded as HE outcome of the Presidential election, in the of Mr. Hoover and his Administrain disapproval of electorate favor decisive verdict of the of approval of Mr.Roosevelt,though than rather tion, as against Roosevelt, the Governor Franklin D. may have drawn support from utterances latter's of the person the in President Executive present Chief Roosevelt was simply the inMr. discontented. the foregone conclusion, a been long has Herbert Hoover, poVular dissatisfaction which through strument who those have to surprise a as come not and does and its course Administration Republican the with It affairs. of a is course the watching closely been behavior public fact, of manifestation of popular discontent, and signifies was expressed. As a matter what it no from different been dissatisfaction with the unfortunate economic up- in this instance has such On times. bad of periods in been heaval which has marked almost the whole of the has always almost invariably is power in party the occasions period during which Mr. Hoover has been at the helm in Washington. As a result of this economic held responsible for the distressing state of things, upheaval the country has had to contend with an era and a desire for a change, no matter what the consequences, rules uppermost, of depression in the industhis being based on the fiand agricultural trial, notion that a change, even steadily world, nancial Report of I. B. A. Convention though it may not bring growing in intensity and We devote twenty-nine pages to-day to actual improvement, is without a parallel in its an account of the proceedings of the annual worth trying with the view widespread and all-pervadConvention of the Investment Bankers' seeing whether the hoped to Association, held at White Sulphur ing character in the history 22-26. result will accrue. for W. on Va., October Springs, of the world, foreign counorganization is great investment This is of course someThere tries falling within its emgrowing in importance and in influence in the thing unreasoning brace the same as the with each succeeding year. The feature of change, a for mere desire United States, and gloom the annual gatherings is always the Comand it often results in inand desolation following in mittee reports, which will be found spread to those who become justice The pages. on its Wake everywhere. subsequent out at length of the emotional victims the thormen of are Committees composed In the estimation of imoughly conversant with their subjects, and impulse. That would cermense masses of the populathey devote themselves to their respective tainly appear to be true, in tion, Mr. Hoover is respontasks with a thoroughness that has never some measure at least, with sible for this distressing been surpassed anywhere in the same line reference to Mr. Hoover. state of things, and these of work—in fact, has never before been Most assuredly he cannot be masses have visited their equalled. Their studies, therefore, are of charged with having caused high value. displeasure upon him by the speculative collapse denying to him what he so which occurred in *October earnestly craved, namely, debauch responsible for it. antecedent the in 1929 continuing and the the privilege and responsibility of Presidential office for another term of four years. It would just as surely have come had Calvin CooIt cannot be denied that this was the governing con- lidge remained in office. The speculation (which, sideration which influenced so many in turning down be it remembered, was not confined to the stock marMr. Hoover's appeal for a second term. Nothing ket, but extended to everything else) had become else can explain the fact that Mr. Roosevelt obtained top-heavy and was bound to collapse of its own a majority of the votes in 42 of the 48 States of the weight sooner or later. Had Governor Alfred E. Union, that as a consequence he will have 472 votes Smith gained the Presidency the collapse would perin the electoral college, Mr. Hoover getting only the haps have come sooner, owing to the distrust felt in remaining 59 votes, comprising merely the States of financial circles regarding the Democratic party, Maine, New Hampshire, Vermont, Connecticut, and having come sooner, before the inflationary Delaware and Pennsylvania. The new Congress will movement had proceeded so far, the collapse would have an enormous Democratic majority, the latest probably have been less severe; but, nevertheless, the returns showing that they will have 314 members in Democratic party and its head would have been the House of Representatives against 110 by the Re- blamed for it, and the cry that "Al Smith had done publicans and four Farmer-Laborites, and 59 mem- it" would have become a common refrain. But if Mr. Hoover cannot be charged with having bers. in the United States Senate. Only a common emotion, holding in its sway the bulk of the popula- brought on the panic and subsequent depression, it tion, could have produced such overwhelming results. still remains an open question whether his course in T 3204 Financial Chronicle Nov. 12 1932 dealing with it did not serve to aggravate and pro- ficulties was this that the ordinary man would have long it until finally it assumed dimensions where shrunk from even eying consideration to it. it became so overwhelming that it got entirely beyond The relief measures which followed for dealing human control and swept everything before it. For with the various phases of the economi depression c nearly two years after the panic broke in the autumn in this country are still within the memory of every of 1929, when business was getting steadily worse, one. We will mention just one, namely, the Reconwith the volume of trade constantly shrinking and in- struction Finance Corporation, at first with capital come fading away, Mr. Hoover kept insisting that and loaning powers of $2,000,000,000, and later innothing was wrong in the business world and that creased to $3,500,000,000. The magnitude of the it was a mistake to proceed as if there were. How amounts involved would have proved so deterrent to different the later situation might have been if the most officials that the thought of even entertaining President had shown an appreciation of the fact that a proposition of such vast extent would have been the speculative era, which, as already stated, had unceremoniously dismissed. But Mr. Hoover, accustaken within its embrace not only the stock market tomed now to dealing with great and grave problems, but the entire business structure, had definitely the immensity of the sums involved was of no conseterminated and had at the same time endeavored quence so long as it furnish ed a sure means to the to persuade the community that the period of wild end sought. speculation was a thing of the past and that now Another distinctive characteristic of Mr. Hoover's there must be an adjustment to the normal and a has been that having acquired the necessary authorcomplete abandonment of the process of chasing ity he was never slow in exercisi ng it, and if the rainbows. In that event the long period of suffer- agencies charged with extending aid and relief hesiing and distress, with steadily growing idleness and tated for any reason to avail of the authority unemployment, which the country has had to endure granted, because of some inherent difficulty or the since then, might have been greatly relieved if not drastic nature of the relief required, he was ever actually spared. prompt to spring to the rescue and to add his own But if in its earlier stages the President failed powerful influence to make the means of relief availto grapple with it in the way he should have done, able and effective. One instanc e of the kind, highly on the other hand, when the stage was reached where creditable to Mr. Hoover, deserves to be placed on an actual crisis developed, he proved himself a man record here because it illustra tes so strikingly the of heroic mold. Mr. Hoover always appeared to preparedness and the facility with which Mr. Hoover greatest advantage in the carrying out of relief always acted when confronted with the imminence measures in periods of great and grave emergencies. of a serious disaster. In saying this we have in mind His greatest achievement of that kind was in mar- chiefly the adroitness and speed with which the shalling relief in Belgium after the signing of the President acted at the time of the Chicago bank Armistice. Here he acted with consummate skill troubles last June. These Chicago bank troubles and rendered succor that will stand everlastingly to were of a most serious nature and were of such a his credit. Having done that job so well, he was ever threatening character that only immediate and quick thereafter called upon whenever grave situations of action on the part of the Reconstruction Finance one kind or another would arise. One of the more Corporation could avert disaster to the entire bankrecent instances of the kind was at the time of the ing world, not alone in Chicago, but over the greater Mississippi floods, when Calvin Coolidge, as Presi- part of the rest of the country . The menacing Chicago dent, selected him as the man best qualified not only situation grew out of the closing of some 40 banks to devise measures of immediate relief, but also to in that city, all except one or two of them in the prepare a comprehensive.plan of structures to guard outlying districts of Chicago . This led eventually against recurrence of similar disasters in the future to runs on the big banks in the Loop district, the and to mitigate the serious ill effects that usually Central Republic Bank & Trust Co., with which Genattend such havoc-dealing forces of nature when free eral Charles G. Dawes was connected, being the from the retarding influences which man often can worst sufferer, but some of the other large banks also impose. becoming the subject of runs,especially the First NaWhen,therefore, the commercial and financial up- tional Bank of Chicago, with its affiliate the First heaval in the United States reached the acute stage Union Trust & Savings Bank, and the Continentaland it seemed as if the whole country might become Illinois Bank & Trust Co. engulfed in ruin and go down to destruction, he was The nature of these Chicago bank involvements pre-eminently the man for the task. Here was the and the sums needed for dealing with them will apgreatest opportunity of his entire life, and candor pear when we say that the crisis on that occasion was compels the statement that he proved equal to the surmounted by the extension of occasion. A man was required bold in conception of in amount of $95,000,000 to financial assistance the Central Republic plans and resolute and unbending in the execution Bank & Trust Co., $80,000, 000 of this being obtained of them. Then followed a series of relief measures from the Reconstruction Finance Corporation (as staggering by reason of their magnitude and im- the head of which General Dawes had resigned the mensity, as well as their multifarious character. early part of the month),and $10,000,000 more being Mr. Hoover never faltered or hesitated. One situa- supplied by a group of Chicago banks and $5,000,000 tion after another was met with a boldness never by a group of New York banks through Mortimer N. before dreamed of. We know of no one in public life Buckner,President of the New York Clearing House who could have conceived in rapid succession relief Association. The facilities of the Chicago Federal measures of the gigantic nature required. It would Reserve Bank had to be freely availed of in the carrytake too much space to enumerate all these, but the ing out of the plan of assistance. In their condition moratorium on German reparations and allied debt statement for the week ended Wednesday night, payments may be mentioned as one of the most note- June 29, the 12 Federal Reserve banks combined worthy and most daring of these. So beset with dif- showed an increase in the amount of Federal Reserve Volume 135 Financial Chronicle notes outstanding of $139,932,000, and on examination it appeared that $117,025,000 of the whole increase had occurred at Chicago. The Chicago Reserve Bank showed an increase in that week in its holdings of United States Government securities from $210,845,000 to $287,380,000, and an increase of from $7,843,000 to $20,258,000 in its holdings of acceptances purchased in the open market. The point we want to stress is the part played by President Hoover in the matter because it is so highly creditable to him and furnishes a striking illustration of the speed with which he has acted throughout his whole career whenever a threatening situation confronted the country and quick action was imperative. In his speech at St. Louis on Friday of last week Mr. Hoover went quite at length into the details of these Chicago banking troubles, now for several months a thing of the past, but we prefer the description of what took place given by William Allen White in an article entitled "The Men and the • Issues," published in the "Herald Tribune" magazine for Sunday, Oct. 23. Mr. White does not mention the Chicago banks by name, but it is easy to identify them from his remarks. Here is what he says on the subject: "I have a letter from a friend who was at Rapidan camp some time in 1932 when, all unknown to the American people, danger tapped at the door of the White House and catastrophe stood waiting for the American people. Let my friend tell the story, in his own language, of that night at Rapidan: "'At 8 o'clock on a Saturday night at the worst of the depression, the President was called by phone at his Rapidan camp. The head of the largest bank in a certain midland city told him that not a city bank would dare open its doors the following Monday unless given financial help. Had those banks failed at that critical time it would have been only a question of days before the other banks of the country would have gone down like a row of falling bricks. Efforts of bankers in that midland city to obtain necessary help from banking circles in other cities had failed. Eighty million dollars was the amount needed. Only the Hoover relief measures were available. "'The President, undaunted, received the startlino' news, requested that representatives from the other banks there be immediately called together and await word from him. Then, obtaining a wire to Washington, Ile asked that members of the Reconstruction Finance Corporation be summoned. Next a wire was opened to New York and representative bankers and members of the Federal Reserve Board were hurriedly called into conference. "'With an open circuit from the midland city to New York passing through Washington and the Rapidan, the President sat at the telephone throughout the night, directing the mobilization of banking credit and currency sufficient to prevent the impending catastrophe. "'At 8 o'clock the following night he hung up the phone knowing that the situation had been saved. Thirty million dollars of currency was delivered to the tottering bank before opening hour Monday morning. Five million dollars more soon followed. The greatest crisis of the depression had been successfully met. The recognized leaders of finance did not initiate and direct this stupendous achievement. In its entirety it was the accomplishment of a weary man who had gone to a mountain retreat for a brief, uninterrupted rest.' "The bank in question was one of the four great banks in one of our major cities. It so happened that I had been in that major city for a week before that night which my friend describes at Rapidan. I am familiar with that city. I have been there at times 3205 of fiesta, on gala days, on days of great stress. But down there in the financial district I never saw such crowds. Policemen were lined up to keep them moving around the banks, the four great banks which commanded the financial resources of an empire larger than the German Empire at its peak and prime, with France and Belgium added—a great American territory where 40,000,000 persons live. "Thousands of depositors were milling around those banks that summer day this year and were allowed through the doors only in such small relays as could be guided peaceably about the counters. Inside the banks policemen shepherded the fearstricken people. Counters were marked: 'For depositors withdrawing checks of a thousand and under.' Again: 'Here for checks of .$10,000 and under.' Again: 'Here for checks of $25,000 and under';'Here for checks of $50,000 and under';'Here for checks of $100,000 and over'—and these signs appeared over different tellers' windows. "Millions were coming out of these banks daily. If Monday morning one bank had failed to open all would have closed by Tuesday night. The banking reserves of this vast region are kept in these banks. By Wednesday night the banks in the smaller cities, towns of two, three, four hundred thousand, would have closed, and country banks that kept their reserves in these banks in the smaller inland cities would have found their reserves gone, and by Saturday not a bank would have been open in this inland empire." The above deals with things that are now a matter of history, but as Mr.Hoover is shortly to retire, they deserve to be set down in the record to his lasting credit. S FOR Mr.Roosevelt,the successful Presidential candidate,the question is as to how he and the Democratic party will conduct themselves in the seat of power to which they have been raised. Mr.Roosevelt during his canvass gave utterance to some remarks of a disquieting character, because of their radical nature and tendencies. Not only that, but. in one of his campaign addresses, to which reference was made in this article, he took pains to say that he wanted himself to be considered, and likewise the Democratic party, as progressive, as distinguished from conservative, and he went further and declared that there was no room in this country for two parties of a conservative type, the Republican party being in this hailed as the distinctive conservative party. As the campaign progressed the leaders of the Republican party, given this cue, conducted what became known as a "campaign of fear," in which it was urged that Mr. Roosevelt and the Democratic party could not be trusted and that they would involve the country in disaster and destruction. This was a type of campaign which it seemed to us was most reprehensible. Nevertheless it was continued right up to the day of election, and the strongest of efforts were made to win support for Mr. Hoover and the Republican party on the ground that the country must prepare for a new setback in business if the Democrats gained control. Mr. Hoover himself indulged in accusations of this kind, saying in the address which he delivered at St. Paul, Minn., on Nov. 5, that a spirit akin to Sovietism dominated the Democratic party, and charging it "was tainted with a philosophy that poisoned all Europe." For ourselves we cannot believe that any menace of that kind confronts the country or is likely to develop. It would be a sad state of things if all the wisdom and all the sound common sense A 3206' Financial Chronicle and all the morality were the exclusive possession of one of the great political parties. Admitting that the Democratic majority in the House of Representatives at the last session of Congress did not act with any great degree of good sense,it yet remains true, as we have said on previous occasions, that responsibility sobers and that full responsibility is a different thing from the divided control between the two parties which has been the ruling condition in the old Congress, the life of which will expire -the coming 4th of March. In the new Congress the Democrats will have such an overwhelming control that the conservative element will be able, aided by Mr. Roosevelt, to suppress any tendency on the part of some small clique or group to engage in overturning things. Furthermore, we refuse to believe that Mr. Roosevelt himself will encourage any moves except such as are calculated to promote the best interests of the country and the welfare of the entire community. As the best evidence of the high aims and purposes of the President-elect we quote here the following excerpts from the final appeal made by Mr. Roosevelt last Saturday night at Madison Square Garden: "The next Administration must represent not a fraction of the United States but all of the United States. No resource of mind or heart or organization can be excluded in the fight against what is, after all, our real enemy. Our real enemies are hunger, want, insecurity, poverty and fear. Against these there is no glory in a victory only partisan. "The genius of America is stronger than any candidate or any party. This campaign, hard as it has been, has not shattered my sense of humor or my sense of proportion—I still know that the fate of America cannot depend on any one man. The greatness of America is grounded in principles and not on any single personality. I,for one,shall remember that even as President. Unless by victory, we can accomplish a greater unity toward liberal effort, we shall have done little indeed. "Let us turn from consideration of leadership and think of the loyal voters who constitute the great army that has brought us to the gate of victory. Let us give thought to the men and women in the ranks. There are many millions of them. What have they in mind? Why have they enlisted? ' "There is among you the man who is not bound by party lines. You vote according to your common sense and your calm judgment after hearing each party set forth its program. To you I say that the strength of this independent thought is the great contribution of the American political system. You, and millions like you, have appraised the Democratic program, and have rallied to its standard. Your thought makes wider our vision in handling our national policies. "There is among you the woman. Women's traditional interests—welfare, children and the home— rest on the broader basis of an economic system which assures her or her husband of a job. The old expression that 'a woman's place is in the home' has a wider meaning to-day." Here there is a display of lofty sentiment which would appear to give a clear insight into the spirit of the President-elect and the aims and purposes to which he means to dedicate himself in the administration of the Presidential office. Moreover, the brief additional remarks that he has made since the election results showed that he had gained the Presidency, give further evidence of the same spirit. President Hoover,in a congratulatory telegram sent to Mr. Roosevelt on Tuesday night showed a fine sense of sportsmanship when he wished him a most Nov. 12 1932 successful administration and referred to the opportunity that had come to him "to be of service to the country," and added that "in the common purpose of all of us" he (President Hoover) dedicated himself "to every possible helpful effort." Mr. Roosevelt responded by saying that he joined with the President in his "gracious expression of a common purpose in helpful effort for our country." At the same time,in a radio speech on Wednesday, Governor Roosevelt, after expressing his deep appreciation to the electorate of the country which had given him what he called such a great vote of confidence, he went on to say that it was a vote that had more than mere party significance. "It transcends party lines." It meant, he was sure,"that the masses of the people of this nation firmly believe that there is great and actual possibility in an orderly recovery, through a well-conceived and actively directed plan of action." It also appears probable that Mr. Roosevelt will co-operate with President Hoover to arrange for some common course of action with respect to pending domestic and foreign affairs during the short remaining session of the old Congress, whose tenure will expire on the 4th of next March. It is to be hoped that this will include some action for the modification of the Volstead Act, with a view to obtaining for the Government a large amount of revenue, which now goes to swell the coffers of the bootleggers. That would be a quick and easy way of balancing the budget, and, that done, the country would be on the sure road to recovery in business. HE Federal Reserve returns this week are without special feature except that they show another increase in the volume of Federal Reserve notes in actual circulation. The further increase the present week has been $14,481,000, raising the total of notes in circulation to $2,715,299,000 from $2,700,818,000 last week and $2,688,871,000 the week before. This increase was presumably in addition to a further expansion in National Bank circulation and we notice that the total increase in money of all kinds in circulation during the week is reported at $35,000,000. The expansion in Federal Reserve note circulation the present week has not been attended by any increase in the volume of Reserve credit outstanding as measured by the bill and security holdings, but rather by some decrease, the aggregate of these bill and security holdings having been reduced during the week from $2,216,305,000 to $2,201,079,000. The reduction has been entirely in the discount holdings, the other items such as the holdings of acceptances and the holdings of U. S. Government securities showing no changes of consequence. The discount holdings, reflecting member bank borrowing, have fallen from $326,044,000 Nov. 2 to $310,953,000 Nov. 9. Gold holdings of the Reserve banks have further risen from $3,003,647,000 to $3,009,645,000 and the ratio of total reserves to deposit and Federal Reserve note liabilities combined has further advanced during the week from 62.1% to 62.4%. This further gain in ratio has occurred notwithstanding the expansion in Federal Reserve notes outstanding, but on the other hand, the deposit liabilities were diminished, mainly as a result of a drop in member bank reserves with the Federal Reserve institutions from $2,384,097,000 Nov. 2 to $2,343,333,000 Nov. 9. The amount of U. S. Government securities held as part collateral for Federal Reserve notes outstand- T Volume 135 Financial Chronicle jug has the present week decreased from $439,100,000 to $424,900,000. Holdings of acceptances in this market for account of foreign central banks have dwindled again, dropping from $38,847,000 to $37,916,000; a year ago, on Nov. 11 1931, these holdings of bills for foreign banks still amounted to $108,862,000. On the other hand foreign bank deposits with the Federal Reserve institutions are slightly higher the present week at $10,717,000 as against $9,888,000; but a year ago, on Nov. 11 1931, these foreign bank deposits stood at $133,008,000. ORPORATE dividend announcements the present week have embraced some favorable features as well as those of the opposite character. Thus, considerable satisfaction was derived from the action of the Union Pacific RR. in continuing the dividend rate on the common stock unchanged at $1.50 for the quarter. The action had been awaited with considerable interest. The dividend on National Dairy Products common was also continued unchanged at the rate of 50c. for the quarter. At the same time there was less scaling down of dividend payments than usual, there having been only about three dividend reductions of any great consequence during the week. One of these was the action of the Ohio Oil Company in declaring a dividend of 10c. a share as against distributions of 20c. a share at the two previous quarterly dividend dates, namely Sept. 15 and June 15. The second reduction occurred in Ward Baking Corp. where the directors declared a dividend of only 50c. a share for the quarter on the 7% cum. pref. stock against $1 a share paid on Oct. 1 and on July 1, prior to which the preferred stock was on the regular basis of $7 a share payable $1.75 each quarter. Congoleum-Nairn, Inc., reduced the quarterly dividend on its no par common stock from 25c. a share to 15c. a share. C OR the third successive month the Government at Washington has raised its estimate of the probable yield of the growing cotton crop, and the addition for this month is in excess of those previously made. At its best, the production this year will be only moderately large compared with the crops of the past six or eight years, although there is a possibility that the final figures for this year may be above those now given. A yield of 11,947,000 bales is indicated. A month ago production was estimated at 11,425,000 bales, while last year's growth was given as 17,096,000 bales. The latest report is based on conditions of Nov. 1. The yield per acre is now placed at 156.2 pounds, which is an increase of 6.9 pounds per acre over the estimate of Oct. 1. Last year's production was 201.2 pounds per acre picked, an unusually high yield. Not since 1923 has the cotton crop been under that now promised for this year. The present forecast for cotton shows an increase over a month ago in all the major States excepting Mississippi, the higher production being especially notable in the Southwest, in Texa, Arkansas and Oklahoma. This is the section in which picking may continue until a very late date, even well into the spring months of 1933, and where much the largest part of the late crop may be obtained. There was some increase also in the Carolinas, Georgia and Alabama, as well as in Missouri and Tennessee. Ginning to Nov. 1 amounted to 9,245,534 bales, which was 77.4% of the November estimate of yield for this year. Last year, to the F 3207 same date, ginnings were 12,124,295 bales, which was 70.9% of the final estimate of yield. Last year's production,'however, was 193,000 bales in excess of the November estimate. ERCANTILE insolvencies in the United States last month were again very much fewer in number than in the first eight months of the year— as they were in September; furthermore, the liabilities were also much lower. The number in the United States, as reported to R. G. Dun & Co., was 2,273 for October, against 2,362 for that month a year ago,a decline of 88, or 3.7%. For the 10 months of this year there have been 27,280 commercial failures in the United States, compared with 23,332 in the same period of 1931, an increase of 3,948 for 1932 to date, or 16.9%. October this year was the first month since September 1931 to show fewer defaults than in the preceding year, while the improvement as to liabilities was even more marked. The total indebtedness recorded for the failures that occurred last month was $52,869,974. This is also below any preceding month since September of last year. In October 1931 liabilities reported were $70,660,436, the reduction this year amounting to $17,790,462, or 25%. For the 10 months of 1932 the indebtedness shown has been $810,502,747 compared with $602,436,440, an increase this year of $208,066,307, or 34.5%. Losses this year on account of business failures have been far in excess of any preceding record. Quite a reduction appears for October in the number of failures in manufacturing lines; also, in the amount of liabilities. Trading failures were fewer in number, but for the brokerage class there was an increase—the indebtedness reported for the latter was practically one-half of the amount recorded in October 1931. In the iron and steel division defaults were again more numerous last month; also in the lumber and building lines. An increase appears for manufacturers of furs, hats and gloves; for the chemical division, and clay, earthenware and glass. On the other hand, there were fewer insolvencies last month than a year ago for the divisions embracing machinery and tools; the large clothing manufacturing section, and milling and baking. In trading lines, defaults among grocers continue heavy; also, for chemicals and drugs. The large clothing class shows a reduction, as well as the division for hotels and restaurants. There were fewer defaults also among general stores; dealers in furniture and crockery, but for dry goods, shoes and leather lines, hardware and tools, jewelry, and books and stationery, the number was slightly larger. M HE outlook for the grain crops continues very good. Changes during the past month were in the direction of improvement. Production of corn was increased somewhat in the November crop report of the Department of Agriculture, issued at Washington on Thursday, to 2,920,689,000 bushels, the highest yield since the corn crop of 1923, the latter being one of the few 3,000,000,000-bushel crops raised in this country. In the leading corn States the crop matured under favorable conditions, and husking returns were somewhat in excess of expectations. In some of the States of smaller production there was some recession in yield from the earlier returns. among them being the two Dakotas and Texas. The yield per acre is now indicated at 26.9 bushels against 26.6 bushels a month earlier, and 24.4 bushels T 3208 Financial Chronicle Nov. 12 1932 the final estimate for the corn crop of 1931, when the to come, and small progress had been made as yet total was 2,563,271,000 bushels. Old corn remaining in even collecting the necessary data. on farms in the United States on Nov. 1 this year A number of other circumstances and developwas estimated by the Department at 154,974,000 ments served to stimulate the rising tendency. The bushels compared with 78,951,000 bushels a year ago. unfilled tonnage report of the United States Steel Other crops mentioned in the November report of Corporation showed an increase of 11,950 tons in the the Department of Agriculture as showing slight Corporation's back-log during October, and animprovement during the past month included pota- nouncement came that the Union Pacific RR. had toes, tobacco, beans and some fruits. For potatoes left the dividend on the common shares unchanged a yield of 359,000,000 bushels is now indicated for on the basis of 6% per annum, while the National this year against a production last year of 376,000,000 Dairy Products Co. also continued its dividend rate bushels. The yield per acre this year is placed at unchanged on the common stock. Then the cotton 105.4 bushels compared with 111.4 bushels in 1931. market developed strength, notwithstanding that the Tobacco production is estimated at 1,024,000,000 lbs., Agrimiltural Bureau in its monthly statement fur708 lbs. per icre, against an average of 1,299,000,000 ther increased its estimate of the size of the growing lbs. for the past five years, or 769 lbs. per cotton crop, raising it from 11,425,000 bales to 11,acre. There was some reduction in the estimate for 947,000 bales, though this still left the crop far below flaxseed, owing chiefly to the abandonment of acre- that of the previous season, when the actual harvest age in North and South Dakota, but a yield of proved to be 17,096,000 bales. The price of spot 12,770,000 bushels is indicated for this year, against cotton in New York on Thursday, after having last year's production of 11,100,000 bushels. dropped from 6.45c., Saturday, Nov. 5 (to which it had advanced from 6.20c. the day before),to 6.15c. on HE New York stock market has displayed con- Wednesday, owing to the higher estimate of the crop siderable strength the present week, with recovered to 6.45c. again on Thursday, and to 6.70c. prices moving briskly upward both before and after on Friday, as against 6.20c. on Friday of last week. Election Day, on Tuesday. The market last week, Wheat prices moved up and down irregularly during it may be recalled, turned upward on Friday, and the course of the week, but on Thursday (the Chicago this rise was continued on Saturday and extended Board of Trade was closed on Friday, Nov. 11, it into Monday of the present week. It was generally being Armistice Day) showed some recovery when recognized that this reflected an oversold condition the December option for wheat in Chicago closed at /8c. as against 43%c.on Friday of list week. Proof the market, and signified a covering of outstand- 437 ing short commitments by those who were unwilling duction of steel again fell back from 20% of capacity 2%, but trade papers took a favorable view to take chances as to what might happen after the •to 191/ election. On Wednesday, with the election results of the outlook for the immediate future, and the definitely known,stock prices, after evincing a rising Steel Corporation showed a slight increase for the tendency during the early hours, took somewhat of a month of October, as already noted, in the unfilled plunge downward in the afternoon under the leader- orders on the books of the subsidiary corporations. The bond market developed greater firmness as ship of the railroad shares, and it was then remarked that the market was on this occasion acting differ- the week moved along, and this helped the rising ently from the way in which it had acted in previous tendency in the stock market. The so-called "beer" Presidential years, when almost invariably prices stocks and other stocks which appear likely to benefit showed an advancing tendency as soon as the elec- by an early modification of the Volstead Act were tion uncertainty was over. But the market was to strong features all through the week. General Amerredeem itself and act true to tradition on Thursday, ican Tank Car closed yesterday at 18% as against and again on Friday. Prices then moved up with 16 on Friday of last week; Crown Cork & Seal reconsiderable vigor and displayed a steadily rising corded a new high for the year at 23 on Nov. 10, and 2 against 181/ closed yesterday at 211/ tendency. 8 the previous Dry Friday; especially Ginger Canada weak on Wedneslist was Ale closed on Friday The railroad 8 the previous Friday; Liquid Car4 against 93 / day, and it later appeared that a reason for this at 121/ /8, while Owens Ill. Glass, /8 against 167 existed in the publication of a statement in the daily bonic at 187 papers that morning saying that there was a possi- after reaching a new high for the year at 421/ 4 on bility that the Coolidge Committee, which is engaged Nov. 10, closed yesterday at 391/ 4 against 343 / 4 on in examining the status of the railroads for their Friday of last week. The gold stocks also were security holders, would make its conclusions avail- strong features, and indeed have been manifesting able within 10 days. The statement also carried the a rising tendency for many weeks past. Homestake covert suggestion, evidently designed to affect the Mining, for instance, sold up to 159 as the high for market, that the committee might recommend the the year on Nov. 10 against a low of 110 on Feb. 15. writing down of capital structures. The statement On the New York Stock Exchange 11 stocks estabwas unfounded, but evidently accomplished its pur- lished new high records for the year the present pose of unsettling the market on Wednesday. A week, while only nine stocks fell to new low records. prompt denial came in the morning papers on Thurs- The call loan rate on the Stock Exchange again conday, and then the railroad stocks bounded upward, tinued unaltered at 1%. carrying the whole market upward with them, perTrading has been somewhat more active, and on mitting it to act in its normal fashion and express Friday exceeded 21/2 million shares. At the half-day by a rise in prices relief that the election uncertainty session on Saturday last the sales on the New York was over. The denial showed that there was not the Stock Exchange were 463,010 shares; on Monday slightest basis for the report; that no conclusions they were 1,609,950 shares; Tuesday was Election whatever had been reached or even discussed by the Day and a holiday; on Wednesday they were Coolidge Committee, and that the committee would 1,268,260 shares; on Thursday, 1,566,910 shares, and not have any report to submit for at least two months on Friday, 2,631,780 shares. On the New York Curb T Financial Chronicle Volume 135 , 3209 Exchange the sales last Saturday wei6 71,100 shares; against 21; Chicago Rock Island &'Pacific at 7 8; New York Central at 2634 against 22; / on Monday, 198,920 shares; on Wednesday, 176,080 against 53 & Ohio at 13% against 12%; New Haven Baltimore on Friday, and shares, 189,415 Thursday, shares; on 8; Union Pacific at 74y8 against / 147 against 2 1 / 17 at shares. 268,015 at 5% against 5; Southern Pacific Missouri 6314; are prices week, last of Friday with compared As 17½; Missouri-Kansas-Texas against 22 at Pacific yesterday closed Electric General around. all higher Railway at 9 against Southern against 8 / 73 at 6½; Brooklyn week; last of Friday on 16 against 8 / at 181 2 1 / 25 against 22; Northern at Ohio & 8 against 76 bid; North American 8; Chesapeake Union Gas at 801/ 2 1 / and Great Northern 16 , against 4 163 at Pacific 2 1 at 3134 against 27½; Standard Gas & Elec. at 18/ 12. against 8 / 8 at / 611 131 at Y. N. 2; Consolidated Gas of against 151/ The oil shares have followed the entire market in 4 against 1 against 561%;Pacific Gas & Electric at 28/ upward. Standard Oil of N.J. closed yester12%; moving against at 4 143 Elec. & Gas 27%; Columbia /8 on Friday of last week; /2 against 297 321 at day 7%; Public against 9% at & Light Power Electric 8 against 2514; Atlantic 271/ at Calif. of Oil l Standard against Internationa 50% at J. N. 47/8; Service of /8, and Texas Corp. at 157 against 8 / 177 at Case I. J. Refining Threshing 20%; against 4 / 241 at Harvester 2 against 14. The copper group has ruled quite 1 8; Sears, Roebuck & Co. at 15/ Machine at 44 against 361/ 4 strong in face of the weakening of the price of the 2against 17%; Montgomery Ward & Co. at 141/ 1 21/ 8; Safe- metal. Anaconda Copper closed yesterday at 11% / 8 against 367 2; Woolworth at 391/ 1 against 11/ 2against 49; Western Union Tele- against 9 on Friday of last week; Kennecott Copper 1 way Stores at 52/ graph at 35% against 28%; American Tel. & Tel. at 13 against 10%; American Smelting & Refining 2 against 1 s at 1714 against 14%; Phelps Dodge at 6/ / 4 against 103%; Int. Tel. & Tel. at 113 at 1121/ 9 7%, and at against Copper ; 8 / 511 Pasco against de 2 / 561 Cerro at 5%; Can against 8%; American . 4 1 / 3 against 3% at 31% against Hecla at & Alcohol Calumet Industrial States United 4 against 9; Shat251%; Commercial Solvents at 111/ Corn Products at and 4, 9 73 against at TOCK prices moved irregularly this week on stock Co. & tuck . 4 1 / exchanges in all the important European finan50 against 54% Allied Chemical & Dye closed yesterday at 81 cial centers. The trend was generally favorable 2 on Friday of last week; Associated early in the week at London, Paris and Berlin, and 1 against 72/ tory Goods at 67/8 against 534 bid; E. I. du Pont de the movement was stimulated in the mid-week ses8 against 33½; National Cash Regis- sion by favorable impressions gained from the reNemours at 391/ 4 against 9%;International Nickel at sults of the national election in the United States. 1 ter "A" at 11/ 4 against 8; Timken Roller Bearing at 16 against The European markets declined Thursday, however, 1 9/ 8; Gillette when reports from New York indicated that no 4 against 211/ 14½; Johns-Manville at 253 Dairy similar upswing had developed here the day before. 17; National at 18% against Razor Safety /8 against 17%; Texas Gulf Sulphur A hopeful attitude continued to prevail, however, Products at 197 4 against as it is assumed in all markets that the end of the 1 at 24% against 21%;Freeport Texas at 27/ 4; election campaign in the 'United States will make /8 against 7/ 1 237/s; American & Foreign Power at 97 / 8; Na- possible a resumption of negotiations on such out8 against 177 United Gas Improvement at 191/ 4 against 37½; Coca-Cola at standing questions as the inter-governmental debts. 1 tional Biscuit at 41/ 91 against 91; Continental Can at 35% against 32%; Political leaders in Europe added somewhat to the Eastman Kodak at 55% against 51; Gold Dust Corp. prevailing optimism early in the week. Neville /8 Chamberlain, Chancellor of the British Exchequer, /8 against 15%; Standard Brands at 167 at 177 4 33 at /8;Paramount Publix Corp. against predicted during a debate in the Huose of Commons, against 147 e Tuesday, a decided upswing in business and an in; 4 / 1 Westinghous & Toll at against 8 1/ /8; Kreuger 27 38% Inc., at / 311 Drug, Mfg. 8 at 25; against Elec. & crease in employment. Premier Edouard Herriot, 4 against of France, declared in an address before the National 1 against 34%; Columbian Carbon at 32/ 8; Economic Council in Paris, Wednesday, that signs 247/8; Reynolds Tobacco class B at 30% against 291/ 8 against 56; Lorillard of approaching economic recovery already are ap/ Liggett & Myers class B at 623 4 pearing. 1 4 against 13; American Tobacco at 68/ at 141/ 2 1 2, and Yellow Truck & Coach at 4/ 1 against .62/ The German market was aided by termina4. against 41/ tion of the campaign for Parliamentary elections, The steel shares have been strong in common with which were held in that country last Sunday. Busithe rest of the list. United States Steel closed yester- ness indices show only moderate change in European day at 39% against 34% on Friday of last week; industrial countries, with the trend apparently 8 against 1734,and Vanadium favorable. The purely financial aspect of affairs / Bethlehem Steel at 207 2 / 121 . against In the auto group Auburn remains satisfactory. New capital issues floated in 4 at 151/ 4 on Friday the London market during October amounted to / 49 against 403 closed at yesterday Auto ex-div. 8 / 151 at against £19,735,507, which is the largest figure for any month General week; Motors of last 13/ 4; Chrysler at 17 against 137/8; Nash Motors at since November 1930. The Amsterdam market also 1 /8 against 13½;Packard Motors at 3 against 27/8; is active, an aggregate of 126,900,000 florins being 147 8 against 4%, and Hupp invested in new issues last month, while refunding / Hudson Motor Car at 57 2. In the rubber group Good- also was heavy.. 1 Motors at 3 against 2/ The London Stock Exchange was very cheerful at year Tire & Rubber closed yesterday at 19% against 4 on Friday of last week; B. F. Goodrich at 7 the start of business Monday. Business was on a 161/ against 5%; United States Rubber at 6 against 5, broad scale and prices moved upward in all depart4 against 9/ 2. 1 / ments of the market with the exception of British and the preferred at 113 higher. Pennruled have also shares funds. Unsettlement in the Government issues was The railroad 8 / 4 133 161 against at closed yesterday RR. ascribed to profit-taking after the long advance. Insylvania & Topeka Fe Santa week; dustrial, last Atchison shipping and mining stocks moved ahead of on Friday Line at 2 1 / 25 on Coast easily good buying, and international issues also 40; Atlantic against at 46% S 3210 Financial Chronicle Nov. 12 1932 gained. The opening Tuesday was again quite cheer- yesterday, and changes at the close were unimful, but the tone became more subdued later in the portant. day. Industrial and mining shares resumed their improvement, •but British funds receded further. EOPENING of the question of intergovernInternational trading favorites were marked up, but mental debts was undertaken with remarkable little business was done owing to the closed market promptness, this week, after the election in this at New York. When trading was resumed, early country was out of the way. It has long been known Wednesday, interest centered on the transatlantic that the British, French, Italian and other Euroissues, which advanced sharply on a general buying pean debtor governments would make representa movement .fostered by the hopeful impressions cre- tions at a suitable time after the election here, as no ated in Europe by the election results here. The provision was made in their respective budgets for gains in this section were maintained until the last the payments due Dec. 15. Any steps taken before hour, when some profit-taking appeared. British the election might prove embarrassing to the Adminindustrial shares showed some good features, but istration, it was thought, and might influence the the Government bond list again declined. There campaign. On the day following the plebiscite, mawas a general reaction on the London exchange, chinery was set in motion which may well result in Thursday, largely due to the unfavorable overnight postponement of the payments aggregating $123,reports from New York. International stocks were 641,698 due next month and possibly reopen the enmarked down to conform to New York quotations. tire problem of these war obligations. It is probably Home industrial stocks suffered from profit-taking, indicative that Greece failed to make a payment of while British funds showed further severe losses. $444,920 due on her debt Nov. 10, while Hungary The trend yesterday was upward in all departments served notice on the same day that she will be unable of the market. British funds were in good demand, to meet a payment of $40,729 due Dec. 15. and industrial stocks also improved. Great Britain is the principal debtor under the Prices .on the Paris Bourse rallied vigorously as funding agreements, and the initial step was taken trading was started last Monday. The firm tendency by the British Government. Sir Ronald Lindsay, was accompanied by increased turnover, which was British Ambassador to Washingto n, delivered a note due in part to professional activities. Improvement on the subject at the State Department, Thursday. was general in French and international issues, and Similar action was taken in behalf of the French prices clat,ed at the best levels of the day. After a and Italian Governments, later the same day, by firm opening, Tuesday,irregularity developed on the Ambassadors Paul Claudel and Giacomo di Martino. Bourse and the initial gains were wiped out. Fluctua- Contents of these communica tions have not been tions were on a small scale, however, and net changes divulged, and probably will not be until after they for the session were unimportant. The trend Wed- have been considered by President Hoover, who is nesday was uncertain, with turnover light. Prices expected to return to Washington from the Pacific were marked down slightly in most sections of the Coast early next week. The British action was market, as French budgetary developments are not heralded in a London report of Wednesday to the occasioning any enthusiasm. The start of budget New York "Times," based upon accounts in all the discussions in the French Parliament, Thursday, London newspapers. The problem was discussed at weighed heavily on the Bourse and prices dropped great length thereafter in the press, but officials substantially in this session. Declines in commodity everywhere have maintained complete reticence, save prices added to the unsettlement during most of the for the admission that diplomatic negotiations are day. A small rally near the close moderated the in progress. London reports stated yesterday that loses, which remained large despite the small re- the British Government has advised the French and covery. The Paris Bourse was closed yesterday in Italian regimes of the steps taken. This measure was observance of Armistice Day. based, it is believed, on the Lausanne agreement for The Berlin Boerse was firm in the initial session consultation on important European questions. In of the week, with business brisk. The Parliamentary all European dispatches it is insisted that there is elections in the Reich accorded with general expecta- no agreement among the debtor nations for common tions, but they were nevertheless regarded with favor or united action on the debts. in German financial circles. Both stocks and bonds Announcement was made in London by Foreign were in demand, and gains were substantial. Tues- Secretary Sir John Simon,late Thursday,that a note day's session also was favorable, partly as a result had been delivered at the State Department concernof the collapse of a traffic strike in the capital. It ing the $95,550,000 payment due from Great Britain was also assumed that the election in the United Dec. 15. Neither the Foreign Office nor the British States would remove a disquieting element and Treasury would reveal the nature of the communicapermit new developments in international economics. tion, a London dispatch to the New York "Times" Active stocks gained as much as six and eight points, said. A desire to give publicity to the whole situawhile bonds also were in excellent demand. A fur- tion was admitted, however, on the assumption that ther advance occurred Wednesday, but interest was it would prove a useful factor in reviving world conconcentrated largely on brewery shares, which regis- fidence. "The British Governmen t is not asking for tered gains of four to five points. This movement cancellation and certainly is not intimating default was due directly to the Democratic.victory in the or repudiation," the dispatch added. "If the negotiaAmerican election, which also brought some buying tions just begun fail, the British will pay the sum in other sections of the market. The trend was re- promptly on Dec. 15." The report stated on "excelversed Thursday, owing to unfavorable reports from lent authority" that Great Britain already has on the New York and London markets. Active stocks deposit in New York sufficient funds to make the declined one to three points, and bonds sold off as payment in full. "But the Governmen t is confident," well. Prices at the close were the lowest of the day. the dispatch said, "that the United States will not After a favorable start prices receded on the Boerse, demand payment, and that it will liot be made." The R Volume 135 Financial Chronicle 3211 all countries, including Germany. The British Government, he added,is willing to co-operate with other members of the Disarmament Conference to see that the principle of equality in the curtailed classes of armaments is embodied in the new document. Negotiations on the naval phase of the disarmament question were continued, in the meantime, by Norman H. Davis, United States delegate to the Geneva conference. Mr. Davis discussed the naval problem in London and Paris, recently, and he arrived in Rome, Monday, to continue the exchanges with the leading naval Powers. He expressed the hope, an Associated Press dispatch said, that a disarmament compromise reconciling the French and Italian positions might be reached. The American representative conferred at length with Premier Mussolini, with the Franco-Italian naval rivalry the main subject of discussion. It was indicated in Rome, late Monday, that Italy is eager to resume negotiations for settlement of this problem, but feels that the next move is up to France. Authorities in Germany apparently are following with warm interest all developments in connection with the French plan and the naval disarmament problem. Chancellor Franz von Papen declared last Sunday that the new French proposals seem to afford a basis for discussion. The Chancellor warned, however, that the German claim for general disarmament still stands NDER the stimulus of German absence from the unshakable. General Disarmament Conference at Geneva. CONOMIC experts who gathered at Geneva sevEurope is rapidly moving toward an "organization eral weeks ago to formulate an agenda for the of peace" which may well include a substantial measWorld Economic Conference adjourned last proposed ure of general disarmament. The naval aspect of continue their studies in their own coun- • to Monday such an accord, in which the United States is unlikely that they will resume discusis It tries. especially interested, also appears to be under close consideration. The new French disarmament plan, sions before next January, and the conference itself of which details were to be made available this week, probably will not start until well into next year. is to be rewritten with a view to its simplification, When the experts adjourned a brief letter was made Paris dispatches state. An outline of the plan was public from Dr. L. J. A. Trip, President of the Prepresented at Geneva last week by Joseph Paul-Bon- paratory Commission, to Sir John Simon, as Chaircour, French Minister of War. Premier Herriot dis- man of the League of Nations Council's committee cussed the project at a Radical-Socialist party con- charged with organization of the economic confergress in Toulouse, last Saturday, and it is under- ence. The exchange of views so far effected has done stood that he secured warm support from this group, much toward reaching an understanding and agreewhich he heads. After further consideration of the ment with regard to "defining the problems with plan in a Paris Cabinet meeting, Monday, it was which the conference should deal and analyzing the indicated that the pi oposals will be revised in some best means of solving them internationally," this degree. As outlined at Geneva, the plan goes far letter stated. The preparatory group decided to adtoward meeting the German demand for equality in journ, it was explained, in order to "give its members armaments status. The aim was declared to be pro- an opportunity to continue in their own countries gressive reduction of armaments until the point is the studies and consultations which are essential to reached where danger of aggression is ended. Chief the progress of the Commission's work." The Counreliance would be placed, it is pointed out, on re- cil Committee was asked to fix a date for resumpgional, Continental and world compacts against war. tion of negotiations by the experts. The letter ex- . Great Britain took a step in this direction, Thurs- pressed the hope that in the meantime "certain matday, when Foreign Secretary Sir John Simon pro- ters outside the purview of the Preparatory Composed in the House of Commons that coincident with mission will develop in ways that will facilitate its conceding Germany's claim to arms equality the task." In League circles at Geneva the belief preEuropean Powers "solemnly affirm that they will vailed, a dispatch to the New York "Times" said, not in any circumstances attempt to resolve any that the experts will not reconvene before next present or future difficulties between them by resort January, and that the conference itself is further to force." The Minister asserted that several funda- off than ever. The sub-committees formed to conmental principles must be applied in the solution of sider monetary and general economic problems drew the disarmament problem. He proposed,firstly, that up memoranda summarizing their work, the report the limitations imposed upon German armaments added, but these documents,were kept secret. by the treaty of Versailles be lifted, and that there RITISH unemployment was the subject of a debe substituted a limitation expressed in a document bate in the House of Commons for a three-day which would apply also to the arms of other nations. The duration of such a disarmament convention, period which ended Tuesday night. Party lines were ex-Sir John Simon continued, should be the same for almost forgotten in this discussion, which was French Finance Minister, Louis Germain-Martin, admitted in Paris, yesterday, that negotiations had been initiated, but he declined to indicate their trend. Washington reports of Thursday and yesterday confirmed the delivery of notes by the British and French diplomatic representatives and added that a communication likewise had been received from Signor di Giacomo of Italy. A brief statement was issued Thursday, by Secretary of the Treasury Ogden L. Mills,to the effect that Greek and Hungarian payments would be postponed. Regarding the Greek payment Mr. Mills said: "There was due and payable to-day under the terms of the debt-funding agreement with the Government of Greece on account of the 4% 20-year loan made on May 10 1920, the sum of $444,920, of which $227,000 represents an installment due on account of principal and $217,920 represents semi-annual interest. The payment has not been received." The Hungarian Government, Mr. Mills stated, "has officially notified the United States Government that it does not have the necessary foreign exchange with which to make the payment due the United States on Dec.15 1932, under the debt-funding agreement. The amount due on Dec. 15 is $40,729.35, of which $12,283 represents principal and $28,444.35 represents semi-annual interest." U E B 3212 Financial Chronicle tremely quiet and serious, but no great progress was made toward a solution. While the debate was in progress a voluminous report of the Royal Commission on Unemployment Insurance was issued, and suggestions contained in this document were made the basis for Government measures designed to alleviate the troublesome "means test" and effect other adjustments. The gloom occasioned in the House of Commons by the fruitless debate on England's unemployed was lightened to a degree, Monday, when it was disclosed that the unemployment total for October had declined 147,067 to an aggregate of 2,710,944, from the September figure of 2,858,011. As the debate started, a dispatch to the New York "Herald Tribune" said, the ,remarkable spectacle was provided of members of all the officially recognized parties discussing the problem in accents almost indistinguishable from each other. Only the vaguest suggestions were made, however, for terminating involuntary idleness, the report added. Prime Minister MacDonald took up the debate Monday, and he admitted frankly that failure had attended the policy pursued by the last Labor Government of starting public works for the sake of making employment. He repeated the familiar statement that unemployment is due to world conditions, and that the chief remedy lies in restoration of normal economic relations between countries. Little hope for great improvement in the immediate future was held out by the Prime Minister, who indicated that he is pinning his faith on the forthcoming world economic conference. Neville Chamberlain, Chancellor of the Exchequer, closed the debate, Tuesday, with assurances that a revival of industry and an increase of work are impending. The report submitted by the Royal Commission on Unemployment Insurance made a number of specific suggestions for changes in the administration of the British plan. The age of eligibility for unemployment insurance should be lowered from 16 to 14, the Commission held. Instead of the present uniform limit of 26 weeks for full unemployment pay, the report urged that the period of benefit vary from a minimum of 13 weeks to a maximum of 39 weeks, depending on the length of time the unemployed person previously contributed to the insurance fund. Assistance granted by the Government after the regular insurance payments cease should be less than the wages which might be earned in employment, but enough to relieve need, the Commission stated. The present debt of the insurance fund to the British Exchequer is £115,000,000, which the Commission would transfer to a separate account, to be amortized in 65 years. Various economies were suggested, and it was also urged that a permanent statutory commission be set up to guide the Government on the flexible administration of insurance in accordance with conditions prevailing at any given period. The "means test" was upheld by the Commission, which maintained that the Government, before giving relief, must have guarantees that it is needed and will not result in the personal deterioration of the recipient. OTERS in Germany went to the polls last Sunday and elected a Reichstag which does not differ sufficiently from its short-lived predecessor to effect any material change in the somewhat strained political situation within the Reich. The Government of Chancellor Franz von Papen and his powerful colleague, Defense Minister Kurt von V Nov. 12 1932 Schleicher, is expected to remain in office with the approval of President Paul von Hindenburg, even if it becomes necessary again to dissolve the Parliament, when it assembles next month. The intention of the von Papen Cabinet to remain in control was announced in Berlin, Monday, in a statement which declared that "no new position" had been created by the election. Although the political situation thus remains cloudy, a distinct gain was seen by all observers in a loss of National-Socialist, or Fascist, strength. The Fascist followers of Adolph Hitler secured approximately 2,000,000 fewer votes than in the Parliamentary election of July 31, when they reached their high point. The Socialist and Catholic Centrist parties also lost ground, while gains were registered by the Nationalist followers of Dr. Alfred Hugenberg and the Communists. This election of the sixth Parliament of the German Republic was the quietest held in the Reich in recent years. There were ample indications throughout the flagging campaign that the German people were weary of the succession of national plebiscites. The voting was preceded this year by two Presidential elections, nation-wide State Parliamentary elections, and the Reichstag balloting of last July. As the fifth general plebiscite approached, it was apparent that the number of voters would decline substantially. The popular vote actually dropped about 1,500,000 to 35,379,011 from the record figure of 36,845,279 recorded on July 31. The National-Socialists remain the largest single political group, with 11,705,265 supporters, but this figure represents a decline of 2,040,524 from their strength in the last election. The Socialists secured 7,231,404 votes, or about 700,000 less than last July. Communist strength increased by 692,000 votes to 5,970,833. The Catholic Centrist party, led by former Chancellor Heinrich Bi'uening, secured 4,228,322 ballots, a loss of 360,000. Nationalist followers of Dr. Hugenberg, who constitute the only group definitely committed to support of the von Papen regime, polled 3,061,626 votes, a gain of nearly 900,000. Changes in the popular vote were reflected directly in the number of Reichstag seats held by the various factions, as the German voting system allots one seat for every 60,000 supporters of a party. The heavy decline in the Nazi vote thus showed a recession of 35 seats in the Reichstag representation of this group, while the Socialists lost 12 and the Catholic Centrists 6. Largest gains were made by the Nationalists, who increased their seats by 14, and the Communats, who added 11 seats to their representation. The number of Deputies fluctuates with the popular vote, under the German system, and the newly-elected Reichstag will consist of only 582 members as against 608 in the last Reichstag. The standing of the parties in the new and old Reichstags, with their gain or loss of seats, is shown in the following table, based on the final returns: Seats. Party— National Socialists Socialists Communists Catholic Centrists Nationalists Bavarian Peoples' People's Christian Social State Farmers Economic Wuerttemberg Wine Gardeners Hanoverlans Agrarians Country Bund Totals Gain (+) or Loss (—)• New. Old. 195 121 100 70 51 18 11 230 133 89 76 37 22 7 4 4 2 2 .- —35 —12 2 —2 2 3 2 2 ÷11 —5 +14 —4 +4 +1 —2 +1 +1 582 608 Volume 135 Financial Chronicle The loss of Hitlerite votes makes the position of the von Papen regime more secure, provided always that Field Marshal von Hindenburg continues to give the Cabinet his Presidential support and affords it the means of governing by signing emergency decrees under Article 48 of the Weimar Constitution. In the last Reichstag, which was dissolved after only two days, a coalition of the Nazis and the Centrists, with the latter's allies, the Bavarian People's party, could have secured the necessary parliamentary majority and demanded a chance to govern. The attempt to arrange such a coalition was made, but did not succeed. In the newly-elected Reichstag, this combination no longer would afford a voting majority. On the other hand, these groups, which are actively opposed to Chancellor von Papen, have sufficient strength, together with the inevitably antagonistic Communists, to force a vote of non-gonfideuce and thus bring about a further Reichstag crisis. It is believed, for this reason, that the von Papen Government will make every effort to secure the support of the Nazis, despite a declaration by Herr Hitler, Monday,that the election outcome "has cleared the way for continuance of the battle against this regime until its final elimination." The test of strength probably will come, it is thought, on the Government's proposals for Constitutional reforms, which are intended to alter the relations between the States and the Federal Government, change the electoral laws and limit the right of Parliament to overthrow the Ministry. Chancellor von Papen has announced his determination to force such changes, but virtually all parties are opposed to them, and a further national election early next year would appear to be indicated. When the complete election returns were available, Monday, President von Hindenburg received Chancellor von Papen and discussed the situation with him,a Berlin dispatch to the New York "Times" stated. An official announcement was issued soon thereafter, asserting that the election left the situation virtually unchanged, and that the Government saw no reason for altering its course. It is now for the parties, the statement continued, to determine whether the Reichstag can function. In an interview granted by the Chancellor and reported by the Associated Press, Colonel von Papen expressed the hope that the election will be the last in some years. "I cherish the confident expectation that when the Reichstag assembles it will develop a working majority capable of constructive work," the Chancellor said. The President, he added, will do "everything humanly possible to give the Reichstag majority an opportunity to co-operate actively." German foreign policy was not an issue in the campaign, the Chan• cellor pointed out, and he promised that there will be no change in this respect. Gains made by the German Communist party should not cause alarm abroad, he asserted, as increases in extremist party strength are occurring everywhere, with the new adherents likely to leave the Communist banner when normal conditions have been restored. "The Chancellor gave the impression," the Associated Pr,ss dispatch said, "of a man who regards it within the range of possibility to come to terms with the Nazi and Centrist adversaries of yesterday, but who prefers to have the other fellow in the political chess game make the next move." 3213 ERMS of an amnesty decree, granted by Premier Benito Mussolini in connection with the tenth anniversary of the establishment of Fascist rule in Italy, were published in Rome last Sunday, and approximately 15,000 to 20,000 prisoners have since been liberated. The decree was promised by Signor Mussolini five years ago, and again heralded when the series of celebrations commemorating the 10 years of successful Fascist rule began two weeks ago. No distinction was made in the decree between political prisoners and those held for common crimes, but the decree was so worded that it will benefit only a portion of the political offenders. All prisoners serving terms of five years and less will be freed, with certain exceptions, this document states. Habitual offenders and fugitives from justice are not included, while the amnesty also will not apply in cases under the military law, such as high treason, cowardice, espionage and desertions. Offenders against taxation laws will be pardoned, if they pay the amounts due before the end of next January. Persons serving sentences ranging from five to 10 years will have three years remitted, while persons serving sentences of 10 years or more will have five years remitted. The rights of freed prisoners to hold office are restored, and fines are lifted simultaneously with prison sentences. As most of the principal political offenders in recent years have received sentences of more than five years, the chief benefit in many,cases of this nature will be a diminution of the terms of imprisonment. Official figures, issued Monday, indicate that 595 political prisoners will be released, out of the 1,086 banished to the Lipari Islands or destined for such detention, for crimes of "anti-Fascism." —4-NE of the most destructive storms of recent years struck the southern coast of Cuba, Thursday,laying waste the entire Province of Camaguey and almost obliterating the -town of Santa Cruz del Sur. Enormous damage was caused by the storm, which reached hurricane proportions. The wind drove a wall of water in upon the coast and in some places it was reported that the force of the wave drove it five leagues inland. Not a house was left standing in Santa Cruz, where the number of deaths was variously estimated at 300 to 1,000. The death toll throughout Cuba may mount to 1,800, dispatches said yesterday. Vast cane fields in Camaguey were laid flat as though brushed by a giant hand, the Associated Press reported. Banana trees were laid down in geometrical rows, while forests of royal palms were torn up by the roots. Oriente Province also suffered from floods. No estimate of the property damage is available as yet, but the disaster is described as the worst in Cuban history. Secretary of the Interior Zubizareta stated Thursday that the Government is taking all necessary measures to assist the hurricane victims. Relief was ordered from all points near the hurricane zone. T O HE Bank of England statement for the week ended Nov.9 shows a loss of £16,965 in bullion, but as this was attended by a contraction of £262,000 in circulation, reserves rose £245,000. The Bank's bullion holdings now aggregate £140,443,458, as compared with £121,836,587 a year ago. Public deposits increased £13,409,000 and other deposits fell off 03,854,010. Of the latter amount £22,813,620 was from bankers' accounts and £1,040,390 T Financial Chronicle 3214 from other accounts. The reserve ratio rose to 40.42% from 37.33% the previous week. A year ago the ratio was 33.60%. Loans on Government securities increased £10,760,000 and those on other securities £96,732. Other securities consists of discounts and advances which decreased £154,615 and securities which rose £251,347. The discount rate is unchanged at 2%. Below we furnish a comparison of the different items for five years: BANK OF ENGLAND'S COMPARATIVE STATEMENT. 1929 1928 1930 1932 1931 Nov. 14. Nov. 13. Nov. 12. Nov. 11. Nov. 9. Circulation_ a 361.210.000 Public deposits 20,427,000 Other deposits 113,715,450 Bankers' accounts 79.08,220 Other accounts 33.857,230 68,053.094 Gov't securities Other securities_ _ 29.586,291 Disc. & advances_ 11,799.151 Securities 17,787,140 Raserve notes & coin 54.233.000 Coln and bullion-140,443.458 Proportion of reserve to liabilities 40.42% Bank rate 2% 357,195.262 19,143.347 98,804.300 60.461,123 38,343.177 54.995.906 41,033.085 11,677.207 29.355.878 39.641.325 121.836,587 355,380.919 16,978.509 93,471.429 60.321.291 33,150.138 36,726,247 26,737,008 4,287.804 22.449.204 64.699,627 160,080,546 358.108.000 15.784,000 96,460,426 54.705.309 41.755.117 66.834,855 28.485,253 9.210.078 19,275.175 34,661,000 132,771,032 133,344,390 15.543.417 99,417,489 Nov. 12 1932 last year. Below we furnish a comparison of the various items for three years: BANK OF FRANCE'S COMPARATIVE STATEMENT. Changes for Week Francs. Gold holdings__ - _Inc. 126,809,757 Credit bats. abr'd_Inc. 4,000,000 aFrench commero'l bills discounted_Dec. 859,000,000 bBtils bought abr'dDec. 6,000 000 Adv. alt. securs_ _Dec. 85000,000 Note circulation_ _Inc. 817,000 000 Cred. cum accta__Dec 1489000.000 Proportion of gold on hand to siiht liabilities Inc. 0.60% Status as of Nov. 4 1932. Nov. 6 1931. Nov. 7 1930. Francs. Frown. Francs. 83,035,819,743 67,580,593,727 51,096,528,540 2,985,102,022 13,374,307.445 6,505,489,077 2,776.997.593 1.996.777,415 2,678.039,629 83,022,581,015 24,293,622,840 6,860.176,378 11.051.429.166 2.864.935,566 82,794,909,410 30.178,140,051 6,870.897,382 19,131.828,043 2.994,769,184 74,709.038.180 21,394,440,357 77.38% 59.82% 53.17% a Includes bills purchased in France. b Includes bills discounted abroad. HE Bank of Germany in its statement for the first quarter of November shows a decline in gold and bullion of 31,000 marks. The total of bullion is now 817,283,000 marks, in comparison 48,872.683 with 1;101,298,000 marks last year and 2,180,009,000 162,467,073 marks the year before. A decrease appears in re4245% 30.88% 58.57% . 33.60% 445% 6% 3% 6% serve in foreign currency. of .1,157,000 marks, in a On Nov.29 1928 the fiduciary currency was amalgamated with Bank of England bills of exchange and checks of 101,695,000 marks, note issues, adding at that time £234,199,000 to the amount of Bank of England in advances of 98,622,000 marks, in other daily notes outstanding. maturing obligations of 23,272,000 marks and in HERE have been no changes the present week other liabilities of 11,431,000 marks. A reduction in the discount rates of any of the foreign in note circulation of 117,811,000 marks reduces the central banks. Present rates at the leading centres total to 3,501,238,000 marks. Circulation a year are shown in the following table: ago stood at 4,541,599,000 marks and the year before DISCOUNT RATES OF FOREIGN CENTRAL BANKS. at 4,372,863,000 marks. Silver and other coin, notes on other German banks, investments and other Rate in Date Effect on Previous Country. assets record increases of 25,841,000 marks, 5,054,000 Established. Rate. Nov. 11. 1932 marks, 55,000 marks and 18,041,000 marks respecAug. 23 7 6 Austria 234 Jan. 13 1932 344 Belgium May 17 1932 934 845 tively. The proportion of gold and foreign currency Bulgaria Aug. 23 1932 Chile 534 444 6 Sept. 19 1932 circulation stands now at 26.8% as comColombia 5 to note 5 Sept. 24 1932 445 Czechoslovakia 4 July 12 1932 5 Danzig 27.8% last year. Below we furnish a with pared 4 Oct. 12 1932 Denmark 334 234 June 30 1932 2 England the various items for three years: of comparison 645 Jan. 29 1932 Estonia 5.14 44,858,449 39,460,478 T T Finland France Germany Greece Holland Hungary India Ireland Italy Japan Lithuania Norway Poland Portugal Rumania Spain. Sweden Switzerland 645 245 4 10 234 445 4 3 .5 4.38 7 4 6 654 7 6 334 2 Apr. 19 1932 Oct. 9 1931 Sept. 21 1932 Aug. 8 1932 Apr. 18 1932 Oct. 17 1932 July 7 1932 June 30 1932 May 2 1932 Aug. 18 1932 May 5 1932 Sept. 1 1932 Oct. 2) 1932 Apr. 4 1932 Mar. 3 1932 Oct. 22 1932 Sept. 1 1932 Jan. 22 1931 7 2 5 11 3 5 5 334 6 5.11 745 434 734 7 8 834 4 234 REICHS13ANIC8 COMPARATIVE STATEMENT. Changes Nov.7 1932. Noy. 7 1931. Nov. 7 1930. for Week. Assets-Retehsmarks. Retchsmarks. Retehsmarks. Retehsmarks. 31,000 Dec. 817,283 000 1,101.298,000 2.180,009,000 Gold and bullion Of which depos.abed_ Unchanged. 63.351.000 66.719.000 221.376,000 Res've in torn curr__ _Dec. 1,157.000 121,826,000 160,650,000 219,185.000 Bills of exch.& cheeks.Dec. 101,695 000 2,794,893 000 3,830,121,000 2.178,856,000 Silver and other coin_ _Inc. 25.841,000 185,685 000 93,841,000 157,726.000 Notes on oth.Ger. bksinc. 5,054,000 7.851,000 15.766.000 7.090.000 Dec. 98,622,000 99,141.000 112.268.000 101,208.000 Advances 55.000 362.346 000 102.884.000 102,475.000 Inc. Investments Inc. 18,041,000 812,558,000 870,077,000 485,257,000 Other assets Liabilities— Notes in circulation_ _Dec. 117,811,000 3,501,238.000 4.541.599.000 4,372.863.000 Oth.daity matur.obilg.Dec. 23,272 000 366,211,000 398,903,000 313,658,000 Dec. 11,431,000 759,708,000 850.386,000 260.034,000 Other liabilities Propor. of gold & fo-'n 0.8% curr. to note circurnIne. 26.8% 45.2% 27.8% In the London open market discounts for short bills on Friday were 11-16W4%, as against WO) 11-16% on Friday of last week, and 13-16@N% for three months' bills as against 11-16@%% on Friday of last week. Money on call in London on Friday HE New York money market was a routine was %%. At Paris the open market rate continues affair this week, no fluctuations of any conat 13/%, and in Switzerland at 13/2%. sequence occurring in any division. Funds were in over-supply, as the huge open market purchases of Federal Reserve System are exercising their the week the statement for HE Bank of France lasting influence. The country also remains holdings natural gold in gain ended Nov. 4, reveals a gainer of gold, although on a smaller scale persistent now 83,a is gold of total of,226,809,757 francs. The months from June to October, inclusive. the 67,580,593,727 than in with compared 035,819,743 francs, as francs last year and 51,096,528,540 francs the previ- Call loans on the New York Stock Exchange were 1% ous year. Credit balances abroad rose 4,000,000 for all transactions, whether renewals or new loans., francs, while bills bought abroad declined 6,000,000 In the unofficial outside market, demand loans were francs. Notes in circulation show an expansion of arranged every day at a concession from the official 817,000,000 francs raising the total of notes outstand- rate. The charge in the street was M% Monday, ing to 83,022,581,015 francs. A year ago circulation Tuesday and Wednesday, VI% Thursday, and M% aggregated 82,794,909,410 francs and two years ago yesterday. Time money rates were unchanged. 74,709,038,180 francs. Decreases appear in French Brokers loans against stock and bond collateral, as commercial bills discounted of 859,000,000 francs, reported for the week to Wednesday night by the in advances against securities of 85,000,000 francs Federal Reserve Bank of New York, showed a deand in creditor current accounts of 1,489,000,000 cline of $2,000,000. Gold movements at New York francs. The proportion of gold on hand to sight for the same weekly period consisted of imports of liabilities is now 77.38% in comparison with 59.82% $4,344,000 and an increase of $103,000 in the stock T T Financial Chronicle Volume 135 of the metal held earmarked for foreign account. There were no exports. EALING in detail with call loan rates on the D Stock Exchange from day to day, 1% was the ruling quotation all through the week both for new loans and renewals. The time money market has shown slight improvement this week, though there is as yet, very little call for this type of accommodation. Rates are quoted nominally at 1A% for 30 to 90 days and VI% for four to six months' maturity. Prime commercial paper continues very slow, mainly on account of the shortage of paper. Quotations for choice names of four to six months' maturity are %@2%. Names less well known are 23%. On 13 some very high-class paper occasional transactions at 13/2% are noted. HE market for prime bankers' acceptances has been extremely quiet this week. The demand T has shown considerable improvement , but there is a dearth of first class paper and only a part of the requirements can be supplied. Rates are unchanged. The quotations of the American Acceptance Council for bills up to and including three months are %% bid, m% asked; for four months, 4 31% bid and %% asked; for five and six months, 1% bid and 7A% asked. The bill buying rate of the New York Reserve Bank is 1% for 1-90 days; 13'3% for 91-120 days, and 13/2% for maturities from 121-180 days. The Federal Reserve banks show a trifling decrease in their holdings of acceptances, the total having fallen from $34,053,000 last week to $34,002,000 this week. Their holdings of acceptances for foreign correspondents decreased during the week from $38,847,000 to $37,916,000. Open market rates for acceptances are as follows: Prime eligible bills SPOT DELIVERY. —180 Days— —150 Days— Bid. Asked. Bed. Asked. 1 1 —120 Days--Bid. Asked. - —30 Days— —90 Days— —60 Days 8(4. Asked. BM. Asked. . Asked. Prime eligible bills 84 N N /i FOR DELIVERY WITHIN THIRTY DAYS. Eligible member banks 1% bid 11131mie non-member banks 1% bid HERE have been no changes this in the T rediscount rates of the Federal Reserve banks. The following week is the schedule of rates now in effect for the various classes of paper at the different Reserve banks: DISCOUNT RATES OF FEDERAL RESERVE BANKS ON ALL CLASSES AND MATURITIES OF ELIGIBLE PAPER. Federal Reserve Bank. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louie Minneapolis }Imam City Dallas Ran Franelsen Rale In Effect on Nov. 11. 3% 24 3% 314 34 34 214 34 3% 314 3% 22 Date EstaNtshed. Oct. 17 June 24 Oct. 22 Oct. 24 Jan. 25 Nov. 14 June 25 Oct. 22 Sept 12 Oct. 23 Jan 28 (let 21 1931 1932 1931 1931 1932 1931 1932 1931 1930 1931 1932 1931 Previous Rests. 2% 3 3 3 4 3 314 2% 4 3 4 2t TERLING exchange continued to display S ease during the current week but with a sharp recovery on Friday. On numerous con- siderable occasions during the week the market had evidence that the British Treasury was operating on both sides of the market. Whenever a low quotation was reached a rally would set in which was met by scale selling of an official nature. It is believed that on balance the British Treasury was a seller until yesterday. 3215 The range this week has been between 3.277A and 3.32% for bankers' sight bills, compared with a range of between 3.28@3.32% last week. The range for cable transfers has been between 3.283 and 3.33, compared with a range of between 3.283/i and 3.323 % a week ago. An outstanding event which might have an important bearing on the future of sterling was the news published to the effect that the British Government was drafting a note to the Washington Government seeking a respite on the Dec. 15th debt installment of $95,500,000. This matter is discussed in greater detail in the earlier portion of this article. It will be recalled that during the last week Sir Arthur Salter, former Director of Economy and Finance of the League of Nations, said on his arrival in New York that the December debt payment due from the British Treasury to the United States would be met by Great Britain on the due date, but added that she will not pay in the future because payment is a physical impossibility. Another factor of great importance affecting the future of sterling has been the opening of the lists in London on Monday for the final conversion loan totaling about £1,028,000,000, which the Government is floating to pay off the remainder of the unconverted war loans and 5% Treasury bonds. This loan completes the conversion of the British longterm credit to practically a 3% basis and is the fourth Government operation of the kind since spring. Now that the Government financing is out of the way and embargoes have been lifted on new flotations, the London money market is expected to take a more active interest in new financing. The month of October witnessed a decided revival in this respect, with new security offerings aggregating approximately £19,750,000, as against practically r othing in the two preceding months when the official embargo was in complete operation. Even in October 1931 such new issues amounted to only £2,500,000, but the financial market was then unsettled by England's departure from the gold standard the month before. Money is again in great abundance in Lombard Street and despite the low rates quoted for sterling snd the firmness in the French franc and the American dollar, there is again a steady flow of funds to London from many parts of the world. Call money against bills in London was in large supply during the greater part of the week at M%. Two-months' bills are quoted 4 5 % to 11-16%, three-months' bills 11-16% to 4 3 %,four-months' bills 13-16% to 7A3%, and six-months' bills 1 1-16%. Gold sold in the London open market this week at from 124s. 81 4d. to 125s. 4d. an ounce. All the gold sold was generally for European account, though it is thought that a small amount was taken for New York bankers, who are, however, now dealing directly with Bombay for the Indian gold being released from hoarding. This week the Bank of England shows a decrease in gold holdings of £16,965, the total standing on Nov. 9 at £140,443,458, which compares with £121,836,587 a year ago. The bank's ratio of reserves to liabilities shows considerable improvement, standing at 40.42% on Nov.9 compared with 37.33% on Nov.2, and with 33.60% a year ago. At the port of New York the gold movement for the week ended Nov. 9, as reported by the Federal Reserve Bank of New York, consisted of imports of $4,344,000, of which $3,207,000 came from India, $691,000 fro n Canada, $233,000 from England, and Financial Chronicle 3216 $213,000 chiefly from Latin American countries. There were no gold exports. The Reserve Bank reported an increase of $103,000 in gold earmarked for foreign account. In tabular for n the gold movement at the Port of New York for the week ended Nov. 9, as reported by the Federal Reserve Bank of New York, was as follows: GOLD MOVEMENT AT NEW YORK, NOV. 3-NOV. 9, INCLUSIVE Imports. $3,207,000 from India 691,000 from Canada Exports. 233,000 from England None 213,000 chiefly from LatinAmerican countries 11,344,000 total Net Change in Gold Earmarked for Foreign Account. Increase: $103,000 The above figures are for the week ended Wednesday evening. On Thursday there were no imports or exports of the metal nor was there any change in gold held earmarked for longer account. Yesterday $23,100 was imported from Mexico. There were no exports of the metal on that day, but gold held earmarked for foreign account decreased $2,294,500. For the week ended Wednesday evening approximately $793,000 was reported as having been received at San Francisco from China. On Friday $213,000 more of gold was received at San Francisco from China. Canadian exchange is at a wide discount this week, having broken to 13% disco int, a new low on the present movement. On Saturday last, Montreal funds were at a discount of 11/%, on Monday at 13%. On Tuesday, Election Day, there was no market in New York. On Wednesday, Montreal funds were quoted at 129.% discount, on Thursday at 119/ 8%, and on Friday at 103/8%. The market was at a loss to understand the sharp break in Canadian funds on Monday. Canadian circles expressed little surprise that the rate should sag, although the precipitous drop was a matter of some comment. Rumors from Montreal and other Canadian points suggested that Canada might be contemplating abandonment of the gold standard. In well-informed quarters this view is not entertained, as by a special order in council, issued Oct. 19 1931, the Canadian Government prohibited the export of gold except under license. It was rumored in the market that the Canadian Government was itself depressing the rate, but denial was promptly made by Mr. E. N. Rhodes, Canadian Minister of Finance, who asserted that the finance department was doing nothing either to raise or lower the value of the dollar. There has been much discussion of currency inflation during the last few weeks in the House of Commons at Ottawa. This talk, together with seasonal factors, might be regarded as a sufficient explanation for the present wide discount on Canadian dollars. The downward movement was probably given impetus by baseless rumors which have a bearing on the rate in view of the fact that gold exports are prohibited. Referring to day-to-day rates, sterling exchange on Saturday last was steady. Bankers' sight was 3.299@3.303; cable transfers 3.293/8@3.309'. On Monday trading was light and sterling firmer. The range was 3.30A@3.313'i for bankers' sight and 3.30/@3.31% for cable transfers. On Tuesday, election day, there was no market in New York. On Wednesday sterling was easier in light trading. The range was 3.283,g@3.303/ for bankers' sight and 3.29@3.31 for cable transfers. On Thursday, sterling was under pressure. Bankers' sight was 3.273' ® Nov. 12 1932 3.28/; cable transfers 3.283@3.28 13-16. On Friday sterling took a sharp upward turn; the range was 3.293@3.323' for bankers' sight and 3.299'@3.33 for. cable transfers. Closing quotations on Friday were 3.31 15-16 for demand and 3.32 for cable transfers. Commercial sight bills finished at 3.31; 60-day bills at 3.303.i; 90-day bills at 3.30; documents for 4 and seven-day grain payment (60 days) at 3.301 bills at 3.31 7-16. Cotton and grain for payment closed at 3.31. on the Continental countries presents EXCHANGE no new aspects Of importance. From dispatches published in other columns it would seem that France is also planning to appeal to the United States Government for a reconsideration of the war debts. French francs are on average fractionally easier than last week, but the franc is now the only currency ruling above par with respect to the dollar. The French position is exceptionally strong because of the large accumulation of funds in Paris and the constant accession of gold by the Bank of France. For the week e iding November 4 the Bank of France statement shows an increase in gold holdings of fr. 126,809,757, the total standing at a new high for all time of fr. 83,035,819,743, as compared with fr. 67,580,593,727 a year ago and with fr. 28,935,000,000 in June 1928 whe 1 the unit was stabilized. Money in Paris is in extreme abundance at very low rates. The Bank's ratio stands at 77.38%, compared with 76.78% on Oct. 28; with 59.82% on Nov. 6 1931, and with legal requirement of 35%. German marks are largely nominal as the rate is under the strict control of the Reichsbank. A recent Berlin dispatch to the "Wall Street Journal" stated that payment by foreign purchasers of German goods with German securities instead of cash has been banned by decree. Exports nay be made, however, to a conutry having exchange restrictions provided that the consent of the German exchange office is secured. The decree has been issued because of extensive trading in German securities for foreign account during recent months despite the fact that such transactions are mostly forbidden. There is renewed discussion in Berlin of the possibility of a further reduction in the Reichsbank rate of discount from the present 4% level. The Reichsbank's decision on its rate is delayed largely because of fear of the effect of expanded credit on prices. It is also understood that the Bank hesitates to make a reduction because it wishes to prevent the repayment of old sterling credits and, as stated here last week, some German bankers feel that reduction in the rate at this time might render the next "standstill" discussions more difficult. Italian lire are exceptionally steady. The firmness in lire is due largely to great improvement effected in the trade balance of the country within the last few years. Money rates are gradually declining on the Italian markets. The excess of imports over exports during the first seven months of 1932 amounted to 1,319,000,000 lire, against 1,580,000,000 lire in the same period last year and 3,651,000,000 lire in 1930. The London check rate o i Paris closed at 84.68 on Friday of this week, against 83.81 on Friday of last week. In New York, sight bills on the French centre finished on Friday at 3.92 against 3.93 on Friday of last week; cable transfers at 3.92A against 3.933/ s, and commercial sight bills at 3.91/ against Volume 135 4. Antwerp belgas finished at 13.88 for 3.923 bankers' sight bills and at 13.883/2 for cable transfers, against 13.93 and 13.933/2. Final quotations for Berli 1 marks were 23.77 for bankers' sight bills a id 23.773' for cable transfers, in comparison with % for 23.75 and 23.753/2. Italian lire closed at 5.115 5.123/i for cable transfers. bills and sight bankers' against 5.11( and 5.123. Austrian schillings closed at 14.103/ against 14.103/2; exchange on Czechoslovakia at 2.96 8, against 2.963/2; on Bucha/ 2, rest at 0.603'I, against 0.6034; on Poland at 11.241 against 11.243/2, and on Finland at 1.453/2, against 1.453/2. Greek exchange closed at 0.58 for bankers' 2 for cable transfers, against sight bills and at 0.583/ 0.56 and 0•56. • XCHANGE on the countries neutral during the war continue to follow trends recently developed. The Scandinavian currencies are irregularly easy, following more or less closely the swings in sterling, to which these currencies are closely related. As noted in another column here last week Sweden has extended the period of gold suspension to March 1 1933. Norway and Denmark are expected to follow this lead at once. The Scandinavians went off gold in Sept. 1931 following the pound. Holland guilders and Swiss francs are easy, ruling generally under dollar par. The softness in these currencies is largely seasonal, but is due also to a movement of Swiss and Dutch funds to other centres for more profitable employment. London, Paris'and to some extent, New York are attracting these funds. Any revival of business here, particularly in the security markets, should result in a heavy movement of Swiss and Dutch funds to this side. Spanish pesetas are exceptionally steady and are apparently unrelated to the main currents affecting the European exchanges. The Bank of Spain shows a steadily improving position. The Bank's statement for the week ended Nov. 5 shows gold holdings of 2,558,000,000 pesetas which compares with 2,246,700,000 pesetas a year ago, meanwhile circulation has dropped from 5,123,700,000 to 4,941,700,000 pesetas. Bankers' sight on Amsterdam finished on Friday at 40.153, against 40.243. on Friday of last week; cable transfers at 40.16, against 40.25, and commercial sight bills at 40.12, against 40.20. Swiss francs closed at 19.25 for checks and at 19.253/2 for cable transfers, against 19.28% and 19.29. Copenhagen checks finished at 17.293/2 and cable transfers at 17.30, against 17.183' and 17.19. Checks on Sweden closed at 17.593' and cable transfers at 17.60, against 17.393 , ' and 17.40; while checks on Norway finished at 16.913/ 2 and cable transfers at 16.92, against 16.813/ 2 and 16.82. Spanish pesetas closed at 8.18 for bankers' sight bills and at 8.183' for cable transfers, against 8.20 and 8.20%• E XCHANGE on the South American countries presents no new features of importance. Quotations are, of course, largely nominal, as all these countries are conducting their foreign exchange and foreign trade operations through officially appointed boards of control. As frequently pointed out here several of these countries are further hampered through moratoria. An improvement in the foreign exchange situation in these countries cannot be expected for a long time to come. It seems almost necessary that the British pound be stabilized and that world-wide business conditions improve E 3217 Financial Chronicle before there can be any recovery in the foreign exchange situation in the South American countries. Argentine paper pesos closed on Friday nominally 4, against 253 4 on Friday of last week; cable at 253 transfers at 25.80, against 25.80. Brazilian milreis are nominally quoted 7.45 for bankers' sight bills and 7.50 for cable transfers, against 7.45 and 7.50. Chilean exchange is nominally quoted 63, against 63'. Peru is nominal at 17.00, against 17.00. XCHANGE on the Far Eastern countries displays wide fluctuations. The Indian rupee is easy and swings around with the fluctuations in sterling exchange to which the rupee is attached at the rate of o se schilling six pence per rupee. Japanese ye I are exceptionally easy and on Saturday last broke to a new low of 21.00. This was followed by another break on Monday when in light trading the unit dro )ped to 20%. There was a partial recovery on yesterday to 21 1-16. Par of the yen is 49.85. The quotations this week represent a decline in value of the yen of around 59% from gold parity. At current rates the pound is about 32% under par. Japan is supposed to derive a great advantage in Far Eastern trade, especially in India as a result of the larger drop in yen with respect to the decline in sterling from gold parity. Hence, there is constant agitation in India for import restrictions on Japanese goods. The Chinese units, of course, fluctuate more or less closely with the changes in silver quotations in London and New York. Silver in New York ranged during the week from 27 to %c. an ounce. China has been the most impor273 tant buyer in the silver market for nearly two months past. Closing quotations for yen checks yesterday were 21 1-16 against 2134 on Friday of last week. Hong Kong closed at 22%@22 15-16, against 22%@, 22 15-16; Shanghai at 29%, against 29%@29 15-16; 5 Singapore at 385 %, Manila at 494, against 494; %; Bombay at 25 1-16, against 253, and against 385 Calcutta at 25 1-16, against 253/8. E FOREIGN EXCHANGE RATES CERTIFIED BY FEDERAL RESERVE BANKS TO TREASURY UNDER TARIFF ACT OF 1922, NOV. 5 1932 TO NOV. 11 1932. INCLUSIVE. Country and Monetary Noon During Role for Cable Transfers in Seto York. Value in United Mates Money. Nor. 5. Nor. 7. p Nov. 8. Nov. 9. Nov. 10. Nov. 11. s $ EUROPE139437 .139437 Austria,schilling 139176 .139076 Belgium, belga 007200 .007200 Bulgaria, lev Czechoslovakia, krone 029626 .029620 171807 .172146 Denmark, krone England, pound 3 300375 3.306166 sterling 014500 .014533 Finland. markka 039290 .039251 France. franc Germany, reichsmark 237382 .237235 005823 .005770 Greece, drachma 402232 .402021 Holland, guilder 174500 .174250 Hungary, pengo Italy, Ilra 051200 .051195 Norway, krone 168138 .168461 Poland,zloty .111710 .111710 Portugal, escudo .030280 .030400 Rumania,leu .005979• .005987 .081910 .081807 Spain. Peseta Sweden,krona 174023 .174892 Switzerland, franc-. .192805 .192705 Yugoslavia, dinar- . .013525 .013650 ASIAChina°micro tadl 307500 .309791 Hankow I sv: 302600 .303958 Shan4h.4ltael 295937 .297968 Tien:Ai n tael 312500 .314791 Bong Kong dollar .226250 .227187 Mexican dollar .207812 .210000 fientsin or Peiyang dollar 207083 .209583 Yuan dollar 207083 .209583 India, rupee 249150 .249750 Japan, yen 209500 .205640 Singapore (S.S.) dollar .382500 .382812 NORTH AMER.Canada. dollar .889427 .866770 Cuba, peso 999100 .999100 Mexico, peso (silver) .315833 .318166 Newfoundland. dollar .887000 .864750 SOUTH AMERArgentina. MOO (gold) .585835 .585835 Brazil. milreis .076300 .076300 Chile, peso .060250 .060250 .473333 .473333 Uruguay. Peso Colombia peso__ 01240n 0524110 $ s .139437 .138807 .007200 .029621 .172138 3.300000 .014433 .039214 .237275 .005809 .401717 .174250 .051193 .168361 .111710 .030525 .006991 .081792 HOLZ- .174607 DAY .192614 .013625 $ $ .130437 .139437 .138748 .138684 .007200 .007200 .029612 .029611 .171307 .171476 3.284666 .014483 .039220 .237496 .005784 .401632 .174250 .051192 .167684 .111710 .030400 .005991 .081803 .174050 .192553 .013550 3.209041 .014433 .039199 .237539 .005784 .401600 .174250 .051183 .167792 .111710 .030420 .005991 .081700 .174484 .192517 .013500 .312083 .306250 .299375 .317916 .228125 .210937 .308541 .307916 .303541 .302916 .296093 .295781 .317708 .313750 .225625 .225468 .209062 .207812 .210833 .210833 .249625 .205250 .383125 .208750 .208750 .248380 .206000 .380625 .207083 .207083 .249325 .209000 .382125 .8"9947 .999100 .324500 .867750 .872447 .999100 .324400 .87025h .889270 .999100 .324000 .886500 .585835 .076300 .060250 .473333 .9S2400 .585835 .076300 .060250 .473333 .952400 .585835 .076300 .060250 .473333 .952400 Financial Chronicle 3218 HE following table indicates the amount of gold bullion in the principal European banks as of Nov. 10 1932, together with comparisons as of the corresponding dates in the four previous years- T Banks of— 1932. 1931. 1930. 1929. £ 121,836,587 540 644,749 50,052,200 89,867,000 58,918,000 71,340 000 73.355 000 51,303 000 11,860 000 9,121.000 8,560,000 £ 160,080,546 408.772.228 101,511,050 99,068.000 57,222,000 35,459.000 37,006 000 25,624,000 13,433.000 9,561,000 8,134,000 £ 132,771,032 322,384,878 103.861,100 102 593.000 56,017.000 36.894.000 29,358,000 21,348 000 13.420,000 9,582,000 8,152,000 Total week 1.272,284,616 1,084,847 536 Pm,. week 1.271.131.652 1.060.364.316 955,870,824 954.974.672 836,381,010 833,975,249 England___ France_a_ _ Germany b Spain Italy Neth'Iands. Nat. Belg.. Switeland_ Sweden Denmark Norway_ _ _ .£ 140,443,456 664,286.558 37,696,600 90,315.000 62.687,000 86,240,000 74,594,000 89,165,000 11,443.000 7,400.000 8,014,000 1928. £ 162,467,073 246,641.115 122,714,850 104.367,000 54,527.000 36.231.000 23,217.000 18,781.000 13,180,000 9,602,000 8,168,000 799,896,038 801,288.207 a These are the gold ho dings of the Bank of France as reported In the new form of statement. b Gold holdings of the Bank of Germany are exclusive of gold held abroad, the amount of which the present year is £3,167,650. The Political Outlook in Germany—Revision of the British Dole. The indecisive outcome of the Reichstag election on Sunday is in striking contrast to the emphatic verdict rendered by the American electorate in the presidential election on Tuesday. Where the American election overwhelmingly repudiated Republican control of both the Executive and Congress and established Democratic control firmly in its place, the German election not only gave no party in the Reichstag the predominance, but made it even less likely than before that a coalition can be formed that will support either the von Papen Government or any other. It would be rash to predict that the parliamentary system in Germany, as a consequence of the election, is likely to be abolished and some other system substituted, but it is clear that the parliamentary system, as a device for securing Government by party, has again broken down, and that an ad interim administration, certainly not in the usual sense parliamentary, whatever it may be called, will have to function until the present party situation is radically transformed or a new system set up through a revision of the Reich's Constitution. The new Reichstag, thanks to a decline in the total vote cast, will number 582 members against a previous 608. The most striking change is in the relative strength of the National Socialists,followers of Adolph Hitler. Although the Hitlerites are still the largest party in the Reichstag, their popular vote fell more than 2,000,000 behind that polled in the election of last July, and the party representation in the Reichstag drops from 230 to 195. Three other major parties also show substantial losses, the Socialists winning only 121 seats against a previous 133, the Centrists 70 against 75, and the Bavarian People's party 18 against 22. The Hugenberg Nationalists, on the other hand, increased their representation from 37 to 51, while the Communists secured 100 seats where before .they had 89. The Populists, the party formerly led by Gustav Stresemann, offered a surprise by increasing their vote from 7 to 11, thereby averting the complete disappearance as a party with which the July election • seemed to threaten them. No searching of this aggregation of parties, however, seems to disclose any probable combination upon which a Government could rely. The Nationalists, who support Chancellor von Papen, are a hopeless minority, the Socialists give no intimation of changing their policy of holding aloof from a Government which they cannot control, and the Communists are to be classed as irreconcilables wherever political co-operation is concerned. The only combination Nov. 12 1932 that could muster a numerical majority is that of Hitlerites and Communists, and while both of these parties agree in hating the von Papen Government, there is no likelihood of joint action save, perhaps, on some special and temporary matter involving no question of general policy. • When, accordingly, the new Reichstag meets early in December (Dec.6 has been tentatively announced as the date), a repetition of the prompt dissolution which met the former Reichstag is apparently foreshadowed, with continuance of government by decree until such time as President von Hindenburg sees fit to call a new election. Political gossip is busy with rumors of the early dismissal of Chancellor von Papen and the designation of a Chancellor who can bring the discordant elements of the Reichstag into line, but there are several reasons for doubting such reports. There is no evidence as yet that President von Hindenburg is dissatisfied with his Chancellor; on the contrary, the Chancellor was personally asked on Thursday to form a Government of "national concentration" or party union. There is also no evidence that if the attempt fails, any other Chancellor who might be selected would be acceptable to the Reichstag. Chancellor von Papen himself would doubtless be glad to have a Reichstag majority,and both he and President von Hindenburg may be expected to go a long way in efforts to conciliate the rival parties and their leaders, but not only has the rift with the Hitlerites been widened by Sunday's election, but the loss of more than 2,000,000 Hitler votes indicates a decline in popular strength that makes it less necessary than before to compromise with the Hitlerite demands. Perhaps a party coalition may be patched up, but only unexpected and radical concessions could give it the assured strength which President von Hindenburg has demanded as a condition of abandoning government by decree. The attitude of the President, indeed, is obviously the controlling factor in the situation. President von Hindenburg has not failed to let the German people know that he intends to rule as a constitutional President, but the anomalous parliamentary situation which the last two elections have produced has shown the need of revising the Weimar Constitution, and plans for revision are likely now to be pushed.as one of the ways out of present difficulties. Precisely what form revision may take is still a matter of discussion, but the willingness of President von Hindenburg,-during the administrations of both Bruening and von Papen, to resort to government by decree when Reichstag co-operation failed, confirms the impression that the President favors a much more highly centralized executive system than the Weimar Constitution provides, and that government by a Ministry without the possibility of obstruction from a national legislature is not at all opposed to his views. The fear which was expressed some months ago lest the national government should be turned into an "autarchy," a form of Ministerial control in which the Reichstag would be virtually dispensed with,is little in evidence now,and Chancellor von Papen has declared that a return to monarchy is not a practical issue, but the parliamentary system of the Weimar Constitution seems destined in the near future for some radical alteration. Given the probable continuance of the von Papen regime for a time at least, what policies are to be Volume 135 Financial Chronicle looked for? The emphasis which has been put upon equality of armaments, and the Chancellor's refusal to participate further in the Disarmament Conference until the principle of equality is conceded, have given color to the charge that the Government was really encouraging a revival of militarism, and that a well-armed Germany was regarded as a preliminary to a general repudiation of the restrictions of the Versailles Treaty. The Chancellor's own statements afford little support for this allegation, and his remarks on Tuesday, at a luncheon of the foreign press correspondents, regarding the French arms proposal, certainly suggest that discussion may be revived. "The French plan," he is quoted as saying, "apparently assumes that all European Continental States will receive equal armies. That appears thoroughly worthy of discussion from the German standpoint." "The French Government," he said later, "apparently goes on the assumption that only similar military systems and similar weapons will make the armies of different nations actually comparable. I deem this standpoint a great step forward." As the arms question is at the moment the only issue of foreign policy that causes foreign chancelleries to look upon the Reich with apprehension, a clear intimation that it has not passed beyond the limits of friendly debate is welcome. As a matter of fact, it is the domestic rather than the foreign situation that may properly give the von Papen Government most concern. A recent decision of the Supreme Court at Leipzig, declaring that the Prussian Ministry which was suspended by decree last July still has legal existence, with the sole right to represent Prussia in the Reichsrat or Upper House, blocks what appears to have been the plan of the von Papen Government to submit proposed constitutional amendments to the Reichsrat instead of to a popular vote—a course which would now be precarious because Prussia has 26 of the 66 members of the Reichsrat. Recent tax exemptions granted to industries bid fair to work a serious diminution of revenue, and a budget deficit of some 750,000,000 marks for the next fiscal year is predicted. The Communists are still a menace, chiefly because of their appeal to the unemployed, and the burden of unemployment relief, while varying somewhat from week to week, continues to weigh dispairingly upon the National Treasury. Some clarification of the principles involved in unemployment relief, applicable in general to all countries in which the dole system has been established, is afforded by the report of the British Royal Commission on Unemployment Insurance made public on Monday. The Commission, which has been studying the question for two years, finds that the Government has underestimated the number of unemployed, and that under a hand-to-mouth policy the "interests both of employers and employed have been sacrificed to political expediency." The dole system, however, is upheld as the "first line of defense over a large part of the field of employment for a great majority of the unemployed," and an extension of the system to include domestic servants is recommended, together with separate provision for agricultural workers. In place of the present fixed period of twenty-six weeks in any one year for which relief may be given, minimum and maximum periods of thirteen to thirty-nine weeks are proposed, with assistance available for all industrial workers under 63 years who are involuntarily unemployed and are 349 not on strike, the cost to be borne chiefly by the national Treasury with supplementary aid from local authorities. The administration of the dole, however, the Commission recommends, should be taken out of politics and intrusted to an advisory commission, and the complicated body of laws and regulations reduced to a single workable act. With a reorganized system of administration, and on the assumed basis of 3,000,000 unemployed (the number reported on Nov. 2 was 2,710,944), the Commission is able to point to a possible saving of about £13,000,000 annually. The present debt on the dole account, amounting to £115,000,000, it is recommended should be transferred to a separate account and paid off over sixty-five years, the amortization being included in the annual cost of £81,670,000 which it is estimated the system should cost. Both Prime Minister MacDonald and Chancellor von Papen are quoted as looking to the World Economic Conference to point the way out of economic chaos. The hope would have had a more encouraging basis if the program committee of the Conference, unable to agree upon the items of an agenda at Geneva, had not adjourned until January. We have not been in accord with those who have expected great things of the Conference, especially since Great Britain, by putting into effect the Ottawa agreements, has rendered itself unable to do much in aid of tariff reductions in other countries. It is more than ever apparent, we think, that national rather than international effort offers the surest way out of the present depression. The test of the "authoritarian" regime to which Germany is apparently to be subjected, now that another election has failed to resolve the Reichstag muddle, will be found in the ability of the Government to accomplish, without the aid of the Reichstag, the things that Germany needs for its national well being, and to persevere whether the Economic Conference meets or not. The Race Against Time. Some pessimists say that a railway company gains nothing by exceptional swift service, and that passengers, as a rule, do not wish to travel faster than 45 miles an hour, inclusive of stops. If their assertions are well founded, and the same amount of traffic could be secured with slower trains, a considerable economy might be effected. The prevailing opinion among railway experts, however, appears to be that quick service, provided that it is also safe, attracts traffic, and that the reputation which a railway company acquires benefits even the slowest accommodation trains. For various economic reasons the speeds of some of the fastest passenger trains in this country to-day do not compare with the speeds maintained before the war, nor even 12 years ago; nevertheless, during the past year or so many of the slower trains have been accelerated and the number of fast trains increased. On the whole, therefore, there has been considerable progress made recently in furnishing quick transportation by rail, even without the whirlwind performances of some of the "midnight flyers" in days gone by. For a number of years the 18-hour trains of the New York Central and the Pennsylvania railroads, the most notable trains in the world, have maintained their remarkable schedules between New York and Chicago. The Empire Stale Express of the New York Central, which runs 439 miles at an average rate of 3220 Financial Chronicle Nov. 12 1932 —long distances at high speeds. France has 125 runs 4 miles an hour or at an average hourly speed of 561/ over, with a total length of 11,380 miles. The United States has more runs at these speeds, but their length is only two-thirds of that of the French. France has 27 runs at 591/ 2 miles per hour and over, covering 3,131 miles, but, here again, although the United States has more runs, the French mileage is 40% above the American. It is concluded that the greatest efforts to increase the speeds of passenger trains have been made in France and Great Britain. More startling results have been obtained in Canada and the United States —the former has four runs with a total length of 380 miles, and the latter seven runs totaling 260 miles, and the average speeds on all these is 621/ 2 miles an hour. These striking facts which have been shown relative to the speed and frequency of passenger trains in the United States and several other countries are not given with the intention of comparing train speeds in the several countries, but merely to show how the railroads here and abroad are striving daily to give their patrons whatever they are willing to pay for by way of convenience and speed in passenger service. The speed question has its romantic side and its sporting side, but in the final analysis it comes to a business proposition. If it is bad business, naturally, the railways want nothing of it. Sixty miles an hour is fast enough for any person to ride, fast enough, anyway, for all practical purposes. The day may CRACK TRAINS ON BRITISH RAILWAYS. come when trains will be run by electricity on a For a really magnificent exhibit of regularly main- single rail at the rate of 100 miles an hour, or, in tained high-speed service—one which provides a de- other words, will convey passengers from New York cided public benefit—England without a doubt to San Francisco in about 30 hours. At that rate of stands alone; for her populous cities afford a dense speed, provided tunnels can be carried under the passenger traffic to support it. The Great Western ocean, a train could go around the world at the Railway in that country recently regained the record equator, a distance of 24,000 miles, in 10 days. That, for the fastest start-to-stop journey in the world, of course, shall never be. / 4 miles when the "Cheltenham Flyer" covered the 771 2 minues. This from Swindon to Paddington in 591/ States at Conflict Over Trucks. speed of 78 miles per hour compares with the 69.3 the regular service. Genfor The recent short but sharp controversy between miles per hour allowed erally speaking, the British passenger locomotives two adjoining sovereign States, Pennsylvania and are capable of faster speeds than those for which New Jersey, as to the right of a motor truck for hire, they are scheduled, and considering this fact, it having a license in one State, to use the highways would seem highly desirable to shorten the time of of another State, centres public attention upon a travel in view of the competition of other forms of controversy which is of growing importance and is transport, but investigations carried on in that coun- likely to be made a subject of legislation at the try have revealed that it would not be commercially coming session of Congress. It will be proposed to justifiable. give the Inter-State Commerce Commission authority In Canada, the actual time of the "International to regulate the motor trucks and possibly motor Limited" between Toronto and Montreal is exactly buses engaged in inter-state business. As the Com360 minutes. From this, however, 40 minutes must mission already has its hands full in the administrabe deducted on account of the necessary slowing tion of affairs pertaining to the steam railroads, down,starting and dead time at four scheduled stops, there is a possibility that truck and bus regulation which leaves the actual running time 320 minutes for may be referred to a newly constituted commission the 334 miles, or at the rate of 571/ 2 miles per hour— or provision will be made for a sub-commission of the fastest time for any train in the world for a com- some sort to act in conjunction with the Inter-State parable distance. Commerce Commission. The average speeds of French trains are very high; The Keystone State once created considerable exfor instance, the Sub-Express from Paris to Bayonne citement by the so-called "Whiskey Rebellion" and easily holds the world's record for a run of that dis- Pennsylvania's present militant Governor appar4 miles ently likes nothing better than to participate in a tance, 488 miles at an average speed of 531/ an hour. The train from Quevy to Paris, 145 miles, fight. 2 miles an hour, holds The subject of truck and bus regulation came with an average speed of 601/ the record for the average speed of a train on a com- before the Pennsylvania Legislature at its last sesplete journey in any one 'country. The character- sion early this year. Stringent bills were advocated istic of French trains is the same as that of English by the railroads and backed by railroad labor organi51.7 miles an hour, has been running for 39 years, and is universally regarded as one of the safest longdistance trains in the world. During the past five or six years all of these trains have been made heavier by putting on additional cars, and yet the speeds have been maintained or slightly improved. The fastest trains in this country are in the short. distance class and operated between Camden, N. J., and Atlantic City, N. J. On this run the Philadelphia & Reading Railway has trains of 10 to 12 all. steel cars running at the rate of 621/ 2 miles on hour; the Pennsylvania average over a slightly longer route is 60.7 miles per hour. These runs, while slower than formerly, are still the fastest in the country. It is quite true that there were more fast trains running over long distances 30 years ago than there are to-day, and the managements only "put the soft pedal" on such performances because they did not pay. In spite of the huge decline in passenger traffic and revenues, the day has long since passed when it was considered good policy to run abnormally fast trains merely for advertising purposes. The ideal aimed at to-day is to make every train pay its own way and get over the journey with the least possible disturbance to the schedules of other trains. The American railways to-day are doing everything they can to give their patrons whatever they are willing to pay for by way of convenience and speed in passenger service, but it is not likely they will ever attempt to "lay out the whole road" for the benefit of some exceedingly fast train that the public will not support. Volume 135 Financial Chronicle zations, the argument being that it was entirely unfair to the rail-carriers, which are heavily taxed to construct and maintain public improved highways, to permit the use of these highways to competitors of the railroads for a nominal consideration. Bills to regulate the vehicle transportation were opposed not only by the companies owning trucks and buses but by manufacturers of such vehicles, farmers organizations, oil companies and truck operators. After extended hearings the Legislature authorized the requirement of a Pennsylvania license for any motor truck licensed in another State which undertakes to operate for hire in Pennsylvania. Governor PInchot determined to enforce this new • authority by using the State police to stop all Motor trucks for hire licensed in New Jersey at the eastern boundry of Pennsylvania. The situation was easily controlled as the State of New Jersey is entirely separated from Pennsylvania by the Delaware River and all highway traffic from New Jersey has to pass either by way of bridges or ferries, and there are comparatively few links of either kind. The Delaware River bridge, extending from Philadelphia to Camden, was the chief scene of the trouble which followed. Pennsylvania State Police held up traffic at the western end of the big bridge and turned back to New Jersey all prospective violators of the Governor's edict. 'Promptly in retaliation New Jersey police stationed at the eastern end of the bridge turned back trucks from Pennsylvania attempting to enter New Jersey. This scene was enacted in lesser degree at each of the other points of entrance to New Jersey, utmost confusion and costly delay. resulting. As New Jersey lies between Philadelphia and other populous cities of Pennsylvania and New York City there is a very heavy daily traffic in either direction across New Jersey and consequently the situation was intolerable, causing loss of perishable goods by delay. Some of the other boundary States followed New Jersey's example of retaliation, but they had means of circumventing Pennsylvania by traveling through other States and the annoyance was not marked. Pennsylvania is not alone in the construction of improved highways. New Jersey has expended millions upon her roads and for the removal of grade crossings, affording easy, rapid and comparatively safe access to the State's summer resorts not only on the Atlantic coast but in Northern New Jersey. Delaware has some splendid highways and so has Ohio. There must be reciprocity among all of the States as to common use of the highways, each State imposing an adequate license or other tax upon the vehicles of its respective territory. The Federal Constitution provided for the free exchange of commodities among the States by prohibiting local tariff laws and the document sets an example for this generation to follow. There is no question that the railroads are very heavily taxed by the States which they traverse and it is therefore unfair not to afford them proper protection by putting other transportation companies upon a basis of cost so far as taxation is concerned equal to that exacted of the steam carriers. Each kind of common carrier has advantages for shippers which excel' those of rivals. One form of traffic may be best handled by the railroads and another by the trucks and buses. Under proper regulation there should be a good and profitable field for each sort 3221 of carrier, resulting in splendid service for the public. This summer it was fully demonstrated that harm would follow the blockading of highways in the West so as to interfere with the transportation of farm products from one State to another. A serious misunderstanding of any kind among States will be contrary to the spirit of the Constitution. There must be proper ways to adjust the problems of transportation and no doubt they will be satisfactorily solved during the coming year. The Official Returns of the British Railways The official annual returns published by the Minister of Transport _provide a valuable analysis of the position of the British railways in 1931, and doubtless will be of especial interest to those who are interested in the transportation industry. The gross revenues amounted to £170,158,536, compared with £184,836,382 in 1930, a decrease of £14,677,846, the principal reductions being in freight and mineral traffic and third-class passengers. Receipts from merchandise—excluding classes 1 to 6—declined by £3,835,248,from minerals and merchandise in classes 1 to 6 by £2,379,335, and from coal, coke and patent fuel by £2,531,910. The most significant fact revealed by these figures is that the greater proportion of loss in revenue occurred in the low-class traffic not particularly susceptible to road competition, a point which has recently caused much concern in connection with the possibility of readjusting the rate schedules. On the other hand, operating expenses declined from £147,595,684 in 1930 to £136,858,604 in 1931, a saving of £10,737,080. The chief reductions were attributed to the operation of locomotives and traffic expenses, maintenance of way and structures and equipment. The economy effected in locomotive operation and traffic expenses was due to reductions of salaries and wages in connection with the award of the National Wages Board, which came into force at the end of March, and there was also a saving of £470,000 assigned to fuel for the operation of steam trains. The operating ratio increased from 79.85% in 1930 to 80.43% in 1931; in 1929 the ratio stood at 77.43%,and in 1928 at 79.12%. The total net revenue derived from the railway and ancillary businesses in 1931 was £33,632,047, compared with £38,044,598 in 1930, a decrease of £4,412,551. This decrease occurred mainly in the net receipts from railway operation which, at £33,299,932, showed a reduction of £3,940,766. The net revenue for last year amounted to £37,561,745, which compared with £42,007,256 in 1930; and the amount assigned to the payment of interest and dividends was £38,350,533, as against £43,749,671 in 1930, representing 3.23%, and 3.68% upon the total capitalization. With regard to the investments of the four large railway companies in highway transportation, it is stated that at the end of 1931 the amount expended in that direction totaled £9,451,232, compared with £7,940,371 at the end of 1930. Profitable returns were secured from these investments: in the case of the London Midland & Scottish, the net revenue for 1931 was £214,271; for the London & North Eastern, £160,657; for the Great Western, £70,053, and for the Southern, £2,930. An analysis of the operating statistics reveals a decrease in locomotive-miles of 23,813,862 or 3.96%. Passenger train-miles decreased by 1.44%, freight Financial Chronicle 3222 Nov. 12 1932 train-miles by 6.07%, switching miles by 6.88%; percentage of receipts derived from reduced and these figures reflecting the results of the depression. from ordinary fares: in 1924 the percentages stood Another point of interest is that while steam loco- at 34.41 from reduced fares (excluding workmen's motive-miles decreased by 25,194,006 miles, or 4.62%, and season tickets) and 65.59 from ordinary fares. the mileage run by electric locomotives increased In 1931 these figures stood at 61.79 and 38.21 reby 1,444,843, or 2.57%. The hours during which spectively, the distribution having practically been locomotives were in, service were reduced by 5.78%. reversed within the past seven years. The incidence of motor truck competition over Despite the adverse conditions, however, the comshort distances is again reflected in the average panies succeeded in establishing a new record for length per of haul. For all descriptions of traffic the operating efficiency. Passenger train-miles 14.72% London, to 1930 Midland & Scottish figure increased from train-hour increased from 14.59% in 47.89 in 1930 to 49.10 last year; the London 11.66. miles to 11.55 from in 1931, and per locomotive-hour & from North from 41.94 to 43.34; the Great increased Eastern train-hour per Freight train-miles Western from 41.22 to 42.61; while the Southern 8.83 to 9.11 and per locomotive-hour 3.53 to 3.61. A study of the traffic statistics reveals that the unit fell slightly from 41.62 to 41.39. It is pointed out that the impression to be drawn total number of passengers carried decreased by 4.66% compared with 1930, and revenues from that from the returns is that, while the railway position source were lower by 7.39%, the higher ratio of de- is bad, it might be infinitely worse. But, so far as crease being attributable to the extended use of cheap operation is concerned the statistics disclose an fares. An interesting comparison is made of the eminently efficient railway system. Gross and Net Earnings of United States Railroads for the Month of September There are at last indications of a change for the better in the returns of earnings of the railroads of the United States. No evidence of this change is as yet discernible in the case of the gross revenues, which still run heavily behind those of the previous year, following very severe shrinkage in the two years preceding, but very drastic reductions appear in the expense accounts, with the result that the greater part of the further falling off in the gross revenues is now being offset by curtailment of expenses, speaking of the roads collectively, while for many separate roads this saving in expenses has been of such magnitude as to work an actual gain in the net results in face of continued contraction in the gross revenues. In saying this our remarks are predicated on the character of the comparisons for the month of September which form the basis of the tabulations in the present article. Presumably the curtailment of expense outlays will continue in succeeding months and before long a point ought to be reached where new losses in gross revenues will terminate (and perhaps be replaced by gains in gross under an improvement in trade and business and concurrently larger tonnage) and then the reduction in expenses will count for its full amount as a gain in the net earnings. That time may be nearer than is generally supposed and when it actually arrives there will be occasion for real rejoicing for the first time in a period of unparalleled depression in trade continued for nearly three years, or since the stock market crash in October 1929. The further contraction in the gross revenues in September was of large proportions and in that respect no improvement has yet occurred. Stated in brief, our tabulations for September register a decrease in the gross revenues from operations the present year in the sum of no less than $77,612,781 or 22.19%, and this comes after a decrease of no less than $117,073,774 or 25.07%,in September 1931, compared with the year preceding, and in turn follows a loss in September 1930 as compared with September 1929, of $99,634,540 or .18.64%. But whereas the net earnings last year recorded a contraction of $55,161,214 or 37.41%, after a contraction in September 1930 of $36,255,079 or 19.75%, the further contraction in the net in September the present year amounts to no more than $9,060,608 or 9.83%. Even as it is the showing is a decidedly poor one, both in the net earnings and in the gross earnings, after three successive years of decline, but nevertheless at least this slight change is welcome. That some such qualifying remark is called for will appear when we say that for September 1932 the gross is now down to $272,049,868, as against $566,461,331 in September 1929, the total having thus been cut in two, and that the net earnings for September 1932 are no more than $83,092,939, as against $183,486,079 in September 1929, there having accordingly been a clean cut of over $100,000,000 in the net for this one month alone. 1932. 1931. Inc. (+) or"Dee. (—). Month of September— 242,292 242.143 +149 0.01% Mlles of road (168 roads)____ $272,049,868 3349 662 649 —877.612 781 22.18% Gross earnings 188.958,929 257.509,102 —68,552.173 25.93% Operating expenses 69.46% 73.65% —4.19% Ratio of expenses to earnings_ Net earnings 883,092,939 892,153,547 —39,060,608 9.83% The further prodigious loss in the gross earnings in the month the present year, we need hardly say, followed from intensification of the business depression, which was necessarily attended by additional losses of traffic. Evidence of this further dwindling in traffic is to be found on every side, the same as in previous months. The automobile industry has of course suffered most and while the output of automobiles in September last year had been deemed very small when the record showed the number of motor vehicles turned out during the month as having been only 140,566 cars as against 220,649 in September 1930 and 415,912 in September 1929, the September total the present year was to witness a still smaller figure at 84,141, or only a little more than one-fifth that of three years ago. For the nine months ending September 30 the present year the automobile production has been only 1,157,029 vehicles, against 2,119,188 in the nine months of 1931; 2,909,130 in the nine months of 1930, and 4,640,823 in the corresponding period of 1929; In other words, nearly 3,000,000 less cars were turned out in the nine-month period the present year than in the corresponding period in 1929. And this affords an idea of the way business depression has Volume 135 Financial Chronicle 223 The loading of railroad revenue freight furnishes been proceeding with the toll in diminished output a composite of these various items of freight as well all the time growing larger. The collapse of the iron and steel trades has been as of all other items of freight, and from statistics no less pronounced and of course the setback en- compiled by the Car-Service Division of the Americountered in the automobile industry has been a can Railway Association, it appears that for the strong contributing factor to the depression in iron four weeks ended Sept. 24 the loading of revenue and steel. In September 1932 the steel ingot pro- freight on all the railroads of the United States comduction in the United States reached only 975,061 prised only 2,244,599 cars, as against 2,908,271 cars tons, as against 1,545,411 tons in September 1931; in the same four weeks of 1931;3,725,686 cars in 1930 2,840,379 tons in September 1930, and no less than and 4,542,289 cars in the corresponding weeks of 4,527,887 tons in September 1929. In September 1929. In the case of the separate roads and systems, the 1932 the daily product was only 37,502 tons, as against 59,439 tons the daily product in September exhibits are in consonance with the showing for the 1931; 109,245 tons per day in September 1930 and railroads as a whole in recording heavy losses in 181,115 tons per day in September 1929. The make gross earnings on top of the huge losses in the two of iron in the United States in September 1932 preceding years, but differ as far as the net earnings aggregated only 592,589 tons, against 1,168,915 tons are concerned in revealing, as already indicated in in September 1931; 2,276,770 tons in September the earlier portions of this article, numerous in1930, and 3,497,564 tons in September 1929, the stances where the 1932 losses in the gross revenues product the present year having been only a little were converted into gains in net earnings through more than one-sixth that of three years ago. curtailment of operating expenses. Among the roads The shrinkage in the quantity of coal mined has so distinguished may be mentioned the New York . also been extremely heavy, though less proportion- Central, the Illinois Central, the Louisville & Nashately than in the case of iron and steel. Only 26,- ville, the Wabash,the Atlantic Coast Line, the Erie, 314,000 tons of bituminous coal were mined in this the Western Pacific, the Yazoo & Mississippi Valley, country in September 1932, as against 31,919,000 the Chicago, Milwaukee, St. Paul & Pacific, the New tons in September 1931; 38,632,000 tons in Septem- York Chicago & St Louis, the Chicago St. Paul ber 1930 and 45,334,000 tons in September 1929. Minneapolis & Omaha and the Alton Railroad, this The production of Pennsylvania Anthracite was 4,- covering all instances where the improvement in 108,000 tons in September 1932 compared with 4,- the net has reached $100,000 or over. In the case 362,000 tons in September 1931; 5,293,000 tons in of the New York Central, the increase amounts to September 1930 and 6,543,000 tons in September $1,235,965 and this is in face of a shrinkage in the 1929. gross of $7,270,805. If we were to include the PittsBuilding operations were of course on a greatly burgh & Lake Erie and the Indiana Harbor Belt, the reduced scale, having suffered severe restriction dur- result would be a decrease of $7,720,129 in gross with ing the whole of the period of trade depression and an increase of $1,249,099 in the net. This follows keeping all the time dwindling to smaller and still a loss of $10,667,464 in gross and of $4,076,327 in smaller figures. Building permits in 576 cities and net in September 1931 and $11,468,783 loss in gross towns of the United States during September 1932 and $4,761,499 loss in net in September 1930. The represented a contemplated outlay in the sum of Pennsylvania Railroad reports no less than $9,only $36,036,718 against $94,843,079 in September 996,130 decrease in gross, with only $776,807 de1931; $168,680,637 in September 1930 and $218,- crease in net in September the present year, after 009,891 in September 1929, according to the compila- $11,532,845 decrease in gross and $4,071,327 decrease tions prepared by S. W. Straus & Co. The compila- in net in September 1931 and $13,395,843 decrease tions of the F. W. Dodge Corp. tell a similar story. in gross and $5,300,699 decrease in September 1930. From these it appears that the construction con- In other sections of the country, the comparisons are tracts awarded in September 1932 in the 37 States much the same a heavy shrinkage in gross the present East of the Rocky Mountains involved an outlay of year following severe shrinkage likewise in each of no more than $127,526,700 as compared with $251,- the two preceding years, but with quite a number 109,700 in September 1931; $331,863,500 in Septem- of instances of improved net (sometimes for only ber 1930, and $445,402,300 in September 1929. Lum- insignificant amounts) as already mentioned. In ber production suffered correspondingly. In the five the following we show all changes for the separate weeks ended Oct. 1 1932, the cut of lumber in the roads and systems for amounts in excess of $100,000, case of 592 mills reporting to the National Lumber whether increases or decreases, and in both gross and Manufacturers' Association was 540,050,000 feet net. As a matter of fact, however, no increase for against 839,275,000 feet in the same period of 1931. that amount appears in the gross. This was a reduction of 36% and if the comparison PRINCIPAL CHANGES IN GROSS EARNINGS FOR THE MONTH OF SEPTEMBER 1932. were extended back to 1930 it would be found that Decrease. Decrease. Pennsylvania RR $9,996.130 Wabash $722.099 the reduction for the two years combined had been New Iork Central a7 270,805 Northern Pacific 715.931 Baltimore & Ohio 4.81C.035 Missouri-Kansas-Texas _ 631.580 Pacific(2 rds.)_ 4,106,011 Lehigh Valley 55%. As it happens, the Western grain movement Southern 631.861 Atch Top & S Fe (3 rds). 3.809.551 Delaware & Hudson 613.727 Union Pacific (4 roads)__ 2.883,092 Seaboard Air Line was somewhat larger the present year than it was Is 613.623 Y N II & Hartford__ 2,205.866 Bessemer & Lake Erie_ 58'4.416 Chicago & IN orth West__ 2.103.795 Is Y Cnicago & St Louis.. last year, though it still failed to come up to that of Chicago 563.577 Burl & Quincy__ 2,101.781 Central RR of New Jer_ _ 561./39 Chesapeake & OW 1,725,607 Denver & Rio Or West 476 914 two years ago. We give the details of the Western Chicago El & Pac(2Lines his) 1.663,24C Chicago Great Western_ _ 441.009 Reading Company 1.6L7,078 Pere Marquette 413.763 grain movement in a separate paragraph further Great .o.orthern 1.501.684 Grand Trunk Western__ 403,273 Norfolk & Western 1.507,740 Texas & Pacific 380,812 along in this article and will only say here that for Duluth Missabe & Nor__ 1,430.381 Central of Georgia 364.346 Southern Ry 1,418.131 Coloraic & Sou 362.579 (2 roads) the five weeks ended Oct. 1 1932 the receipts at Missouri Pacific 1.267,594 Virginian 356.020 Louisville & Nashville__ 1,153.452 Maine Central 348.718 the Western primary markets aggregated 86,484,000 Erie RR (3 roads) 1.088,509 Los Angeles & Salt Lake.. 341,197 Chic Milw St P & Pax_ _ 1,045.492 Pittsburgh & Lake Erie_ 332.125 bushels as compared with 70,211,000 bushels in the Boston & Maine 1,030,921 Yazoo & Miss Valley --310.244 St Louis-San Fran (3 r la) 298.439 934,961 Internet Gr.st Northern corresponding five weeks of 1931 and 124,545,000 Illinois Central 293.129 900,895 Elgin Joliet & Eastern__ Del Lark & Western 288.079 843.645 Kansas City Southern__ Long Island bushels in the same five weeks of 1930. 274.112 759,348 Alton RR Atlantic Coast Line Southwestern__ 737,240 St Louis 252.844 Financial Chronicle 3224 Decrease. Decrease. Union RR (of Penna)___ $ 248.435 Illinois Terminal Co....,, $148,197 143.054 237,634 Bangor & Aroostook... Chic N 0& Tex Pac__-134,610 232,711 Norfolk Southern Chic Ind & Louisville_ __ 137,855 226,034 Chicago St P Minn & Om Wheeling & Erie___ 132,796 201,658 Northwestern Pacific Minn St P & S S Marie__ 128,867 175,065 Rico Fred & Potomac.. Chicago & Eastern all__ 127,887 166,585 Term RR Assn of St L Nash Chatt & St Louis__ 117.199 Belt Harbor Indiana (3 Mex & Texas rds) 0 N 161.000 Louisiana & Arkansas__ 158.556 Western Maryland 157.511 $74.797,589 Total (85 roads) 148,295 Alabama Great Soutaern a These figures cover the operations of the New York Central and the leased lines-Cleveland Cincinnati Chicago & St. Louis, Michigan Central, Cincinnati Northern and Evansville Indianapolis & Terre Haute. Including Pittsburgh & Lake Erie and the Indiana Harbor Belt, the result is a decrease of $7.720.129. PRINCIPAL CHANGES IN NET EARNINGS FOR THE MONTH OF SEPTEMBER 1932. Decrease. Increase. 776,807 New York Central a$1.235,965 Pennsylvania RR 614,454 Illinois Central 862.987 Chicago Burl & Quincy_ _ 521.107 Louisville & Nashville 565.649 NY NH & hartford.. .178.885 roads).. (2 Pac & I R Chic 494,775 Wabash 401,422 312,555 Delaware & Hudson____ Atlantic Coast Line 398,480 Erie (3 roads) 308.768 Bessemer & Lake E:ie_ 386.057 280.707 St Louis San Fran (3 rds) Western Pacific 280,581 160,792 Virginian Yazoo & MISR Valley 254.286 140,067 Norfonk & Western Chic Milw St P az Pac__ 241,359 N Y C _icago & St Lou's., 128,728 Chicago Great Western_ 238.750 109,742 Kansas City Southern Chic St P Minn & Om_ 221,458 105.301 St Louis Southwestern__ Alton RR 208,275 Missouri-Kansas-Texas__ 186,817 Island Long $4.706,036 roads) (14 Total 183.816 Decrease. Boston & Maine 179,451 Atch Top & S Fe (3 rds)- $1,637.458 Denver & B G Western_ 128,938 Union RR of Penna_ 112,016 Bangor & Aroostook__ r %Pke eo allgri Duluth Missabe & or__ 1,014,469 $13,343,694 Total (33 roads) 982,639 Union Pacific (4 roads)-816.433 Great Northern oith•ANers.:, York Central ams cover the ir Theeige d er4 l an8en -a .2 Michigan lines-Cleveland Terre Haute. InIndian:3pol% Cincinnati Northern and Evansville Indianapolis Erie and the Indiana Harbor Belt, the cluding the ofth$18249%. tsheur cir*eai an InP r When the roads are arranged in groups or geographical divisions, according to their location, the part played by the lowering of expenses on a number of roads and systems is again in evidence. All the different districts, Eastern, Southern and West. ern, as well as all the different regions in each of these districts, again record a further large diminution in gross revenues on top of the big diminution in the two years preceding, but in the case of the net earnings two regions form an exception to the rule, and show improvement in the net due to a lowering of the expense accounts. The two regions thus favored are the Great Lakes region in the Eastern District and the Southern region, as distinguhhed from the Pocahontas region,in the Southern District. Our summary by groups appears below. As previously explained we group the roads to conform to the classification of the Inter-State Commerce Commission. The boundaries of the different groups and regions are indicated in the footnote to the table. SUMMARY BY GROUPS. Gross Earnings District and Region. Inc.(+)or Dec.(-) 1931. 1932. Month of September$ % $ 8 Eastern District-3.896,388 24.29 16,040.525 12.144.137 . _ roads)._ New England region (10 52,451,974 65,862.793 -13,410.824 20.36 Great Lakes region (30 roads) Central Eastern region (25 roads)._ 52,891,239 73.248,339 -20.357.100 27.79 117,487,350 155,151,662 -37,664,312 24.27 Total (65 roads) Southern DistrictSouthern region (30 roads) Pocahontas region (4 roads) Total (34 roads) Western DistrictNorthwestern region (17 roads) Central Western region (22 roads)_ Southwestern region (28 roads). _ Total(56 roads) -7,093,709 18.53 -3,718,234 18.67 31.179,893 16,196,344 38,273,602 19.914.578 47,376,237 58,188.180 -10,811,943 18.58 35,252,012 49,356.971 22,577.298 43,780,150 -8,528,138 19.47 63,485,586 -14,128,615 22.25 29,057,071 --6,479.773 22.30 107,186,281 131,322,807 -29,136,523 21.37 Total all districts(166 roads). _ 272,049,868 349,662.649 -77,612,781 22.19 District and Reeion. Net Earning Month of Sept.- -Mileage--1931. InC.(+) or Dec.(-) 1932. $ % Eastern District1932. 1931. $ $ New England region__ 7,276 7.277 3.433.539 4,334,252 -900.713 20.78 Great Lakes 27.470 27.267 13,922.096 11.968,718 +1,953,378 14.03 Central Eastern region 25,472 25,509 17,317,111 20.159,562 -2.842,451 16.31 60,218 60,053 34,672,746 36,462,532 -1,789,786 4.90 Total SoWhern District39,967 40,026 7,076,617 5,203,268 +1,873,349 36.00 Southern region Pocahontas region__ _ 6,137 6,119 7,868.835 8.400,770 -531,935 6.33 46,104 Total Western DistrictNorthwestern region 48,870 Central Western region 53,933 Southwestern region 33,167 Total 46,145 14,945,452 13,604,038 +1,341,414 9.86 48,877 10,772,580 13,019,418 -2.246,838 17.25 53.839 16.491,296 20.926,224 -4,434,928 21.19 33.229 6,210,865 8,141,335 -1,930,470 23.71 135,970 135,945 33.474,741 42,086,977 -8.612.236 20.46 Total all dIstricts___ 242,292 242,143 83,092.939 92,153,547 -9,060,608 9.83 NOTE -We have changed our grouping of the roads to conform to the classification of the Inter-State Commerce Commission, and the following Indicates the oontines of the different groups and regions: EASTERN DISTRICT. New England Region.-Thls region comprises the New England States. oiest Lakes Region.-This region comprise; the section on the Canadian boundary between New England and the westerly shore of Lake Michigan to Chicago, and north Of a Me train Chicago via Pittsburgh to New York. Nov. 12 1932 Central Eastern Region.-Tble region comprises the section south of the Great Lakes Region, east of a line from Chicago through Peoria to St. Louis and the Mississippi River to the mouth of the Ohio River, and north of the Ohio River to Parkersburg. W. Ye, and a line thence to the southwestern corner of Maryland and by the Potomac River to its mouth. SOUTHERN DISTRICT Southern Region.-This region comprises the section east of the Mississippi River and south of the Ohio River to a point near Renova, W. Va., and a line thence tollosing the eastern boundary of Kentucky and the southern boundary of Virginia to the Atlantic. Pocahontas Region.-This region comprises the section north of the southern boundary of Virginia. east of Kentucky and the Ohio River north to Parkersburg. W. Va.,and south of a line from Parkersburg to the southwestern corner of Maryland and thence by the Potomac River to it mouth WESTERN DISTRICT. Northwestern Region.-This region comprises the section adjoining Canada lying north of a line from Chicago to Omaha and thence Region, west of the Great Lakes to Portland and by the Columbia River to the Pacific. Central Western Region.-This region comprises the section south of the Northwestern Region, west of a line from Chicago to Peoria and thence to St. Louis, and north of a line from St. Louis to Kansas City and thence to El Paso and by the Mexican boundary to the Pacific. Southwestern Region.-Tbis region comprises the section lying between the Mississippi River south of St. Louis and a line from St. Louis to Kansas City and thence' to El Paso and by the Rio Grande to the Gulf of Mexico Western roads, as we have already indicated, had the advantage of a larger grain traffic than in September last year. With the single exception of barley, the increases extended in greater or lesser. degree to all the different cereals. Thus for the five weeks ending Oct. 1 1932, the receipts of wheat at the Western primary markets were 45,001,000 bushels, as against only 43,829,000 bushels in the corresponding five weeks of 1931; the receipts of corn 22,797,000 bushels, against only 10,265,000 bushels; of oats 11,502,000 bushels, against only 8,593,000; but of barley only 1,275,000 bushels as compared with 5,893,000 bushels, and of rye 5,909,000 bushels, against 1,631,000 bushels. For the five items combined the receipts at the Western primary markets for the five weeks the present year aggregate 86,484,000 bushels as against only 70,211,000 bushels in the corresponding five weeks of 1931, but comparing with 124,545,000 bushels in the five-week period • of 1930. The details of the Western grain movement in our usual form are set out in the table we now present: WESTERN FLOUR AND GRAIN RECEIPTS. Corn. Oats. Wheat. Barley. 5 Wks.Ended Flour. (Bush.) (Bush.) (Bush.) (BM.) Oct. 1. (Bush.) Chicago38,000 975,000 1.419,000 13,692,000 2,371,000 1932 1931 1,119,000 2,492,000 3,774.000 2.726.000 564,000 Minneapolis13,994,000 1,120.000 3,686,000 835,000 1932 561.000 1.126,000 2,234.000 11,036,000 1931 Duluth7,000 818,000 14,731.000 281,000 1932 329,000 1,499,000 27.000 1931 437,000 Milwaukee 193,000 11.000 263,000 1,212.000 1932 50,000 401.000 216,000 1,949,000 163,000 2.620,000 1931 Toledo192.000 1,057,000 2.287,000 1932 7,000 65,000 655,000 980,000 7,000 1931 Detroit 69.000 1932 9,000 138.000 278,000 1931 5,000 153,000 82,000 52,000 Indianapolis & Omaha1932 2,188,000 2,680.000 2,035.000 4.000 1931 3,495,000 2,141,000 1,746,000 30,000 St. Louis1932 687.000 24.000 699.000 2,112,000 1,401,000 1931 534,000 258,000 922,000 753.000 3,357,000 Peoria1932 185,000 207.000 146,000 1,361.000 5.000 1931 328,000 954,000 338,000 367,000 245,000 Kansas City1932 132,000 842,000 71,000 5,098.000 1931 414.000 756,000 8,000 9,163,000 St. Joseph389.000 1932 249,000 152.000 1931 293.000 898,000 310,000 Wichita1,734.000 1932 13,000 1931 8,000. 3,301,000 26,000 12,000 Sioux City362,000 19,000 . 26.000 1,000 1932 468,000 126,000 8,000 1931 337.000 Total all1932 1931 Rye. (Bush. 459,000 776,000 2,840,000 726,000 1,032,000 50.000 1,039.000 10,000 3,000 2,000 122,000 52,000 8.000 209.000 5.000 178,000 1,000 7.000 20,000 1.000 1.980,000 45,f01.000 22,707.000 11,50'.00 1,275,000 5,f09,000 2,288.000 43,829.000 10.265,000 8.593.000 5.803.000 1.631.000 The Western livestock movement,• on the other hand, appears to have been somewhat smaller in September 1932 than in the month a year ago, the receipts at Chicago having comprised only 12,339 carloads, as against 15,493 carloads in September 1931; at Kansas City only 6,592 carloads, against 6,736, and at Omaha but 5,763 cars against 6,916. As to the cotton movement in the South, this, so far as the port movement of the staple is concerned, was slightly larger than in the month a year ago, but was very small in the case of shipments over- Financial Chronicle Volume 135 land. Gross shipments overland for the month under review aggregated only 20,166 bales, as against 29,405 bales in September 1931; 49,837 bales in September 1930; 51,520 bales in September 1929; 34,363 in September 1928; 37,429 in September 1927 and no less than 125,751 in September 1926. Receipts of cotton at the Southern outports during September the present year were 1,065,623 bales as against 1,053,908 bales in September 1931; but comparing with 1,649,272 bales in September 1930;1,327,471 bales in September 1929; 1,306,890 bales in 1928, and 1,395,840 bales in September 1927. In the following table we give the details of the cotton traffic for the past three years: RECEIPTS OF COTTON AT SOUTHERN PORTS IN SEPTEMBER 1932. 1931, 1930, AND SINCE JAN. 1 1932, 1931, 1930. September Since Jan. 1. Porta. Ga1veston-Houston, dmNew Orleans.. Mobile Pensacola Savannah Charleston_ ... _ Wilmington_ _ _ Norfolk Corpus Christi_ Lake Charles_ _ Brunswick_ __ _ Beaumont Jacksonville-- _ Total 1932. 1931. 1930. 181,459 401.476 200,851 37,592 13,466 41,000 61,281 7.054 7.151 48,536 64,874 8,100 227,827 446.179 54,047 30,941 7,559 90.830 26,927 4.696 8,352 149,380 2,783 7,170 197,003 1,029,506 655,847 1,355.966 158.303 1,620,190 80,273 335,177 23,469 74,256 209,936 167,973 71.484 112,879 3.293 27,745 20,160 21.747 194,327 266.417 95,557 31,866 31,718 3,239 26.636 9.740 72 1932. 1931. 1930. 500,913 532,031 885,732 1,275.167 540,018 664,619 253.278 183.021 45,256 35,815 271.580 397.829 82,409 161.973 23,620 18,513 46.297 67.856 274.458 512,139 18,781 5.109 37,866 5,398 4,914 8,592 12 1.065.623 1.053.908 1.649_272 5.075.507 2.956.332 3.896 924 RESULTS FOR EARLIER YEARS. It is important to bear in mind that the heavy losses in the last three years-$77,612,781 in gross and $9,060,608 in net in 1932 following $117,073,774 in gross and $55,161,214 in net in 1931, and $99,634,540 in gross and $36,255,079 in net in 1930-do not, as might be supposed, follow large gains in the years immediately preceding. On the contrary, they come after indifferent results in September 1929 and equally indifferent results in September 1928 and decidedly unfavorable results in September 1927. In 1929 our September compilation registered an increase of no more than $9,812,986 in gross, and of only $2,612,246 in net. In September 1928 our tables recorded $9,980,689 loss in gross with $1,711,331 gain in net. In September 1927 there was $26,058,156 loss in gross, and $13,799,429 loss in net. On the other hand, however, our tabulations for September 1926 showed gains then which did not differ greatly from the losses which followed in 1927. In other words, our statement for September 1926 recorded $24,192,709 increase in gross and $14,996,918 increase in net. These 1926 increases, too, came after moderate increases in the year preceding, our tabulations for September 1925 having shown $24,381,000 gain in gross, and $18,026,891 gain in net, notwithstanding that at that time the anthracite carriers had to contend with the strike at the anthracite mines, which served to cut off completely all traffic in hard coal. Even in 1924, which was a period of trade reaction, there was in September of that year only a relatively slight falling off in gross earnings (no more than $5,116,223), while in the net there was no loss at all then, but rather improvement in the large sum of $29,947,793 (expenses having been reduced in amount of $35,064,016 at that time). Moreover, this followed $44,549,658 improvement in gross in September 1923, and $37,441,385 improvement in net. It is true that this notable improvement in 1923 was due in part to the poor exhibit made by the carriers in September 1922, when they had to contend at once with the shopmen's strike and the strike in the unionized coal mines. And yet there was no actual loss in gross even in September 1922, but an increase, though this increase amounted to only $1,723,772, and was accompanied by $29,046,000 decrease in the net, due to the augmentation in operating costs occasioned by the labor troubles referred to. Furthermore, this loss in the net in 1922 came after $11,372,524 gain in the net in 1921, as compared with September 1920. The noteworthy feature about this 1921 gain in the net was that it occurred notwithstanding a tremendous shrinkage in the gross revenues in that year arising out of the great slump in trade and industry which marked the course of the whole of the year 1921. The improvement in net came as a result of prodigious curtailment of the expenditures which was forced upon the carriers in order to offset 3225 the great loss in traffic. .In previous months of that year the extent of the shrinkage in traffic consequent upon the collapse in trade had been in considerable measure concealed owing to the fact that the roads were then getting very much higher transportation rates both for passengers and for freight. In other words, in these earlier months of 1921 the loss in gross revenues because of diminished traffic was in large part offset by the additional revenue derived from higher rates on the traffic which the carriers actually did handle and transport. In September this was no longer the case, for in that month comparison was with a time in 1920 when the higher rates authorized by the Inter-State Commerce Commission in the summer of that year were already in effect. It was estimated at the time when these great advances were made that on the volume of traffic then being handled they would add $1,500,000,000 to the annual gross revenues of the roads, or, roughly, $125,000,000 a month. Deprived of the advantage-in the comparisons-of these higher rates, the naked fact of a tremendous shrinkage in the volume of business then being moved (1921) stood out in all its grimness. The loss, accordingly, aggregated no less than $120,753,579, or not far from 20%. But by dint of great effort, the roads managed to cut down their expenses in the prodigious sum of $132,126,103, leaving a gain in net of $11,372,524. The 12% reduction in the wages of railroad employees which had been in effect since July 1, under the authorization of the Railroad Labor Board, was one fact in the big contraction in expenses; the shrinkage in traffic was yet another factor, and of much larger magnitude, in addition to which railroad managers skimped and pared in every direction, in particular cutting the maintenance outlays to the bone, little repair work of any kind being done that could be deferred. As against the gain in net in 1921, however, brought about in the way indicated, it is important to note that in preceding years very large additions to gross revenues arising either from an increased volume of traffic or from higher rates failed to yield any substantial additions to the net. This remark applies to the results for many successive years of this earlier period, operating costs having steadily risen at the expense of the net. In that respect, the exhibit for September 1920 was particularly disappointing. Great expectations had been built on the benefits to be derived from the noteworthy increase in passenger and freight rates that had then just been put into effect. Gross earnings did reflect the higher rates in an increase of no less than $113,783,775, or 23.68%, but $104,878,082 of this was consumed by augmented expenses, leaving hence a gain in net of only $8,905,693,or less than 10%. In the years preceding, the showing as to the net was equally unsatisfactory. Thus for September 1919 our tabulations registered $9,252,922 gain in gross, but $18,828,861 loss in the net. In September 1918 the gain in the gross revenue reached enormous proportions, the war being still in progress and the volume of traffic extremely large, besides which decided advances in both passenger and freight rates had been made only a few months before. The addition to the gross was no less than $129,367,931, or 36.16%. But this was accompanied by an augmentation in expenses of $126,177,381, or 51.82%, leaving net larger by only $3,190:550, or 2.79%. The year before rising expenses played a similar part in contracting the net results. In that year (in September 1917) there was $33,901,638 increase in gross, but 7,699,654 loss in net, owing to an expansion of 41% million dollars in expenses. In the following we furnish the September comparisons back to 1906: Gross Earnings. Net Earnings. Year. Year Given. 1 1 Inc. (+) or Year Preceding. 1 Dec.(-). Year Given. 1 Inc. 1+) or Year Preceding. Dec. (-). Sept. $ i $ I $ $ $ 1 1906.138,839,986126.782.987 +10.056,999 48,341,798 45,653,884 +2,687.914 1907 _ i41.229.009,128,047,787 + 13,172.222 41.818.855 45.413.3581 -3.594.503 1908 _ 218.929,381 234,228,778 -15.299,397 81,615.313 77.531.878 +4,083.435 1909.246.965 956 219.013.703 +27,052.253 95.443,956 81,858,560 + 13.585.396 1910 _ 256,647.702 246 335.586 +10,312.116 91,580,434 95.449.517, -3,869.083 1911.249,054.036 249,014,234' +39,801 90.720,548 89.398.733 +1,321.815 1912.272,209.629262,318,5971 +19.891,032 96,878,558 90.842.946, +6.035.612 1913.285,050.042275,244,811 +9,805.231 92.847,193 98.000.260 +5,153.067 1914 _ 272,992.901 285.850,745 -12.857,844 92.022,947 91.274.033 +748,914 1915 _ 294,241,340 276,458,199, +17.783,141111.728,27693,181.915 +18,546.361 1916.332,888.990294.333.449 +38,555.541 124,447,839,111,875 296 +12.572.543 1917.. 384,880,086 330.978.443 +33.901,638116.086.103 123,785.757, -7,699.654 1918 _ 487,140.781 357.772,850 +129,367,931 117.470.621114.28 +3.190.550 1919 _ 495,123.397 485.870,475 +9.252.922 98.302,598,117,130.071 -18.828.861 1.459 1920. 594.192.321480,408,546 +113,783,775 102,329,0841 8,905.693 93,423.391 + 1921 _ 496,784,097617.537,676-120,753,579 120,604,462 1922.498,702.275496.978.503 +1,723,772 91,384,503 109,232.938 +11,372.524 1923.544,270,233499,720,575 +44.549,658129,300,309 120.428.552 -29.046 059 91.858.924 +37,441.385 1924 _ 539,853,860544,970,0s3 -5,116,223 159.176,504,129,2 28,711 +29,947.793 1925 _ 564,443,591 540,062,5871 +24,381.004177,2 42.895 159,216,004 + 18,026.891 1926 588,948,933 564,756,924 +24,192,009191,933.148 + 14,996,918 176,936.230 1927 564,043.987 590,102.143 -26,058,156 179.454,277193.233.706 -31,799,429 1928 554,440,541 564.421,630 -9.980.689180,35 9,111178,647,780 -1,711.331 1929.565,816,654555,003,648 +9,812,986 181,413,185 178,800,939 +2,612,246 1930 _ 466,826,791 566,461,331 -99,634,540 147.231,000 -36.255.079 1931 349.821.538 466.895,312-117,073.774 92,217,886 183,486.079 -55.161,214 147,379,100 1932.272.049.868349,662,649 -77,612,781 83.092.939 92,153,547 -9,060,608 Note.-In 1906 the number of roads included for the month of September was 98: In 1907.84;in 1908 the returns were based 00 231,387 236.545 miles; In 191000 240,678 miles; in 1911 on 230,918 miles; miles;in 1909 onmiles; M 1913, In 1912, 237.951 242,097 miles; In 1914, 242,386 miles; In 1915, 245,132 miles;in 1916. 248,156 miles: In 1917, 245,148 miles;In 1918, 232,186 miles;in 1919, 232,772 miles:In 1920, 226.955 miles; In 1921, 235,155 miles; In 1922, 235,280 miles; in 1923. 235,611 miles;in 1924, 235.178 miles; in 1925, 236,752 miles; In 1926, 236,779 miles; in 1927, 238,814 miles; In 1928. 240,693 miles; in 1929. 241,704 miles; in 1930, 242,341 miles; In 1931. 242.815 miles: in 1932, 242,292 mlies. 3226 Financial Chronicle Nov. 12 1932 The New Capital Flotations During the Month of October and for the Ten Months Since the First of January The new financing done during October was again of meagre and $450,000,000 comprised an offering of Treasury notes proportions, the total falling even below that of the pre- running for 43/i years and bearing 3% interest, and on ceding month, and it is necessary to again repeat what we which the allottments reached $508,338,600, $333,492,500 have said in previous reviews, namely that ordinary financ- of which was to retire Treasury certificates of indebtedness ing now holds a decidedly subordinate place to the financing maturing Oct. 15 1932, leaving $174,846,100 as an addition to the public debt and representing strictly new capital in done by the U. S. Government. Accordingly, in any the investment market. As showing the popularity of analysis and review of the demands made upon the money these Government offerings running for a fairly long date, and investment markets consideration must first be given we may say that the total cash subscriptions for these 43 to the new issues brought out by the U. S. Government. year Treasury notes footed up no less than $8,368,343,700. Then also much of the financing formerly done in the ordinary New Treasury Offerings During the Month of October 1932. way through corporate undertakings and by States and On Oct. 3 Acting Secretary of the Treasury Ballantine municipalities is now being done by the United States through announced an offering of $75,000,000 or thereabouts of the Reconstruction Finance Corporation and other Govern- 92-day Treasury bills. The bills were dated Oct. 11 1932 ment agencies. It should.not beforgotten, either, that the and mature Jan. 11 1933. The total applied for was United States presents its offerings in very tempting form, $259,468,000. The amount accepted was $75,954,000. The average price was 99.951, the average rate per annum stripping them of all requirements to pay income taxes, on a bank discount basis being 0.19%. The financing not merely the normal income taxes, but the surtaxes as provided for the retiring of $50,278,000 of Treasury securiwell, an important consideration now that the income tax ties, the rest representing new money. Mr. Ballantine on Oct. 5 announced, as already stated, rates have been very greatly raised. As a result of all this, new financing by the United States an offering of $450,000,000 or thereabouts of 3% Treasury now represents larger new debt creation than all other sources notes (series B-1937) which were heavily oversubscribed. The notes were dated Oct. 15 1932 and mature April 15 of new capital issues combined. The shrinking in the volume 1937. The total amount applied for was $8,368,343,700. of new capital issues brought out in the ordinary way is of The amount accepted was $508,338,600. Issued at par. course easily explained. It is due to the fact that general The financing provided for the retiring of $333,492,500 of investment and market conditions have continued highly Treasury obligations, the remainder constituting new debt. _ An issue of $75,000,000 or thereabouts of 91-day Treasury unfavorable, making it_risky business.to _undertake,the floating of new securities, even those of a very choice.type. bills was announced by Mr. Ballantine on Oct. 12. The bills were dated Oct. 19 1932 and will mature Jan. 18 1933. In a measure also, the Government has really, been preThe total amount applied for was $252,465,000. The empting the ground and certainly it has been occupying amount accepted was $75,110,000. The average price was the investment field to the disadvantage of ordinary financ- 99.965, the average rate on a bank discount basis being ing, a matter of.'no Small:consequence,-especially.in view of 0.14%. This marked a record low interest rate on Governthe fact that owing to the prevailing,loss of confidence in ment borrowing of this description. Issued to replace security values generally, the demand on the 'part of the maturing bills. Secretary of the Treasury Mills on Oct. 19 announced a investing public has been almost entirely for the highest and new offering of 91-day Treasury bills in the amount of best type of security investment-and obviously nothing $80,000,000 or thereabouts. The bills were dated Oct. 26 could be higher or better than a United States obligation, 1932 and mature Jan. 25 1933. The total amount applied though that does not mean that such an obligation may not for was $227,202,000. The amount accepted was $80,suffer sharp depreciation on occasions, as the investor has 295,000. The average price was 99.951, the average rate on a bank discount basis being 0.0%. Issued to replace learnt from sad experience. maturing bills. In recent months certainly, U. S. Government financing In the following we show all the Treasury financing back has been of far larger magnitude than the ordinary financing to the first of January. The result is found to be that the as represented by the borrowings of corporations, munici- Government disposed of $7,187,724,600 during the 10 months palities, farm loan emissions and the like. Therefore we to Oct. 31, of which $4,128,205,500 went to take up existing now pursue the practice of dealing with it before dealing with issues, and $3,059,519,100 constituted new debt. FINANCING DURING FIRST TEN our compilations relating to ordinary financing. In any UNITED STATES TREASURY MONTHS OF 1932. study of new financing the important point is to know Dalt Amount Amount how much of the financing represents distinctly new capital, Verret. baled. gee,pod. 19(1(144 for. Due. Illee. Yield. ---- -- as distinguished from issues made to provide for the taking Ian 7 Ian. 13 11 days 4169.337.000 350,176,000 Average 90.272 '2.875% Ian 17 Ian. 25 93 days 191.581,000 50.937.000 up and retiring of issues already outstanding, ana which Ian. 25 Feb • 1 6 ['loathe. 395,9311.500 227,631.000 Average 99.35S "2.40% 100 3.128% lain. 250.148.000 144.372.000 1 1 year 100 3.76% are to be replaced by the new issues. And this is par- Ian. 231 Feb. Feb. 8 93 days 196.673.000 76,399,000 Average 99.314 '2.655. F'eb. 7 'eh. 15 93 days 211.872.000 76.689.00e Average 99.287 '2.70% ticularly true with reference to the placing of U. S. Govern- Feb. II. Vet). 24 91 days 196.183,C00 62.851.000 Average '2.71% 1..30. 292.984.000 101.412 000 Average 99.3IP Mar. 2 91 days 99.360 .2.30% ment securities. Treasury bills are all the time maturing, Mar. 245 Mar a28.000,000 628.000.000 hi 1 year 100 2.00% Mar. 6 Mar. Ii 7 months 952.619.500 333.492.50( 1011 3.126% having a life usually for only 90 to 93 days, and have to Mar. e mar. In 1 year 2.450.1106.001 660,653,5m 100 3.76% Star 23 Ater. 2011 days 380.198.018 102.1119.000 Average 911.474 '2.08% be replaced with other issues, while Treasury certificates Apr. 7 Apr. 13 91 days 399.374.0011 76.200.0110 Average 99.735 '1.05% Apr. 14 Apr. 20 li days 289.740.000 76.000.000 Average 99.847 '0.62% of indebtedness are another form of short-term borrowing hDr. 21 Apr. 2: 11 days 241.451.00(1 50.550.000 Average 99.841 '0.03% Apr. 25 MAY 1.699,608.001 1 year 100 2.011% which has to be periodically renewed without swelling the Apr. 25 May 22 2 years 1.496.428.700 239.197.001 244.234.601 100 3.00% May 4 May 11 41 days 351.6111.000 76.744,000 Average 99.8211 '0.68% outstanding aggregate of indebtedness. So long as the Ni.,, May II %/ay IF al days 395.009.000 75.000.000 Average 99.893 .0.43% 1,., %lay 22 ,3 I days 334,1414.0014 60,050,0114 Average 99.927 "0.29% Government was showing huge budget surpluses and the May 24 June ,11 days 291.503.001 100,200.000 Average 99.910 "0.32% lune 5 'tine 12 1 year I,4i.53,$14,0(8J 373.650.500 100 1.50% Government indebtedness was as a result being steadily June 5 1IPIP 17 3 years I.143.51)i.4)14l 4111,602.800 100 3.00% lune 22 June 29 91 days 292.891 000 I00,-196.0047 ‘versge 99 Rtn .0.41% 273.658.000 and largely reduced, the matter was of little consequence, July 7 July 13 90 days 75.278.000 Average 99.904'029% July 14 July 20 91 days 241.256.000 75.923.000 Average 99./499 .0.40% 191.613.001 but now that there is a budget deficit running into billions July 21 July 27 91 days 83.317.000 Average 99.882 *0.47% July 24 Aug. 1 2 roars L701.6.31,800 345,2 1.r.0 . IOU 2.125% a year, it is important to know the extent to which the July 24 Aug. 1 4 years 3,1401,721.,00 367,13 'moo 100 3.25% tug. 4 Aug 10 91 days 333,468.000 75.217,00D A verage 99.866 *0.53% 333.747.000 Government itself is obliged to have recourse to the in- tug. II tog. 17 01 days 75,016.000 Average (1(1878 *0.48% Aug. lg tug 24 91 days 347.816.000 62,350,000 Average 90 894 *0.42% 463.281.000 100,500,000 %verage 99.918 0 vestment and money markets. During October new obliga- Aug. 25 Aug 31 41 days 0.3295 (opt. 6 Sept. 15 5 years 1.351.749.90) 834,401 500 100 3.25% Sept. 6 Sept. 15 1 year 3.069.449,000 451,447 000 tions brought out by the U. S. Treasury were not of the 484.26 100 1.25% 412,500,000 100 665 000 Average 09.941 *0.2335 8ept,28 91 days 259,468,000 75,954.000 Average 09.951 *0.19% magnitude of those offered in September, and yet they Oct. 3 Oct. 11 92 days Oct. 5 Oct. 15 43.( years 8,388,343.700 508,338,000 100 3.00% Oct. 12 Oct. 19 91 days 252,465,000 75,110,000 Average 09.065 *0.14% reached a total of $739,697,600, of which $231,359,000 Oct. 19 Oct. 26 91 days 227,202.000 80,295.000 Average 99.951 *0.20% consisted of sales of Treasury bills on a discount basis, a Approximate. •Average rate 09 a bank discount basis. Volume 135 Financial Chronicle USE OF FUNDS. Dale Offered. Jan 7 Jan. 17 Jan. 2.5 Jan. 25 Jan. 31 Feb. 7 Feb. 16 Feb. 24 Mar. 5 Mar. 6 Mar. 6 Mar. 23 Apr. 7 Apr. 14 Apr. 21 Apr. 25 Apr. 25 May 4 May 11 May 18 May 24 June 5 June 5 June 22 July 7 July 14 July 21 July 24 July 24 Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 6 Sept. 6 Sept. 26 Oct. 3 Oct. 5 Oct. 12 Oct. 19 Type of Security. Treasury bills "froasury bills 3)4% Treasury attn. 334% Treasury ctfs. Treasury bills Treasury bills Treasury bills Treasury bills I% Treasury ctts. 314% Treasury etts. 3*4% Treasury ctfs. Treasury bills Treasury bills Treasury bills Treasury bills .2% Treasury ctfs. 3% Treasury notes Treasury bills Treasury bills Treasury bills Treasury bills 134% Treasury ctfs. 3% Treasury notes Treasury bills Treasury bills Treasury bills Treasury bills 2SI% Treasury notes 314% Treasury notes l'reasury bills Treasury bills Treasury bills Treasury bills 34% Treasury notes I'.% Treasury ctfs. Treasury hills Treasury bills 3% Treasury notes Treasury bills •DPaeov•••,. hille Total Amount Accepted. Refunding. New Indebtedness. 350,175.000 850,175.000 50.937,000 50.937,000 227,631,000 I 50,000.000 3322.003.000 144,372.000 1 76.399.000 76.399,00( 75,689.000 75.689,000 62.851.000 62,851.000 10 .412,000 101.412,000 .28.00c000 *28,000,000 333.492.500 1 624.000.000 370.146,000 660,653.501 102.169.000 102,169.000 76,200.000 50,175.000 26,025.000 75.600.000 75.600.000 51.550.000 51.550,000 239,197,001, 239,197,000 244,234,600 244.234.600 76,744,000 76.744.000 75,000,000 75,000,000 60.050.000 60,0o0,000 100,200,000 100,200.000 373.856,500 1 324.578,500 465,880,800 416.602,800 100.466.000 100.486,000 75.278.000 75.2711.000 75.923,000 75.923,00 83.317.000 51.550.01)0 31,767.000 345.292.600 1 227.631.000 482.799,600 365.138.000 l 75.217.000 75.217,000 75.016.000 75.016.000 62.350,000 62.350.00 100,500.000 100,500.00 834.401,500 I 712,104.500 573,344.000 451.447.000 I 100.665 000 100,665,000 75,954,000 50,278.000 25,676.000 503,338,600 333.492,500 174.846,100 75.110,000 75,110,000 on one /WM . OA OrIt AfIr• • • •Approximate. Taking up now our tables of ordinary financing for the month of October, we fiud that the total of the new issues brought out was $121,470,901. This compares with $141,395,801 in September, with $169,842,388 in August, with $154,120,622 in July and with $142,206,468 in June, all very light monthly totals. For the benefit of the reader we will say that our compilations, as in preceding months, include the stock, bond and note issues by corporations, by holding, investment and trading companies, and by States and municipalities, foreign and domestic, and also farm loan emissions. How small present totals are appears when comparisons are made with corresponding figures for some previous years. As against the October total of new issues, the present year, of $121,470,901,the amount in October 1930 was $445,125,642 and in October 1929, $880,890,425. In October 1931 the new financing was extremely light, footing up only $46,018,247, that having been the month immediately following the suspension of gold payments by Great Britain. It deserves further to be noted that of the $121,470,901 total for the present year, $23,661,789 was for refunding purposes, that is to take up old issues, leaving only $97,809,112 of strictly new capital. The mumcipal awards were only $40,866,651 (not including any State and municipal financing done by the Reconstruction Finance Corporation), and the corporate offerings $67,489,250. Proceeding now with our analysis of the amount of new corporate financing during October, we observe that public utility issues at $60,523,000 as compared with the diminutive total of $9,732,000 reported for September practically comprised the entire corporate total of new financing. Industrial and miscellaneous flotations during the month amounted to $6,966,250 as compared with only $1,150,000 in September. As was the case in September, no railroad issues were brought to market in October. Of the total corporate offerings of all kinds during October for the amount of $67,489,250, long-term bonds and notes comprised $43,298,000, while short-term bonds and notes aggregated $20,900,000. There were but two stock offerings during October, amounting to $3,291,250. The portion of the month's financing raised for refunding purposes was $19,015,000 or over 27% of the total; in September the refunding portion was $4,332,000, or over 39% of the total; in August the refunding portion was $107,114,000, or over 80%; in July $49,029,000, or 43%; in June $25,230,500, or 80%; in May $15,000,000, or 67%;in April, $33,124,000, or 68%; in March $9,097,320, or 15%; in February $5,688,000, or 12%, and in January only $1,500,000, or slightly over 3%. In October 1931 the amount raised for refunding was $500,000, or less than 3% of the month's total. The $19,015,000 raised for refunding in October (1932), comprised $3,000,000 new long-term to re- 3227 fund existing long-term; $14,515,000 new short-term to refund existing short-term and $1,500,000 new stock to replace existing short-term debt. There was only one conspicuous refunding issue offered in October, namely: $9,000,000 North Boston Lighting Properties 5 secured notes, due Oct. 15, 1937, of which $7,500,000 was for refunding. The October corporate offerings worthy of mention were as follows: $18,000,000 Connecticut River Power Co. 1st mortgage 5s A 1952,issued at 94 to yield 5.50%; $15,000,000 The Detroit Edison Co. general and refunding mortgage 5s E 1952, issued at 995' to yield 5.00%; $9,000,000 North Boston Lighting Properties 5 secured notes due Oct. 15 1937,issued at par, and $2,500,000 Western Massachusetts Companies 5 year 5% notes Oct. 15 1937, issued at 99% 3 to yield 5.05%. No foreign securities of any kind were brought to market in this country during October. Included in the month's financing was an offering of $9,100,000 Federal Intermediate Credit Banks 23/2% collateral trust debentures dated Oct. 15 1932 and due in 12 months, offered at price on application. During the month there was but one security offering carrying a convertible feature, namely: $3,400,000 Davison Chemical Co. five year 634% notes 1937. (Each $1,000 of notes carries a detachable warrant entitling the holder to purchase, up to Oct. 1 1937, 40 shares of Davison Chemical Co. common stock at $15 per share.) Two new fixed investment trusts were offered during October, viz.: American Business Shares, Inc., offered by Lord, Westerfield & Co,, at market. Domestic Capital Corp. 6% income debentures. Sept. 1 1942, offered by Lyon, Pruyn & Co., N. Y., at market. The following is a complete summary of the new financing, corporate, State and city, foreign government, as well as farm loans issued during the month of October and the 10 months ending with October: SUMMARY OF CORPORATE, FOREIGN GOVERNMENT, FARM LOAN AND MUNICIPAL FINANCING. 1932. MONTH OF OCTOBER— Corporate— Domestic— Long-term bonds and notes Short term Preferred stocks Common stocks Canadian— Long-term bonds and notes Short term Preferred stocks Common stocks Other foreign— Long-term bonds and notes Short term Preferred stocks Common stocks Total corporate Canadian Government Other foreign Government Farm Loan issues Municipal. States, cities. drc United States Possessions Grand total 10 MONTHS ENDED OCT.31— Corporate— Domestic— Long-term bonds and notes Short term Preferred stocks Common stocks Canadian— Long-term bonds and notes Short term Preferred stocks Common stock Other foreign— Long-term bonds and notes Short term Preferred stocks Common stocks Total corporate Canadian Government Other foreign Government Farm Loan issues Municipal, States, Cities, &c United States Possessions New Capital. Refunding. g $ 40,298.000 6.385.000 1,000.000 791,250 3.000.000 14,515,000 48,474,250 4,015,000 19,015,000 1,500,000 Total. 8 43,298.000 20.900 000 1.000.000 2,291,250 67.489.250 4.015.000 9,100,000 a36,219,862 a4,646,789 9.100.000 a40,866,651 97,809,112 23,661,789 121,470,901 257,700.300 32,616.500 8,975.275 5,038,150 101.838.500 163,894,000 3.397.320 359.538.800 196 510 500 8,975.275 8,435,470 304.330,225 26,015,000 269,129,820 40,000 000 573,460,045 66.015,000 59,100.000 5637,090.574 692,000 92.500.000 151.600,000 561,434,069 5698.524 643 692,000 Grand total 1,027,227,799 463,063.889 1,490.291,688 a Not including 594,192,845 Reconstruction Finance municipalities, either actually made or proposed during Corporation advances to October. S Not including an wrgregate of 3129,648,016 of such advances, either actually made or proposed to Oct. 31. In the elaborate and comprehensive tables on the succeeding pages we compare the foregoing figures for 1932 with the corresponding figures for the four years preceding, thus affording a five-year comparLon. We also furnish a detailed analysis for the five years of the corporate offerings, showing separately the amounts for all the different classes of corporations. Following the full-page tables we give complete details of the new capital flotations during October, including every issue of any kind brought out in that month. CHARACTER AND GROUPING OF NEW CORPORATE ISSUES IN THE UNITED STATES FOR THE MONTH OF OCTOBER FOR FIVE YEARS. 1932. 1931. 1930. 1929, 1928. MONTH OF OCTOBER. New Capital. Refunding. Total. New Capital. Refunding. Total. New Capital. Refunding. Total. New Capital. Refunding. Total. New Capital. Refunding, Total. Notes $ Long-Term Bonds and $ $ $ $ $ $ $ $ $ $ Railroads 5,000,000 54.220,000 5,000.000 54,220,000 45,830,000 45,830.000 40,023,000 3.000,000 43,023.000 Public utilities 2,000,000 43.758,100 2,000,000 16,351.000 60,109.100 65,476,000 60,552,000 4.924,000 71,770,000 2,200,000 73,970.000 Iron. steel, coal, copper. &c 2,000,000 4,000,000 6,000,000 6,410,500 7,139,500 13.550,000 Equipment manufacturers Motors and accessories 275.000 Other industrial and manufactur i 275.000 160,000 160,000 20.350.000 20.350.000 16.750,000 16.750.000 9,325,000 4,000,000 13.325,000 Oil 23.500.000 102.000.000 23.500.000 102.000,000 Land, buildings, &c 9.125,000 9,125,000 6.635,000 6,635.000 19.275.000 59,814,000 19,275.000 5.050,000 64,864.000 Rubber Shipping 5.000,000 5,000,000 Inv. trusts, trading, holding, Sze_ 3.500.000 3.500.000 Miscellaneous 2.500.000 2.500.000 4,725,095 3.574.905 13,000,000 8.300.000 13,000,000 36,637.500 662,500 37,300,000 40,298,000 3,000.000 Total 43,298.000 13,785,000 13,785.000 109.468,195 23.925.905 133.394,100 270,797,000 4,924.000 275,721,000 229,787,000 19,052.000 248,839,000 Short-Term Bonds and Notes Railroads 4.685,000 12.815,000 Public utilities 17.500.000 1,000.000 30.000,000 30.000.000 1,000,000 2,110,000 10.000,000 12,110,000 Iron, steel coal, copper. &c 15,000,000 15.000.000 Equipment manufacturers accessories and Motors 1.700.000 1.700,000 3,400.000 Other industrial and manufacturi 1,500.000 100.000 1,500,000 100,000 Oil 193.000 57,000 250.000 Land, buildings, &c 500.000 500,000 1.870.000 150.000 2.667,500 2,020,000 2.667,500 4.045,000 4.045.000 Rubber Shipping by,trusts, trading, holding, arc.. 1.000,000 1.000.000 Miscellaneous 5.600.000 1.495.000 1.495.000 5,600.000 6,385,000 14,515,000 Total 20.900,000 500.000 500.000 20,058.000 30.207,000 10,367.500 50,265.000 10,367.500 6,155,000 10.000.000 16,155,000 Stocks— Railroads 3,000,000 3,000,000 Public utilities 14.019,347 34.679.878 513.972 1,200,000 14,533.319 35,879.878 123,510,850 123,510.850 Iron,steel coal, copper. &c 3,654.960 3,654,960 3,438,134 3,516.900 6,955,034 Equipment manufacturers Motors and accessories 1.114.245 1,114.245 7.401,792 6,097,865 13,49-9-,Wi Other industrial and manufacturi 1,791,250 1,500,000 3,291.250 2.000.000 2,000,000 1.755.250 75.888.408 1,755,250 694.000 76,582.408 59,210.427 7.692.500 66,902.927 Oil 4,000.000 7.679.560 8,000,000 12,000.000 7,679.560 Land, buildings, &c 85.000 1.780.000 85,000 1.780.000 16.717.500 ----...16.7177,8M Rubber 34,730.000 25,270,000 60.000.000 17.200.000 7.500.000 24,700,000 Shipping Inv. trusts, trading, holding, &c 940.800 940.800 77.637.816 -- - - - — 77,637,816 88,195,000--- -_.-,._ 8§.-195-.13136 Miscellaneous 665.000 665.000 1,762.500 202.836.730 1.762.500 1,000,000 203.836,730 51.857,760 1,271,500 53.129.260 Total 1,791.250 1.500,000 3.291.250 3.605,800 21.622.097 3,605,800 8.513.972 30.136.069 443,001,597 28,164,000 471.165,597 367,531.463 26.078,765 393,610.228 Total— Railroads 5,000,000 5.000.000 57,220,000 - ---57.220.000 45,830.000----_- --, 45.830.000 Public utilities 44,708,000 15.815.000 60.523,000 2,000.000 57,777.447 46,864.9/2 104,642,419 2.000.000 96.231.878 6,124,000 102,355,878 197.390.850 12.200,000 209.590,850 Iron, steel, coal, copper, Atc 17.000,000 4,000.000 21.000.000 3,654,960 3,654.960 9,848,634 10.656.400 20,505,034 Equipment manufacturers Motors and accessories 1.114,245 1,114.245 7,401,792 6,097,865 13- 49:6K manufact industrial and 3,766,250 Other 3,200,000 6.966.250 2,160.000 23.605.250 2,160.000 23.605.250 92.738.408 694,000 93,432.408 68.535.427 11.692.500 80,227,927 Oil 27.693.000 §:aY000 35.750.000 109,679,560 109,679,560 Land, buildings, &c 9.125.000 500,000 9,625.000 8.590.000 150,000 23.722.500 8.740.000 23.722.500 80,576.500 5.050,000 lig,6-2-6-.856 Rubber 34.730.000 25.270,000 60.000,000 17,200,000 7,500,000 24,700,000 Shipping 5.000.000 5,000,000 Inv. trusts, trading, bolding, &c.. 940,800 940.800 3,500,000 78.637,816 3.500.000 78,637,816 88.195.000 ----8§.-1-9-5-,6456 Miscellaneous 3.165.000 3.165.000 7,982,595 3.574,905 221,436,730 11.557,500 1,000.000 222.436.730 88.495,260 1.934.000 90,429,260 48.474.250 19.015.000 67.489.250 Total corporate securities 17,390,800 500.000 17,890.800 151.148.292 62.646.877 213,795,169 724.166.097 33.088.000 7872.c4 n01 MR 4'72 AAR AC 1211 7ac aao an. ..,... 0.2 00 Z161 Zr *A011 SUMMARY OF CORPORATE, FOREIGN GOVERNMENT, FARM LOAN AND MUNICIPAL FINANCING FOR THE MONTH OF OCTOBER FOR FIVE YEARS. MONTH OF OCTOBER. 1932. 1931. 1930. 1929. 1928. New Capital. Refunding. Total. New Capital Refunding. Corporate— Total. Total. New Capital. Refunding. New Capital. Refunding. Total. New Capital. Refunding. Total. Domestic— $ $ $ $ $ $ $ Long-term bonds and notes_ 3.000.000 43,298,000 40,298,000 13,785,000 — 13,785.000 16.074.905 101.548,600 85,473.695 224.347,000 4,924.000 229,271,000 192,187,000 204.339,000 12,152,000 Short term 20.900.000 6,385,000 14,515,000 500.000 30.207.000 500.000 50.265,001 20.058,000 10.367.500 -------10.367.500 6.155,000 10.000,000 16,155.000 Preferred Stocks 1.000.000 1,000,000 1.650.0001.650.000 8,000,000 11.710,200 19.710,200 147.948.995 27,470.000 175.418,995 144,488,800 5.595.000 150,083.800 Common stocks • 1.500,000 2,291,250 791,250 1.955,800 513,972 1.955,800 9,911,897 10,425,86f 293,375,102 694.000 294,069,102 214,122.663 20.483,765 234,606.428 Canadian— Long-term bonds and notes_ 7,851.000 31,845.500 23,994.500 41,450,000 41..450.000 9,400.000 9.400.000 Short term Preferred stocks 2.500.000 2,500,000 Common stocks Other Foreign— Long-term bonds and notes_ 5,000,000 5,000,000 28.200,000 6,900,000 35,100,00(s Short term Preferred stocks 1.525,000 1,525,000 stocks Common 152,500 152,500 6,420,000 6.420,000 Total corporate 48,474.250 19,015.000 67.489.250 17,390.800 500.000 62.646.877 213.795,16f 151.148.292 17,890,800 724.166,097 33,088,000 757.254,097 603,473,463 55,130,765 658,604,228 Canadian Government 4,015.000 4,015,000 75.794,000 75,794.000 1.000,000 1,000.000 5,080.250 5.080,250 Other Foreign Governments_ 3,500,000 3.500.000 36,750,000 36,750,000 9.100.000 Farm Loan issues 9.100.000 12,000.000 12.000.000 750,000 750,000 Municipal._ States, Cities, &c_ *36.219.862 *4,646,789 *40,866,651 15,682,785 444,662 4,965.551 155,536,473 150,570,922 16,127,447 117.592,453 1,143,875 118,736,328 98,561.055 672,400 99,233,455 United States Possessions_ 400.000 400,000 Grand total 97.809.112 23.661.789 121,470.901 4.662 377.513,214 67.612,428 445.125,642 46.018.247 846,658,550 34.231,875 880.890,425 744.614.768 55,803,165 800,417.933 • Figures do not include 994.192.84b Reconstruction Finance Corporation advances to municipalities, either actual y made or proposed during October. 1930. Refunding. Total. 222.662.750 924,131.000 133.613,500 1,403,677.600 4,000.000 27.500.000 9,040.000 27.355.000 6,950.000 70,000 255.456,910 173.000.000 131.230.500 30.000.000 10.000.000 78.750.000 alb:§158 73,205,000 399,471.155 3,115,991,010 2.500.000 52,878.000 5,000,000 17,350.000 657.000 835.000 15,000.000 14.500.000 238.100.000 48.000.000 12.000.000 10.100,000 90,705.000 7,500.000 52.405,650 18,900.000 41,000.000 1.000.000 18.245.000 95,220,000 551,455,650 1229. New Capital. Refunding. Total. 1928. New Capital. Refunding. Total. $ 355,847.240 181.413.760 537.261.000 161.718,500 206,691.500 368,410.000 590,704.500 257,284,000 847.988.500 772.106.000 541,059,800 1.313,165,800 123,513.500 3,186,500 126,700.000 91.793,200 69.108.800 160.902,000 1,850.000 1.850.000 5,816,000 5.816,000 150.000 150.000 5.020.000 780.000 5.800.000 236.303.000 i,b771:666 238.378.000 250,948.700 111.192.300 362.141.000 170.984.000 15,41(1.000 186,400.000 27,753,000 31;747.000 59,500.000 314.025.100 3,929,000 317,954.100 494,682.050 89,670,000 584.352.050 1,000.000 1.000.000 1.300.000 1.300,000 8,100.000 6,000.000 14,100.000 116,250,000 116,250.000 82,388.000 1,012,000 83.400.000 277.555.000 12.905.000 290.460.000 359,097.000 42,978.000 402.075,000 2,196,282.340 482.209,260 2,678,491.600 2.252,622,450 1.094,239,400 3,346.861,850 1.500.000 39,826,283 720.000 5,360.000 41.313.717 5,780,000 500,000 13,250.000 2.000.000 64,340.200 1.000.000 32.203.500 155,339.983 1.916,500 54.370,217 6,860.000 81.140,000 6.500.000 12.500,000 89.532,000 400,000 17.000.000 16,000,000 29,500,000 105,532.000 400,000 500.000 13,250,000 2,000,000 64,340,200 4.200.000 4,803,900 6,505,800 28.513,100 750.000 2.488,100 10,694,200 1.441,500 4,950.000 7.292.000 17.200,000 29.954,600 1.000.000 34.120.000 209,710.200 1,600.000 25.225.000 173.279,800 1600.000 25.225.000 221,653,600 48,373.800 66,055,600 74,107,700 74,107.700 51,597.650 139,954.700 191,552,350 13.426,222 717.923.664 1.131.045,979 205.306,590 1,336,352.50 691,643,483 15.3,828,598 845,472.081 133.351,675 148.689.880 351,020.200 499.710.080 60.817.995 20,716,900 81,534.895 568.947 568.947 1.920.000 1.920,000 4,723,962 80.631,555 5.511,852 86,143.407 16,880,192 35,006,567 51,886.759 1.371.500 200.583,815 857,699.013 90,923.220 948,622,233 405.119,425 76.583,540 481.702.965 8,000.000 94.323,463 92,628,212 58,666.080 151.294,292 10,126.180 10.126,180 112,514,830 16.405,000 408.500 112,923.330 76.473.283 f:316;666 77.819.283 88,983,534 25,270.000 114,233.534 29.047,975 8.542,400 37.630,375 23.178,000 23.178.000 8,325,855 8.325.855 112,987.079 2.092.906.788 1.500.000 2.094,406,788 312.121.912 2.964,500 315.086,412 382.000 129.979,852 1,136.198,264 13.342,400 1,149.540,661 339.957.617 36,489.240 376,446.857 23,179,722 1,476,334,110 5,839,132,702 751.948.842 6.591.081,544 2,004.071,567 475.432,445 2.479,504,012 225,162.750 1.004,686,600 431,454.940 186,773.760 618.228.700 225.816,150 363.646.200 589,462.350 199,917.722 2,359.701.264 1,761,576.762 503.904,307 2,265,481.069 1,553.281,483 710.888,398 2.264,169,881 9,000.000 208.851,675 272.923,380 359.986,700 632.910.080 153,011.195 89,825,700 242,836,895 21.040.000 2,418.947 2,418,947 7,736,000 7,736,000 14.823.962 81.281.555 5,511,852 86,793,407 26,100.192 36.536,567 62,636,759 46:616:866 546.745.725 1.107,252.013 92.998,220 1200.250,233 660.872.025 190.263,940 851.135,965 15,607.000 274,823,463 265,612.212 74,082,080 339.694,292 44,384,980 42,441,200 86,826.180 905.000 200,041.150 490.880.130 4,337,500 495.217.630 599.668.433 92,457.500 692.125.933 15,000.000 48.900.000 89.963.534 25.970,000 115.233.534 30.387.975 8,542.400 38.930,375 10,000.000 31.278,000 6.000.000 37.278.000 8,325.855 8,325,855 232,737.079 2,210,156,788 1,500.000 2,211,656.788 396,109.912 400.086.412 6:01:§68 221.429,852 1.445,956.764 28.163.900 1.474,120,664 724.279.617 79,467,240 803.746.857 517.870.877 5.143,780.770 8.190.755.025 1.288.528,319 9.479.283.344 4.429,973,817 1,618,045.645 6,048.019,462 apyroltio reptretqg 1932. 1931. TEN MONTHS ENDED OCT.8 • New Capital. Refunding. Total. /Veto Capital Refunding. Total. New Capital. Long-Term Bonds and Note $ $ $ Railroads 9,327,000 9.327,000 302.147,300 154,282.700 456,430.000 701.468,250 Public utilities 253.025.300 92.461,500 345,486,800 492.268.500 490.632.000 982.900.500 1.270.064.100 Iron,steel, coal, copper, &a 102.939,800 6,062.500 109.002.300 23.500,000 Equipment manufacturers 12,934.000 12,934.000 9.040,000 Motors and accessories Other industrial and manufacturta g 275,000 275.000 83.112.000 5.950,000 89.062.000 228.101,910 Oil 2,000.000 2.000.000 166.050.000 Land, buildings. &c 3,200.000 50.000 3.250.000 107,860.000 i.12-6566 109,080.000 131.160.500 Rubber 30.000.000 Shipping 1,650.000 1.650,000 10.000.000 Inv, trusts, trading, holding. &c. 78.750.000 Miscellaneous : 1,200,000 1.200.000 15.286.000 2.694.000 17,980.000 68,385,095 Total 257,700.300 101.838,500 359.538.800 1,120,197,600 660,841.200 1,781.038.800 2.716,519,855 Short-Term Bonds and Note Railroads 11,325,000 23,500,000 34.825.000 34.970,000 12.530.000 47.500.000 12.000.000 Public utilities 7,535.000 138.144.000 145.679.000 181,947,500 41,077,500 223,025.000 185.222.000 Iron.steel coal, copper, Scc 100,000 100,000 899,000 3,101.000 4.000.000 43.000.000 Equipment manufacturers 12.000.000 Motors and accessories 10,100.000 Other industrial and manufacturl 1,700,000 1.700,000 21,535.000 3.400.000 33.500.000 55.035,000 73.355,000 011 9.649,000 791,000 10,440,000 6.843,000 Land, buildings, 3zu 4,101.000 4.101.000 8.485.250 1,900.000 10,385,250 51,570.650 Rubber 3.900,000 Shipping 450,000 450.000 Inv. trusts, trading, holding, &c_ 500,000 500.000 41,000.000 Miscellaneous 7,955.500 7.955.500 20.100.000 20,100.000 17.245.000 Total 32,616,500 163,894,000 196,510,500 277.585.750 93.399,500 370,985,250 456.235,650 StocksRailroads 66.055.600 Public utilities 6.462,175 1,897.320 8.359,495 197.228.511 31,050,000 228.278,511 704,497.442 Iron, steel coal, copper, &c 3.390.000 3,390,000 133,351,675 Equipment manufacturers Motors and accessories 4,723.962 Other industrial and manufacturin 3,882,500 1,500,000 19,752.872 5,382.500 800,000 20.552.872 199,212.315 Oil 3.452.500 3,452,500 86.323.463 Land, buildings, &c 1,466,500 1,466,500 16,405.000 Rubber 2,168,750 2,168.750 Baipping Inv. trusts, trading, holding, &c_ 4.084,550 4.084.550 112.987.079 Miscellaneous 1500.000 1,500,000 19,183.290 19.183.290 129,597,852 Total 14,013,425 3.397,320 17,410.745 248.558,223 31,850,000 280,408,223 1,453,154,388 TotalRailroads 11.325.000 32.827.000 44.152.000 337,117.300 166.812.700 503.930.000 779.523.850 Public utilities 267,022.475 232.502,820 499,525.295 871,444.511 562.759,500 1,434,204.011 2,159.783,542 Iron, steel, coal, copper, 8ic 100,000 107.228.800 100.000 9,163,500 116,392.300 199.851.675 Equipment manufacturers 12,934,000 12.934,000 21.040.000 Motors and accessories 14.823.962 Other industrial and manufacturing 5,857,500 3.200,600 124,399.872 9.057,500 40,250.000 164.649.872 500.669,225 Oil 15,101.500 791,000 15.892,500 259,216,463 Land, buildings, &c 7.301,000 7.351,000 50.000 117,811,750 3,120,000 120,931.750 199.136.150 Rubber 2.168,750 2,168.750 33.900,000 Shipping 450.000 1,650.000 450.000 1.650.000 10,000.000 Inv, trusts, trading, holding, dtc 4,084.550 500.000 4,584.550 232,737.079 Miscellaneous 10,655.500 10.655.500 54.569.290 2,694.000 57,263.290 215.227.947 Total corporate securities I 304.330,225 269.129,820 573.460.045 1.646.341573 786.090.700 2.432,432,273 4.625.909.893 ger erunloA SUMMARY OF CORPORATE, FOREIGN GOVERNMENT, FARM LOAN AND MUNICIPAL FINANCING FOR THE TEN MONTHS ENDED OCT. 31 FOR FIVE YEARS. TEN MONTHS ENDED OCT. 31. 1932. 1931. 1930. 1929. 1928. New Capital. Refunding. CorporateTotal. New Capital. Refunding. Total. New Capital. Refunding. Total. New Capital. Refunding. Total. New Capital. Refunding. Total. Domestic$ $ $ Long-term bonds and notes_ 257.700.300 101.838,500 359.538.800 907.397.600 660.841.200 1.568.238,800 2,349,872,355 344,643.155 2.694.515,510 1,779,472,340 480,209.260 2,259,681,600 1.729,190.950 972.428.900 2.701.619.850 Short term 32,616,500 163,894,000 196.510,500 277,585,750 88.399.500 365.985.250 419.535.650 95.220.000 514,755,650 153.722,700 43.937,500 197,660.200 164.279.800 48,373.800 212.653.600 Preferred Stocks 8.975.275 8,975,275 115,599.667 31,850.000 147.449.667 408.238.230 9.350,000 417.588,230 1,494.518,261 177,681.540 1.672.199.801 819.293.946 242,585.300 1.061.879.246 Common stocks 3,397,320 5,038.150 8,435,470 132,958.556 132,958.556 1,005.339.818 13.829.722 1.019,169.540 4,179,804494 574.267,302 4,754.071,796 1.090.869.971 206,847,145 1,297.717.116 CanadianLong-term bonds and notes_ 140.000.000 140,000,000 197,632.500 45,851,000 243.483.500 255.550,000 255.550,000 100.380.000 68,792.000 169.172.000 Short term 5.700 000 5.700.000 Preferred stocks 13.000,000 13,000,000 10.400.000 10,400,000 24.500.000 50.500.000 26,000.000 Common stocks 16,516,340 16.516.340 18,163.900 18.163.900 8,613.400 8,613,400 Other ForeignLong-term bonds and notes_ 72.800,000 72,800,000 169.015.000 8,977,000 177,992.000 161.260.000 2,000.000 163,260.000 423,051,500 53,018.500 478.070.000 Short term 5,000,000 5.000.000 31.000.000 31.000,000 1.617,283 12,050.000 10.000.000 10,432,717 10.000.000 Preferred stocks 103.837,200 103.837,200 14,030,000 14.030,000 Common stocks 10.060.000 10,060,000 32.408.847 32.408.847 45.764.250 45.764,250 Total corporate 304.330,225 269,129.820 573.460.045 1.646.341.573 786.090.700 2.432,432,273 4,625.909,893 517.870.877 5,143,780.770 8.190,755,025 1,288,528.319 9,479.283,344 4.429,973,817 1.618.045,645 6,048,019,462 Canadian Government 26.015.000 40,000,000 66,015,000 40,922.000 9,500.000 50.422.000 124.586,000 7.158,000 131.744.000 29,612,000 38,612.000 33,920.250 9,000.000 36.920.250 3.000.000 Other Foreign Governments_ 412.306,000 69.080.000 472.386.000 68,250,000 68.250,000 519,581.587 100.538,413 620.120.000 Farm Loan -issues 59,100.000 92.500.000 151.600.000 56,600.000 51,000.000 107.600,000 45,500,000 45.500.000 40,850.000 40,850.000 Municipalr States, Cities, &c_ *637,090.574 *61,434,069 *698.524.643 1,136.554.631 19,575.362 1,156.129,993 1.164,665,514 47,192,188 1,211.857,702 1,044,686,027 10,449.061 1,055.135.088 1,060.664.824 33.409,609 1.094.074,433 United States Possessions692.000 692.000 795.000 795.000 9,675.000 9.675.000 2.395.000 2,395.000 6.161,500 6.161,500 Grand total 1.027.227.799 463,063.889 1.490.291.688 2.881.213.204 866.186.0623.747,379.266 6,382.642.407 632.301.065 7.014,943,472 9.335.698,052 1.307.977,380 10643.675.432 6,091,151.978 1.754,993.667 7.846.145.645 *Figures do not Include a total of 8129.643,016 Reconnruction Finance Corporation advances to municipalities, either actually made or pro,osed to Oct. 31. CHARACTER AND GROUPING OF NEW CORPORATE ISSUES IN THE UNITED STATES FOR THE TEN MONTHS ENDED OCT. 31 FOR FIVE YEARS. 3230 Financial Chronicle Nov. 12 1932 DETAILS OF NEW CAPITAL FLOTATIONS DURING:OCTOBER 1932. LONG TERM BONDS AND NOTES (ISSUES MATURING LATER THAN FIVE YEARS). AMOnta. Purpose of Issue. Price. To Yield About. Company and Issue and by Whom Offered. $ Public Utilities— 223.000 Retire bank loans 18,000,000 Acquisitions; construction. &O.__ American States Public Service Co. 1st Lien 534s, 1948. Placed privately by company. Placed privately 94 5.50 Connecticut River Power Co. 1st M.58 A, 1952. Offered by Chase Harris Forbes Corp.; the First of Boston Corp.; Bankers Trust Co.: Baker, Young & Co.: Lee Martinson Corp. Paine, Webber at Co.; Soden & Co.: Stone & Webster and Blodget, Inc.; Hornblower & Weeks; Otis & Co.. Inc., and the N. W. Harris Co.. Inc. 15,000,000 Improvements;addn's extens., &o 5.00 The Detroit Edison Co. Gen. & Ref. M.5s E. 1952. Offered by Coffin & Burr, Inc.; Chase Harris 9934 Forbes Corp.: Spencer Trask & Co.: Bankers Trust Co. and First Detroit Co.. Inc. 6.40 Monmouth Consolidated Water Co.(N. J.) 1st 5s A, 1956. Offered by W. C. Langley & Co. 300.000 Addn's;Improvements. extensions_ 83 1,200,000 Extensions; Improvements 4.95 Rockland Light & Power Co. lot Ref. M.430 A. 1958. Offered by Estabrook & Co.; Edward M. 93% Bradley & Co., Inc.; Tenney & Co.: H.P. Wood & Co. and Putnam & Co. 800,000 Capital expenditures 6.30 Sierra Pacific Power Co. 1st Ref. M.530 B, 1957. Offered by Stone & Webster and Blodget. Inc. 90 and Pierce, Fair to Co.. San Francisco. 7,500.000 Refunding:additions & extensions- 9934 5.00 Union Electric Light & Power Co. (Missouri) Gen. M.58, 1957. Offered by Dillon, Read & Co.: Chase, Harris Forbes, Corp.: Bankers Trust Co.: Spencer Trask & Co.; Stone & Webster and Blodget. Inc.; the N. W. Harris Co., Inc. and Blyth & Co.. Inc. 43,023.000 Other Industrial & Mfg.— 6.00 Battle Creek Food Co. (Battle Creek, Mich.) 1st M.6s, 1945. Offered by company. 275,000 General corporate purposes 100 SHORT TERM BONDS AND NOTES (ISSUES MATURING UP TO AND INCLUDING FIVE YEARS). Amount. Purpose of Issue. Price. Public Utilities— 6,000,000 Refunding; other corp. purposes-9.000,000 Refunding: repay bank loans, &c_ 2.500.000 Retire bank loans To Yield About. 5.50 Eastern Utilities Associates Three Year 5% Notes Oct. 15 1935. Offered by Stone, & Webster and Biodget, Inc.' Estabrook & Co.; Kidder. Peabody & Co. and F. S. Moseley & Co. 5.50 North Boston Lighting Properties 534% Secured Notes. Oct. 15 1937. Offered by Chase Harris Forbes Corp.* the r'irst of Boston Corp.; Bankers Trust Co., Baker, Young & Co.; Lee, Higginson Corp.: F. S. Moseley & Co.; Paine, Webber & Co.; Soden & Co.; Stone & Webster and Biodget, Inc.; Hornblower & Weeks: Otis & Co.. Inc.; Tenney & Co.; Edward M. Bradley & Co.. Inc.: H. P. Wood & Co. and the N. W. Harris Co., Inc. 5.05 Western Massachusetts Companies Five Year 5% Notes, Oct. 15 1937. Offered by the First of Boston Corp.; White, Weld & Co.; F. S. Moseley & Co.; Kidder. Peabody & Co.; TIM Bros., and Arthur W. Wood Co. • 6.50 Davison Chemical Co. Five Year 634% Notes. Oct. 1 1937. (Each new Davison note is to have attached to it a detachable warrant entitling the holder at any time up to Oct. 1 1937 to purchase at $15 a share 40 shares of Davison common stock for each 51,000 prircipal amount of the notes.) Offered to holders of Silica Gel Corp., 634% notes maturing Oct. 1 1932 and to bank creditors of the company. 9834 100 995( 17.500,000 Other Industrial & Mfg.— 3,400,000 Refunding Company and Issue and by Whom Offered. 100 STOCKS. Par or No. of Shares. Price (a)Amount To Yield Invoiced. per Share. About. Purpose of Issue. Other Industrial & *61.100 shs Retire notes; other corp. purpose& 1,000,000 Working capital 50,000 Working capital 2,291,250 Company and Issue, and by Whom Offered. 37,4 American Home Products Corp. Common. Offered by company to stockholders underwritten by Hornblower & Weeks, New York. Axton-Fisher Tobacco Co., Inc. 6% Cum. Pref. Offered by Henning Chambers & Co.; Aimstedt Bros.* W. L. Lyon & Co.: J. J. B. Hilliard & Son; Dunlap Wakefield 1,000,000 2 shs. pref. and 1I & Co.: James C. Willson & Co. and Stein Bros.& Boyc e. p share B for 8200 Aston-Fisher Tobacco Co., Inc. Class LI Common. Offered by Henning Chambers & Co.; Almstedt Bros.; W. L. Lyon & Co.* J. J. B. Hilliard & Son; Dunlap Wakefield & Co.; James C. Willson & Co. and Stein Bros. & Boyce. 3.291.250 FARM LOAN ISSUES. Price. Issue and Purpose. Amount. $ 9,100,000 Federal Intermediate Credit Bank 234% Coll. Trust Deb. dated Oct. 15 1932 and due in 12 months (provide funds for loan purposes) To Yield About. Price on applie. Offered by Charles R. Dunn, Fiscal Agent, New York. ISSUES NOT REPRESENTING NEW FINANCING. Par or No. (a) Amount of Shares. Invoiced. Price. 100,000 shs 600,000 6 350 000 350.000 90 To Yield About. Company and Issue and by Whom Offered. Asbestos Manufacturing Co. (Ind.) Common stock. Offered by Ewart & Bond, Inc., N. Y. and Paul W. Cleveland & Co., Inc., Chicago. 5.70 Newport (R. I.) Gas Light Co. 1st 5s A. 1961. Offered by A. C. Allyn & Co.,Inc. and F.L. Putnam & Co. Inc. • Shares of no par value. a Preferred stocks of a stated par value are taken at par, while preferred stocks of no par value and all classes of common stocks are computed at theirjoffering rrices The Course of the Bond Market. The general bond market during the current week failed to show any pronounced trend, with the possible exception of the United States Government obligations, which were slightly easier than last week. The election appeared to have influenced the market but little. The rapid changes in stock quotations made for similar movements in the speculative bonds. Thursday and Friday the bond market showed moderate strength. At the close on Friday prices were slightly higher than those that prevailed last week. Moody's computed price index of 120 domestic bonds was 79.91 on Friday, as compared with 79.11 the week previous and 80.49 two weeks ago. The election week witnessed fractional declines in Government bonds of all classes, although the low coupon currency issues were relatively firm. The recently issued 1937 maturities declined a point with the yield approaching 3%. Treasury issues are now selling in a narrow range and appear to be waiting until the next Government financing or some important development, such as budget deliberations at the next session of Congress. The price index for eight long term Treasury bonds on Friday was 101.18, as compared with 101.31 a week ago and 101.36 two weeks ago. Railroad bonds for the most part showed moderate strength, possibly a belated recognition of the relative improvement in earnings for September and in anticipation of further improvement in those for October, shortly to be made public. Price changes were not large, high grade bonds holding firm or advancing fractionally, Atchison gen, mtge. 4s, 1995,from 903. to 92; Union Pacific 1st mtge. 4s, 1947, from 963. to 973i; Chesapeake & Ohio gen. mtge. 3 to 963/g, and Pennsylvania RR. 43's, 1992,from 95% cons.i mtge. 43's, 1960, from 983. to 99. Low priced speculative railroad bonds experienced larger gains, Illinois Central deb. 43 4s, 1960, from 35 to 40; New York Central ref. & impt. mtge. 4s, 2013, from 44 to 48; Missouri Pacific 1st & ref. mtge. 5s, 1977, from 263% to 29%. The 40 railroad price index stood at 72.55 on Friday, 71.57 a week ago and 73.45 two weeks ago. Utility bonds opened the current week in an encouraging manner, the majority of the listed issues moving upward. Following the election, no real trend was discernible. High grades held quite steady while speculative issues followed the course of the stock market. Strength was exhibited on Thursday and Friday and many bonds of all classes registered respectable gains. In the investment groups Delaware Power & Light 4%2's, 1971, Jersey Power & Light 43.s, 1960, and Union Electric Light & Power 53's, 1954, made the best showing, while in the lower classes American & Foreign Power 5s, 2030, Postal Telegraph & Cable 5s, 1953, New England Gas & Electric 5s, 1943,and United Light& Rys.6s, 1973, showed the largest gains. The upwar,d swing, however, was brought about by relatively small turnover and there were a number of outstanding exceptions to the major Volume 135 Financial Chronicle movement such as Montana Power 5s, 1962, off 5; Minnesota Power & Light .44s, 1978, off 23, and Quebec Power 5s, 1968, off 4. Moody's price index for this group was 84.00 on Friday, Its compared with 83.85 a week ago and 85.23 two weeks ago. The industrial list was dull prior to election, losing ground fractionally. Greater strength which developed in other sections of the list on Thursday was not transmitted to the industrial bonds in any appreciable degree, though earlier losses were mainly recovered. On Friday, however, this group led the moderate advance in bond prices. 17p to Friday, even speculative specialties were quiet during the week, in most cases firming slightly from lows established in the preceding decline from September highs. Silica Gel 63's were a Curb feature, advancing during the week about 17 points to 85 on light trading. Greater strength than was evident in the packing group as a whole characterized the Armour issues, in which trading was active. Steel bonds, continuing firm, reflected not only moderate gains in the industry but also maintenance of strong financial positions through the depression by the major companies. Moody's industrial bond price index was 83.48 at Friday's 3231 close, as compared with 82.74 a week ago and 83.60 two weeks ago. The foreign bond market failed to show any pronounced trend during the current week, most issues closed with but fractional changes, an exception being made by German governmental, municipal and corporate issues which developed noticeable strength. Austrian Govern also advanced somewhat. Japanese issues, ment bonds on the other hand,showed fractional declines,somewhat more pronounced in the Government's directobligations than in the bonds and public utility credits. The foreign guaranteed bond yield average on Friday stood at 10.10%,as compar ed with 10.30% a week ago and 10.20% two weeks ago. In the municipal section of the bond market high grade issues proved steady with bids somewhat lower for a number of the issues selling to return a high yield. The elections brought gratification of new State issues totalin g 000, while North Dakota voters turned down the 3100,000,debt moratorium, possibilities of which had been three-year unsettling the market for the State bonds for some time. Moody's computed bond prices and bond yield averages are shown in the tables below: MOODY'S BOND PRICES.* (Based on Average Yields,) 1932 Dully Metall'''. k1ov.11 10 9 8 7 5 4 3 2 1 WeeklyOct. 28 21 14 7 gept. 30 23 16 9 2 Aug. 26 19 12 5 July 29 22 15 8 1 tune 24 17 10 3 May 28 21 14 7 Apr. 29 22 15 8 1 Mar.24 18 11 4 Feb. 26 19 11 All 120 Domestit. 120 Domestics by Ratings. Aaa. 79.91 101.97 79.34 101.81 79.22 101.81 79.56 79.22 79.11 78.99 79.45 80.03 101.81 101.64 101.64 101.47 101.64 101.64 Au. 87.96 87.30 87.30 Stock E 87.56 87.69 87.58 87.69 87.96 87.96 80.49 101.64 88.23 81.18 101.81 88.90 80.84 101.84 88.63 81.42 101.81 88.63 82.50 102.30 89.45 82.14 101..47 88.90 80.84 100.49 87.83 81.78 100.33 88.10 81.18 99.68 87.43 80.95 99.36 87.96 80.14 98.73 86.38 76.67 96.70 83.85 72.26 95.18 80.72 70.43 94.29 79.45 66.98 93 26 77.88 64.71 91.81 76.46 62.87 90.83 74.67 62.48 90.13 74.77 63.27 90.27 75.82 63.90 90.55 76.78 63.11 90.13 76.35 60.97 89.04 73.45 59.01 86.64 73.55 62.02 89 45 77.00 6398 92.10 78 88 66.55 93 26 80.95 68.40 93.85 81.90 69 86 94.58 82.62 68.49 92.82 80.95 67.07 92.68 79 68 71.67 94.58 82.54) 74.88 98.70 8433 75.61 90.70 84.72 7765 97.62 85.74 75.82 95.83 83.48 74.57 94.29 82.02 74.40 93.70 81.54 72.16 91.67 79.80 5 72.65 91.81 80.49 Jan. 29 72.95 92.25 81.07 22........_ 74.36 93 40 82.99 15 74.77 93 70 82.87 High 1932 82.62 102.30 89.72 Low 1932 5767 8561 71.38 High 1931 93.55 10696 101 64 Low 1931 62.56 87.98 76.03 Year Ago-Nov. 11 1931 78.10 98.57 89.17 Two Years AgoNov. 8 1930 93.70 104.68 100.00 A. Boo. 76.67 61.71 76.35 60.97 76.25 60.67 xchang e closed 76.35 61.11 76.14 60.60 76.03 60.38 76.03 60.01 76.46 60.89 76.78 62.02 77.11 77.55 77.22 77.33 78.44 77.66 76.78 77.22 76.89 76.67 75.61 72.26 68.67 67.42 83.27 60.16 58.73 58.52 59.38 59.94 59.80 58.04 56.12 88.52 60.31 63.19 65.82 67.07 86.64 67.07 71.29 73.45 73 85 75.29 7333 72.26 71.77 69.77 70.62 70.52 72.06 73.15 78.55 54.43 92.97 59.87 62.79 63.98 63.68 64.96 68.30 66.81 64.88 67.18 66 47 65.79 65.54 61.11 54.61 51.8.5 47.63 45.50 43.58 43.02 43.62 44.25 43.02 41.03 38.88 41.44 42.90 45 441 47 44 49.22 47.73 45.15 50.80 55.42 58.58 59.80 58.66 57.57 58.32 55.55 55.73 55.99 57.17 57.30 67.86 37.94 78.55 42.58 MOODY'S BOND YIELD AVERACIES.1 (Rased on Individual Closing Prices.) 120 Domestics by Groups. RR. 72.55 71.77 71.57 72.16 71.87 71.57 71.57 72.16 72.85 73.45 74.25 73.95 74.67 76.67 76.46 74.88 76.25 76.14 76.25 76.35 71.38 65.45 64.15 59 87 8432 54 86 54 73 5681 56.32 55 61 52.47 49 53 52 24 54.55 57 64 59 94 62640 60 82 59.29 64.80 70 15 71 19 73.85 72.95 71 67 71.77 69 31 70 lb 70 71 72 06 72 16 78.99 47 58 96 18 53.22 74.57 59.36 72.75 93.11 80.14 94.88 1932 Daily P. 11. Indus. Averages. 84.60 83.48 Nov.11._ 84.35 83.11 10__ 84.22 82.87 9.. 8.. 84.35 82.99 7__ 83.85 82.99 5_ _ 83.85 82.74 4__ 83.85 82.50 3.. 84.22 82.99 2._ 84.85 83.23 1.... Weekly 85.23 83.60 Oct. 28._ 86.12 83.97 21.. 85.61 83.72 14.. 86.64 83.72 7._ 87.43 83.85 Sept.30__ 86.77 83.72 23.... 85.61 82.74 16__ 86.51 8:423 9__ 85.74 112.14 2.. 85.87 81.15 Aug.26__ 84.85 79.45 19._ 81.66 77.66 12._ 77.55 74.77 5__ 7682 7226 July 29._ 73.05 .6981 22._ 7218 67.25 15._ 69 40 65914 8__ 69.13 65 12 I__ 69.59 86.04 June 24._ 70 52 66.21 17__ 69.68 65.82 10._ 41883 63 90 3-88.73 83.35 May 28_,_ 71.09 65.29 21.. 72 95 8864 14._ 74.48 79 40 7._ 75 92 70 90 A.29._ 78 68 71 48 22._ 74 98 71.00 15._ 71.87 71.38 8__ 7785 73.65 1._ 8072 74 57 Mar.24__ 81 07 74 98 18._ 83 35 76.14 11._ RI 42 73.55 4__ 79.408 72 75 Feb. 26._ 79 56 72.45 19.. 77 11 70.62 11-77 44 70.71 5__ 77416 70 81 Jan. 29._ 80.14 71.48 22._ 81.64 71.19 15__ 87.69 84.22 Low 1932 65 71 62 up High 1932 96.85 90.55 Low 1931 72.55 63.74 High 1931 Yr. Ago. 87.56 75.19 Nov. 11'31 2 Yrs.Ao, 95.78 90.55 Nov. 8'30 All 120 Domes tic. Aaa. Aa. 6.22 6.27 6.28 4.63 4.64 4.64 5.57 5.62 5.62 6.25 6.28 6.29 6.30 6.26 6.21 4.64 4.65 4.65 4.66 4.65 4.65 5.60 5.59 5.60 5.59 5.57 5.57 6.17 6.11 6.14 6.09 8.00 6.03 6.14 6.06 6.11 6.13 6.20 6.51 6.94 7.13 7.51 7.78 8.01 8.06 7.96 7.88 7.98 8.28 8.53 8.12 7.87 7.56 7.35 7 19 7.34 7.50 7.00 6.68 64: 6.43 6.59 6.71 6.72 8.95 690 6.87 6.73 6.69 5.99 8.74 5.17 8.05 4.65 4.64 4.65 4.84 4.61 4.66 4.72 4.73 4.77 4.79 4.83 4.96 5.06 5.12 5.19 529 5.36 5.41 5.40 5.38 5.41 5.49 5.67 5.48 5.27 5.19 6.15 5.10 5.22 5.23 5.10 4.96 4.98 4.90 5.03 6.12 5.16 5.30 5.29 5.26 5.18 5.16 4.61 5.75 4.34 5.57 5.55 5.50 6.52 5.52 5.46 5.50 5.58 5.56 5.61 5.57 5.69 5.89 8.15 6.26 640 6.53 8 70 6.69 659 654) 6.54 6.82 681 8.48 631 6.13 6 05 5119 6.13 6.24 6.00 5.85 5.82 5.74 6.92 6 04 6.08 6.23 6.17 6.12 5.96 6.97 5.44 7.03 4.65 6.57 6.47 8.02 6.43 7.87 6.46 7.91 6.45 7.75 6.35 7.59 6.42 7.53 6.50 7.76 6.46 7.49 6.49 7.57 6.51 7.85 6.61 7.68 6.94 8.24 7.32 9.20 7.411 9.67 7.96 10.48 8.37 10.94 8.57 11.39 8.60 11.53 848 11.38 8.40 11.23 8.42 11.53 8.67 12.05 8.96 12.67 8.60 11.94 8.35 11.56 7.97 10.95 7.67 10.52 7.50 10.16 7.55 10.46 7.50 11.02 7.04 9.86 6.83 9.07 6.78 8.89 6.64 8.42 6.83 8.59 8.94 8.74 8.99 8.63 7.20 9.05 7.11 9.02 7.12 8.98 6.96 8.80 6.85 8.78 6.34 7.41 9.23 12.96 5.21 6.34 8.41 11.64 6.38 4.84 5.48 6.71 8.48 5.16 4.47 4.75 5.20 6.20 120 Domesties by Rat nos. A. Baa. 120 Domestics by Groups. z 40 ForP. U. Indus. etym. RR. 6.51 8.16 6.91 6.54 8.26 6.99 6.55 8.30 7.01 Stock E xchang e closed 6.54 8.24 6.95 6.56 8.31 6.98 8.57 8.34 7.01 6.57 8.39 7.01 6.53 8.27 6.95 6.50 8.12 6.88 5.83 5.85 5.86 5.92 5.95 5.97 10.10 10.15 10.15 5.85 5.89 5.89 5.89 5.86 5.81 5.96 5.96 5.98 6.00 5.96 5.94 10.22 10.29 10.30 10.27 10.18 10.16 5.78 5.71 5.75 5.67 5.61 5.66 5.75 5.68 5.74 5.73 5.81 6.07 6.43 8.59 6.86 6.95 7.24 7.27 7.22 7.12 7.21 7.33 7.54 7.06 6.87 6.72 6.58 6.50 6.67 6.98 6.43 6.15 6.12 5.93 6.09 6.24 6.25 6.47 6.44 6.42 6.20 6014 5.59 7.66 4.95 6.81 5.91 5.88 5.90 5.90 5.89 5.90 5.98 5.94 6.03 6.11 6.26 6.42 6.69 6,144 7.25 748 7.26 7.73 7.62 7.60 7.117 7.88 7.95 7.71 7.55 7.24 7.08 7.02 7.07 7.03 6.80 6.71 6.67 8.56 681 6.89 692 7.11 7.10 7.09 7.02 705 5.8 . 8.11 5.38 7.90 10.20 10.09 9.97 9.99 9.98 10.08 10.48 10.33 10.92 10.99 11.19 11.30 11.53 11.72 12.02 12.16 12.12 13.76 13.91 14.30 14.76 15.20 15.2f 14.81 14.01 14.11 13.7( 13.31 13.31 13.21 12.71 1264 12.61 12.3: 1264 12.8: 12.81 13.Y. 13.01 13.2: 13.1: 13.31 9.5, 15.8: 6.6 16.5 6.89 5.60 6.65 10.7 5.08 5.02 5.38 6.82 6.74 6.77 6.70 6.51 6.53 6.68 6.55 6.56 6.55 6.54 7.03 7.69 785 8.41 8.93 9.18 9.18 9.04 893 9.04 9.56 10.10 960 9.21 8.73 8.40 8.05 8.28 8.49 7.77 7.16 7.05 6.78 6.87 7.00 6.99 7.25 7.16 7.10 6.96 0.95 6.30 10.49 5.06 9.43 6.90 •Note -Those prices are computed from average yields on the baRla of one "Idealaverage ,evel or the average movement of actual price quotations. They merely serve bond (43(% coupon, ma wing in 31 years) and do not purport to maul of yield averages, the latter being the to show either the Illustrate In a more comprehensive way the truer picture of the bond market. relative levels and the relative mo,•. t The 1118t complete list of bonds used in computin these Indexes VMS published In the 'Chronicl Prices by months back to 1928, refer to the "Chronicle" ofg Feb. e" on OM 1 1932. page 2228. For Moody's 6 1932. page 907. Index of bond a Revised back to Sept. 19. Other figures are as follows: Sept. 22. 10.24; Sept. 21, 10.31; Sept. 20, 10.39, and Sept. 19, 10.40. Omission of a Word in Our Report of the Addres s of Paul Soup, of Southern Pacific Co. Before the Bankers Convention. We gladly make room for the following which calls attention to the omission of a word in one of the paragraphs in the address which was delivered before the annual convention in Los Angeles by Paul Shoup, Vice-Chairman of the Southern Pacific Co., and which was published in our special edition-the American Bankers Convention Section, issued Oct. 22: New York, Nov. 7 1932. To the Editor: -Mr. Shoup Sir. Dear delivered an address to the members of American Bankers' Association at their convention in Los Angeles the on Oct. 6 on "Over-Taxation-A Business Viewpoint" which Is included in the "Bankers' Convention Section" of the "Commercial tllt Financial Chronicle" in your issue of Oct. 22 1932. In re-reading the copy of the speech sent to the American Bankers Association we find that an error was made which we hope may ' corrected in a subsequent issue of the "Chronicle." This appears in be second column of page 20. The paragrap the h reads: "California has a magnificent highway system. It has added wonderfu to the attractive.'"ess and to the wealth lly of the State. Yet it is well to note that the annual cost per family to would buy two moderately pricedmaintain this system is $1,100, which automobiles. We cannot further lest we get the cart before go much the horse or more .before the auto." literally the highway . It should read: "California has a magnific fully to the attractiveness andent highway system. It had added wonderto the wealth of the State. note that, capitalized. the Yet it is well to annual cost per family to maintain Is $1,100, which would buy this system cannot go much further lest we two moderately priced automobiles. We get the cart before the the highway before the auto. horse or more literally You will note that the word omitted is "capitalized" in the third line of the paragraph. Yours truly. J. W. FERGUSON,Secretary. 3232 Financial Chronicle Nov. 12 1932 Indications of Business Activity THE STATE OF TRADE—COMMERCIAL EPITOME. Friday Night, Nov. 11 1932. • on a very moderate remained Business activity has seasonal level with but few changes in volume. Now that the election is out of the way and many of the issues raised by politicians of both parties laid to rest for some time to come, industry will undoubtedly resume its task of readjustment with new hope and vigor. The tone, at any rate, is unquestionably better. Retail trade has been steady, although somewhat below the level of last year. Textiles continue fairly strong, except in the case of cotton. Iron and steel are still quiet with a slow but steady increase in orders. Cleveland's steel plants are reported to be operating on the basis of 36% of capacity, with employment increased 11% in the last 40 days. In Philadelphia hosiery mills are working full time and have enough back orders on hand to keep them busy until the end of the year. Louisville reports that the tobacco manufacturers in that district are working overtime to supply the demand. Furniture manufacturers are doing a good volume of business, and are believed to have a backlog that will keep them busy for a month to come. Chicago reports an increase in the production of electrical appliances. There is some increase in activity in the automobile trade, but that industry is still merely feeling its way. The noticeable decrease in the number of commercial and bank failures is a cheerful and steadying factor. Some further increase in employment is noted, but that problem is still far from being solved. The sharp rise in the stock market, with the increasing activity of the past two days, is believed to portend a better feeling in financial circles toward the new political regime. Very little fear is being expressed in Wall Street of any radical legislation being adopted. The interim, or so-called "lame duck," session of Congress which begins on Dec. 5 is not expected to produce anything startling in the way of legislation, although some action may be taken toward the amendment of the Volstead Act, and by March 4 the new Cabinet will have been chosen and the new policies to be inaugurated will be better known. Wheat has been stronger of late and appears to be stabilizing itself around present prices inordinately low though they may be. A fair export business has been done in Manitoba wheat, but American hard wheat has been 3c. above an export parity. Corn has continued its firm tone. Expectations of a fair export trade has kept the price up and been the main reason for a lessened selling pressure. Oats and rye have responded to the higher prices for the other grains. Cotton has been helped by a strong technical position after a decline of nearly $20 a bale. There has been an increased trade demand for the staple and the South has been a reluctant seller at this level. Sugar has risen sharply owing to the great storm in Cuba, while coffee has continued the downward course which commenced with the opening of the port of Santos last month. Taking all factors into consideration, however, the fact remains that business news is being brought to the front again instead of politics, and although the problems confronting the country are as stupendous as ever sentiment appears to have become more hopeful recently. It is pointed out that cotton mill activity in this country is on a much higher level than general manufacturing activity, as measured by average relationships in 1922 to 1927. On that basis, the index number for cotton goods production last month was approximately 95 while that for manufactures in general was only 68, a spread of 27. In October of last year, the index for cotton cloth output was 83 and that for general manufactures was 72, a spread of 11. Two years ago,cotton goods production was below production of general manufactures, the index numbers being respectively 79 and 88. In 1921, cotton spinning improved much earlier and more sharply than manufacturing in general; the cotton manufacturing curve rose sharply early in 1921, even while cotton prices were continuing to decline and general manufacturing activities were continuing to recede. Print cloths here have been more active and at times stronger. Decreases in chain store sales compared with those of 1931 are becoming smaller. The stock market on the 5th continued the strength of the previous day and closed higher with trading in only 463,000 shares. Bond sales were $3,455,000 with advances and declines about evenly divided. The salient fact of the short day was the continued firmness on the eve of the election. Wheat advanced and cotton rose some 25 points. On the 7th stocks suddenly developed pronounced strength and advanced 1 to 5 points with sales of 1,610,000 shares, or 640,000 shares more than on the• previous Friday, the last full day. Election hesitation was thrown off and there was unmistakable relief that the campaign was near an end. A moderate reaction from the early and highest prices took place before the close but the tone of the market was distinctly good. Bonds were also strong and advanced 3 to 6 points, led by the railroad issues. On the 9th, stocks advanced 1 to 2 points, but reacted later and closed with net declines of 1 to 4i points. Sales were 1,268,300 shares. Bonds fell off in some cases 2 to 3 points on sales of $7,579,000 but in general the declines were fractional. Profit taking after the election together with lower grain and cotton markets were considered as logical explanations of the setback which in any case was not severe. On the 10th stocks advanced 2 to 5 points with Wall Street in a very hopeful frame of mind. There was also an advance in grain, cotton, rubber, silk and other commodities. The volume of trading was not large, i. e., 1,577,000 shares, but the feeling was more confident and closing prices were near the highest of the day. Domestic bonds were generally higher and foreign issues in some cases followed their lead. U. S. Governments, however, were fractionally lower. Today stocks advanced 1 to 6 points with transactions reaching 2,600,000 shares. It was the broadest and most active market in more than a month. Rails, industrial specialties and leading utility issues were in the van. Bonds were higher. Rail issues led the rise. U. S. Government shares were quiet. Chicago reported that the electric output in that district for the week ended Nov. 5 totaled 92,997,000 kilowatt hours, a decline of 6,979 from the corresponding week of 1931. During the week ended Oct. 29 output aggregated 94,317,000 kilowatt hours, a decrease of 8.6% from the like 1931 week. At Selma, N. C., the Lizzie and Ethel mills of the Eastern Manufacturing Co., the Mobile Cotton Mills of Selma and the Smithfield Mills, Inc., all in Johnstown County, are reported operating at full capacity day and night. They have a large number of operatives at work. London cabled that in view of the difficulties encountered in discussing details of the more-looms-perweaver system, employers and operatives representatives' have unanimously agreed to invite Chief Conciliation Officer Legett of the Ministry of Labor to act as chairman at future meetings beginning next Monday. At Nashville, Tenn., the Walter Fred Hosiery Mills, Inc., is operating at full capacity. This mill is sold up until Christmas. Its salesmen have been withdrawn from the road until the first of the year. This is the first time it has ever withdrawn salesmen at this date. The unfilled orders of the United States Steel Corporation increased in October it was gratifying to notice 11,950 tons. This is an increase in three months of 30,738 tons against a decrease of 290,324 in the same time in 1931 and 540,292 in a like period in 1930. Montreal advices say that in line with seasonal developments, cotton trade activity in Canada has slackened off perceptibly during the past fortnight. Cotton mill operations and the industry as a whole have been running at about 66% of capacity since mid-summer, with some mills operating near a capacity while others, notably in the commercial and style cottons divisions, have operated at only from 30 to 50% capacity. Although considerable damage was reported on the 9th as a result of the tropical hurricane in Cuba, first advices did not reveal or even approximate the extent of the catastrophe. Reports received to-day indicate that the deathtoll will be nearly 2,000 and that the entire province of Camaguey has been laid waste not to mention tremendous damage in other parts of the island. It is impossible at this Volume 135 Financial Chronicle writing to estimate accurately just how much property has been destroyed but sugar mills in the devastated districts have suffered severely; 2,000,000 sacks of sugar owned by the National Sugar Export Corp., part of the sugar segregated under the Chadbourne plan has apparently been lost and many cane fields ruined. Jamaica also suffered heavy losses and all of the West IndianAslands in the path of the storm were damaged to a greater or less extent. Some of its effects were made manifest in contiguous parts of the mainland where a cloudburst flooded the Everglades of Florida. At about the same time a northeast gale with heavy rains and high winds described as the worst in years battered the North Atlantic coast of the United States. New England, New York and New Jersey bore the brunt of it and the property damage suffered will mount into millions of dollars. The temperatures in N. Y. City on the 8th were 50 to 56 degrees. Boston had 46 to 48; Chicago, 52 to 62; Cincinnati, 56 to 74; Cleveland, 52 to 66; Denver, 22 to 50; Detroit 48 to 54; Kansas City, 32 to 36; Milwaukee, 50 to 54; Min.-St. Paul, 38 to 50; Montreal, 36 to 42; Omaha, 30 to 36; Philadelphia, 54 to 60; Phoenix, 46 to 80; Pittsburgh, 54 to 68; Portland, Ore., 48 to 52; Portland, Me., 46; San Francisco, 54 to 74; Seattle, 46 to 52; Spokane, 38 to 42; St. Louis, 48; Winnipeg, 30. On Friday the 11th temperatures in N. Y. City were 45 to 55 degrees; Boston, 44 to 62; Chicago, 26 to 34; Cincinnati, 32 to 54; Cleveland, 40 to 46; Denver, 10 to 28; Detroit, 30 to 40; Kansas City, 28 to 36; Milwaukee, 26 to 36; St. Paul, 24 to 32; Montreal, 34 to 38; Omaha, 24 to 28; Philadelphia, 46 to 60; Phoenix, 44 to 80; Pittsburgh, 40 to 52; Portland, Ore., 46 to 54; Portland, Me., 42 to 50; San Francisco, 58 to 76; Seattle, 44 to 50; Spokane, 28 to 40; St. Louis, 28 to 40; Winnipeg, 12 to 26. National City Bank of New York Finds Evidence That Sentiment of Country Is for Economy in Government Expenditures — Sees Impressive Business Improvement Since July—Over-Subscription of Treasury Bills Reflects Undesirable Condition in Money Market. Issued on Nov. 1 (prior to the elections on Nov. 8), the monthly letter of the National City Bank of New York stated that "the chief influence on business sentiment during the past month must be looked for in the political rather than the trade news, for undoubtedly the campaign has been the topic of absorbing interest." The bank observed that "what the country needs from both parties is determination to preserve sound principles in public finance. The central element in such a program must be the balancing of budgets through reduction of expenditure." In part the bank also said: Since early July there has been a vigorous and impressive business im- provement, and the country very well understands that this recovery followed upon the relief of fears concening the dollar and the financial situation generally, just as the collapse of business in tbe Spring was a consequence of those fears. This demonstration of cause and effect has been a convincing one, and wins support for sound policies. Another reason why the demand for economy and sound public finance has continuously grown is the increase in the tax burden, now that taxes must be paid out of incomes cut in half. Pertinent to the foregoing is the following extract from the bulletin on the agricultural situation published by the Corn Belt Farm Dallies, under date of Sept. 30 It would be a wonderful thing if both candidates could spend a little more time with practical farmers and a little less with political farm "leaders." They would discover, for one thing, that the most vote-getting talk at the present time would be along the line ofeffective curring down bureaucratic activities of the Government and reducing costs and taxes, and not the promotion of schemes to Involve the Government in nobody knows how many millions or hundreds of of new expenses. and business in costly uncertainties of world-widemillions influence. This is not quoted as a criticism of the candidates, but as informed testimony to the state of mind which is entering into the elections this year in the farm country, and, it is safe to say, elsewhere also. The evidence is convincing that the sentiment of the country is for economy, and for a balance between receipts and expenditures that will keep the public credit above reproach. The political history of the country justifies the utmost confidence that any Congress elected will contain a majority supporting these principles. The Treasury and the Ifoney Market. Of course some people still believe that the way out of the depression Is through the expenditure of Government credit in gigantic sums. They interpret the subscription to the offering of $450,000,000 Treasury notes on Oct. 15 which was oversubscribed 18 times as evidence of an almost unKnitted ability of the Treasury to borrow. However, this is a serious misapprehension. Aside from the familiar "padding," due to Institutions subscribing for more notes than they expected to get in order to get all they wanted, the oversubscription reflects an unnatural and undesirable condition in the money markets, growing out of the depression. Capital shuns investment In private enterprises of all but the highest credit, and indeed avoids comitment in long term obligations of any sort. Thus there is a great piling up of funds in the money centers seeking liquid short term investments of high standing, among which the Treasury notes and minicotes are of course pre-eminent. These are funds normally needed by business, and they will be needed again as business recovers. Th3ir diversion to Treasury uses Is not a sign of the strength of the public credit, but of the weakness of business. 3233 Moreover,the banks are in funds by reason of the large volume of Federal Reserve Bank credit outstanding, and short term Government securities provide the only important outlet for the investment of their excess reserves. This is the chief explanation for the oversubscription mentioned. The questions involved in Government credit policies in the depression arc complex ones, and people may sincerely differ upon them. However, two propositions seem indisputable. First, there are plainly limits beyond which the Government debt cannot be expanded without causing such alarm as to offset, and perhaps more than offset, the temporarily stimulating effect of the disbursements. There is no gain from employing the National credit to replace private capital in support of business if the policy drives as much or more private capital out of business, into Government obligations, into hiding, or even out of the country. The second "proposition is that the public credit canaot be employed continuously to support the economic organization unless it is preserved by a balanced budget. The Government, like an individual, must in the long run live within its income; otherwise its credit will decline. During the fiscal year to date, (October figures up to the 22d) the current operating deficit was $601,000,000. and if the $345.000.000 allotted to the Reconstruction Finance Corporation be added the total was $946,000,000. For the same period of the preceding fiscal year the operating deficit was 8635,000,000. Consideration of these figures must, of course, take account both of the fact that the new income rates do not become effective until after the first of the calendar year,and also the fact that internal revenue receipts In the early months of the fiscal year were undoubtedly diminished by the tendency of purchasers to anticipate their needs before the new taxes went into effect. The yield of these taxes has lately been increasing. Moreover, any improvement of business would further lessen the demands on the Reconstruction Finance Corporation. as well as speed up the repayment of its advances. All of which would tend to improve the Treasury position. However, none of this is certain. Since this is so the country cannot afford to ignore the import of the current figures, nor abate its determination to bring the budget to a balance. , Commodity Prices Reactionary. The truly disappointing feature of the business situation is the downward movement of commodity prices, which has continued since early September. Great importance was correctly attached to the summer rise, which not only added to purchasing power in the farm market, where It was badly needed, but gave a new incentive and stimulus to trade. However, the rise was too great to last. Wheat has lately sold 16 cents and corn 12 cents below the top, and both at new lows for the depression. Cotton has lost 3 cents of its 4-cent advance, and hogs the greater part of their early summer gain. Cattle and hides, wool and other farm products with some exceptions have reacted, and the non-ferrous metals also are lower. Among the imported products, representing purchasing power in other countries, cocoa, rubber, coffee and silk have dropped much of their advance. In the security markets also the trend during October has been reactionary, and probably the influences at work are the same in all the markets. It would be interesting to know what those who were saying in August that the rise in stocks and commodities was engineered for political purposes are saying now. The outcome proves the truth of the statement made in this Letter two months ago, that the buying came from the plainest of motives. i.e., the buyers believed they would make money, and tha no other explanation was correct or necessary. It May be considered that the price reaction reflects in mercantile circles a disposition to estimate trade prospects conservatively, and in business sentiment generally a recognition of uncertainties and difficulties that hamper recovery. The disturbance of international trade and finance Is a continuing factor, and there has been a fresh disturbance in the month In a further decline in the pound sterling, which affects other currencies, introduces new elements of competition and uncertainty, and is an unfavorable influence on prices everywhere. It Is evident that a "managed" currency, cut loose from gold, may prove unmanageable, and of course the fluctuations are unsettling. Loading of Railroad RevenueFreight Somewhat Smaller. Loading of revenue freight for the week ended on Oct. 29 totaled 617,642 cars, according to reports filed on Nov. 5 by the railroads with the car service division of the American Railway Association. Due to the usual seasonal decline in freight traffic which generally sets in around this period of the year, this was a reduction of 24,531 cars under the preceding week. It also was a decrease of 122,721 cars under the same week in 1931 and 317,073 cars under the same week two years ago. Details follow: Miscellaneous freight loading for the week of Oct. 29 totaled 226,149 cars, a decrease of 10,101 cars under the preceding week, 46.954 cars under the corresponding week in 1931 and 132,876 cars below the same week In 1930. Loading of merchandise less than carload lot freight totaled 177.662 cars, a decrease of 1,082 cars below the preceding week, 36,677 cars below the corresponding week last year and 62,920 cars under the same week two years ago. ' • Coal loading totaled 128,869 cars, a decrease of 11,936 cars below the preceding week. 12.199 cars below the corresponding week last year and 47,388 cars below the same week in 1930. Live stock loading amounted to 23,608 cars, a decrease of 88 cars below the preceding week, 5.382 cars below the same week last year and 8.851 cars below the same week two years ago. In the Western districts alone, loading of live stock for the week ended on Oct. 29 totaled 19,346 cars, a decrease of 4.565 cars compared with the same week last year. Grain and grain products loading totaled 31,951 cars. 1,033 cars below the preceding week. 9.324 cars below the corresponding week last year and 12.396 cars under the same week in 1930. In the Western districts alone, grain and grain products loading for the week ended on Oct. 29 totaled 20.627 cars, a decrease of 5,48 cars below the same week In 1931. Forest products loading totaled 18.856 cars. an increase of 283 cars above the preceding week, but 4.790 cars under the same week in 1931 and 19,278 cars below the corresponding week two years ago. Ore loading amounted to 6,019 cars, a decrease of 264 cars below the week before. 6.637 cars under the corresponding week last year and 29.044 cars under the same week in 1930. Coke loading amounted to 4.528 cars, a decrease of 310 cars under the preceding week. 758 cars below the same week last year and 4.320 cars below the same week two years ago. All districts reported reductions in the total loading of all commodities compared with the same week in 1931 and 1930. Financial Chronicle 3234 Loading of revenue freight in 1932 compared with the two previous years follows: 1932. 1931. 2,269,875 2,245,325 2,280,672 2,772,888 2,087,756 1,966,355 2,422.134 2,065,079 2,244,599 622.075 625,636 650,578 642,173 617,642 2,873,211 2,834,119 2,936,928 3,757,863 2,958,784 2,991,950 3,692,362 2,990,507 2,908,271 777,712 763,818 761,596 769,673 740,363 3,470,797 3,506,899 3,515,733 4,561,634 3,650,775 3,718.983 4,475.391 3,752,048 3,725.686 971,255 954,782 931,105 959,492 934,715 23.512.787 31.757.157 39.129.295 Four weeks in January Four weeks in February Four weeks in March Five weeks in April Four weeks in May Four weeks in June Five weeks in July Four weeks in August Four weeks In September Week ended Oct. 1 Week ended Oct. 8 Week ended Oct. 15 Week ended Oct. 22 Week ended Oct. 29 Total 1930. Nov. 12 1932 The foregoing, as noted, covers total loadings by the railroads of the United States for the week ended Oct. 29. In the table below we undertake to show also the loadings for the separate roads and systems. It should be understood, however, that in this case the figures are a week behind those of the general totals-that is, are for the week ended Oct. 22. During the latter period 23 roads showed increases over the corresponding week last year, the most important of which were the St. Louis-San Francisco Ry., the Texas Pacific Ry., the Wheeling & Lake Erie Ry., the Pittsburgh & West Virginia Ry., the Northwestern Pacific RR., the New York Ontario & Western Ry., the Spokane Portland & Seattle Ry., the Fort Dodge & Denver City Ry., the Gulf Coast Lines and the Terminal RR. Association of St. Louis. REVENUE FREIGHT LOADED AND RECEIVED FROM CONNECTIONS (NUMBER OF CARS)-WEEK ENDED OCT. 22. Eastern DistrictGroup A: Bangor & Aroostook Boston & Albany Boston & Maine Central Vermont Maine Central New York N. if. & Hartford.... Rutland Total Group B: y Buff. Rochester & Pittsburgh_ Delaware & Hudson Delaware Lackawanna & West. Erie Lehigh dr Hudson River Lehigh & New England Lehigh Valley Montour New York Central New York Ontario & Western Pittsburgh & Shawmut Pittsb. Shawmut & Northern... x Ulster & Delaware Total Group C: Ann Arbor Chicago Indlanap.& Cleve. Cin. Chi. & St. Louis-Central Indiana Detroit& Mackinac Detroit er Toledo Shore Line_ -Detroit Toledo & Ironton Grand Trunk Western Michigan Central Monongahela New York Chicago & St. Louis. PoreMarquette Pittsburgh & Lake Erie Pittsburgh 4z West Virginia.... Wabash Wheeling & Lake Erie Total Grand total Eastern District Allegheny DistrictBaltimore & Ohio Bessemer & Lake Erie y Buffalo Sr Susquehanna Buffalo Creek & Gauley Central RR. of New Jersey__ Cornwall Cumberland & Pennsylvania._ Ligonier Valley Long Island Pennsylvania System Reading Co Union (Pittsburgh) West Virginia Northern Western Maryland Total Pocahontas DistrictChesapeake & Ohio Norfolk & Western Norfolk & Portsmouth Belt Line Virginian Total Southern DistrictGroup A: Atlantic Coast Line Clinchfield Charleston & Western Carolina Durham & Southern Gainesville & Midland Norfolk Southern Piedmont & Northern Richmond Frederick.& Potom_ Seaboard Mr Line Southern System Winston-Salem Southbound_ Total Loads Received from Connections. Total Revenue Freight Loaded. Railroads. 1932. 1931. 1930. 1932. 1931. 1.025 2,874 7,837 718 2.508 10,661 701 2,066 3,746 9.721 785 3,083 13,487 754 2,296 3.702 11.539 902 3,949 14.799 769 206 4,702 9.630 2,268 1,892 11.502 885 254 5,869 12,158 2,768 2,929 14.697 1,283 26,324 33.622 37,956 31,085 39,956 e;oii 7.776 12,966 16,052 208 2,155 11.115 2.363 26,035 2,134 597 467 9:9. 64 14,377 16.971 234 2.898 12.379 3,189 33,018 1,553 618 521 6:175 9,684 12,570 171 1,565 8,756 2.191 21,059 2,195 511 283 5,409 13,158 1,819 871 6,342 22 27.069 1,964 57 259 7.983 6.713 15.371 2,534 1,261 7,831 63 31,610 2,443 75 321 64,996 81,868 95,721 63,149 76,005 633 1.655 8,198 49 449 171 1,329 2,523 5,461 3.815 4,558 4,873 3.833 1,558 5,888 3,560 651 1,929 9,213 52 481 267 1,338 2,767 6,593 4,356 6.199 5,812 4,364 1,440 6.786 3.223 767 2,550 12,120 72 519 315 2.277 3,992 8.727 5.267 6.804 7,722 6,532 1.734 7.156 4,107 1,002 1,776 11,539 65 120 2,166 709 5,485 7,462 222 8.348 4,514 4,598 528 7.171 1.824 1,135 2,019 11,932 91 167 2,313 855 6,229 9,041 220 8,853 4,930 5,289 735 8.147 2.683 48,553 55,471 70.651 57.505 64,639 139.873 170,961 204,328 151,739 180,600 27,489 1,272 33,142 2,104 z42,501 4,506 13,827 850 17,409 1,175 263 6,529 1 224 226 1,045 55.959 14,144 2,831 55 3,042 109 9,368 564 435 188 1,733 75,325 17,819 5,470 46 3.646 205 11.727 388 472 191 2.004 90.723 20,651 9,908 70 3.884 6 10,261 30 19 11 3,400 37.968 14,881 914 5 13,060 62 16 35 4,670 45,359 19,038 1,830 3,609 4,509 113,080 149,949 187,230 85.776 107,168 24,128 19,213 764 3.489 24,733 21,609 950 3.845 29,221 22.539 1,066 4,195 7,693 3,609 1,094 596 8,405 4,149 1,758 444 47,594 51.137 57.021 12,992 14,756 6,803 889 388 163 77 1,596 461 290 6,364 19.371 210 8,720 1,328 420 189 70 2,106 565 437 7.982 24,046 204 12,572 1,389 720 229 130 2.500 581 440 11.414 28,657 234 4,013 1,214 88e 332 106 1,242 775 2,107 2,928 11,171 717 4,945 1,246 894 483 165 1.390 905 2,808 3,629 13.214 1,057 Total Railroads. Group B: Alabama Tenn.& Northern_ _ _ Atlanta Birmingham & Coast__ Atl.& W.P.-West RR.of Ala. Central of Georgia Columbus & Greenville Florida East Coast Georgia Georgia & Florida Gulf Mobile & Northern Illinois Central System Louisville & Nashville Mason Dublin & Savannah__ _ Mississippi Central Mobile & Ohio Nashville Chattanooga & St. L. New Orleans-Great Northern__ Tennessee Central Total Loads Received from Connections. 1932. 1931. 1930. 219 644 673 3,262 237 484 863 320 830 23,494 18,284 122 211 2.042 2,997 565 264 285 690 791 3,797 350 541 1,127 431 988 26,636 19,964 152 228 2,412 3,386 982 609 258 1,031 915 4,917 544 749 1,408 597 1,467 31,320 26,976 191 299 3.317 4,066 863 754 1932. 1931. 137 510 1.016 2,100 236 284 1,211 253 606 8,986 3,502 259 265 1,384 1.979 383 794 175 800 1,134 2,582 280 435 1,400 275 857 9,820 4,249 287 340 1,325 2,171 348 705 55,511 63,369 79,672 23,885 26,983 Grand total Southern District__ 92,123 109,436 138,538 49,175 57,719 Northwestern DistrictBelt Ry. of Chicago Chicago & North Western Chicago Great Western Chic. Milw. St. Paul & Pacific_ Chic. St. Paul Minn. & Omaha Duluth Missabe & Northern_ _ Duluth South Shore & Atlantic Elgin Joliet & Eastern Ft. Dodge Des M.& Southern_ Great Northern Green Bay & Western Minneapolis & St. Louis Minn. St. Paul & S. B. Marie.. Northern Pacific Spokane Portland & Seattle. 990 15.620 2,460 18,707 3,514 1,551 646 3,115 266 10,608 498 2,026 4,922 10,190 1,242 1,399 19,779 3,382 22,421 3,832 5,591 1.177 3,804 324 13,274 782 2,208 6,173 12.280 908 1,599 26.187 3,553 27,692 5,455 12,853 1,190 6,352 432 19,454 902 2,882 9.101 16.206 1.884 2,009 9,635 2.814 7.435 3.318 114 389 3,409 137 1,749 349 1,632 1,677 2.089 1,051 1,976 11,045 3.132 7,944 3,920 108 442 4,663 174 2,248 485 1.729 2.180 2,511 987 78,355 97.334 135.522 37,807 43,524 24,887 3,578 134 18,291 13.284 2.853 *1,620 4,406 561 2,103 956 245 18,333 216 409 17,901 766 1.633 27,116 3,977 182 21,336 16,224 3,189 2.363 4.572 649 2,041 836 136 18.738 328 278 19,851 584 1.850 33,136 4.720 281 28.456 18,116 4,076 2,805 8,265 952 1,917 1,256 241 27,239 329 302 24,265 1.038 2,186 5,706 2.129 25 7.136 7,182 1.822 1,335 3,060 12 1,441 225 42 3,359 384 1.030 10,157 9 2,355 5,659 2,483 31 8,230 8,269 2,453 1,350 2,702 15 1,435 300 58 3,569 283 892 9,495 21 1,917 112,176 124,248 157,582 47,409 49.162 122 239 357 1.834 85 1,971 301 1,711 1,285 89 912 218 6.313 16,595 42 208 11,143 3,388 267 6.682 5,560 1,620 32 169 219 273 1,508 227 2,117 268 1,985 1,795 345 984 180 6,515 20,351 45 168 11,097 3.500 385 7,809 5,117 1,510 41 244 464 471 2.013 291 2,434 444 2.659 1,726 576 1,478 145 7.185 23,326 41 178 13,147 3,528 345 9,730 6.650 2,160 36 2,819 799 182 972 51 1.623 913 1,435 954 438 174 231 2,658 8,060 21 165 3.399 1.287 218 2.764 2.957 2.285 57 2,671 553 130 1,543 62 2,061 986 2,017 1,154 668 297 339 2,445 8,515 36 102 3,677 1,200 252 3,481 3.844 2,700 39 60,972 68,808 79,271 34,462 Total Total Central Western Dist.Atch. Top. & Santa Fe SystemAlton Bingham & Garfield Chicago Burlington & Quincy.. ChicagoRock Island & Pacific_ Chicago & Eastern Illinois Colorado & Southern Denver & Rio Grande Western_ Denver & Salt Lake Fort Worth & Denver City-Northwestern Pacific Peoria & Pekin Union Southern Pacific (Pacific) St. Joseph & Grand Island Toledo Peoria & Western Union Pacific System Utah Western Pacific Total Southwestern DistrictAlton & Southern Burlington-Rock Island Fort Smith & Western Gulf Coast Lines Houston & Brazos Valley International-Great Northern Kansas Oklahoma & Gulf Kansas City Southern Louisiana & Arkansas Litchfield & Madison Midland Valley Missouri & North Arkansas_ _ Missouri-Kansas-Texas Lines._ Missouri Pacific Natchez & Southern Quanah Acme & Pacific St. Louis-San Francisco St. Louis Southwestern San Antonio Uvalde & Gulf __ _ _ Southern Pacific in Texas & La. Texas & Pacific Terminal RR. Assn. of St. Louis Weatherford Min. Wells& N.W. 36,612 58,866 46.067 25,290 30,736 Total x Included In New York Central. 9 Included in Baltimore & Ohio RR. z Est mated. • Previous week. Further Decline Noted in Commodity Prices During Week Ended Nov. 5 by National Fertilizer Association. For the eighth consecutive week, wholesale commodity prices were again lower for the week ended Nov. 5, as reported by the National Fertilizer Association. The general index number declined from 60.3 to 59.9. This is a loss of four fractional points. During the preceding week, the index declined three points and two weeks ago it declined one point. The latest index number, 59.9, is now only three Total Revenue Freight Loaded. 38,77 fractional points higher than the record low of 59.6 recorded on June 11 1932. During September, the index advanced to 62.7, but the veekly losses during the last two months have wiped out the gains made in August and September. (The three-year average 1926-1928 equals 100.) The Association further said as follows on Nov. 7: During the latest week,five groups declined, three advanced and six were unchanged. The advancing groups were building materials, fats and oils, and fertilizer materials. Losses were shown in the following groups: foods, fuel, grains, feeds and livestock, textiles, and miscellaneous commodities. Price losses were shown during the latest week for 41 commodities, while 21 commodities showed price gains. During the preceding week, there were • Volume 135 Financial Chronicle 41 price declines and 13 price advances. Among the commodities that advanced during the latest week were lard, butter, eggs, heavy hogs, tin, silver, Cement, sulphate of ammonia, sodium nitrate, and heavy native hides. The list of declining commodities included cotton, wheat, corn, cottonseed meal, feedstuffs, lumber, gasoline, rubber, coffee, silk, burlap and many foods. WEEKLY WHOLESALE PRICE INDEX-BASiED ON 476 COMMODITY PRICES (1926-1928=100). Per Cent Each Group Bears to the Total Index. 23.2 16.0 12.8 10.1 8.5 6.7 8.6 6.2 4.0 3.8 1.0 .4 2 100.0 Group. Latest Week Nov. 5 1932. Preceding Week. Month Apo. Year Ago. Foods Fuel Grains,feeds and livestock-. Textiles Miscellaneous commodities Automobiles Building materials Metals House-furnishing goods Fats and oils Chemicals and drugs Fertilizer materials Mixed fertilizer Agricultural implements 60.4 64.0 37.5 44.8 61.0 86.6 70.7 08.0 77.4 42.0 87.4 62.2 68.8 92.1 61.5 64.2 38.4 45.7 61.2 86.6 70.5 68.0 77.4 41.4 87.4 61.7 68.8 92.1 62.1 61.5 40.9 47.6 61.4 89.0 70.4 69.7 77.4 41.8 87.4 62.0 69.0 92.1 74.2 60.3 15.0 51.2 66.3 89.3 75.0 75.3 86.0 58.3 86.7 70.5 79.7 95.2 59.9 60.3 60.9 67.8 All groups combined Estimated Seasonal Increase in Department Store Sales from September to October Reported by Federa l Reserve Board. Preliminary figures on the value of departm ent store sales show an increase from September to October of about the estimated seasonal amount. The Federal Reserve Board's index, which makes allowance both for number of business days and for usual seasonal changes, was 70 in October on the basis of the 1923-1925 average as 100, compared with 70 in September and 66 in August. Further reporting on department store sales, the Board said as follows on Nov. 11: In comparison with a year ago the value of sales for October, according to the preliminary figures, was 21% smaller: when allowance is made for the fact that there was one less business day in October this year than last the decline is 18%. The aggregate for the first ten months of the year was 23% smaller than for the correspon ding period of 1931. PERCENTAGE INCREASE OR DECREA SE FROM A YEAR AGO. -21 -21 -16 26 -21 -23 -24 -22 -17 -20 -15 -22 Total _ol Number of Mee. 100 59 41 53 54 33 61 21 19 29 17 82 28 29 16 16 22 19 36 9 12 14 6 31 1 KAO 92LI 111111 111111 . to Federal Reserve DistrictBoston New York Philadelphia Cleveland Richmond__ _.. Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Jan. 1 Number of to Reporting Oct. 31.* Stores. t.D to to INN to to W NI to I A•Coba0C,•14.0-41-..-••-• October.* • October figures preliminary; in most districts the month had one less busines day this year than last year. Slight Decrease Reported by United States Department of Labor in Wholesale Prices During Week Ended Nov. 5. The Bureau of Labor Statistics of the U. S. Department of Labor announces that its index number of wholesa le prices for the week ending Nov. 5 stands at 63.9 as compar ed with 64.1 for the week ending Oct. 29, showing a decrease of .3 of 1%. The Bureau also said as follows under date of Nov.9: These index numbers are derived from price quotation s of 784 commodities, weighted according to the importance of each commodity and based on average prices for the year 1926 as 100.0. The accompanying statement shows the index numbers of groups of commodities for the weeks ending Oct. 8, 15, 22, 29, and Nov. 5. INDEX NUMBERS OF WHOLES ALE PRICES FOR WEEKS OF OCT.8, 15, 22, 29, AND NOV. 5. (192100.0) Week Ending All commodities Farm products Foods Hides and leather products Textile products Fuel and lighting Metals and metal products Building materials Chemicals and drugs Housefurnishing goods Miscellaneous Oct. 8 Oct. 15 Oct. 22 Oct. 29 Nov. 5 64.9 48.8 61.5 73.0 56.3 71.3 80.1 70.5 72.9 74.1 64.1 64.4 47.4 60.7 72.5 54.9 71.3 80.1 70.5 72.7 72.4 63.9 64.4 47.0 60.8 72.8 54.7 71.9 b0.3 70.5 72.7 72.5 63.9 64.1 46.2 60.1 72.2 54.5 72.8 79.9 70.6 72.4 72.5 63.9 63.9 45.9 59.3 71.6 54.2 72.8 79.9 70.7 72.4 72.5 63.8 Annalist Weekly Index of Wholesale Commodity Prices Increased Moderately. A moderate rise of 0.4 points from the previous Tuesday lifted the Annalist Weekly Index of Wholesale Commodity Prices to 88.9 on Monday, Nov. 7 (prices as of Nov.8 being largely unavailable owing to the election holiday), interrupting the unbroken decline of the eight previous weeks. Further reporting, the "Annalist" also said: 3235 Most of the groups were little changed, only farm and food products showing appreciable gains, while fuels lost a half point. In view of the restricted list of commodities that advanced, the week's rally cannot be Considered as of other than passing significance, being largely due doubtless to reaction from the sharp declines of recent weeks. "ANNALIST" WEEKLY INDEX OF WHOLES ALE COMMODITY PRICES (Unadjusted for Seasonal Variation (1913=100). Farm products Food products Textile products Fuels Metals Building materials Chemicals Miscellaneous All commodities * Provisional. x Revised. Nov. 7 1932, Nov. 1 1932. Nov.10 1931. 70.2 68.7 89.8 94.4 93.7 111.0 *72.8 x72.9 85.2 131.6 132.1 131.3 95.0 95.0 100.2 106.5 106.4 111.5 95.3 95.3 96.8 73.3 73.3 88.1 88.9 85.5 the 5 Alfred P. Sloan, Jr., of General Motors Corp., on Effect of Election on Business-Of Prime Importance that Early Announcement Be Made of New Policies. Alfred P. Sloan, Jr., President of General Motors Corp., in answer to inquiries with respect to the effect of the election on the business trend, made the following statement on Nov. 9: In my opinion there is ground for the thought that there will be a certain amount of hesitancy as a result of the change in administration until more Is known of what the new policies are to be. This suggests the prime importance and helpfulness of the earliest practical announcement of such policies, as well as the names of the individuals who will be directly concerned. On the other hand, the strong mandate given the new administration is certain to establish great confidence the world over that national and international questions vital and fundamen tal in the building of a broad foundation of economic recovery will now be dealt with aggressively and constructively, something that has apparently been impossible before. In balancing these two influences one against the other. I am confident that business will push forward aggressiv ely. That at least will be the policy of General Motors Corp. We must always remember that this country of ours is greater than any individua l or group of individuals. American Federation of Labor Puts Pay Decline at $25,020,000,000-Compares Estimated Total of 1932 with That of 1929 Peak Year-Retail Sales Drop Large. Estimating the decline in workers' income in 1932 at $25,020,000,000, as compared with 1929, and the decreas e in retail sales for the same period at $20,000,000,000, the American Federation of Labor, in its monthly survey, on Nov. 4 called upon business men to create jobs and raise wages as the only sure way to bring about a continuing economic revival. A Washington dispatch to the New York "Times" Nov. 4 further reported: Business has gained this fall for the first time since the spring of 1931. the Federation said, reaching a little more than normal seasonal proportions, but WiLS checked in mid-October and did not go forward into a marked upward trend. "We cannot expect large gains in business while buying power Is at so low a levet." the survey added. It classified the revival this fall as a "replacement upturn," which was felt particularly in the lighter industries-textiles, shoes, clothing, foods and printing. This indicated, it held, that those who have been at work have at last been forced to replace wornout goods. "Firms do not yet see enough business ahead to warrant large production increases or investments in new machinery and construct ion," the Federation said, "which would give large orders to the metal industries and put men to work. In the so-called heavy or basic industries, therefore -iron and steel, machinery, automobiles, metal mining-p roduction Increases have also been confined in general to essential replacem ents of machinery and tools." Tables Prepared on Declines In dealing with the decline of workers' income, in which it included wages and salaries, and in the loss in retail sales, the Federation used the following table: Year- 1929 1930 1931 1932 Workers' Income. Loss From 1929. Retail Sales. Loss From 1929, S53.252.000.000 $50,000,000,000 45.503.000.000 $7,749.000.000 44.000,000.000 86,000.000.000 37.741.000.000 15.511.000,000 37.500.000.000 12,500.000 .000 28.232.000.000 25.020.000 000 30.000 000.000 20,000 000.000 The figures for workers' income in 1929, the Federatio n said, were from "Business Week," while the other figures were its own estimates. It added that the "close correspondence between workers' income losses and the decline of retail sales shows why business lags." The Federation said that while in September 560.000 workers found at least temporary employment, there were still 10.900,000 unemployed. Trade union reports for the first part of October show a further gain, the unions reporting 25.4% of their membersh ip out of employment in July. 25.1 in August. 24.8 in September and 24% in the first part of October. "Even these relatively small gains have increased workers' buying power and retail trade shows the effect." it added. "In July department store sales were 30% below last year, in August the margin was decreased to 24%, in September to 18%. "Only 5% of the unemployed went back to work in September. This gain has little permanent significance, as relief for the unemployed unless the usual winter layoffs can be prevente d. For the last three years from 1.000,000 to 1,600,000 have been laid off from October to January." Says Industry Does Not Seek Credit. Because buying power is not sufficient to assure future business increases, the Federation argued, industry is not seeking credit from banks beyond immediate needs, and efforts to "coax out credit reserves supplied Nov. 12 1932 Financial Chronicle 3236 have not been sucfrom Federal funds and get them to work in industry cessful." loans declined It pointed out that during the fall business revival bank that banks were by 8300.000.000 from Sept. 7 to Oct. 26, and contended $406,000,000 hoarding their surplus credit, having since July 1 deposited 0,000 in Govwith the Federal Reserve and invested more than $1,000,00 ernment securities. co-operation The Federation said that there had not been whole-hearted work, shorten by business men with local committees to put credit to hours and create jobs. when new orders "The following records show," it said, "that this fall, lengthened work hours made it possible to increase production, firms per employee in instead of employing more men. Average hours worked August to 34.8 in manufacturing industries increased from 32.2 a week in employment only 22%, September; in iron and steel, production increased 19%, employment 1%; 1%; in food industries, production increased 1%; tobacco proleather and shoes production gained 10%, employment we are to pull toduction increased 3%, employment fell nearly 1%. If losing opportuinties gether out of this depression, business men must stop to create jobs." Declared World Problem. adjusted the balance The Federation said that the depression had not as since 1929 workers' between wage payments and dividend distribution, dividends are still Incomes have fallen 23% below the 1922 level while 32% above it. problems which "check our The Federation added that many of the by international action." It recovery are world wide and must be solved conference would acexpressed hope that the proposed world economic added that "unless our complish constructive action, but added that at home they cannot representatives are backed by intelligent opinion " make decisions which will contribute to recovery. still quite large, but the reduction that appears in comparison with the earlier months of the year is notable. The October figures are also less than those of a year ago, comparing with 2,362 for October 1931, a decline of 3.8%. This showing is quite in contrast with that for the preceding nine months. The number for that period was 25,007 against 20,970 in 1931, an increase this year of 4,037 or 19.3%. Liabilities are still further improved. For October the amount of $52,869,974 compares with $70,660,436 a year On ago, a reduction this year of $17,790,462 or 25.0%. busithe in d involve dness indebte total the the other hand , ness failures for the nine months of this year up to October period was $757,632,773 against $531,776,004 for the same in 1931, an increase this year of $225,856,769 or 42.5%. The change for the better in both directions has been very marked. and Monthly and quarterly failures, showing number mentioned: periods the for below ed contrast are es, liabiliti ion of Smaller Decline Reported in Weekly Product g pondin Corres with ed Compar as ity Electric Period Last Year. ion, the According to the National Electric Light Associat power production of electricity by the electric light and 5 Nov. ended week the for States United industry of the as com1932 was 1,525,410,000 kwh., a decrease of 6.3% s with pared with the same period in 1931, and compare 7.2% was which week, ng 1,533,028 kwh. for the precedi week below the figure for a year previous. The output for the 2.6% down was d seaboar Atlantic the for ended Nov. 5 from the same period last year and compares with a decrease taken of 3.1% for the week ended Oct. 29. New England, in the alone, was off 3.5%, against a decrease of 2.7% by previous week. The Central industrial region, outlined ee, Milwauk and Louis St. ti, Cincinna Buffalo, Pittsburgh, showed a decrease of 7.8%, compared with a decline of 9:2% the week before. The Pacific Coast was down 9.1%, against a decrease of 7.8% in the Oct. 29 week. Arranged in tabular form, the output in kilowatt hours of by the light and power companies for recent weeks and months since the first of the year is as follows: LiaMlities. Number 1930. 1931. 1932. 1931. 1930. 2.273 2.182 2,796 2,596 2,362 1.936 1,944 1,983 2,124 1.963 1.913 2.028 7,574 5,863 5,904 $220,348,485 $161,278,635 $135,964,091 2,688 2,788 2,816 1,993 2,248 2,383 2.026 2,179 2,198 8.292 6,624 6,403 5261,763,666 8155.894,995 $167.731,532 2.951 2.732 3,458 2.604 2,563 2.316 2.347 2.262 2.759 1st Quarter-- 9,141 8.483 7.368 5275.520.622 5214.602,374 $169,357,551 1932. October September August July 3d Quarter_ _ June May April 26 quarter March February January $52,869.974 570,660,436 856,296,577 56.127.634 47,255.650 46,947.021 77,031.212 53,025,132 49,180,653 87,189.639 60,997.853 39.826.417 $76,931,452 $51,655,648 $63,130.762 83,703,521 53.371,212 55.541.462 101.068,693 50,868,135 49,059,308 593.760,311 $60,386,550 858.846.015 84.900,106 59,607.612 51,326,365 96,860,205 94,608,212 61.185.171 ER 1932. FAILURES BY BRANCHES OF BUSINESS-OCTOB Liabilities. Number, 1932. 1931 1930. ManufacturersIron, steel and foundry Machinery and tools Woolens. carpets, Ace Cottons and lace Lumber, building lines Clothing and mIllInerY Hats, gloves and furs Chemicals and drugS Paints Printing and engraving Milling and bakers Leather, and shoes Tobacco, Stone, clay and 51ass All other • Total manufacturing 20 36 4 1 70 49 20 13 13 42 7 9 25 2 54 59 15 7 1932. $ 1,054,294 1,765,393 147,198 100,000 3,751.762 832,164 600,.83 358,606 50,000 1,126.374 373,196 945,087 239.711 1,375,716 6,176,122 1931. 1930. 5 4,345,550 1,837,160 1,891.370 $ 199,330 626.667 28,203 3.659.024 2,490,022 237,653 356,285 2341,902 750.44/1 936,309 216,456 163.305 2.305,424 7.904,615 1.177.111 3.882.155 1,407.605 1 4 31 42 19 10 29 197 32 50 18 14 9 290 54 62 33 4 3 20 35 15 14 12 211 542 614 499 18,896,406 26.333,523 17,959.289 65,300 93.034 729.339 245,631 250,828 322.030 1.414.1146 7,648,110 1932' 1932. Weeks Ended. 1931. 1930. 000 1.680.269.000 Jan. 2 _.,._ 1,523.652.000 1.597.454.000 1.781.583.000 Feb. 6..-- 1.688.853.000 1.679,016. 000 1,750.070,000 1.664.125, 000 Mar. 5_..__ 1.519,679. 000 1,708.228, 2 --- 1,480.208.000 1.679.764.000 Apr. May 7 __-_ June 4 -_-July 2 -_-Aug. 6 -_-_ Sept. 3 -_-Sept. 10 ---Seat 17 ---Sept.24 -_-_ Oct. 1 ---Oct. 8 __-_ Oct. 15 -_ Oct. 22 --__ Oct. 29 Nov. 5_ _ MonthsJanuary_ __ _ February March April May June July August 911hAr RA9111, 1929. 4.6% 5.4% 8.7% 11.9% 12.7% 13.3% 9.3% 13.1% 10.4% 1,689,034.000 1.657.084.000 1,594.124,000 1,691,750.000 1,630.081000 1.728.800.000 1.722.059.000 1,714.201.000 1.711.123,000 1.723.876.000 1,729.377.000 1,747,353,000 1,741.295.000 1,728,210,000 1.702.570.000 1.663.291,000 1.608,492.000 1.689,925,000 1,592.075,000 1,729.1367,000 1.774.5/18.000 1,806,259,000 1,792.131,000 1.777.854.000 1,819.276.000 1,806,403.000 1,798.633.000 1.824.160,000 1.815,749,000 1,798,164,000 7,439.888.000 6.705.564.000 7,381.004.000 7,193,691,000 7.183.341,000 7,070,729.000 7.286,576,000 7.166.086.000 8.021,749.000 7,066.788.000 7.580.335.000 7,416.191,000 7,494.807.000 7,239.697.000 7.363.730.000 7,391,1911.000 7,585,334,000 6,850,855,000 7,380,263.000 7.285.350.000 7,486,635,000 7.223.279.000 7.484.727.000 7.772.878.0110 A 017 702 nnn ',Ann 401 nnn 7 027 IAA nnn 1931. 1.542.000.000 1.726.161.000 1,429,032.000 1,637,296.000 x1.381.452.000 1,593.622,000 1.456,961.000 z1.607.238.000 1.426.986.000 1,642.858,000 1,464,700.001 1,635.623.000 1,443.977.000 1.582,267.000 1,476,442.000 1,662.660,000 1.490.863.000 1,660.204.000 1.499,459.000 1,645,587.000 1,506,219.000 1,653.369,000 1,507,503,000 1.656.051.000 1,528,145,000 1.646.531,000 1.533.028.000 1.651,792.000 1,525,410,000 1,628,147,000 7.014.066,000 6.518,245.000 6.781.347,000 6.303.425,000 6.212.090.000 6J30.077,000 6.112.175.000 6.310.667.000 Under 7 590 205 nnn 8.707 11.2% 10.2% 8.9% 8.9% 9.0% 7.2% 7.2% 6.3% Total trading 3ther commercial Total United States 956.125 1,734,222 1,468,720 98 105 108 350 107 22 188 98 49 72 312 110 25 217 96 60 70 61 269 102 27 193 99 46 78 48 112 106 88 1,760.892 9 37 22 12 327 6 33 18 7 379 6 89,850 28 542.622 18 264,573 11 295.090 353 8,223,513 78 3,836.415 1,639,851 306,832 2,214,276 2,374.086 850.691 1,418,108 1,343,356 4,630.978 3.517.424 123,903 6,141,522 1,561,221 917,519 2,131,172 825.769 1,0.56,766 290,934 970.675 667.797 71,496 D,844,681 3.139,522 1,024,041 218.888 2,488,405 1,101,980 339.420 2,122,840 859,839 747.445 105,505 454,749 135.122 313.030 7,576.057 1,681 1.605 1.474 26,116,260 29.485.979 22.095,565 150 143 151 7,857,308 14,840.934 16,211,723 2.273 2.362212452 500 074 70 AAA ARAM 900 R77 5.7% 76.1% 8.2% 12.4% 13.5% 13.3% 16.107 11.9% It 1101_ x Including Memorial Day y Change computed on basis of average daily reports. $ Including July 4 holiday. approxiNote -The monthly figures shown above are based on reports covering are based mately 92% of the electric light and Power industry and the weekly figures on about 70%. Dun's Report of Failures Improved for October. Insolvencies during October were again reduced. The number in the United States for that month, according to es the records of R. G. Dun & Co. was 2,273, and the liabiliti were closed just month the for $52,869,974. These defaults slightly more numerous than in September, but with that exception were considerably less than for- any month back dness shown was to November of last year, while the indebte er 1931. Only Septemb since month ng precedi below any banks and figures, these in business concerns are included and individuals being men onal professi of tcies bankrup the omitted. year in the matter of inThe change for the better this in September has been nce appeara its solvencies that made report. The number is October the in ed develop further TradersGeneral stores Grocery, meat and fish Hotels and restaurants Tobacco, Clothing and furnishing Dry goods and carpets Shoes and luggage Furniture and crockery Hardware, stoves and tools Chemicals and drugs Paints Jewelry and clocks Books and papers Hata, furs and gloves kll other Business Conditions in Kansas City Federal Reserve District-Display of Decidedly Mixed Tendencies Noted in September-Department Store Trade Shows More Than Usual Seasonal Increase. "Business conditions in the Tenth (Kansas City) Federal Reserve District displayed decidedly mixed tendencies in September," according to the Federal Reserve Bank of Kansas City. The Bank in its "Monthly Review" of Nov. 1 also states that "loans and discounts at member banks continued to decline and the member banks made additional reductions in their indebtedness to this Bank and branches." Continuing, the Bank further commented as to business conditions in its District: for the Debits by banks to individual accounts were slightly larger month but displayed about the same decline from a year ago as reported both es markedly declined insolvenci in previous months. Commercial as to number and to the amount of liabilities involved. more Department store trade, favored by weather conditions, showed September than the usual seasonal expansion and the 11.2% decrease in from decrease dollar salee, as compared to a year ago, was the smallest June 1931. the corresponding month of the preceding year reported since volume Wholesale trade also made a good seasonal showing, but the dollar es at both for all reporting lines was below that of a year ago. Inventori low. are wholesale and retail, which have declined for several years, load ore, biHigher ore prices stimulated shipments of zinc ore and usual, and tuminous coal production expanded at a greater rate than Financial Chronicle Volume 135 cement mills reported a non-seasonal pick-up in output. Crude oil production declined, but flour production increased somewhat. Very little building activity was reported. Marketings of grain were comparatively light and livestock, hogs excepted, were marketed in somewhat smaller numbers than usual, although receipts were seasonally heavier than in August. Harvesting of corn cotton, sugar beets, broomcorn, dry beans, grain sorghums, hay, and late potatoes is making good progress, and the seeding of winter wheat and rye is nearly completed in the eastern half of the District. Seeding and plant growth in the western part of the wheat belt have been retarded by inadequate moisture supplies. Agricultural Commodity prices, with few exceptions, declined in September and the forepart of October. All grain prices broke sharply between Sept. 1 and Oct. 15, on which date they were at new low levels for this year's crops. Livestock values moved downward with present pork prices, but 35 cents per hundredweight above the 35 years' low of last May, and cattle and sheep prices the lowest for this season in 33 years. In its "Review" the Bank had the following to say regarding wholesale and retail trade conditions: Retail Trade. Weather conditions during September were more favorable to department store trade than a year ago or in 1930. Dollar sales reported by 35 department stores in the District increased seasonally 37.4% as compared to August, whereas last year the increase was only 17.6% and the five-year average increase but 18.2%. Not since June 1931 have sales shown as small a reduction compared to the corresponding month of the preceding year as the decline of 11.2% reported this month. Sales for the months of June. July and August this year were 29.2, 29.7 and 24%, respectively, below those reported for June, July and August last year. Dealers enlarged their inventories 3.8% during the month, as against 4.8% a year ago and 5.4% during the like period the past five years. Collections showed little change during the month, amounting to 30.4% of amounts outstanding on Aug. 31 as compared to 29.5% in August and 88.3% in September 1931. Wholesale Trade. Each of the five reporting Wholesale lines (dry goods, groceries, hardware,furniture and drugs) reported their September sales volume exceeding that for August. The increases of 16.7% in sales of dry goods and 6.2% In groceries were contrary to the five-year average declines of 8% for the former and 3% for the latter. Seasonal increases in the remaining lines exceeded the averages of the past five years. Wholesalers of dry goods were the only ones to report their 1932 sales as larger than in September 1931, declines in the other lines ranging from 13.3% for drugs to 21.6% for groceries. Inventory changes for the month, with the exception of dry goods, which increased 4.4% as against a five-year average decline of 5.9%, showed no departure from normal tendencieS. All lines reported monthend stocks as considerably lighter on Sept. 30 this year than on Sept. 30 1931. Dealers report Collections as slow, with improvement in both collections and sales depending on an advance in agricultural commodity prices. Total Value of Exports and Imports of Merchandise by Grand Divisions and Principal Countries in September. • The Department of Commerce on Nov. 7 1932 issued its report showing the merchandise imports and exports by grand divisions and principal countries for the month of September and the nine months ending with September for the years 1931 and 1932. The following are the tables complete: TOTAL VALUES OF EXPORTS OF MERCHANDISE BY GRAND DIVISIONS AND PRINCIPAL COUNTRIES. Exports to- Month of September. 1931. 1932. Nine Months End. September 1931. 1932. Grand Divisions:$ $ Europe 90,361,493 72,630,761 Northern North America- 28,475,238 19,210,441 Southern South America 12,267.232 8.231,927 South America 10,228,818 7,000,014 Asia 30,880,062 19,035,333 Oceania 3,670,884 3,108,962 Africa 4,343,993 2,808,617 Total Principal CountriesBelgium Czechoslovakia Denmark France Germany Greece Irish Free State Italy Netherlands Norway Soviet Russia in Europe Spain Sweden Switzerland United Kingdom Canada Central America Mexico Cuba Dominican Republic Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela British India British Malaya China Hong Kong Netherland East Indies Japan Philippine Islands Australia New Zealand British South Africa Egypt $ 880,952,835 329,471,367 149,940,537 128,979,524 272,695,636 33,066,253 46,667,438 $ 564,623,225 192,515.717 91,069.101 68,636,594 216,399.918 28,486,810 27,188.676 180,227,718 132,026,055 1.841,773,590 1.188,920,041 4,565.052 308,286 1,761,944 7,726,117 12,836,439 922,589 295,733 3,985,884 4,948,905 829.797 10,500,292 2,347.153 2,051.791 937,740 34,590,023 27,802,001 3,260.128 2,856,027 3,102.582 384,333 3,657,887 1,996,020 699,350 1,088,043 209.016 672,236 446,003 1,270,795 2,851.859 287.417 8,933,313 1,025.970 1,009,305 12,370.034 3,338,275 2,380,837 1,132,774 1,982,044 412,895 3,078,512 46,192,924 29,071,178 87,673 2,998,217 1,516.311 892.055 22,564,203 8,920,023 10,251.160 96,057,777 79,978.899 15,790,884 118,365,144 94,818.579 188,348 5,368,548 6,131,996 492,804 3,972,554 3,605.086 4,773,648 37.472,546 33,323.398 3,253,152 48,991,244 33,352,886 633,164 8,830,177 5,276,666 1,169.655 92,076,207 9,478,713 2,253,191 25,398,715 19,258,986 1,530.742 24,496.202 12,032.229 594,625 7,323,754 5,592,003 25,728,103 322,003,098 209,163,824 18,745,160 323.503,749 189,110,091 1,986,875 36,382,242 22,827.860 2.346,738 43,466.072 24,965,378 1,543,441 37,410,706 22,766,837 267,815 4,391002 3,465,343 2,550,073 43,379,542 22,752.572 1.984.033 20,746,061 19,360.224 219,741 18.609.971 2,741,587 813.375 13,735.109 7,586.762 2.318,7E8 131,658 1,19 .213 251.910 5,976.246 2,966.024 8,351,772 159,713 2,456.437 12.623,305 875.125 7.487.881 29.627,165 1,356,275 19.447,354 3,723,845 196,068 1,935.067 43.517.302 3,705,666 - 59,029.490 10,198.954 690,837 7,354.772 12,120,518 745.218 6,379,625 95,100,238 7,803,187 109,842,282 38,140,234 3,275,656 34,234,299 21.747,941 2,317,810 21,047.280 10,533.033 785,483 6,941.187 22,146,210 1,488,617 11,836,301 180,939 4,154,880 1.916.703 3237 TOTAL VALUES OF IMPORTS OF MERCHANDISE BY GRAND DIVISIONS AND PRINCIPAL COUNTRIES. Month of September. Nine Months End. September ImportsfromGrand Divisions- 1931. 1932. s $ 60,785,447 32,388.641 Europe Northern North America- 22,957,489 13,172,254 Southern North America- 18.651.700 10.622,582 22,379,551 13,282,090 South America Asia 40,842,320 27.224,016 Oceania 1,671.316 507,725 3,096,089 1,250,442 Africa Total Principal countries: Belgium Czechoslovakia Denmark France Germany Greece Irish Free State Italy Netherlands Norway Soviet Russia in Europe Spain Sweden Switzerland United Kingdom Canada Central America Mexico Cuba Dominican Republic Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela British India British Malaya China Hong Kong Netherlands East Indies.-Japan Philippine Islands Australia New Zealand British South Africa Egynt 1931. $ 484,198.314 212,028,815 191.546.056 241,654,899 443,549,869 15,029,189 27,666.011 1932. $ 287,812.258 141,430,349 129,469,545 157,622.350 275.149.322 5,909,243 18,355,634 170,383,912 98,447,750 1,618.673,152 1,015,748,699 3,053,127 1,766.254 1,992.885 1.228,322 122.707 152,830 7,799.769 4,023,036 12,203.217 6,753,844 288,541 138.468 94,867 26,857 5.634,930 3,130.262 5,204,338 2,746,150 762,159 662,110 1.531,554 697,545 1,272,323 703,842 3,215,314 1,348,262 2,099,172 1.013,777 13,365,333 6,420.334 21,929,190 12,507.799 1,927.037 1,832,358 2,664,815 2,424,524 7,586,650 5,127.822 410,535 86.686 4,752,632 803.520 6,908,522 5,531,613 3,721,053 134.560 4,362,989 4,375.471 293,524 251,184 382.911 339.524 230.037 223,161 1,661.714 1,475,895 4.696,485 1.547,492 5,592,211 1,903,025 3,169,566 1,618,598 248,287 328.509 2,677.245 2,412.803 17,275,862 12,135,255 5,102,408 6,200,702 1,055.189 316,794 368,733 101,302 478.174 46.341 337.601 162.057 25.340.418 17,670,880 1.525,885 57,066,993 98,551.867 7,508,480 2,009,235 43.803.842 26,141.651 14.206,843 9,684,336 12,942.149 25.507.583 17,745,419 106.390,790 204,559,848 26.023.911 39,102,106 71,025.586 4.165,319 28,591,136 85,205,392 53.240.146 57.985.015 2.870,898 7,437,806 3,046,342 22,472.744 47,108,091 66,017,104 54,028,768 4.580,533 25,893,955 146.714.475 77.4 4.445 9,859.216 3,430.941 3.610,482 3.373.442 16,609,504 9.620,922 986.546 31,855,034 55,302.190 6,042.645 261,245 30,899.475 16,510,602 7.600,193 7,053.406 8,640.195 16,942,032 9,104,094 56,473.187 136.303.751 18,813.440 31,376,454 46,425,320 2,886.960 11.984.385 63,025,097 11,694.193 46.521.544 1,983.231 2,403,131 1,791.460 17,085,300 25,863,170 26,091.037 19,626,804 2,968,133 20,412,397 99,451,872 67,132.543 3,703.048 1.557.397 1,747.971 4.042.901 Continued Improvement Noted in Business Activity in. ClevelandFederal Reserve District During Late September and First Half of OctoberExpansion in Most Lines Greater than SeasonalConditions in Wholesale and Retail Trade and Rubber and Tire Industry. "The improvement in general business activity discernible in the first half of September continued in the latter part of the month and the first half of October, both in the Fourth (Cleveland) District and the entire country," says the Federal Reserve Bank of Cleveland. The bank, in its Nov. 1 "Monthly Business Review," also states that "the expansion in most lines was greater than seasonal and was encouraging since, at this time in the three preceding depression years, the trend of general business was downward despite the fact that there is usually some improvement in the fall." The bank continues to say as follows: The accompanying chart [this we omit--Ed.] shows the extent of the advance in industrial production in the entire country, based on the Federal Reserve Board's index, and in distribution, as reflected by this bank's weekly index of carloadings, both seasonally adjusted on a 1923-1925 base. Industrial production advanced from a low point of 58 in July to 60 in August and 66 in September. Carloadings rose from a low of 48 in the first week of August to 58.4 in mid-October, after allowing for the fact that normally in the fall of the year there is an expansion in loadings as movement of coal, crops, miscellaneous freight, &c., reach their peak. Carloadings in the latest week were only 14.6% below the corresponding week of 1931. whereas the loss for the year to date was 26.4%. Some increase in the use of electric power was reported in this section, but the declines from a year ago continue to be larger than In other parts of the country. The improvement in this district was somewhat slower than in the entire country because of the dependence of so many local factories on the automobile industry, which showed a contraction in September and the first part of October and was operating at the lowest level for this season since the war. The downward trend of employment was reversed in September, however, both in the district and the entire Country and payrolls expanded slightly in the month and the first part of October. The greatest increases were reported in the metal products, stone, clay and glass, textile and shoe industries, with reductions at rubber and automobile factories. A sizeable increase in Fourth District department store sales was recorded in September. the seasonally adjusted index advancing from 51 to 57% of the 1923-1925 monthly average. Wholesale sales also improved, though dollar value of both continues to be about 25% below a year ago. In the financial field the contrary-to-seasonal reduction in money in circulation continued in late September and the first part of October, indicating that hoards were still being reduced. Credit extended by member banks in leading cities of the country was increased largely through holdings of Government securities, though the volume at banks in this district was little changed in the four latest weeks. At all Reserve banks member bank indebtedness was reduced sharply and reserve balances were increased as a result of gold imports and a return flow of currency, though little change in the four latest weeks was recorded in these items at the Federal Reserve Bank of Cleveland. Iron and steel production increased by considerably more than the usual seasonal amount in September and the improvement continued at a moderate rate in the first half of October,though output is still very much below former years. Coal production increased sharply in September, output being 18% below the same month of 1931. whereas the nine-month reduction was 31%. The improvement continued in the first two weeks of October. 3238 Financial Chronicle The value of building contracts awarded in this district in the third quarter was larger than in the second quarter, though usually there is a seasonal decline. The favorable trend also was apparent in the first part of October, though the value of awards is still very much below the average of past years. Clothing production in early October was, at the highest level in many months and shoe production in September was above the same month last year. Despite the increases in the various lines, there were few indications in September of any expansion in inventories, other than seasonal. Department store stocks at the month-end were smaller than at the close of August and most, orders, either from wholesalers, jobbers or retailers, are for immediate delivery and chiefly for current needs. Reporting on the rubber and tire industry in its district, the bank said as follows: Replacement tire sales in September, according to reports from principal manufacturers, were larger than expected, the gain from the preceding month being about 20%, whereas sales in September are usually smaller than in August. The tire industry in the past few months has been very much affected by the price situation. August sales were 46% below the same month last year, based on shipments made by companies representing 80% of the Industry. This reduction was larger than might have been expected because of the heavy replacement sales in June in anticipation of the price increase which actually did not materialize until Sept. 12. Dealers stocked very heavily at that time, replacement sales amounting to over 8,500,000 tires in June. This September price advance no doubt had some effect on sales during the month, particularly the early part, and stocks of dealers were enlarged to some extent. It is generally felt in the trade that the trend of tire prices is upward. In the first part of October sales were showing a seasonal decline and demand for original equipment was very limited, as activity in the automobile industry dropped to the lowest level since the war. Consumption of crude rubber by manufacturers in the United States amounted to 22,491 long tons in September. This was an Increase of 0.5% from August, but was 5,000 tons below imports of 29,509 tons. Imports were 13.8% below August 1932 and down 27% from September a year ago. Domestic stocks on Sept. 30 were estimated to be 365,789 tons. an Increase of 43.8% from the same date in 1931. Employment at Ohio rubber concerns declined 6% from August, in contrast with a five-year average drop of 3%. Five companies showed an increase, but reductions were reported by the majority of organizations cooperating with the Ohio State Bureau of Business Research. August production figures (the latest available) for 80% of the tire industry, as reported by the Rubber Manufacturers' Association, show that production was 21% below August 1931, and in the eight months was down 18%. Inventories of manufacturers on Aug. 31 were 25% smaller than a year previous. Stocks are lower for this time of year than since 1924. Rubber prices have declined in recent weeks and in mid-October were barely one-half cent above the all-time low,touched in June. It is reported that the price advance in August and September caused an increase in native production. The fact that imports continue in excess of consumption is one of the chief causes of price weakness. As to wholesale and retail trade conditions, the bank had the following to say: Retail trade, as reflected by sales of 55 department stores in this district, increased considerably more than the usual seasonal amount and the adjusted index advanced from a record low of 51 in August to 57.2% of the 1923-1925 monthly average in the latest period. This was the first greaterthan-seasonal increase since early spring and in all cities except Cleveland, where an unusual situation prevails, sales in September showed a smaller reduction from the same month of 1931 than the percentage loss for the year to date. According to "Fairchild's" index, retail prices showed no change in September from the preceding month, the first halt in the downward trend of prices in this depression. Slight increases were even recorded for house furnishings, women's apparel and yarn goods. The generally recognized fact that prices were unusually low, and that, with wholesale prices advancing, they probably were at the bottom, the slight increase in employment and payrolls, the depleted condition of consumers' goods and favorable weather all contributed to the larger amount of retail purchases during the month. Sales in September were 25% below the same month of 1931, but prices are reported to be down about 16% in the same period. The reduction in the first nine months was 27%. Wholesale Trade. Except in a few individual cases, there was no evidence of expanding department stores stocks. On Sept. 30 they were valued at 24.5% less than on the same date of 1931. the 7.8% increase from August being less than seasonal and the adjusted index dropped to 57.5% of the 1923-1925 monthly average, a new low point. Charge sales increased slightly more than seasonally, but the ratio of credit to total sales was still smaller than a year ago, the reduction being more pronounced In the case ofinstallment sales than in regular charge sales. The percentage of all accounts receivable on Aug.31 which were collected in September was about on a par with the preceding month and only slightly below last year. It amounted to only 26%. however, with the collection ratio on 30-day accounts being 29.6%. Wholesale sales in the four reporting lines increased in September by slightly more than the average August-to-September change in past years. Despite the improvement, which was well distributed, dollar sales for all lines were only 56% of the 1923-1925 monthly average and were about 23% below the same month of 1931. Seasonal Rise in Business During September Reported by Richmond Federal Reserve Bank in Its District — No Material Changes Noted in Employment. According to the Federal Reserve Bank of Richmond, "Fall trade usually begins in earnest in September, and many lines of business take a seasonal upturn." The Bank, in its "Monthly Review" of Oct. 31, states that "this seasonal rise in business volume occurred in the Fifth (Richmond) Federal Reserve District last month, and in a few lines was in larger volume than seasonal influence alone would explain." The Bank also said: In banking,the developments in September and early October were mostly of an unseasonal nature, among them being a decline in rediscounts for Nov. 12 1932 member banks at the Federal Reserve Bank, a decline in outstanding loans In reporting member banks located in leading cities, a slight decrease in the circulation of Federal Reserve notes, and practically no net change In deposits in member banks in spite of a reduction in loans. Time deposits In both member banks and in mutual savings banks increased in September. Debits to individual accounts figures in 24 leading cities in the four weeks ended Oct. 12 1932, totaled 19.3% more than debits In the preceding four weeks, ended Sept. 14, an increase only partly due to seasonal influences. Every one of the 24 cities reported higher figures for the later period. Commercial failures in September in the Fifth District compared favorably in both number and in aggregate liabilities involved with the record of other recent months, and last month's llabilities were less than those of September 1931. Employment showed some seasonal changes last month, but there was no material net increase or decrease in the number of employed persons in the District. Textile payrolls were increased during September, chiefly by increase in the number of days per week the mills are now running. Practically all mhis are on full daylight time in the latter part of October, and cotton consumption in September increased more than seasonally. Coal production increased in September, as usual, and by about the usual amount. Spot cotton prices declined further between the middle of September and the middle of October, influenced adversely by the Department of Agriculture's increase in its estimate of probable production, made on Oct. 8. Cotton consumption and cotton exports increased notably in September, and average hours of operation per spindle in the United States rose from 175 in August to 218 in September. Auction tobacco markets in the Carolinas sold much less tobacco than in September 1931, but the tobacco sold brought better prices than those of last. year. Agricultural prospects on the whole declined considerably during September because of dry weather, some sections experiencing drouth conditions almost as severe as those of 1930. The drouth was not as extensive this year, however, and also developed later in the growing season, and therefore did much less damage than the record drouth of 1930. Construction work provided for in building permits issued and contracts actually awarded last month was in very small volume, as in all other recent months. Retail trade as reflected in sales in 33 leading department stores in the Fifth District Increased more than seasonally last month, and averaged only 10.8% less than sales in September 1931. while cumulative sales in the first nine months of this year averaged 18.8% below sales in the corresponding period last year. Wholesale trade reports in five leading lines also showed seasonally increased sales in September,and shoe sales were ahead of sales In September last year, this being the first llne to report in ten months an increase in comparison with the corresponding month of the preceding year. In its "Review" the Bank reported as follows regarding employment conditions: There was no material changes in employment conditions in the Fifth District during the past month. Textile mills increased operations and either took on additional workers or gave longer working hours to persons already employed, and there was also some seasonal rise in employment in coal mining, but the approach of cold weather brought further unemployment, of a seasonal nature, in construction work as summer projects were completed. Fall trade during the next two months will require temporary help in many mercantile establishments, but on the other hand winter weather will increase the hardships of unemployment and will cause a rise in the assistance which charitable organizations and governmental agencies will be called upon to furnish. St. Louis Federal Reserve Bank Reports Continued Improvement in Business in Eighth District During First Three Weeks of September. "The improvement in general business in the Eighth (St. Louis) District, which became noticeable in late July and continued in increasing measure during August," according to the Oct. 31"Monthly Review" of the Federal Reserve Bank of St. Louis, "was extended through the first three weeks of September." The "Review" also states: Since that time the pace has slackened perceptibly, and while a considerable part of the gains In both trade and industry has been held and the general level is still well above the low point of the spring and early summer, some hesitancy has developed during the first half of October, with certain lines failing to show seasonal betterment. Taken as a whole, September proved to be the most satisfactory month experienced so far this year in distributive lines, both wholesale and retail. Increases in sales volume over August were larger than could be accounted for by seasonal influences, and for the first time since April 1931, combined sales of all wholesaling and jobbing lines investigated by this bank showed an increase in September over the corresponding period a year earlier. There were also moderate Increases in production in a number of manufacturing lines, some of which had had a record of steady declines during the preceding 18 months. Due to importance of agriculture in this district, the factor of dominating influence in the progress of business, both in point of morale and volume transacted, has been the price of farm products. The advance in hog values In late June, which was followed by a sharp rise In cotton, wheat and some other commodities in July and August, was reflected in a marked acceleration in buying of merchandise and restoration of confidence in the business community and the public generally. Failure of these advances to hold, coupled with declines in prices of corn, oats, potatoes and some less important products to new record lows for the season in many years had the effect of substantially reducing purchasing power in the agricultural areas, of reversing the feeling of optimism and of reinstating the policy of ultra conservatism in commitments for merchandise of all descriptions. Warm weather during September and most of the first half of October tended to hold down distribution of seasonal goods, both at wholesale and retail. On the other hand these conditions were favorable for completing the harvest of late crops, which operations were in the main accomplished with a minimum loss of quality and quantity. According to the report of the U. S. Department of Agriculture, based on Oct. 1 conditions, yields of the principal crops of the district fully carried out estimates made earlier in the season. The employment situation underwent slight improvement in September as contrasted with the two preceding months, with betterment most noticeable in the large industrial centers and the bituminous coal fields. The supply of farm labor continues considerably in excess of requirements, with wage scales on Oct. 1 the lowest since the beginning of the present century. As reflected by sales of department stores in the principal cities of the district, the volume of retail trade during September was 49.1% greater than in August and 15.7% smaller than September 1931: for the first three quarters of this year cumulative sales were 22.7% smaller than for the comparable period in 1931. Combined sales of all wholesaling and jobbing Interests reporting to this bank in August showed an increase of 8.5% over the preceding month, and of 1.1% over the September total last year: for Volume 135 Financial Chronicle the year to Sept. 30, aggregate sales were 24.6% smaller than for the first nine months of 1931. The dollar value of permits issued for new construction in the five largest cities of the district in September was 32% larger than in August, but more than two-thirds less than in September 1931; for the first nine months the total was 23% smaller than for the corresponding period last year. Contracts let for construction in the Eighth Federal Reserve District in September were 7.7% larger than in August,and 14.6% less than the September total last year; for the first nine months this year the aggregate fell 55.4% below that for the same period in 1931. Debits to checking accounts Increased 11% in September over the preceding month, but declined 24% under September 1931: the total for the first nine months this year was 26% smaller than for the like period last year. While continuing much below the volume at the corresponding period during the past several years. freight traffic of railroads operating in this district has shown decided expansion during recent weeks. The showing made by miscellaneous freight, merchandise in less-than-car-lots and coal has been particularly favorable. The movement of livestock continued light. For the country as a whole, loadings of revenue freight for the first 39 weeks this year, or to Oct. 1, totaled 20.976.758 cars, against 28,721.707 cars for the comparable period in 1931, and 35,349,201 cars in 1930. The St. Louis Terminal Railway Association, which handles interchanges for 28 connecting lines, interchanged 120,261 loads in September, against 143,022 loads in August, and 144,843 loads in September 1931. During the first nine days of October the interchange amounted to 40,871 loads, which compares with 33.075 loads during the same period in September,and 46,993 loads during the first nine days of October last year. Passenger traffic of the reporting roads decreased 33% in September as compared with the same month in 1931. Estimated tonnage of the Federal Barge Line between St. Louis and New Orleans in September was 95,500 tons, against 99,822 tons in August. and 106.931 tons in September 1931. Taken as a whole, collections during the past 30 days showed slight Improvement over the similar period immediately preceding, and quite marked betterments as compared with the corresponding time last year. Generally through the south settlements with both merchants and banks were in increased volume, and resumption of operations at a number of mines was reflected in better payments In bituminous coal fields. In the northern tiers of the district, where wheat and corn are the chief crops. farmers are disposed to hold their stocks for higher prices, and backwardness in'collections has resulted in many sections. Wholesalers in the chief distributing centers are for the most part getting in their money promptly. This is true particularly of boots and shoes, dry goods and other lines with which October is an important settlement month. Spottiness still characterizes collections of retailers in the large urban centers, with increasing complaints of backwardness by firms which do an extensive installment payment business. Review of Southwest Business Conditions by Los Angeles Chamber of Commerce During OctoberBusiness at Materially Higher Level Than During Spring and Summer Months-Employment Lower As Compared with September. In its "Southwest Business Review" the Los Angeles Chamber of Commerce states that "October business, while not maintaining the rate of increase set by September, is, however, moving at a materially higher level than during thespting and summer months." The Chamber also said: October 3239 ReportT of[Business Conditions in Dallas Federal Reserve District During September by Federal Reserve Bank of Dallas-Stronger Demand for Merchandise at Both Wholesale and Retail and Increased Activity in Some Lines of Manufacturing Noted as Significant Developments. In its district summary compiled Oct. 15, as given in its "Monthly Business Review" of Nov. 1, the Federal Reserve Bank of Dallas stated that "a stronger demand for merchandise in both wholesale and retail channels and increased activity in some lines of manufacturing were significant developments in the Eleventh (Dallas) District during the past month." The Bank also said as follows: Sales of department stores in larger cities reflected a gain of 55% over those of August, which was considerably more than seasonal, and were only 8% below sales in September 1931. Distribution at wholesale, likewise, showed a larger than usual seasonal expansion, and comparisons with the corresponding month of the previous year were the most favorable reported in many months. In fact, sales in some reporting lines closely approximated those in September last year. Although retailers are buying a wider assortment of goods, they are continuing the policy of holding commitments to well defined needs, and are making frequent reorders in small volume as consumer demand arises. The decline in the price of cotton tempered the enthusiasm evident in late August and early September, yet late reports indicate that October business has been very good. The business mortality rate in this district evidenced a material betterment. Both the number of failures and the amount of liabilities declined sharply in September and were lower than in any month in more than a year. The past month witnessed a seasonal liquidation of Indebtedness at the Federal Reserve Bank, and an expansion in the loans and investments of member banks in selected cities. Federal Reserve Bank loans declined from $12,891.000 on Sept. 15 to $10,331,000 on Oct. 15, and on the latter date were $9,008,000 lower than a year ago. The loans and investments of member banks in larger cities rose to $388.043,000 on Oct. 12. which was the highest level reached since early in July. The daily average of combined net demand and time deposits of member banks amounted to $600,331,000 in September, as compared with $597,162,000 in August. and $724.824.000 in September 1931. The strong demand for the 3% United States Treasury notes dated Oct. 15 was manifested in subscriptions of $98,886,400, against which allotments of only 33.617,300 were made. Agricultural prospects showed no material change during the past month. Heavy rains damaged crops in some areas but the improvement which occurred in other sections as a result of the additional moisture was an offsetting factor. While harvesting operations were retarded during September by excessive moisture, farmers have made rapid progress with this work since the advent of favorable weather early in October. There is an excellent season In the ground and the fall seeding of small grains is well under way. Reports indicate that the portion of the crop now up is looking fine. Ranges have shown a marked improvement and are now in the best condition for this season reported in several years. Livestock are, likewise, showing noticeable improvement and are expected to go into the winter in fine shape. The local demand for livestock Is becoming stronger. Construction activity, as measured by the valuation of building permits Issued at principal cities, declined to a low level, the September total being 20% below August and 68% under a year ago. The production of cement reflected a substantial increase as compared with the previous month, but was smaller than in the same month last year. Shipments were less than in either comparative month. business, while not maintaining the rate of increase set by September is, however, moving at a materially higher level than during the spring and summer months. Employment for the month fell off about 10 points, due to small seasonal declines in most of the industrial groups. Postal receipts are not available for the month, due to a change in the Post Office Department method of giving out these figures. Stock Exchange transactions showed a sharp decline from those of September. Building permits dropped off slightly Regarding wholesale and retail trade conditions, the below the previous month's figures. Bank debits also fell off, probably Bank reported the following: due to the lack of activity in financial transactions. Among the important industries, apparel and millinery are going through Wholesale Trade. their normal dull season between fall and spring buying; furniture also is The improvement in business at wholesale, which began in August. having a seasonal dull period. Motion pictures are progressing with continued to be in evidence during September. Further substantial large schedules that mean employment for large number's of people. ConIncreases were reported in all lines except farm implements. The sales trol of daily production in the petroleum industry is keeping daily proof dry goods showed a 20.4% increase which was contrary to seasonal duction down. tendency; and in the case of hardware and drugs. the pick-up was appreAgricultural conditions in California are about as satisfactory as can ciably larger than is usual at this season. More favorable comparisons be expected, in view of reduced market prices of most commodity groups. with a year ago were recorded for the second consecutive month, the Water commerce returned a total somewhat less than for the previous decreases from September 1931 ranging from 1.2% in the case of hardmonth. ware to 14.5% in the case of drugs. As retailers generally are adhering Building Permits. to the policy of ordering in small lots and for immediate shipment, it New construction during October showed a slight decline from the appears that the heavier demand is traceable directly to actual movement volume of September, but was still well ahead of that for the late spring of goods into the hands of consumers. Business was reported to be fairly and summer months. The 10'months of the year to date show a decline well sustained in the early part of October. The volume of collections from a like period of 1931 of 56%. turned upward in September and was seasonally larger than in the prela The value per permit continues to lag below $1,000, due in part to ceding month. low material costs, but mainly to the fact that no large construction is Following the large increase of 153.5%, which was reflected in the August In evidence. business of wholesale dry goods firms, there was a further gain of 20.4% Indications are that several architects have under preparation plans in the volume of sales during September. The latter increase was parwhich, when completed, will brighten the construction horizon about the ticularly encouraging. in view of the fact that a seasonal decline in disfirst of the year. tribution is usually visible in this month. The demand during September Comparative figures are as follows was only 3.6% less than in the corresponding month last year, as comNumber. Value. October 1932 pared with a similar decline of 12.4% in August, and 44.1% in July. 1,507 $1.253,450 October 1931 2,311 Purchases 3,459,905 by retailers were for the most part necessitated by current 10 months, 1932 14,877 15,534,104 requirements, there being little disposition to buy in anticipation of 10 months, 1931 22,032 36,081,039 possible future needs. Collections reflected a further increase of 28.9% Employment. over August. Due to small declines in eight out of the 10 Industrial groups during A considerable improvement in the sales of reporting wholesale hardthe month of October, the Chamber of Commerce Index of Industrial • ware firms occurred during September, as evidenced by an increase of Employment dropped 10 points from the year's high level set last month. 19.8% over the previous month, and a dollar volume only 1.2% under In spite of this decrease, however, the Index for October is still second that of September 1931. Only part of the business gain was attributable high for the year and Is on the average five points above levels of spring to seasonal influences. Indications are that consumer demand is exand summer months. panding, and as merchants generally are carrying moderate stocks, they The only two industries to escape the decline in employment during are finding it necessary to replenish supplies at frequent intervals. There the past month were clay products and petroleum. The largest declines was a seasonal pick up of 9.6% in collections. took place in motion pictures and food products, in the latter case due Although the demand for groceries at wholesale during September to a normal seasonal dropping off in the food canning industries. showed somewhat less expansion than usually occurs at this season, the Compared with a year ago, nine out of the 10 groups are operating at comparison with the same month a year ago continued to improve. The lower levels, although the spread between the two years is much less than total sales of reporting wholesale grocery firms were 6.5% greater than it was during May. June and July. The only industry which has not In August, but 7.3% under the volume of September 1931. During the declined below last year is mill work, due probably to the fact that the third quarter of the current year, they averaged 13.9% less than a year decline in this line of business antedated the general depression. ago. Indications are that business is more satisfactory in some sections The comparative figures are as follows: October 1932, 63.9; September than in others. September witnessed an improvement of 21.7% In col1932, 74.6; October 1931, 71.0. lections, as compared with the previous month. Financial Chronicle 3240 A rather general increase of 14.5% was shown in the demand for drugs at wholesale during September, this gain being substantially larger than seasonal. The month's sales were 14.5% below the level of September 1931; Yet this comparison was the most favorable recorded in the past 14 months. The volume of collections increased seasonally. The distribution of farm implements at wholesale during September was 13% less than the volume of the preceding month; yet the decline from the corresponding month a year ago amounted to only 6%, as against a like decrease of 45.3% in August. Collections during September showed a slight increase. CONDITION OF WHOLESALE TRADE DURING SEPTEMBER 1932. Percentage of Increase or Decrease in- Sept. 1929. Aug. 1930. Net Sales July 1 to Dale Compared with Same Period Last Year. Groceries -7.3 Dry goods --3.6 Farm implements -6.0 -1.2 Hardware -14.5 Drugs +6.5 +20.4 -13.0 +19.8 +14.5 -13.9 -16.1 -41.2 -17.0 -22.3 Net Sales September 1932 Compared with Sept. 1931. Aug. 1932. Ratio of Collections During Sept. to Accounts and Notes Outstanding on Aug. 31. -13.6 -34.2 -5.0 -12.1 -18.5 +5.4 +1.2 -1.3 -0.3 -0.9 71.7 26.9 2.7 27.0 34.2 Stocks September 1932 Compared with Retail Trade. A pronounced upturn was witnessed during September in the business of department stores located in principal cities of this district. The better public sentiment, together with the long delayed purchases of consumer needs, stimulated the demand for fall merchandise. Sales of the following Items were above those a year ago: women's and children's gloves, neckwear and scarfs, children's shoes, all items of women's and misses' ready-to-wear. and men's and boys' shoes. The gain in total dollar volume of sales during the month was considerably larger than seasonal, being 54.8% above that In August, and the decline from a year ago, which was only 8%. was the most favorable recorded since October 1930. This Bank's seasonally adjusted Index of department store sales also reflected a substantial betterment, increasing from 63.6 in August to 70.1 in September. Inventories of merchandise held by reporting firms on Sept. 30 showed a further seasonal increase of 9.5%. but continued materially below those a year ago. The rate of stock turnover during the first nine months of 1932 remained 1 elow that in the corresponding period of 1931, but for September this year the rate was .30. as against .23 in September last year. Collections during September evidenced a seasonal increase, and were The ratio of charge accounts approximately the same as a year ago. collected during September to outstandings on the first of the month was in September 1931. 27.8% and August 27.7%. as against 26.4% In Increase of .5% Reported by University of Texas in of Employees in Texas Firms During Number Period From Sept. 15 to Oct. 15. The extra-seasonal gains made in the number of employees in Texas firms during September did not carry through into October, according to reports submitted to the University of Texas Bureau of Business Research and the United States Bureau of Labor Statistics by 928 establishments in Texas. "These firms reported 65,595 employees on their plyrolls as of Oct. 15, an increase of .5% as compared with those a month earlier and 14.6% below those on Oct. 15 a year ago," the Bureau's report said. "Last year there was a gain of2.1% in the number of workers on payrolls from September to October; in 1930, there was a drop of 2%; and in 1929 there was a gain of 1.5%. The report issued by the Bureau, Nov. 5 also said: In six groups, confectioneries, meat packing and slaughtering plants, railroad car shops, retail stores, hotels and miscellaneous classifications, both the number of workers and the average weekly wages were higher on Oct. 15 than a month earlier; these six groups involved more than 27,000 workers. In 13 other groups, auto and body works, bakeries, pure food products, cotton oil mills, cotton compresses, men's clothing manufacturers, women's clothing manufacturers, petroleum refining, saw mills, furniture manufacturing, paper box manufacturing, newspaper publishing, and wholesale stores, increases In the number of workers on payrolls were accompanied by decreased average weekly wages per worker, indicating either the addition of less-skilled workers or shorter working periods for more men. Beverages, ice factories, brick, factories, structural iron works, electric railway car shops, lumber mills, cotton textile mills, cement plants, and commercial printers decreased their forces but increased average weekly wages. The port cities, Beaumont, Galveston, Houston. and Port Arthur made relatively the poorest showing, while El Paso, Fort Worth, San Angelo, San Antonio, Waco. and Wichita Falls increased the number of workers on payrolls as compared with the previous month. Wichita Falls was the only city in the State in which more workers were on payrolls on Oct. 15 than on the corresponding date a year ago. Lumber Production and Orders Show Slight Seasonal Decline. Softwood lumber production showed some decline in the week ended Nov. 5 as compared with the previous six weeks and new business was lowest of any week since that of July 2, according to telegraphic reports to the National Lumber Manufacturers Association from regional associations covering the operations of 713 leading softwood and hardwood mills. Hardwood cut was somewhat less than the previous week and reported orders were heavier. The Association further reports as follows: year softwood production Compared with the corresponding week of last production was 39% less. New business showed 15% decline; hardwood last year and for hardwoods,30% below. for softwoods was 28% below production of all reporting mills was During the week ended Nov. 5, capacity. New business was 122,267.000 feet 115,687,000 feet or 23% of Nov. 12 1932 or 24% of capacity, compared with 25% the previous week and 26% two weeks ago. Although all reporting associations except the West Coast Association showed new business ahead of production during the week ended Nov. 5, the Southern Pine Association was the only one giving orders greater than during corresponding week of 1931. Its report indicated increase of 7% over last year. Forest products was the only commodity group during the week ended Oct. 29 which reported carloadings greater than during the previous week. With the exception of two recent weeks these were highest since May and were 20% less than during the same week last year. Lumber orders reported for the week ended Nov. 5 1932, by 466 softwood mills totaled 107,132,000 feet, or about the same as the production of the same mills. Shipments as reported for the same week were 127.115,000 feet, or 19% above production. Production was 106,993,000 feet. Reports from 261 hardwood mills give new business as 15.135,000 feet, or 74% above production. Shipments as reported for the same week were 17,867,000 feet, or 106% above production. Production was 8,694,000 feet. Unfilled Orders. Reports from 403 softwood mills give unfilled orders of 338,586,000 feet, on Nov. 5 1932. or the equivalent of nine days' production. The 375 Identical softwood mills report unfilled orders as 331,971,000 feet on Nov.5 1932, or the quivalent of nine days' average production, as compared with 407,050,000 feet, or the equivalent of 11 days' average production on similar date a year ago. Last week's production of 428 identical softwood mills was 102,982,000 feet, and a year ago it was 121,654,000 feet; shipments were respectively 120,805,000 feet and 128,955,000; and orders received 102,104,000 feet and 140.892.000. In the case of hardwoods. 194 identical mills reported production last week and a year ago 7,701.000 feet and 12,639,000; shipments 15,248,000 feet and 18,171.000; and orders 12,171,000 feet and 18,700,000. West Coast Movement. The West Coast Lumbermen's Association wired from Seattle the following now business, shipments and unfilled orders for 217 mills reporting for the week ended Nov. 5 UNSHIPPED ORDERS. 1 SHIPMENTS. NEW BUSINESS. Feet. 1 Feet. Feel. I Coastwise and Domestic cargo Domestic cargo 27,783.000 90,896,000 dellvery..._ lutercoastal 22,721,000 _ _ delivery__ 10,464,000 6,834,000 Export 7,155,000 Foreign Export 18,390,000 34,729,000 Rail 14,856.000 Rail Rail 7.031.000 Local 7,031.000 Local 186,459.000 Total 63,668,000 Total 51,363,000 Total Production for the week was 57,592,000 feet. Production was 23% and new business 21% of capacity compared with 25% and 21% for the previous week. Southern Pine. The Southern Pine Association reported from New Orleans that for 120 mills reporting, shipments were 27% above production, and orders 11% above production and 13% below shipments. New business taken during the week amounted to 26,204,000 feet, (previous week 26,949,000 at 116 mills); shipments 30,042.000 feet, (previous week 31,044,000); and production 23,580.000 feet, (previous week 23,942,000). Production was 35% and orders 39% of capacity, compared with 37% and 42% for the previous week. Orders on hand at the end of the week at 108 mills were 63,201.000 feet. The 108 identical mills reported a decrease in production of 11%. and in new business an increase of 7%,as compared with the same week a year ago. Western Pine. The Western Pine Association reported from Portland, Ore., that for 108 mills reporting,shipments were 25% above production, and orders 10% above production and 12% below shipments. New business taken during the week amounted to 27,465,000 feet, (previous week 32,882,000 at 113 mills); shipments 31.044.000 feet, (previous week 35,349,000); and production 24,880,000 feet, (previous week 27.530,000). Production was 19% and orders 21% of capacity, compared with 21% and 25% for the previous week. Orders on hand at the end of the week at 108 mills were 105,516,000 feet. The 98 identical mills reported a decrease in production of 10%. and In new business a decrease of 32%, as compared with the same week a Year ago. Northern Pine. The Northern Pine Manufacturers of Minneapolis, Minn., reported production from seven mills as 767,000 feet, shipments 1,756,000 feet and new business 1,245,000 feet. The same number of mills reported no production last year and new business this year 34% less than for the same week last year. Northern Hemlock. The Northern Hemlock and Hardwood Manufacturers Association, of Oshkosh, Wis., reported production from 14 mills as 174.000 feet, shipments 605,000 and orders 455,000 feet. Orders were 6% of capacity compared with 12% the previous week. The 14 identical mills reported a decrease of 65%.in production and a decrease of 26% in new business, compared with the same week a year ago. Hardwood Reports. Manufacturers Institute, of Memphis. Tenn., reported production from 247 mills as 8,694,000 feet, shipments 17,137.000 and new business 14,485,000. Production was 18% and orders 30% of capacity, compared with 19% and 27% the previous week. The 180 identical mills reported production 38% less and new business 27% lees than for the same week last year. The Northern Hemlock and Hardwood Manufacturers Association, of Oshkosh, Wis., reported no production from 14 mills, shipments 730.000 feet and orders 650,000 feet. Orders were 13% of capacity, compared with 16% the previous week. The 14 identical mills reported a decrease of 56% In orders, compared with the same week last year. The Hardwood During August at Lowest Point During Present Depression According to National Lumber Manufacturers Association. Price of Lumber Lumber prices reached the lowest point in August last since September 1916, according to the Bureau of Statistics of the Department of Labor. And the statisticians of the National Lumber Manufacturers Association are inclined to think that the August low is the low of the present depression. The Bureau's price index for lumber stood at 55.5 in August and 56.3 in September-100 being the 1926 price average. Brick prices give indications of having also Financial Chronicle Volume 135 reached the bottom in August. Other commodities in the building materials group stabilized earlier in the year. Cement hit bottom last December and steel in April. The National Lumber Manufacturers Association in issuing the foregoing at Washington, under date of Nov. 8, also issued the following table of building material prices prepared by its statiscians: INDICES OF BUILDING MATERIAL PRICES. (1926=100) Material. Lumber Brick and tile Cement, Portland Structural steel Paint and paint materials Other building materials All building materials x December 1931: January 1932 75.2. Low Month 1932. Lowest Since. Sept. 1932 Aug. 55.5 Aug. 75.2 Dec. x74.6 Jan. 77.3 July 66.8 June 77.6 Aug. 69.6 1916 1918 1917 1915 1915 1916 1916 56.3 75.4 79.0 81.7 68.2 79.9 70.5 The Association also issued the following: " r - As compared with the dollar in 1926 the September 1932 dollar is worth In purchasing power; in lumber, $1.77; in brick. $1.33; in cement. $1.27; In structural steel, $1.22; in a composite of buidling material. $1.42. IP0 If the lows of buidling materials have been passed and the present upward trend in prices continues it is believed that the public will soon perceive that the time to build is now-before prices begin to approach the levels of 1926-29. Lumber Production, as Reported by an Average of 604 Mills for the Four Weeks Ended Oct. 29 1932, Off 25% as Compared with the Same Period Last Year-Shipments Declined 13%-Orders Receiv-ea Showed a Decrease of 18%. We give herewith data on identical mills for the-flitr weeks ended Oct. 29 1932 as reported by the National Lumber Manufacturers Association: An average of 604 mills reported as follows to the National Lumber Manufacturers Trade Barometer for the four weeks ended Oct. 29 1932: Production. au 1,000 board ft.) Softwoods Hardwoods Total lumber Shipments. Orders Received. 1932. 1931. 1932. 1931. 1932. 1931. 435,572 28,872 565,210 51,002 532,437 58,913 611,246 66,895 470,020 53,998 575,419 65.520 464.444 616.212 601 350 675.141 524.016 640 010 Production during the four weeks ended Oct. 29 1932. was 25% below corresponding weeks of 1931, as reported by these mills, and 49% below the record of comparable mills for the same period of 1930. 1932 softwood cut was 23% below that of the same weeks of 1931 and hardwood cut was 43% below. Shipments in the four weeks ended Oct. 29 1932, were 13% below those of corresponding weeks of 1931, softwoods showing 13% decline and hardwoods, 12% decline. Orders received during the four weeks ended Oct. 29 1932 were 18% below those of corresponding weeks of 1931 and 42% below orders for similar weeks of 1930. Softwoods showed 18% decline as compared with 1931, and hardwood also 18% decline. The production of the reporting mills in the four weeks ended Oct. 29 1932 was 24% of their capacity and 42.5% of their three-year average production (same weeks of 1929-30-31). On Oct. 29 1932. gross stocks, as reported by 359 softwood mills, were 3.040.781,000 feet or the equivalent of 82 days' average production of the reporting mills, compared with 4,238,790,000 feet on Oct. 31 1931, the equivalent of 114 days' average production. On Oct. 29 1932, unfilled orders as reported by 554 mills (Cutting either hardwoods or softwoods or both) were 445.623.000 feet or the equivalent of 11 days' average production, as compared with 12 days' average produc. tion or 518.434,000 feet on Oct. 31 1931. Flour Production in October 1932 Higher Than in Preceding Month, but is Still Below Corresponding Period Last Year. General Mills, Inc., in presenting its summary of flour milling activities from figures representing approximately 90% of the mills in principal flour producing centers, reports that during the month of October 1932 production totaled 6,165,944 barrels of flour, as against 5,902,958 barrels in the preceding month and 6,854,721 barrels in the corresponding period in 1931. During the four months ended Oct. 31 1932 output amounted to 22,910,979 barrels as compared with 27,011,672 barrels during the same four months last year. General Mills, Inc. summarizes the following comparative flour milling activities as totaled for all mills reporting in the milling centers as indicated: PRODUCTION OF FLOUR (NUMBER OF BARRELS). Month of October. 1932. Northwest Southwest Lake Central and Southern Pacific Coast 1931. 1,531,045 1,893,181 2,156,457 2,365,279 2,149,834 2,158,705 437,556 328,608 Four MOS. End. Oct. 31. 1932. 5,635,951 8,101,164 7,932,503 1,241,361 1931. 7,626,749 9,148,448 8,740,460 1,496,015 6,165.944 6,854,721 22,910.979 27 011,672 Grand total Note.-Thls authoritative compilation of flour milling activity represents approximately 90% of the mills in principal flour producing centers. 3241 Agricultural Department's Complete Official Report on Cereals, &c. The full report of the Department of Agriculture, showing the condition of the cereal crops on Nov. 1, as issued on the 10th inst., will be found on page 3380. Hearing of Chicago Board of Trade Appeal-Proceedings Outgrowth of Refusal to Grant Clearing Privileges to Farmers' National Grain Corporation. Associated Press accounts from Washington yesterday (Nov. 11) stated that the U. S. Circuit Court of Appeals had under advisement the appeal of the Chicago Board of Trade from an order of a Federal Commission suspending its activity for sixty days for refusal to admit the Farmers' National Grain Corporation to membership in the Board's clearing corporation. The hearings on the appeal were brought under way on Nov. 10, the Associated Press adviees of that date from Chicago stating: An attorney for the Chicago Board of Trade argued before the Circuit Court of Appeals to-day that the board had no alternative but to bar the Farmers' National Grain Corporation from clearing-house privileges. The arguments were on an appeal by the Board of Trade from a ruling from three of President Hoover's Cabinet members ordering the board either to admit the Grain Corporation to all privileges or suspend operations for sixty days. Weymouth Kirkland, attorney, told the three circuit judges that the Board of Trade could not admit the Grain Corporation to the clearing corporation without first determining definitely the co-operative's financial liability and that the Grain Corporation declined to furnish necessary information. Without clearing privileges the Grain Corporation must pay a fee of 3 -cent a bushel on the huge amount of wheat it trades on the Chicago market. Mr. Kirkland reviewed the details of the entire altercation between the co-operative and the Board of Trade, including the board's suspension of the Updike Grain Company after the Grain Corporation had purchased it as a medium to the clearing house. "We received nothing but promises that the necessary information would be supplied when we sought to determine the Grain Corporation's financial responsibility and to learn if it were legally formed and legally conducted" Mr. Kirkland said, "and those promises were not kept. "The Board of Trade is not, and never has, fought against lawful farm co-operatives. But members of the board had a right to know the details of this organization, that did a business of $245,000,000 in twentyone months and borrowed $16,000,000 from the Federal Farm Board." Mr.Kirkland questioned whether the Farmers' National Grain Corporation was a lawfully formed corporation and whether it operated lawfully under the Capper-Volstead law, which requires that a farm co-operative do 50% of its business with members. He mentioned business done by the Corporation for the Grain Stabilization Corporation The attorney said corporations were not admitted to membership in in the Clearing Corporation because their financial liability was not so definite as individuals or partnerships. He said, however, the Grain Corporation would have been admitted under the grain futures act had its officers proved it to be operating lawfully and responsible financially for grain trades contracted. References to the appeal appeared in our issues of Oct. 1, page 2259; and Oct. 22, page 2731. Farmers' National Grain Corporation at Chicago Issues Stock Dividend. The Farmers National Grain Corporation, the sales agency created by the Federal Farm Board with a capitalization of $20,000,000, announced on Nov. 2 the issuance of 5,011 additional shares of stock to its twenty-eight member grain associations as a patronage dividend. Reporting this a Chicago account to the New York "Times" Nov. 2 stated: The announcement was made on the third anniversary of the Corporation's start in business. The 28 regional and State-wide associations obtaining the new shares now hold a total of more than 12,000 shares of the Corporation's stock. According to C. E. Huff, President, the stock has a par value of $100 and represents a total investment of nearly $1,250,000. At the same time that the Corporation's report was issued, charges that more than 20 farmers' co-operatives in North Dakota have "lost their properties since affiliating with the Farm Board set-ups," were made public by Thomas R. Cain, President of the Farmers' National Grain Dealers' Association of Jacksonville, Ill. Federal Farm Board Not Selling Wheat The following from Chicago is from the "Wall Street Journal" of Nov. 9: From time to time there has been recurrent talk of Stabilization Corporation selling wheat but there is excellent authority for the statement that there has been no change in net position of the Corporation. It is understood, however, that holdings of futures are being gradually changed over from nearby to distant futures: this is in accord with the Corporation's policy announced some months ago when it said it would not sell any of its holdings until after Jan. 1. Barley Trading Renewed on Chicago Board of TradeMove Regarded as Incident to Expected Modification of Prohibition Act. Barley, a foundation stock of beer, was recalled on Nov. 10 from a nine-year exile by traders on the Chicago Board of Trade said Associated Press adviees from Chicago that day, which likewise said: 3242 Financial Chronicle Apparently believing that modification of the Volstead Act to permit the manufacture of beer was imminent as a result of Tuesday's election, traders gathered around the small rye pit as the gong boomed to start the day and quickly began dealings in barley. It was the first time in nine years that future deliveries of that grain had been traded on the Exchange. Barley was fairly active when a great amount of the grain was used for beer. With the advent of the Eighteenth Amendment demand began to lag and eventually trading was discontinued by common consent. The first deal completed was for barley to be delivered next month. The price was 25 cents a bushel. Bidding was brisk, however, and the grain quickly ran up in price. The final sale was at 29 cents, with 29X cents bid just before the close. Directors of the Board of Trade will meet on Tuesday to consider a change in the grading of barley. The present operations were said to be based almost entirely on export and feed requirements rather than on malting types. The malting types have been quoted in Milwaukee daily for many years. After the enactment of the Volstead Act, which made the -provisions of the Eighteenth Amendment workable, barley was relegated to the comparative obscurity of the cash grain market. Rarely, however, was any of the grain sold here. The sudden interest in barley gave some measure of stimulus to all grains. The New York "Herald Tribune" in its Financial Market Nov. 11 commenting on the move said: Overshadowing, for the time, speculation in wheat and corn in the grain pit was a heavy buying movement in barley, based on the probability of early legalization of beer. The price of this cereal jumped 434 cents a bushel. Bidding for future deliveries of barley was re-commenced at Chicago. after a stoppage that had lasted for nine years. Initial bids were at 25 cents a bushel for December grain, with the price mounting subsequently to 29;i cents. Not only did speculators take cognizance of the changed situation resulting from the election, but the Board of Directors of the Chicago Board of Trade announced that they would appoint a special committee to investigate changes of barley grading to provide for a better malting type. Before the advent of prohibition brewers consumed 50,000.000 bushels of barley annually. "Wet" Stocks Rise. The flareup in the barley market had its counterpart on the Stock Exchange in a lively bidding for the issues of companies standing to profit from the legalization of beer. Owen Illinois Glass featured the so-called "wet" stocks, rising to a new high for the year at 42 h , up 4,1 points. Liquid Carbonic, Libby-Owens-Ford Glass, National Distillers and United States Industrial Alcohol were other prominent performers in the group. -4.-. Canadian Wheat Production This Year Estimated at 431,200,000 Bushels. Canadian press advices from Ottawa (Ont.) Nov. 10 said: Nov. 12 1932 The rural development is described as a continued "advance on the front of Socialist agriculture." Figures are issued showing that the percentage of peasants attracted to collective or State farms increased to 61.5% of the entire rural population last summer. The percentage reported at the end of 1931 was 54.7. These farms were reported to have cultivated 82.5% of the crop-bearing land of the nation this year. On the remainder of the land private peasants have continued to resist government efforts to induce them to become members of the collective farms. Complete collectivization of agriculture is one of the goals of the second five-year plan, beginning Jan. 1 1933. Industrial Centres Rising. The urban development has been centered mainly in new cities created at the scenes of industrial enterprises. In 1926, at the time of the general census, there were only steppes and forests on ground where those cities have sprung up. The city of Magnetogorsk, called the "Gary" of Soviet Russia, was credited with a population of.more than 64,000 in the 1931 count and ultimately a great model community of 260,000 persons is planned there. This will provide a maximum employment to operate the great steel plant and its auxiliaries, including the power station operated there. When the work was begun at Magnetogorsk and mines in July 1930, the spot was nothing but a barren steppe in the remote depths of Asiatic Russia. Stalingrad, another of these new industrial centres, Is claimed to have increased in population from 90.000 in 1924 to 294,000 in 1931. 20% Population Gain. The city of Stalinsk is said to have 46,000 inhabitants. It has only been In existence a few years. Nizhny Novgorod, the famous trade centre and historic city of the Middle Ages, on the Volga River, which has been renamed Maxim Gorki, in honor of the writer, is credited with a 20% Increase in population in the last year as a result of new factories there. Yusovka,now known as Stalin,and Chellabinsk are reported to have made similar increases. The opening of the new power project at Dnieprostroy, intented to be the largest in the world, is expected to bring phenomenal growth to that new city on the Dnieper River. Officials estimate that the total population of the Soviet Union increased 16.000,000 from 1926 to 1932 and that its population now is about 163.000,000. A general census has been ordered for 1933. Russian Grain Off—Oct. 20 Procurings Only 37% of Monthly Plan. The following from Washington, Nov. 7 is from the New York "Evening Post": Russian grain procurings on Oct. 20 were only 37% of the monthly plan and for the season to date represented less than half of the yearly plan, according to a report to the Department of Agriculture. The quantity actually procured is said to be 23% below last year. Canada's wheat production this year is placed at 431.200,000 bushels In the report issued to-day by the Dominion Bureau of Statistics. "The estimate of wheat production in the prairie Provinces," the Bureau says,"is now placed at 411,000.000 bushels, compared with the preliminary estimate of 446,000,000. A reduction of 2.000.000 bushels is shown in Manitoba, 25,000.000 in Saskatchewan and 8,000,000 in Alberta. "From Aug. 1 to Oct. 28 deliveries at country elevators and platform loadings were approximately 26,200,000 bushels in Manitoba, 119,100.000 in Saskatchewan and 69,700,000 in Alberta, making a total of 215,000,000 bushels. At the present date, deliveries have exceeded 230,000,000 bushels.". Austria's Foreign Wheat Needs the Coming Year. Austria will be dependent on the importation of foreign wheat to the extent of almost 40% of its total requirements or approximately 220,000 metric tons, about 8,083,000 bushels, during the 12 months ending Aug. 311933, according to a report from Consul General E. L. Harris, Vienna, made public by the Department on Commerce on Nov. 3. The Department also had the following to say: Canadian Pool Shows Profit of $180,213—United Grain Growers Adds to Surplus After Paying Dividend of 5%. The following (Canadian Press) from Saskatoon (Sask.) Nov. 9 is from the New York "Herald Tribune" In former years most of the imports have consisted of Hungarian wheat which cannot be imported this year on account of the embargo on its exportation, it was stated. At the present time the most important sources of supply are Jugoslavia, Bulgaria, Russia and Canada. Representing more than 30,000 members scattered throughout western Canada, 400 delegates to-day attended the opening of the annual meeting of the United Grain Growers, and were greeted with a financial statement which gained general approval. Operating profit for the year was 3917,245, the report indicated, out of which, after allowing for interest, depreciation and income tax payments, net profit remained of $180,213. This, added to the surplus balance carried forward from the previous year, gave a total of $988,601 before payment of dividends. Shareholders received a 5% dividend, leaving a surplus account of $828.557. The balance sheet revealed a strong financial position, with assets placed at $2,934.591, against $1.220,039 liabilities. All bank loans were paid off on July 31, the statement showed. Outstanding in the report of R. S. Law, President, was the statement that company elevators handled a larger percentage of the Western wheat crop than for several years, due to comparatively favorable location of elevators in good-crop districts and also a tendency on the part of farmers to give increasing patronage to the United Grain Growers elevators. Manitoba Wheat Pool Reported Bankrupt. From the New York "Times" we take the following (Canadian Press) from Winnipeg (Man.) Nov. 9: Bankruptcy of the Manitoba Wheat Pool became a fact to-day with the signing of an order by Chief Justice D. A. MacDonald in the court of King's bench on an application of the Gillespie Grain Co., elevator operator. The London and Western Trusts Co. was appointed custodian of the pool. Within a few days a meeting of creditors will be called, at which Inspectors will be appointed and winding-up proceedings will begin. The bankruptcy proceedings were begun several months ago when the Gillespie company was unable to collect a judgment made against the Pool. Russia Farms Report Gain for Collective Plan61.5% of Peasants Now Work on State Projects, Officials Declare—Increase in City Populations. Associated Press accounts from Moscow, U. S. S. R., Nov. 5 are taken from the New York "Herald Tribune": Soviet An increase in number of peasants attracted to the collective farms and growth of new industrial centres in the Soviet Union are reported In information just made public by government officials. Wheat Growers Aided—Australian Government Will Grant $6,000,000 to Farmers. From the New York "World-Telegram" we take the following (Associated Press) from Canberra, Australia, Nov. 11: Prime Minister Lyons announced to-day that the Government will grant E1,250,000 ($6,000.000 at par) for the assistance of wheat growers. He also announced a subsidy of roughly $5,000,000 to producers of superphosphates and a reduction in taxes of about 35,000,000. Great Western Sugar Company to Pay $10,000,000 to Farmers on Nov. 15 on Account of 1932 Beet Sugar Crop. The Great Western Sugar Co. will pay nearly $10,000,000 to farmers Nov. 15 as the first payment on the 1932 sugar beet crop, said Associated Press advices from Denver, Nov. 10, which further reported: Farmers in Colorado will receive $5,393.924; Nebraska, Montana. $1,296,000. and Wyoming, $704,372, aggregating $2.575,080; $9.969.376 initial payment on 2.434.721 tons of beets delivered In October. Further payment will be made Dec. 15 and if warranted thereafter during the period covered by the beet contract, ending Sept. 30 1933. St. Paul and Milwaukee Brewers Prepare for Manufacture of Beer. Under date of Nov. 9, Associated Press accounts from Milwaukee said: Confident that the election result means the early return of beer, brewers In Milwaukee and St. Paul announced plans to-day to prepare for its manufacture when legalized. Edward Lansberg, President of the Dietz Brewing Co., said that his company was prepared to expend $2,000,000 and to add from 700 to 800 employees as soon as the Volstead Act was modified. W. H. ICraft, General Manager of the Miller Brewery, said "we are prepared to produce beer on short notice," and he predicted a marked Increase in employment by his firm if beer was legalized. S. E. Abrams, General Manager of the &hilts Brewing Co., asserted approximately 2.000 employees would be added to his firm in such an event. Fred Pabst, President of the Pabst Corp., reported that his employees would be Increased from 600 to 2,000 by beer's return. Volume 135 Financial Chronicle At St. Paul, William Hamm, Jr., President of the Theodore Hamm Brewing Co., announced a contemplated building program including $250,000 for new equipment and as much again for repairs. Europeans Planning Liquor Sales In U. S.—Stocks Rise in Wake of Election—British, Austrians and Others Elated by the Outcome. From London Nov. 9 the New York "Times" reported the following: British brewery interests greeted Governor Roosevelt's victory joyfully to-day in full confidence that the Voistead Act would be modified and beer legalized in the United States in a very few months. Distillery add brewery shares were bought greedily when the stock market opened and remained active in an advancing market throughout the day. At the same time the brewers made plans to send agents to the United States and advertise their products when the expected change occurs. H. C. Vickery, Secretary of the Allied Brewery Traders Association, expressed the belief to-day that the Americans would buy big quantities of English beer and ale despite their former allegiance to lager beer of the German variety. On the same date (Nov. 9) a Vienna cablegram to the "Times" stated: What Austria and Southeastern Europe generally hope for from the Democratic victory in the United States was clearly indicated to-day by a slight general improvement on the Vienna Boerse and a marked demand for shares of beer and wine companies. Robert von Schlumberger, head of one of the leading Austrian wine exporting concerns, said "We expect a considerable export trade to the United States to follow the removal of prohibition, the more so since we have been in negotiation with American friends for some time. We expected this result." The Hungarian Government, which is a large owner of wine estates, was urged some time ago in Parliament to prepare for the end of prohibition. Dublin Associated Press advices Nov. 9 said: Irish distillers were especially interested to-day in the outcome of the American election, for most of the large houses have kept large stocks of spirits on hand for export in case the United States should modify its prohibition laws. Settlement of Strike of Cotton Spinners in B itish Mills. Following a settlement on Nov. 5 of the strike in the spinning section of the Lancashire (England) cotton textile industry, work was resumed on Monday,Nov.7. Regarding the adjustment of the differences, which grew out of proposed wage cuts, a London cablegram Nov. 6 to the New York "Journal of Commerce" said: The ballot of striking Lancashire cotton operatives showed that cardroom operatives gave a majority of 13,298 favoring resumption of work, but spinners gave a majority of 6,699 against resumption. On the total operatives' vote there was a majority of 6,599 for resuming work, so it was decided to call off the strike and restart the mills on Monday. It was indicated that the wage agreement providing for a reduction of is. 63'2'd. per pound wages would be ratified later. Under date of Oct. 31 advices to the same paper from London stated: With the unions carrying out their protest against wage reductions, the strike in the spinning section of the Lancashire textile mills was about complete to-day. It was estimated that about 170.000 are affected. A ballot of the union membership to be completed Saturday offers the chief hope of a settlement. The decision to reject the reduction, averaging more than 7%, was made by a vote of delegates. Both the Operatives and the Spinners' Cardroom amalgamations decided to take a vote of their members on the issue. Since 80% suPPert is required to justify the continuance of the strike, the trade is hopeful. The Manchester exchange was affected by the movement to-day and orders in the weaving end, particularly the sections using rayon, are being held up. An item regarding the strike appeared in our issue of Nov. 5, page 3062. World Consumption of Cotton in October Exceeded That of Same Month Last Year. World consumption of American cotton in October was much higher than in the same month last year, according to the New York Cotton Exchange Service. While only general indications are in hand at this time, it seems probable that consumption last month totaled over 1,200,000 bales compared with only 1,044,000 in the same month last season, said the Exchange Service on Nov. 7, which also stated: If later advices confirm these indications total consumption in the first quarter of the season will be in the neighborhood of 3,350,000 bales compared with 2,996,000 in the same quarter of last season, a difference of approximately 350,000 bales. This increase is due to a sharp upturn in mill activity in the United States and to a substantial increase in spinning operations in Europe. Mexican Import Duties Increased on Hosiery of Cotton, Linen and Wool. A Mexican Presidential decree, published Oct. 17 1932, and effective five days thereafter, for the purpose of encouraging further development in the domestic industry, increased the rates of Import duty on hosiery of knit cotton, linen and wool, and made minor modifications in the tariff nomenclature and created a few new classifications covering cotton 3243 and linen thread without effecting any change in duty, atcording to Commercial Attache 'Charles H. Cunningham, Mexico City. The new increased duties are not to apply to shipments by vessels which have left the port of embarkation prior to the publication of the decree, said the Department on Oct. 26, which also said: The new duties on hosiery, in Mexican pesos per legal kilo, are as follows, former rates and item numbers being shown in parentheses: Hosiery of knit cotton, even when having adornments or embroideries that are of silk, when each pair weighs up to 40 grams (Item 5.01.00), 13.00 (8.40); the same, when each pair weighs more than 40 grams (Item 5.01.01), 11.00 (7.00); hosiery of knit cotton, with adornments or embroideries of silk, when each pair weighs up to 40 grams (Item 5.01.02), 13.50 (9.80) ; the same, when each pair weighs more than 40 grams (Item 5.01.03), 13.00 (8.40); hosiery of knit linen or other smooth vegetable fibers except cotton, even when having adornments or embroideries that are not of silk (Item 5.11.00), 13.00 (9.10) ; the same, with adornments or embroideries of silk (Item 5.11.01), 14.000 (10.50); and hosiery of knit wool and other animal fibers except silk, even when having adornments or embroideries that are not of silk (Item 5.41.00), 13.00 (12.60). In addition to the basic rates of import duty, the general surtax of 3% of the duty also applies. Slight Improvement in French Cotton Industry. A slight improvement was evident in the French cotton industry during September, according to a report received by the Department of Commerce from Assistant Trade Commissioner Berkalew, at Paris. The Department, on Oct. 29, further said: In a number of cases, mills are reported to have increased working hours. The spinning mills are said to have sold a considerable proportion of the output, and orders received by the spinning as well as by the weaving mills exceeded the volume of recent months. The takings of American cotton from Havre by French spinners during September averaged 10,020 bales a week, which is slightly larger than the takings during August, averaging 9,896 bales, and the takings during September last year averaging 9,264 bales. Total takings of American cotton for August and September amounted to 90,000 bales compared with 83,000 bales for August and September last year. Stocks of American cotton at Havre at the end Of September amounted to 131,000 bales against 112,000 bales at the end of August and 187,000 bales at the end of September 1931, showing a gain of 19,000 bales over the August stocks and a decline of 56,000 bales from the stocks at the end of September last year. Stocks of other than American cotton at Havre amounted to 12,000 bales, which is 2,000 bales lower than the stocks at the end of August and 22,000 bales lower than the stocks at the end of August last year. Improvement in United States Cotton Textile Trade With Colombia Evident. A marked improvement in the volume of cotton textile exports to Columbia in the three months' period July-September served to partially overcome the handicap resulting from the loss registered in the first six months of this year as compared with the same period of 1931, according to the Commerce Department's Textile Division. In indicating this, on Oct. 29, the Department added: Shipments of cotton piece goods to this market in the first half of this year amounted to 12,885,344 square yards, a figure 19% below that of the first six months of 1931. Heavy shipments, however, during July, August and September brought the total nine months' exports up to 20,027,471 square yards, which was only 8.5% less than the same period of last year. Colombia, it is pointed out, has usually been the fourth best foreign outlet for American cotton textiles, ranking after the Philippines, Cuba and Canada. That Colombia ranks as the second largest purchaser of British cotton materials in South America was recently pointed out by an authoritative British publication which attributes this development chiefly to the fall in the value of sterling exchange. According to this journal, Lancashire firms are "making a bold bid to consolidate their gains and to extend their activities in this market." Leading firms, the Manchester authority says, are to-day quoting special export prices for Colombia, and are ready to grant extensive credits to capture business. Colombia is an important market for carded cotton yarn, taking in excess of a million pounds annually. For the first half of 1932 exports amounted to 400,000 pounds, or 50% below the same period of 1931. However, as in the case of piece goods, heavy shipments in &illy, August and September of this year brought Colombia's takings of 780,000 pounds up to within 21% of the nine months' total of 1931. —- Foreign Purchases of American Cotton Larger During September According to United States Department of Agriculture—Exports of Wheat and Flour Less. Heavy foreign purchases of American cotton and a drastic reduction in exports of wheat and flour were features of the agricultural exports situation in September, according to the Bureau of Agriucltural Economics, of the U. S. Department of Agriculture. The Bureau's index of volume of exports of 44 principal farm products stood at 90 for September, as compared with 64 for August, and with 88 in September a year ago. Excluding cotton, the September index was 66, as compared with 60 for August, and with 92 in September a year ago. In stating this the Burreau also said as follows under date vof Nov:9: Total exports of lint cotton in July, August and September this year aggregated 1.735,000 bales with a value of $65.624.000 as contrasted with 1,082.000 bales valued at $46.574,000 in the same period last year. The figures show an increase of 60% in volume but a gain of only 41% in value. 3244 Financial Chronicle 'Only once within the last 20 years. says the Bureau, have exports of wheat, including flour, dropped to the low point reached this September when total shipments to foreign countries were only 4.225,000 bushels. Total exports from July 1 to Sept. 30, aggregated 14.918,000 bushels compared with 41,101.000 bushels in the corresponding period a year ago. This Bureau's index of exports of grains and grain products in September Is placed at 45% of pre-war average. against 64 in August, and 105 in September a year ago; of anlmalproducts, 60% in September against so% in August, and 56 in September last year; dairy products and eggs. 67 in September, 81 in August. and 122 in September. 1932; fruits. 259 in September, 208 in August, and 318 in September last year. The export index for tobacco is 130 for September, 74 for August, and 137 in September last year; for lard, 113 in September, 89 in August, and 96 in September a year ago. The index of exports of cotton fiber, including linters. is 109 for September this year, against 67 in August, and 81 in September a year ago; of wheat, including four, 47 in September, 65 in August. and 130 a year ago. Nov. 12 1932 It is understood that the new understanding represents concessions made by several major purchasing companies, who will absorb about 8,000 barrels daily in excess of their present takings. • This will add to storage about 600,000 more barrels of oil than would otherwise be the case, and will involve an expenditure of about $500,900 additional by these companies. Stronger efforts are to be made to reduce crude output, now running about 30,000 barrels daily above prob_ able consumption. The Executive Committee for Equitable Curtailment in California had set upon 440,000 barrels as the daily limit for that State, but production has been running from 25,000 to 30,000 barrels above this figure. The new arrangement will serve to protect present price levels for California crude. 73% Increase in German Rayon Exports In AugustThere were no developments of an important character Imports Drop 20%. in other producing centers, and prices hold generally unCompared with the corresponding month of the previous changed throughout the country. year, exports of German rayon products during August, the Prices of Typical Crudes per Barrel at Wells. last month for which figures are available, advanced 73%, (All gravities where A. P. I. degrees are not shown.) 81.72 Eldorado, Ark., 40 and imports dropped 20%, it is made known in advices to Bradford, Pa 80.76 Corning, Pa_ .85 Rusk, Tex., 40 and over .95 the Commerce Department's Textile Division. On Nov. 3 Illinois 1.10 Salt Creek, Wyo., 40 and over_.__ .94 Western Kentucky 1.05 Darst Creek .80 the Department also reported: Mid-Continent, Okla., 40 and above 1.12 Midland Dist., Mich .85 Tex. 40 and over____ .87 Sunburst. Mont 1.05 The favorable recent development over the past few months in German Hutchinson,Tex., .90 Santa Fe Springs,Calif.,40 and over 1.00 ' 40 and over foreign trade in rayon yarn was thus continued in August, when imports Spindletop, Winkler, Tex_ .75 Huntington, Calif., 26 1.00 of yarn dropped to 655.000 kilos from a monthly average of 928,700 kilos Smackover, .75 Petrone, Canada Ark., 24 and over 1.90 In the first quarter of the year. 884,400 kilos in the second quarter, and REFINED PRODUCTS--SINCLAIR INTERESTS WITHDRAW EF795,800 kilos in July. FORT TO ENTER WEST COAST MARKET VIA RICHFIELD At the same time exports increased from 395.800 kilos in April, 524,300 PURCHASE AS STANDARD OFFER IS ACCEPTED-GASOLINE kilos in May. 557,900 kilos in June, and 606.300 kilos in July, to total 653.400 kilos in August. The German trade balance in rayon for August SLIGHTLY EASIER IN EAST AND CHICAGO-KEROSENE showed an import surplus of 2.04 million marks, which declined to 1.69 FIRMING. million marks in April 1932. 851,000 marks in July and 164.000 marks in August of the current year. Acceptance of the offer made by Standard Oil Co. of B Occupation in the domestic industry showed an improvement in recent California for the extensive Richfield Oil Company interests, weeks and small advances in prices have been effected. The demand is expected to increase still further as a result of the nation-wide advertising which followed closely upon the withdrawal of an offer by campaign, so that the employment of additional workers may be expected Sinclair interests, means that Sinclair is again delayed in in the near future, it was stated. About one-third of the drastically curtailed American imports of rayon assuming a decisive position in the rich West Coast markets. yarn in 1932 have come from Germany; some 47,000 pounds in the total Various groups representing stockholders of Richfield have of 152,000 pounds received through the first nine months. accepted the $22,500,000 Standard offer as against the (German mark equal to about 23.75 cents, U. S.) $27,500,000 Sinclair offer on the grounds that Standard's Wage Scale of Union Sheet Mill Workers To Continue offer means the equivalent of cash. The stockholders of Richfield must now approve the action of their representaUnchanged In November and December. tives. From the Cincinnati "Enquirer" we take the following Bulk gasoline prices in Chicago showed a general easing this (Associated Press) from Youngstown, Ohio, Nov. 1: week, reflecting the unsettled crude price situation arising It Wages of union sheet mill workers will remain unchanged during November and December, under the bimonthly wage settlement between the union • from two sets of posted prices, the higher level recently and employers, it was announced to-day by Elias Jenkins, representing the establshed by various interests, and the former level held manufacturers. The average selling price of sheets for the SeptemberOctober period, on which the wage settlement was based, was found to be to by Standard affiliates and others. Low-octane gasolfne ranged from 43/80. to 4/c., off lAc., $2.30 per 100 pounds, unchanged from the previous two-month period. at Tulsa, while buyers reported that bulk gasoline was Petroleum and Its Products-Texas Oil Bill Passes actually available at 4 1 0. under these levels. The Mid-west Senate-Plan Stabilizing California Production is also disturbed by widespread price cutting in retail circles, Worked Out-Prices Throughout Producing Fields brought on by greatly curtailed consumption and a subsequent battle for business. Unchanged. New York's bulk gasoline market also showed an easier Governor Ross Sterling's measure giving the Texas Railroad Commission enhanced power in its ruling curtailing tendency this week, although sellers are maintaining posted oil production has been passed by the Senate, called into prices, with 65-octane gasoline listed from 614c. to 63'c., special session to consider this and other emergency legis- and 6%c. to 7c. for above 65 octane. Jobbers seem detertion. The amended oil conservation law provides that mined to restrict operations to immediate needs, holding market demand can be one of the determining factors in that nothing in the present outlook supports a belief that prices will advance, but that on the contrary there are several the Commission's rulings. While this bill passed the Senate Committee by a vote of factors indicating a downward revision. Gasoline export 18 to 7, with a provision that the law shall expire by limits,- business has not been very active, and prices have eased tion Sept. 1 1935, the House has adopted an amendment slightly here. Kerosene has displayed greater activity this week, and requiring that the Commission must consider and protect the interests of the purchasing and consuming public in refiners report a good movement into consuming channels. administering the law. It is understood that the variations The general price for 41-43 water white, in bulk at refinery, in the Senate and House bills will be settled amicably in free is 53/2c. a gallon, but the market may move up to a 6c. level conference. If a two-third vote is won by the free conference in the near future. Grade C bunker fuel oil is firm at 75c. a barrel at refinery, report, the new law will become immediately effective, otherwise the bill cannot by law become effective until 90 days and Diesel continues steady and unchanged at $1.65 a barrel, same basis. There has been an improvement in the moveafter adjournment of the present session. Meanwhile the Federal Court in Texas has consented to ment of domestic heating oils, and an increase in the call for postponement of its decree holding that the Railroad Com- industrials. No price changes were posted this week. mission had exceeded its authority in East Texas proration Gasoline, Service Station, Tax Included. orders. It was the decision of this three-judge court which York $ 16 Cleveland 8 185 New Orleans 3.128 opened the question of the Commission's authority, and led New Atlanta 19 Denver .20 Philadelphia 14 .194 Detroit Baltimore .125 San Francisco: to the present legislative action. Boston 16 Houston 18 Third grade..,.139 75 Jacksonville Conferences of bankers and oil executives which have been Buffalo 195 Above 65 octane___ 180 Chicago 15 Kansas City 155 Premium 214 186 Minneapolis held during the past few weeks culminated this Wednesday Cincinnati .147 St. Louis 14 Kerosene, 41.43 Water White, Tank Car Lots, F.O.B. Refinery. in a general understanding destined to hold California oil N. Y.(Bayonne)___ .0534 Chicago 8.0214-.0334 New Orleans, as._..$0.0338 and gasoline markets at a stabilized basis approximating North Los Ang.,ex .04lined Texas .03 Tulsa.0414-.0334 present levels until the close of the year. This agreement Fuel Oil. F.O.B. Refinery or Terminal. Y.(Bayonne)California 27 plus D Gulf Coast C 8.60 serves to offset a situation which would have been detri- N.Bunker 8.75 C 8.75-1.00 Chicago 18-22 D-42)1.50 Diesel 28-30 D.... 1.65 New Orleans C mental, in view of the failure of the State to move toward a .60 Philadelphia C .70 Gas Oil, F.O.B. Refinery or Terminal. new reduced output on Oct. 1, in line with efforts made to I Chicago(Bayonne)I Tulsa 8.0134 28 plus 0 bring this about. 32-30 G 0 01%1 Financial Chronicle Volume 135 ILL S. Gasoline, Motor (Above 65 Octane). Tank Car Lots, F.O.B. Refinery N. Y.(Bayonne)Chicago N. Y.(Bayonne)$ 05H-.055( Sinclair Standard 011, N. J.$.074 New Orleans, ex. .05-.053' Pan-Am. Pete Co. .06 Arkansas Motor, 60 oo04-.04)4 Shell Eastern Pet_ .0631 California tane $ 063j 05-.07 Motor, 65 ocNew YorkLos Angeles, ex_ .0451-.07 Colonial-Beacon.. .07 .07 tane Gulf ports 05-.05H, Motor,standard .07 Crew Levick Tulsa 07 06-mq z Texas Stand. Oil, N. Y. .07 0634 Pennsylvania___ .05H Gulf Tide Water Oil Co .07 06H 07 Continental Richfield Oil(Cal.) .07 Republic Oil Warner-Quin. Co_ .07 06)4•. •Below 65 octane. z"Fire Chief" .07. "Standard Oil of N. Y. now Quoting on basis of de ivered price not more than Sc. per gal, under company's posted service station pr ce at point and date of delivery but in no event less than 834c. a gal., f.o.b. New York Harbor. exclusive of taxes. Average Daily Production of Crude Petroleum Shows a Gain of 7,100 Barrels-Further Decline Reported in Gasoline Stocks. According to the American Petroleum Institute, the daily average gross crude oil production for the week ended Nov.5 1932 was 2,103,700 barrels, compared with 2,096,600 barrels for the preceding week, an average of 2,122,550 barrels per day for the four weeks ended Nov. 5 1932 and 2,456,800 barrels daily for the week ended Nov. 7 1931. Gasoline stocks declined from 49,477,000 barrels at Oct. 29 1932 to 48,970,000 barrels at Nov. 5 1932, or a decrease of 507,000 barrels. Reports received during the week ended Nov. 5 1932 from refining companies controlling 93.4% of the 3,856,300 barrel estimated daily potential refining capacity of the United States, indicate that 2,000,000 barrels of crude oil daily were run to the stills operated by those companies and that they had in storage at refineries at the end of the week 31,573,000 barrels of gasoline and 134,348,000 barrels of gas and fuel oil. Gasoline at bulk terminals amounted to 11,536,000 barrels and 1,061,000 barrels were in water borne transit in or between districts. Cracked gasoline production by companies owning 95.4% of the potential charging capacity of all cracking units averaged 433,000 barrels daily during the week. The report for the week ended Nov. 5 1932 follows in detail: DAILY AVERAGE PRODUCTION OF CRUDE OIL. (Figures in Barrels of 42 Gallons.) Week Ended Nov. 5 1932. Oklahoma Kansas Panhandle Texas North Texas West Central Texas West Texas East Central Texas East Texas Southwest Texas North Louisiana Arkansas Coastal Texas Coastal Louisiana Eastern (not including Michigan) Michigan Wyoming Montana Colorado New Mexico California Week Ended Oct. 29 1932. 394,100 95.250 44,200 47,250 24,800 150,800 49,450 349,100 52,650 29,550 34,050 132.750 35.400 102,350 21.050 34.350 6.550 2.000 31.850 465,300 Total 395,400 95,900 44.100 47,350 24.850 148.900 49,350 341,800 52,900 29,300 34,000 126,300 34,750 98.900 22,700 34.000 6,400 2,700 31,900 475.100 Average 4 Weeks Ended Nov. 5 1932. Week Ended Nov. 7 1931. 390,450 534,850 98.050 106.450 46,600 67,450 47.500 57,450 24,700 26.600 156,900 194,750 50.750 55,900 355,400 419,450 56,400 54.150 29,650 29,050 33,950 37.750 126,100 126.350 34,600 32.450 100.500 109,750 22.400 11,850 33,700 38,450 6,900 7,500 2,750 4.300 31,800 43.950 475,700 496,100 2,103.700 2.096,600 2,122.550 2.456.800 CRUDE RUNS TO STILLS, MOTOR FUEL STOCKS AND GAS AND FUEL OIL STOCKS, WEEK ENDED NOV. 5 1932. (Figures in Barrels of 42 Gallons Each.) • Daily Refining Capacity of Plants. Crude Runs to Stills. District. Reporting. 1 0cocco0000 1 0000000.41901 nc-C.M,10=c1.-4 East Coast Appalachian._ Ind., 111., 1Cy Okla., Kan., Mo. Inland Texas... Texas Gulf Louisiana Gulf No. La. & Ark Rocky Mountain California Total. % 638,700 137,500 424,000 405.800 219,700 545,000 142,000 84,500 139,000 866,100 0000000000 Potential Itale. or ,o Daily OyerAverage. Wed. 452,000 93,000 282,000 178,000 77,000 347,000 71,000 44.000 26,000 430,000 allotor Fuel Stocks. Gas and Fuel Oil Stocks. 70.8 11,930,000 9,331,000 67.6 1.657,000 760,000 66.5 6.071.000 4.069.000 43.9 4.729.000 3,149,000 35.0 1.291,000 2,084.000 63.7 5,449,000 9,559,000 50.0 1.350.000 3,738.000 52.1 231.000 474,000 18.7 1,128,000 458,000 49.6 15,134,000 100,720,000 Totals weekNov. 5 1032_ 3,856.300 3,602.300 93.4 2,000,000 55.5 c48970000 134,348,000 oct. 29 1932_ 3.856.300 3.609.800 93.6 2.040.000 56.5 49.477.000 133.004.000 a Below is sot out an estimate of to al motor fuel stocks on U. S. Bureau of Mines basis for week of Nov. 6 1932, compared with certain October 1931 Bureau figu-es: 50.070,000 barrels A.P.I. estimate B.of M.basis week Nov.5 1932..b 50.43,1,000 barrels U. S. B. of M. motor fuel stocks Nov. 1 1931 51,995,000 barrels U. S. 11. of M. motor fuel stocks NOV. 30 1931 b Estimated to permit comparison with A. P. I. Economics report, which is of Bureau of Mines basis. c Includes 31.573,000 barrels at refineries, 11,536,000 at bulk terminals. 1,061.000 barrels In transit, and 4.800,000 barrels of other motor fuel stocks. Daily Average Crude Oil Production Increased During September-Inventories Continue Downward. According to reports received by the Bureau of Mines, Department of Commerce, the production of crude petro- 3245 leum in the United States during September 1932 totaled 65,036,000 barrels, a daily average of 2,168,000 barrels. Compared with August, this represents an increase in daily average output of 32,000 barrels; this was the first increase in crude production since April. The increased output in September was due almost entirely to developments in the East Texas field as production in both the other two leading producing States, California and Oklahoma, declined, and the increase in the Texas Gulf coast was virtually balanced by declines elsewhere in the State. The daily average production in the East Texas field in September was 371,000 barrels, compared with 329,000 barrels in August. This material increase resulted primarily from an increase in the daily allowable per well, although the gain in the number of producing wells (413 oil wells completed in the East Texas field in September) was also important. The new coastal fields, Rabb Ridge and Conroe, continued to grow in importance, their combined daily average output in September was 31,500 barrels. The increase in crude production and a decline in refinery demand were reflected in the trend of crude stocks, which although it continued downward, showed a tendency to flatten out in September. Thus the net withdrawal from refinablo crude stocks in September amounted to only 1,270,000 barrels compared with 3,375,000 barrels in August. Due largely to increased demand for fuel oil, stocks of refined products were drawn on more extensively in September than in August. The net decline in total stocks of all oils in September amounted to 7,766,000 barrels, compared with a net decrease of 6,379,000 barrels in August. The daily average crude runs in September totaled 2,130,000 barrels, or 40,000 barrels below August, added the Bureau, further stating: Decreased crude runs and a decline in gasoline yield in September were reflected in the daily average output of motor fuel which declined from 1.083.000 barrels In August to 1,046,000 barrels in September. The trend In stocks of motor fuel continued downward, the total on hand Sept. 30, 47,933,000 barrels, representing a decline of 4,925.000 from the stocks on hand Sept. 1. The daily average indicated domestic demand for motor fuel In September was 1.122,000 barrels. a decline of 8% from a year ago. Daily average exports of motor fuel in September amounted to 91,000 barrels, an increase of 15.000 barrels over the daily average in August. The refinery data of this report were compiled from schedu'es of 336 refineries, with an aggregate daily recorded crude-oil capacity of 3,564,402 bards covering, as far as the Bureau is able to determine, all operations during September 1932. These refineries operated during September at 60% of their recorded capacity, given above, compared with 342 refineries operating at 61% of their capacity in August. SUPPLY AND DEMAND OF ALL OILS. (Including wax, coke, and asphalt In thousands of barrels of 42 U. S gallons.) New Supply3omestic production: Crude petroleum Dally average Natural gasoline BenzoLa Total production Daily average Imports. Crude petroleum Refined products Total new supply, all ells Daily average Increase in stocks. all olls_b DemandTotal demand Daily average Exports: Crude petroleum Refined products Domestic demand Daily average Excess of daily average domestic procluen over domestic demand c Sept. 1932. Aug. 1932. Sept. 1931. 85,038 2,168 2,793 81 67,910 2,264 88.220 2,136 2,819 77 69,116 2,230 64,378 2,146 3,107 130 67,615 2,254 595.198 2,172 27,105 863 623,166 2.274 631,001 2,311 33,269 1,438 665,708 2.438 1,893 1,244 71,047 2,368 1,862 1,572 72,550 2,340 3,426 3,468 74,509 2,484 37,524 25,989 686,679 2,506 35,225 29,415 730.348 2,675 7,766 6.379 13,052 18,435 45,232 78,813 2,627 78,929 2,546 87.561 2,919 705,114 2,573 775,580 2,841 2,113 5.783 70,917 2,364 2,839 5,650 70,440 2,272 2,296 7,817 77.448 2,562 21,380 59,884 823,850 2,277 19.828 76,635 679,319 2,488 100 42 Jan.-Sept. Jan.-Sept. 1932. 1931. 328 3 50 Stocks (End of Month)Crude petroleum: East of California California_d Total refinable crude Natural gasoline Refined products_d 313,373 314,861 328.934 40,367 40,149 41,888 353,740 355,010 370,822 3,502 3,690 3,088 255,900 262.208 247.520 313.373 40,367 353.740 3,502 255,900 328,934 41,888 370,822 3,088 247..520 Grand total stocks all oils Days' supply 613.142 620,908 621,430 233 244 213 613.142 238 621.430 219 Bunker oll (Included above in domestic demand) 3,350 3,066 3,068 29,722 33,564 a Based upon production of coke reported to Coal 1Ivision by those by-product coke plants that recover bentol products b Decrease. c Deficiency. d California heavy crude and residual fuel included under refined products. NUMBER OF WELLS COMPLETED IN THE UNITED STATES.a September 1932. Oil Gas Dry Tntn1 August 1932. September 1931, Jan.-Sept. 1932, Jan.-Sept. 1931. 913 69 370 1,145 71 290 445 147 233 7,979 760 2,593 4,465 1,653 2,967 1 302 100* 520 11 322 8.985 a From "011 & Gas Journal" and California office of the American Petroleum Institute. Financial Chronicle 3246 PRODUCTION OF CRUDE PETROLEUM. (Thousands of barrels 0(42 U. S. gallons.) September 1932. August 1932. Total. DailyAs. Total. DailyAv. Arkansas California: Kettleman Hills Long Beach Santa Fe Springs Rest of State Total California_ _- _ Colorado Illinois Indiana—Southwestern Northeastern Total Indiana Kansas Kentucky Louisiana—Gull Coast Rest of State Total Louisiana_ _ . _ Michigan Montana New Mexico New York Ohio—Central & Eastern Northwestern Total 0110 Oklahoma—Okla. City Seminole Rest of State Total Oklahoma__ Pennsylvania Tennessee Texas—Gulf coast West Texas East Texas Rest of State Total Texas West Virginia Wyoming—Salt Creek... Rest of State Total Wyoming_ _ _ _ TT . Q +Mal DISTRIBUTION OF TOTAL CALIFORNIA OIL RECEIPTS. (Barrels of 42 Gallons.) Jan.Sept. 1931. Jan.Sept.1932. 991 33 989 32 9,010 11,722 1,775 2,136 1,768 8.672 14,351 92 374 62 59 71 59 289 478 3 12 2 1,869 2,250 1.822 8,899 14,840 86 408 71 60 73 59 287 479 3 13 2 64 2,919 647 856 866 1.722 712 188 940 277 290 89 379 2,019 3,367 6,463 11,849 969 1 3.993 4,979 11.133 7,086 27,191 307 641 422 1,063 i 98 22 29 29 58 24 6 31 9 10 3 13 67 112 216 395 32 --__ 133 166 371 236 906 10 22 14 36 73 2,983 578 950 883 1,833 846 221 987 304 300 94 394 2.250 3,539 6.805 12.594 1.051 _ 3-,i21) 5.329 10.210 7.429 26.697 337 662 537 1,199 i 96 18 31 28 59 21 7 32 10 10 3 13 73 114 219 406 34 -120 172 329 240 881 11 22 17 39 16,441 21,041 17,129 80,152 134,763 915 3,785 628 23 651 25,879 4,806 8.286 7,562 15.848 4,876 1,929 9.746 2.716 2,693 829 3,522 26,386 33,056 57,691 117,133 9,483 5 30,381 48.447 92,904 65,102 236,834 2,976 8,121 4.200 10,321 12.037 23.176 18.534 88,872 142,619 1.162 3,718 604 29 633 27.661 4.736 6.797 9,667 16,464 2,477 2,199 11.273 2,410 3,191 850 4.041 32,234 35.802 65,166 133,202 8,487 5 37,316 60,551 73.291 72,290 243,448 3,323 6,789 4.626 11.415 RA 990 2 116 505108 631.001 ax ma 9 1Al2 Imports of Petroleum at Principal United States Ports Gained During October. According to figures collected by the American Petroleum Institute, imports of petroleum (crude and refined oils) at the principal ports for the month of October 1932 amounted to 3,906,000 barrels, a daily average of 126,000 barrels, compared with 2,623,000 barrels, a daily average of 87,433 barrels, in the month of September. The Institute's statement follows: IMPORTS OF PETROLEUM AT PRINCIPAL UNITED STATES PORTS (CRUDE AND REFINED OILS). (Barrels of 42 Gallons.) Month. At Atlantic Coast Ports— Baltimore Boston New York PhiladelphiaOthers Total Daily average At Gulf Coast Ports— Total Daily average At All United States Ports— Total Tlallyr clIrannirc• October. September. August. Ade. 2,238,000 950,000 221.000 153.000 66.000 1,737,000 365.000 302.000 103.000 67.000 2,253,000 794.000 65.000 81.000 67.000 1,952.000 463,000 66.000 3,844.000 124,000 2,623,000 87,433 3,282.000 105.871 2,629.000 84,808 2.623.000 87.433 3,282,000 105.871 2.629.000 84.806 435,000 62.000 2,000 3.906,000 126.000 DISTRIBUTION OF TOTAL IMPORTS. (Barrels o142 Gallons.) Month. October. September. Nov. 12 1932 August. Month of— October. At Atlantic Coast ports—Gasollne Kerosene Gas oil Fuel oil Lubricants TY4A1 1 125nnn 2,596,000 62.000 61,000 1,383.000 1,531,000 1,187,000 1.240,000 6.000 1,745.000 903.000 1 Total 3.906.000 2.623.000 3.282,000 2,629,000 Receipts of California Oil at Atlantic and Gulf Coast Ports Increased in October. Receipts of California oil (crude and refined) at Atlantic and Gulf Coast ports for the month of October 1932 totaled 1,135,000 barrels, a daily average of 36,613 barrels, as compared with 986,000 barrels, or a daily average of 32,867 barrels, during the preceding month,the American Petroleum Institute reports. The detailed statement follows: At Atlantic Coast ports— Baltimore Boston New York Philadelphia Others 74,000 30.000 448.000 290.000 285,000 1,135,000 Total 36.613 Daily average At Gulf Coast ports—Total Daily average At Atlantic & Gulf Coast ports— 1.135.000 Total 36.613 September. August. 739.000 74,000 81,000 92.000 (IRA nnn August. July. 1.018,000 1.147.000 50.000 80.000 30,000 168.000 113.000 8.000 I nn7(Inn 1 307 rinn Stabilization of Markets for Crude Oil and Refined Products Agreed to by California Oil Concerns. It was reported on Nov. 10, according to the New York "Herald-Tribune" of Nov. 11, that oil companies operating in California have reached a basis of understanding tending to give more stability to markets for both crude oil and refined products and definite plans to this effect have been completed by executives of the various groups. The "Herald-Tribune" also reported as follows: While no official announcement of the accord was made, the reports followed a series of conferences in which bankers as we'l as oil executives are understood to have taken part, the discussions extending over the last two weeks. Under the understandings reached, it is said, several of the largest oil purchasing organizations have agreed to purchase in excess of current requirements, while at the same time every effort will be made co-operatively to reduce daily average crude oil production. Currently, daily crude oil output in California is estimated about 10.000 barrels in excess of requirements. Leading buyers have indicated they will purchase about 8,000 barrels a day more than they have been taking, which would mean that some 600.000 barrels of oil would be added to storage before the end of the year at a cost of 5500.000. New Oil Curb Law Passed by Texas House of Representatives—Statute May be in Hands of Governor Sterling by Nov. 18. The Texas House of Representatives on Nov. 10 passed finally the corrective oil and gas conservation bill for which its special session was called, according to advices from Austin, Texas, Nov. 10, to the New York "Journal of Commerce," which also said: The bill as enacted, survived all adverse amendments and retained authority for the Texas Railroad Conunission in prorating oil and gas production, to consider economic waste and reasonable market demand along with physical waste, the changes being made to conform to a recent Federal decision nullifying the present enforcement. Final passage of substantially the same bill in the Senate, and adjustment of differences was certain to send the new statute to Gov. Ross Sterling's desk by Nov. 18. The committee of the House has added two provisions to the bill which must have the approval of the Senate. One would provide for proration of natural gas output on an individual-field basis instead of a Statewide basis, and the other that whatever law is finally enacted shall not conflict with the common purchaser act, the marginal law and the anti-trust laws. The common purchaser act was brought into the limelight recently when the Humble 011 & Refining Co. sought to reduce its takings of crude oil from wells not owned, offering to store oil produced by independent operators for a nominal charge. It was ruled that the company had to purchase ratably from all wells to which it was connected and from which It had been taking oil. The calling of the special session of the Texas Legislature by Governor Sterling was noted in our issue of Nov. 5, p. 3064. Natural Gasoline Production Declined in September— Inventories Show a Further Drop. According to the United States Bureau of Mines, Department of Commerce, the production of natural gasoline in September 1932, totaled 117,300,000 gallons, compared with 118,400,000 gallons produced in August. Though this represents a decline of 1,100,000 gallons in total output, the daily average production showed a gain of 2%. The chief gains in output in September were recorded in the settled fields of Oklahoma and in the Rocky Mountain district. Stocks of natural gasoline held at the plants were reduced in September but the net withdrawal was considerably below the average for the preceding six months. PRODUCTION OF NATURAL GASOLINE(THOUSANDS OF GALLONS). RECEIPTS OF CALIFORNIA OIL AT ATLANTIC AND GULF COAST PORTS (CRUDE AND REFINED). (Barrels 01 42 Gallons.) October. September. July. 1,726,000 Crude Gasoline Kerosene Gas oil Fuel oll Month of— 904,000 78.000 153,000 Production, July. Stocks End of Mo. Jan.Sept, 1932. Sept. 1932. 1932. 4.400 48.200 700 5.800 26,500 287,700 2.600 18.300 32,700 265,200 4,300 36,400 1.900 15,200 6.400 40.200 51,000 415,400 1,608 222 10,849 910 7,019 820 268 666 2,268 2,335 152 11,898 996 7.079 576 242 366 2.244 117.300 118,400 130.500 1138.400 24,628 3,900 3,820 4,350 4,150 2.793 2.819 3,107 27,105 -555 93 91 104 99 25,888 Sept. 1932. Aug. 1932. 3,800 500 28,700 1,600 29,300 3.700 1.600 5,200 44,000 87,000 138,000 72.000 1, 0 000 349.000 3,0.000 697.000 234.000 238,000 689.000 269.000 277.000 986,000 32,807 1,307,000 42.161 1,307,000 42,161 3,800 Appalachian 700 Illinois. Kentucky,Indiana_ 29,800 Oklahoma 1,700 Kansas 28,300 Texas 3,500 Louisiana 1.500 Arkansas 5.700 Rocky Mountain 42.300 California. 981,000 32,81,7 1.307.000 42.161 1.307.000 42.161 Total Daily average Total (thousands of bble.) Dally average Sept. 1931. Aug. "iii Volume 135 Financial Chronicle Reorganization of Sicilian Sulphur Consortium. Negotiation for the reorganization of the Sicilian Sulphur Consortium, which got under way in Rome early in October at the call of the Italian Government, have been temporarily suspended, according to reports of the Commerce and State Department officers in Italy received in the Commerce Department's Chemical Division. The Department on Nov. 4 further announced: Prevention of further adverse developments since the dissolution of the concortium, July 31 1932, has been the principal objective of the reorganization proposals made by the Italian Government. The former consortium was a central sulphur marketing association Of Sicilian producers functioning since about 1905, except for the period during the war, according to C. C. Concannon, Chief of the Commerce Department's Chemical Division. It operated from 1922 to 1930 under Government management by commissioners, all sulphur producers in Sicily being required by law to be members. A marketing agreement on refined sulphur was reached between the Consoritum and Sicilian refiners in 1925. Conditions in the Sicilian sulphur industry improved in this period, so that towards 1929 general optimism brought about increased production. Simultaneously, sulphur production on the Italian mainland rose markedly from 46.500 metric tons in 1924 to 98,500 tons in 1930, making available a substantial new tonnage in export markets. The approaching industrial depression found Italy's sulphur production on an upward trend, with growing complications from opposing domestic interests. On one hand, the Continental production dominated by the "Montecatini" Company, represented a mechanized extraction and refining,.industry in one unit, while the Sicilian extraction and refining indust!5' were separate units opposed to mechanization and favoring manual production to employ the large labor supply. In 1930 the management of the Consortium was turned back to the producers, at which time there was a surplus of stocks approximating 60,000 tons. This surplus grew to 200.000 tons by July 1932, resulting in dissolution of the Consortium and unstable conditions in the sulphur export markets. American sulphur interests are extremely interested in the entire situation, since from $9,000.000 to $18.000.000 out of 830,000,000 to $40,000.000 worth of American brimstone shipped annually enters into foreign markets. This foreign trade meets competition to the extent of about one-third of the above export values from Italian sulphur exports. Copper Advanced Abroad on Increased BuyingUnchanged Here-Lead Higher. According to the "Metal and Mineral Markets" of Nov. 10 the feature in the market for non-ferrous metals was the resumption of buying of copper by European interests. The demand for the metal abroad was of sufficient volume to absorb quite a bit of the so-called surplus offerings here, for the two markets were virtually on the same basis as the week came to a close. Domestic buying of copper was light, yet prices were easily maintained at about the preceding week's level. Demand for lead continued on a good scale, and yesterday the price was raised to 3.15 cents, New York. Zinc prices were steady, even though the demand was slow. Tin and silver moved upward on fair buying outside of this country by the speculative element. It is added: Copper Active Abroad. Sales of copper in the foreign market took on good volume in the last week, total sales in the United Kingdom and on the Continent amounting to more than 8.000 tons. This buying caused the European market to advance almost daily. Early in the week metal changed hands abroad as low as 5.125 cents, c.i.f, usual ports. Yesterday, transactions in that sector were recorded at prices ranging all the way from 5.50 cents to 5.70 cents. On the tonnage sold, however, the average for the day was no higher than 5.55 cents. Some operators thought that speculative operations accounted for most of the buying, traders being influenced by a more hopeful attitude regarding the outcome of the German and American elections, and the feeling that something constructive may yet come out of the deliberations of copper producers that are to meet here shortly. On the other hand, consumers took a good share of the metal purchased and were able to obtain a fair quantity of first quarter shipment copper. European buyers are following developments in Wall Street closely. Domestic business was inactive and copper was available throughout the week at 5.25 cents., Connecticut, for November-December shipment, and 5.375 cents for January forward. The uplift abroad had the effect of making traders here very nervous. Several sellers withdrew from the market on the assumption that prices may soon move to higher ground. Producers are getting ready for the conferences and committees are being formed to handle the various questions that will come up for discussion, such as curtailment and foreign selling. Few traders hope for more than an agreement to keep production down to around the prevailing 20% basis. Fabricators report a fair movement of material against specifications, though new business remains rather quiet. The belief that more copper is being consumed than is being produced at present seems to be growing. Lead Advances to 3.15 Cents. New York. Continuation of the good inquiry for lead that prevailed throughout the past week, particularly on Monday, resulted in an advance in the price of metal yesterday to 3.15 cents, New York. the contract settling basis of the American Smelting .St Refining Co.. and 3 cents, St. Louis. Total volume of sales for the week, more than 4,000 tons, was well above the seven-day average, and also represented a gain over the generally satisfactory total of the preceding week. Prior to yesterday, all sales of the past week were on the basis of 3 cents. New York. and 2.90 cents, St. Louis. Corroders, especially pigment interests, were the Principal buyers, with sheet lead firms also acquiring fair tonnages. Business booked was about equally divided between November and December. Sales of virgin lead for November shipment total about 19.000 tons, and those specifying December shipment have reached about 9.500 tons. In September, according to the American Bureau of Metal Statistics, total lead stocks increased by 5.677 tons, standing at 257,730 tons at the end of the month, as against 252.053 tons at the end of the preceding month. Receipts of lead in ore by United States smelters showed little change, totaling 20,421 tons, as compared with 20,333 tons in August. 3247 Receipts of lead in scrap, however, mounted to 5,219 tons in September, whereas the total for the preceding month was but 2,226 tons. Foreign Price of Copper at 5.50c. a Pound. In the export copper market on Nov. 10 following the previous day's somewhat feverish dealings, an easier tendency was noted. Sales were reported during the morning of Nov. 10, according to the New York "Evening Post" of that day as having been made at 5.50c. a pound,e. i. f. European ports, which contrasted with top figure of Nov. 9 of 5.75e. a pound. In the domestic market, according to the "Post," copper again is available at 53j to 534c. a pound, delivered Connecticut Valley, up to the end of the year, with 534 to 534e. a pound quoted in some directions for first quarter of next year. Dealings are quiet. Production of Slab Zinc Increased During OctoberShipments Fell Off-Inventories Also Lower. According to the American Zinc Institute, Inc., there were produced during the month of October 1932 a total of 14,866 short tons of slab zinc, compared with 13,005 tons in the preceding month and 21,548 tons in the corresponding period last year. Shipments amounted to 18,821 short tons as against 21,152 tons in September 1932 and 21,181 tons in October 1931. Inventories declined from 123,056 short tons at Sept. 30 1932 to 119,101 tons at Oct. 31 1932. The latter figure also compares with 130,535 tons a year ago. The Institute's statement follows: BLAB ZINC STATISTICS CALL GRADES), 1930. 1931 and 1933. iTons of 2.000 Lbs.) yRetorts Stock at :Ship- °peace. End of sedfor End of Month. Export. Month. Unfitted Orders. End of Month Produced During Month. Shipped During Month. 1932. January Febrtary March April May June July August September October 22,516 21.516 22 493 20.620 18,642 16.410 14.771 13,404 13.005 14.866 22.444 21.896 22.576 18.046 18,087 14.958 12,896 18.108 21,152 18,821 129.914 129.534 129.451 132 026 132.580 134,032 135.907 131,203 123 056 119,101 31 0 0 0 0 24 0 39 20 20 22.044 21.752 22,016 20.796 20.850 18.742 18.295 14.514 12,191 14,645 24,232 23.118 23.712 20.821 19.837 16.116 16.949 18.017 16.028 10,333 723 743 726 688 601 547 475 432 434 480 1931. January February March April MAY June July August September October November December 32.522 29,562 32,328 29.137 25.688 23.483 21.365 21,467 21.327 21.548 20.548 21.868 31.064 30.249 35,224 27,418 25.851 27.604 28.460 23,599 20.860 21.181 19.963 23,041 145.076 144.389 141.493 143.212 143.049 138.928 131.833 129.701 130,168 130.535 131.015 129.842 1 0 0 0 20 33,235 33.118 31.821 26,672 20.624 19.022 19.266 19.305 20.417 21.374 19.428 19.875 30.251 33,453 31,216 36.150 31.146 33.086 24.815 20.503 15.388 18,365 21.3.55 18.273 1.049 1.056 1,043 971 829 783 689 892 708 695 681 705 Total for year 300,738 Monthly aver 25,062 314.514 26.210 23,680 26,166 822 59.457 59.929 51.300 50.038 52.072 52.428 46.030 48,004 42.574 38.664 35.092 31.240 39.017 32.962 29.330 29.203 30.515 28.979 34.135 38.972 27.108 29.510 24,481 26,651 1.678 1,594 1.552 1.481 1.437 1.449 1.291 1,323 1,349 1.321 1.067 1.064 Month. 1930. January February March April May June July August September October November December 52.010 44.628 48,119 44.435 44,556 43,458 40.023 41,012 40.470 40,922 32.097 32.733 40.704 41.296 41,820 40.597 38.681 36,448 35,389 81.901 32.470 32,430 30.285 34.254 Total for year 504.463 Monthly aver 42.039 436.275 34,356 2 Dolly Aver. Prod. 4 85.736 90 068 96.367 100.205 106.080 113,090 117.724 126,835 134,835 143.327 145,139 143.618 20 6 17 26 31 37 31 17 11 0 0 o 196 16 47,064 30,073 1,355 Export shipments are included In total shipments. AVERAGE RETORTS DURING MONTH. 1932. 1931. 1932. 1931. 1932. 1931. January___21,001 32.737 May 20,172 20,632 August_ _--15,087 18.140 February__20.629 34,423 June 19,670 19,898 September_11.085 19.752 March _ _21.078 30.647 July 17,552 17,920 October...13,177 19,809 April 19,489 26,765 October Daily Pig Iron Output Gained 5-3%. Estimated production of coke pig iron in October, according to revised figures released. by the "Iron Age" of Nov. 10, was 644,808 gross tons, compared with the Stepember figure of 592,589 tons. The gain in the daily output of October over September was 5.3%, or from 19,753 to 20,800 tons. This is the first time since April 1931, that there has been a consecutive gain in the daily output for two months. The "Age" further reported as follows: There were 49 furnaces in operation on Nov. 1 making iron at the rate of 20,170 tons daily, compared with 47 on Oct. 1, with a daily operating rate of 19.205 tons. Two furnaces were banked during October and four were blown in, making a net gain of two. Furnaces blown in include: One Ohio furnace of Carnegie Steel Co.. the Portsmouth furnace of the Wheeling Steel Corp.. one Pioneer furnace of the Republic Steel Corp.. and one furnace of the Sloss-Sheffield Steel & Iron Co. The ,Carnegie Steel Co. banked a Carrie furnace and the Shenango Furnace Co. banked a Shenango furnace. The Jones & Laughlin Steel Corp. has begun work dismantling its Soho furnace, which reduces the total number of available furnaces in the country to 283. Financial Chronicle Hall year July August September October November December 1931. 1.714,266 1.706,621 2.032,248 2.019,529 1.994.082 1,638.627 972.784 964.280 967.235 852.897 783,554 628,064 14.251 19.480 27.899 25,456 23.959 11,243 1932. 11,250 4.010 4.900 481 5.219 7.702 11.105.373 1,463,220 1,280,526 1,168.915 1.173.283 1,103.472 980.376 5.188.814 572.298 530 576 592,589 644,808 122.288 17.776 12.482 14.393 14.739 14.705 15.732 33.582 2.299 3,414 2,212 2,302 Year 212.115 18,275.165 z These totals do not Include charcoal pig iron. The 1930 production of this Iron was 96.580 gross tons. y Included In pig Iron figures. DAILY RATE OF PIG IRON PRODUCTION BY MONTHS-GROSS TONS. MerSteel Works. chants. Total 1930January 71.447 February 81,850 March 83,900 April 85,489 May 84.310 June 77.883 July 66.949 August 64,857 September 63.342 October 57.783 November 49,730 December 40,952 1931January 45,883 February 49,618 March 54.975 A pill_ 53,878 use----------11.113 IfCrSteel Works. chants.. Total. 19,762 91.209 19,810 101,390 20,815 104,715 20,573 106,062 19,973 104,283 19,921 97,804 18,197 85.146 16,560 81,417 13,548 75,890 12,043 69,831 12,507 62,237 11,780 53 732 9,416 11.332 11,48! 13,439 13 219 55,299 60,950 65,566 67.317 an 190 1931June July August September October November December 1932January February March NprIl May June July August September Clete-111pr 43,412 11,209 54,621 35,189 12.012 47.201 31,739 9.569 41.308 29,979 8,985 38,964 30,707 7,051 37,848 31.024 5.758 36,782 24,847 6,778 31,625 25,124 25,000 24.044 23.143 20.618 14,845 15,132 14,045 16.540 16 014 6,256 31,380 7,251 33,251 7,157 31,201 5,287 28.430 4,658 25,276 6,090 20.935 3.329 18,461 3,070 17,115 3213.19.753 4.246 20.800 * Includes pig Iron made for the market by steel companies. DAILY AVERAGE PRODUCTION OF COKE PIG IRON IN THE UNITED STATES BY MONTHS SINCE JAN. 1 1927-GROSS TONS. January February March Aprli May June First six months_ _ July August September October November December 12 mos.' average_ _ 1927. 1928. 1929. 1930. 1931. 1932. 100,123 105.024 112,366 114,074 109,385 102.988 107,351 95.199 95,073 92.498 89,810 88.279 86.960 99.266 92,573 100,004 103,215 106,183 105,931 102,733 101.763 99.091 101,180 102,077 108,832 110.084 108,705 103.382 111,044 114.507 119,822 122.087 125.745 123,908 119,564 122,100 121,151 116,585 115.745 106,047 91.513 115.351 91.209 101.390 104.715 106.062 104.283 97,804 100.891 85.146 81,417 75,890 69,831 62.237 53,732 86.025 55.299 60.950 65.556 67,317 64,325 54,621 61,356 47.201 41.308 38,964 37,848 36,782 31.625 60.069 31.380 33,251 31.201 28,430 25,276 20,935 28,412 18,461 17,115 19,753 20,80C Further Increase in Ingot Production. The American Iron & Steel Institute, in its latest report of steel ingot production calculates the output during the month of October at 1,068,550 tons, an increase of 93,489 tons over the previous month during which 975,061 tons were produced. In Oct. 1931 aggregate production was 1,590,180 tons. Approximately daily output was also greater, amounting to 41,098 tons for the 26 working days in October and only 37,502 tons for the same number of days in September. In October 1931, however, daily output averaged 58,896 tons for 27 working days. Below we show the monthly figures given out by the Institute since Jan.1931. MONTHLY PRODUCTION OF STEEL INGOTS, JANUARY 1931 TO OCTOBER 1932-GROSS TONS. Reported by companies which made 95.33% of the open-hearth and Bessemer steel Ingot production in 1931. 10 mos October _ Novem be Decembe Total_ 1932. January-February_ March __ _ April May June July Aug Sept October 93,042 106,128 117.475 106,421 98,140 81.837 72.599 66,032 59,439 58,896 18,659,303 2,598,907 21.258,210 22,299,860 260 85,769 40.37 27 25 26 58,896 63,666 50,047 27.72 29.97 23.58 21,004,543 3.011,394 24,015,937 25,192,715 311 81,006 38.13 58,133 58,308 52,187 47,625 42,540 34,511 31,701 30,830 37,502 41,098 25.96 26.96 24.13 22 02 19.67 15.96 14.66 14.26 17.34 19.00 2,098,176 2,131.079 2.565.531 2,321,043 2,130,805 1,782.007 1,574.379 1,462.254 1,274,072 1,319,958 1.319,958 1,276,856 1,068,384 1.230,661 1,232.588 1,149,307 1,036,227 950,785 755,123 652,650 5696.206 804,556 885,773 296,620 296,974 346.137 316,668 301,639 246.365 225.010 174.380 199,151 195,943 195,943 240,441 172,046 160.633 157.067 193,944 144.197 103.593 100.249 102,872 *97.323 124.970 132,876 2,394.795 2,428,053 2.911,668 2,637,711 2,432,444 2,028.372 1.799,409 1,636,634 1,473,223 1,515,001 1,515,901 1,517,297 1,240,430 bo.4-40,b; .t.., ocAoomA.coos 00 0 0010.4.0090 "c>"oini.WW; 1931 January _ February March _ _ • April May June July August _ _ Sept October_ Calculated No.of Approx. Per Monthly Cent. Monthly Work- Daily Output Bessemer. Companies Output All 097 Output OperaReporting. Companies. Days. All Cos. tfon,a bo , DNNIsDNN.JN. .400004000....4 OpenHearth. 2.512.140 2,547.027 3.054.339 2,766.959 2,551,633 2.127,762 1.887.580 1,716,829 1,545,411 1.590,180 1,590.180 1,591,644 1,301,211 1,459,450 1,457,710 1.409,054 1,238,250 1,108.030 897,275 792.533 832,402 975.061 1,068.550 28 25 27 20 28 26 25 27 28 26 43.86 49.06 55.30 50.09 46.20 38.52 34.17 31.08 27.98 27.72 9.393.856 1.317.724 10.711.580 11.236.315 260 43.217 19.98 10 MO9_ a The figures of "per cent. of operation" In 1931 are based on the annual capacity as of Dec. 31 1930, of 66,089,570 gross tons for Bessemer and open-hearth steel ingots and in 1932 on the annual capacity as of Dec.31 1931 01 67.473,630 gross OM UNFILLED ORDERS OF SUBSIDIARIES OF U. S. STEEL CORPORATION. End of Month. January _ _ _ February __ March April May June July August_ _ _ September. October__. November .. December 1932. 1931. 2,648,150 4,132,351 2,545,629_ 3,965,194 2.472,413 3,995,330 2,326,926 3,897,729 2,177,162 3,620,452 2,034,768 3,479,323 1,966,302 3,404.816 1,969.595 3,169,457 1,985,0903,144,833 1,997,040 3.119.432 2,933,891 2.735.353 1930. 1929. 1928. 4,468,710 4,479,748 4,570,653 4,354.220 4,059,227 3,968,064 4,109.487 4,144,341 4.410,718 4,427,763 4,304,167 4,256.910 9,022.055 4,088,177 3,580,204 3,424,338 3,481,763 3,639,636 3,943,596 3,658.211 3.902,581 4,086,562 4,125,345 4,417.193 4,275,947 4,398,189 4,335.206 3,872,133 3,416.822 3.637,009 3,570.927 3,624,043 3,698,368 3,751,030 3,643.000 3.976.712 1927. .4,ow-.4.40.-t4oco.4 January February March April May June Ferromanganeae.y 1932. Unfilled Orders Show Further Gain. Unfilled steel orders on the books of subsidiaries of United States Steel Corp. at Oct. 31 amounted to 1,997,040 tons, an increase of 11,950 tons since Sept. 30 and of 30,738 tons since July 31 when the figure was at its all time low and since when each succeeding figure has been larger. At Oct. 31 last year the backlog was 3,119,432 tons. Below are the monthly figures since Jan. 1927. Figures for earlier periods are obtainable from "Chronicle" of April 16 1927, page 2215. hD,a...coczwwoaw,o Ply fron.z 1931. Nov. 12 1932 wwwppwwwwwww 3248 PRODUCTION OF COKE PIG IRON AND OF FERROMANGANESE. (Gross Tons.) Slight Decline Recorded in Steel Production-Prices Unchanged. • Pre-election hesitancy, which has exerted a dampening influence on iron and steel buying since the middle of October, reached its climax in the last week of the Presidential campaign, says the "Iron Age" of Nov. 10, which adds that "with most consumers marking time in the last few days of suspense, business volume suffered noticeably. While slight gains in steel production were registered at Cleveland and Buffalo, losses were reported at Birmingham, Detroit and in the Valleys, reducing the national average from 20% to 193.% of capacity." The "Age" also states: Undoubtedly a recovery In buying will follow the release of election tension. The steps thus far taken by certain automobile builders to increase their operations are one earnest of such improirement. Whether tho gain will be sufficient to offset seasonal tendencies as the year-end approaches is still uncertain. Much depends on the rapidity with which railroad rehabilitation programs get under way and structural projects, financed by public funds, are launched. The upward impetus in automobile output has come chiefly from a sharp rise in Plymouth schedules. Production of this car has been Increased from 200 to 1.000 units a day, five days a week, and the November total will exceed 20.000. Meanwhile Chevrolet is going ahead with its recently announced program, which calls for the manufacture of 110,000 cars in the next 90 days. Greater activity on the part of both Chevrolet and Buick has been reflected in good-sized releases of steel for prompt delivery. Ford has bought full-finished sheets for certain parts for 7,000 cars, and continues to operate its Rouge plant three days a week, turning out about 1,200 units a day. The confidence of motor car makers in the imminence of improvement in automobile buying is traceable partly to the large replacement requirements of the market. According to Detroit estimates, fully 8,000,000 of the 22,000.000 cars in service in this country are ready for the scrap heap. Fabricated steel awards for the week are very light, totaling only 4.300 tons, but a number of large pending projects are approaching the contracting stage. For the Golden Gate bridge, San Francisco, for which 75,000 tons of structural material was recently placed, 10,700 tons of structural steel and 6.000 tons of bars remain unawarded. The cables and suspenders for the bridge, amounting to 24,890 tons, have just been let to John A. Roebling's Sons Co. Bids on the structural material for a post office at Cleveland, 11,000 tons, will be taken Nov. 15. Releases against old rail contracts, which last week enabled a Pittsburgh rail mill to resume operations, have now permitted a Chicago mill to start for a two weeks' run. The Western Maryland has purchased 1,600 tons of rails and a number of larger tonnages may be placed before Jan. 1. The Chesapeake & Ohio. which had a large portion of its 1932 purchase of rails in stock, has authorized the laying of much of this tonnage and has released the remaining 50% of the required track fastenings, orders for which had been held up at the mills. The Norfolk & Western has placed 1,300 tons of plates for the repair of 500 hopper cars at its Roanoke, Va., shops. The Reading has bought additional plates for car repairs and still has about 700 tons to award. The New York Central car repair program, for which a Reconstruction Finance Corporation loan was recently authorized, will call for a minimum of 10,000 tons of steel, according to estimates of the trade. Tin plate production has declined to 45% of capacity. Specifications have fallen off sharply pending the announcement of the 1933 price, which is expected in the next week or two. Prices have shown little additional change, evidently reflecting the dullness of most markets. Scrap shows a softer tone, although actual reductions are limited mainly to the eastern Pennsylvania district. In that area also malleable pig Iron is off $1.75 a ton and low phosphorus iron 50c. a ton. A central Pennsylvania melter has purchased 6.000 tons of basic iron, and an eastern Pennsylvania furnace has gone into blast after a long period of inactivity. Generally speaking,foundry melt throughout the country is at an unchanged rate, although stove makers in the St. Louis district are busier and automotive foundries tributary to Chicago are taking more metal. Los Angeles has divided an order for 7,600 tons of centrifugal cast Iron pipe between the United States Pipe & Foundry Co. and R. D. Wood & Co. Steel ingot production in October. at 1.068,550 tons, or 41,098 tons daily, showed a gain of 9.6% over the September output of 975,061 rtons, or 37,502 per day. This increase followed a gain of 21.6% in September over August. October output was the highest since May and was one-third larger than the August total, which was the lowest of the entire depression. THE "IRON AGE" COMPOSITE PRICES. Finished Steel. Nov. 7 1932, 1.948c. a Lb. Based on steel bars, beams, tank platen. 1.944c, One week ago wire, rails, black pipe and sheets. 1 977c. These products make 85% of the One month ago One year ago 2 0080. United States output. Financial Chronicle Steel Scrap. 113ased on No. 1 heavy melting steel Nov. 7 1932, $7.50 a Gross Ton. 57.501 Quotations at Pittsburgh, Philadelphia One week ago One month ago 7.671 and Chicago. 8.75 One year ago Low. High. $6.42 July 5 $8.50 Jan. 12 1032 7.62 Dec. 29 11.33 Jan. 6 1931 11.25 Dec. 9 15.00 Feb. 18 1930 14.08 Dec. 3 17.58 Jan. 29 1929 13.08 July 2 16.50 Dec. 31 1928 13.08 Nov.22 15.25 Jan. 11 1927 Steel production advanced from 193/2% to 21 in the week ended Nov.5, the first time since early June that the rate has crossed 20%, and if schedules for this week are maintained a further rise to about 22% is indicated, states "Steel" of Cleveland in its summary (Nov. 7) of the iron and steel markets. "Steel" also says: Oct. 22 1932.d Calendar Year to Date. Oct. 31 1931. 1932. 1931. 1929. /Miura. coal-s Weekly total 7,475,000 7,850,000 8,016,000 242,427,000 316,175,000 438,722.000 946.000 1,232,000 1.709,000 Daily aver_ _ 1,246.000 1,308.000 1,336.000 Pa. anthra.-b Weekly total 1,001,000 1,367.000 1,309,000 39,804,000 50,734,1)00 60,227,000 117,000 Daily aver_ _ 200,200 227,800 261,800 200,100 237,600 Beehive coke16.300 25.200 19.100 591,800 1,087,100 5,644.700 Weekly total 2,717 4,200 3,183 2.285 Daily aver_ _ 4,197 21,794 a Includes lignite, coal made into coke, local sales, and colliery fuel. b Includes Sullivan County, washery and dredge coal, local sales, and colliery fuel. c Subject to revision. d Revised. ESTIMATED WEEKLY PRODUCTION OF COAL BY STATES(NET TONS). Week Ended. Mate. Oct. 22 '32. Oct. 15 '32. Oct. 24 '31. Oct. 25 '30. 7,850,000 1,367400 7,888,000 1,256.000 000000§8g0000008o2000gos0. o.6888888.o86888c8.58 1 Total bituminous coal Pennsylvania anthracite co=00.9 00000. 220.000 118,000 127,000 816.000 313.000 97,000 152.000 554.000 268,000 28,000 9.000 38,000 29,000 52,000 591,000 1,786.000 70,000 13,000 74,000 234.000 38,000 1,710.000 434.000 115.000 2,000 1, ..). .7 194,000 119,000 111,000 837.000 306.000 91,000 143,000 737.000 244,000 26.000 9.000 31,000 27,000 42,000 392,000 1,833.000 67,000 12,000 8.5.000 217,000 41,000 1,741,000 431,000 112.000 2.000 Cl Alabama Arkansas and Oklahoma Colorado Illinois Indiana Iowa Kansas and Missouri Kentucky-Eastern Western Maryland Michigan Montana New Mexico North Dakota Ohio Pennsylvania (bituminous) Tennessee Texas Utah Virginia Washington West Virginia-Southern_ a Northern_b Wyoming Other States 0'01 . Week Ended. Oct. 29 1932.e ... In the first week of November last year there was an increase of more than 1% in the rate of the industry to above 31%. U. S. Steel showing a gain of over 2% to 3U.5%. while independents were up fractionally to a shade above 29%. In the prior years the early part of November witnessed sharp declines in declines in operations. For 1930 the average was off 4% to a little over 43%, with U. S. Steel showing a drop of 43.4% to better than 47%. and independents being down 3% to 41%. For the same week of 1929 the industry recorded a drop of over 4% to 73%. U. 9. Steel being down 5% to 75% and independents 3% to 72%. In the like 1928 week the average went off 4% to 824i%, U. S. Steel showing a loss of 5% to 80%,and independents being down 3A % to 84%. ESTIMATED UNITED STATES PRODUCTION OF COAL AND BEEHIVE • CORE (NET 'IONS,) cicic4O•;c7.c.;44c.ioOmc44OviuioCc4c.iwi.Z 1 .00.r0r.£400...mo0000000.am. Steel ingot production in the week ended Monday (Nov. 7) is placed at slightly better than 19% of theoretical capacity, according to the "Wall Street Journal" of Nov. 9. This compares with 19 in the preceding week. U. S. Steel is credited with a rate of a little under 18% against 17% in the week before, while independents are placed at 21%, compared with nearly 22% in the previous week. The "Journal adds: The total production of soft coal during the week ended Oct. 29 1932, is estimated at 7,475.000 net tons. Compared with the output in the preceding week, this shows a decrease of 375.000 tons. or 4.8%. Production during the corresponding week in 1931 amounted to 8.016.000 tons. The total production of anthracite In the State of Pennsylvania during the week ended Oct. 29 1932, is estimated at 1,001.000 net tons. The decrease-366,000 tons-was due in part to the occurrence of "Mitchell Day," Oct. 29, which is observed as a holiday in the hard coal fields. The average daily rate of output for the five active days, however. was lower by 12.1% than for the preceding week. Production during the corresponding week of 1931 amounted to 1,309.000 tons. Beehive coke production during the week ended Oct. 29 is estimated at 19.100 net tons. This is in comparison with 16.300 tons in the preceding week, and 25,200 tons in the same week of 1931. N..CIN This improvement is largely the result of a bunching of orders in the Pittsburgh district, where the operating rate is up two points to 19%. and of the release of automotive requirements, especially to Clevelend and Youngstown mills. Producers at Cleveland last week pushed their activity up seven points to 3334%, with a further Increase to 38 probable this week. Youngstown mills are up half a point, to 19%. The Edgar Thomson rail mill of the Carnegie Steel Co. was to resume Nov. 6 for a short run. But beyond the current week, producers are not disposed to look. Actual bookings since Nov. 1 have been strikingly smaller than the average for October. a slump which is in large measure ascribed to uncertainty over the election. The tendency to await the outcome of the election unquestionably has delayed some business. Granting that the election is a variable, the Industry is hopeful that the emergency government measures will mitigate the easing-off in the markets which usually characterizes November and December. Automobile production has definitely improved, and It. F. C. loans for railroad equipment repairs and for building projects cannot help but create some tonnage. Steel prices may face a test shortly. For the general run of small buyers, current levels are firm. Automotive consumers, however, have pressed for and in some instances won concessions, and if recovery proceeds far enough to conjure up genuine tonnage the temptation to bid for it might be strong. In fact, scrap prices a definitely weaker tone, dealers at Pittsburgh offering heavy melting steel at $9, or $1 off the recent peak. In many districts the necessity for further buying to substantiate present levels is great. • Because the repairs will be light, comparatively little steel will be required for the New York Central program of 13,000 cars. Norfolk & Western, Reading and Baltimore & Ohio are buying some repair material. Chesapeake & Ohio has released 135,000 screw spikes. Dominion Steel & Coal Co. has booked 150,000 tons of rails for the Canadian government. Automotive releases for sheets, chiefly by Chrysler and Chevrolet, have enabled sheet mills at Cleveland to speed up to 40% and at Detroit to 35. highest this year. First pipeline of size in months is a projected 3,500-ton line for a Pure Oil Co.subsidiary from Toledo, 0., to Detroit. Structural steel awards at 7,436 tons are below the season's average. An R. F. C. loan makes 12,000 tons for a Hudson river bridge at Catskill, N. Y., a possloility. Next week bids will be called for on 200.000 tons for the Government-financed San Francisco Bay bridge. Shipments more than orders continue to be stressed in pig iron. The St. Louis producer has reduced its stocks 30.000 tons in two months. At Philadelphia, where malleable iron quotations are weaker. 6,000 tons of basic have been sold. Seasonal gains by radiator plants have expanded consumption at Pittsburgh. October developed a 5% gain in pig iron production, the daily rate going from 19.788 tons in September to 20,795 tons in October. and in active furnaces there was a net gain of four as of Oct. 31. Since the low of August. nine furnaces have resumed and the daily rate has jumped 22.1%. A comparable Improvement will be shown by steel ingot statistics for October. The iron and steel composite of Steel was unchanged at $29.32 last week, and the finished steel composite at $47.70, but an adjustment in compressed sheets put the steel scrap composite up 8 cents to $6.91. Further Decline Noted in Production of Bituminous Coal-Pennsylvania Anthracite Output Also Lower. According to the United States Bureau of Mines, Department of Commerce, a further decline was noted during the week ended Oct. 29 1932 in the production of bituminous coal and Pennsylvania anthracite. Bituminous coal output during this period was estimated at 7,475,000 net tons as compared with 7,850,000 tons in the preceding week, 7,888,000 tons during the week endeded Oct. 15 1932 and 8,016,000 tons during the week ended Oct. 311931. Anthracite production during the week ended Oct. 29 1932 was estimated at 1,001,000 net tons as against 1,367,000 tons during the previous week, 1,256,000 tons during the week ended Oct. 15 1932 and 1,309,000 tons during the week ended Oct. 31 1931. During the calendar year to Oct. 29 1932 there were produced an estimated total of 242,427,000 net tons of bituminous coal as compared with 316,175,000 tons during the calendar year to Oct. 31 1931, while anthracite output totaled 39,804,000 net tons as against 50,734,000 tons during the corresponding period last year. The Bureau's statement follows: §§§§§§§§8§§888§888§§§KA pig Iron. Nov. 7 1932, $13.59 a Gross Ton. fj3ased on average of basic iron at Valley $13.59 furnace foundry irons at Chicago. One week ago 13.64 Philadelphia, Buffalo, Valley and 111rOne month ago 14.95 mingham. One year ago Low. Hick. $13.59 Oct. 25 $14.81 Jan. 5 1932 15.79 Dec. 15 15.90 Jan. 6 1931 15.90 Dec. 16 18.21 Jan. 7 1930 14 18.21 18.71 May Dec. 17 1929 Nov. 27 17.04 18.59 July 24 1928 17.54 Nov. 1 19.71 Jan. 4 1927 3249 . t.3 . t.,0..11ka.w .0110 e4. wTmex 010 wob.....000 at en a e 0,0-40.m0 Pr5D:.°°S.g?'5PPP.7.P!'!- Low. 1.926c. Feb. 2 1.945e. Dee. 29 2.018c. Dec. 9 2.283c. Oct. 29 2.217c. July 17 2.212e. Nov. 1 1 1932 1931 1930 1929 1928 1927 High. 1.977c. Oct. 4 2.0370. Jan. 13 2 273c. Jan. 7 2 317c. Apr. 2 2.286e. Dec. 11 2.402c. Jan. 4 I Volume 135 8,144,000 10.587,000 1,711,000 1,856,000 Total coal 9.217.000 9.144.000 9.855.000 12.443.000 a a Includes operations oa the N.& W.; C.es.0.; Virginian; K.es M. and B. C. & G. b Rest of State, Including Plinhandle, October Production of Bituminous Coal and Anthracite Shows Gain Over Previous Month, but Continues to Show a Decrease as Comparep with Corresponding Period in 1931. According to the United States Bureau of Mines, Department of Commerce, preliniinary estimates for the month of October 1932 show that for this period production of bituminous coal amounted to 32,633,000 net tons as compared with 26,314,000 tons in the preceding month and 35,700,000 tons in the same period lastyear. Anthracite output totaled 5,225,000 tons as against 4,108,000 tons in September 1932 and 6,561,000 tons in October 1931. The average daily production increased from 1,040,000 net tons of bituminous coal and 164,300 tons of anthracite during September 1932 to 3250 Financial Chronicle 1,255,000 tons of bituminous coal and 209,000 tons of anthracite during October. The Bureau's statement follows: Total for Number of Average per Calendar Year to Working Working Day. End of October Month. (Na Tons) Days. (Net Tons) (Na Tons) October 1932(Prelim'ary)— Bituminous coal 1,255,000 243,881,000 32,633.000 26 Anthracite 39.981,000 5,225,000 209.000 25 Beehive coke 67.800 595,700 20 2,608 September 1932(Bataa)— Bituminous coal 26,314,000 1,040,000 25.3 Anthracite 164,300 4,108,000 25 Beehive coke 46,700 20 1.758 October 1931— Bituminous coal 317,740.000 1,322,000 35,700.000 27 Anthracite_ a 252,300 50,818.000 6,561,000 28 Beehive coke..a 968,600 93.400 27 3.500 a Final figures. Note.—The preliminary estimates for the latest month shown are subject to slight revisions, which will be issued in the Weekly Coal Report. All current estimates will later be adjusted to agree with results of the complete canvass of productions made at the end of the calendar year. British Coal Export Levy Plan Proposed. On Nov. 2 the Department of Commerce at Washington stated that a plan for increasing the price of inland coal and helping British coal exports has been outlined by the central council set up under the Coal Mines Act of 1930, and it is Nov. 12 1932 hoped that details may be worked out sufficiently in time to have the proposed scheme authorized by the present pullsment, it is learned from a report to the Commerce Department from Trade Commissioner Floyd E. Sullivan, London. The Department's advices continued: Far-reaching proposals for revision of existing coal marketing schemes are seen in the new plan, it was stated. The central authority under the plan would have power to enter into comprehensive agreements with producers In other countries. The new proposals have been circulated to various coal executives and if approved will be submitted to the British Board of Trade. Parliamentary sanction will then be sought. Under the new proposals, it will be within the power of the owners' district committees to fix the minimum price for every class of coal, to fix the prices for every consumer of coal, and for every area to which coal is supplied, it was stated. In order to eliminate competition for the inland market, it is proposed that arrangements shall be made to ensure that export districts shall not "dump" on the inland market coal they cannot sell abroad. In return for this consideration, inland districts may be required to pay a levy to compensate and assist the exporting districts. With respect to international agreements, the Central Council would be given power to enter into agreements with any other bodies or persons for the sale and supply of coal. It is recognized, the report pointed out, that output exceeds demand in Europe, and view is widely held that only by agreements between producing countries can the industry be re-established on a profitable basis. Current Events and Discussions The Week with the Federal Reserve Banks. The daily average volume of Federal reserve bank credit outstanding during the week ending November 9, as reported by the Federal reserve banks, was $2,223,000,000, a decrease of $5,000,000 compared with the preceding week and an increase of $128,000,000 compared with the corresponding week in 1931. After noting these facts the Federal Reserve Board proceeds as follows: On November 9 total reserve bank credit amounted to 32.199.000,000. decrease of $27.000,000 for the week. This decrease corresponds with decreases of $42,000,000 in member bank reserve balances and 83.000.000 In unexpended capital funds, non-member deposits. &c., and increases of $4,000.000 in monetary gold stock and 311.000.000 in Treasury currency, adjusted,offset in part by an increase of $36.000,000 in money in circulation. Holdings of discounted bills declined $7,000,000 at the Federal Reserve Bank of New York, $3,000,000 each at Cleveland and San Francisco and 815.000.000 at all Federal reserve banks. The System's holdings of bills bought in open market and of United States Government securities were practically unchanged. a Beginning with the statement of May 28 1930, the text accompanying the weekly condition statement of the Federal Reserve banks was changed to show the amount of Reserve bank credit outstanding and certain other items not included in the condition statement, such as monetary gold stocks and money in circulation. The Federal Reserve Board's explanation of the changes, together with the definition of the different items, was published in the May 31 1930 issue of the "Chronicle" on page 3797. The statement in full for the week ended Nov. 9, in comparison with the preceding week and with the corresponding date last year, will be found on subsequent pages, namely, pages 3317 and 3318. Changes in the amount of reserve bank credit outstanding and in related items during the week and the year ending Nov. 9 1932 were as follows: Increase (+) or Decrease (—) Since Nov. 9 1932. Noe. 2 1932. Nov. 11 1931 Bills discounted Bills bought U. S. Government securities Other Reserve bank credit 311,000,000 —15,000.000 —372,000.000 34.000,000 —562,0110,000 1,851,000.000 +1,124,000,000 —53,000,000 3,000,000 —12,000,000 TOTAL RES'VE BANK CREDIT-2,199,000.000 Monetary gold stock 4,270,000,000 Treasury currency adjusted 1 918,000.000 Money in circulation. 5.661,000.000 Member bank reserve balances 2,342,000,000 Unexpended capital funds, non-member deposits, &c 394.000,000 —27.000,000 +4.000.000 +11,000.000 +35.000,000 —42.000.000 +135,000,000 —76.000.000 +172.000.000 +134.000.000 +243.000.000 —3,000,000 —148.000,000 Returns of Member Banks in New York City and Chicago—Brokers' Loans. Beginning with the returns for June 29 1927, the Federal Reserve Board also commenced to give out the figures of the member banks in New York City, as well as those in Chicago, on Thursday, simultaneously with the figures for the Reserve banks themselves and for the same week, instead of waiting until the following Monday, before which time the statistics covering the entire body of reporting member banks in the different cities included cannot be got ready. Below is the statement for the New York City member banks and that for the Chicago member banks, for the current week, as thus issued in advance of the full statement of the member banks, which latter will not be available until the coming Monday.. The New York City statement, of course, also includes the brokers' loan of reporting member banks. The grand aggregate of brokers' loans the present week shows a decrease of $12,600,000, the total of these loans on Nov. 9 1932 standing at $360,000,000, as compared with $331,000,000 on July 27 1932, the low record for all time since these loans have been first compiled in 1917. Loans "for own account" decreased from $343,000,000 to $341,000,000, but loans "for account of out-of-town banks" remain unchanged at 813,000,000 and loans "for account of others" at $6,000,000. CONDITION OF WEEKLY REPORTING MEMBER BANKS IN CENTRAL RESERVE CITIES. New York. Nov.• 9 1932. Nov. 2 1932. Nov.11 1931. 3 Loans and investments—total 7 044.000.000 6,998,000,000 7,240,000.000 Loans—total 3 420,000,0(10 3.404,000,000 4,474.000.000 On securities All other 1,570,000.000 1,576,000,000 2.270.000.000 1,850.000.000 1.828,000,000 2.204,000,000 3,624,000,000 3,594,000,000 2,766,000.000 Investments—total U. S. Government securities Other securities 2,555.000,000 2,534,000,000 1,732.000.000 1,069,000.000 1,000,000,000 1,034,000,000 Reserve with Federal Reserve BankCash in vault 969.0r/).000 1,006,000,000 41,000.000 34,000.000 723.000.000 53,000,000 Net demand deposits Time deposits Government deposits 5.476,000,000 5.466.000.000 5,353,000.000 910,000,000 901,000,000 902,000.000 214,000,000 236 000 000 27,000,000 Due from banks Due to banks 82.000.000 87,000,000 1 419,000,000 1,403,000,000 Borrowings from Federal Reserve Bank_ 68,000.000 967.000,000 16,000,000 Loans on secur. to brokers & dealers; For own account 341,000,000 For account of out-of-town banks 13.000,000 For account of others 6,000.000 343,000.000 13.000.000 6,000.000 553,000,000 116.000,000 182,000.000 360.000,000 302,000.000 831,000,000 Om demand On time Loans and investments—total 203,000,000 205.000,000 594,000.000 157,000,000 157,000,000 237.000.000 Chicago. 1.141.000.000 1,142,000,000 1.661,000,000 Loans—total On securities All other Investments—total 684,000,000 664,000,000 1,160,000.000 372,000,000 292,000,000 372.000,000 292,000,000 678,000.000 484,000,000 477,000,000 478,000,000 501.000,000 285,000.000 192,000,000 288,000.000 190,000,000 283,000.000 218,000,000 Reserve with Federal Reserve Bank.... 271,000,000 Cash In vault 18,000,000 263,000.000 148,000.000 16,000,000 Net demand deposits Time deposits Government deposits 889.000,000 323.000.000 28.000,000 878.000.000 1,105,000.000 324.000.000 449.000.000 30,000,000 3,000,000 Due from banks Due to banks 223,000,000 308.000,000 222,000,000 302,000,000 D. El. Government securities Other securities Borrowings from Federal Reserve Bank_ 16,000,000 124,000,000 259,000,000 3,000,000 Complete Returns of the Member Banks of the Federal Reserve System for the Preceding Week. As explained above, the statements for the New York and Chicago member banks are now given out on Thursday, simultaneously with the figures for the Reserve banks themselves and covering the same week, instead of being held until the following Monday, before which time the statistics covering the entire body of reporting member banks in 101 cities cannot be got ready. Financial Chronicle Volume 135 In the following will be found the comments of the Federal Reserve Board respecting the returns of the entire body of reporting member banks of the Federal Reserve System for the week ended with the close of business on Nov. 2: The Federal Reserve Board's condition statement of weekly reporting member banks in leading cities on Nov. 2 shows decreases for the week of $4,000.000 in loans and investments, $16.000.000 in time deposits, $26.000,000 in government deposits and 246,000,000 in reserve balances with Federal Reserve banks. Loans on securities increased 37,000.000 in the New York district, $6,000,000 in the Boston district and 54,000.000 at all reporting member banks. "All other" loans increased $13,000,000 in the New York district, and declined $12.000,000 in the Boston district. 25,000,000 in the San Francisco district and $9,000.000 at all reporting banks. Holdings of United States Government securities declined $14,000.000 in the New York district and at all reporting banks. Holdings of other securities increased $12.000,000 in the New York district and 215.000,000 at all reporting banks. A summary of the principal assets and liabilities of weekly reporting member banks, together with changes during the week and the year ended Nov. 2 1932, follows: Increase (-I-) or Decrease (—) Since Nov. 2 1932. Oct. 26 1932. Noo. 4 1931. 8 investments—total_ __ _19,026,000,000 Loans and *-4,000.000 —2,121,000,000 Loans—total On securities AU other Investments—total 10,441,000,000 *-5,000,000 —3,069,000,000 4,311,000.000 6,130.000,000 *-F4.000,000 —1,556,000,000 '-9,000,000 —1,513.000,000 8,585.000.000 •+1,000,000 U. S. Government securities__ -- 5,284.000.000 Other securities 3,301,000,000 Reserve with F. It. banks Cash in vault Net demand deposits Time deposits Government deposits Due from banks Due to banks 1." Borrowings from F. R. banks +948,000,000 --14,000,000 +1,176,000,000 *-1-15,000,000 --228,000,000 1,929.000,000 189,000.000 —46,000,000 --14,000,000 +324,000.000 --75,000.000 11,461,000,000 5,709,000,000 534,000,000 —9,000,000 —16.000,000 —26.000,000 —882,000,000 --588,000,000 +405,000.000 1,589,000,000 3,241,000,000 •+35.000,000 +77,000,000 +546.000,000 +587,000,000 +2,000,000 —323,000,000 105,000,000 *Oct. 26 figures revised to exclude a Chicago bank which withdrew from membership after close of business Oct. 26. the deposit liabilities of which bad been assumed by a new reporting member bank on Oct. 6. Statement of Bank for International Settlements for Oct. 31—Cash on Hand Totals 8,986,573.88 Swiss Francs, as Compared with 13,601,781.01 Sept. 30. Associated Press advices from Basle, Switzerland, Nov.5 said as follows: Following is the balance statement of the Bank for International Settlements,giving its condition as of Oct.31 1932,as made public here yesterday. Figures are in Swiss francs at par, 19.3 cents. Assets— October. September. I. Cash on hand and on current account with banks 8.986.573.88 13,601.781.01 II. Sight funds at interest 50,090.878.92 40,439.653.58 III. Rediscountable bills and acceptances: 1. Commercial bills and bankers'acceptances_ 318,563,301.03 355,485,809.91 2. Treasury bills 132,955.996.87 127,634,148.20 Total 451,519,297.90 483.119,958.11 Iv. Time funds at interest: Not exceeding three months 232,400,183.40 245,599,908.63 V. Sundry bills and investments: 1. Maturing within three months: (a) Treasury bills 14,308,675.55 29,985,884.96 (h) Sundry investments 71,173,297.27 47,588,785.94 2. Between three and six months: (a) Treasury bills 36,100.035.18 14,315,140.81 (b) Sundry Investments 35,602,622.67 59,235,379.85 3. Over six months 1,646.708.49 1,920,131.87 VI. Other assets TotalTotal assets Ltabtlities— I. Paid-up capital II. Reserves: 1. Legal reserve fund 2. Dividend reserve fund 3. General reserve fund Total III. Long-term deposits: 1. Annuity trust account 2. German Government deposit 3. French Government guarantee fund Total IV. Short-term and sight deposits: 1. Central banks for their own accounts: (a) Not exceeding three months (b) Sight 158.831,339.16 153,045,123.43 8,003.750.22 6,754,626.38 909.832,003.48 942,561,051.14 125,000,000.00 125,000,000.00 1,318,467.03 2,689,570.55 5.379,141.10 1,318,467.03 2,889,570.55 5,379.141.10 9,387,178.68 9,387,178.68 153.768,617.50153,768,617.50 76,884,308.75 76.884,308.75 68.848.520.43 68,648.520.43 3251 It is larger by 806,616 Exports of Gold From New Zealand Rise. Exports of gold from New Zealand totaled 20,347 ounces during September, it was announced at Wellington, New Zealand, on Oct. 27, according to Canadian Press accounts, which stated that this was the highest export figure since the days of the gold rush. Canadian Dollar Breaks Sharply in New York Market— Touches 861A Cents and Closes at 87—Biggest Discount Since July 19—Drop Ascribed to "Reflation" Reports in Absence of Other Apparent Causes. The Canadian dollar, which had given evidence of weakness at the close of last week, broke two cents on Monday, Nov. 7, to a discount of 13 M cents in terms of United States money, the widest discount since July 19. Noting this, the New York "Times" of Nov.8 added: The Canadian monetary unit closed on Saturday(Nov.5) at 884 cents. The best price quoted yesterday was 88 cents; the poorest, 86% cents, and the closing, 87 cents. In the absence of other apparent causes, the decline was ascribed to concern over the reported intention of the Canadian Government to provide for an increase in fiduciary currency as permitted under the War Finance Act. The purpose of the increase in currency, according to the reports, is to induce a degree of "reflation" in the hope of raising prices. Canadian banks, under legislation passed at the time of the war, are permitted to deposit gold and Canadian Government securities with the Government, and to receive therefor currency for issuance to their customers. Few banks are making use of this privilege now, but the present plans, according to reports from Canada last week, are for the Government to issue 235,000.000 of two-year notes, which the banks will purchase by means of book credits and then apply to the securing of additional currency. The need for this move is not clear to bankers here. The Canadian banks are permitted to issue their own currency in an amount equal to their paidup and unimpaired capital funds at all times, and between Sept. 1 and Feb. 28 they are permitted in addition, subject to a tax, to issue a further amount of currency equal to 15% of their paid-up and unimpaired capital funds. This makes available during the crop-moving season a currencyissuing power on the part of the banks of 115% of their capital funds. These capital funds amount to about $144.500.000, yieldling a note-Issuing capacity of $166,175,000, apart from what can be issued through the deposit of gold and Dominion securities with the Government. Recent circulation figures show less than $128.000,000 of bank notes outstanding, which indicates that a considerable expansion of currency could be secured without resorting to new measures. The Canadian dollar yesterday (Nov. 11) was quoted at a discount of 10Y8%. Canadian Finance Minister Says No Action Has Been Taken to Cause Drop in Price of Canadian Dollar in New York. From Ottawa, Nov. 7, Canadian Press advices said: The Department of Finance had done nothing that would cause the drop in the price of Canadian dollars in New York, E. N. Rhodes, Minister of Finance,said to-day. The Department was doing nothing either to raise or lower the value of the dollar. He made no further comment. In the last few weeks there has been much discussion in the House of Commons over inflating the currency. The United Farmer group has been urging inflation on the ground that it would increase the price of farm products. Some members think Canadian money has been weakened in New York by these debates and also by the move to bring the Canadian dollar to a parity with the pound sterling, which, although defeated, had considerable support. Canadian House of Commons Defeats Progressive Motion to Inflate Currency and Abandon Gold Standard. Canadian Press advices from Ottawa Nov.4 stated: The House of Commons defeated to-day a Progressive motion to inflate currency and abandon the gold standard, by a vote of 66 to 18, The motion was made as a sub-amendment to the address debate. The House then voted on the Liberal amendment, which criticized the government's tariff and financial policies. 299.301,446.68 299,301,446.68 87,494,378.97 85,813,532.20 352,213,882.77 371.188,401.45 Total 2. Central banks for the account of others: 419,708,261.74 457.001.933.85 Sight 14,484:833.88 13,144,466.52 3. Other depositors: (a) Not exceeding three months 6,273,480.57 6,257,508.29 (b) Sight 166,153.49 179.904.55 Total 8,439.634.06 6.437,412.84 V. Miscellaneous items 35,530.648.44 32,288,812.77 Total liabilities 909,832,003.48 942,561,051.14 Nine Months' Gold Output in Transvaal Breaks Record. Gold output in the Transvaal during September is reported by the Johannesburg Chamber of Mines as 961,501 ounces, said a cablegram from London, Oct. 14, to the New York "Times," which likewise stated: This is less than the August high record of 991,322 ounces, but it compares with 916,024 ounces in September 1931, and with 849,553 ounces in the sanre month of 1929. Total Transvaal gold production for the nine completed months, amounting to 8,619,205 ounces, exceeds the output of the corresponding months of 1931 and surpasses all records for .the i period. ounces than the nine months' output of 1929, Premier Bennett of Canada Says Easing of Money Is Necessary—Explains Borrowing of $35,000,000 from Chartered Banks. The easing of money and credit in Canada has become necessary, Premier Bennett told the House of Commons on Nov.8, explaining the borrowing of $35,000,000 from the chartered banks. We quote from Canadian Press accounts from Ottawa Nov.8, which further reported: "Some of the reactions to the report that the government had arranged a sale to the banks of $35.000.000 in two-year notes which the banks would use as security for borrowing under the finance act appear to indicate some misunderstanding of the situation," said the Prime Minister. "So far as I am aware the best and most conservative opinion throughout the world is committed to the idea that easing of money and credit is highly desirable in the interests of business recovery. Such is certainly the case in Great Britain and in the United States." Explaining that the 4% notes will enable the banks to obtain an equivalent amount under the finance act, increasing their loaning capacity, Premier Bennett said, "this procedure differs in technique, but not in fact, from normal central bank policies followed in various other countries." "Because of our sound banking situation a Canadian policy of this type can and must be of a much more restricted character both relatively and absolutely than the examples to which I have referred," he said. "In 3252 Financial Chronicle fact, advances under the finance act are to-day at a very low level. At the close of business on Nov. 7 such advances amounted to only $28,344,000 and when full advantage is taken of the recent arrangement the total will only slightly exceed $40,000,000. "Not only are advances under the finance act at a low level but our gold holdings are larger than a year ago. To-day our gold holdings represent 44.5% of the total Dominion note circulation as compared with 43.1% on the same date last year." Canadian Proclamation Establishing 12-Mile Limit— Aimed At "Rum-Runners." Canadian Press accounts from Ottawa Nov. 1 said: As from to-day, Canada's maritime jurisdiction, so far as it affects Canadian-owned vessels, extends to 12 miles offshore, from low tide. This is the effect of a proclamation issued here to-day in an extra of the Canada Gazette. Legislation establishing the 12-mile limit as territorial waters of Canada was passed by Parliament in 1931. The principle had previously been asserted, but, at the time of its incorporation into the statutes, it was being disputed in a law-suit before the Supreme Court of Canada. The Supreme Court decided the law to be ultra vires, and the Government then took the case to the judicial committee of the Privy Council. Meanwhile the act was assented to, and carried the rider that it would become effective on proclamation of the Governor-in-Council. The judicial committee of the Privy Council reversed the judgment of the Supreme Court, holding that Canada was within its rights in legislating territorial limits at sea for the operation of vessels owned by nationals of the country. This settled, the Government has now given effect to the enactment by proclaiming it to have come into force to-day. Customs officials to-day declared that, primarily, the law was aimed at rum-runners. Great Britain Reported as Seeking Further Moratorium on Debt to United States—Note Handed to Secretary of State Stimson—Conversations in Washington.1 A note from Great Britain on the subject of war debts was handed to Secretary of State Stimson in Washington on Nov. 10 by Sir Ronald Lindsay, British Ambassador to tho United States, it was learned unofficially in London, said a cablegram (Nov. 10) to the New York "Journal of Commerce," which went on to say: It is understood that the British note sought a temporary extension of the Hoover moratorium on European war debts payments due December 15, while the entire question is thrown open for negotiation of a new settlement which would entail a decrease in their amount. While stating that Britain is willing to meet the installment due next month the note, it is said, contends that a payment at that time would create difficulty owing to present conditions. Under present exchange rates, due to the fall of the pound, the amount of the British payment Is increased, it is pointed out. In its Washington advices the same day (Nov. 10) the paper quoted said: Interpreted in many quarters as the initial move of the European debtors to launch the long expected drive for a scaling down of their obligations to the United States, Sir Ronald Lindsay, British Ambassador, and Paul Claudel, French Ambassador, held conferences with Secretary of State Samson to-day. While State Department officials declined to comment, the impression was general that Sir Ronald handed Secretary Stimson a note setting forth the British fiscal position as beset with financial difficulties. It is expected that a similar note will be received from France to-morrow. Whether Sir Ronald reiterated the views expressed in London that Great Britain would pay if absolutely necessary was not disclosed, but it was recognized that the British position would be improved by a postponement of the December payment, and belief was expressed that this message was conveyed to Secretary Stimson. Nothing was expected from Secretary Stimson until the Government has had the opportunity to study carefully the British representations. Officials Meet Mills. Shortly after the Ambassador's call on Secretary Stimson State Department officials were in conference with Secretary of the Treasury Mills. It was believed that the debt issue was the paramount topic of consideration. The British payment December 15 is $65,550.000 interest and $30,000,000 In principal. Under the optional clause of debt agreement London would have had the right to serve notice September 15 that the principal payment would be postponed. The debt agreement also gives the Secretary of the Treasury tho right, In his discretion, to waive the 90-day notice and permit postponement of the principal up to the time it is due. England did not give the 90-day notice and dispatches from London had indicated the intention to pay. Interest payments are non-postponeable under the debt agreements leaving the Government without authority to act unless Congress enacts the necessary legislation. May Leave Issue to Roosevelt. There was a disposition on the part of some officials to leave the debt question as a legacy for the Roosevelt Administration, although such vigorous representations may be made by Great Britain and other countries that in the interest of international credit stability President Hoover's Government may be forced to act. The Congressional attitude toward another moratorium is decidedly hostile. President Hoover's decision to return directly to Washington instead of making the trip via the Panama Canal was linked with the debt situation. It was believed that the Administration felt it necessary to take definite action before the due date of the next debt payments so that the necessary recommendations could be made to Congress if this course was agreed upon. Stanley Baldwin of Great Britain for New War Debt Deal—Lausanne Work Must Be Completed He Says at Lord Mayor's Dinner. Stanley Baldwin, Lord President of the Council, who in the absence of Prime Minister MacDonald spoke for the British Government at the Lord Mayor's dinner in London Nov. 9, made a significant allusion to the Hoover disarma- Nov. 12 1932 ment plan and clearly implied that ending of reparations at Lausanne should now be followed by a new deal on war debts. The foregoing is from a London cablegram Nov. 9 to the New York "Times" from which we also quote the following: "The Lausanne agreement," said Mr. Baldwin, "aimed at an ultimate end of all reparations, and the signing of that settlement was obviously the first preliminary step open to all nations concerned toward a solution of the crisis which even now is paralyzing the trade world. It is essential that there should be ratification of that settlement and that the work begun at Lausanne should be completed." This, of course, was Interpreted by everybody at the brilliant dinner in Guildhall as an intimation that debts should follow reparations into the discard. The Lord Mayor In his speech had said without mentioning the election,"We wish the United States Godspeed and a happy issue out of all her difficulties." After having declared Britain could go no further in unilateral disarmament, Mr. Baldwin said concerning the Geneva conference: "One great difficulty has been how to unite the various plans proposed in one form or another. The Hoover plan is a case in point. It was a plan cordially and sincerely welcomed by His Majesty's Government as a very important contribution to the problem. In many ways those proposals were wholly and literally accepted by us. In other respects we had some modifications to suggest taking account of the various needs of the different nations concerned and we now have some suggestions of our own to put forward. "Despite what I said of unilateral disarmament, yet we are as desirous as any country in the world to proceed rapidly with substantial disarmament because we believe disarmament is the best way of securing peace, and to that end our endeavor will be devoted at Geneva. His Majesty's Government are firmly resolved to stand by all obligations which they have undertaken in the Covenant of the League of Nations and co-operate with the League in every aspect of its work for the maintenance of peace and the promotion of social well-being." Referring to the coming world economic conference, Mr. Baldwin said the auspicious proceedings at Lausanne and Ottawa made ono trust the world conference might profit by the example already set it. Concluding, Mr. Baldwin said the signs of better times were not clear, but he thought they could be seen on the horizon. London Paper Says Great Britain Will Pay United States—Asserts Government Will Not Ask Pos, ponement. A London cablegram Nov. 5 is quoted as follows: The British Government does not intend in any circumstances to ask the United States for postponement of next month's debt payment, according to the "Daily Telegraph." At the same time It is probable, the "Telegraph" asserts, that in announcing its intention to pay Great Britain will remind the United States Government of the "very onerous circumstances" under which payment will be made. The depreciated pound and the cessation of reparations receipts will be called to the attention of the United States after the election. The "Telegraph" says, but the "government will not consider for a moment the alternative of defaulting." Change in Debt Stand Reported Hoped for in Greece— More Liberal American Policy is Seen as Result of Election. From Athens Nov. 10 to the New York "Times" reported the following: The Greek newspapers, commenting on Governor Roosevelt's victory in the American election, express hopefulness as to a change of attitude on the war debts. The government newspaper Prola, attributing the Republicans' defeat to exaggerated conservatism, predicts a more liberal American policy on the debts. Manchuria and all European questions. The newspapers ask why Greece has not followed France's example in advertising her wines early, but hope for an increase in Greek exports to France as a result of the expected improvement in the French wine situation. United States Failed to Receive from Greece Payment Due Nov. 10 on Nonpostponable Debt—Hungary Also Announces Lack of Exchange to Meet Interest Payment Due. The United States failed to receive from Greece a $444,920 nonpostponable debt payment due Nov. 10, Ogden L. Mills, the Secretary of the Treasury,announced Nov. 10. Secretary Mills characterized the action as a default and as the first one, according to the "United States Daily" of Nov. 11, which further said: Although the Greek payment, the first nonpostponable Item to mature since the expiration of the one-year moratorium, was not received, the American Government does not believe that this fact forecasts the action of other debtors, according to oral statements made at the Treasury. Secretary Mills at the same time announced that the Hungarian Government has notified him that it does not have the necessary foreign exchange to make a $40,729 debt payment due Dec. 15. Hungary becomes the fifth government to seek a postponement of a debt payment under the terms of the war debt funding agreement: Estonia, Latvia, l'oland and Germany already have postponed amounts totalling $9,959,420, according to additional information. First to Come Due, The Greek payment was the first nonpostponable installment to come due. The Greek Government could not invoke an automatic treaty delay, as the other Governments have done and as OW herself did on a $130.000 payment due July 1 the first day after the expiration of the moratorium, according to additional information. Although Hungary has notified of her inability to meet her December payment,she has no privilege under the debt funding agreement to postpone her interest payment, which amounts to $28,444 of the total $40,729, and will have to be in default unless Congress waives the requirement, it was explained orally. AP. Volume 135 Financial Chronicle Mr. Mills' Statement. Secretary Mills' statement follows in full text: There was due and payable to-day under the terms of the debt-funding agreement with the Government of Greece on account of the 4% 20-year loan made on May 10 1929, the sum of $444.920. of which $227,000 represents an installment due on account of principal, and $217,920 represents semi-annual interest. The payment has not been received. The Hungarian Government has officially notified the United States Government that it does not have the necessary foreign exchange with which to make the payment due the United States on Dec. 15 1932, under the debt-funding agreement. The amount due on Dec. 15 1932, is $40,729.35, of which $12,285 represents principal and $28,444.35 represents semi-annual interest. South Africa Amends Treaty With Germany to Exempt British Empire Preference From Most-FavoredNation Treatment-Change in Accord With Ottawa Agreement. The treaty of commerce and navigation, which became effective June 11 1929 between the Union of South Africa and Germany has been amended to exclude from the operation of most-favored-nation treatment, preferential tariff rates granted by the Union to imports from the British Empire, said a cablegram received in the Department of Commerce from Minister Ralph J. Totten, Pretoria. The Department on Oct. 27 further reported: Section 8 of the treaty provided for mutual unconditional most-favorednation treatment, with the exception of reductions already granted by South Africa to the United Kingdom, Canada, and New Zealand, and, in effect, assured Germany the benefit of any additional preferences that might later be extended to the British Empire. The effect of this amendment is to exclude from the operation of this clause any such new preferences which the Union, in accordance with the agreements entered into at the Imperial Conference at Ottawa, has undertaken to accord to the various parts of the Empire. The agreement, entered into by an exchange of notes, is subject to ratification and will become effective on the date of the exchange of ratifications at Pretoria. The amendment will be applied provisionally as from Oct. 24, except in regard to goods shipped to South Africa before Oct. 13. Bahamas Increase Import Duties With Wider Margin of Preference to British Empire Imports. An announcement, as follows, was issued Nov. 4 by the United States Department of Commerce: The Bailsman Assembly on Nov. 1 voted to increase the general tariff rate from 121 / 2% to 20% ad valorem (applying generally to all imports except on a special category of agricultural products, goods separately dutiable, and articles included in the free list), and also to widen the margin of preference on imports from the British Empire by increasing the rebate from one-fourth to one-half of the duty, according to a cablegram received in the Department of Commerce from Consul John P. Hurley, Nassau. It is stated that the new duties will not become effective until Nov. 8, and that the question of the treatment of goods in transit, particularly consignment shipments, will receive consideration. At the same time increased duties were recommended by the Govern. ment on some 70 tariff classifications, the new duties to be made provisionally effective by orders-in-council pending discussion by the Legislature. United Kingdom Announces Termination of Russian Commercial Treaty. Under date of Oct. 20, the Department of Commerce at Washington said: The British Government has announced that the temporary commercial agreement with Russia will be terminated on April 17 1933, according to a cablegram received to-day in the Department of Commerce from Commercial Attache William L. Cooper, London. The agreement, signed on April 16 1930, and subject to denunciation on six months' notice by either party, provided for reciprocal most-favored-nation treatment in trade. It is stated that this action is taken as a result of the United Kingdom. Canada agreement signed at the Ottawa Conference, under which provision is made to prohibit the entry of goods from any foreign country the prices for which are created or maintained "directly or indirectly by State action" in such country, thereby threatening to frustrate the preferences granted In the agreement. Federated Malay States Accord Further British Duty Preferences. Duty changes made by the Federated Malay States Government, effective Oct. 14, in line with the agreements concluded at the Ottawa Conference, accord further duty preferences to British products and affect principally textiles, rubber manufactures (including tires and tubes), canned fruits, printing paper, certain metal manufactures, batteries, and tanned hides and skins, it was made known in a radiogram received in the Department of Commerce from Trade Commissioner Frank S. Williams, Singapore. Report of Royal Commission Endorses British DoleUrges Extension to Include Domestic and Farm Workers-Would Amortize Big Debts-Findings Call for Reduction in Total Expenditure by More Flexible Relief. The majority report of the Royal Commission on Unemployment Insurance, made public at London on Nov. 7 3253 (said a London cablegram to the New York "Times") upholds the "dole" system as the "first line of defense over a large part of the field of employment for a great majority of the unemployed." Further indicating the conclusions of the report the cablegram to the "Times" continued: Moreover, it recommends certain extensions in the system to include domestic servants, and it would include under a separate plan a system of benefits for unemployed agricultural workers. The Commission's investigation required two years. I- The majority And minority'reports agreed that the State should be responsible for training and educating unemployed persons, especially young men and women. The report of the Commission was well received by members of the Tory majority in Parliament, and it is likely the Government will adopt the recommendations despite inevitable bitter opposition from the Labor party and unemployed workers. The present debt on the unemployment insurance fund amounts to £115,000,000, which the Commission would transfer to a separate account to be amortized in 65 years. Report Goes to Parliament. r The majority report was represented to Parliament today, signed by the Chairman of the Commission,Judge Holman Gregory,and his six associates. The Commission recommends various economies and would take the question out of politics by setting up a permanent statutory commission to guide the Government on the flexible administration of insurance in accordance with conditions prevailing at any given period. The minority report, also presented to Parliament, was signed by two Socialist members of the Committee, W.Asbury and Mrs. D. C. Rackham, and recommends that unemployed persons receive benefits as long as they are out of work, regardless of whether they are insured. The minority also would completely abolish the so-called means test now in operation to determine the actual need of uninsured jobless persons. In other words, the minority Socialist suggestion is based on the assumption that society is at fault for unemployment and should be held responsible for compensating any man out of work. The majority answer to this is that such a basis for unemployment compensation could exist only in a State which controlled industry. In Britain, however, the State controls only one-tenth of employment. and before giving relief must have guarantees that it is needed and will not result in the personal deterioration of the recipient, the report held, thus upholding the means test, which has caused so much bitterness. The standards of relief, says the majority report, must depend on the general level of national prosperity and the amount of public funds available. The amounts paid for relief, it says, must always be less than the prevailing wage rate. The majority report criticizes successive British Government for making provision for financing unemployment on too low estimates of the number of workless. For the last 11 years,the report asserts,the average unemployment has been 13% annually. The governments, according to the report, in adopting a hand-to-mouth policy, had figured on totals lower than that and the "interests both of employers and employed have been sacrificed to political expediency." The Commission says various emergency measures in recent years have resulted in a complicated body of laws which shlould bow be superseded by a consolidated act to get rid of anomalies and make jobless insurance workable. Parliament, according to the Commission, is not the best qualified ,group to control the situation. There should be appointed a permanent statutory commission outside of the political arena to advise the Government, the report holds. Such a commission, it adds, by contact with industrial organizations, should keep the whole matter of unemployment in constant review and suggest to the Government each year what changes, if any,should be made in the rates of insurance benefits payable and what premiums should be contributed by employers and insured persons. Flexible Period for "Dole." r Instead of a fixed period of 26 weeks, to which the insured jobless man is now entitled to benefit in any one year, the Commission recommends minimum and maximum periods ranging from 13 to 39 weeks, for which Insured persons would be entitled to benefits according to the number of contributory payments previously made to the fund. The report says that because of the seasonal character of farm labor it is inadvisable to try to make the present insurance scheme cover unemployed agricultural laborers, but that some separate plan should be devised for their benefit. As to assistance for unemployed and uninsured jobless persons, the majority report says "A method of assistance must be adopted that will be acceptable to the public conscience." Such assistance would be extended to all workless persons under 63 years old in the industrial field who involuntarily were unemployed and were honestly seeking work and not out of jobs because of strikes. Assistance to such persons must be entirely outside the scope of the humiliating poor laws, the Commission says, and the cost should be borne chiefly by the national exchequer, supplemented by contributions from local authorities. The cost of the Government of benefits paid to unemployed and uninsured persons and jobless persons who did not qualify as insured amounted In 1928 to E11,800,000. In 1932 this total was £80,500.000. If the present system were continued with no reforms, the Commission estimates that the cost for the coming year would be £84.600,000, with no provisions made for freeing the system of the present load of debt. By the adoption of the changes it recommends,the Commission estimates that for the coming year, on a basis of 3.000,000 persons unemployed, the cost to the Government would be £81,670,000, but that total contains an annual provision for amortization. The Commission does not recommend any alteration in the amount contributed to the insurance fund now made by the Exchequer, employers and workers. Except for very minor modifications, it recommends the continuance of the existing rate of benefits. It recommends that young persons should begin paying insurance premiums as soon as they enter employment, provided they are not below 14 years old, the legal age for leaving school. is Great Britain Plans to Ease Means Test for Doleould"All—f ow or War Pensions, Workmen's Com-p.? pensation and Any Savings Funds. — 7i -wireless message Nov. 9 from London to the New York "Times" is authority for the statement that the British :(.31?iia2iment_refealed-thati-night-its - plans forremoving some irritations in connection with-the administration of the highly contentious "Means te-st" viiiichiiriginally was ,' -- 3254 Financial Chronicle designed to prevent payment of a full dole to unemployed persons of substance. The message added: At an estimated cost to the taxpayer of about /1,000,000 a year it is proposed to instruct the public assistance committees when, assessing the need of applicants for State relief, henceforth to disregard at least a half of any war pensions and at least half of any workmen's compensation payment for injury and the first 725 of any savings. Every subsequent £25 savings would be deemed to produce an income of Is. a week. Laborites vigoroulsy opposed any form of test, but the Government is determined that it shall remain, a spokesman contending that the proposed bill is the best means of obtaining greater uniformity in administration of the test,lack of which hitherto has been one of the chief causes of complaint. Leave to introduce the bill was granted by a vote of 267 to 43. British Lists Opened for Final Loan Conversion. On Nov.7 Associated Press advices from London stated: The lists were opened to-day. for the final conversion loan, totaling £1,028,000,000 (about S3,382,000,000), which the Government is floating to pay off the remainder of the unconverted war loans and 5% Treasury bonds. The sale opened at three-eighths of 1% discount, subscriptions totaling less than was expected. After a few hours, however, the quotation rallied to one-eighth of 1% discount. Applicants for amounts up to £5,000 received full allotments. Others obtained about 75% of their applications. This loan completes conversion of the British long-term credit to pracfealty a 3% basis. • New 2% British Treasury Bonds of $150,000,000 Reported Well Received. Under date of Nov. 4 an announcement by the U. S. Department of Commerce said: it Cash subscribers to the recent issue of E150.000,000 2% British Treasury bonds, 1935-38. have now received their allotments on the basis of 47% of the amount applied for, and dealings in the new bonds opened at a small premium, according to a report to the Commerce Department from Trade Commissioner Roger R. Townsend, London. An unusual feature of the new issue was that no commission was allowed to banks and brokers on cash subscriptions, although a commission of %% was allowed in respect of conversion applications. The immediate success or this new issue, despite the unusually low rate of interest offered, had a stimulating effect on the bond market and particularly in the gllt edged section. No announcement has been made of the total amount of cash subscriptions, or of the amount applied for by holders of the £140,000,000 of 4%% Treasury bonds who were offered the option of conversion into the new issue in place of redemption on Dec. 1, when the outstanding bonds will be repaid. The new issue was well received and the cash subscription offer was closed within an hour of being opened. The new 2% bonds are repayable on April 15 1938 but may be redeemed at the option of the Treasury on or after April 15 1935. They were offered to cash subscribers at par, but those who accepted the conversion offered received a cash bonus at the rate of 10 shillings per £100. or %. on the amount of their holdings of the 434% bonds thus converted. The new 2% issue was referred to in these columns Oct. 15, page 2581. Re-election of Montagu Norman as Governor of Bank of England Again Recommended. A London cablegram Nov. 10 to the New York "Journal of Commerce" said: The re-election of Montagu Norman as Governor of the Bank of England was recommended to-day at the meeting of the Court of Governors. They also recommended the re-election of Sir Ernest Musgrave as Deputy Governer. Mr. Norman held the post of Governor of the Bank of England for the longest period in the history of the bank. Through the past decade he was re-elected each time his term ended. He is said to have been largely responsible for the return of England to gold in 1925 on a 4.86 basis. Dead—Formerly Governor of Bank of England. Under date of Nov. 4 United Press advices from London to the New York "World-Telegram" said: Lord Cullen Lord Cullen of Ashbourne, 68, who played an Important part in Great Britain's finances through the World War and the first of the critical postyears, died yesterday. As Brien Cokayne he was Governor of the Bank of England from 1918 to 1920. It is noted that Brien Cokayne was made a Knight Commander of the British Empire in 1917 and was created the first Baron Cullen of Ashbourne three years later. London Chamber of Commerce Urges Barter Countries to Free Frozen Credits. with 35 Contending it had better do some trade on a primitive barter basis than do no trade at all, the London Chamber of Commerce on Nov. 10 published a scheme for the reversion to a temporary form of barter with 35 foreign countries which have imposed severe restrictions on currency exchanges with Great Britain. A London cablegram Nov. 10 to the New York "Times"from which we quote added: The chamber suggests that representatives of the Central Banks or the Governments of the 35 countries should immediately discuss the establishment of clearing houses to provide machinery for the exchange of goods between traders. Under the proposed system checks or vouchers would be issued for goods. An agreement between two countries to adopt the scheme with legislative sanction would permit the Central Banks of the two countries to fix their own internal par value of an external trade barter unit or "barter bond." negotiable only between the two countries. Nov. 12 1932 Excess sales by one country to the other would lead to the accumulation of barter bonds, which it is thought would automatically bring about a corrective in the form of a reduction in later sales or an increase in purchases from the other country as the only means of liquidating the bonds. By this system, the London Chamber of Commerce contends frozen credits could be released immediately, if foreign Governments undertook to issue ten-year guaranteed barter bonds, payable one-tenth each year, covered by an agreed excess of exports over imports. Neville Chamberlain, British Chancellor, Sees Business Recovery but Rejects Remonetization of Silver to Aid Idle. Neville Chamberlain, British Chancellor of the Exchequer, assured the House of Commons at the close of the three-day unemployment debate on Nov. 8 that the Governments' economic policies would bear fruit soon in a revival of industry and an increase of work. A London cablegram Nov. 8 to the New York "Times" went on to say: He rejected the proposals to remonetize silver that Sir Robert Horne had advanced as a remedy for unemployment. Bringing In silver to help gold would not be useful in the present circumstances, said the Chancellor. He similarly rejected proposals that the Government help industry with credits and thus stimulate employment. Warns Against Pessimism. "It is very easy to waste money." said the Chancellor, "trying to provide employment by inducing authorities or individuals to undertake work that would certainly not be done except to increase employment. After all, If a thing Is a profitable enterprise, why is it not going on now? "Don't let's be too pessimistic, becasue there are signs in many quarters that the effect of measures we have taken is beginning to show itself." New Australian Loan of £8,000,000. Subscription lists of a new ten-year £8,000,000 3%% Commonwealth loan were opened on Nov. 6 and will remain open until Dec. 5. if the issue is not oversubscribed meanwhile, said Canadian Press accounts from Canberra, Australia, Nov. 6, which added: Half of the proceeds of the loan will be used to fund Treasury bills and the remainder for financing Public works to reduce unemployment. Interest on the loan will be exempt from State income tax, from any general increase in the Federal income tax and from the 10% Pedes1 supertax. The loan is being underwritten by the Commonwealth Bank of Australia and trading banks and will be sold at par. The new loan was referred to in our issue of Nov.5, p.3071. New Zealand Maturing Loans to Be Renewed. Associated Press advices from Wellington (New Zealand) Nov. 7 stated that Prime Minister Forbes announced that day that negotiations have been completed whereby New Zealand's municipal loans maturing soon will be renewed for periods ranging from 10 to 15 years to save the costs of exchange involved at present in the transfer of the accumulated sinking funds for repayment of the loans. British Raise Duty on Irish Products--Treasury Acts to Offset Loss Due to Free State's Failure to Meet Obligations—Britian Induces Argentina, Australia and New Zealand to Reduce Exports of Meats. A cablegram from London Nov. 7 is taken as follows from the New York "Times": A further move in the economic war between Great Britain and the Irish Free State was made to-night by the British when a new treasury order was issued, doubling the import duties on Irish live cattle shipped to England and increasing by 50% the duties on Irish pork, poultry and dairy products. This action was taken under a provision of the special duties act authorizing the British Treasury to recompenge itself for any losses due to Ireland's failure to meet her financial obligations to Great Britain. This law is now invoked because of the Free State's refusal to pay to Britain land annuities amounting to £5,000,000 (about $16,562,000) an. nuttily. The duties of 20% on live cattle imposed by a treasury order last July are now increased to 40%, and the 20% duties on pork and dairy products are raised 30%. Major Walter Elliott, the Minister of Agriculture, revealed to-night the drastic measures the Government has taken to restrict meat imports for the next two months and to help British live stock farmers over a desperate emergency. He announced Argentine exporters had agreed voluntarily to cut exports of mutton and lamb to Great Britain by 20% and exports of chilled beef by 10%, and by 20 later if necessary. Australia and New Zealand, he said, were ready to cut their experts of mutton and lamb to Great Britain by 20%, and the Scandinavian countries had been asked for similar restrictions on their bacon and ham exports, and would probably agree. Such a scheme was preferable, said Major Elliott, to taxing meat im• ports, which would have meant taxing dominion produce and violating the spirit of the Ottawa agreements. Irish Cattle Market Affected by Increases in British Tariffs—Price of Dairy Cows Drop $9.90. Stating that the cattle market showed signs of collapsing on Nov. 10, as a result of the increased British tariffs against Free State live stock, the price of dairy cows falling £3 [about $9.90 at current exchange] apiece, a Dublin message on that date to the New York "Times" said: Volume 135 Financial Chronicle Prices are so low that the owners of live stock hesitate to sell, but the time is approaching when they will have no option. A new schedule of twenty-six duties against British goods was announced on the Dail to-day. Most of the articles had already been taxed, but the rate of duty is now increased to 50% with a preferential rate of one-third on imperial produce. The articles include about all classes of goods manufactured of wood and also toys exceeding a value of one shilling. Dublin to Reimburse Exporters for Duties—Will Pay Equivalent Bounties on Irish Manufactured Articles to Meet British Exactions. According to a Dublin cablegram Nov. 9 to the New York "Times" the Irish Free State Government announced that night that it would pay bounties on all articles locally manufactured to the equivalent of the duty that will be imposed on them after next Tuesday, when imperial preferences end between Britain and Southern Ireland. The cablegram added: The articles include malt, marble, stone, brooms, brushes, candles, oils, paper, stationery, jute, cotton, linen, wools, carpets, shirts, hosiery and gloves. The special British duties on goods from the Free State are designed to raise about £5,000,000 [about $16,500,000 at current exchange] yearly, representing payments in respect of the land and other annuities being withheld by the Free State. The imposition of an additional duty on Free State cattle yesterday resulted in remarkable scenes in Belfast to-day. Twenty special cattle trains were rushed to the city, but few arrived in time to escape the duty. Finance Commission of French Chamber of Deputies Delays War Debt—Debate Awaiting the Outcome of Diplomatic Negotiations. In a cablegram from Paris, Nov. 9, to the New York "Times" it was stated that the Finance Commission of the Chamber of Deputies decided that day to postpone parliamentary debate on the motion by Deputy Louis Mann calling for reconsideration of the whole question of interallied debts "because it might interfere with diplomatic negotiations now going on." The cablegram continued: M. Mann's motion indicated that readjustment of war debts should be sought before France's next payment to the United States falls due on Dec. 15. Nevertheless, the Finance Commission studied M. Mann's proposal carefully and opinions regarding its merits were exchanged. It was recalled that the Chamber, in 1929, adopted a "safeguard" resolution which specified that all France's debt payments would be conditional on receipt of equal reparation payments from Germany. Therefore, the French Government may consider itself automatically relieved of the necessity of meeting the Dec. 15 payment. inasmuch as the Lausanne conference abolished reparations. Cut in Debts and Arms Urged by Henry Berenger of France. From Associated Press advices from Paris, Nov. 4, it is learned that Henry Berenger, co-negotiator of the MellonBerenger debt accord, said in an address that day that the impending economic and disarmament conferences should decide that war debts must be reduced simultaneously with war armaments. He is quoted as saying: Simultaneous War which may come already has cost 150.000,000.000 francs (about $6,000,000,000). We must do away with the double burden of gold and steel if humanity is to find prosperity." He spoke over the radio under the auspices of the International Association "Messages." French Railway Makes Profit in Retiring Bends. The following is from the New York "Sun" of Nov. 4: The Paris Lyons Mediterranean Railway of France is saving on interest and at the same time retiring an obligation in depreciated sterling, making an exchange Profit, through issuing 45,000,000 guilders (about $18,000,000) of 454% bonds in equal portions in Holland and Switzerland. It is reported the purpose is to repay by call at 103 £5,000,000 6% sterling loan of 1922. Because the franc is upon the gold standard, while the British pound is at a discount of 30%, it will cost the French about $16.500,000 to buy back an issue of bonds which, were sterling at par, would require more than $24,000,000. The new Dutch-Swiss issue is a 20-year loan, redeemable after 1938. The issue price will be around 97%. Monaco to Submit to French Taxation—Principality Prepares to Give Up Independence in Return for Financial Help—France Is Said to Have Obtained Permission to Fortify Rock in the Event of War. From Monte Carlo, Nov. 8, advices to the New York "Times" said: Financial difficulties may force the principality of Monaco to surrender its independence and accept French control, it was learned here on good -day. authority to Agreements are said to have been drawn up by which in return for 13.000,000 francs (the franc is worth about 4 cents) in cash and a perpetual annuity of 3,750,000 francs Monaco will give to France customs privileges and supervision of her finances. A bill, said to be sponsored by Premier Bernet, has been prepared for the French Chamber of Deputies. 3255 The bill has been approved by Maurice Boullloux-Lafont. Minister of State of Monaco. Monaco adopted this arrangement to do away with one of the prized privileges of her citizens, freedom from taxation, and residents will be subject henceforth to the taxation imposed on citizens of France. Foreigners who established.themselves in Monte Carlo and drew dividends from investments in Monaco free of taxes would come under the new taxation. The proposed treaty with Monaco is said to contain a clause providing for the right of France to fortify the Monaco rock in the event of war "with a foreign power." In publishing the above the "Times" of Nov. 9 stated: Monaco is a principality on the Mediterranean amid the French Department of Alpes Maritimes. The principality was abolished under the French Revolution after having existed since 968. but was re-established in 1814. Since 1861 it has been an enclave of France. Financial troubles of Monaco became acute in 1930 with the decline In income of the Monte Carlo gambling casino, which had provided most of the revenue. Accompanying threats to oust Prince Louis H caused the Prince to dissolve the elected National Council on Dec. 26 1930, and to suspend some of the constitutional guarantees. The gambling casino paid about $400,000 yearly to Monaco beginning in 1917; 8450.000 yearly beginning in 1927. The contract for the concession calls for a yearly payment of about $500.000 in 1937. Very little is paid now. The industrial depression caused a slump in gambling until the casino was forced to put in slot machines to gain stray francs from those who formerly played for high stakes. Marketing of 830,000,000-Franc Issue of Five-Year Treasury Bills By Belgian Banks. On Oct. 27 an announcement issued by the Department of Commerce at Washington said: A group of Belgian banks assumed the responsibility of marketing the 830,000.000-franc issue of five-year Treasury bills authorized by the Finance Law of September 16. The principal loan of 1,500030 000 francs provided for by the same law was temporarily withheld, presumably until the completion of the French loan conversion operations, as a substantial portion of the funds would doubtless have to be obtained in France, it was stated. Holland Backs Gold Basis—Government Says Dropping Standard Would Hurt Country. From The Hague Nov. 7 the New York "Times" reported the following: Holland's struggle to maintain the gold standard will be continued by all the means in her power, the Government explained to-day, saying the "presumed advantages of abandoning the gold standard are partly illusory and partly temporary." In a memorandum prepared at the request of the Lower House's budget committee. the Government remarked that the "disadvantages would make themselves felt in a tangible manner immediately and for a long term to come, while their extent and duration would be quite incalculable." The Government insists that those countries that have gone off the gold standard will return to it in due course, while those that have held fast to gold will reap a reward for having kept faith with their own citizens and foreign investors. Trouble in Financing Imports into Germany—Trade Revival Finds Provision of Raw Materials Obstructed by Circumstances. Advices as follows from Berlin Nov. 5 appeared in the New York "Times": Banks express fear that inability to finance import of raw materials may check industrial recovery. Except for cotton, import of all sorts of materials has declined this year and only consumers who are financially strong are holding large stocks of cotton. Recent import of raw materials averaged monthly only $50,000.000, as against 3150.000,000 in 1928. The amount of acceptance credits available for import undo' the standstill agreement has fallen 10% since March. Compulsion on German exporters to grant constantly longer credits, up to three years, in business with Italy, the Balkans and Russia, aggravates the situation. It is feared that shortage of raw materials, due to inability to finance imports, may cause undue rise in home prices. In view of the superfluity of materials in America and the heavy decline of the outstanding American trade credits shown by the last report of the American Acceptance Council, business men hope that some arrangement to facilitate German imports may be possible. Interest Burden of German Farmers Temporarily Lightened by Presidential Decree. Easing of'the interest burden on German farmers is provided in a new presidential decree, says a report from the Commercial Attache's office in Berlin to the Commerce Department which on Oct. 29 also stated: According to this decree all rates on mortgages are temporarily reduced by 2%, except that a minimum of 4% is established. This is the second Interest reduction by Presidential decree and as a result a large portion of the German farm mortgages are now bearing 4 % interest,it is pointed out. Under the terms of the decree, the reduction in interest extends to Oct. 1 1934. At that time, the interest saved can be added to the Principal of the mortgage debt and will become due at the end of the amortization period. No interest can be charged on the deferred interest payments:NI It Is pointed out that this decree applies only to farm mortgages and not to mortgage bonds. Germany Reported Seeking 20,000,000 Bushels of U. S. Corn. Officials of the U. S. Department of Commerce indicated on Nov. 4 that they had received word that German importers were preparing to start negotiations in the United States for the purchase of upward of 20,000,000 bushels of corn for stock feed. A Washington dispatch, Nov. 4, to 3256 Financial Chronicle the New York "Journal of Commerce" reporting this further said: John H. Bruins, American Consul at Hamburg, reported that part of this requirement, if not all, would be sought in America, although the Argentine competition was brisk. In discussing Mr. Bruins's report Department officials said they were aware of Germany's recent financial situation, but were inclined to regard the reported corn purchase plan as a sign of improvement. German interests were represented as weighing American and the Argentine prices before beginning the contemplated negotiations, but were expected to reach a decision soon. Only a small price difference between American and the Argentine corn now exists, it was said, and Mr. Bruins was understood to have expressed the opinion that American corn would receive preferential consideration because hog raisers in Germany like it better than the South American product. Felix Pope, the Commerce Department's grain authority, explained that the amount the German interests would purchase in this country would obviously depend upon the price relation of American corn with that of its competitors. He said the demand would be for "No.2 mixed" chiefly, but there likely would be some for "No. 2 yellow" and "No. 3 white" as well. Simultaneously with the receipt of Mr. Bruins's report the Department's grain division compiled statistics on last week's corn exports, showing shipments of 1,140,000 bushes!, the largest outgoing movement of the year. Approximately all this shipment went to Canada from the Chicago market. The shipment last week was more than one-third of the entire exports from July 1 to Oct. 31 1931, according to Department records. In the week preceding the heavy Canadian shipment, the outbound movement of corn totaled 353,000 bushels, while in the corresponding week of 1931 the exports amounted to only 1,000 bushels. New Wheat Tariff in Effect in Germany. A new wheat tariff was in effect in Germany on Nov. 2 imposing a duty of 7.50 marks (about $1.77) alon on wheat Imported on import certificates. Associated Press advices from Berlin reporting this further said: This tariff will not affect wheat brought into Germany under ordinary tariff schedules, but only that grain previously brought in duty-free on certificates issued by the government against wheat exported earlier in the year. lit The government in the Spring inaugurated the certificate system whereby an-exporter could sell wheat and receive a certificate entitling him to import a like amount into Germany duty-free. The proposal was put into effect to permit German farmers to raise cash necessary for taxes or Improvements. b. With the ordinary tariff of 250 marks (about $60) a ton for wheat these certificates had a negotiable value and lately have dropped to about 140 marks (about $33) per certificate ton. With the inland price of wheat varying around 197 marks a ton of 38 bushels, the differential is still too great to permit extensive importing, except in the case of Canadian hard wheats needed for milling mixtures. Recently Manitobas 1 or 2 have been selling c. I. f. Hamburg at 91 marks a ton, but even the drop in the price of certificates to 140 marks makes Manitoba wheat cost 231 marks a ton inside the country, against 197 marks for domestic wheat. Plan to Increase Trade with Germany Through Creation of International Clearing House. Through the creation of the International Waren Clearing G.m.b.H., greater facilities are now being provided for exporters and importers to enlarge their trading activities with Germany, it was made known on Nov.4, said the New York "Journal of Commerce" of Nov. 5, from which we also quote as follows: To overcome the Increasing difficulties which confront international trading the creation of a clearing house for the interchange of goods is deemed by both importers and exporters as a means of facilitating foreign commerce. Acts as Mediator. F More than 100 export and import concerns have joined the International Waren Clearing G.m.b.H., according to the American Import Merchant. Serving on the board of directors are Gustav Scipio,President of the Bremen Chamber of Commerce; the former managing director of the North German Lloyd Line, Ernest Glasse], and other prominent business men. The organization acts as mediator between exporters and importers and facilitates the exchange of goods with foreign countries to a larger extent than the Government exchange regulations would ordinarily permit to individual firms. While it is true that the German Government has restricted the quantity of imports into Germany, nevertheless, under the clearing house plan it is said to be possible to increase the amount, provided it can be proved and justified through additional exports of German goods. The International Waren Clearing G.m.b.H. collects data on possible new foreign trade and endeavors thereby to facilitate business for both importers and exporters. The company is issuing query sheets giving detailed information as to the trading contemplated with the name of the company interested. When the parties to a contract are arranged the clearing house company seeks the approval of the governmental authorities to the transaction. Although it is said the clearing house medium Is not absolutely necessary to the American importers in their transactions with Germany, it does afford them an additional means of extending their trading operations. An application to the clearing house for registration may lead to enlarged trading between American exports and importers, it is stated. German Decree Bans Payment by Foreign Purchasers in German Securities—Payment Required in Cash. From Berlin the "Wall Street Journal" of Nov. 5 reported the following: fr Payment by foreign purchasers of German goods with German securities, Instead of cash, has been banned by decree. An exception is made, however, in the case of exports to a country having exchange restrictions. The consent or the German exchange office is necessary in such cases. The decree has been brought about by the extensive trading in German securities during recent months for foreign account, although these transactions are mostly forbidden. Nov. 12 1932 German Construction Projects Financed by Loans, Two-Thirds of Which Booked as "Lost" When Loan Is Made. Several construction jobs are under way in Germany as a result of the reconstruction program of the new German Cabinet, it is made known in a report from the American Consulate at Hamburg, made public by the Commerce Department. The Department on Nov. 5 further said: One of these, the causeway under construction on the Island of Sylt, is being carried forward under a plan whereby two-thirds of the 1,500,000 reichsmarks appropriated by the Federal authorities is booked as "lost" while the balance is considered a loan to the local authorities. A number of smaller projects are underway and others planned. In the past few months, the number of registered unemployed in Germany has been reduced materially. (Mark equals about 23.8 cents.) Improvement Seen in German Unemployment Problem. Improvement in the unemployment situation in Germany is indicated in a report from Vice-Consul C. W. Gray, Berlin, made public by the Commerce Department Nov. 2, which shows that registered unemployed at the end of September totaled 5,100,000 persons, as compared with 5,225,000 in the previous month and 6,128,000 in February 1932. The Department likewise said: Although there has been some change in the method of determining unemployed, it is pointed out that reports throughout Germany tend to prove that more persons are returning to gainful pursuits. The decline from the February peak has been gradual and consistent. A seasonal gain in unemployment is considered normal during the next four months. Berlin Marketing Tax Certificates—First of Government's New Paper for Future Payments of Levies Sell at 90. A cablegram from Berlin, Nov. 1, is taken as follows from the New York "Times": The great event to-day on the Doerse was the introduction of the Government's tax-redemption certificates, which were quoted officially for the first time since they were created In Chancellor von Papen's economic reconstruction plan last August. The certificates handed out were those for the payment of turnover and certain other taxes and can be used for the payment of those taxes between April 1934 and April 1938. By selling the certificates in the bond market, employers were to be provided immediately with funds for hiring additional workmen, thereby mitigating unemployment. The success of the Chancellor's plan depends therefore chiefly on whether there is a good market for the certificates. There were practically no certificates available to-day to satisfy a large demand. It was reported that only 800 marks of certificates were offered. as against a total demand of well over 500,000 marks. Acting as agent fof the Reichsbank, the Deutsche Bank furnished the necessary amount of certificates. The largest business was done in the first set of certificates, which may be used for tax payments beginning on April 1 1934. On a turnover of about 500,000 marks they were quoted at 90X. Other sets of four certificates, maturing on April 1 1935, and the same date in subsequent years until 1938 were quoted at 85, 80, 75li and 71. • The stock market was quiet to-day without anything to stimulate interest. all sorts of rumors, which resulted in a gradual Reallzing sales gave rise to decline of prices. The stagnation was due in part also to the Catholic holiday and the fact that general interest was concentrated in the tax certificates. Bonds also showed a tendency to decllne. Differential on German Dollar Security Quotations No Longer Significant. Under date of Oct. 25, an announcement by the Department of Commerce at Washington said: Because of the narrower margin between the Berlin and New York quotations on dollar securities and of the special restrictions recently enacted by the German foreign exchange control board, it is thought that It will not be possible for Germans to repatriate dollar bonds and stimulate exports at the same time so extensively as has been the case since June, when quotation of German securities on domestic exchanges was again permitted, according to a report by Vice Consul A. N. Steyne, Hamburg, made public by the Commerce Department. While no accurate figures are obtainable as the total value of the dollar obligations repatriated since June, or of the additional exports made possible, it is believed by trade observers that the amounts have been considerable. The Foreign Exchange Control Bureau has allowed concerns engaged in foreign trade to retain a proportion of their dollar receipts, received in payment for merchandise exported, when such goods could not otherwise be sold at a profit. This amount could then be utilized in New York to Purchase German dollar industrial and state obligations which were resold In Germany at considerable gains, depending upon the security and the date of transaction. The practice. however, is self-annulling, as increased purchases of securities on the American market and sales in Germany tend to reduce the difference between the quotations in the two markets. As a consequence, the German premium has declined from a general average of 25% a few months ago to about 13% in the latter part of September. Germany's Silver Coinage Program Believed to Have Exhausted Most of Present Possibilities. The U. S. Department of Commerce stated on Nov. 3 that it believed locally that Germany's program of coining silver in an effort to reduce note circulation has about exhausted present possibilities in that direction, according to a report from Consul Sydney B. Redecker, Frankfort-onMain. In the past year and a half, Germany has been an Volume 135 Financial Chronicle outstanding buyer of silver in the international market, says the Department, which adds: 45% to a total of 1,371,In 1931, Germany's metal coinage increased by and at the end of August 000,000 marks. The expansion continued in 1932 character on the market. The there were 1.672,000,000 marks of this a decree in July 1931 by expansion of this type of money was authorized about 20 marks per which made possible the increase of metal coinage from capita to 30 marks. Germany has been able to withBy issuing metal coins in large numbers, amounting, according to recent draw large amounts of paper currency, lowered, by a corresponding This marks. estimates, to as much as a billion amount, the required gold currency reserves. Another factor in this coinage program has been the profit to the Governthe low price of silver, it is ment resulting from the operations. Owing to a profit of between 78 reported locally that each mark minted represents and 85 pfennigs, or about 400%• program is becoming eviA reaction in trade circles against the coinage to the Reich Bank. dent, the report said, and large amounts are returning of silver metal coins stock a in At this time, the return flow has resulted stock of a amounting to about 304.000,000 marks as compared with normal about 75,000.000 marks. Germany imported 958.936 kilograms of silver in 1931 as compared with first seven months of this 224,580 in 1930; and 728,223 kilograms in the year as compared with 71,479 kilograms in the same period of 1931. (German mark equal to about 23.75 cents, United States.) World Currency Ridiculed—German Writer Insists on Return to True Gold Standard. From Berlin, Oct. 21, the New York "Times" reported the following: Alfred Lansburgh, Editor of Die Bank, rejects as impracticable and unnecessary the suggestions to create a world currency or a European currency. He declares that the purposes of the currency enthusiasts would be realized only if the country were to return to the pre-war system of a genuine gold standard. In other words, Germany would have to abandon what he calls the spurious gold-exchange standard. Germany Repays On Instalment On Lee, Higginson Credit. The "Wall Street Journal" of Nov. 9 reported the following from Berlin: German treasury has repaid punctually the second $3,000,000 instalment on the $125,000,000 Lee Higginson credit. Death Of Henry Nathan, Director Of Dresdner Bank Of Berlin. The death of Henry Nathan, 71 years of age, a Director of the Dresdner Bank of Berlin and one of Germany's prominent financiers, was reported in United Press advices to the "Wall Street Journal" of Nov. 9. Bank, German Co-operative Institution, Reported Closed. Associated Press advices from Essen (Germany), Nov. 11, stated: Essener The Essener Bank, well-known co-operative institution, closed its doors to-day with a reported deficit of 11,000,000 marks (about $1,750.000). The bank temporarily suspended payment in February, but resumed operations on a government subsidy. A similar rescue action already has begun to protect 10,000 depositors. Hungary Decrees Cut in Farm Loan Interest—Finance Minister to Ask Foreign Creditors to Make 5% Rate Permanent. A cablegram as follows from Budapest, Oct. 29, is taken from the New York "Times": Of considerable importance to American investors in Hungary is a decree Issued by the government to-day reducing the interest rate on loans secured by farm mortgages from 7;i and 7% to 5%. Bela Imredy, Finance Minister, announced he would endeavor by negotiations with foreign creditors to have this reduction, which provisionally holds good only for a year, made permanet and extended to all other categories of mortgage bonds. In his report on the financial condition of Hungary for the third quarter of the present year, Royal Tyler. League of Nations Commissioner to Hungary, announced the economic condition of the country had grown worse, agricultural prices had decreased, industrial prices had risen and the State deficit increased so that drastic budget changes would be necessary to avoid inflation. The foreign debt of Hungary on Oct. 1 was $250,000.000. Trustees of Kingdom of Bulgaria 73.% Stabilization Loan of 1928 Announce Receipt of Funds to Pay 50% of Nov. 15 Coupon. Speyer & Co. and J. Henry Schroder Banking Corp. announced on Nov. 8 that they received from the trustees of the above loan the following communication: The trustees of the above-mentioned loan announce that they have received from the Bulgarian Government sufficient sums in foreign exchange to provide for the payment of 50% of the interest coupon due on Nov. 15. The balance due to the service of the loan (interest and sinking fund) has been blocked in Lavas at the National Bank of Bulgaria in the name of the League of Nations' Adviser to the Bank and invested by him in Bulgarian Treasury Bills, in accordance with the proposal recommended in their communication to the bondholders by the League Loans Committee of July 22 1932. The trustees are therefore arranging with the paying agents for the payment of 50% of the coupon due on Nov. 15. In order to preserve 3257 the bondholders' claim to the balance, in the case of the sterling and dollar issues, the coupon will be marked "50% paid" and returned to the bondholder; in the case of the French franc issue a fractional coupon receipt will be issued. It will not be possible to provide any sums for sinking fund purposes, and drawings will therefore not take place. The trustees have informed the League Loans Committee of the present Position with a view to immediate negotiations with the Bulgarian Government as regards the service of the loan after Sept. 30, on which date the provisional arrangements terminated. Denmark's Treasury Shows Small Surplus at Close of Fiscal Year. Denmark's treasury showed a small surplus of 100,000 kroner at the close of the 1931-32 fiscal year, which runs from April 1 to March 31, it is stated in a report to the Commerce Department from Commercial Attache Charles B. Spofford, Jr., Copenhagen. The Department on Nov.8 also had the following to say: It was expected that the Treasury would show a deficit of about 5.300.000 greater than kroner, but it was disclosed that revenues were 3,000,000 expected. was expected, and expenditures 2,400,000 leas than kroner and an The capital account showed an income of 131.500.000 was covered from expenditure of 171,000,000 kroner. The difference end of the the at kroner cash on hand, which was reduced to 2,600.000 fiscal year. The State debt at the end of this fiscal year amounted to 1,255,000.000 kroner. it is difficult For the present fiscal, from April 1 1932 to March 31 1933, previously estimated to estimate final figures. The Finance Minister had for new taxation. a decline of about 20,000,000 kroner, and called Actual Import duties had been budgeted to yield 97,000,000 kroner. brought in customs receipt during the first half of the fiscal year have only 39.000.000 kroner. revenues, The first half of the year also revealed a decline in other indirect this decline because no tax but it is not easy to estimate the influence of indirect taxation, it was basis is so uncertain in times of depression as taxes in order to balance stated. The Government now favors new direct the budget. 301,700.000 and The 1933-34 budget allows for ordinary revenues at a surplus of 1,200.000 ordinary expenditures at 300,600,000 kroner, leaving kroner. States.) (A kroner at par is equal to 26.8 cents. United Danish Import Duties on Many Products Increased. goods Danish import duties on footwear, hats, radios, knit inappreciably been have products and a good many other 1932, creased by a law passed by Parliament on Oct. 13 according to a radiogram from Commercial Attache Charles B. Spofford Jr., Copenhagen. Announcement of this was made Oct. 19 by the Department of Commerce at Washington, which said: system of control The present temporary law, under which the Danish (import permits) operates, of most imports through "exchange centificates" its prolongation of question the and year, is only valid until Oct. 31 of this no important is now being debated in the Danish Parliament. However, locally, according modifications of the system after Oct. 31 are expected source. to a radiogram of Oct. 17 from the same (No further details are yet available.) Netherland Import Duties Increased Provisionally. The Department of Commerce on Oct. 11 stated: were Effective Sept. 29 1932, most existing Netherland import duties pending provisionally increased by a surtax of three-tenths of the duties, according to a passage of the bill definitely providing for this increase, Hague. cablegram from Commercial Attache Jesse F. Van Wickel, The increase provisional It is understood that excess duties paid under this Parliament, Netherland the by will be refunded if the bill is not passed now in session, it was stated. 6% Secured Gold Notes Extended to May 4, 1933. Speyer & Co., the National City Co. and J. & W. Seligman & Co. announce that the $7,500,000 Greek Government 6% Secured Treasury Gold Notes have been extended to May 4 1933, with interest at the same rate, all holders having agreed to this extension. Greek Government Barter System Arranged Between Czechoslovakia, Turkey and Bulgaria Involving Tobacco. Bulgarian and Turkish tobacco are involved in the latest middle European barter arrangement with Czechoslovakia, according to the Commerce Department's Tobacco division. Reporting this on Oct.27 the Department said: ale Czechoslovakian Tobacco Monopoly has now extended the time limit on opening of bids on 500,000 kilograms of Bulgarian tobacco from Oct.8 to Nov. 15, owing to the present export difficulties of Czechoslovakian goods to Bulgaria. It is expected that it will be easier for the Bulgarian bidders than for the Czechoslovakian exporters to make proposals for compensation agreements. Under the arrangements the tobacco would be compensated for by Czechoslovakian exports to Bulgaria. On Oct. 17, the monopoly opened bids on 2,000,000 kilograms of Turkish tobacco, valued at about 82,100,000. According to a temporary agreement with the Turkish government the payments were to be deposited on a blocked account with the Czechoslovak National Bank, which was to use the money in redeeming Turkish obligations issued by the Turkish Government and payable to a certain machinery company in Prague for shipments of machinery. The Turkish tobacco suppliers were to be paid by the Turkish bank of issue from blocked account of the machinery company. 3258 Financial Chronicle "Barter" Arrangements Between Czechoslovakia and Denmark. Negotiations between Czechoslovakia and Denmark have resulted in a compensation arrangement being made for the exchange of Czechoslovak textile and glass for 140 metric tons of Danish butter, and nine carloads of Polish eggs will also be imported against shipment of Czechoslovak automobiles and malt beverage, it is stated in a report to the Commerce Department from Assistant Trade Commissioner S. E. Woods,Prague. The Department (Nov. 3) added: Both Denmark and Poland are primarily agricultural countries, while Czechoslovakia is an important central European industrial country. I The barter or compensation system of international exchange of goods has made much headway, particularly in central European countries, where lack of foreign exchange has all but throttled foreign trade. Increase in Farm Output in Spain Seen as Result of Agrarian Reform Law. A marked increase in agricultural productivity of Spanish farmers is anticipated as a result of the recent agrarian refrom bill passed by the Cortes, it is indicated in a report made by the Commerce Department's Regional Division. The advices of the Department Nov. 8 said: The law calls for the expropriation of large tracts of cultivated land and their distribution under Government ownership among small holders and co-operative associations, it was stated. In addition to allocating land to small holders, the law also provides facilities for financing farm equipment and crops, construction of buildings and purchase of seeds and fertilizer, it was reported. Establishment of settlers on the expropriated lands of Andalucia, Estremadura, Ciudad Real, Toledo, Albacete and Salamanca, those regions in which agricultural conditions have been most acute, will be provided for, and also temporary settlement on lands subject to expropriation in the provinces. For the purpose of carrying out the law, the Institute de Reforms Agraria has been created. This organization will be conceded 50.000,000 Pesetas annually which is to be included in the budget to finance the application of the law. This unit is charged with the establishment of credit organizations and is charged also with the organization of official entities for the purpose of fomenting agricultural education, with a view to greater production. (Peseta equal to about 8 cents, U. S., at present exchange.) Sao Paulo to Create State Mortgage Bank. An Associated Press dispatch from Sao Paulo (Brazil) Nov. 11 to the New York "Sun" said: Waldorniro Lima, Military Governor of Sao Paulo since the collapse of the revolution,to-day announced creation of a State mortgage bank modeled after Argentina's to aid small agriculturists. It will also co-operate with the National Coffee Council. Credits of 26,000 contoe—equivalent to 818,000—will be opened to aid farmers. Brazil Goes on Eight-Hour Day—Shops Close Two Hours at Noon. According to a Rio de Janeiro cablegram to the New York "Times," the eight-hour day went into effect by law on Oct. 31. The cablegram added: In compliance with it stores closed between 11.30 and 1.30 p.m., causing consternation among shoppers who found themselves unable to make any purchases during luncheon hours. A modification of the law is expected. The Economist Party, the first National party in Brazil's history, has been organized, and its leaders will meet Saturday to approve by-laws and a political program. It is composed of agricultural, industrial and commercial groups, and it is expected that hundreds of thousands of Brazilians who have been too indifferent to vote will enroll, bringing heavy pressure at the elections next May. The development is disturbing the professional politicians. Brazil Auto Owners Protest Against Alcohol in Gasoline The mixture of gasoline and alcohol now served by all service stations in Rio de Janeiro, Oct. 29, is condemned by most automobile owners, according to Brazilian newspaper investigations. A cablegram from Rio de Janeiro to the New York "Times," reporting this on Oct. 29, added: Cleaners and other industries also protest that they are unable to obtain pure gasoline. An official of a gasoline company said to-day the country's alcohol supply would be exhausted by the end of November, when pure gasoline would be served again. The gasoline-alcohol mixture is the result of a Government decree compelling gasoline companies to purchase alcohol equal to 5% of the country's gasoline imports. I A reference to the sale of diluted gasoline in Brazil appeared in our issue of Oct. 29, page 2900. Chile Urged to Halt Motor Traffic to Save Gold— Finance Minister Warns Gasoline Imports of $50,000 a Week Are Depleting Reserve in New York. From a Santiago (Chile) cablegram, Oct. 30, to the New York "Times" it is learned that the Central Bank has advised the Finance Minister that it will be impossible to continue the importation of gasoline at the rate of $50,000 a week without further depleting the bank's gold reserves in New York. The cablegram added: Nov. 12 1932 The statement recommends that drastic measures be adopted to reduce gasoline consumption in Chile to a minimum, even including the suspension of motor traffic, as great difficulty is being encountered to find sufficient foreign drafts to import foodstuffs to feed the people. The question of maintaining or removing the exchange control commission is still being discussed. The Minister of Finance appears inclined to remove it in the belief that this would improve the exchange rate, but others argue that a free market for foreign currencies would create an outlet from ,the accumulated profits of foreign firms dealing here which would proceed to export their capital, lowering still further the value of Chilean currency. Richard Washburn Child Heads Committee Representing Holders of Bonds of Departments of Republic of Colombia in Default. Richard Washburn Child, former United States Ambassador to Italy and founder of the Council on Foreign Relations, announced on Nov. 9 the formation of a Committee of holders of external dollar bonds of Departments and Municipalities of the Republic of Colombia now in default. The announcement issued in the matter said: The Minister of Finance and Public Credit of Colombia. Don Esteban Jaramillo, has publicly announced that his Government had been constantly preoccupied in endeavoring to find some method whereby contact might be established with the holders of the bonds representing the various Colombian loans, and that he has been handicapped and prevented from attaining his object of negotiating with the bondholders and arriving at an honorable and equitable arrangement with them by the lack of any organization representing the bondholders and clothed with sufficient authority to negotiate in their name. It is the desire of this Committee to co-operate with the Minister of Finance and endeavor to effect a settlement of the situation which will be satisfactory to the holders of the bonds as well as to the Republic. Mr. Child's Committee is formed, therefore, to represent the holders of bonds of the various Departments and Municipalities of Colombia which are in default. These comprise some eighteen different issues of the Departments of Antioquia, Caldas, Cauca Valley, Oundinamarc a, Santander and Tolima. the City of Bogota. and the Municipalities of Call and Medellin. Members of Mr. Child's committee include: Frederick E. Hasler, Chairman of the Executive Committee of the Continental Bank & Trust Co.. who has been actively engaged in commercial banking relations with Colombia. Judge Wm. H. Jackson, for eight years United States District Judge at Panama. Fred 'Avis, Consulting Engineer, whose intimate connection with Colombia dates from forty years ago. Frederic It. Sawyer, investment counsellor of Douglas Bradford, 130 Wall St., is Secretary Boston. and the New York Trust Co.. depositary. The situation of the external debt of Colombia is somewhat complicated by the question of exchange, and although most of the Departments and Municipalities are able and have shown every willingness to meet their obligations and in several instances have deposited in banks in Colombia funds for this purpose, they have not been able because of exchange restrictions to make remittances to New York to meet decree proposed to make these deposits available the service. A recent for public works. The Colombian National Government has so far promptly met the interest of the external direct and guaranteed debt of the nation. The President, Dr. Enrique Olaya Herrera, and his anxious to find a means of restoring and sustaining Minister of Finance are the credit of the country and of meeting all of the external obligations but, as stated in the message of the Minister of Finance, they have met the insuperable difficulty of having no responsible and properly accredited representatives of the holders of the bonds with whom to reach a settlement. It is the purpose of this committee, therefore, to call for a deposit of bonds, and the announcement particularly stresses the fact that it has been formed to comply with the expressed desire of the Minister of Finance and In an endeavor to co-operate with the Colombian authorities to reach a solution of its difficulties which will inure to the benefit of all concerned. France and Chile Sign Nitrate Agreement. Press accounts from Paris on Oct. 28 stated that the Chilean Ambassador in London and the French Governme nt have signed an agreement under which the sale of Chilean nitrates shall be financed in part through release of frozen French credits in Chile. The Paris message published in the New York "Sun" stated: The plan provides that 40% of the amount due on whatever allotment may be fixed for the importation of Chilean nitrate into France during the coming year shall be paid in pesos. The allotment has not yet been fixed. but 130,000 tons has been mentioned as the probable quantity to be shipped to France next year. It is possible that a higher figure will be obtained when the licensing commission meets ten days hence to fix quotas for Chilean, American and German nitrates. United States Not Informed as to Reported Plan of Chile to Take Over Nitrate Activities. According to Washington advices Nov. 4 to the New York "Journal of Commerce," State Department officials asserted that night that they were without knowledge of the rumored intention on the part of Chile to take over the nitrate activities in their country and engage m Government operation. Just what might be the policy of the Administration in the event of such an occurrence they declined to forecast. The paper quoted went on to say: The United States recently gave recognition to the Oyanedel Government of Chile after having withheld such action in the case of the Davila Government and the Blanche Government which succeeded it. It is to be assumed from this that the State Department was satisfied that the international obligations of Chile would be fulfilled by the Oyanedel Government and now by President-elect Arturo Allesandria, who Soon will become the chief executive or that country. Volume 135 Financial Chronicle Under international law, while it is within the power of any country to take over commercial and other activities carried on within its borders, in so doing it is required to reimburse foreign nationals for any losses they may sustain. It would be expected by the United States Government that such course would be followed if Chile takes over Cosach, the nitrate monopoly in that country, but on this possibility State Department officials decline to speculate. Chile Authorizes Cosach to Get Loan—Assures Nitrate Corporation of Operation Until Year's End, Pending Reorganization—Currency Reform Urged— Central Bank Fears Inflation Will Cause Further Depreciation. According to a cablegram from Santiago, Chile, Oct. 27, to the New York "Times," the operation of Cosach, the Nitrate Corporation of Chile, was assured until the end of this year, at least, by resolutions adopted that afternoon (Oct. 27) by the Government after considering a report issued by the consulting committee recently designated by the Minister of Finance. It is stated that the report contemplates provisional financial support for the corporation to maintain the operation of nitrate fields while a complete study of reconstruction schemes for Cosach is carried on by the new administration which will come into office after the Oct.30 elections. The cablegram to the "Times" continued: The Finance Minister said this evening the Government had authorized Cosach to proceed with negotiations for the financial support of foreign bankers within limitations previously established. To-day's agreement contemplates the export of 100.000 to 150,000 tons of nitrate from northern ports before the end of the year, with no reduction of the number of the corporation's nitrate plants in operation. The independent producers have not yet reached an agreement concerning the sale of their nitrate in foreign markets, as they do not desire to co-operate in the distribution policy of Cosach, according to the latest reports. A bulletin issued to-day by the Central Bank says that, whatever may be the result of the Oct. 30 elections, they will not afford apy immediate solution of the economic crisis Chile is undergoing, although the country can no longer endure ill-considered measures and experiments in State socialism. The bulletin recommends the reformation of the present exchange control commission, which it says is ineffective. The report adds that the abnormal conditions in foreign exchange are responsible for the confusion in business here, while the forecasts are that there is danger of still greater currency depreciation due to failure to balance the budget. Reviewing the unfavorable budget situation, the report asserts the deficit at the end of the year will be at least five times that already existing. It admits that additional note issues up to September bring the total circulating above 750,000,000 Pesos--$50.000,000--which is more than double the figure for September last year. It observes that further issues already authorized will carry the currency issues beyond 1,000,000.000 pesos by the end of the year. The bulletin indicates that due to the impossibility of importing raw materials, no improvement is noticeable in industry, notwithstanding the increased consumption. It asserts the lack of sufficient production, with the consequent increase in the price of wheat, has compelled the Government to import Argentine grain. The report ends by recommending State control of basic production to safeguard the vital needs of the country, which never will be self-supporting in this line, and demanding the adoption of measures to regulate food to the requirements of the populace. Nitrate Accord Expected to Restore Trade Equilibrium of France and Chile. A cablegram from Santiago, Chile, Nov. 5, to the New York "Times" had the following to say: The commercial treaty recently signed by Chile and France, involving the employment of compensating measures in the transfer of goods, has become the most important step in the readjustment of trade conditions, according to Hermann Max,technical expert of the Chilean Central Bank. France, he points out, engages to purchase 75.000.000 francs worth of Chilean nitrates, delivering 60% to the Cosach Nitrate Corp. This presumably is designed to cover operating expenses. The balance is to be used to pay off pending credits of French firms established here, and 15.000.000 francs will be used to finance the importation of French goods. Nitrate Plant in Chile Closed—Guggenheims Suspend Production and Supervisors Return to Homes. The following (Associated Press) from Tocopilla, Chile, Nov. 4, is from the New York "World-Telegram": The world's largest nitrate lpant, the Pedro de Valdivia, had suspended production to-day, retaining all Chilean workmen for jobs in other plants. American supervisors are returning home. The plant is owned by the Guggenheim interests. Medley G. B. Whelpley, President of the Cosach Nitrate Combine. which controls the plant, said that this was a "constructive move to divide production evenly among the other plants and at the same time to cut operating costs." Mexicans Reported Confident of $10,000,000 Loan— Advance on Taxes, It Is Said, Will Be Made by Oil Companies Soon. The following from Mexico City, Nov. 8, is from the New York "Times": Reports that oil companies operating in Mexico would lend the Government $10.000,000 as an advance on taxes are declared in reliable circles to be likely to materialize in a few days. The actual amount likely to change hands now is $7,000,000, the balance being included in a loan already advanced by the Standard Oil Co. The proceeds of the loan, it is said, will be held temporarily by the Banco de Mexico In order to avert too great fluctuations of dollar exchange 3259 pending the loan's disposition. The peso, which has been quoted as low as 4 to the dollar this year, went down to 3.08 to-day. An earlier item in the matter appeared in our issue of Oct. 22, page 2744. Mexican Party Would Deny Second Term to President. From the New York "Times" we quote the following from Mexico City Oct. 31: The biggest Mexican political convention in many years, that of the National Revolutionary party, which opened yesterday at Aguas Calientes, approved this evening in principle a platform plank which would forbid the re-election to the Presidency of Mexico or to the Governorship of a State any person who has ever served in the office concerned. A resolution was approved, subject to discussion of details, to reduce the terms of Congressional Deputies from three to two years and increase the terms of Senators from four to six years. Dr. Jose M. Puig Oasaurane, the Mexican Ambassador to the United States, argued at the convention that the anti-re-election measure would bar from supreme power such revolutionary figures as former President Calles and Pores Gil and President Abelardo Rodriguez. Silver Bank Notes Issued by Bank of Mexico Total 35,800,000 Pesos. The following is from the New York "Evening Post" of Nov. 7: Silver bank notes issued by the Bank of Mexico since the gold standard was abandoned July 25 1931 totaled 35.800.000 pesos (approximately *11,500,000 American) up to October 9, of which 31,942,540 are in circulation and 3.857,460 retired. The National Banking Commission statement shows that on October 9, the bank's metallic reserves were 33,918,942 pesos, while its cash On hand totaled 50,204,176 pesos. Bank's outstanding gold bank notes on October 9 totaled 49,995 pesos. Mexico's 1933 Income Put at $91,350,000—Government Departments Prepare to Keep Within Estimate to • Avoid Later Upset. Indications are that the Mexican Federal Government's income for 1933 will be about 290,000,000 pesos—$91,350,000 at quotations on Nov. 7, said Mexico City advices that day to the New York "Times" which also had the following to say: Finance Minister Alberto Pan! IS understood to have notified the various governmental departments of this prospect and they are preparing to keep within their share. It is believed that the overestimate last year which caused a financial stringency and consequent dislocation of business early this year will be avoided in the coming budget. Improved income enabled the Government to renew payment of salaries and other obligations on the due date. Business has been picking up, with Mexican merchants showing a tendency to restock their shelves. This is due in part to the fact that the dollar quotation for the Mexican peso has been fairly stationary recently at around 31 cents, restoring confidence to many business men who had been delaying purchases because of dread of violent fluctuation of dollar exchange. New Trade Mark Regulations Announced in Shanghai —May Sell Bonds to Meet Budget Deficit and Finance Reconstruction Work. New regulations of the Chinese Trade Mark Bureau prohibit the use of the words "registered trade mark" on goods offered for sale in China unless the mark is registered in China, it was indicated in a radiogram on Oct. 28 to the United States Commerce Department from Acting Commercial Attache A. B. Calder, Shanghai. It is not believed that this particular portion of the regulations will decrease the fraudulent use of American trade marks on goods manufactured elsewhere, said the Department which announced: The Chinese Municipality of Greater Shanghai is planning to float a 20-year bond issue of 6,000,000 yuan in November. This is equivalent to about $1,250,000. The bond issue is for the purpose of financing the municipal deficit and providing money for reconstruction work. Japan Grants New Subsidy to Shipping. After much discussion during recent months, the Japanese government is to provide a subsidy for shipbuilding, contingent upon scrapping at least double the amount of tonnage built, it is announced by the Commerce Department's Transportation Division. The announcement (Oct. 28) likewise said: The subsidy program is to extend over three years and provides amounts of 45 to 65 yen per ton for new vessels, and anticipates the construction of some 200,000 gross tons. As a prerequisite to the subsidy, 400.000 to 600,000 tons of vessels over 1,000 gross tons and 25 years of age must be scrapped. it was stated. (Yen equal to bout 22% cents, U. S.) Series of Conferences on Current Financial and Business Problems To Be Held Weekly at New York Stock Exchange Under Auspices of New York Group of Investment Bankers' Association and New York University. The New York group of the Investment Bankers' Association of America and New York University announced on Nov. 1 the inauguration of a series of conferences on current 3260 Financial Chronicle financial and business problems, to be jointly sponsored by both organizations. These conferences will be held in the Governors' Room of the New York Stock Exchange each Thursday at 5 p. m. Leading financial and industrial figures will address these conferences, which are designed to be of special interest to investment bankers and those connected with commercial banks and trust companies. They will make available to people in the financial district expert and informed discussions on a number of subjects of major current interest to them. The initial conference was held on Nov.3and was addressed by Colonel Allan M.Pope who was, during the year 1931-32, President of the Investment Bankers' Association and who is President of the First of Boston Corp. Colonel Pope opened the series of conferences with an address on the "Place of Investment Banking in Our Economic System." He summarized the role that the investment banking mechanism has played in the past in the upbuilding of our economic structure as well as the establishment of the United States as the leading creditor nation in the world to-day. This week (Nov. 11) Dr. Benjamin M. Anderson Jr., economist of the Chase National Bank, addressed the conference on the gold problem. Other speakers will be Thomas W. Lamont of J. P. Morgan & Co., who will address the conference in January on "Foreign Investments as a Factor in American Industry and World Finance"; Pierpont V. Davis, Vice-President of the National City Co., who will talk on the "Economic and Investment Essentials in Railroad Finance," and Harry M. Addinsell, President of Chase Harris Forbes Corp., who will speak on the "Present and Future Development of Public Utility Finance." Other speakers will be: Walter Case, director of Case, Pomeroy & Co. Warren J. Hoysradt, of First Detroit Co. David Sarnoff, President of the Radio Corp. of America. James H. Perkins, President of City Bank Farmers Trust. Bayard Pope, Executive Vice-President of Marine Midland Trust Co. William C. Breed, of Breed, Abbott & Morgan. F. Seymour Barr, President of Barr Bros., and Kenneth Stephenson, of Stone & Webster and Blodget. A joint announcement made Nov. 1 indicates that these conferences are held under the auspices of the Investment Bankers' Association of America and New York University, constitute a new departure in higher education, designed to bring about increased co-operation between financial leaders and educational institutions, making a broad survey of the economic problems of the day. Registration for the conferences is now being arranged at the offices of the Wall Street Division of New York University at 90 Trinity Place. U. S. Federal Reserve System Now Seen as Decided Against Bond Sales—Will Give Policy of Huge Excess Reserves Full Post-Election Trial—Revival of Bond Market is Desired Before Selling Will Commence a Material Scale. In the New York "Journal of Commerce" of Nov. 5 it was stated that Federal Reserve authorities are decided on giving the policy of excess reserves and consequent extreme ease in the money market a longer trial, and will not sell any material part of their open market holdings of Government bonds for the time .being, according to wellinformed bankers here. The paper from which we quote likewise stated: • This decision has been reached, it is said, only after wide differences of opinion had developed among bankers on the wisdom of this course, and extended discussions on open market policy had been had. Several weeks ago there was considerable pressure for a modification of the open market policy, with one strong contingent both within and without the system advocating gradual sales of Government bonds, accompanied by another reduction in the rediscount rate. However, the advocates of the policy of maintaining enormous excess reserves appear to have convinced the others that the present holdings of some $1,850,000,000 in Government bonds be kept intact for several months if necessary. Interest Cut Seen. In the meanwhile bankers believe that elimination of interest payments on demand deposits may have to come, despite strong opposition from some quarters, as excess reserves mount further. Such a move would be accompanied by lower interest rates on time deposits also, it is anticipated, as already ordered in Chicago. Excess reserves reached a peak of approximately $540,000,000 on Oct. 26. It is estimated that $330,000.000 of this total was in New York banks, and $120,000,000 In Chicago institutions, leaving only $90,000,000 for the other ten districts. Last week, month-end currency requirements cut excess reserves by $28,000,000, leaving them at an estimated $512,000,000. In the New York district alone, excess reserves were down $40,000,000, cutting them to $290,000,000. Trend of Reserves. Excess reserves are expected to remain fairly steady from now to the end of the year, owing to the influence of holiday currency requirements, with a drop to below the $300,000,000 level late in December for this Nov. 12 1932 reason. By the end of January excess reserves are expected to reach some $700,000,000, if present indications as to maintenance of open market holdings of Government bonds are borne out. The Reserve banks are now understood committed to the theory that recovery will tend to come about through stimulation of the bond market, which will in turn result from maintaining bank excess reserves. The full force of the open market policy, some observers believe, cannot now be discerned because of the deterring influences of the election. With that event out of the way, it Is thought that a better opportunity will be furnished to fully test the potency of the open market operations. Appointment of Commission to Study Banking Legislation Reported Sought by Bankers in New York— Move Against Enactment of Glass Bill—Same Procedure as in New York State Favored. The appointment by the present Senate of a non-political commission which would study the need for new banking legislation, or at least a special Senate committee, is being sought by a group of Wall Street bankers, it *as learned on Nov. 10, it was stated in the New York "Journal of Commerce" of Nov. 11, which went on to say: One of the major objectives, it was said, is the prevention of the Passage of the Glass banking bill during the Decemoer session, since this measure now has right of way on the Senate calendar. An informal committee of bankers is now at work on the plan. Several conferences have been held during recent weeks to discuss the situation. When and If their plan is successful, they will seek co-operation from the rest of the banking community. Would Copy State Plan. The banking commission plan would be developed along lines already adopted in New York State. Efforts by Superintendent of Banks Joseph A. Broderick to pass a comprehensive series of amendments to the State banking laws in 1931 were defeated through adoption by the State Legislature of an alternative plan for a banking commission, non-political in character, to study carefully and at leisure the whole question of banking operation and legislation. Bankers who favored the adoption of the commission plan In New York are also understood strongly behind a similar move on the fart of the Senate. Several features of the Glass bill have aroused particular animosity in the financial district, even though the measure has been greatly toned down from its original form. Among these are segregation of security affiliates of banks and restrictions on certain types of bank security loans and investments. Certain additional restrictions on Federal Reserve operations are disliked also. Senate Committees. In the meantime, there were reports yesterday that Senator Glass may leave his post as head of the Senate Committee on Banking and Currency, which would then fall to Senator Wagner in the new Congress. Senator Glass by rank is entitled to head the Appropriations Committee, the Chairmanship of which would go either to himself or to Senator Kenneth McKellar of Tennessee. It was reported that Senator Glass was importuned to take the post on the Appropriations Committee on the ground that his own backgound and training better equip him to fulfill the important duties of this position than the other prospective incumbent. Senator Glass, it was reported, has not yet made any decision on the matter, in view of his lifelong interest in banking legislation. The coincidence of a possible change in the makeup of the Banking Committee with efforts in Wall Street to promote the formation of a nonpolitical commission, it was pointed out, should facilitate the plans of the Interested hankers. It is generally believed that Senator Wagner, as head of the Senate Committee on Banking and Currency, would be favorable to the plan. Commission's Functions. while the shelving of the Glass bill during the December session is said to be an important aim of the Wall Street bankers, the proposed commission would also take over significant work of a positive kind. For example, It was said, it would study not only the national banking laws but also the laws of each of the 48 States. On particular points, efforts would be made to encourage unification of the laws of the different States and the Federal Government on banking. It is felt that such a commission, made up of non-political experts, would be likely to reach conclusions in reasonable harmony with those held in Wall Street. Wider branch banking powers, it is thought, would be one result that would be acceptable if accompanied with suitable safeguards. President Richard Whitney of New York Stock Exchange Calls Meeting on Unemployment Situation —Letter to Members of Exchange. Richard Whitney, President of the New York Stock Exchange, sent the following letter to members of the Exchange calling a meeting to be held on Nov. 15 with regard to the unemployment situation in New York City for the coming winter: Nov. 11, 1932. To Members of the Exchange: I have called a meeting in the Governing Committee Room on the sixth floor of the New York Stock Exchange Building at 3.30 P. M. on Tuesday, Nov. 15, to which I earnestly and personally invite you and the members of your firm, and any of your employees whom you may desire to have attend. Mr. Harvey D. Gibson, Chairman of the Emergency Unemployment Relief Committee, and Mrs. August Belmont, Chairman of the Women's Division, will address the meeting regarding the unemployment situation that confronts us this winter in the City of New York. I hope, and ask, that the members of your firm and many of your employees will be present at this meeting. The unemployment situation is one of paramount importance to us all. I cannot emphasize too strongly the necessity of acquainting ourselved first hand with existing conditions. No subscriptions will be asked for at this meeting. Faithfully yours, RICHARD WHITNEY,President. Financial Chronicle Volume 135 Halsey, Stuart & Co.-Public Service Commission Of Wisconsin Refuses to Modify Its Order Suspending Market Value of Bonds Listed on the New York Stock Exchange-Figures for Nov. 1 1932. The following figures of the total market value and the average market price of all listed bonds on the New York Stock Exchange, were issued by the Exchange on Nov. 9: As of Nov. 1 1932, there were 1,575 bond issues aggregating $51,740,095.817 par value listed on the New York Stock Exchange, with a total market value of $39,517,006,993. This compares with 1,578 bond issues aggregating $51,780,423,888 par value, listed on the Exchange Oct.1, with a total market value of $40,132,203,281. In the following table listed bonds are classified by governmental and industrial groups, with the aggregate market value and average price for each: Average Market the Firm's License to Do Business in That State. According to United Press advices from Madison, Wis., yesterday, Nov. 11, officials of the Milwaukee office of the investment firm of Halsey, Stuart & Co., have been notified by the Public Service Commission of Wisconsin that it would not modify its order suspending the company's license to do business in that State. The dispatch added: Price. Value. $15.351,886.941 $101.70 67.72 10,999,176,242 59.75 6,445.711.006 85.40 3,245,611,697 61.92 2,113,659,111 56.87 1,360,981,996 United States Government Foreign government Railroad industry (United States) Utilities (United States) Industrial (United States) Foreign companies $39,517,006,993 All bonds $76.38 The license was suspended after the company and its officers were placed under Federal indictment on charges involving mail fraud. The company asked modification of the order and permission to sell an approved list of securities. Chicago Curb Exchange Expels Herbert G. Metcalf. According to Chicago advices on Nov. 3, appearing in the New York "Evening Post," the Governors of the Chicago Curb Exchange Association have expelled Herbert G. Metcalf from membership in the Association after finding him guilty of violation of Sections 18 and 19 of Article 14 of the By-Laws. Continuing, the dispatch said: Market Value of Listed Shares on New York Stock Exchange Nov. 1, $23,440,661,828, Compared with $26,734,828,668, Oct. 1-Classification of Listed Stocks. As of Nov. 1 1932, there were 1,245 stock issues aggregating 1,312,480,819 shares listed on the New York Stock Exchange, with a total market value of $23,440,661,828. This compares with 1,246 stock issues aggregating 1,310,966,486 shares listed on the Exchange Oct. 1 with a total market value of $26,734,828,668 and with 1,245 stock issues aggregating 1,311,960,145 shares with a total market value of $27,782,501,806 on Sept. 1. In making public the Nov. 1 figures on Nov. 7, the Exchange said: As of Nov. 1 1932, New York Stock Exchange member borrowings on security collateral amounted to $324,702,199. The ratio of security loans to market values of all listed stocks on this date was therefore 1.39%. As of Oct. 1 1932 New York Stock Exchange member borrowings on security collateral amounted to $379,801,583. The ratio of security loans to market values of all listed stocks on that date was therefore 1.42%. kiIn the following table, listed stocks are classified by leading industrial groups, with the aggregate market value and average price for each November 11932. Market Values. Aver. Price. October 1 1932. Market Values. Aver. Price. Autos and accessories 1,067,420.697 9.81 1,380.004.697 12.76 Financial 811.837.140 14.89 721,158.337 13.25 Chemical 1.748.573.007 26.27 1,993.423.193 29.95 Building 188,338.234 11.91 154.727,828 9.79 Electrical equipment manufacturing 740.655.392 18.13 611.871.134 14.97 Foods 1,699.241.895 23.83 1,847.880.564 25.91 Rubber an tires 173.832.217 14.08 143.545.819 11.62 Farm machinery 214.050,452 19.06 264,414.835 23.54 Amusements 91,196,338 4.82 121.537.484 6.43 Land and realty 35.603.792 7.10 42.176.883 8.41 Machinery and metals 693.834.243 14.54 597.616.115 12.53 Mining (excluding iron) 624.846.724 10.43 738.792.276 12.36 Petroleum 2,374.325.03 13.13 2.448.447.494 13.59 Paper and publishing 152.378.057 9.50 l3,821.3408.1f Retail merchandising 1.222,279,94 17.19 1.411,740.075 19.86 Railroads arid equipments 2,497,043,24 21.87 2.951,902.313 25.61 Steel, Iron and coke 959.529,405 24.47 1.128.417.643 28.78 Textiles 128,945.750 11.87 112.732,824 10.18 Gas and electric (operating) 2,200,443,842 31.81 2.422.449.99 34.71 Gas and electric (holding) 1.509.734,036 15.42 1,727,481.36 17.76 Communications (cable. tel. dr radlo)- 2,304.917.868 61.47 2,541.007.065 87.76 Miscellaneous utilities 129.323.491 12.89 122.451.285 12.02 Aviation 131.703.592 7.24 186.438.089 9.15 Business and office equipments 144,367,541 13.83 172.304.132 18.60 Shipping services 10.630.164 5.09 6,884.393 3.29 Ship operating and building 11.075.604 3.28 9,213,183 2.73 Miscellaneous business 50.157.439 11.19 53.488.498 11.93 boots and Leather 148,980,997 21.28 161.048,448 23.30 Tobacco 1.053,100,431 40.45 1,212.311,669 46.56 Garments 10.377,873 7.98 9.046,708 6.95 u. EL companies operating abroad 348.628.388 10.38 423.249.804 12.57 Foreign companies(Incl. Cuba & Can.) 398.643.392 8.88 475.086.507 10.61 All listed companies 23,440.881,828 17.86 26,734.828,668 20.39 Total Short Interest on New York Stock Exchange During October. Under date of Nov.5 the New York Stook Exchange issued its compilation indicating the short interest on stocks for the month of October. Under the ruling of the Exchange made on Sept. 16, calling for weekly instead of daily reports of the short positions of members (as noted in our issue of Sept. 24, page 2083), the figures show the short position existing at the opening of business each Monday during October. The highest total for the month was reported on Oct. 24, the short position being 1,884,826. This compares with the only weekly total during September reported on Sept. 26, of 1,746,216. The announcement issued by the Exchange showing the short interest, follows: The following statistics, which have been complied from information secured by the New York Stock Exchange from its members,show the total short Interest existing at the opening of business on each Monday during October 1932: *1,800,886 Oct. 24 1.884,826 Oct. 3 1,876.496 Oct. 31 1,839,939 Oct. 10 1,798,059 Oct. 17 •Last published figure. 3261 These sections deal with conduct and transactions inconsistent with just and equitable principles of trade or detrimental to the interests and welfare of the Exchange. Nebraska Bank Deposit Guaranty Law Held Invalid by State Supreme Court. Nebraska's guaranty fund banking legislation was invalidated by a State Supreme Court decision on Nov. 10, said Associated Press advices from Lincoln, Neb. on that date; the dispatch added: The decision held legislation passed by the 1930 special session which provided for lower annual assessments than under the old guaranty fund law was unconstitutional because it took property from one class of property owners, without benefit, to give to another. Money collected under this law was to be distributed only to depositors in banks which failed prior to enactment of the law. The Court ruled also that assessments levied from Dec. 15 1928. under the old guaranty fund law until it was repealed by the 1930 special legislature, were confiscatory under existing conditions. The request of the banks for an injunction to prevent collection of these assessments was upheld. Banks had set aside $3,000.000 to pay these assessments and this money will be released for stockholders' dividends, or to furnish further assets of these banks. The decision did not invalidate the principle of guaranty fund legislation, nor bar further legislation. New "Young Plan" Pays Failed Bank DepositorsSmall-Town Arkansas. Financier Evolves Method of Selling Certificates to Them Against Their Accounts. From the Topeka (Kansas) "Daily Capital" of Nov. 6 we take the following (Associated Press) from Pine Bluff, Ark., Nov. 5: A new "Young Plan" has sprung up here to aid business recovery and depositors of defunct banks. Through spending certificates issued under the "Young Plan"-so named after its originator, D.C. Young.a local banker-more than 8.000 depositors of four closed banks hope to aid return of normal business and at the same time receive dividends on their frozen deposits. $1 to $100. Certificates in denominations of from $1 to $100 are being sold by J. A. Perdue Sr., Trustee of the "Young Plan." for 100 cents on the dollar and are accepted on the same basis as cash by grocers, butchers, merchants, rental agencies, and others. To participate,the depositor who has an account in a closed bank transfers such account to the trustee of the "Young Plan" and is assigned an account number. When be has money to spend, he purchases certificates in the amount to be spent and they bear his account number. Receives 96 Cents for Them. When the certificate Is returned to the trustee for redemption, the holder receives only 96 cents on the dollar. The.certificate plainly states the redeemable value is only 96 cents, but unth it is redeemed, is worth 100 cents. Each certificate must be redeemed within 10 days of its issuance. Of the four cents retained by the trustee out of each dollar, three and one-third cents are credited to the account of the person who purchased the certificate. At regular intervals, or on demand,dividends will be paid. The remaining two-thirds of a cent out of each dollar is deducted for overhead, printing, et cetera. Not Copyrighted. In the event the liquidating agent of a closed bank pays a dividend, the the account of the depositor-and he will to full amount will be credited continue to get all bank dividends and all "Young Plan" dividends until he has realized the fud 100% of his account. After that future dividends will go into a general fund to be distributed pro rata to other depositors participating. Mr. Young has not copyrighted his plan. He said he believes it will work out to such an advantage that he would be pleased to see it in operation in other communities. Two Weeks' Extension of Nevada Bank Holiday. According to Associated Press advices from Carson City, Nev., Nov. 10, extension of the Nevada bank holiday for another two weeks was ordered by Governor Balzar, in a proclamation on Nov. 10. The dispatches of that date added: 3262 Financial Chronicle The Governor asserted the ext&sion of the holiday, which started Nov. 1, was necassary to give 12 banks and the depositors time to work out an agreement for reopening. Reference to the 12-day holiday proclaimed in Nevada by the Governor was made in these columns Nov. 5, page 3075. Banking Moratoria in States Construed—United States Treasury Not Called to Act on Situation in Nevada. From the "United States Daily" of Nov. 9 we take the following: State authorities will be the first to act on the legality or illegality of bank holidays such as that now in force in Nevada, according to oral statements Nov. 7 at the Treasury Department. Federal banking authorities, including the Comptroller of the Currency and the Federal Reserve Board, have not been called upon officially to take any action in any of the numerous bank moratoria declared by mayors or other local officials, it was stated. Additional oral information made available follows: The Attorney General of Minnesota already has ruled that municipal moratoria are illegal, and the Lieutenant Governor of Nevada has called a special session of the Legislature to deal with the first State moratorium declared in that State. Only the Legislature can legally declare a holiday, according to the informal opinion of Federal authorities, but formally no opinion has been drawn up and the Federal Government has not been called into any local situation. Market Action of Leading New York City Bank Stocks Compared with Industrial Stocks. A study of the market action of leading New York City bank stocks since the first of the year as compared with industrial stocks discloses that bank stocks have shown greater advances during each upward move, while in declining markets their losses have not equaled that of the industrial stocks, according to Rackliff, Whittaker & Loomis. It is noted that as a result of their favorable market action, the bank stock average showed a net gain of 4% on Nov. 2 over Jan. 1, as compared with a net decline of 25% for industrials during the same period. The following tabulation of the firm shows how bank stocks have outstripped industrials since the first of the Year: 1932— Jan. 1 to Mar.8 Mar.8 to July 8 July 8 to Sept. 7 Sept. 7 to Nov.2 Jan. 1 to Nov.2 Bank Stock, Average.* Plus 31% Minus 45% Plus 100° Minus 21 Plus 4% *"American Banker." **Dow, Jones & Co. Industrials, Average.** Plus 14% Minus53% Plus 94% Minus27% minus 25% "The action of bank stocks during recent months," says Rackliff, Whittaker & Loomis, "would indicate that the liquidation of 1930 and 1931 has largely eliminated weak holders with the result that little stock is forthcoming in declining markets. Conversely, this scarcity of stock brings about sharp price advances when buyers enter the market on any sizable scale. The technical condition of the bank stock market has seldom been stronger." Nov. 12 1932 a comfortable margin according ta Rackliff• Whittaker & Loomis. It is stated that an another encouraging development, discolosed by third quarter bank statements, was the fact that deposits in many instances showed substantial gains over June 30th figures. These gains were especially noteworthy in view of the fact that deposits normally show a seasonal drop during the third quarter of the year. The following tabulation, giving third quarter earn.ngs of 12 leading institutions as compared with dividend requirements for the period, shows an average excess coverag e of 15%. Bank— Guaranty Chase City First National Bankers Irving Central Hanover Chemical Manhattan Trust New York Trust Manufacturers Corn 3rd Quarter Earnings. Quarterly Div. Rec. Excess Change in Earnings Deposits Since Over Div. June 30. 84.835.000 4,854,000 4,210.000 a2,754.000 2,035,000 2,010.000 51,575.000 1,325,000 952.000 881.000 5823,350 794,000 84,500.000 7% +7.5% 3,700.000 26% +9.0% 3,100,000 36% +5.0% 2.500,000 10% +17.8% 1,875,000 8% +5.8% 2,000.000 ---+3.3% 1,575.000+9.5% 945,000 ioF,., +12.1% 834,400 14% +14.6% 825,000 41% +8.3% 823.350-1.2% 750.000 -ii —10.5% Totals _ 226.636.350 223.227.750 1KW.. Avrr_45 2-3q. a Before a special transfer of 825.000,000 from surplus to reserves. b After additions to reserves. The firm says: That these banks are able to more than earn their dividends under present conditions is worthy of comment, particular ly in view of the fact that eight of these institutions are paying the same dividends to-day that they were in 1929 while present dividend rates of the 12 average 86% of 1929 payments. Survey of New York City Bank Stock Market in October. Although marking time before Election in sympathy with other security markets, the New York City bank stock market closed moderately higher from the lows of October, Hoit. Rose & Troster report. The firm's weighted average of 17 representative issues opened October 1 at 64.35, eased off to the month's low of 53.69 Oct. 10, but closed Oct. 31 at 57.47. Leaders in the improvement over the lows were First National, Guaranty Trust, Central Hanove r and New York Trust. Based upon closing bid prices, the month's range follows: Month's High Oct. 1. Bankers Trust Brooklyn Trust Central Hanover Chase Continental Chemical City Commercial Corn Exehange Empire Trust First National Guaranty Trust Irving Trust Manhattan Manufacturers Trust New York Trust Public National 68 200 147 42 1934 3934 5434 178 73 283i 1870 331 27 3834 3314 99 31 Month's Lou, Oct. 10, 61 170 128 3234 173j 33 41 158 64 2334 1480 291 2214 3034 2534 85 253( Close Oct. 31. 653( 175 138 35 1738 3634 4334 160 7234 24 1510 312 2344 31 2834 92 30 Pacific Coast Banking Resources Reported in Excess of $5,000,000,000—Aggregate Deposits of Banks in 12th Federal Reserve District Increase for Quarter Weighted average 64.35 53.69 57.47 Ended Oct. 1. 1932 Range. High, Sept. 7 Showing greater strength in the banking structure of the 70.76 Low, May 31 31.34 Pacific West, approximately 1,000 National and State banks report resources in excess of five billion dollars, and some Offering of $75,000,000 or Thereabouts of 91-Day 500 member banks m the 12th Federal Reserve District Treasury Bills. report an increase in deposits of $10,000,000 since June last Announcement of a new issue of 91-day Treasur y bills to to date, according to a survey completed by the Bank of the amount of $75,000,000 or thereabouts was made by America, large Pacific Coast branch banking system. It is Secretary of the Treasury Mills on Nov.9. Tenders for the stated that as an indication of increasing strength, eight new bills, which are sold on a discount basis to the highest banks in southern Idaho and eastern Oregon reopened for bidders, will be received at the Federal Reserve banks and business during the week ended Nov. 5, making available their branche s up to 2 p.m. Eastern standard time on Monto depositors $10,000,000 for regulated withdrawals. These day, Nov. 14. The new bills will replace a similar amount banks have been closed since Aug. 30. It is further observed of bills which mature on Nov. 16. The new issue will be by the Bank of America that while detailed reports show dated Nov. 16 1932 and will mature on Feb. 15 1933, and that banking has improved generally in the seven States of on the maturity date the face amount will be payable withthe 12th Reserve District, some weakness has developed in out interest . The bills will be issued in bearer form only, Nevada, where nine National and 14 State banks, having and in amount s or denominations of $1,000, $10,000, aggregate deposits of $22,000,000, have taken advantage of $100,00 0, $500,000 and $1,000,000 (maturity value). Secan optional State bank holiday, extending until Nov. 12. retary Mills's announcement also says in part: It is added that those who have studied the Nevada problem No tender for an amount less than 31,000 will be considered. Each tender multiples must be in of $1.000. The price offered must regard its origin as largely local and assert that the holiday be expressed on the basis of 100, with not more than three decimal places, e. g., 99.125. may prove a painless operation leading to sound recovery. Fractions must not be used. The First National Bank, Reno, with deposits of $5,000,000, Tenders will be accepted without cash deposit from incorporated banks and trust companies and from responsible and recognize elected to remain open. d dealers in investment Leading N. Y. City Banks Earnings Dividends According to Rackliff, Whittaker & Loomis. Despite prevailing low money rates and lack of business activity, third quarter earnings of leading New York City banks and trust companies covered dividend requirements by securities. Tenders from others must be accompan ied by a deposit of 10% of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour for receipt of tenders on Nov. 14 1932, all tenders received at the Federal Reserve banks or branches there°_ up to the closing hour will be opened and public announce ment of the acceptable prices will follow as soon as possible thereafter probably on the , following morning. The Secretary of the Treasury expressly reserves tho Volume 135 right to reject any or all tenders or parts of tenders, and to allot less than the amount applied for, and his action in any such respect shall be final. Those submitting tenders will be advised of the acceptance or rejection thereof. Payment at the price offered for Treasury bills allotted must be made at the Federal Reserve banks in cash or other immediately avallalbe funds on Nov. 16 1932. The Treasury bills will be exempt, as to principal and interest, and any gain from the sale or other disposition thereof will also be exempt, from all taxation, except estate and inheritance taxes. No loss from the sale or other disposition of the Treasury bills shall be allowed as a decuction ,or otherwise recognized, for the purposes of any tax now or hereafter imposed by the United States or any of its possessions. Comment by Treasury Department on Low Rates on Treasury Issues—Security Houses Said to Be Buying Short-Term Bills. From the "United States Daily" of Nov. 9 we:take the following: Security houses such as investment banks have become interested in shortterm Government loans during the depression, helping the Treasury to float 91-day bills at record low discount rates, according to information made available Nov. 7 at the Treasury Department. Treasury bills, attractive because of their soundness and liquidity, have appealed to commercial banks in normal times while investment houses placed their funds in securities of long maturity, the information shows. Additional information made available follows; Entrance of investment houses into the field of competition for Treasury bills has helped reduce the discount rate on them to record low levels. On ,Oct. 19 the Treasury borrowed $75,000,000 of 91-day money for a discount rate equivalent to 14% on an annual basis, the lowset rate on record. Since the low mark of Oct. 19, the rate which the Government has had to pay has advanced slightly, reaching .20 on Oct. 26 and .22 on Nov. 4, but this advance is not considered indicative of any tendency on the part of banks to place funds in commercial rather than Government loans. Proclamation of President Hoover Setting Aside Nov. 24 as Day of Thanksgiving—Quotes Proclamation of President Washington in 1789. In issuing on Nov. 3, his proclamation setting apart Nov. 24 "as a day of National thanksgiving," President Hoover took occasion to quote in full the original Thanksgiving proclamation, issued Oct. 3 1789 by President-Washington. President Hoover's action is prompted by the fact that the present year is the 200th anniversary of the birth of Washington, a fitting occasion for "our people" to "refresh their memory of his (Washington's) first Thanksgiving proclamation." President Hoover's proclaimation follows: THANKSGIVING DAY 1932. By the President of the United States of America. A PROCLAMATION. Whereas at this season of the year our people for generations past have always turned their thoughts to thankfulness of the blessings of Almighty God, Now, therefore, I, Herbert Hoover, President of the United States, do set aside and declare Thursday, Nov. 24 1932, as a day of national thanksgiving, and I do urge that they repair to their places of public worship, there to give thanks to the beneficent Providence from whom comes all our good. And I do further recommend, inasmuch as this year marks the two hundredth anniversary of the birth of George Washington, the Father of our Country, whose immeasurable services to our liberty and our security are blessings perennially renewed upon us, that our people refresh their memory of his first Thanksgiving proclamation, which I append and. Incorporate in this present proclamation: "A PROCLAMATION. By the President of the United States of America. "Whereas, it is the duty of all nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits and humbly to implore His protection and favor—and whereas both houses of Congress have by their joint committee requested me 'to recommend to the People of the United States a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many singal favors of Almighty God, especially by affording them an opportunity peaceably to establish a form of government for their safety and happiness.' "Now therefore I do recommend and assign Thursday the 26th day of November next to be devoted by the people of these States to the service of the great and glorious Being, who is the beneficent Author of all the good that was, that is, or that will be—that we may then all unite in rendering Unto Him our sincere and humble thanks—for His kind care and protection of the people of this country previous to their becoming a nation—for the signal and manifold mercies, and the favorable interpositions of His providence, which we experienced in the course, and conclusion of the late war— the great degree of transquillity, union and plenty, which we have since enjoyed—for the peaceable and rational manner in which we have been enabled to establish constitutions of government for our safety and happiness, and particularly the national one now lately instituted—for the civil and religious liberty with which we are blessed, and the means we have of acquiring and diffusing useful knowledge; and in general for all the great and various favors which He hath been pleased to confer upon us. "And also that we may then unite in most humbly offering our prayers and supplications to the great Lord and Ruler of Nations and beseech Him to pardon our national and other transgressions to enable us all, whether in public or private stations, to perform our several and relative duties properly and punctually to render our national government a blessing to all the People, by constantly being a government of wise, just and constitutional laws, discreetly and faithfully executed and obeyed—to protect and guide all Sovereigns and nations (especially such as have shewn kindness unto us) and to bless them with good government, peace, and concord —to promote the knowledge and practice of true religion and virtue, and the increase of science among them and us—and generally to grant unto all mankind such a degree of temporal prosperity as lie alone knows to be best. "Given under my hand at the City of New York the third day of October in the year of Our Lord 1789." G. WASHINGTON. In witness whereof. I have hereunto set my hand and caused the seal of the United States to be affixed. Done at the City of Washington this 3d day of November, in the year of Our Lord nineteen hundred and thirty-two and of the Independence of the United States of America the one hundred and fifty-seventh. HERBERT HOOVER. By the President: STIM SON, HENRY L Secretary of State. 3263 Financial Chronicle Election of Gov. Franklin D. Roosevelt of New York as President of United States—As Democratic Nominee He Received 472 Electoral Votes Against 59 for President Hoover, Named as Republican Candidate for Re-Election. The National election on Tuesday, Nov. 8, resulted in a sweeping Democratic victory, Franklin D. Roosevelt, Governor of New York, being elected President by a record vote. Out of a total of 531 electoral votes, Gov. Roosevelt received 472, this number representing 42 States, while President Hoover carried but six States, giving him 59 electoral votes. These six States were Connecticut, Delaware, Maine, New Hampshire, Vermont and Pennsylvania. Four years ago President Hoover carried 40 States, with an electoral vote of 444, while the Democratic nominee in 1928, Gov. Alfred E. Smith carried eight States with an electoral vote of 87. Record figures of the popular vote are also registered this year; while there are still some election districts to be heard from, the latest figures indicate that Gov. Roosevelt has received 20,744,378 votes against 14,716,947 for President Hoover. These figures compare with 21,392,190 for President Hoover in 1928 and 15,016,443 for Gov. Smith in that year. It was recently stated that nearly 47,000,000 had qualified to vote at this year's election. According to Associated Press accounts from Washington yesterday (Nov. 11) the popular vote for Norman Thomas, Socialist candidate for President, has climbed to 459,959 as returns slowly drifted in. The dispatch said: This vote was gained from 64,279 precincts, or slightly more than half of the nation's total of 119,714. Other minor candidates and their votes to date follows: Reynolds, 1.608; Foster, 2,715; Upshaw, 23,480; and Harvey. 21.217. In referring to the record breaking landslide for the Democrats, the New York "Herald Tribune" of Nov. 9 noted that: The first nation-wide election in the hard times developed a political upheaval which swept Democrats back into complete control of the national government for the first time since the World War. From the New York "Times" of Nov. 10 we quote: Big Congress Majority. The victory gave the successful party a tremendous lead in Congress. With 26 House seats doubtful, the tally was Democrats, 298; Republicans, 36; Farm-Labor, 1. Senators Dale of Ve-mont, Barbour of New Jersey, Norbeck of South Dakota, Steiwer of Oregon. J. J. Davis of Pennsylvania and Gerald P. Nye of North Dakota, who wore the Republican label, survived the balloting. Senators Smoot of Utah, Moses of New Hampshire, Watson of Indiana. Bingham of Connecticut, Glenn of Illinois and Jones of Washington were among those stalwarts who were rejected by their constituencies. The Democrats won 18 contests for Governorships and will probably be victors in many of 11 others where the count is not complete. Seven States retired Republican Chief Executives for Democrats, following the example set by Maine in September. In Wisconsin Walter J. Kohler, who overturned the La Follette dynasty, was defeated by Mayor A. C. Schmedeman of Madison, a Democrat, for the Governorship, and Illinois refused to reseat former Governor Small, giving its preference to Judge Henry Horner, a Chicago Democrat, In Tennessee, where the regular Democratic Gubernatorial nominee. Hill McAlister, was opposed by Lewis Pope, another Democrat, on the Issue as to whether former Senator Luke Lea should be extradited to the demand of North Carolina, Mr. McAlister won easily. A fusion movement against the Fergusons failed in Texas, and Ma and Jim were sent back to Austin. . . . The South returned so enthusiastically to its ancient political moorings that Virginia ejected its only Republican Representative, and Georgia gave to the "first citizen of Warm Springs" an astronomical majority. The defection of five Southern States from Alfred E. Smith in 1928 was atoned for in full. Kentucky, where the count may not legally begin until the day after election, early showed that it was not out of step with the national trend and would give a large lead to Governor Roosevelt. Wherever they gathered, Republican leaders took stock of the situation, and, despite their natural gloom, tried to find bright spots in their clouded party sky. In New York a disposition was evident to rebuild the party at once as the Democrats did after the 1928 debacle. One leader said that the thing to do was to remove from party place all traces of "the Hoover influence." He described the President as "a great soul and a great President, but a poor politician." To such weakness he ascribed much of the party's woe. Local gossip was that the election of former Senator James W.Wadsworth of Genesee as a Representative has given New York Republicans a new leader to supplant the Secretary of the Treasury, Ogden L. Mills. In New York State Col. Herbert H. Lehman (Democrat) was elected Governor by a vote of 2,657,923 against 1,819,532 for Col. William J. Donovan, Republican candidate for Governor; it is proper to state that the figures for Governor are still incomplete, since some election districts are missing. Yesterday (Nov. 11) Associated Press accounts from Washington said: The Democratic triumph in Tuesday's Senatorial election was so complete that It not only gives the Democrats control for the next Congress but assures them a majority until 1937 and probably until 1939. By winning 28 out of 34 Senatorial contests, the Democrats will have 59 seats in the new Senate beginning in March, a strength which has been exceeded only twice in history. All of these 28 newly elected Senators hold office until 1937 at least, providing death does not interrupt their service. In addition, the Democrats have 18 holdovers whose terms do not expire until that time. making 46 of the 49 necessary for a majority. 3264 Financial Chronicle Also of the 13 Democratic Senators who face the polls in 1935, five are from the solid South, which gives the Democrats an almost certain strength of 51 until 1937. Tuesday's one-sided results also give the Democrats a very good chance of controlling the Senate from 1937 to 1939, because 27 of their candidates Just elected serve until the latter date. If they continue to hold the 16 Southern seats that are contested in 1935 and 1937, they will have 43 votes, and will only need to retain six of the other 16 seats they now hold. Latest returns to-day showed the next House will be composed of 314 Democrats, Ill Republicans and four Farmer-Laborites. Seven seats remained in doubt. Secretary of Agriculture Hyde in Message to President Hoover Says "Your Shadow Will Lengthen in History." An Associated Press dispatch Nov.8 from Palo Alto, Cal., said: One of the first messages received by President Hoover to-night as he watched the mounting election returns was from Secretary Hyde. The telegram read: lose or draw, you have made a gallant fight both as President and as candidate. Regardless of election results to-day, your shadow will lengthen in history." Everett Sanders, Republican Campaign Manager, Lays Result of Election to World-Wide Slump—Says Hoover Defeat Was Caused by Those Who Did Not Understand a Great Man. The following radio speech was made early Nov. 9 over National Broadcasting Co. networks from Chicago by Everett Sanders, Republican campaign manager, according to the New York "Times": A very great man has been defeated. The millions of votes that have been cast for him constitute not only a marvelous tribute to him, but approval of his policies. America has never returned to power any administration in a period when we have hard times. That this was not just hard tines but a world depression for which the administration was not responsible, has been brought home to those who have thoroughly understood the conditions. Millions have hope ' that a political change would better their economic condition. This vote has outnumbered the votes of those who did understand. The millions of votes that have approved Herbert Hoover are a great vindication of a great President. So far as I have the power to do so, I shall give every support to the incoming President in all of his ploicies that are for the best interests of our country. PreElection Telegram to President Hoover Reported Argentinian Papers as Putting Hope in Gov. Roosevelt for Lower Tariffs. From the New York "Times" of Nov. 8 we take the following: President Hoover made known to-day that a telegram had been received saying that leading Argentine newspapers were advocating the election of Franklin D. Roosevelt with the hope that tariffs would be lowered, thus enabling their nation to export its agricultural and animal products to the United States. The announcement was as follows: "The President to-day received a telegram confirming dispatches from Buenos Aires as printed in this country in which it was stated that the leading newspapers in the Argentine capital were advocating the election of Roosevelt with the hope that tariffs would be lowered, thus enabling the Argentine to export its agricultural and animal products to the United States. "Such exportations would result in further demoralizing agricultural prices in the United States as the Argentine products would replace large volumes of American farm products." • Secretary of Treasury Mills Congratulates PresidentElect Franklin D. Roosevelt. Secretary of the Treasury, on Nov. 9, Mills, Ogden L. according to United Press accounts from Washington congratulated Franklin D. Roosevelt in a public statement to the press as follows: "The American people have decided they desire a change in administration. "It is now the duty of all of us to be helpful whenever we can to the new administration in meeting the difficult problems that lie ahead, and in promoting the common welfare. "I congratulate Governor Roosevelt and Speaker Garner on the country's vote of confidence." President Hoover's Message of Congratulation to President-Elect Roosevelt—Offers to Co-operate with New Administration—Governor Roosevelt's Reply. From Palo Alto, Cal., Nov. 8, where he had gone to cast his vote in his home town, President Hoover sent to the newly-elected President, Franklin D. Roosevelt, Governor of New York, a congratulatory telegram, as follows: Palo Alto. Cal., Nov. 8, 1932, The Hon. Franklin D. Rooseve t, Biltmore Hotel, New York. N. Y. lk 1 congratulate you on the opportunity that has come to you to be of service to the country and I wish for you a most successful administration. In the common purpose of all of us I shall dedicate myseif to every possible helpful effort. HERBERT HOOVER. Nov. 12 1932 The reply of Governor Roosevelt follows: New York, Nov. 9, 1932. The President, Palo Alto, Cal. I appreciate your generous telegram for the immediate as well as for the more distant future. I join in your gracious expression of a common purpose in helpful effort for our country. FRANKLIN D. ROOSEVELT. President-Elect Roosevelt in Message Election Night Expressed Hope His Administration Would Do Everything Possible to Restore Country to Prosperity. Just before midnight on Nov.8, when his election as President seemed assured, Gov. Franklin D. Roosevelt of New York, addressing a gathering of Democratic workers in the Hotel Biltmore, New York, said: My friends, I have come out here to bid you God-speed and to thank you, each and every one, for all you have done in this campaign, and especially all the men and women who have worked so faithfully. It has been because of their work that the great majority we have had throughout the country has been made possible. I want to say just one word—that there are two people in the United States, more than anybody else, who are responsible for the great victory. One is my old friend and associate. Colonel Louis McHenry Howe, and the other one is that splendid American, Jim Farley. As you know, the returns have not yet come in from a number of the Western States, so I am making no formal statement. All I can tell you is that the returns seem to indicate a great victory, and it is my great hope that during the next four years we, all of us, will do what we possibly can to restore this country to prosperity. President-Elect Roosevelt in Radio Message Expresses "Deep Appreciation" for "Great Vote of ConRegards it as "National Expression of Liberal Thought." From his New York home on Nov. 9, Gov. Franklin D. Roosevelt, President-elect, broadcast a radio message, expressing his "deep appreciation" for the "great vote of confidence" cast at Tuesday's election (Nov. 8). The message was broadcast over the NBC and Columbia Broadcasting networks, and rebroadcast to Europe, Asia and South America. The message follows: My Friends: I am glad of this opportunity to extend my deep appreciation to the electorate of this country which has given me this great vote of confidence. It is a vote that has more than mere party significance. It transcends party lines. It became a national expression of liberal thought. It means, I am sure, that the masses of the people of this nation firmly believe that there is great and actual possibility in an orderly recovery, through a wellconceived and actively directed plan of action. Such a plan has been presented to you, and you have expressed approval of it. This, my friends, is most reassuring to me. It shows that there is In the nation unbounded confidence in the future of sound agriculture and honorable industry. This clear mandate shall not be forgotten. I pledge you this, and 1 Invite your help, the help of all of you, in the happy task of restoration. Statement by Democratic National Chairman James A. Farley with the Election as President of Gov. Franklin D. Roosevelt of New York. On election night, Nov. 8, James A. Farley, Democratic National Chairman,issued the following statement anent the election as President of Gov. Franklin D. Roosevelt as President: The returns of course indicate that Governor Roosevelt has been elected by the greatest vote ever given a nominee in a two-party fight in this country. The result was not wholly unexpected in these headquarters. We were satisfied that the citizens of America were in accord with the platform of the Democratic party and the policies outlined by Governor Roosevelt in his campaign and that the people were determined to place him in the White House in this momentous period in the history of our country. Of course I am happy at the result and take this opportunity to thank every worker throughout the country for the part he played, and I am grateful to the American public, who made this victory possible. Madison Square Garden Speech of Gov. Franklin D. Roosevelt with Closing of Presidential Campaign— By United Effort of All, He Holds, Fear Can Be Dissipated and Economic Fabric Reconstructed. Gov. Franklin D. Roosevelt, Governor of New York (who on Nov. 8 was elected President of the United States) with the practical close of the Presidential campaign on Saturday, Nov. 5, delivered an address at Madison Square Garden, New York, in which he declared that "there can be only one great principle to guide our course in the coming years." The Governor went on to say: We have learned the lesson that extravagant advantage for the few ultimately depresses the many. To our cost we have seen how, as the foundations of the false structure are undermined, all come down together. We must put behind us the idea that an uncontrolled, unbalanced economy, creating paper profits for a relatively small group, means or ever can mean prosperity. The Governor made the statement that "confident in the sinew and fibre of American life, we know that our losses are not beyond repair. We know that we can apply to the Volume 135 great structure we have built our power of organization, our fertility of mind and the intelligence and the foresight needed to make that structure more serviceable." He added: We refuse to be oppressed by baseless fears that our firesides are to become cold or that our civilization will disappear. We know that by the united effort of us all, our fear can be dissipated, our firesides protected, our economic fabric reconstructed and our individual lives brought to snore prefect fulfillment. At the close of his address Gov. Roosevelt said: We can and will bring to the problem of the individual the maturity of the united effort of a nation come of age. America, mature in its power, united in its purpose, high in its faith, can come and will come, to better days. Gov. Roosevelt's speech in full follows: To-night we close the campaign. Our case has been stated and made. In every home, to every individual, in every part of our wide land full opportunity has been given to hear that case and to render honest judgment on Tuesday next. From the time that my airplane touched ground at.Chicago up to the present I have consistently set forth the doctrine of the present-day democracy. It is the program of a party dedicated to the conviction that every one of our People is entitled to the opportunity to earn a living and to develop himself to the fullest measure consistent with the rights of his fellowmen. You are familiar with that program. You are aware that it has found favor in the sight of the American electorate. The movement comes not from the leaders of any group, of any faction or even of any party. It is the spontaneous expression of the aspirations of millions of individual men and women. These hopes, those ambitions, have struggled for realization in different ways, on the farms, in the cities, in the factories, among business men and in the homes. These have found at length a common meeting ground in the Democratic program. To-night we set the seal upon that program. After Tuesday we go forward to the great task of its accomplishment and, we trust, to its fulfillment. There can be only one great principle to guide our course in the coming years. We have learned the lesson that extravagant advantage for the few ultimately depresses the many. To our cost we have seen how, as the foundations of the false structure are undermined, all come down together. We must put behind us the idea that an uncontrolled, unbalanced economy, creating paper profits for a relatively small group, means or ever can mean prosperity. Exactly four years ago, on a similar occasion, the Democratic party, in closing its campaign,stigmatized the condition, then called "Prosperity," in truly prophetic language with the label "False Prosperity." You know now, and America knows, the justice of that label. The reasoning then was as simple as is the analysis now. While the families upon our farms are in want there can be no safety for the families of the workers in our cities. There is an interdependence in economics Just as there is a brotherhood in humanity. Loss to any is loss to all. By United Effort Economic Fabric Can Be Reconstructed. To-day we struggle against the inevitable result of wandering after false gods. Confident in the sinew and fiber of American life, we know that our losses are not beyond repair. We know that we can apply to the great structure we have built our power of organization, our fertility of mind and the intelligence and the foresight needed to make that structure more serviceable. We refuse to be oppressed by baseless fears that our firesides are to become cold or that our civilization will disappear. We know that by the united effort of us all our fear can be dissipated, our firesides protected, our economic fabric reconstructed and our individual lives brought to more perfect fulfillment. In that united effort I make bold to include not only you, the members of my own party; not only the great independent masses who seek relief from an administration which has served them ill; not only the liberalminded elements in all parts of the country who have joined in creating the program we are proud to offer but also the men and women in the ranks of the Republican party, whose interest must also be ours. Genius of America Stronger Than Any Candidate or Party. The next administration must represent not a fraction of the United States but all of the United States. No resource of mind or heart or organization can be excluded in the fight against what is, after all, our real enemy. Our real enemies are hunger, want. insecurity, poverty and fear. Against these there is no glory in a victory only partisan. The genius of America is stronger than any candidate or any party. This campaign, hard as it has been, has not shattered my sense of humor or my sense of proportion—I still know that the fate of America cannot depend on any one man. The greatness of America is grounded in principles and not on any single personality. I, for one, shall remember that even as President. Unless by victory we can accomplish a greater unity toward liberal effort, we shall have done little indeed. *,Let us turn from consideration of leadership and think of the loyal voters who constitute the great army that has brought us to the gate of victory. Let us give thought to the men and women in the ranks. There are many millions of them. What have they in mind? Why have they enlisted? There Is among you the man who is not bound by party lines. You vote according to your common sense and your calm judgment after hearing each party set forth its program. To you I say that the strength of this independent thought is the great contribution of the American political system. You and millions like you have appraised the Democratic program and have rallied to its standard. Your thought makes wider our vision in handling our national policies. There is among you the woman who knows that women's traditional interests—welfare, children and the home—rest on the broader basis of her husband of a job. The old an economic system which assures her or expression that "a woman's place is in the home" has a wider meaning home, but you now know that they to-day. Your interests may be in your Into your home, are no longer disassociated from the interests of the State. pay for it is largely determined for instance, comes electricity. What you family budget must provide by the attitude of your government. Your clothes. And you know now that for a tax bill as well as for your baby's amount of taxes your family the your baby's clothes are apt to depend upon many of your private pays. You who have had the clarity of vision to trace the problems back to their roots in government policy best' appreciate program we lay before you. Logical Remedy for Mistaken Policy is Change in Policy. who has heard the There is among you the man in business or in trade fearful thing but who. unafraid, has decided to cry that change was a wrong, only partisan change. You know now that when things are going You know now prejudice and stupidity can countenance a continuance. in policy. You have change is a that the logical remedy for mistaken policy 3265 Financial Chronicle decided to make this change. You have decided to put the conduct of affairs into other hands. All of you, consciously or not, have helped shape the policies of the Democratic Party in this, its war on human suffering. Your own experience and your own fears and your own problems—all have written themselves into our program. There is something of you in all of us. There is among you the man who has been brought up in the good American tradition to work hard and to save for a rainy day. You have worked hard. You have stinted yourself to save. You now find your savings gone. You now find your job gone. Your resentment comes not from discontent alone but from a feeling of deep injustice. You have joined us not because of discontent, but because in our program you find the hope that this can not come again. We have not enticed you with offers of magic, nor lured you with vain promises. We have given you the hope of a better ordered system of national economy. We have pledged you our word and our will to do. There is among you the man who has been brought up to believe that a livelihood could always be wrung from the soil by willing labor. You have broken your back in your efforts to make the soil produce. And when you have gathered your harvest you have found that harvest worthless. In bewilderment, you have learned that when you had something to buy the cost was great; but when you had something to sell, the price was low—or the price was nil. For years you have endured this until at length the mounting tide of debt has threatened your very home. You have entered our ranks. No promised cure-all led you there. You came because by careful analysis you were convinced where your difficulty lay. You knew that your difficulties were beyond your individual control to prevent or cure. Our plan offered to you a mobilization of the resources of government to bring to you the fruits which your labor deserved. There is among you the man who has been able to save something from this wreck. You have joined our ranks because you, too, have come to realize the falsity of the 1928 economics and to look for your safety in a new and stronger philosophy of American constitutional government. All of you, in all places, in all walks of life, have joined in proving that only by a true conception of the interdependence of the American economic system, can there be hope of safety and security for all. To-day there appears once more the truth taught 2.000 years ago— that "no man lives to himself, and no man dies to himself; but living or dying, we are the Lord's and each others'." It may be said, when the history of the past few months comes to be written, that this was a bitter campaign. I prefer to remember it only as a hard-fought campaign. There can be no bitterness where the sole thought is the welfare of the United States of America. Strength og Country Is Strength of Union. It is with this spirit and in this spirit that I close the campaign. I believe that the best interests of the country require a change in administration. Every sign points to that change. But I would have you realize that the strength of the country is the strength of union. Let us restore that strength. It was said at the close of the World War that "America had come of age." After that war we had a unique opportunity to build permanently for America. That opportunity we did not grasp. But even in our mistakes we have learned how strength can best be used to the common benefit of us all. The millions of unchronicled heroes who, by self-denial and patience, have carried this Nation through•this economic crisis must give us new hope. We can and will bring to the problem of the individual the maturity of the united effort of a nation come of age. America, mature in its power, united in its purpose, high in its faith, can come and will come to better days. Resolution Adopted By Texas House Calling Upon All Holding Office as Democrats to Vote Democratic Ticket From "Top to Bottom"—Criticism of President Hoover's Springfield, Illinois, Speech. A resolution attacking President Hoover's speech at Springfield, Ill., and calling on all "who sought, accepted or hold office as a Democrat" to vote the Democratic ticket from "top to botton" was passed in the House of the Texas Legislature on Nov. 5, said Associated Press advices from Austin, Tex., Nov. 6, published in the Houston "Post." The dispatch continued: The resolution was adopted, 83 to 11, with six present and not voting, but the action was not final because of a motion to reconsider and spread on the journal. The resolution referred to Hoover as the "Acting President" and quoted him as likening the present economic crisis to the Civil War period. Bayonet Rule Recoiled, Citizens of Texas were "reminded" in the resolution of the "bayonet enforced Republican rule, one time foisted on the people of the Lone Star State" and were exhorted to turn to the Democratic Party for relief. Criticizing the President's Springfield address, the resolution stated; "We condemn the veiled threat to arouse sectional strife among our people and to return to our State carpet bag governors, and to prevent this we respectfully urge the citizens . . . to vote a straight Democratic in order that the great principles of Democracy may ticket . survive." Presumably the resolution was offered in an effort to obtain support for the national Democratic ticket, but many interpreted it as an effort to line up additional sentiment for Mrs. Miriam A. Ferguson, Democratic nominee for Governor, who is engaged in a fight with Bullington. Republican candidate for the governorship. Many Democrats opposed to the Ferguson cause, including Governor Ross S. Sterling, have announced they would support the Republican in preference to their party's nominee. Resolution Called Ill-Timed. The statements concerning the return of carpet bag Governors were challenged by Representative Penrose Metcalfe of San Angelo, who stated he voted the "ticket from top to bottom" before leaving to attend the legislative session. Metcalfe stated he believed the resolution to be "illtimed" and added that "the Legislature is in bad enough repute with the citizens of Texas without playing partisan politics on the floor of the House." Proponents of the resolution disclaimed any intention of mixing Into State politics in a paragraph citing that "where bayonets supersede civil authority in the enforcement of legislative enactments" the foundations of government were shaken. Representative Thomas R. Bond of Terrell had interpreted the clause as an assault on the action of Governor R. S. Sterling in declaring martial law in the East Texas oil field to aid in controlling oil production. Bond moved that the resolution be reconsidered and spread on the journal, keeping it open for amendment. He stated he did not want anything in 3266 Financial Chronicle the resolution to cause a further breach between the Sterling supporters and the Democratic Party, and that the party wanted everybody to vote the ticket straight at Tuesday's[Nov. 81 election. President Hoover's Springfield speech is referred to in another item in this issue: President Hoover in St. Louis Speech Relates Incidents Bearing on Loan by Reconstruction Finance Corporation to Dawes Bank in Chicago—Says "Constant Misrepresentation" of Episode Is "Cruel Injustice to General Dawes." The incidents bearing on the $80,000,000 loan in June by the Reconstruction Finance Corporation to the Chicago bank headed by Charles G. Dawes were related by President Hoover in a speech delivered in St. Louis, Nov. 4. That part of the President's address bearing thereon is given herewith: I do not have time to-night to present the whole great constructive measures of the Administration by which we defended the American people from acute danger of a generation of chaos from this world disaster. These measures are now placing us upon the road to recovery. They are vast and complicated. I think perhaps I can best illustrate the working of only two of them by short examples. I would like to have you picture a group of gentlemen sitting in the board room of the Federal Reserve Bank in one of our important cities, a thousand miles from Washington. Another similar group is seated in the board room of another Federal Reserve Bank in a city some 200 miles from Washington. A group of advisers is seated with the President of the United States. Both of the city groups included Governors of the Federal Reserve banks, directors of the Reconstruction Finance Corporation, together with the leading bankers and merchants of these two cities, embracing men of both political parties. It was Sunday afternoon, and all had been summoned, on a few moments' notice, to meet a grave emergency. These three groups were continuously in communication by long-distance telephone. During the preceding week there had been a general run upon the banks In one of these important cities. All of the banks had felt the pressure of these unreasoning withdrawals. On Saturday morning the situation had become critical in the extreme. The financial districts were thronged with excited crowds of frightened and hysterical depositors. They filled the lobbies of the banks and stood in long queues upon the sidewalks. When the doors were closed for the day there were still crowds demanding their deposits. Throughout Saturday • evening and Sunday panic increased and began to spread like a contagion to the whole district. The banks were under heavy pressure because of the frightened depositors and the inability of the banks in the midst of the crisis to make a quick sale of their long-term securities without such tremendous sacrifices as to imperil all of the depositors, or, in turn, to force the payment of notes of an army of borrowers without, in turn, forcing them to sell their homes and business at half price. It was found that one of the banks in one of these great cities had been weakened more than the others by these panic-stricken depositors. Without assistance, that bank would be unable to open on the following Monday morning. The failure of this bank to continue business would have added to the panic which threatened to bring down on the other banks of that city and spread in turn to other cities and involve many trust and insurance companies. Efforts to Quiet Unreasoning Pear. The immediate problem was to provide before Monday morning a sufficient sum of money to quiet unreasoning fear and give absolute assurance that funds were available to pay every depositor in full without question. In the course of inquiry into the condition of the bank it was found that they had ample securities which, in normal times, could have paid out their depositors, leaving a large margin. But the securities could not be instantly sold at any price, or at least at a price which would produce sufficient to pay all depositors, and they could not collect instantly from the notes. In the inquiry into the condition of the bank it developed they had 122,000 depositors, of whom 105,000 were savings depositors; that the average of the savings deposits was only $140 each, many of them working women and children; that the safety of these depositors could not be separated from the other depositors of the bank. It was found that there were 17.000 commercial depositors, most of whom were men and women engaged in small businesses, whose deposits represented the money necessary to meet their payrolls, the purchasing of their materials and the discharge of obligations to others incurred in the course of business. Jeopardy to them meant that many thousands of men and women in factories and stores would be discharged into untold hardships. But these were not all who were depepdent upon the maintenance of this bank. It was found that among the 17,000 commercial deposits 755 were country banks, the great maiority of them in towns of less than 5.000 people. If this hank should fail many of these country banks must fall. In the complex system of our economic life things that on the surface seem unrelated are in feet under the surface inextricably tied together. A farmer in a small town in an agricultural State might feel no concern for the safety of this important bank In a great city. The widow with a small deposit in a small hank of a town of another State might know of no relationship between her hank and the city bank. But the farmer in one State and the widow in another, even though they did not know it, had a direct financial stake in the fate of this city bank. For the country hanks must conduct business with the city banks in the ordinary conduct of trade and must carry their reserves with the city banks in order that they may draw interest upon them which they-in turn pay to their depositors. Now, it was foend on examination that these 755 depositing hanks had 8,500,000 depositors scattered over 15 States. But that Is not all. There were 21.000 other hacks scattered throughout the country which had deposits in the 755 banks depositing with this particular city bank: and in these 21.000 banks were more than 20,000,000 depositors; and they involved widows, orphans, workers, insurance companies, manufacturers and merchants. And in addition to all tide, there was the position of the borrowers from all this mass of harks. If this city bank should fail, there must he immediate demand for the payment of the money due frown its borrowers. Nov. 12 1932 If any of the banks dependent upon it should fail, their borrowers in turn would be compelled to make immediate payment of money due and to realize upon their property at a time when property could not be turned into cash at anything like its real value. In this city bank and in the 755 banks who carried their reserve deposits In this city bank, there was 695,000 men and women and institutions owing money on their notes. They were scattered throughout the length and breadth of the land. They were on the farms, in the cities, the villages and hamlets. Most of all, these groups of people were unaware of their danger. They were in their homes and in their churches, concerned with their own affairs —but they were not being forgotten. Dawes Bank. The men who had conducted this bank over great numbers of years were men of high esteem in the whole community. To their credit be it said that their chief concern was the preservation of these hundreds of thousands, of millions of people from disaster. They were not asking aid for themselves. The investigations and the conversations occupied many hours of continuous communication from these two cities to Washington and back again. Remember this was on Sunday, when the normal processes of business were difficult to conduct. Countless difficulties were encountered and solutions worked out. They were working against time. Finally, at three hours after Sunday midnight, the task was completed. The assets had been valued by the examiners of the Reconstruction Finance Corporation. The banks of the two cities joined in lending assistance, and the Reconstruction Finance Corporation agreed to furnish a sufficient sum to assure that this bank could open without fear and meet every demand of its depositors. At 10 o'clock on Monday all these banks opened for business as usual. Public announcement was made that ample funds were on hand to Pay every depositor. As had been anticipated, immediately excitement and panic subsided and confidence was restored. The crowds melted away—deposits began to return. The situation was saved, not only in this bank but in the other banks which had been subject to heavy withdrawals. The loans offered by the co-operating banks and the Reconstruction Finance Corporation were never fully celled for and have since been largely repaid, and every danger in connection with that episode is now over. The central human figure of that bank was a man who had served his country for 40 years in many high capacities, who in recent years had been abeeet fro.-n the country in a position of first importance to the American people. That is the story of the Dawes bank in Chicago. You know the use our political opponents have made of this incident. They ignore that fact that General Dawes resigned from the Reconstruction Finance Corporation three weeks before, on his first news that attacks were being made on the bank with which his name had long been associated. lie resigned to try to save that bank without call on the Reconstruction Finance Corporation, of which he had been a director. He knew and appreciated the use that would be made in this campaign of such calumny. He sought to avoid it. Loans Secured and Being Paid Off in Ordinary Course. And you should know that, when that Sunday meeting started, General Dawes stated that he could not bring himself to ask for assistance from the Corporation in which he had so lately been a director but it was upon the Insistence of the two Democratic members of the Reconstruction Board, sitting in the Federal Reserve Bank meeting in Chicago, and upon the insistence of the leading Democratic banker of Chicago, who was then mentioned as a candidate for the Presidency of the United States, and upon the insistence in New York City of the leading Democratic banker and a leading Democratic manufacturer, also mentioned for the Presidency, upon insistence of the othei Democratic members of the Reconstruction Finance Corporation, that this was no case of the personal feelings of General Dawes or the effect upon my Administration; that it was solely a case of national necessity, and those men then and there jointly offered to take the full responsibility for the action. These men acted not because they were Democrats or because they were loyal citizens of the United States.Republicans, but The situation demanded broad vision and comprehensive understanding of the problem, instant decision, bold and courageous action. Only by this was a major disaster averted. And I may tell you that not only were these loans adermately secured, but in the ordinary course of business they are being paid off. "Constant Misrepresentation" "Cruel Injustice to General Dawes." The constant misrepresentation of this episode for political Democratic politicians is a slander upon men of their own purposes by party as well as a cruel injustice to General Dawes. It is a characteristic example of the character of this campaign. Insult to the American people to substitute this sort of political It is an action for competent discussion of the grave issues which lie before our country. And I may tell you that this is but one of six similar episodes in great financial centers in the United States President Hoover in Springfield (III.) Speech Reviews Events in Earlier History of Nation—Finds Situation'Akin to That in President Lincoln's Time. Stating in a speech at Springfield, Ill., on Nov. 4 that "I would like to give to you an important analogy with the whole situation we are now in." President Hoover added that "from Springfield, in the heart of the western prairies, Lincoln was called to the leadership of the nation at the beginning of a crisis that threatened its destruction." In that part of his Springfield speech in which he devoted his remarks to stressing the similarity of the present period with that of President Lincoln's time, President Hoover went on to say: It was an unprecedented situation, of unprecedented problems. A multitude of conflicting counsels heat in on Washington. An influential body of public opinion advocated a do-nothing Policy. Even the Commander-in-Chief of the national armies, on the day before lineedn's inauguration, wrote in this Writ: "Say to the seceded States," he wrote: "Wayward sisters, depart In peace" The most distinguished statesman of the time, William H. Seward. Lincoln's See.etary of State, advised the President to take the country into a foreign war in the hope that this might rally the separating States to the defense of the Union. Volume 135 Financial Chronicle As the long conflict wore on. discouraged patriots urged a negotiated settlement. Through all this tumult of discordant opinions under the terrible strain of discouragement and apparent failure. Lincoln kept his head. He thought straight: "The Union must and shall be preserved." He never was diverted from his goal. He never faltered, and in the end the policies he had adopted, the forces he had set in motion carried the country through. The Union was saved. His record, his example, are a priceless heritage to the nation. They are a constant incentive to every man who occupies a position of leadership in difficult times. They are a living guide to every man who, in the Presidential office, lives hourly in his invisible presence. We are assembled here to-day in the midst of a gigantic economic conflict. For the last three years we have been beset with forces that threatened our economic structure as truly as the forces unleashed in the war between the States threatened the structure of the Republic. On other occasions I have compared our present situation to a war on a hundred fronts. I have given some account of these various engagements, and of the general strategy of our campaign. Here at Springfield, with its historic associations, it is appropriate to rex low briefly the events of that earlier struggle and to consider some of the similarities to the situation of the last three years. We must not press analogies too far. But I believe you will agree with me as we examine the record that certain phases of the conflict between the States will help to a better understanding of recent events. And first I would call your attention to the suddenness and unexpectedness with which the blow fell that transformed a peaceful people into a people engaged in a desperate war. As we look back, it seems perfectly clear that the struggle had been in the making for many years. In the light of history, it seems to have been an inevitable conflict between two irreconcilable theories of government. But even as the day of armed conflict approached, the people were busy with the matters of everyday life. If you search the newspaper and magazine files of the time, you will be amazed at the tranquility shown, In view of what we now know was pending. It is easy to be wise after the event. As you all remember, the storm broke in the weeks Immediately before Lincoln's inauguration. The events that followed I need sketch only in the broadest outlines. The first two years were a period of almost unrelieved gloom for the Union forces. One disaster followed another, and the year 1862 ended with Burnside's defeat at Fredericksburg. The year 1863 opened as gloomily with the disaster to Hooker at Chancellorsville. But in July of 1863 the Union retreat was definitely stopped by Meade at Gettysburg, and Grant at Vicksburg. Still, the victory was far from won. The draft riots in New York that summer showed, however, the North was feeling the strain. The gigantic struggle continued into the fourth year with no decisive outcome in sight. Grant, intrusted with the chief command of the Union forces in March. 1864, entered upon the frightful Wilderness campaign, which culminated in the appalling losses at Cold Harbor June 1 to 3. Presidential Campaign in 1864. The Presidential campaign was coming on. A convention of the die. affected met at Cleveland on May 31, and nominated General John C. Fremont for President. The Republican convention met at Baltimore June 7—only four days after Cold Harbor. We know now what could not be known at the time—that the real victory had been won at Gettsyburg: that the forces against the Union, gallant as they were, and actuated by the deepest of convictions, had been overcome in the long struggle of the preceding years. Yet this fundamental fact was still obscured by the smoke of battle. The North was still dismayed, almost stunned by the violence of the blows it had received. The casualties of the Wilderness hung like a pall over the land. Would it be possible, men asked, for the nation to survive? Was it worth while fighting on? Renomination of President Lincoln. Lincoln was renominated, but the country was profoundly disheartened. ft felt it had made enormous sacrifices and made them in vain. True, Grant had now advanced on Richmond and had invested the capital of the Confederacy. But early in July the dashing Jubal Early had appeared in front of Washington, and it looked for a tense moment as if the national capital itself might fall. A few days later a Federal attempt to break through theidefense of Richmond failed disastrously. Bear in mind what I said a moment ago, that the retreat of the Unien had been for months definitely stopped and that the advance was already in progress. But the strain had been so long and so heavy that the nation could not realize what had happened. The wave of discouragement that swept over the country in the summer of 1864 was so extreme that on Aug. 23 Lincoln prepared his famous secret memorandum "This morning," he wrote. "as for some days past. it seems exceedingly probable that this Administration will not to re-elected. Then it will be my duty to so co-operate with the President-elect as to save the Union between the election and the inauguration, as he will have secured his election on such ground that he cannot possibly save it afterwards." Democratic National Conrention in 1864. Six days later the Democratic National Convention met at Chicago and declared In its platform "as the sense of the American people, that after four years of failure,to restore the Union by the experiment of war— justice, humanity, liberty and the public welfare demand that immediate efforts be made for a cessation of hostilities." On that platform, with its appeal to discouragement, discontent and suffering, the Democratic convention nominated General George B. McClellan, of New York. for President. But events marched rapidly. The grand strategy of the general advance, for which the foundation had been laid in the previous 12 months, began to bear fruit. After the gloomy summer of 1864 success attended the Union arms on every front. Sherman captured Atlanta on Sept. 2 and began his march to the sea. Sheridan routed Early at Cedar Creek in October. The President was re-elected in Novemoer. Thomas destroyed hood at Nashville in December. and the following April came Appomattox Courthouse and the end of the war. The transformation from apparent stalemate to overwhelming victory may have seemed amazing to many. But, if It seemed amazing. It was only because people did not understand how well the foundation had been laid in the dark days that preceded and how effectively the strategy had been planned. 1860-1929. I believe this brief outline of the progress of events in a crisis that confronted a previous generation may help us to a juster appreciation of what has happened in the years Just past and what is happening to-day. In 1860, as in 1929. the country was unexpectedly faced with a great calamity, Then, as now,the disruptive forces gathered strength, and for a time their progress seemed irresistible. Then, as now, the resources of the nation were mobilized and organized in a campaign that finally ended the initial retreat. Then, as now. the strategy of campaigns on many fronts produced their inevitable results. Then, as now, advances began here and there, so co- 3267 ordlnated as to lead to the final triumph. But then, as now, the natio* had undergone such a strain, it was reeling under so many blows, that even after the advanco had begun many failed to realize what had happened. To-day our opponents are declaring in their platform, in words atrangely reminiscent of those used by their predecessors in Chicago 68 years ago, that the struggle of this Administration against the depression has been a failure and that "The only hope of improving present conditions"—I quote from the present Democratic platform—"lies in a drastic change in economic governmental policies." So in 1864 the Democrats declared that "After four years of failure to restore the Union by the experiment of war"—again I am quoting from their platform — "that immediate efforts be made for a cessation of hostilities." To-Day and in 1864. So again to-day, as in 1864, in the midst of a great war, they call Icor a change of leadership and of policies at Washington. In spite of the hardships, privations and other difficulties of the time, the nation in 1864 refused to be swerved from a course that had turned the retreat into an advance. It supported the policies whose value had been. tested under the fiery strain of the struggle. By its election mandate it directed those to whom it had intrusted leadership to go forward with the campaign strategy whose results already were in evidence. It declined emphatically to turn aside to untried policies and experimental leadership. The same alternatives are before the country to-day that lay before it In that momentous campaign of nearly three-quarters of a century ago. The choice that the American people made in 1864 was made on Nov. 8. The choice they are called to make in 1932 will be made on Nov. 8. My fellow citizens, can we doubt what the choice will be? Men and women—and I include women because they bore then and they do now a large part of the burdens of that struggle—the support of that strategy and that leadership which preserved the Union came from the constancy of the Republican Party in its refusal to be diverted from the leadership which it had given at that time and the leadership which it has given in the last four years to the solution of a great national crisis. The turn in the tide of the Civil War was made at Gettysburg. The turn In the tide in this crisis was made in the last winter, and just as after Gettysburg long months of continual batter were required to bring about the saving of the Union, in the same manner we must continue the fight to-day to recover our prosperity and to preserve the social and political principles for which Abraham Lincoln stood, Initial Distribution of 13.% by American Securities Investing Corporation Formed Under Presidency of T. W. Lamont of J. P. Morgan & Co. The directors of the American Securities Investing Corporation, the so-called bond pool organized by banks here last June under the presidency of Thomas W. Lamont of J. P. Morgan & Co., met on Nov. 10 and declared an initial distribution for the first half year of operations of 1 on the corporation's outstanding income debentures, payable on Dec. 1. From the New York "Times" of Nov. 11 we quote: The pool was organized with subscribed capital of $100,000.000, of which $23,000,000 has been paid in from time to time. The distribution, which is being made on the entire outstanding amount of debentures, amounts to about $345,000, which is at the rate of 3% annually. This payment does not represent the full earnings of the corporation for the period. A large part of these earnings Is not at this time available for distribution because, although they have piled up in the form of accrued interest on the bonds in which the corporation's funds are invested, in the case of many bonds the dates on which the coupons are payable have not yet been reached because none of the corporation's money has been invested for a full period of six months and much of it has been invested for a much shorter period. The pool began operations early in June, at a time when the bond market was close to its lows for the depression to date. As soon as the announcement of the formation of the organization was made bond pricers started up and soon thereafter the general recovery in security prices set in. As a result of this movement the pool never got a chance to get all its capital to work under the conditions it was formed to take advantage of. In recent months the corporation has not been very active, but it has retained all the investments it made. An item regarding the formation of the corporation appeared in our issue of July 16, page 413. 450 Farmers Sorrow from Omaha Branch of Regional Agricultural Credit Corporation. Approximately 450 loans, totaling $1,000,000, have been made by the Omaha Branch of the Regional Agricultural Credit Corporation, since it was established here the first of October, Charles Kuning, manager, announced Nov. 1, said the Omaha "Bee" of Nov. 3, which also said: The loans have been made principally to farmers and stockmen In this Federal Land Bank district, comprising Nebraska, Iowa, South Dakota and Wyoming, to finance livestock feeding operations. The main office of this regional Agricultural Credit Corporation is located at Sioux City. Some loans have been for amounts as low as $250, while a few range loans have amounted to $15,000 and more. One Wyoming rancher has applied for $175.000 and It is expected this loan will be approved within the next two or three weeks. Hulling disclosed. An executive conunittee of five directors of the Omaha branch, which meets daily at Kuning's office on the fifth floor of the Medical Art building. examines all applications and approves all loans, except those of $100.000 and over. Loans of $100.000 or more are approved by the Board In Washington, of which Ford Hovey, President of the Stockyards National Bank of Omaha, is the head. Hovey announced at Washington Tuesday the appointment of' two additional men to the board of directors of the Omaha branch. They are Charles Finnegan. Banker of Hyannis. Neb.. and Chris J. Abbott. Banker and Rancher. of Alliance. Neb, W. Dale Clark is Chairman of the board of the Omaha branch. Other directors, besides Finnegan and Abbott, are James Owen and J. Francis McDermott of Omaha,Frank Everest, Council Bluffs: W.J. Lewis, Harlan, Iowa; R. I. Alter, Grand Island; Charles Stuart, Lincoln; Elmer Brock. Casey, Wyo., and C. L. Rigby, Stanwood, Neb. Financial Chronicle 3268 Clark, Owen, McDermott, Everest and Lewis comprise the executive committee which passes on the loans. Kuning said his branch now is making an average of 100 loans a day. He has applications for loans amounting to more than $5,500,000 on hand, he revealed. Approximately 50 persons are employed in the office and over 100 inspectors are In the field, inspecting the collateral of the feed loans. $400,000 Loan to Colorado Stockmen by Regional Agricultural Credit Corporation. From the Denver "Rocky Mountain News" of Nov. 2 we take the following: An additional $400.000 in loans to Colorado stockmen were approved by the loan committee of the Regional Agricultural Credit Corporation yesterday. The new batch of loans brings the total amount of funds released to Colorado stockmen by the Government relief agency to approximately 31,300,000. More than 150 applications for loans have been approved. Federal Home Loan Banks Said to Include Thousand Affiliate Members—More Than Fifth of Eligible Building and Loan Associations Now Represented According to Board Member—Figures Incomplete on Subscriptions. More than 1,000 building and loan associations, or a number in excess of 20% of associations now eligible for membership, already have affiliated with the 12 Federal Home Loan banks, according to an oral statement, Oct. 31, by H. Morton Bodfish, member of the Federal Home Loan Bank Board. In the "United States Daily" of Nov. 1, Mr. Bodfish was quoted as saying: p"We regard that is highly significant, because it represents just that many associations whose managements want to co-operate in a movement that is designed to be helpful. They have come in, cash in hand, In a period when cash is hard to get; it is one of the finest things I have seen, and we here recognize it as portending well for the future of the system." Accurate Figures Unavailable. From the "Daily" of Nov. 1 we also take the following Mr. Bodfish explained that, while the Board has a general estimate on the amount of subscriptions paid in thus far, it can not compile anything like an accurate figure on the funds provided by the members for some days. The reason, he stated, is that some of the subscriptions have been sent to the Board itself, some have gone to the headquarters of each of the 12 banks, and still others are in the form of pledges to subscribe if and when their respective State legislative bodies pass enabling legislation. None of the pledge-type of subscribers, however, were counted in the 1,000 listed as members. The Home Loan Act provided for a Federal participation in the bank capital of $125,000,000 at the outset, and the Board, after detailed study of the requirements,fixed the combined capital of the banks at $134.000,000, so that the necessity arose for the system to obtain more than 39,000.000 in subscriptions before or by the date when lending begins. Funds Not Requested. The Board, Mr. Bodfish said, had not called on the Treasury for funds yet, because it does not know how much it will need. The Federal funds will be requested, however, as soon as accounting systems are Installed in the several banks and actual approval of borrowing applications has started. Mr. Bodfish added that some of the banks will be ready to make loans ahead of the rest, but he felt it was inadvisable to name the dates for the reason that included in the details of organization are some that possibly may cause unexpected delay. Additional Information was supplied as follows: More Expected. The fact that more than 1.000 of the associations aligned themselves with the new system before its banks were organized and before It had funds to loan is accepted in the Board as indicating widespread belief in its basic principles, coupled with a desire on the part of the association managements to render a service in the small mortgage field. Members of the Board have participated in meetings of a number of the regional bank boards and they feel that they have selected men of exceptional characteristics and fitness for the work they are to do. This fact also has furnished ground for a belief that there will be many more of the associations join the system from the 5.000 that are situated in States where they may affiliate with agencies of the type of the home loan banks. While it is considered by the Board as a guess, it is the belief • that at least 40% of the eligible institutions will apply for and qualify as members of the banks as soon as the necessary formalities can be completed on their part. Contrary to some suggestions that have gone out, the Board's information Is that many bank managements have been confronted with troublesome details under State laws or under their charters, matters that must be disposed of before applications can be made for membership. The Board feels that much progress has been made all along in organization work in the last week. There were many functions to be performed by the newly named bank boards and staffs after they formally took office on Oct. 15, and the Board's advices and observations upon personal attendance at bank meetings has brought the conviction of careful procedure, and sound progress will be the rule. Delay in making loans has been occasioned by various factors over which neither the Board here nor the regional bank boards have had absolute control but these have largely been swept away now, and the Board feels that its appointees have developed machinery which will not suffer handicaps of ill-advised organization plans. In the matter of memberships, the Board takes the position that the Home Loan Bank System was not given the impetus at the start which characterized the initiation of the Federal Reserve System, with which the Home Loan agency often has been compared. With the Federal reserve banks, every commercial banking institution operating under a National bank charter was compelled to become a member and subscribe to its proportionate share of capital stock. Such was not the case with the Home Loan System, for it had to start of the 12 "from scratch." and every lender who has affiliated with one own volition. Thus, the view is that the banks has done so on his or its influence and membership its that and system has been well received, Nov. 12 1932 will be expanded as soon as many of the States whose laws now deny building and loan associations the right to acquire such stock have made the necessary changes in their statutes. Applications for Loans Under Self-Liquidating Provisions of Emergency Relief and Construction Act More Than Billion Dollars-37 Engineers Named as Members of Advisory Committees of Loan Agencies of Reconstruction Finance Corporation. Applications for loans under the self-liquidating provisions of the Emergency Relief and Construction Act aggregate more than a billion dollars, according to the American Engineering Council, which is organizing the nation's engineering profession to co-operate with the Reconstruction Finance Corporation in speeding construction projects contemplated by Congress. The American Engineering Council also says: Engineer activity is now under way throughout the country following the appointment of 37 engineers as members of the advisory committees of the Corporation's loan agencies. From now on, It is believed, the work of each of these agencies will be co-ordinated so effectively that the task of the Engineers' Advisory Board of the Corporation at Washington, to which all applications are submitted for final engineering approval, will be materially simplified. Much of the difficulty encountered by the Board, it is disclosed, arises from the inadequate engineering data which frequently accompanies applications for loans. Many applications are insufficiently descriptive of the projects proposed, and lack essential, detailed information, delaying decisions by the Board until the gaps in the evidence have been filled; others are alien to the purposes of the Emergency Act, which requires that self-liquidating enterprises involve construction and the employment of men and materials. With procedure speeded by engineering participation in the local administration of the Corporation, applications in the future are expected to be better supported by information which will facilitate consideration by the Board. The soundness of each self-liquidating project may now be determined with engineering counsel on the advisory committee of the loan agency area in which the project arises. Engineers in each loan area are being mobilized to aid in determining engineering problems, W. S. Lee of Charlotte, N. C., President of the Engineering Council, said, pledging the continuing co-operation of the Council with the Reconstruction Finance Corporation. Engineering assistance, it is planned, will both expedite the disposal of applications already made and encourage a large number of new undertakings, particularly those involving small loans. Self-liquidating loans totalling $134,633,500 have already been approved. Engineers express confidence that there will soon be a large increase in loans of this type, with a resultant sharp gain in employment and manufacturing activity before winter sets in Class 1 applications received by the Engineers' Advisory Board total ese aprp elpica resteionnts,a which hi $135,796,653 and cover 64 projects. l ai feino lete Thdata, range construction activity, and indicate a widening interest in small loans. Thirty, aggregating $3,309,120, are for the construction of water supply systems. Eleven are bridge projects totalling $34,725,533. Five, aggregating $31,963.000, are for irrigation. Five applications for power plants ask $6,859,000. Three sewer projects involve 336.580,000. There are two applications for terminals to cost 3350.000, and two applications for docks costing $675,000. Three housing projects call for $5,695.000. For the construction of markets $1,500,000 is asked. A loan of $4,100,000 has been applied for to construct an airport, and another of $40,000 to build a ferry. Class 2 applications—including all those which are regarded as incomplete and informal—number 42 and aggregate $189,051,520. They involve the following projects: Sixteen water supply systems, $20.484.000; 7 Irrigation systems, 32.523.956: 5 housing programs, $47.418,000: 5 power plants, $32,670,000; 4 bridges, $3,380.564; 1 airport, $7.000.000; 1 dock, 375,000: 1 drainage system, $250,000; 1 hospital. 3250,000. and 1 tunnel. $75,000,000. Class 3 applications—which are informal and which are accompanied by little or no data—total 87 and involve $385,522,257. They represent projects which follow: Thirty-nine water supply systems, $36.439,257; 13 bridges, $93,051,000; 9 irrigation systems. $18.279,000; 4 housing programs, $30.700.000;4 Power plants. $980,000; 4 sewers. $1.695.000; 3 markets, 34,320,000; 2 gas plants, $135.000:2 terminals. 31.000,000:2 tunnels,$38.440,000; 1 drainage system, $83.000; 1 ferry, 3300.000: 1 Park, $100,000, and 1 ship canal. 3160,000,000. Other applications covering projects still inchoate bring the total selfliquidating loans requested to well over 31.000.000.000. Each application is studied and passed upon by the Engineers' Adirlsory Board and by both the financial and legal advisers of the Reconstruction Finance Corporation promptly upon receipt of an necessary information regarding the projects. Those which meet the three testa thus imposed go to the Corporations' Directors, with whom the ultimate decision rests. Engineers point out that the Reconstruction Finance Corporation has faced the colossal task of building in a few months a financial enterprise comparable in magnitude to the whole field of American investment banking requiring a century to develop. Oklahoma Cancels Farm Moratorium—Notices Authorized to Nearly 600 Farmers Delinquent in Their 1931 Rentals. Advicos as follows from Oklahoma City (Okla.), Nov. 7 to the "United States Daily" said: The Commissioners of the Land Office have abandoned their plan adopted last year on a moratorium on farm land rentals, and have authorized notices of cancellation of leases of nearly 600 farmers who are delinquent in their 1931 rentals. Members of the Commission decided also to cancel nearly 150 other leases held by farmers who are still delinquent on their 1930 farm rentals, which were extended from time to time under the moratorium plan until the last extension expired several weeks ago. A. L. Beckett. Secretary of the Commission. said the preference right leases delinquent represent more than a fourth of the 2,100 leaseholders, and that the delinquencies represent $90,576 in farm land rentals due the State. Volume 135 Financial Chronicle cancel leases it proWhen the Commission in such cases takes action to in which to make payaments vides for 90 days' notice to the leaseholders before the cancellationcan take effect. Mayor McKee Moves to Amend Tax Exemption Law to Prevent Bronx Building, Thus Blocking Loan By Reconstruction Finance Corporation. The following is taken from the New York "Sun" Nov. 11: The city moved to-day to block the attempt of the Hillside Housing for Corp. to obtain funds from the Reconstruction Finance Corporation the building of a vast housing development in the Bronx. Assembly Municipal the in Acting Mayor Joseph V. McKee introduced an emergency measure to amend the present local law which exempts from areas, taxation for 20 years new buildings in "congested and unsanitary" providing that any such application for tax exemption must first receive Apportionment. the approval of the Board of Estimate and It is understood that the Acting Mayor's petition to the Reconstruction Finance Corporation and the State Housing Board has held up the final approval of the loan, pending the passage of the local amendment, giving the Board of Estimate a chance to say yes" or "no" in the exemption of its own taxes. Approval of the State Housing Board has heretofore been sufficient to grant the exemption, the city formerly waiving this power. Will Be Pushed Through. The amendment had its first reading to-day. It will come up before the Municipal Assembly for a hearing next week and will be pushed through, the Mayor indicated, In time to block what Mr. McBee regards as a "glutting of the market" on Bronx apartments. Text of Amendment. The amendment reads: of exemption from local taxation as set forth securing purpose the "For in Section 2 hereof, an application shall first be made to the Board of Estimate and Apportionment setting forth all details of the proposed housing operation and compliance with the provisions of Section 2 of the State housing law and Section 1 of this law. "The said Board of Estimate and Apportionment shall thereafter in its discretion by resolution either grant or refuse the said exemption. "This local law shall take effect immediately." 3269 extends for 17 miles from Tualatin Pass in a southwesterly direction. The connecting branch above referred to extends to Tillamook Gate, and at present constitutes the connecting link between the main line of the Flora Logging Co. and the western terminus of the applicant's railroad. The applicant proposes to purchase the entire 17 miles of the main line of the Flora Logging Co. and thereafter operate it as a common carrier. This main logging line is standard-gauge; the right-of-way has been cleared and grubbed; 10 miles of the line are laid with 70-pound rail and seven miles with 65-pound rail. No part of the loan requested is proposed to be used for the purchase of the 17 miles of main logging road. The Flora Logging Co. has agreed to accept in payment therefor a note for $425,000, secured by a second mortgage upon the applicant's railroad properties, which will be subordinate to the first mortgage proposed to be pledged as security for the loan now requested. As above stated, the application by the Carlton ,St Coast RR. Co. to acquire this 17 miles of logging road is being concurrently denied by us in Finance Docket No. 9439. With a part of the proceeds of the loan requested, the applicant proposes to construct a new connection 9.5 miles in length, extending from a point, Cedar Creek, near the Western terminus of the present line of the applicant in a general northwesterly direction to Tualatin Pass, the northeastern terminus of the logging road of the Flora Logging Co. This new cut-off or extension would avoid the maximum grades of 7% and difficult operating conditions existing on the present connection between the appli. cant's railroad and the main line of the Flora Logging Co. The applicant does not propose to abandon its railroad west of Cedar Creek, since its operation will continue to be necessary in serving two industries now located upon that trackage. The track is laid mainly with 56-pound rail; the ties are of sawn and hewn fir, 2,640 to the mile. The applicant owns one locomotive and 10 freight cars, and leases one locomotive and one passenger car. The applicant also owns terminal lands and facilities at Carlton, including a lake used in storing logs, also log rollways and dams. Necessities of the Applicant. The present connecting link between the applicant's line and the main logging road of the Flora Logging Co. extends westerly from Tillamook Gate, the western terminus of the applicant's railroad. It is necessary reason to operate this portion of the logging line with geared engines, by five cars at a of existing grades of 7% and extreme curvature. Only four or time can be handled. The 17 miles of main line of the logging company which the applicant proposes to purchase have a maximum grade of 214% and can be operated with rod egines in the same manner as the present a line of the applicant. The new cut-off, if constructed, will have maximum operated with rod engines, resulting in a Carlton & Coast RR. to Receive Loan of $549,000 from grade of 3%, and it also will be expenses estimated at 75c. per 1,000 feet of logs. Reconstruction Finance Corporation—Townsville savingitinis operating estimated that 150,000,000 feet of logs will be transported each Since RR. Denied Loan—Additional Applications for year, the total annual saving is estimated in excess of $100,000. Furtherwill be much safer, a matter Loans Filed, Including $35,000,000 Loan by New more, it is claimed that operating conditions since a number of men have been killed, and serious injuries importance, of Short Line, that have been numerous on the present switchback. The applicant states unless funds are included for The Inter-State Commerce Commission on Nov. 3 ap- none of the proposed loan will be advisable the construction of the Cedar Creek cut-off. proved a loan of $549,000 to the Carlton & Coast RR. from proposed to The $250,000 of the applicant's 5% first mortgage bonds were issued under a total the bringing on Corporation, Reconstructi Finance the be retired with a part of the proceeds of the loan These bonds became due and payable on loans approved to $350,589,678 to 73 roads. The Commis- mortgage dated March 1 1910. 1 1930. On that date the applicant was unable to discharge the sion, at the same time, denied the application of the Towns- March trustee bonds and the entire amount is at present in the possession of a ville RR.for a loan of $32,000 because "the prospective earn- awaiting payment, the owners of the bonds having agreed to accept in value of the bonds without ing power of the applicant and the security offered as a satisfaction and discharge thereof the face accrued interest. to the afford Ladd for pledge proposed loan are not such as The beneficial owners of these bonds, which are held by the are also reasonable assurance of its ability to repay the loan." Estate Co., Paul C. Murphy and Frederick H. Strong, as trustees, timber holdings and other properties, which, together Applications were filed by two additional roads to borrow the owners of large The with the bonds, are under contract of sale to the Flora Logging Co. a total of $39,000,000 from the Reconstruction Finance Cor- purchase price involved in the contract of sale has all been paid with the In interest. poration, bringing the total amount of loans applied for to exception of about $200,000, which includes principal and thereof must applicant pays these bonds, the present owners the event the date to approximately $479,131,336. The two roads seeking to the final apply $200,000 of the total amount of $250,000 so received the loans are the Vicksburg Bridge & Terminal Co. for a payment due from the Flora Logging Co., under the contract, but they of about $50,000 to the loan of $4,000,000, and the St. Louis-Kansas City Short Line will be under obligation to return a cash balance Logging Co. Therefore, the payment of the bonds will improve the Co., a new company, which petitions for a $35,000,000 loan Flora position of approximately extent the to Co. of the Flora Logging cash for the purpose of constructing a 236-mile double-track line $50,000. The Flora Logging Co. will also receive title to the following feet of timber; timber lands comprising an estimated amount of 53,845,000 between St. Louis, Mo., and Kansas City, Mo. R. 5, W.; parts of parts of Sections 8, 18, 19, 20 and 26, Twp. 2, So. Tile report of the Commission approving the loan to the Sections of Section 28, part and W.; 6, 10, 14, 27, 28 and 34, Twp. 2, So. R. Carlton & Coast RR. follows: Twp. 2, So. R. 7, W. be received The Carlton & Coast RR. on May 25 1932 filed an application to the The sum of $50,000, together with the additional amount to is expected to be Reconstruction Finance Corporation, and on July 23 1932 an amended by the Flora Logging Co. from the sale of its equipment, of new and additional application, for a loan under the provisions of Section 6 of the Reconused by the logging company in the construction available new logging spurs into uncut timber lands, thereby making struction Finance Corporation Act, approved Jan. 22 1932, as amended. of timber and providing traffic for the applicant's line for future sources The Application. will years. Without assistance from these sources the Flora Logging Co. The applicant requests a loan of $556,000 for a term of three years be financially unable to construct these logging spurs. and the principal, in from the date thereof, with the privilege of repaying The timber along the present logging road is nearly exhausted whole or in part, before maturity. The purposes for which the proceeds operation of the applicant's railroad is practically at a standstill. Until of the loan are proposed to be used are as follows: recently it has been impracticable to project any new spurs into the Rehabilitation of seven miles of the logging road of the Flora uncut timber lands because of the great diversity of ownership of Logging Co $7,000 various tracts of land proposed to be served. Heretofore, the owner Payment of principal of matured first mortgage bonds 250,000 of one section of timber land seldom owned or controlled the adjoining 80,000 Purchase of 80 logging cars from the Flora Logging Co 20,000 Purchase of one locomotive sections, and the owners of some sections were in a position to block the Construction of new extension 199,000 construction of logging facilities to other sections; furthermore, owners of isolated sections would not have found it profitable to provide transTotal $556,000 portation facilities for small and disconnected tracts of land. However, The applicant states that it is unable to obtain any part of the necessary there has been effected within the last few months by means of exchanges funds from local financial insitutions, from the Southern Pacific Co., with of titles, a consolidation of the various tracts into three main areas, each which it interchanges traffic, or from any other source. of single ownership, thereby insuring a permanency of traffic when the On May 25 1932 the applicant presented an application under Secnew logging spurs are constructed. These exchanges of title were the tion 1(18) of the Inter-State Commerce Act for authority to construct the result of an agreement entered into on June 29 1931 by the Flora Logging new extension and to acquire the line of the logging company. This Co. with the owners of a majority of the standing timber. The agreement application is filed in Finance Docket No. 9439. We are concurrently further requires the owners of the timber lands adjacent to the logging denying this application insofar as it involves the acquisition of the line road of the Flora Logging Co., proposed to be acquired by the applicant, of the logging company. to grant easements for connecting logging roads to the owners of timber Transportation Properties and Operations. lands further removed from the road to be acquired. The main source of timber which will be carried by the applicant at The applicant owns and operates a single-track standard-gauge steam first will be from the timber lands owned by the Flora Logging Co., conrailroad extending from Carlton to Tillamook Gate, Yamhill County, Oreg., but a distance of 13.93 miles, with 2.34 miles of yard tracks and sidings. At taining approximately 1,900,000,000 feet of merchantable timber,upon eventually the timber lands of the other owners also will be served, the eastern terminus, Carlton, the applicant's railroad connects with the which it is estimated there are approximately five billion feet of timber. Southern Pacific. The principal commodity carried is forest products, It is urged that the acquisition of the 17 miles of logging road of the other traffic being negligible in amount. At a point near its western Flora Logging Co., their operation in common carrier service by the terminus, Tillamook Gate, the applicant's railroad connects with a branch applicant, and the construction of new logging spurs, which will be of the logging road of the Flora Logging Co., not a common carrier, which possible only through use of the money to be obtained by applying the extends westward through timber lands now practically exhausted. The proceeds of the loan to the purposes proposed, will all be of important Flora Logging Co. owns the entire capital stock of the applicant. The public advantage since it will insure an outlet for timber of all owners main logging railroad of the Flora Logging Co.; as at present constructed, 3270 Financial Chronicle Nov. 12 1932 whose lands are susceptible of being served. It is further stated that of New York, for financing of the project. The collapse of another advantage to the public is the insuring of a steady the money supply of markets in 1920 put an end to the transactions, howe,er, and funds are tin,ber for years to mule tor the mills to which the tinraer originatin g now sought from the Reconstruction Finance Corporation to resume work on the applicant's line is now saipped, some of the mills being dependent on the construction. apon the applicant far their main source of supply. The company proposes to construct a short-cut between Kansas The applicant further proposes to use $83,0J0 of the proceeds of City and the St. Louis under existing lines between those points. The shortest route now loan requested in the purchase of 80 logging trucks from the Flora Logging in existence is that of the Missouri Pacific IIIL., amounting Co. These trucks are part of 100 sets purchased new by to 278 miles. the Flora Logging Co. at a total price of $154,744, plus freight amounting Financial Problems. to $8,0J2.55, •making a total cost of the 100 sets of $162,746. The application stated that the company is unable to secure the necessary. 55, or an average per truck of $1,627,46. The price proposed to be paid funds for the construction in whole or in part. "This iinancial situation, by the " applicant is $1,000 per set of trucks. Fifty of the 100 sets originally it was said, "is the result of the collapse of the money markets in 1929 purchased by the Flora Loatig Co. were acquired during at which time this project was ready for financing. Negotiations were the year 1923, 20 in 1925, 10 in 1927, and the remaining 20 in 1928. They then pending with the financial house of Dillon Read are all-steel & Co. of New York trucks and have been maintained in excellent condition. The applicant City, and upon said collapse the negotiatikns ceased. Recent interviews states that by owning these trucks operation will be more economica with that company dev.lops the fact that l than they will not now consider by operation under lease. financing this project. The applicant also proposes to expend $20,000 of the proceeds "However," it was said, "it is the purpose of the applicant of the to designate loan in the purchase of a loccmotive in the open market. It would financial agents to act in handling the funds in repaying also to the Corporation sae $7,000 of the proceeds for rehabilitation of seven miles from the sale of applicant's securities, such of the main balances be due to fnay as logging road of the Flora Logging Co. proposed to be acquired. the Corporation after the annual payments Our denial from operation earnings and In Finance Docket No. 9439 of the application profits of applicant have been made thereon." to acquire this logging mad, as hereinbefore stated, will result in a reduction of $7,000 The application declared that the purpose in the of the loan is "to resume amount of loan which will be considered herein. construction of the double-track railroad between St. Louis, Mo., and Kansas City, Mo. Construction can begin immediate Security. ly and will set at work 20,000 men for two years' time. As collateral security for the loan, the applicant offers a first mortgage "Business men and other citizens of Missouri have expended $265,000 in upon all the property and assets now owned or hereafter acquired. By securing rights-of-way, surveying, and doing exte”si e engineering and season of our concurre it decision in Finance Docket No. 9439 deying the statistical work usual to an enterprise of this magnitude and character. application of the Carlton k Coast RR. Co. to acquire the 17 miles of The county courts of each county have granted the permits required by law. fogging road of the Flora Logging Co., the applicant's mortgage will Legislatio n was passed by the 72nd Congress and approved by President not Include any part of the 17 miles of the logging road. Hoover on April 2 1932, authorizing the applicant to construct its two As of June 30 1917, we found the final value, for rate-making purposes, bridges over the Missouri River. The project is now ready for conof the applicant's owned and used property to be $348,603. If there be summation. added the net of additions and betterments between valuation date and Services Long Needed, Contends Applicant. Bee. 31 1931, the amount becomes $399,737. The investment in road and "The uses to which the loan will be applied," continued the application, equipment as of the latter date. was shown as $468,655. The construction "is to fill a transportation need that has existed ever since the West has of the Cedar Creek extension involves an estimated capital expenditu been building up, the territory embraced re within the sphere of service of of $199,000, and the purchase of equipment would represent an investmen the proposed line having been only inadequate t ly served by branch railroads of $100,000. and lines of such excessive length, cheap constructi on and heavy grades that Relying on the fact that the applicant's railroad as extended will be the railroad service heretofore offered has been so inadequate that natural the sole means of transportation for a large timber area, and assuming development has been greatly retarded, to the detriment a revival of • the lumber trade, the applicant estimates that its of the business men, farmers, planters, ranchers and all net other shippers and persons living railway operating income for the first year of complete operation will in this part of the West and Central West. be $68,000, based upon an estimated production of 100,000,000 feet of timber "The dates upon which the funds are desired are that $3,000,000 become and for the succeeding years $145,000 based upon an estimated production available upon the granting of the loan and the same amount at the end of 150,000,000 feet each year. of each second month thereafter, or as much The applicant has reported deficits in net income in each year since 1927. as shown by the auditors' monthly statement thereof as may be required , undrawn bi-monthly balances In 1931, without any payment of interest on the funded debt, a deficit of to be available upon call of applicant, per auditors' statement." $1,384 in net income was incurred. For the period 1921 to 1931 the As security for the loan sought the railroad proposes to make a first applicant earned an aggregate gross income of $78,334 applicable to mortgage on its properties, and relies upon its ability to repay the loan payment of interest totaling $163,091. For this period as a whole, thereIn part by the application of its annual earnings, and upon the sale of its fore, after payment of interest, a deficit of $84,757 was experienced, securities to Pay the balance. or an average per year of $7,705. During the period earnings fluctuated Absence of Control of Corporation widely; for example, a net deficit occurred in 1921 of $53,134 and Cited. a net "Applicant's opinion that the value of Income in 1925 of $40,556. Net income was earned only in the the security is ample," it was years stated, "is based upon the fact that it 1924 to 1927, inclusive. consists of first mortgage upon all the property of the applicant, which will Conclusions. In construction in addition to the completedinclude the entire sum expended We conclude: right of way whose equity will be valued at $7,000,000 and upon which 1. That we should approve a loan of not to exceed $549,000 will have been expended the to the additional sum of $340,000. applicant by the Finance Corporation for a term not exceeding three years "Collectively, the entire sum, together with from each of the advances thereon for the purpose of providing funds to the equity which will then be established, will represent and aggregate pay the applicant's matured first mortgage bonds, to construct a value whose worth, because an extension of location and control of its territory, will of line and to purchase equipment, as described herein; increase in value every year." The application declared that no corporatio 2. That the applicant should pledge with the Finance Corporati n holds any control over the on company, the stock now subscribed for being $549,000 of the applicant's bonds issued under a first mortgage in the hands of business men upon its and other citizens of Missouri located in properties now owned or hereafter acquired which shall be in form satiscommunities along the right of way of the intended line. factory to the Finance Corporation; It was pointed out that the Corporation is 5. That the loan should be further secured, as to payment of both clothed will full authority to make the loan sought in accordance with principal and interest, by the unrestricted indorsement and guaranty Section 5 of the Reconstruction of Finance Corporation Act of 1932, wherein the Flora Logging Co., to be secured by a first mortgage by the it is provided that "The Flora Corporation . . . may make loans to Logging Co. upon its railroad properties, including railroad eouirment railroads . . . in process of , construction." and upon certain timber lands in Twp. 2, So. R. 5, 6, and 7, W., as The authorized capital stock of the company is described herein, said mortgage to be in form satisfactory to the Finance $70,000,000, under the laws of Missouri. Corporation. It was stated that the new railroad "will be for the convenien As stated above, two additional roads have applied ce and necessity of the territory and people, and for emsdlv as imnorf ant and outloans aggregating $39,000000, bringing the total amonnt standing is the fact that it is for the of convenience and necessity of all lines of railroad now crossing the State of loans applied for to approximately $479.000.000. Details be available to all of the present operating Missouri. In that Its lino will regarding the application of the St. Louis-Kansas City tracks on a wheelage basis in transporting theirlines, that they may use its hea‘y trid,rht and passenger trains across the State, thus reducing Short Line RR., as reported in the "United States Daily," their present excessive expense and greatly lessening the time of transit. follow: "It is indisputable," continued the apnliestio n, St. Louis Kansas City Short Line RR. "that a* very large amount of their (the railroads) former revenue has been lost through motor Authority to borrow $35,030,000 from the Reconstruction Finance truck and similar competitive agencies Corpowhose growing inroads of their ration, to be used in the corstruction of a 236-mile legitimate business has placed their lines line of new railroad in a hazardous position from across the State of Missouri from St. Louis to Kansas which there is no escape under present City, was sought in an application filed with the Inter-State Commerce Commissio t'on conditions, and the building of the proposed railroad, to the transporta n Nov. 7 by Mina of which the St. Louis-Kansas City Short Line RR., a new corporatio they will have full access, will provide them with the only n. visible escape from their present Application for permission to build the new hazardous conditions. line is now being prepared and will soon be submitted to the Commissio n for its approval and the granting of a certificate of public convenien Proposed Line Connects with Terminal ce and necessity, it was stated. Roads. "This new line connects at St. Louis and To De Electrified. railways which are owned by and connect Kansas City with the terminal with every line coming into Before securing such authority, however, the those two cities, hence the new line is new company desired to easily at the disposal of all, complete its financial arrangements for the project, for their convenience and necessity." which is to be electrithroughou fied t and the construction of which The line will pass through 40 communiti will provide estimated es. Including the termini employment for 20,000 men for a two-year period. of St. Louis and Kansas City, and will consist of 236 miles of main If Commission authority is forthcoming line double. tracked, with no branches. In addition to soon, together with the $35,shortoning tlme and distance 000,000 loan from the Finance Corporation, it between its termini, the line will be used to was said, the construction will be started immediately, and is expected to be completed of coal and mineral lands not now availab'e develop "thousands of acres by October 1934. The total estimated cog of the new project is to entire absence of transportation belittles"for commercial purposes due placed by the railroad at $35,206,000. which includes 86.392.000 for The line is to be completely electrified roadway, $3,589,000 for minor structures, $9,667,000 for track, $190,000 for most modern type of electric locomotives. throughout for the use of the buildings, $5,034.000 for large bridges, $2.760,900 for miscellaneous, $889.000 The railroads already in the territory. hut for contingencies, $1,481,000 for engineering, and $3,204,000 for proposed to be served by the new line largelywhich serve the communities interest during construcby branch connections, are tion at 6% for 5/6 time. the Alton RR., the Missouri Pacific, the Missouri-Kansas-Team, the Estimated Earnings. Wabash, and the Rock Island. The company estimates Its annual earnings at $18,069,500, of which Vicksburg Bridal' & Terminal $1,551,500 will be in through passenger service and Co. $146,000 on local The Vicksburg Bridge & Terminal Co. has service, the remainder being in f•eight, express and mail. asked the Inter•State Commerce Commissio n's approval of a $4,000.ro0 loan The company was incorporated Nov. 28 1924, under the laws of the from the Reconstruction State Finance Corporation. It was proposed to nnnly the proceeds of the loan to of Missouri, and negotiations commenced thereafter with Dillon Read & Co., liquidation of the company's bonded indebtedness and replace a temporary Volume 135 footings, under timber trestle with a permanent steel structure on concrete requirement of the War Department. The ecr:npany also applied for authority $4,000,000 of its first to issue and pledge with the Finance Corporation mortgage 6% bonds as security for the proposed loan. Farm Co-operatives Now Existing Found in Excess of 12,000—Total of 8,242 Shown to Have Discontinued in Survey Conducted by Federal Farm Board. A study of the records of 20,697 co-operatives marketing associations of farmers shows that 12,455 were still in existence at the beginning of this year, while 8,242 "had passed on, each having made its contribution to the co-operative movement," according to a review of the development of co-operative marketing made public by the Federal Farm Board. In noting this Oct. 31, the "United States Daily further said: A survey In 1931 showed 11,950 associations active enough to be counted as "going concerns." it was stated. The review beginning with the first efforts of farmers at co-operation, shows a steady rise in the number of associations operating up to 1923, since then the number remained nearly constant up to 1930. It reveals the shifting importance of associations dealing in the various commodities, the period of greatest activity in organization, and other factors affecting the movement. The following additional information is given in the report: The review takes in all associations of which there is record, but the figures are conservative since some co-operatives were organized, functioned, and dissolved, leaving only local records and without being noticed outside their own local regions. These often left no obtainable records. The figures presented go back 60 years or more. Grain operatives lead in number of associations, membership, and estimated volume of business, according to a comparison for 1915. 1925 and 1930 Dairy co-operatives rank second in all three phases with livestock cooperatives third, fruits and vegetables fourth, cotton fifth, and tobacco sixth. These rankings are a result of numerous shifts in the last 15 years, however. In 1915,for instance, there were more dairy than grain co-operatives, while fruit and vegetable co-operatives have advanced from sixth in membership in 1925 to fourth in 1930. Tobacco co-operatives ranked fourth in volume of business in 1915 but sixth in 1930. Former President Coolidge Sees Rail Data Ready In Two Months—Denies Report Will Be Issued In Ten Days—Committee Meets. Former President Calvin Coolidge denied on Nov. 9 that the National Transportation Committee will be able to have its report ready within the next ten days and stated that at least two months more would be required before the committee could complete its findings. Mr. Coolidge is Chairman of the committee, which is making a survey of the railroad industry and general transportation conditions with a view to proposing methods for rehabilitating the credit of the railroads. We quote from the New York "Herald Tribune" of Nov. 10, from which the following is also taken: The complete personnel of the committee met here yesterday afternoon in the Empire State Building. In addition to Mr. Coolidge. Bernard M. Baruch, Clark Howell. Alexander Legge and Alfred E. Smith arc members of the investigating group. All of these men were present yesterday. Dr. Harold G. Moulton, President of Brookings Institute in Washington, reported to the committee some of the preliminary data which he has obtained as its chief investigator. Conclusions Not Reached. "The National Transportation Committee met to-day to formulate IM plans," stated Mr. Coolidge, after the meeting. "We received reports on the progress of the investigations. The work Is just beginning and of course no conclusions have been reached," he said. "We plan to ask various groups interested in the subject of the Investigations to submit suggestions in writing." the former President continued. "It will be at least two months more before we can expect to make any report. We are planning to have meetings in the early part of Decembar, but whether we shall have any before that Ls not certain. "What we want to get as 80011 as we can are the reports from the various groups that are interestisi. Of course it will take some time for the groups to formulate their reports to us and probably in the meantime we will not have any meetings." Mr. Coolidge stated that the Joint Committee of Railroad Presidents and representatives of the National Highway Users' Association had been organized with his knowledge and approval. This committee is endeavoring to arrive at compromise measures representing the previously opposing viewpoints of both the groups which it represents. Mr. Coolidge said that like the National Transportation Committee, this committee would devote itself to a fact finding survey from which it would draw specific recommendations. Coolidge Group to Get Data. Both the data compiled by this committee and the recommendations made by it will be turned over in the form of a report to the Collidge commission. It Is expected that the Co lidge group will adopt in the main the proposals of this committee. Other groups working on special phasm of the transportation problem and who will turn over their findings to the Coolidge committee are that of the United States Chamber of Commerce, the Investment Bankers Association of America, the National Association of Mutual Savings Banks. the American Bankers Association. shippers associations and organizations representing investors in railroad securities. Practically all the leading insurance companies in the country have also sponsored the Co lidge committee and some of them will turn over reports by their experts. The original list of sponsors of the Coolidge committee is being supplemented from time to time with the names of insurance companies, shippers organizations, commercial and manufacturing organizations, universities and charitable institutions, all of whom feel that the committee will be able to contribute to a solution of the railroads problem. 3271 Financial Chronicle Selected Income and Balance Sheet Items Steam Railway for August. of Class I The Bureau of Statistics of the Inter-State Commerce Commission has issued a statement showing the aggregate totals of selected income and balance sheet items of Class I steam railways in the United States for the month of August. These figures are compiled from reports representing 164 steam railways, including 17 switching and terminal companies. The report in full is as follows: TOTALS FOR THE UNITED STATES (ALL REGIONS).a Income Items. For the Month of August 1932. 1931. For the Eight Months of 1132. 1931. 5355.294.104 Net railway operating income $28,567.755 $56.593.045 $153.491.886 14.350.915 16.572 289 133.876.924 172.037,286 Other income 542,918.670 $73.165 334 3287 388.810 8527.331,390 Total income 11,144.115 11.211.524 87 976.923 88.349.165 Rent for leased roads 44,833,369 43.949.476 356.091.025 353.129.292 Interest deductions 2.011,833 17.193.522 17 081,661 2,146.792 Other deductions 558.124,276 857.172833 5461.261.470 5458.560,118 Total deductions d15,205,606 15.992,501 d173,892,660 68,771,272 Net Income Dividend declarations (from Income and surplus): 10,968,488 31.462 949 53.220.638 192.335,660 On common stock 3 214 950 13 177.929 37.256,076 2.874.596 On preferred stock Balance Sheet Items. Balance at End of August. 1932. 1931. Selected Asset Items-Investments in stocks, bonds, &c., other than those of affiliated companies 8777.209,478 8837.432,105 ' Cash Demand loans and deposits Time drafts and deposits Special deposits Loans and bills receivable Traffic and car-service balances receivable Net balance receivable from agents and conductors Miscellaneous accounts receivable Materials and supplies Interest and dividends receivable Rents receivable Other current assets 5267.429,457 $373,649,744 49,032,029 37.766.123 77,032,147 28.565.856 60,195,550 29.691,359 8.763,814 13,927,149 63,443.632 44,958.131 52.093.756 38,876.309 170.665.048 148.938.270 397.447,493 338.120,860 39,544,286 36,123 901 4.805,658 2.789.764 12.705,127 7,539.353 Total current assets Selected Mobility Items— Funded debt maturing within six months_b $994,724,532 $1,309,378,284 Loans and bills payable Traffic and car-service balances payable Audited accounts and wages payable Mis ellaneous accounts payable Interest matured unpaid DI ddends matured unpaid Funded debt matured unpaid Unmatured dividends declared Uninatured interest accured Unmatured rents accrued Other current liabilities 5276 712 822 5194.519,880 89,666,668 61.568 712 266,156.179 195 873 065 70,883,230 75.496.995 142 697,121 157 485.609 18,478,773 4 720.344 41.888.550 .50616.564 25.871,068 13 850.818 113 749,272 112,501.860 30 062.612 29 885.594 19.764.933 16.772.598 $90,143,934 877.192,357 8995,484,981 81,011,788,286 Total current liabilities for inclusion in a Complete data for the following Class I railways not avallcb'e Pacific Lines in these totals' Canadian National Lines in New England. Canadian Maine, and Canadian Pacific Lines in Vermont,, b includes payments which will become due on account of principal of long-term debt (other than that In Account 764. funded debt matured unpaid) within six months after close of month of report. d Deficit. Railroads Would Retain Rate Rise—Decide to Ask Continuance of Freight Surcharges. The following announcement was issued Nov. 10 by the American Railway Executives: The Association of Railway Executives, representing approximately 95% of the mileage of the class 1 railroads of this country, at a meeting to-day at the Waldorf-Astoria Hotel, decided to ask the Inter-State Commerce Commission to continue in effect the increase in fret -ht rates allowed by the commission In ex parte 103. Under the decision of the commission, the increased rates are automatically terminated on March 31 1933. unless the commission should otherwise order. The Association of Railway Executives designated the committee of executives which formally handled the ori;inal application of the railroads. to handlE. In co-operation with the general counsel, the request for a continuation of the present rates. This committee is composed of J. J. Pelley, President of the New Haven; H. A. Scandrett, President of the Milwaukee, and W.R. Cole, President of the Louisville & Nashville Alfred P. Thom is General Counsel for the Association. In reporting the foregoing the New York "Sun" Nov. 11 further states: Although not stated in the announcement, It Is the desire of the carriers to obtain extension of the rate increases without having to continue operation of the marshaling and distributing plan through the Railroad Credit Corporation. This plan was imposed by the Inter-State Commerce COMMISSion as a condition for granting the increases which went into effect on Jan. 4 1932. Since that time the Reconstruction Finance Corporation has been organized, and a majority of the carriers favor retaining for their own use the higher revenues under ex parte 103, leaving weak roads to Justify their right to live through applications to the Reconstruction Finance Corporation. Present Rail Wage Schedule May Be Extended. Definite indications that the railroads will be willing to continue the present scale of wages for unionized employees for six months after the current agreement with the unions expires on Feb. 1 have been revealed in a letter from W. F. Thiehoff, heading the companies' committee, to A. F. Whit- 3272 Financial Chronicle ney, Chairman of the Railway Labor Executives' Association. The "Journal of Commerce" Nov. 7 further states: The suggestion included the proposal that the renewed wage agreemen t could be terminated by either the railroads or the unions after the six months with 30 days' notice. Representatives of the railroads and the unions are to meet in Chicago on Dec.10.for a series of conferences in advance of the expiration of the present agreement which has brought a 10% wage cut from the levels prior to Feb. 1 1931. The Chicago meetings are called almost two months in advance of the expiration of the agreement so that wages will not automatically be restored the first of February. A proposal of the railroads to serve notices of a 20% wage cut from the levels prevailing before the present agreement was refused by the unions. President Hoover, upon being appealed to by the unions, asked that further discussion of the new cut be postponed until after Jan. 1, but the several conferees are meeting 20 days earlier than that date in order to have more time for negotiations. The six months' extension now proposed is considered to be an alternative suggestion by the railroads. Thiehoffs Views. Mr. Thiehoff's letter to Mr. Whitney, quoted in the "Railroad Trainman," publication of the Brotherhood of Railroad Trainman, said in Part: "We have received and given consideration to your reply of Oct. 14 to our letter of Oct. 13. You have placed interpretations upon our letter with Which we do not agree and we are also unable to agree with the suggested procedure as outlined in your letter. "As a means, however,of arriving at a solution of our immediate problem and to provide a method of procedure which will disturb present condition s as little as possible, we propose the following: "The conference committee of managers proposes that the railroads represented by it will agree to withhold the service of notice of any reduction in present basic rates of pay pending a negotiation referred to below, provided that the members of the Railway Labor Executives' Association will undertake to proceed forthwith to ascertain in accordance with the laws of their respective organizations whether they will authorize representatives to enter into a negotiation with this conference committee of managers beginning at approximately Dec. 10 1932, upon the proposal made by this conference committee of managers, which is that the present agreemen t providing for 10% deduction from pay checks shall be extended from its present expiration date of Jan. 31 1933. for such a period and in such a manner as may be agreed upon in said negotiation." Eastern Railroads Restrict Free Passes. The use of free passes on railroads in Eastern territory will be restricted on Jan. 1, according to an announcement, as follows, issued Oct. 31 by the Committee cn Public Relations of the Eastern railroads: As a result of studies which have been made under their direction, it has been announced by the Presidents of substantially all of the major railroads in Eastern territory that: Effective Jan. 1 1933 it will be the purpose of such carriers to issue free or reduced rate complimentary or exchange transportation only to directors, officers and employees of railroads who are carried regularly and in good faith on the payroll of the railroad for account of which such transportation is rogue,ted and who devote substantially all their working time to railroad business. The New York "Journal of Commerce" of Nov. 1, in noting the promulgation of the new ruling, said: This move marks the first step taken by the carriers to restrict free transportation which had heretofore been awarded as a courtesy to all railroad employees and officers, regardless of the carrier they belonged to. This practice had come in for much criticism recently, espedally since passenger traffic losses have been mounting since 1920. Passes to Be Limited. Under the new ruling only full-time officers and employees of the carriers who are carried regularly on the payroll of the railroad for the account of which such transportation is requested, add who devote practically all their time to railroad business, will be given passes. Carriers in Western and Southern territory are expected to take similar action soon. It is understood that the heads of practically all the large railroads of the country had come to an understanding In this direction before the Eastern carriers made their announcement. Those rules under which dependents of railroad employees may obtain free transportation, as well as the rules affecting clergymen and certain charity workers who, under certain conditions, obtain rebates and passes, will not be changed. Effective Jan. 1. Under the new ruling directors and officers, regardless of rank, who do not devote nearly all of their time in the service of the railroad, will not be entitled to free transportation. These individuals will be restricted to passes on their own lines, or lines with which their railroad is affiliated. Great Lakes Navigation to Be Closed on Nov. 15— Some Lighthouses and Markers to Continue for Two Weeks. According to advices from Detroit, Nov. 6, to the New York "Herald Tribune" navigation on the Great Lakes for 1932 will be cl3sed officially on Tuesday, Nov. 15, when the Lighthouse Service plans to begin the removal of all the buoys and lightships from the Great Lakes and tributary waters in preparation for freezing weather. All navigation markers will have be( n removed from the Lakes on Dec. 7, said the account, which also stated: Working from the more exposed portions of the Lake, the lighthouse tenders will first remove those buoys which can best be spared by navigators. The removal of the last of the buoys will be delayed as long as possible for the use of belated vessels, and the four lightships which guard the dangerous reefs in the northern part of Lake Michigan and in Green Bay will not be taken into port until the first week of December. Last of the lightships to be withdrawn will be the vessels on Lake Huron and Lake St. Clair which guard the approaches to Detroit. In removing the keepers from the more isolated lighthouses, considerable danger is frequently encountered. An unheralded cold snap often forces the keepers to reach shore over newly-formed ice. After preparing their stations so that the minimum of damage will be done during the long Nov. 12 1932 and severe winter, the keepers of certain designate d stations prepare the unattended winter light, of sufficient candle power to aid mariners who have been delayed or have been caught in the ice. The shore lighthouses are the last to dim their lights, and even when it seems apparent that the last vessel has made port a careful watch is kept and the light immediately relighted or a fog signal started should a ship be sighted. President Hoover Sees Need of Working Out of Proble m of Regulation of Transportation by Water— Injuries to Traffic Incident to "Cut-Throat' Competition. In a letter read before the Atlantic Deeper Waterways Association Convention, which opened in Philadelphia, damaging our other great arm of transportation, thatis, the Oct. 27, President Hoover stated that "cut-throat com-• petition is not only injuring waterway traffic itself but it is railways." The President wrote thus to Mayor J. Hampton Moore, of Philadelphia, President of the Waterways Association, his letter also statin "we must work out the problem of regulation of transportation by water, because the cutthroat competition now going on in certain cases is making impossible the entry and maintenance of adequate services upon these channels." The President's letter follows: The development of the natural water channels with which the United States is so richly blessed has for many years been an active interest with me. They provide an economical means of transportation of bulk goods that is of immense benefit to farmers and the heavy industries. These benefits reflect to the whole nation in increased buying power of the agricultural communities and in lessened costs to the consumers. Twice as much work on these inland waterways has been accomplished in the last three years as in any comparable period in our history. We have new problems before us in the matter of waterways. We must work out the problem of regulation of transporta tion by water: First, because the cut-throat competition now going on in certain cases is making impossible the entry and'maintenance of adequate service upon these channels. And, second, this cut-throat competition is not only injuring waterway traffic itself, but it is damaging our other great arm of transportation, that is, the railways. There is a place for both of these in our system, and their development can be made of mutual interest. A study of these problems by your association would be a contribution to the proper development of the waterways and the securing of the advantages which they offer. I wish you success in your labors to promote the development of these great national services. Five States Notify Inter-State Commerce Commission of Change in Freight Rates —IntraState Charges To Be Advanced to Inter-State Level Prescri bed by Federal Commission. Five States have officially notified the Inter-State Commerce Commission that they will "promptly" advance the freight rates on certain commodities moving intra-State within their respective borders, to a level with the interState rates prescribed by the Commission in the so-called "Fifteen Per Cent Case," according to information puf lie by the Commission Nov. 1. The "United made States Daily" from which we quote added: By its ruling in Docket No. 25135. "Increase s in Intrastate Freight Rates," the Commission agreed with the railroads that the :efusal or. the State regulatory commissions to permit increases in intrastate rates in line with those advanced for inter-State traffic had resulted in discrimination against inter-State commerce. The States were given until Nov. 1 to notify the Commission that they will "promptly" readjust the intra-Stat e rates to the inter-State level, failing which orders would be issued by the Commission requiring compliance with its ruling. Six Slates Heard From. At the close of business Nov. 1, however, only the.States of Arkansas, Nebraska, Oklahoma, Texas and Utah had made such official notification, although Kentucky filed a petition Nov. 1 asking for further hearing in tile proceedings. The States of Idaho. Louisiana, and Montana have yet lobe heard from, and while some grace is usually given if the notifications are in the mail before midnight of the date set for the filing, it was explained, failure to respond within a reasonable time will leave the Commission no alternative but to issue an order under Section 13 ot the Inter-State Commerce Act requiring compliance with its decision. Petition by Kentucky. The State of Kentucky, in its petition for a further hearing in the proceedings. recited a number of exceptions to the n's report and declared that "no justification is shown why theCommissio principal industrial pursuits,such as coal mining and agricultural pursuits, such as tobacco farming, of Kentucky, should be burdened with these emergency charges, while the principal industrial pursuits of other States, such as petroleum production (in direct competition with coal) and furniture manufacture: and agricultural pursuits such as grain and stock farming should be exempt: and the Commission will err if it should make the threatene d order, under the circumstances." It was further contended by Kentucky that the Commission erred in using its discretion as to what inter-State commoditi es should bear these emergency charges while denying intra-State authority like discretion without having determined that either the inter-State or intra-State rates would be just and reasonable. It was pointed out that if the Commission enters an order requiring that the intra-State rates be changed in compliance with the Commission's decision, such order will be "an unwarranted and unjustifia ble invasion of the domain and rights of the State of Kentucky." It was charged that the intra-State rates in Kentucky, with few "isolated exceptions" already are higher than the intra-State rates in neighboring States, even with the addition of the emergency charges in those States. Volume 135 Financial Chronicle Wage Cut Accepted by Tugboat Workers in New York—Agreement Affects 4,000, Ends Strike Threat and Assures Peace for at Least Six Months. A new wage agreement for the 4,000 men employed by tugboat lines operating in the Harbor was signed on Nov. 7, by representatives of the men and the owners, meeting at the New York Towboat Exchange, 17 Battery Place. According to the New York "Times" of Nov. 8, which reports this, peace was thus assured for six months after a series of conferences held in the last four weeks at which threats of a strike to tie up harbor traffic were conveyed to the employers. The "Times" continued: Despite the inability of the two groups to reach satisfactory terms at the earlier meetings, both sides indicated that everything possible would be done to keep the tugboats operating and assure the safe movement of transatlantic liners to and from their piers and the movement of freight between the various terminals in the port. At yesterday's meeting both sides agreed to make concessions and terms were settled after several hours of discussion. Under the new contract the licensed employees, including captains, pilots and chief engineers, accepted a reduction of $10 a month and the unlicensed employees, including deckhands, cooks and other workers, were reduced $5 a month. The allowance of 60 cents a day for food for the men on the boats was reduced 10 cents a day. The contract which expired Oct. 1 will be retained with these exceptions. The employers demanded originally that the licensed employees be reduced $20 a month and the unlicensed men $10 a month, and that the working day, which has been 7 a. m. to 5 p. m., be changed to 5 a. m. to 7 p. m. This would not have meant an extension of the number of hours of work, but would have limited the time during which employees would have had an opportunity to receive overtime wages, which are 50% higher than the regular wages. The employers also demanded that the allowance for food be reduced to 65 cents a day,and that a fee of$2 paid to a man on the tug who goes aboard an unmanned lighter and handles the rope be eliminated. When these demands were first submitted the men replied that they could not live on smaller wages than those paid during the last year, when an average of only 300 men worked six days a week and about 2,000 worked at intervals, ranging from two to five days a week. The men threatened to strike if the employers' demands were pressed, but at a meeting Sunday evening they authorized a conference committee to accept the'best agreement possible without strike. The old agreement expired Oct. 1 and the new one will be effective as of Nov. 1 and run until May 1 1933. and thereafter unless one group asks for a reopening of the matter before May 31. The maximum salaries under the new scale will be $240 a month for tugboat captains, $230 for chief engineers, $201 for pilots and masters and $75 to $90 for firemen. The pay of the dockhands and other workers will average about $85. Captain William A. Maher of the Associated Marine Workers and Joseph H. Moran, President of the Moran Towing & Transportation Co.. acted for the employees and owners, respectively, during the negotiations. $33,000,000 All-American Canal Los Angeles Flood Control 15,000,000 District Pine Canyon Dam, Pasadena 10,000,000 Navy Dirigible Base, Sunny5000,000 vale 3273 Army Bombing Base, Mann $4.000,000 County 165,000,000 Hoover Dam Los Angeles Water DIstriet_220,000,000 30,000.000 Golden Gate Bridge S. F.-Oakland Bay Bridge__ 75,000,000 It is stated that supplementary figures on employment indicated that at the peak of activity the Metropolitan Water District, Los Angeles, would employ 15,000 men; San Francisco-Oakland Bay Bridge, 6,000; Golden Gate Bridge, San Francisco, 1,500, and Hoover Dam, 3,000. Except for the latter, where more than 3,400 men are now employed, most of the projects are not expected to reach peak figures before six months. It is added: Some undertakings . . . in other parts of the West are: New Federal building, Spokane, $790,000; city power plant, Seattle, $1.500.000; public market. Portland, $1,400,000; special highway construction, Utah, $2,500,000, as well as large reservoir and conduit systems, entailing some 20,000 man days of labor in that State and approximately 30 post office buildings, each costing upward of $100,000. already under construction or which will be started immediately in cities within the area. Some indication of the importance of the construction work to allied industries is found in the reports on the San Francisco-Oakland Bay Bridge project, which at the peak is expected to employ an additional 2,300 men In factories and shops within the area, aside from those employed in Eastern and Mid-Western steel mills and factories. Economic Policy Commission Finds Economic Changes Affecting Banks Preferable to Legislative Reforms —Eliminations of "Uneconomic Units" by Suspensions, Mergers, &c., Viewed As Strengthening Banking Structure. A stronger banking structure has already been developed through the elimination of "uneconomic units" by suspensions, mergers and voluntary liquidations with greater thoroughness and effectiveness than could be accomplished by any of the sweeping plans proposed for reform through legislation, the Economic Policy Commission of the American Bankers' Association declares in a study made public in New York on Oct. 25. In 11 years, the report finds, the number of American banking institutions has been reduced by these means from over 30,000 to under 20,000 and their average financial resources doubled. Although many good banks and bankers were ruined by conditions in the depression for which they were not to blame, the institutions eliminated during the past decade, it says, were mainly among banks that should never have been granted charters, Oklahoma Corporation Commission Issues Order to that were improperly conducted or for which sufficient business to support them no longer existed in their localities. Permit Increases in Intra-State Freight Rates. The following from Oklahoma City, Nov. 1, is from the The report says: There have been a salutary elimination of undesirable elements and causes "United States Daily": of weakness that reacted against all banking, a strengthening of the banks The Oklahoma Corporation Commission has issued an order, effective Nov. 15, amending its previous order so as to permit increases in intraState freight rates to the 161411 of the increases authorized by the InterState Commerce Commission in the 15% case. The State Commission had refused to permit Increases on petroleum oils and refined and other gasolines when such commodities are moving for further manufacture; on crude oil; on cottonseed products, on certain animal and poultry feeds, and on less-than-carload traffic handled at a rate of $1.04 or less. Upon consideration of this case, tpe Inter-State Commerce Commission held that increases should be permitted except in the case of the intra-State rates on oils, refined, and on other gasolines and fuel, road and petroleum residual oils when moving for further manufacture. Canadian National Railways Show Increased Earnings. Advices as follows from the .Department of Commerce were issued on Nov. 5: Net earnings for the Canadian National Railways for September were registered at $2,828,833 compared with $1.387,081 for the corresponding month of last year, an increase of $1.441,752, according to a report to the Commerce Department from Trade Commissioner E. G. Sabine, Montreal, Canada. Gross revenues of the railways, however, were more than $1,000,000 lower than the same month in 1931, it was stated. This particular showing for the net earnings was reported accounted for largely by the reduced operating expenses and the heavier grain movement of recent weeks. For the nine months from Jan. 1 to Sept. 30 1932, the net revenue of the system totalled $6,200,117 compared with $3,565,770 in the corresponding period of 1931, it was pointed out. 300 Large Construction Projects to Give Employment to Thousands in Far Western States—Entail Expenditure of Nearly $800,000,000. Eleven States of the far West are planning activity on some 300 large construction jobs, entailing an estimated expenditure of nearly 8800,000,000, it was announced on Oct. 30 by the Bank of America, Pacific Coast branch banking system. Reports from cities of the area, it is stated, show that practically all work has been financed and construction has started, or will start, at an early date. Outstanding projects in California where much of the construction work is centered include: that are left and a raising of the new prevailing standards of character and soundness as measured in terms of average capital, resources, available volume of business and qualities of management. The average bank in 1921 had the activities of only 3,500 persons as the basis of its business, while to-day there are more than 6,000 persons per bank, it brings out, adding that the capital funds per bank then averaged $205,000 and the deposits $1,250,000, while the average,for the present structure are $420.000 and $2,500,000. or twice the former figures. The total capital funds for the 30,800 banks of 1921 were $6,360.000,000 and to-day they are approximately $8,500,000,000 for 19.500 banks—a readjustment downward from the high point of $10.000.000.000 reached In 1930. No arbitrary dimensions can be stated for the banking plant required by the nation, but probably these readjustments have gone far in bringing it in line with a sounder relationship to the actual needs of the country than has existed in over a decade and the present number of banks and volume of banking capital can take care for some time to come of the expansion in business which is to be expected. Over-competition among too many banks and dispersion of capital among toe large a number of small, high-cost units have been largely responsible in the past for unsatisfactory banking developments. The report says it is not claimed that all desirable readjustments have been perfected, granting that some changes in existing banking laws to bring them up to date with economic changes and correct features that experience has proved undesirable are in order. The report further says: Such changes should be given deliberate consideration and based on practical banking experience and conditions, not on theoretical or prejudiced views. For the greater part, however, the further strengthening and readjustments desirable in the banking structure will come in due course from other than legislative sources. It is expected that consolidations , and voluntary liquidations will continue to eliminate where and as required such uneconomic units as still remain and will be the chief means of correction, as distinguished from the destructive forces of bank suspensions. In places which have been deprived of needed bankinT facilities they should be restored by reopenings, establishment of branches where State laws permit or organizations of new banks where fully justified from all points of view. These processes present the most effective and desirable means for bringing the banking structure, both as to the number, capital and distribution of its units, into closer contact with the economic needs of the nation. The looseness of this contact was created in the past large', as a result of former competitive and ill-considered chartering practices on the part of both State and National banking authorities. It is a cardinal requirement for insuring sound banking that these mistaken policies shall not be repeated. Full consideration of the advisability of granting new charters can be exercised under existing laws. both State and National. There is no need for any major legislative enactment to prevent the return of the evils of over-banking or the entry of unauallfied persons into the banking business. 3274 Financial Chronicle Nov. 12 1932 External factors aiding in bringing about "a sounder standards of liquidity. It was against this precarious position that the situation on more fundamental lines than could be provided full force of the public panic of distrust against the banks struck. by laws," as cited in the report are the "marked subsidence Those who blame the impairment of banking liquidity on of public fear in regard to banks, a reduction in withdrawals changed methods "premeditatedly adopted by bankers and for hoarding, a falling off in runs, a gradual revival of sound would curb them by law would strike at symptoms rather industrial and mercantile transactions as a basis for new than the disease itself," the report declares. It adds: obligations, a return toward normal market values in the Those who hold that Increased investments by commercial banks and investment securities that form the basis of so large a part. the undesirable decline of liquid commercial loans should be corrected by outlawing investment activities so far as the commercial banks are of bank assets and a gradual improvement in the ability of concerned , apparently have the theory that engrossment of bankers in borrowing customers to meet past obligations." Investment affiliates, distribution of securities and building up large Economic conditions, it says, by thus reversing their Investment portfolios for their banks caused neglect and shrinkage of pure commercial bank credit. The reverse may be the truth. Shrinkage of trends are exerting opposite influences from those "by which demand from business for accommodations on a commercial credit basis many banks were previously wrecked." Full considera- and its transfer of a large part of its working capital requirements from bank loans to security issues naturally caused bankers to increase their tion is also to be given to the emergency aid to banks ex- Interests along investment lines to keep their facilities and growing retended by the Reconstruction Finance Corporation, the sources employed. report says. It adds: If, with return of normal conditions, business methods The great majority of the aided banks were return to their former standard credit practices, the chief cause well managed, intrinsically sound institutions under anything like nortnal conditions and capable of of impaired liquidity will be remedied or reduced, and likerendering useful services to their communities. There developed a wholly wise business will find a better capitalized and better managed artificial situation, against which no banking structure could be wholly proof In all its parts without special aid, that was created group of banks ready to serve it than under pre-depression by public conditions and public acts and called for public aid and a change of public atticonditions, the report says. Continuing the report, said: tude. The Reconstruction Finance Corporation loans were the answer If to this situation. These loans brought the powers of the nation's public credit to the support of the banking structure, which is a semi-public instrumentality. We would particularly emphasize that this in no way constitute d "banking relief" in the sense of helping banks make money with public funds or enabling them to pass losses on to the Government. Advances are purely loan ton the basis of intrinsically good assets with ample margins of security and ample elements of responsibility on the part of the borrowers and should ultimately be repaid in full. The change of public attitude has relieved pressure against the banks and the turn in the bond market has materially aided in readjusting their positions, justifying the theory on which the Reconstruction Finance Corporation was based and going far in making possible a real start in liquidating the temporary emergency credit structure erected by it with public funds in the public interest. In the case of some banks their part in taking down this structure by repayment of their loans can be carried out promptly, while in others doubtless the longer term of credit aid envisioned in the Reconstruc tion loan plan will be necessary. However, we would emphasize that in the interest of the banks themselves it is highly desirable to free the structure as rapidly as possible of all leaning on public support asbanking fast as general and individual circumstances permit. Changed Business Methods Regarded as Main Factor _ in Non-Liquid Banking Situation Which_ Had Its Inception in 1929 According to Economic Policy Commission of A. B. A. Scarcity of financ.al transactions of a type creating pure commercial credit, caused by changed business methods rather than voluntary banking policies, was a major factor in the non-liquid banking situation that was "abnorm ally vulnerable to the general business reaction" which began in 1929, the Economic Policy Commission, American Bankers Association, said in a report made public Oct. 27. Banking readjustments that have now been made and a return by business to former financial practices are more effective means for restoring desirable conditions than "too much regulation by means of radical legislation," it says. Loss of liquidity by the commercial banking credit structure has "imp::rtant social and economic aspects and is not merely a banking technicality," the commission says, defining banking liquidity as "maintenance of an adequat e position, by the convertibility of earning assets into cash through the automatic maturity of loans and discounts and the marketability of other paper and investments without loss, to keep a bank amply prepared at all times to meet withdrawals of deposits or make adjustments in the employment of its funds." The most satisfactory method, says the Commission, is an ample volume of eligible commercial loans and commercial paper, and, secondarily, investment in Federal Government ind other high grade securities with stable market conditions, it says, but points out that "this ideal situation was very materially disrupted by circumstances over which bankers had little or no control." Widespread changes in the financial habits of business, which moved its goods faster and financed working capital needs more largely with security issues in place of bank credit, resulted in a decline in the demand for commercial loans and supply of commercial paper, causing "technological unemployment for commercial banking credit," the commission finds. The report also said: The enforced search for other employment was reflected in an increase In investments, a rise In loans on real estate, often taken as additional collateral to secure weakened loans, and expansion in loans on securities dur ng the stock market boom when many desirable customers were insisting on such accommodations. Always there continued a steady drop In the ratios of pure commercial credit. At the very time there prevailed to a serious extent this direct debasement of the liquidity of the credit structure of the banks, their position was further rendered less liquid by collapse of market values of investments and real estate. This disruption in conditions under which banking was operated rendered it absolutely Impossible for it to maintain Its former there does not develop the hoped-for restoration of the part played by pure commercial banking, and a less liquid type is to become permanent, the present structure will be better qualified than before to adapt itself to this situation without need of too much regulation by statute. It will require closer adaptation of the investment portfolio to the deposits side of a bank's position In co-ordination with Its commercia l loans than generally existed when the depression fell upon the country. It will require, also, a higher development of the investment faculties of our commercial banks, rather than their suppression by law. These are largely managerial problems to be handled by the banks themselves and cannot be solved by means of radical legislation. Banking Unification Through Abolishment of State Banks Opposed by Economic Policy Commission of A. B. A.—Instead Would Extend Scope of Federal Reserve System Among State Banks. Unification of commercial banking operations by extending further the scope of the Federal Reserve System among State banks, rather than by doing away with the State banking systems and forcing all commercial banks under Federal charter as proposed at Washington, is advocated by the Economic Policy Commission of the America Bankers n ' Association in a report issued in New York on Oct. 30. It points out that the ratio of cominercial banking activities conducted by members of the system comprising both State and National banks, has risen in recent years to nearly 80% of the total volume, while the percentage of non-members has decreased. Improvement in banking conditions, it declares, can be attained without sacrificing "the dual banking system of optional State and National charters which, in the banking field, stands as just as great a defense against undue central government control over the financial liberties of our people as the dual system of State and Federal governmental jurisdictions represents in respect to their political liberties." The report says in part: -it is the theory of proposals for unification that a single, unified system for the country as a whole under Federal Government supervision would make for better supervision, a more compact and better co-ordinat ed banking structure, a nationally higher standard of management for all banks and a credit mechanism that would he subject to greater control in the National Interest. While we are wholly In sympathy with the basic purposes in this argument, we believe they can be attained tinier the present dual system of State and National charters, that this dual system has additional virtues In itself, particularly along the lines of maintainin g local financial Independence and credit sympathies free from the domination of • ever-centralized Federal Government, and that the dual system should be strengthened rather than destroyed. "Material enlargement of the sphere of the Federal Reserve System is particularly favored by the reduction of the banking picture to Its present dimensions and character. In 1921. 65% of all banks In the commercia l field were not Federal Reserve members. The great bulk, however, of the activities in that field were within the system since members represented 71% of the deposits and loans and Investments. This extensive unification existing even then has been carried further by subsequent developme nts. In June 19:31 the ratio of outside banks had fallen to 62%, while 75% of the commercial banking capital funds were In the system, 79% of the deposits and 78% of the loans and investments. This is a distinct move in the right direction. The changes this has involved have promoted unity In the operating aspects of our commercial banking system embracing both State and National banks, without abrogating their respective charter rights or nullifying the advantages of our dual system. "With these developments pointing the way, the end to be sought is not destruction of the dual banking system, but promotion to the utmost of further developments along the lines Indicated. As a condition developed In which the greater portion of banks were of a size and character to qualify them for membership In the Federal Reserve System, and as the system by Its demonstrated advantages of membership extended its scope, we would approach in the dual system itself, without sacrificing its own peculiar virtues, all the virtues claimed for a unified system. "It Is true the Federal Reserve System's record has in no sense shown It to be a panacea for banking difficulties or an impregnable defense against depression. Many banks have failed within the system as well as outside. However, the record for the banks in the system was materially better than for those outside. Moreover, although the facts indicate that greater strength is to be desired for banks both inside and outside. is It our conviedon that the system constitutes the most promising instrument ality for Volume 135 Financial Chronicle building up the kind of banking structure that is to be desired. We are in favor, therefore, of a broadening unity in the functioning of our commercial banks both State and National. along sound co-ordinated lines under the leadership of an ever improving Federal tteserve System" State Committee on Mortgages Created in Ohio— County Organizations to Be Set Up to Aid Farmers and Home Owners, Governor Announces. Columbus (Ohio) advices, Nov. 3, to the "United States Daily" stated that Governor George White on Nov. 1 announced appointment of a State-wide Farm and Home Protective Committee to set up organizations in every county to co-operate with farmers and home owners burdened with mortgages on their property maturing or past due. The Governor is quoted as follows: "The purpose of these organizations is to bring together the mortgagor and mortgagee of property about to be foreclosed and attempt to work out some plan of refinancing whereby the property owner may continue in possession for sufficient time to work out his problem. Sympathy Expressed. "I have every sympathy with the man who has worked hard for years to acquire a farm or home and now, through no fault of his own, but due solely to present economic circumstances, loses it and sees the results of a .lifetime of effort wiped out. When the manufacturer, merchant or the operator of a commercial enterprise gets into financial difficulties it Is the custom for his bankers ai d creditors to strain every effort toward refinancing or readjusting his affairs so the enterprise may be placed upon its feet rather than put out of business. "We see strenuous efforts upon the part of agencies of the Federal Government to prevent failures and bankruptcies of railroads and other large enterprises. Why, as a matter of justice and right, should not a similar method be provided for the farmer or home owner about to lose his property under mortgage foreclosure? Reasons for Plan. "To my regret, I found it impossible, due to constitutional limitations, to ask for legislation in the nature of an extension of time for payment of mortgages at the recent special session of the Legislature. So I am placing this plan in operation, hoping that, in many cases through co-operative effort of the owner and the mortgage holder, plans may be devised affording the farmer or home owner opportunity to work out of his difficulty." The Columbus advices to the "Daily" further said: The Governor explained that the State-wide committee, serving without pay, will be the nucleus of his plan and it will designate local committees In each County. As mortgages mature or in cases where they are now past due, the owner of the property may consult the County Committee and that Committee will intervene with the mortgage holder in an attempt to delay foreclosure. It also will counsel and assist the owner of the farm or home in refinancing, and defer final action until a chance is afforded to overcome obstacles. Stockholders of Closed Bank in Illinois Subject Assessment for Depositors' Loss, According State Supreme Court. to to Reaffirming a previous opinion, the Illinois Supreme Court has ruled, after rehearing the case involving the matter, that all former stockholders of a closed bank are liable up to the par value of their stock for all deposits made while they were stockholders, provided such deposits were not withdrawn up to the time the bank closed. Advices to this effect from Springfield, 111., Oct. 24, as given in the "United States Daily" of Oct. 26. continued: The court, in an opinion written by Justice Frank K. Dunn, declared that "under the Constitution the stockholder is responsible to the amount of his stock for all liabilities of the bank incurred during his ownership of stock and no more, and such respmsibility continues until the liability is discharged. Stockholders of a bank at the time credit was extended to it or a liability was incurred by it are individually and personally liable to the creditor to an amount equal to their stock." In the court's first opinion, filed laid April, It was also held that the statute of limitations with regard to stockholders' liability does not commence to run until the bank closed, and that the double liability provision may be enforced against heirs of former stockholders who have died. Because the lower court did not classify various creditors' claims. the Supreme Court stated it had no blitis for holding that the statute of limitations applies to any debt iiic!nd'id in the decree. The case in which the dee'aion was handed down was brought by Charles Sanders and six other creditors against the Merchants' State Bank of Centralia and present and former stockholders. The latter had appealed. Two Suits Delay Action on Oklahoma State Guaranty Fund—Liquidation in Oklahoma Bank Case Tied Up by Cases in Federal Court, State Officer Says. Liquidation of Oklahoma's defunct State Bank Guaranty fund has been delayed attain by two suits in Federal District Court here which have been scheduled for hearing before Judge Edgar S. Vaught. Nov. 14, according to M. B. Cope, attorney for the State Banking Department. We quote from Oklahoma City advices, Nov. 3, to the "United States Daily," which went on to say: After several years of litigation, a number of cases involving claims against the defunct fund finally were consolidated in a case tried in the Oklahoma County District Court before Judge Sam Hooker, in which liquidation of the fund's assets was provided, it is explained. The district court approved findings of John B. Harrison, referee, in the case. Later, according to Mr. Cope, the District Court overruled a motion for a new trial filed by some dissatisfied litigants. The two Federal court suits which tied up the fund again were filed by attorneys for the American Surety Co. of New York and the United States Fidelity and Guaranty Co., and seek to recover about $200,000 of the assets of the fund. 3275 Liquid Assets of Fund. Mr. Cope said the total liquid assets of the defunct fund total only about $250,000, so outcome of the Federal court suits will have an important bearing on chances of claiments to realize anything on their clainm Mr. Cope and W. J. Barnett, State Bank Commissioner, who, upon taking office several months ago replaced C. G. Shun, former Cummissierter, as receiver for the fund, estimate total indebtedness of the bank guaranty fund when the law was repealed in 1923 ranged above $5,000,000. Since about three-fourths of this total was composed of bank deposits on which depositors will recover little if anything, about $1,500,000 In claims are imolved in the liquidation litigation, it is explained. Of the total claims, $1,297,000 consisted of Banking Board warrants and the remainder of bank drafts, certificates of deposit and cashier's checks, which at the time of payment were not considered along with deposits. Assets of the fund amount to obout $250,000 in cash, distributed In various banks in Oklahoma, it was pointed out, and about $150,000 in Liberty bonds originally posted with the Banking Department as collateral to assure payments of assessments levied against banks. The District Court decision however ruled these bonds where they can be identified let banks which paid all assessments levied against them, will be returned to the banks. Warrants Sometimes Issued. Mr. Barnett said the Banking Board, when the bank guaranty law still was in effect, with consent of depositing banks sometimes sold the collateral bonds and issued to the bank owners Banking Board warrants. Banks holding these warrants will share only pro rata in distribution of assets of the fund, while the bonds will be returned to clatment banks which did not consent to exchange for warrants. The District Court ruling decided against a plea of some claiments that the assets of the fund go to pay warrant holders in numerical order from the first numbered warrant until the fund is exhausted. The judge ruled the fund is insolvent and under the rules of law all creditors should share pro rata, there being no preferred claims to the cash. If the fund were liquidated now the creditors would receive about 15 cents on the dollar. Mr. Barnett said the bank guaranty fund stood by itself while the law was in effect, since the State of Oklahoma is not the guarantor of payment of any claims which cannot be satisfied from the assets of the fund itself. The fund was operated by the State officials but did not directly involve the State. Less Freight Cars and Locomotives Owned by Railroads Now Than at Any Time During Past Decade— Made Possible by Modernization of Existing Railway Equipment According to M. J. Gormley of American Railway Association. As a result of a gradual reduction in recent years in the amount of rolling stock owned, the railroads of this country now have fewer freight cars and locomotives than at any time in the past decade, according to the annual report of the Car Service Division submitted at the fall meeting of the American Railway Association held Nov. 11 at the Waldorf-Astoria Hotel in New York. "The reduction," said M. J. Gormley, Chairman 3f the Car Service Division of the Association, in submitting the report, "in ownership of freight ears and locomotives has been made possible by the modernization of existing railway equipment. This, together with the fact that the handling of freight traffic has been expedited and operating efficiency greatly improved in recent years, has resulted in a constant improvement of service to the public." Mr. Gormley also said as follows: Freight cars owned by the railroads of this country now total 2.141.647 cars, a reduction of 223,025 cars, or 9.4%. compared with the number owned in 1925. when the ownership was the hiehest on record. The average capacity of freight cars to-day, however. is 47.07 tons, an increase of nearly two and one-half tons since 1925 and an increase of 3.71 tons in toe past 10 years. Ownership of locomotives on Oct. 1 1932, totaled 52.936. a reduction of 12.135 or 18.6% compared with the number owned in 1924. which marked the highest number on record in any one year. At the same time, there has been an increase of 16.4% in the tractive power of locomotives and for the 10-year period, an increase of 19.4%. Regarding freight traffic this year. Mr. Gormley said: the movement of crops and fuel, together with some greater stimulation in business activity, there has been an improvement in freiTht traffic this fall compared with earlier months. Be-Inning with the week ended on Aug. 6, When 496.033 cars were loaded with revenue freight, there was a steady increase up to the week ended on Oct. 15. when 650.578 cars were loaded. This was an increase of 31.2% compared with the week of Aug.6. In 1931 for the same period, there was an increase of only 5.9%.and In 1930, an increase of only 8.9%. For the same period In 1921. the increase was 22.7%. These comparisons show there has been a greater percentage of increase for this period in 1932 than ordinarily occurred in previous years. Due to Re-opening by Inter-State Commerce Commission of Inquiry into Freight Rates on Newsprint. Rs -opening of its investigation into freight rates OD :Jewsprint in the Eastern States to hear nridence of changed conditions since the closing of the recorl in 1930 was ordered by the Inter-State Commerce Commission on Nos. 2 at the request of the American Newspaper Publishers Association and the Publishers Ass)ciation of New York. The New York "Times" in a Washington dispatch Nov. 2, reporting this added: The Commission assigned the case for further hearing at the Hotel New Yorker on Nov. 28 before Examiner Howell. The petition of the publishers followed a tentative recommendation by Mr. Howell for sweeping revisions in the prevailing rate structure, providing for both increases and reductions. 3276 Financial Chronicle The publishers in their joint brief contended that evidence on which the report was based took no account of and did not adequately reflect the real conditions in the newspaper, newsprint and transportation Indiratries. They pointed out that the record in the case was closed on May 7 1930, more than two years before the recommendations were made. The trunk line carriers in their reply brief said they did not object to a reopening of the case provided the taking of new testimony was restricted to evidence not already of record and which dealt with conditions that had developed since May 1930. The publishers intend to show that since that time there have been drastic reductions in newsprint prices: that many newspapers have failed or withdrawn from business: that consideration should be given in any rate revision to the marked falling off in advertising lineage reducing newspaper revenues: that much traffic is being diverted from the rails to trucks and waterways and that the Commission should consider the prospective ability of the newsprint traffic to bear any increase in rates at this time. To Widen Scope of Work7of American Institute of Banking Through Institute Graduate School. At the recent convention of the American Bankers Association m Los Angeles, Harold Stonier, Educational Director of the American Institute of Banking, announced a new plan for expanding the usefulness of the institute of outstanding interest not only to every Institute graduate, but every bank officer in the country. The plan proposes opening an Institute Graduate School, probably first in New York City, in 1933 or 1934, and to concentrate on five major subjects of an advanced nature. They are: 1. Bank management. 2. Trusts. 3. Credit. 4. The investment portfolio, and 5. The laws relating to the operation of National and State banking systems as well as the Federal Reserve System. The school will be conducted on an intensive basis for two or three weeks during the summer under a faculty of exceptional weight and experience. Two faculty members, both foremost in their particular lines, have been selected to head the work. Mr. Stonier says: This project will enter a field where no pathways have been blazed, where all the basic material must be gathered from National surveys by the various divisions and sections of the American Bankers Association, and Where for the first time a clinical approach will be made toward the problems of banking and bank management. Upon the results of this experiment depends the spread of the work to every nook and corner of the banking world over the vast nation-wide net.' work of 223 chapters of the institute. Everyone interested in the future of banking will give this forward-looking plan careful study to determine how best to use it for his own benefit and for the benefit of his bank. The announcement of this new program was the result of a survey of the possibilities for a graduate school, suggested by former President H. J. Haas of the American Bankers Association, conducted by its Public Education Commission under the Chairmanship of John H. Puelicher. The survey revealed that there were 16,000 graduates of the American Institute of Banking, many in executive position, who might put to profitable use a highly concentrated course of study, while there were many thousand other bank officers to whom specialized training would be beneficial. Mid-Winter Meeting of National Association of Real Estate Boards to Be Held in Washington Jan. 26-28. Washington,D.C., will be the place for holding the coming mid-winter annual business meeting of the National Association of Real Estate Boards, according to the action taken by the executive committee of the Association. The meeting will be held at the Willard Hotel, Washington, Jan. 25, 26, 27 and 28. Nov. 12 1932 Fourth Annual Trust Conference to Be Held at Paterson, N. J., Nov. 17-18 Under Auspices of New Jersey Bankers' Association. George Letterhouse, Chairman of Committee on Trust Matters, New Jersey Bankers Association, has announced the following speakers and subjects for the Fourth Annual Trust Conference to be held at the Alexander Hamilton Hotel in Paterson on Nov. 17 and 18: Walter J. McLaren of the Trust Co. of New Jersey as "Principles of Personal Trust Solicitation." John H. Annis, Trust Officer, Camden Safe Deposit & Trust Co. on "Organization of a Trust Department." Rembrandt P. Lane of the National Newark & Essex Banking Co. on "Practical Handling of Trust Securities." James Wilson,President, Chamber of Commerce,Paterson. N.J. Frederic R.Pilch, Vice-President, National Commercial Title & Mortgage Guaranty Co., Newark, N. J. on "Problems of Property Acquired Under Foreclosure." Waldron M. Ward of Pitney, Hardin & Skinner. Newark, N. J. on "Trustees' Responsibility Particularly on Retaining Securities a Decedent Might Have Left." Senator Arthur N. Pierson of Westfield, N. J. on "What is Responsible For the Present Standing of Jersey Municipals." E. P. Thomas Named President of National Foreign Trade Council—James A. Farrell to Continue as Chairman—G. L. Harding Elected Secretary Succeeding Late 0. K. Davis—Pittsburgh Chosen for 1933 Convention To Be Held April 26-28. The election of Eugene P. Thomas to the newly created post of President of the National Foreign Trade Council was announced by James A. Farrell, Chairman of the Council, following the organization's annual meeting on Oct. 17. The meeting also re-elected Mr. Farrell as its Chairman. He will continue his relationship as the head of the Council as heretofore. Mr. Farrell at the same time announced the election of Gardner L. Harding as Secretary to succeed the late 0. K. Davis, with the reelection of Robert H. Patchin, VicePresident of W. R. Grace & Co., as Treasurer, and of the members of the Executive Committee as follows: James A. Farrell, Willis H. Booth, Fred I. Kent, P. A. S. Franklin, Robert H. Patchin, Lewis E. Pierson, John D. Ryan, Eugene P. Thomas. Mr. Thomas has been identified with the foreign trade of the United States Steel Corp. for the past 30 years, having been the President of the United States Steel Products Co. from 1911 until 1928 when he became Vice-President of the United States Steel Corp. in charge of sales. He has been a member of the Council since its organization in 1914. In discussing a further extension of the Council's work, Mr. Farrell says: In times like these it should be possible for industrial leaders to voice with no uncertainty their views touching those fundamentals that are the foundations of our industrial system and our economic order. It is most desirable, therefore, that the work of this Council should be continued unimpaired, and, as far as possible, extended in the educational field. At our annual conventions we have a co-ordination of all interests concerned, directly or indirectly, in the promotion of our foreign commerce. How to maintain this co-ordination throughout the year is a problem which is at present engaging our thoughts. The segregation of particular interests through separate organizations leads to over-lapping, and to much confusion of thought on questions of public interests. We are fortunate in having added to our Council the names of men prominent in the industrial life of America. The fact that the following leading foreign trade executives have become members of the National Foreign Trade Council this year is an added incentive to the continuance and extension of our work: H. C. Beaver, President, Worthington Pump & Machinery Corp. George L. Browning, President, Seaboard National Dank of Los Angeles. Reginald F. Chutter, Export Manager, Sharp & Dohme. Philadelphia,Pa, W.L. Clayton (Anderson, Clayton & Co., Houston, Tex). Philip B. Deane, (General Manager of Sales, York Safe & Lock Co.), York, Pa. Col. Edward A. Deeds, (Chairman, National Cash Register Co.), Dayton, Ohio. R. Stanley Dollar,(Dollar Steamship Lines), San Francisco, Calif. E. C. Faustmann,(President, Royal Typewriter Co.), New York City. David M. Goodrich, (Chairman of the Board, The B.F. Goodrich Co.), Akron, Ohio. Carl R. Gray,(President, Union Pacific System), Omaha, Neb. T. H. Hanrahan,(President, Buffalo Freight Terminal Warehouse Co.), Buffalo, N. Y. R. 0. Holmes, (President, The Texas Co.), New York City. W.P. Kenney,(President, Great Northern Railway Co.), St. Paul, Minn. Herbert L. Pratt, (Chairman of the Board, Standard Oil Co. of N. Y.), New York City, A. W. Robertson, (Chairman, Westinghouse Electric & Mfg. Co.), New York City. George C Scott, (President. U. S. Steel Products Co.), New York City. A. D.Simpson.(Vice-President, National Bank of Commerce), Houston, Tex. H. S. Wherrett, (President, Pittsburgh Plate Glass Co.), Pittsburgh, Pa. Death of E. H. Outerbridge, Former Chairman of the Port of New York Authority and Former President of the Chamber of Commerce of the State of New York. James Brown, President of the Chamber of Commerce of the State of New York, announced on Nov. 10 that he had appointed the following members to represent the Chamber at the funeral of Eugenius H. Outerbridge, former President, who died on Nov. 10: James Brown, Joseph E. Sterrett, Alfred E. Marling, Irving T. Bush, Frederick H. Ecker, William L. DeBost, Leonor F. Loree, J. Barstow Smull and Charles T. Gwynne. Mr. Outerbridge had been a member of the Chamber for 29 years and served as President in 1916-1918 and as VicePresident in 1924-1925 and 1927-1931. At the time of his death he was Chairman of the special Committee on National Defense, and a member of the Board of Trustees of the Real Estate of the Chamber and of the Committee on Fund for the Relief of Members of their Families. Mr. Outerbridge was also formerly Chairman of the Port In outlining the plans of the Council, Mr. Thomas emof New York Authority. At the time of his death he was President of Harvey & Outerbridge, Inc., importers. Mr. phasizes the further co-ordination of effort now taking place among associations representing special phases of the foreign Outerbridge was born in Philadelphia in 1860. Volume 135 Financial Chronicle trade field. He stressed the formation of a joint committee for foreign trade action which had its first meeting at India House earlier in October, with representatives of 10 associations present, and the co-operation now effectively secured between exporters and importers in the Council's Committee on Exchange Restrictions, also set up by agreement among all the foreign trade groups, as practical steps toward this policy of further concentration. Mr.Thomas also referred to the important work being done by the committee on Inter-American Relations, of which General Palmer E. Pierce of the Standard Oil Co. of New Jersey is chairman, associated with the National Foreign Trade Council, on improving the better understanding with our southern neighbors. An important step in furthering this program a muted effort on behalf of American foreign trade, it is anticipated will be the 20th National Foreign Trade Convention, to be held in Pittsburgh on April 26, 27 and 28 next, which will bring together 2,000 foreign traders representing all sections and industries of the United States. ITEMS ABOUT BANKS, TRUST COMPANIES, &c. Arrangements were made Nov. 7 for the sale of a New York Stock Exchange membership at $125,000, an advance of $5,000 over the last previous sale, Oct. 21. Arrangements were made Nov. 11 for the sale of a New York Curb Exchange membership at $32,000, an increase of $2,000 over the last previous sale, Oct. 24. Arrangements were completed Nov. 11 for the transfer of a Chicago Stock Exchange membership at $4,000, a decrease of $5,500 from the last previous sale which was made about Sept. 10. All New York security and commodity exchanges, including the New York Stock and Curb Exchanges, commemorated the fourteenth anniversary of Armistice Day, Nov. 11, by a two minute suspension of trading. All American grain exchanges, including Winnipeg, were closed. In Chicago, the Stock, Curb and Cotton Exchanges were closed, but the Chicago Livestock Exchange remained open. The Boston Stock Exchange held no regular session but all the necessary facilities were open for the specialists whom were present to receive orders as usual. As Armistice Day is a legal holiday in.Pennsylvania, the Philadelphia Stock Exchange and the Pittsburgh Stock Exchange remained closed. Other exchanges that remained closed in observance of Armistice Day were: The New Orleans Cotton Exchange, the St. Louis Stock Exchange,the Cleveland Stock Exchange, the Cincinnati Stock Exchange, the Toronto Stock Exchange and both the Montreal Stock and Curb Exchanges. The new branch of the Emigrant Industrial Savings Bank of New York City in the remodeled Transit Building at 7 East 42nd Street in the heart of the Grand Central district will be formally opened on Monday, Nov. 14. The branch extends from Forty-second to Forty-third Streets, with entrances on both streets. The present uptown branch of the bank at Lexington Avenue and Forty-third Street will be consolidated with the new branch. Regarding the new quarters an announcement says in part: The decorative motif of the new branch of the Emigrant Industrial Savings Bank departs from the conventional bank Interiors of cold marble and fonmidable steel cages, and by so doing it creates an atmosphere of warmth. The entire interior—walls, doors, counters and other fixtures— is finished In warm lacewood, which is soft reddish brown in color with delicate and intricate graining. The effect of friendly ease Is heightened by the absence of partitions and cages. The fifteen receiving tellers will work with 'only a narrow lacewood counter separating them from depositors. The administration officers, instead of being cloistered by partitions, will have their desks out in the open. . . . From the founding of the bank in 1850, over 82 years ago, until June 1925, the entire business of the bank was conducted at its main office at 61 Chambers Street, opposite Oity Ball Park. On June 1st 1925, a mid-town office was opened with temporary quarters at 43rd Street and Lexington Avenue. About 2,800 depositors opened accounts at this branch on its first day of business. To-day, deposits at the mid-town office alone are in excess of $126,000,000, making this office by itself equal in importance to many of the largest savings banks in New York City. In other words, in less than eight years, the mid-town office has grown to o point where its deposits are nearly one-third of the Emigrant Banks total deposits of over $400,000,000. This very rapid growth made it a plain necessity to offer even greater convenience of location and banking quarters to the mid-town depositors. Accordingly, the bank purchased the building at 5-7 East 42nd Street, and additional frontage on 43rd Street, and began the remodeling of the lower floors and the construction of a special building on the 43rd Street ground. This makes possible the transfer of the business of the Lexington Avenue office to the new quarters—with entrances on both 42nd Street and 43rd Street. As a special convenience to commuters, late or early, to shoppers, and to office workers in the mid-town area, the banking hours have been extended. The mid-town office will be open daily from 8:30 A. M. to 1:30 P. II., except Saturdays. until 3:30 P. M. - 3277 On Saturday, the bank will remain open Effective Monday of this week, Nov. 7, John T. Brook has resigned as President of the Pelham National Bank of Pelham, N. Y., according to Pelham advices to the New York "Herald Tribune" on Nov. 4, which went on to say: Clyde F. Brown, Vice-President for the last two years, will be elected President. Mr. Brooks will devote his attention to his large estate holdings in Pelham. The Board of Trustees of the Buffalo Savings Bank, Buffalo, N. Y., on Nov. 7 announced the resignation of E. Corning Townsend as President of the institution and the appointment of Charles L. Gurney (heretofore First Vice-President) as his successor, and that of Seymour P. White and Edward L. Koons, as First Vice-President and Second Vice-President, respectively. Mr. Townsend will continue to serve on the Board of Trustees. Relative to the affairs of the Inman Trust Co. of Cambridge, Mass., which closed its doors on Dec. 15 1931, it is learned from the Boston "Herald" of Nov. 5 that following approval of an agreement by the Supreme Court under which the Lechmere National Bank of Cambridge will purchase a portion of the assets of the trust company, Arthur Guy, State Bank Commissioner for Massachusetts, announced on Nov. 4 that a 25% dividend would be paid within the next few weeks to depositors of the savings department of the closed bank and a dividend of 10% to deppsitors in the commercial department. Continuing the paper mentioned said in part: The National Bank has agreed to purchase approximately $600,000 of the dosed bank's securities and arrangements for the distribution of this amount are being made for Immediately after the legal limitation of 21 days from the date of approval has expired. Commissioner Guy said that the net earnings of the bank while in his possession amount to 660,000 which shows that the closed bank is that much better off now than it was on the date on which it was taken over by him last December. The offices of the dosed bank will be used as a branch of the National Bank. . . • Following the announcement of the proposed dividends the reorganization committee of the Inman Trust Co.released this statement: The purchase of certain assets of the bank by the Lechmere National Bank under the so-called Spoke plan is the culmination of 10 months of Intensive work on the part of the bank department, the depositors' reorganization committee and the directors of the Inman Trust Company to effect a reorganization of the bank for the benefit of the depositors. It had been the hope of the committee that the general financial condition would have so improved as to warrant the reopening of the bank Itself but owing to the continued depressed condition of the real estate and securities markets resulting in a large percentage of the assets of the banks being ins frozen condition it was deemed unwise to attempt a reorganization within the bank. The acquisition of certain assets of the Inman Trust by the Lechmere National with a contemplated opening of a branch In the quarters formerly occupied by the Inman Trust at Inraan Square will give to the depositors of the Inman Trust immediate and substantial relief. Under the plan. the Bank Commissioner will be able to credit immediately more than $600,000 which will enable the depositors at this time to receive at least 25% in the savings department and at least 10% in the commercial department and from the liquidation of assets obtained by the commissioner additional credits will be released as rapidly as conditions will permit so that ultimately the committee believes that the depositors will fare as well as they would have under the original plan for the reorganization of the bank. The Inman Trust depositors will become depositors in the Lechmere National and will be free to withdraw the money released to them under this plan without restriction. The assets not now sold to the Lechmere remain in possession of the Bank Commissioner whose liquidating agent. Charles W. Mulcahey, will proceed with their orderly and careful liquidation subject to the right of the Lechmere to acquire these remaining assets for cash at face value as conditions warrant, thus enabling a more speedy and economical liquidation with a more rapid release of additional money to the depositors. The Inman Trust Co. was taken over by the State Bank Commissioner on Dec. 15 1931 as a result of the failure on that day of the Federal National Bank of Boston, as noted in our issue of Dec. 19 last, page 4104. Reference to the company's affairs was made in the "Chronicle" of May 14, page 3581. Plans for the reorganization of the Federal National Bank of Boston, Mass., have been abandoned and the subscription committee has been discharged. An announcement to this effect was made after a meeting of the re-organization committee, held Nov. 2. The Boston "Herald" of Nov. 3, in reporting the matter, furthermore said: The subscription committee which solicited powers of attorney of the depositors reported to the re-organization group that it had decided by a unanimous vote that a re-organization of the bank, along the lines outlined In a letter to the depositors last Jan. 11. cannot be accomplished. The full committee voted to accept the report of the subscription committee and discharged the members, with a vote of thanks for their work. Charles J. O'Malley was Chairman of the subscription committee, and the 3278 Financial Chronicle other members were John N. Fulham and Daniel a MuHoney, the latter formerly President of the bank. The re-organization committee also voted that it will not under any circumstances use the warrants it has obtained and that they will be considered null and void. Mulloney explained the causes leading up to the inability of the committee to re-open the bank, and the meeting then adjourned. Nov. 12 1932 Pennsylvania, checks would be mailed on Nov.7 to 226 out-oftown depositors. The checks, amounting to $17,834.39, It was stated, would be drawn on the Real Estate Trust Co. of Philadelphia. The paper mentioned furthermore quoted Dr. Gordon as saying: The Federal National Bank of Boston closed its doors in December 1031. Our last previous reference to its affairs appeared in our issue of Aug. 27, page 1424. "The remaining 16,221 depositors have at their disposal in the new Homewood Bank, Pittsburgh, $689,625.62, which may be withdrawn or continued in the form of a new account. On Sept. 7 the larger amount was transferred from the Homewood People's Bank, which closed Oct. 31 1931." Further referring to the affairs of the defunct private bank of Pallotti, Andretta & Co., Inc., which was closed in December 1930 by the Connecticut State Bank Commissioner, the Hartford "Courant" of Nov. 5 carried the following: Regarding the above mentioned dividend, the Pittsburgh "Post Gazette" in its issue of Nov. 7 carried the following: decision Friday ',Judge P. B. O'Sullivan of the Superior Court reserved receiver of the Pallotti, (Nov. 4) on an application by John L. Bones, Andretta & Co., Inc., private bank, for permission to pay a 4% dividend to depositors. He indicated, however, that he preferred the dividend payment plan to that advanced by a depositors' committee represented by Attorney Joseph Klau. which would have a liquidating corporation take over the affairs of the bank. Morris "With $114,957.92 on hand, Mr. Donee and his counsel, Attorney Older,said they believed this to be a good time to distribute 4% of the total deposits of $2,451,216.74, amounting to about $98,000. and Mr. Klau, In opposing this, said the receivership is running at a loss pointed out that some depositors have as little as $1 in their accounts and, cancellathe urged therefore, a dividend would hardly benefit them. He tion of these small deposits by paying those of $100 or less in full. Most of corporation the larger depositors, he said, favored joining the liquidation which would be conducted by Attorney Guy Walker of New York. Mr. Walker was described to the court as having aided the Riverside Trust of reorganization and now engaged in reorganizing the Mechanics Bank New Haven. he Mr. Older said the receiver is not hostile to Mr. Mau's proposal but their declared that the committee engaged in having depositors assign misrepreof guilty holdings to the Proposed liquidating corporation has been dividend sentation. He said that depositors have been told that if the 4% is paid it will be the only money they will receive. This is not the fact. Mr. Older said. Co., Attorney Hairy L. Nair, of counsel for the Riverside Bank & Trust $190.000 on urged payment of the dividend. He said the Riverside has Riverside is not deposit with the Pailotti bank. Mr. Mau retorted that the formation of a depositor, but a creditor of the Palieu! bank. Opposing the complications legal a liquidating corporation. Mr. Nair said there are grave State. this in company and doubts involved in the operation of such a liquidating Judge O'Sullivan expressed skepticism over the proposed making corporation but he told Mr. Klau he would think it over before his decision on the dividend application. Our la it previous reference to the affairs of this institution appeared in the "Chronicle" of Oct. 1 1932, page 2281. The Philadelphia "Ledger" of Nov. 9 stated that E. E. Shumaker, who took an active part in the organization of the Merchantville National Bank & Trust Co. of Camden, N. J., and served as President of the institution since it opened for business on May 14 last, had been promoted to Chairman of the Board of Directors, according to an announcement made Nov. 8. Mr. Shumaker, it was said, had been succeeded in the Presidency by Perry L. Smith, Mayor of Merchantville, who is a director of the bank, and who was also largely instrumental in the establishment of the Institution. and that T. Wilbur Evaul, who had been acting Cashier, had been appointed Cashier. Announcement was made on Nov. 4 by Dr. William D. Gordon, State Secretary of Banking for Pennsylvania, that a payment of 10% would be made to the depositors of the closed Hamilton Trust Co. of Philadelphia, on Nov. 15, as reported in the Philadelphia "Ledger" of Nov. 5. This is the second payment to be received by the depositors, an Initial dividend of 10% having been made July 28 last. The present payment will total $152,907 and will be distributed to 11,200 accounts, it was stated. Our last reference to the affairs of the Hamilton Trust Co., which was closed on Oct. 7 1931, appeared in our Nov. 5 issue, page 3106. A new bank has been organized in Donora, Pa., under the title of the Union National Bank, to succeed the First National Bank and the Union Trust Co. of that place. The new organization is capitalized at $200,000 and has surplus of $103,000 and total resources of approximately $3,500,000. Ben G. Bennis is President and H.0. Colgan, Cashier, while the Board of Directors is made up of the following members: J. F. Patterson, Paul Mellon, D. M. Anderson, Ben G. Binns, R. M. Ridgely and M. F. Rumbaugh. Concerning the affairs of the Homewood People's Bank of Pittsburgh, which closed in October 1931 and was replaced Sept. 7 of the present year by a new institution, known as the Homewood Bank, the Pittsburgh "Post Gazette" of Nov. 5 stated that according to an announcement the previous day by Dr. William D. Gordon, State Secretary of Banking for Clarifying his previous announcement with regard to an advance payment of $707,460.01 to depositors of the Homewood People's Bank, State Banking Secretary William D. Gordan yesterday (Nov. 6), said $689,825.82 of this amount was made available on Sept. 7 to 16,221 depositors, through the new Homewood Bank at Pittsburgh. The remaining 226 out-of-town depositors would receive by mail yesterday (Nov. 6) their share of the 25% distribution, or $17,834.39, Dr. Gordon stated, correcting "an erroneous impression that a second 25% was being distributed at this time." Depositors of the defunct People's Trust Co. of Annville, Pa., were to receive a dividend of 10% on Nov. 7, according to the Philadelphia "Ledger" of Nov. 5, which stated that the dividend would total $34,527 and be made to 1,400 accounts. Samuel Caston Edmonds, Chairman of the Board of Directors of the Philadelphia Company for Guaranteeing Mortgages. Philadelphia, Pa., died suddenly in that city on Tuesday of this week, Nov. 8. Death was attributed to acute indigestion, resulting in a cerebral hemorrage. Mr. Edmonds, who was 63 years of age, was stricken while seated at his desk in his office in the Land Title Building. Dr. S. P. Ross, who has an office in the same building, was summoned and administered first aid and the patient appeared to respond to the treatment. He then accompanied the physician unaided to the latter's office where he suddenly collapsed and died in a few moments. Mr. Edmonds was born in Pottsville, Pa., but moved to Philadelphia when a boy. He was graduated from the Central High School in 1889. Early in his career, he joined the staff of this paper with which he remained for a period of some ten years or more, serving as head of one of the departments and proved one of the most efficient and capable men which it has ever been the good fortune of the paper to have in its service. Mr. Edmonds was in every way an exceptional man, and the highest type of a business executive. In 1907 Mr. Edmonds severed his connection with the "Chronicle" and returned to Philadelphia to enter the employ of the Philadelphia Company for Guaranteeing Mortgages, then just organized. After serving first as Secretary and Treasurer and later as Vice-President, Mr. Edmonds was promoted to the Presidency of the institution in March 1928, holding that position until the beginning of 1929 when he became Chairman of the Board of Directors, a new office especially created for him. Initial dividends to depositors of three closed banks of the Turtle Creek Valley (Pa), amounting to approximately $400,000, will be distributed before Thanksgiving. These banks—the People's National Bank of Pitcairn, Pa.; the First National Bank of Pitcairn, and the First National Bank of Trafford, Pa. (the closing of all three of which on Feb. 3 last was noted in the "Chronicle" of Feb. 6, page 967), had deposits totaling approximately $1,600,000. The Pittsburgh "Post Gazette" of Nov. 7, authority for the foregoing, went on to say: Checks representing a 22% dividend are being paid to depositors of the People's National Bonk of Pitcairn. Checks for a 35% distribution to depositors of the First National Bank of Pitcairn and 20% to depositors of the First National Bank of Trafford were in the hands of the Comptroller of the Currency at Washington for approval and are expected to be returned for distribution this week. As of Nov. 1 1932, the Farmers' National Bank of Canton, Pa., with capital of $50,000, went into voluntary liquidation. The institution was taken over by the First National Bank of Canton. The Downingtown National Bank, Downingtown, Pa., capitalized at $125,000, and the Grange National Bank of Chester County at Downingtown, capitalized at $100,000, were consolidated on Nov. 5. The new organization which continues the title of the Downingtown National Bank is capitalized at $140,000 with surplus of $260,000. Reference to the proposed union of these institutions was made in the "Chronicle" of Oct. 1 last, page 2281. Volume 135 Financial Chronicle The First National Bank of Richwood, West. Va., capitalized at $40,090, was placed in voluntary liquidation effective Oct. 28 1932. It has been succeeded by the Cherry River National Bank of Richwood. 3279 the failed German Bank of Millard, Neb., according to Associated Press advices from Lincoln, Neb., which also said: The dividend, from liquidated assets, amounted to $14,031 and brought to $70,157 the total returned to depositors. This is 50% of the deposits when the bank closed. The National Bank of Martinsville, Martinsville, Ind., The Sturdivant Bank of Cape Girardeau, Mo., said to a new institution organized by a group of business men and be the oldest bank in Southeast Missouri, failed to open for farmers of Martinsville and Morgan County since the closing busines on Nov.7, according to a dispatch by the Associatel of two banks in that place some months ago, opened for Press from that city. The directors, in a statement, were business on Nov. 7, according to Martinsville advices on reported as saying that they had asked the State Finance that day to the Indianapolis "News." The new institution, Department to take charge of the institution. "Frozen" which is located in the building formerly occupied by the loans, largely on real estate made in years back when farm Citizens' Mortgage Co., is capitalized at $50,000 and has property values were higher, caused the closing, the statecombined surplus and undivided profits of $12,500. Its meat said. The bank is capitalized at $200,000 with surplus officers, as named in the dispatch, are as follows: E. C. of $30,000 and had deposits at the close of business Nov. 5 Shireman, President; F. T. Singleton, Vice-President, and aggregating $697,000. Officers were named in the advices M. R. Wilson, Cashier, as follows: Charles L. Harrison, Chairman of the Board; Clyde A. Vandivort, President, and M.G. Bender, Cashier. Acting under authority conferred by the stockholders The dispatch furthermore said: The city's two other banks, the First National and Farmers' 6; Marlast February, the directors of the United Labor Bank & opened for business as usual, and there was no evidence of withTrust Co.of Indianapolis, Ind.,announced in correspondence chants'. drawal of deposits. to depositors on Nov. 5 that liquidation steps would be Recent heavy withdrawal of public funds hastened the closing, the Board taken beginning Nov. 7, with an invitation for all de- said. The hank within a period of four years has taken over three other banks here. positors to accept payment in full. The Indianapolis "News," from which the above information is obtained, A. C. Long has resigned, effective Nov. 1, as Chairman continuing, said: F. William Dobson, Executive Vice-President of the bank, announced that with approval of the State Banking Department, the institution would cease accepting deposits at 1 p. m. Saturday and thereafter for a;period of 15 days, will leave its doors open so that all customers may withdraw their deposits 100 cents on the dollar. ilkLuther F. Symons. State Bank Commissioner, asserted that a recent rigid examination of the bank by T. G. Inwood, Examiner, had reported it to be fully solvent, and that the arrangements for liquidation, paying off of depositors and ceasing business were agreeable to the Department. "In taking this step," the letter of directors said. "we have sufficient cash to meet all our deposit liabilities. We therefore request that you arrange, as promptly as possible, to check out your account in full. In view of this assurance that your money will be refunded, 100 cents on the dollar, there need be no apprehension on your part concerning the liquid condition of our finances." In Its last statement of Oct. 6. the United Labor Bank SE Trust Co. reported assets of$412.738.85. Its paid-in capital and surplus was9135.000 Total deposit liabilities, according to the latest report of examiners,amounte to $98,928.82. Effective Oct. 24 1932, the Negaunee National Bank of Negaunee, Mich., was placed in voluntary liquidation. This bank, which was capitalized at $100,000, was absorbed by the First National Bank of Negaunee. An item with reference to the merger of the institutions appeared in our issue of Sept. 3 1932, page 1602.. A dispatch by the Associated Press from Racine, Wis., on Nov. 1 reported that G. W. Weyland, formerly of Milwaukee, and William H. Bell had been appointed Chairman of the Board and President, respectively, of the reorganized Racine City Bank of Racine, at a meeting of the directors held Nov. 1. The dispatch added: The bank was closed some time ago, but was reopened under a moratorium plan a week later. That a new banking institution would open in Eau Claws, Wis., on Nov. 21 under the title of the American National Bank & Trust Co., was indicated in Associated Press advices from Eau Claire on Nov. 2. The new bank will be capitalized at 3100,000 with surplus of $20,000, it was stated and will be headed by R. J. Lewis as President. The dispatch furthermore said: Mr. Lewis was founder and head of the First National Bank at Moose Lake. Minn., which he sold a year ago. Twin Cities bankers and Eau Claire citizens are stockholders, Lewis said. Suspension of the Sawyer County Bank of Hayward, Wis., was announced on Nov. 2 by the Wisconsin State Banking Department, according to Associated Press advices from Madison, Wis., on that date. Advices from Faribault, Minn., on Nov. 4, appearing in the Minneapolis "Journal," stated that less than five days after Mayor H. P. Bell of Faribault proclaimed a business holiday the Citizens' National Bank of Faribault and the Faribault State Bank reopened for business. The dispatch furthermore said: of the Board of Directors of the Shelby County Trust & Banking Co. of Shelbyville, Ky., after having rounded out 51 years of service with the institution, according to advices from Shelbyville to the Louisville "Courier-Journal." Sale of the Greensboro, N. C., unit of the North Carolina Industrial Bank to the Morris Plan Bank of that place, effective Nov. 9, was announced in Greensboro on Nov. 7 by N.S. Calhoun, President of the North Carolina Bank & Trust Co., with which the North Carolina Industrial Bank had been affiliated. Associated Press advices from Greensboro on Nov. 7, from which the above information is obtained, continuing said: Mr. Calhoun mentioned the North Carolina Bank St Trust Co. "previously initiated a program of concentrating our efforts on and activities In trust and commercial banking." The negotiations have been in progress quite a while. it was recalled. The other units of the North Carolina Industrial Bank have already been discontinued. Although the consideration involved in the deal was not made public, It is known that it runs well in excess of half a million dollars. Announcement has been made by Julian Hamilton, liquidatjag agent for the Bank of Pender at Burgaw, N. C., which closed its doors on Jan. 7 last, that the institution is expected to pay a third dividend of 10% before Christmas. Advices from Wilmington, N. C., on Nov. 7, reporting this, furthermore said in part: The amount will total approximately $15,000. Payment of the dividend Is expected to be expedited through a request loan from the Reconstruction Finance Corporation. The two previous dividends, both 10%, amounted to a total of approximately $30,000. A press dispatch from Corinth, Miss., printed in the Memphis "Appeal," reported that a new banking institution under the title of the Security Bank would open for business in Corinth about Nov. 10, and that officers for the same had been announced as follows: Dr. Robert C.Liddon,President; Walter W. King, Vice-President; W. F. Holder, Cashier, and Troy Maxedon, Assistant Cashier. The advices went on to say: Mr. Holder has been In the banking business In Citronelle. Ala., for a number of years. Mr. Maxedon was connected with the First National Bank here for several years, and at one time was In the employ of Union Planters Bank & Trust Co., Memphis. Announcement was made on Nov. 2 by Edward Rainey, State Superintendent of Banks for California, of the payment of a second dividend of 73.'% to depositors of the closed Marine Bank of Santa Monica, Calif., and of an initial dividend of 7 to depositors of the closed Venice Savings Bank at Venice, Calif., according to a press dispatch from Santa Monice, on that date, printed in the Los Angeles "Times." The dispatch added: A total of 3,300 checks was mailed, the total amount being $73.000. The reopening was made possible through the signing of waivers by virtually all the depositors of the two institutions agreeing not to make large withdrawals. The waivers also assure protection of the depositors' funds. The directors of the Provincial Bank of Canada (bead office Montreal) have declared a quarterly dividend of 2%, payable on the 1st of December next to stockholders of record Nov. 15. The Montreal "Gazette," from which this is learned, continuing, said: The State Banking Department for Nebraska on Nov. 1 announced the payment of a dividend to the depositors of In doing so, this institution is therefore following the example of nearly all Canadian banks, which have recently decided to reduce their dividend rate; the quarterly payment of 2% authorized represents an annual dividend rate of 8% instead of 9% as formerly. Financial Chronicle 3280 Nov. 12 1932 21sT ANNUAL CONVENTION Investment Bankers' Association of America HELD AT WHITE SULPHUR SPRINGS, W. VA., OCTOBER 22 TO 26 1932. INDEX TO REPORTS Page Annual Address of President of Association Col. Allan M.Pope__3280 Address by Under Secretary of Treasury Arthur A. Ballantine__3281 3283 Address by E. G. Buckland 3284 Report of Railroad Securities Committee Report of Committee on Government and Farm Loan Bonds__1_3286 3288 Report of Foreign Securities Committee 3289 Report of Director of Institute of International Finance 3292 Report of Real Estate Securities Committee 3294 Report of Municipal Securities Committee 3296 Report of Legislation Committee Annual Address of President of Association, Col. Allan M. Pope—Asserts Conditions Would Have Been Worse if Flow of Excess Capital Had Not Gone Abroad Following War—Cites Care Exercised by Bankers in Flotations in Indicating Low Percentage of Defaults as Compared with Volume of Outstanding International, Foreign Dollar Bonds, &c. In his annual address as President of the Investment Bankers' Association, at White Sulphur Springs, W. Va., on Oct. 24, Col. Allan M. Pope, President of the First of Boston Corp. of New York, referred to the "inordinate inflation and speculation" following the World War, and noted that "one of the great effects of that speculative era was to shut off, almost to the vanishing point, the sale of that very commodity that was in most cases the sole stock in trade of the investment house, namely, long term bonds. I am definitely of the opinion," said Col. Pope, "if this flow of excess funds had not gone abroad, from whence millions of it were at once returned through increased trade and other repayments, the internal over-expansion in practically all lines of endeavor in this country would have been so increased above what it actually was, security prices would have been so raised above the point to which they actually rose, the conditions in Europe would have been so disastrously affected to our own economic detriment, that our present condition, bad as it has been, out of gear as it seems, would have been far worse to-day but for that world-wide distribution of the dollar that time." Col. Pope pointed out that in spite of the world wide depression, the total collapse or revaluation in the values of internal currencies that have taken place within the last 10 years, &c., the following record of defaults "emphasizes the comparative safety of bonds and the care which must have been exercised by bankers." ,Of $7,500.000,000 of foreign dollar bonds outstanding, 10.4% are in default; Of $10,584.000.000 of industrial bonds outstanding, 7.2% are in default; Of $16.590.000.000 of public utility bonds outstanding, 5.4% are in default; Of 812,021,000,000 of railroad bonds outstanding, 3.5% are in default; Of $18.185.000.000 of municipal bonds outstanding. 1.8% arc in default of communities having a population of over 30.000. No records arc available for communities of lesser population. Col. Pope's address follows in full: This marks the opening of the twenty-first annual convention of the Investment Bankers' Association of America, and I take great pleasure in officially welcoming you on behalf on this Association. There is little that I can say to you who are assembled here regarding our past year's activities which you do not already know by virtue of having taken part in them or having directly benefitted from them. Never, I believe, have we experienced a year that has called for as much energy and devotion to the cause of investment banking by our members. As President of your Association, there has been given to me the privilege of working more or less intimately with all of your committees, and I would be remiss in my duties, I would be ungrateful for the unstinted help and support I have received. if I did not publicly acclaim the vast amount of time and labor which men in this Association have given for the good of all—time in so many Instances which [ know too well has involved a real sacrifice to their own personal affairs. After having closely observed the operations and tho results of the operations of the Association for a year, I can say to you that it is absolutely certain that the member of this Association who feels that his business derives little benefit from it does not know his own business. At the January meeting of the Board of Governors this year. it was the very general opinion that the President and the Executive Vice-President AND PROCEEDINGS. Report of Federal Taxation Committee Report of Committee on State and Local Taxation Report of Sub-Committee on Trends of Business Report of Business Problems Committee Report of Committee on Investment Companies Report of Committee on Industrial Securities Report of Public Service Securities Committee Report of Oil and Natural Gas Securities Committee Report of Special Committee on Aviation Securities Election of Officers Page 3297 3298 3299 3301 3302 3303 3304 3304 3307 3308 of this Association should visit as many of our groups throughout the country as might be possible, in conformity with previous custom. Most of the groups from coast to coast were visited in consequence. To me making this trip for the first time, it was a now and broadening experience• We were given the most cordial reception wherever we went, and practically all member houses in their respective groups were represented at many enthusiastic luncheons and dinners. Aside from any personal element involved. I returned from these many Interesting visits with the belief that a direct annual contact between the groups and the executive officers of the Association has much of genuine mutual valve for the Association and its members. I know that the rare opportunity afforded me of meeting on their own home grounds not only representatives of our own member houses but many men outstanding in other walks of life related to ours, has placed me in a position of visualizing the Investment banking business in a way that has been given to few of us this year. I shall, therefore, attempt to present to you some of the most Important factors affecting our business that I have observed. In the first place, I believe it is an indisputable fact that there is no other business wherein every phase of its operations is so absolutely dependent upon public opinion as is the investment banking business, and I do not have to remind you that public opinion is a most severe and critical task master. For this reason, in spite of statements to the contrary, the investment banker is far from being his own free agent. The traditional silence of the investment banker before public criticism reminds me of a little boy who went to a Sunday School party. The Sunday School teacher had been asked by his parents to send him home immediately if he did not behave. Within fifteen minutes after leaving for the party, home he came. The angry father met him at the door and proceeded to give him a spanking, after which he said:"Now, tell me what you did." "I didn't do anything," said the boy, "the party was postponed!" Every phase of investment banking involves the future. No other business on earth Is so dependent upon that one definitely unknown quantity. Every class of security is, without exception, but in considerably varying degree, a risk on the future, and it is the function of the investment banker to marshal the available historic facts together on which judgment can be passed to determine the extent of the hazard. Jam proud to say that investment bankers have lived up to established tradition to the great credit of the industry. That the public should in times of stress feel in some instances that investment bankers should have bad a definite knowledge of the future is unreasonable but not unexpected. Th investing public is actually divided into two classes: that which represents either individual or institutional accumulated wealth in largo amounts and that which represents the smaller investor. In general, the first class is naturally more experienced in the investment field. It is a definite part of their business to be so. Constructively critical as these custodians of great wealth properly are of investment bankers, welcome as such criticism is to this very association, and deserved as such criticism may may have been in some instances, as you men who sit hero to-day are quite well aware, and great as are the losses on the books of such experienced Investors to-day in probably every instance, the business of Investment banking is being carried on with these same institutions, these same large Investors with the same degree of mutual confidence which must always characterize the investment banking business if it shall bo successful. It is this second class, the smaller investor, the less experienced individual and frequently the less experienced smaller institution, of which I desire particularly to speak. In the first place, this inexperience of the smaller investor is no reflection upon his intelligence, his judgment, or his business acumen. In the vast majority of cases, this lack of experience is due solely to his preoccupation with his own business affairs, which to him are the more important and which as a rule are not productive of banking experience. As a class, therefore. such investors cannot be expected to know bow we do our business. I am to-day cognizant of the fact that this class of investor, for one thing, fails to realize the fundamental difference between commercial and investment banking practice and the necessary place each occupies in our whole economic fabric. The commercial bank is engaged primarily In the business of investing Its capital funds and its depositors' money. On account of the passible fluctuations in Its funds available for investment, it primarily invests in securities of short maturity. In this way, It is the main factor in supplying the short-term financial needs of commerce. Industry, and government. Almost all classes of borrowers require at times money for fixed capital purposes, that Is, for additions and improvements—in other words, for purposes of a lasting nature. Such requirements can properly be met through borrowing, with repayment to be made over a period of years. To Improve conditions of manufacture, to purchase land for farming, to build homes, to extend the facilities of our public utilities and railroads, to pay the extraordinary expenditures of government, are among the countless reasons that such long term borrowing is essential. The great mass of such Volume 135 Financial Chronicle long term funds falls to the lot of the investment banker to supply. If the investment banker fails, the wheels of progress are definitely slowed. The investment banker, as such, has no huge reservoir of funds under his direct control for the purpose of investment as has the commercial banker. The handling of such funds is not his business now and never has been. The reservoir of funds available for long term commitments lies with the invest-. ing public, whose investment needs and capabilities it is the investment banker's function to know and to appraise. In other words, the investment banker must be familiar with the available supply of funds throughout this nation and abroad that is seeking a more permanent investment than is represented by a deposit in a commercial bank or a thirty or ninety day obligation. These funds, which in the aggregate are vast to-day, represent investments as shown by the present outstanding dollar bonds of all classes of more than ninety billions ofdollars. Into which of these classes available funds should be directed to-day is but another problem which the investment banker is called upon to face. As the great proportion of the capital of the investment banker is invested In the very securities he sells, in common with all other investors he has therefore suffered in the last three years, but, in addition, in his early and natural efforts to protect the securities he has sold to investors, he has often suffered far more than the general run of such investors. The casualties in the last three years in the ranks of investment houses have been extremely large in comparison with those in almost any other field of business because of these losses and because of the economic upheaval which reduced the volume of security transactions. Because the investment banker cannot possibly have sufficient capital of his own to supply the demand for long term loans, the business of investment banking must always be primarily that of distributing such loans as it may buy. I regret to say that this function of the business, perhaps too little understood, has given rise to the fallacious charge that if any losses are sustained it is the public alone which stands the brunt. This charge overlooks the fact that, in every loan bought and issued to the public, the investment banker takes the initial risk and stands the greatest loss if the loan is not well received or if the price is not sustained. Again, it overlooks the fact that during the entire life of the loan the investment banker recognizes a moral responsibility to the holder which has necessitated the spending of hundreds of thousands of dollars in the last three years by such bankers on behalf of their clients' interests in securities in default or threatened with default through circumstances beyond the power of the banker to control. In this connection, in spite of the world-wide depression, in spite of the total collapse or revaluation in the values of internal currencies that have taken place within the last ten years, in spite of the departure from the gold standard by the majority of countries, in spite of numbers of political revolutions, in spite of the headlong plunge of raw material values, in spite of the stagnation in trade hero and throughout the world, in spite of the tremendous decrease in farm values and urban real estate values. in spite of the drastic reduction in earning power of our major industries, our railroads, and to a lesser degree our public utilities, the following record of defaults—a record which is the best obtainable and believed approximately correct, a record which, while it shows the greatest number of defaults in our history, nevertheless, in view of what we and the rest of the world have been through, emphasizes the comparative safety of bonds and the care which must have been exercised by bankers: Of $7,500,000,000 of Foreign Dollar Bonds outstanding, 19.4% are in default; Of $10,584,000,000 of Industrial Bonds outstanding, 7.2% are in default; Of $10,590,000,000 of Public Utility Bonds outstanding, 5.4% are in default; Of $12,021,000.000 of Railroad Bonds outstanding, 3.5% are in default: Of $18,185.000,000 of Municipal Bonds outstanding, 1.8% are in default of communities having a population of over 30,000. No records are available for communities of lesser population. There are approximately $6.000,000,000 of real estate bonds outstanding. No figures are available for issues below $500,000 in default of the outstanding total. About 14%. of the total, representing issues in excess of $500.000, are in default. This percentage might be considerably increased by the defaults in small issues of bonds. There undoubtedly have been reorganizations not technically reported as defaults which would make the percentage of defaults of large issues greater than recorded herewith. Since the World War, we have witnessed a period of industrial expansion that was halted, at least as a contributing cause, by inordinate inflation and speculation. Even though we might not have realized it at the time, it would be ridiculous now for us as bankers to assert that we were not, as a class, drawn Into that speculative maelstrom in common with the rest of the world, or that we had not contributed thereby to its evil effects by merely becoming a part of it. It is equally ridiculous to assert that, as a class, we caused it, willingly fostered or approved it. for one of the great effects of that speculative era was to shut off, almost to the vanishing point, the sale of that very commodity that was In most cases the sole stock in trade of the investment house, namely long-term bonds. Public sentiment, the ever present taskmaster of ours, decreed against the buying of bonds in favor of stocks. That period began in the spring of 1928. In the few years preceding that period, the enormous export of gold to our shores and other causes produced a demand for bonds in unprecedented proportions. Surplus money had to be invested, and the normal channel :or the employment of a very large part of such funds lay in bonds. The great criticism to-day of the investment banker during this period • of excessive bond buying, looked at through the magnifying glass of hindsight lies in the re-exportation of capital brought about through the flotation of foreign loans. Cognizant as I am of the nearly 20% of defaults to-day in outstanding foreign dollar bonds (which includes many large loans issued before the war) a percentage which we have no right at this time to assume as meaning a similar percentage of permanent loss of capital.lam definitely of the opinion, and it can never be more than an opinion on anyone's part, that if this flow of excess funds had not gone abroad,from whence millions of It were at once returned through increased trade and other repayments. the internal over-expansion in practicallyall lines of endeavor in this country would havo been so increased above what it actually was, security prices would have been so raised above the point to which they actually rose, the conditions in Europe would have been so disastrously affected to our own economic detriment, that our present condition, bad as it has been, out of gear as it seems, would have been far worse to-day but for that world-wide distribution of the dollar at that time. I have represented this association in public hearings of Congress. As an individual I have also appeared. In this way and In others I have been brought into contact with national legislation designed to correct the abuses that speculation Inevitably creates. You cannot legislate speculation out of existence—you can in some instances minimize its effect. I am impressed with the sincerity of purpose of most of the legislators I have met. I am Impressed with their lack of knowledge of our business, which is inevitable, for few of them have had experience in banking fields. I am impressed with their general bitterness as a result of conditions is general but directed against bankers in particular with unprecedented unfairness. I am im- 3281 pressed with the fact that such legislators are attempting to voice the opinion of the small investor who is more or less publicly inarticulate, this second class of investor to which I have referred. This effort has apparently caused our legislators to produce, through the sponsorship of men of long legislative experience, dangerous bills, bills of which this association has publicly disapproved, bills some of which, if enacted. would have brought financial ruin upon our government, our people, our banks and bankers. Such bills have not been passed. It is true that they contained in part sound ideas with which this association is in hearty accord, yet in my opinion, where they were designed to affect the investment banking business, such as the Glass bill In particular, in practically all Instances they failed to reach the fundamental wrong, a wrong which since the War crept into the conduct of our business and which is to-day being steadily corrected from within our own ranks, to the benefit of the small investor and of the large, and hence to the benefit of ourselves. This wrong cannot be legislated out of existence. We alone control the power to correct it. As inevitably as mass production and instalment buying became the slogan of manufacture, so did the practice of distributing securities through what might be called mass merchandising methods and so did the application of the principle of margin accounts, applied to a class of securities to which it should not apply, come into play. Bonds are not merchandise. A bond is a piece of paper on which are written the terms under which the borrower agrees to pay the principal and interest. The holder of a bond can read the terms as he can look over any piece of merchandise, but he must also know in the case of a bond the credit position of the borrower, or know some banker whose knowledge can enlighten him. In the wild scramble for bonds in the few years preceding the spring of 1928, the public accepted and the investment banker in many instances instituted, the practice of merchandising securities in a manner only applicable to commodities. It may have been necessary under the circumstances, which apparently forced it on us, but that did not make it right. Let me give you an instance of this, which is only one of hundreds of cases. A new issue of many millions of dollars of bonds was offered to the public early in 1928 at a price which was close to par. The statements in the prospectus were accurate then, and appear equally accurate to -day. Public subscriptions were received for the issue by the bankers far in excess of the bonds available for allotment. The bonds went up moderately in price, and then dropped, after the autumn of 1929, to a low point of 19. Inappropriate and inapplicable merchandising methods of distributing bonds had been at work. The demand, already unduly augmented by the thirst for such securities, reached inordinate bounds. When the turn came, there were not enough holders of such securities who had been properly informed of the credit behind this issue to prevent them dumping their bonds through fear in the general upheaval, augmenting their own losses and jeopardizing the public credit of the borrower. This is in spite of the fact that these very bonds have not been in default as to sinking fund or interest, and it is not expected that they will be. It is with great satisfaction that I can say to you that my observation of the investment banker to-day, meeting him as I have on his own doorstep throughout the country, is that this method of selling securities has gone forever. I firmly believe, in addition, and as bordering on such merchandising methods, that the days of security salesmen on a commission basis are numbered. Already in many instances other methods of compensation have been substituted. To-day bonds are being, and should be, sold in the way they always had been formerly sold, that is by men of experience who are, or are of the calibre to become, officers and partners of their own houses. To-day new issues are priced at a point which the banker and the investor alike agree to be justifiably considered below the ultimate free market price. We have only to look at recent issues for verification of this. This practice is. I believe, a fixture. Public sentiment demands it, and public sentiment in this case is right. There is satisfaction of a substantial kind in the recollection that this Association, representing as it does the thought and ideals of its members, comprising the principal investment banking houses of this country, has stood for sound investment banking principles which alone can insure the stability of the function of investment banking, a business which Is an absolute essential to the development of industry and commerce and the general public welfare of this and of any civilized country. The commercial welfare of our people, the sound development of manufacture, agriculture and banking is a sure way of contributing to general happiness, and now that the fever of speculation and easy profits and sudden riches are things of the past, and now that we see a glow that heralds the dawn of an era of reasonable profits, perhaps the significance of the old parable can be better appreciated to-day of the man who was told by a soothsayer that the way to obtain happiness was to find a completely happy man, then ask him for his coat and wear it. The world was searched from end to end, and at last a completely happy man was found, but he did not own a coat. "Current Aspects of Federal Finance" Discussed by Under Secretary of Treasury Arthur A. Ballantine Before Investment Bankers' Association—Says Improvement in Position of Government Securities Augurs Well for Future. Before the annual Convention of the Investment Bankers' Association of America, at White Sulphur Springs, W. Va., on Oct. 26 Arthur A. Ballantine, Under Secretary of the Treasury discussed "Current Aspects of Federal Finance." He referred to the National Credit as having "withstood all of the shocks of the depression" and added that "United States Government obligations remain the world's best Investment security." The amount of Government debt as it stood on Oct. 15 1932, at. nearly $20,800,000,000, is described by Mr. Ballantine as "still some 20% below- the war peak." That total he said "includes a little less than $6.000,000,000 short-dated debt, maturing within five years, which must be reduced or replaced. It also comprises the Fourth Liberty Loan of over $6,000,000,000, callable after October 15 1933, due October 15 1938, which must be dealt with by the latter date." While acknowledging that "the amount of refunding in prospect is very large" Mr. Ballantine declared that "the operation can be satisfactorily carried out." 3282 Financial Chronicle Mr. Ballantine referring to the new tax measure said that its full effects cannot be judged from its early operation. He reported receipts from the new miscellaneous taxes as showing a steady Increase; for September and the first three weeks of October they aggregated $131,736,560 as compared with $76,870,296 in the corresponding period of last year. The returns under the new income tax rates he noted will not be reflected until March 1933, and no estate tax at the new rates will be payable until June 1933. Calls for advances by the Reconstruction Finance Corporation to financial institutions, said Mr. Ballantine, have steadily diminished. He also noted that "during past months demand for United States Government securities has shown remarkable improvement." The address of Under Secretary Ballantine follows in full: The national credit has withstood all of the shocks of the depression and United States Goverment obligations remain the world's best investment security. Government offerings are eagerly taken at interest rates lower than those available to any other government in the world. Prospects for the financial operations of the Government are increasingly favorable. What we need to maintain this position is not a new plan but all around co-operation in adherence to right principles of public finance. Sound policies followed in the post-war years helped in the meeting of the Government's financial problems resulting from the depression. On Chief among these was continuous reduction in the public debt. June 30 1930, the debt was more than $9,000,000,000 less than on June 30 1919. Reducing the debt by over a third within a single decade was a convincing demonstration of fixed determination to provide for the meeting of our national obligations. In addition, the fact that nearly $3,500,000,000 of the reduction was accomplished by the accumulation and application of surplusses in good years, carrying retirement to that extent beyond the amount called for by sinking fund provisions, furnished in a sense a reserve which might be drawn upon in lean years. Debt reduction in any such amount could not have been accomplished unless Federal expenditures after the war and up to the depression had to 1929 been kept well within hounds. For the eight years from 1922 for they averaged $3,640,000,000, in spite of the fact that expenditures constituted the service of the debt, tor veterans, and for defense together about two-thirds of the total expenditures. risen to The amount of the debt as it stood on October 15 1932, had nearly $20,800,000,000, and amount however still some 20% below the short$6,000,000,000 than war peak. That total includes a little less replaced. dated debt, maturing within five years, which must be reduced or It also comprises the Fourth Liberty Loan of over $6,000,000,000 callable after October 15 1933, due October 15 1938, which must be dealt with by the latter date. The amount of refunding in prospect is very large but the operation can be satisfactorily carried out. The financial operations of the Government have been and are facilitated by the development of Treasury methods for handling Government issues so that they can be made quickly and with a minimum of a strain upon the market. On telegraphed notice from the Secretary of the Treasury the Federal Reserve Banks issue the circulars which are sent to all financial institutions or others who may be interested in subscribing in the respective districts. It is thus possible to fix the final tonne of an issue very close to the date of the public offering. In taking payment for subscriptions the Treasury follows the helpful practice of permitting accredited banks to make payments by establishing deposits in favor of the Government. These are drawn upon by the Governback ment only as funds are about to be paid out so that they will go selling into the market. In recent years the Treasury has not employed because drives such as were used during the war. This has been primarily become financial institutions had steficient funds to enable them to and purchasers or distributors of Government issues in adequate volume bank upon pressure there was, hence, no need to run the risk of putting Government of care take to deposits. To-day banks are even better able Federal Issues as member banks have decreased their borrowings from excess Reserve Banks from $850,000,000 to $300,000,000 and are carrying reserves to the amount of not less than $400,000,000. freedom Treasury operations are also at all times facilitated by the choose in his which the law accords the Secretary of the Treasury to bills to whether issued, discretion the particular kind of security to be In not be sold on a discount basis, interest-bearing certificates maturing maturity more than a year, notes of from one to five years, or bonds of any the time of not less than five years. The Secretary is also free to chose dates is for any financing. Quarterly financing on income tax payment all Secretary the in vested of course customary, but under the discretion and financing is timed so as to take advantage of favorable conditions best meet the general situation in the investment and money markets. The ability of the Government to place and refund its obligations depends essentially upon continued maintenance of the merit of the securities and limitation upon their amount. What gives United States Government obligations their distinctive investment standing is absolute confidence In the unwavering purpose of the Government to provide for the payment of principal and interest and in its capacity to do so. That purpose must be evidenced by so controlling expenditures and providing revenues that at least in the long run all of the Government's financial requirements, Including debt requirements, will be met frcrm reyeunes. It must also be evidenced by restricting the use of Government credit to oblects which command general respect and support. There is en underlying requirement which in ordinary times does not need attention hut which has called requirement for much attention in the days of the depression. This is the that the measures of the Government must be Ruch as to preserve and the full insure to 09 so country strengthen the economic system of the utilization of our unrivalled resources in production and employment, thus affording an adequate base for the maintenance of our Government as well as of our people. Under the leadership of the Administration our Government has in making good the main followed those policies in this time of trial and Is the fight the fundamentals uron which its credit depends. The story of elniches of the depression falls at the to rescue the Blideet from the moment in the field of political discussion and need net he told here. of the effect of the The expectation, based upon earlier indientions that the storm might he weathered nression upon Government revenues, without imposing new burdens mem by drawing upon the reserves and having taxpayers, was swept away by ths intensification of adverse forces their main origin abroad. Nov. 12 1932 When the time came last full to call upon the already harassed business Institutions and all taxpayers of the country to assume larger burdens for the ultimate financial protection of the nation, the Administration initiated vigorous action. In spite of the vivid clearness of the need it took six n3onths to secure the enactment of the revenue bill planned to yield over a billion of new revenue, including the increase in postal revenues. Notwithstanding the urgency of the need, measures for new economics in Government expenditures took an even more difficult course and only some $150,000,000 of prospective additional economies was ultimately provided for. Yet the combined effect of reduction in the Budget as submitted by the President, new savings under the Economy Act, and the elimination of large non-recurrent emergency expenditures of last year, started us upon the current fiscal year with a prospect of expenditures which would be less than those of last year by a billion dollars. In addition, measures passed by the House which would have added as much as three billion and a half to expenditures met defeat. The net result when Congress adjourned was that our financial defenses had held, great forward steps had been taken, and the program of reconstruction and recovery was under way. These accomplishments brought relief to the country, the restoration of confidence and hope, and a forward movement in business and industry that still continues. From the amount of the deficit for the current year as appearing on the Daily Statement of the Treasury, it is argued that the Government's financial position to-day is disturbing. No such inference is warranted. What the position of the Government will be at the end of the fiscal year 1933 depends upon the total of expenditures and revenues for the full twelve-month's period. Expenditures so far this year included an item of $100,000,000 for Adjusted Service Certificates which was not Included in the comparable period of last year. Expenditures later on In the past fiscal year included many large emergency items not to be repeated this year, such as expenditures for the capital stock of the Reconstruction Finance Corporation and the Federal Land Banks, together amounting to $625,000,000. The full revenue effects of the new tax measure cannot be judged from Its early operation. New miscellaneous taxes, although effective for the most part from June 21 1932, have been slow in becoming reflected in the revenues. The large purchasers by dealers in June, mule in anticipation of the imposition of taxes, cut down 801e9 subject to tax in July and August. In some cases there was a two-months' lag in the collection of the tax. Receipts from the new miscellaneous taxes are showing a steady increase. For September and the first three weeks of October, they aggregated $131,736,560 as compared with $76,870,296 in the corresponding period of last year. In addition it should not be forgotten that returns under the new Income tax rates and provisions will not be reflected until March 1983, and that no estate tax at the new rates will he payable until June 1933. The new revenue measure will prove Increasingly effective as time goes on and its full benefits will not be realized until next year. In appraising the financial position of the Government it should be remembered that as the months pass funds that have been advanced to the Reconstruction Finance Corporation, to take the place of private credit for a time, will be returned to the Treasury. Up to October 20th, the total of the amount paid in to the Reconstruction Finance Corporation for its capital stock and Of the net advances to the Corporation as public dobt items in accordance with the law, was in excess of $1,100.000,000. The providing of these funds added a corresponding amount to the public debt, but their expenditure furnished the Government with assets in the form of secured obligations which are already being repaid. Up to October 20th repayments of loans made by the Reconstruction Finance Corporation had amounted to about $230,000,000. Calls for funds for advances by the Reconstruction Finance Corporation to financial institutions have steadily diminished. In April applications from banks aggregated 1,269. In August the number had fallen to 899, and in September fell to 515. Loan applications from other financial institutions fell from 239 in April to 171 in September. Total loans authorized by the Corporation aggregated $23o.000,0no in April and but $138,000,000 in September. The use of funds for financing selfliquidating projects will increase, but those loans also will constitute assets and as normal security markets revive those loans can he placed in the markets and new projects will again be financed through private agencies, thus further releasing and reducing the demand for funds to be supplied by the Government. During past months the investment demand for United States Govern• inent securities has shown remarkable improvement. If we go back as far as the latter part of January of this year we find that long-term Government bonds were selling in the market on a basis to yield from 4 20 to 4.75 as con -pared to yields of 3.24 to 3.57 on October 13 1932, or about a full point less. In December 1931, one-year obligations eommended as much as 21,4%. On October 15th they were selling to yield about % of 1%. In February 1032 the yield of 90-day Treasury Bills was upwards of 2%. On October 15th the yield had receded to the record low of one-fifth of 1%. In December 1931 it was edvisable to provide for Treasury financing on the basis of issues of net more than a year's maturity. In recent months it has become possible to increase the maturity of notes offered up to five years. It is of interest to trace this progress. In considering the amounts of Treasury obligations offered during the period it should he borne in mind that about two-thirds of the financing was for meeting debt maturities. In December 1931 all Treasury bonds bearing less than 4% were selling nt a discount and it seemed clearly unwise to attempt to sell any long-term offering. $000,000,009 of 354% one.vear notes were the longest maturity included in a total offering of $1 190.009,093, and the amount of subscriptions for these notes woe only irm.ono,noo. On February 1 1932, the Treasury's requirements were nhont $350.000,000. The situation as regards a longterm offering was even less favorable than In December and these adverse cenditiens until Time. On February let the Treasury offered a combined total of $330.on0.000 in two issues, one 354% six months' certificates and the other 334% one-year rertificates. Subscriptions for the two issues aggregated fin.m.non,nno, and Allotment to each issue was made in the proportion that total subscriptions for that isvnie bore to the comhined total of subserintions. TI1R RIT TROTIthe issue was nlimed $227,009,000 and the one year tame $144 onn.nno. When the time came for the March financing the situation as to yield on Government issues was practically unehanged. To meet maturities and provide new money the Treasury rennired ?inwards of 9nn.00n,000. It offered $300,900,000 3;4% sevon•month certificates, and $000.090,000. 3N% one-year certificates. Subscriptions for the short-term 31,4% certificates aggregated $952,000,000 and those for the 12-months 3in% certificates $2.450.000,000. When the Treasury was preparing for its May financing the situation was begInning to show signs of imorovement. Long-term bends had advaneed and were selling from 34 to S447',. This was the first time pfr,,, flip pro,•invys Fall when the Tr.lourv harl felt 01(4 It xrelilei be justified In offering a security haying a maturity of more than 12 months. Volume 135 Financial Chronicle tOn May 2 1932, the Treasury offered $225,000,000, 2% one-year certificates and a like amount of X% two-year Treasury Notes. The Treasury's judgment as to the improvement in the Government market was confirmed by the fact that while $1,700,000,000 was subscribed for the one-year certificates, subscriptions for the two-year notes aggregated over $2,496,000,000 On June 15 1932, to meet maturities and obtain new funds the Treasury offered $400,000,000 8%, three-year notes with $350,000,000 1%%2 oneyear certificates. Subscriptions for the shorter term issue aggregating $1,653,000,000 ran Alwad of subscriptions for the three-year issue which aggregated $1,143,000,000. In August the situation was much improved. The budget accomplishments which had been achieved, the detest of dangerous legislative proposals, and the securing and operation of the reconstruction program had restored confidence and that confidence was promptly reflected in the Government security market. On Aug. 1 the Treasury offered $325,000,000 two-year 2%% notes and a like amount of four-year 314% notes. Subscriptions for the twoyear notes aggregated $1,706,000,000, while subscriptions for the fouryear notes were in excess of $3,800,000,000 clearly reflecting a demand for longer term issues. Further improvement was registered in September. Refunding and financing needs were provided for by offering $750,000,000 five-year 3%% notes with $400,000,000 one-year 114% certificates. The maturity of the notes was the longest and the rate on the certificates was the lowest which the Treasury had felt warranted in offering within a year. Subscriptions for the notes were over $4,351,000,000 and for the certificates over three billions. On October 15th the Treasury offered $450,000,000 3%, notes maturing in four and one-half years, and subscriptions aggregated over $8,368,000,000. Except for the 8% and the VA% Treasury bonds, all Treasury bonds, notes and certificates are selling at premiums. The financial problems ahead unquestionably require Jima and intelligent handling and do not admit of any weakening in adherence to sound methods and principles. Yet the improvement in the position of Government securities augurs well for the future and rests upon a solid foundation. It reflects dangers avoided, the great progress made in budget legislation of last year, and draws support from large reduction in Government expenditure which is in process, and from a lessening of demands for Government funds. It rests also upon the substantial progress which is being reported in business and industry and which will be augmented as the program of recovery and reinvigoration goes forward. Address Before Investment Bankers' Association by E. G. Buckland—"American Railroads—A Sound Investment." "Changes in existing Federal legislation to permit railroads to make rates and adjustments thereof to the extent necessary to meet competition, however arising," were advocated before the annual convention of the Investment Bankers' Association of America, at White Sulphur Springs, W. Va., on Oct. 24 by E. G. Buckland, Chairman of the Board of the New York New Haven & Hartford RR. Co. and President of the Railroad Credit Corporation. Mr. Buckland further advocated that the Inter-State Commerce Commission should not be permitted to suspend rates and interfere with the discretion of railroad management, at least so long as the railroads are earning less than a fair return upon the value of their properties." "Railroads," he declared, "should be permitted to engage in any and all kinds of transportation upon substantially the same terms as their competitor s." "The Government," he said,"should retire from the operation of barge lines in competition with private enterprise." Mr. Buckland also said remedial legislation "should be applied to stop the useless expense in connection with the current valuation of railroads and law suits for recapture of income alleged but not proven to have been earned." Mr. Buckland in his address pointed to taxation burdens borne by the railroads, and in citing figures to show that $56.69 in paid in taxes as compared with every $100 earned of net income, he said "it may fairly be asked whether any other American institution is required to pay out in taxes so large a proportion of what would otherwise be net income." Mr. Buckland's address follows: The American Railroads—A Bound Investment. A discussion of the soundness of investments in securities of American railroads may appropriately begin with a text drawn from an Act of Congress and an opinion of the United States Supreme Court defining and fixing the Federal Government's policy respecting railroads Inter-State commerce. The text is taken from two excerpts, engaged in one from the Inter-State Commerce Act, the other from an opinion of the Supreme Court of the United States. Paragraph (2) of Section 15a of the Inter-State Commerce Act enacted as a part of Transportation Act, 1920) reads, in pert, (originally as follows: "(2) in the exercise of Its power to prescribe just and reasonable mission shall initiate, modify, establish or adjust such rates so that rates the Comcarriers will, under honest. efficient and economical management and reasonable . . expenditures for maintenance of way. structures and equipment, earn arermate annual net railway operating income equal, as nearly as may be. an a fair return upon the aeereeate Value of the railway property of such carrierstoheld for and used in the service of transportation." United States Supreme Court in Dayton-Goose Creek Railway v. United States, in construing Transportation Act, 1920, used the following forceful language: "The new Act seeks affirmatively to build up a system of prepared to handle promptly all the Inter-State traffic of the country. Itrailways to rive the owners of the railways an opportunity to earn enourh to maintainalms their nronerties and equipment in such a state of efficiency that they can carry well this burden. To achieve this great purpose, It puts the railroad systems of the country more completely than ever under the fostering guardianship and control of the Corninisalon, which is to supervise their Issue of securities, their car , and dietribution. their joint use of terminals.(heir construction of new lines,Knuth their abandonment of old linen. and by a proper division of Joint rates. and by Thine adequate rates for Inter State commerce, and in case of discrimination for !Mtn -State commerce, to secure a fair return upon the properties of the carriers engaged." 3283 This part of the Inter-State Commerce Act and the judicial interpretation thereof are In a sense only declaratory of the constitutional right of each railroad to earn, if it can, by means of reasonable rates, fares and charges a fair return on the value of its property held for and used in the service of transportation. To this constitutional right possessed by each railroad, the quoted text adds the mandate to the Inter-State Commerce Commission to permit and aid the railroads to realize a fair return upon the value of their property devoted to the service. With this policy of Government clearly defined, investors in railroad securities may still inquire: (I) Whether the service upon which a return is sought is a necessary service. (2) Whether the value Upon which the return is sought is a real value. (3) Whether the property is operated with such efficiency and economy as to produce an Income assuring payment of interest and dividends. (4) Whether the management Ls of such character and morale as fairly to guarantee continued operating efficiency and economy. It is by applying these tests that the American railroads have proved to be, and under "Equality of Opportunity," will continue to be sound Investments. (I) Is the service performed by the American railroads a necessary service in the sense that no other agency can perform it as efficiently and economically? The facts are that in spite of the other methods of transportation, by water, by highway and by air, carriage by rail has been, is now, and bids fair to continue to be the principal method of transportation in the continental United States. As a proof, in the calendar year of 1931, 85% of the ton miles performed, other than traffic on the Great Lakes, moved over the railroads. The Association of Railway Executive!) emphasizes this in its statement, "To the American Public" of July 20, in the following language: "It should not be forgotten that through a period of More than 100 the railroads, when Considered as a single system, as in effect they are, have years to their present proportions responsive to the actual or potential demandsgrown of commerce. They could to-day with the existing plant carry the entire of the country, while all other transportation agencies combined could commerce carry a small part of the reduced traffic now moving over the railroads. It follows,only therefore, that the railroads will always be needed not only in time of peace, but even more in time of war. However much we may wish it were otherwise, the hazard of war cannot yet with safety be overlooked. In order to meet satisfactorily the demands that will be made upon them in the future, the roads must be kept at all times well and efficiently equipped both as to material requirements and as to personnel." Professor Ripley, in his recent articles in the New York "Times," has shown the impossibility of the performance of this service over the highways. He points out that in 1929 the Class I railroads of the United States hauled 490,000,000,000 tons of freight one mile and shows how many motor trucks it would take to carry this amount of load moved by the railroads. The average run of a motor truck is 25,000 miles per year, two-thirds of this under load and the remainder empty. Proper allowance must be made for idle time, repairs, itc. It would, therefore, appear that about 6,250,000 five-ton trucks would have to be constantly at work to do this job. At an average length of 25 feet, 6,250,000 trucks would form a solid line 30,000 miles long. Picture that number of trucks almost 10 columns abreast, fenders touching all the way from New York to San Francisco. Upon the foregoing facts it may be stated without fear of successful contradiction that the railroad service is a necessary one, which no other agency can perform as efficiently or economically. (2) What is the value of the American railroads upon which they are entitled to a fair return/ I again quote from a statement of the Association of Railway Executives: "In 1920 the railroads of the United States were tentatively valued for ratemaking purposes by the Inter-State Commerce Commiisinn at 318,900.000,0 00. Since then, and responsive to the insistence and even demands of shippers, officers of the Government and others, mo:e than $7,000.000,003 have been expended on these properties for additional facilities and equipment, so that to-day their value, based upon the Commissioa's finding In 1920, may be taken to be at least 525,000.000,000." In this connection it may be said that this value is ultra-conservative . The figure of $18,900,000,000 was arrived at by the Inter-State Commerce Commission in 1920, in spite of undisputed testimony, fixing the value at approximately $22,000,000,000. Bear in mind, this figure does not include any assets of a railroad corporation except those used and useful in the performance of transportation by rail. It does not include ownership in non-railroad property, such as water lines, timber lands, property lying outside the right of way and not used for railroad purposes and other miscellaneous investments. As against this asset value, the total funded debt of the railroads at $12,300,000,000 is less than 50% of the valuation as shown above, while funded debt and stock combined, roundly $19.500,000,000, are equal to about 78% of the total valuation based upon Commission's tentative estimate. It cannot in fairness be claimed the that collectively the railroads, from the standpoint of the investment, are overcapitalized. The point made •by the foregoing is emphasized by the aggregate investment in non-railroad properties which though not valued by the Commission, nevertheless appears upon the balance sheet and is properly reckoned as a part of the assets against which the evidences of indebtedness and stocks were issued. If it be said that some part of these assets so valued have ceased to be useful in producing transportation, there is yet such a marginal surplus of asset value over the par of liabilities, as will justify the statement that as a whole the American railroads are under-capitalized rather than over-capitalized and that they have the right to earn a substantial surplus charges and reasonable dividends. This being so, the right of over fixed any governmental body may be sharply challenged to prevent, through the suspension of tariffs, the discretion still vested In railroad managers to fix and collect reasonable rates, fares and charges which they believe will promote the traffic which they are seeking to develop and carry. The evidence of faith in this valuation is shown by the fact that more than one-third of the outstanding railroad bonds are held by insurance companies and savings tanks. Add to these the holdings of probably $2,230,000.000 in endowment funds by colleges, hospitals and institutions of a similar character and the result is that more than half of these bonds are held by institutions where safety first is sought. Investment bankers will confirm the statement that the most conservative investors are the savings banks and the life insurance companies. A savings bank regards as a fairly conservative investment a loan for one-half the value of improved real estate secured by a mortgage thereon. The total railroad funded debt is less than half the Value of and this funded debt constitutes all the evidences the property securing it, of funded indebtedness, senior, Junior, first-grade and second-grade. The investments of the savings banks and life insurance companies in the railroads are generally in the highest grade of bonds, which it is safe to say represent a prior lien upon property of at least three times the par of the bonds. The payments, when due, of principal and interest of these bonds are to be relied upon as implicitly as are payments of loans upon real estate. Next to Government (end some State) bonds, they ought to he, rind I believe are, among the safest and soundest of our investments. The sayings banks and life insurance companies which have made these investments have no reason to apologize for them. They have every reason to defend them. 3284 Financial Chronicle (3) has the property of the American railroads been operated with such efficiency and economy as to produce an income assuring payment of interest and dividends? The necessity for the service and the value of the property having been established, the third test is the economy and efficiency with which such property is operated and the income as a result thereof. Here again there is no need for oral assertion. Statistics derived from the standard accounting under the rules of the Inter-State Commerce Commission show the following operating indices of economy for the 10 years of 1921-1930, inclusive: "For Class I carriers of the United State; the net ton miles revenue and nonrevenue per train hour Increased trout 7,506 In 1921 to 10.580 in 1929; for the year 1930 they were 10,839. The net ton miles per freight car day Increased trona 389 In 1921 to 547 In 1929; for 1930 they were 469. Freight locomotive miles per locomotive day Increased from 49.5 in 1921 to 65.1 In 1929; and In 1930 were 58.0. Passenger locomotive miles per locomotive day Increased from 103.4 in 1921 to 120.3 in 1929; and In 1930 were 116.1. The pounds of coal consumed per 1,000 gross ton miles decreased from 162 in 1921 to 125 In 1929; they were 121 In 1930. The pounds of coal consumed per passenger ear mile decreased from 17.7 In 1921 to 14.9 In 1929; they were 14.7 in 1930, In these figures the consumption of all other forms of fuel used on steam locomotives is equated into coal. Based on these statistics it may be computed that fuel consumption for the year 1930 WS 28,774.000 tons less than it would have been on the basis of the performance of 1921." The average net income of Class I railroads in the United States for the 10 years ended Dec. 31 1930 was $618,692,000. The average funded debt outstanding for these same railroads, covering the same period, was $10,378,300,000. The annual average interest charges on both funded and unfunded debt was $503,499,000. The income earned applicable to such interest charges averaged $1,122,191,000, or 2.23 times this interest charge. During that period the average yearly tax accruals were $350,738,000, or 5.88% of the gross operating revenues and 56.69% of the net inccrne. Translated into the language of the "man in the street," this means that the American railroads during the 10 years ended Dec. 31 1930 paid out in taxes out of every $100 which they earned $5.88. In spite of this and after this payment, they earned almost two and one-quarter times their interest upon all their indebtedness consisting of senior bonds and junior bonds, debentures and bank loans, and they had left to apply to dividends upon $7,200,000,000 of stock and surplus for future needs, $618,693,000. This net income was realized after a prior payment of $350,738,000, or $56.69 paid in taxes, as compared with every $100 earned of net income. It may fairly be asked whether any other American institution is required to pay out in taxes so large a proportion of what would otherwise be net income. The foregoing figures seem to demonstrate that during a period of normal business the American railroads have been honestly and efficiently operated and have earned, in spite of an extraordinary burden of taxation, two and one-quarter times the interest on their entire indebtedness. (4) Is the management characterized by such integrity and morale as to justify the expectation of continuing efficiency and earnings under normal conditions of business? The figures cited have borne witness to the increased efficiency and economy with which the Amenican railroads were operated in the 10 years ending 1930. Speaking generally, the same men are now working for the same railroads as during that period and from top to bottom they have been, and continue to be, actuated by a morale extraordinary in the difficulties with which they have been surrounded. In speaking of management, I make no distinction of rank. Our railroad executives have mostly come in through the hawse hole—few through the cabin window, and the same standards which have brought the executives to their places in general characterize the entire body of employees. The executives of the American railroads in 1917, upon the declaration of war, pooled their efforts and property so far as the law allowed (and as they were warned, beyond what the law allowed) to help our country win the war. For the remainder of the year, they established a War Board of their own members in Washington, to co-operate with the Government until the Government itself took over the railroads on Dec. 28 1917. The same men, in general, operated the railroads under Government direction, and while not free to obtain the economy of private operation, they did so perform as to keep the Allies supplied with the necessities for war beyond the capacity of the Allies' ships to transport. When peace came and the railroads were returned to their owners, it was found necessary to obtain through loans the aid of the Government to rehabilitate the properties. In all, nearly $1,116,000,000 were loaned. Of this amount, the railroads repaid to the Government almost $1,077,000,000, leaving a balance outstanding of a little over $39,000,000. In addition, they paid 6% interest upon the principal sues, or nearly $180,000,000. The money which the Government loaned the railroads cost it about 4% during this period, and as it received 6% from the railroads, one-third of the interest received was profit, amounting to a little more than $60,000,000, which represents an actual profit in cash to the Government of this amount less whatever of existing indebtedness of $39,000,000 be uncollectible. In short, upon the Government loans made succeeding Federal control, the Government has already realized a net cash profit of $21,000,000, and as much more as may be collected from debtor railroads. No further comment is needed to establish the financial integrity of the managers of the American railroads. The men who manage and the men who serve are of a rugged reliability, a genial comradeship and a keen loyalty unsurpassed by any other class of Americans. To be called a "railroad man" is to accord an honorable standing, likened only to the approbation which the term "soldier" means to a man in the army and "sailor" to the man in the navy. In each case, it means that the man is engaged in an honorable work and is doing his job well. This combination warranted recognition and received it in the report of the Secretary of Commerce (now President of the United States) in 1926. The results there stated have been progressively improved in subsequent years, as shown by the indices of operation which have been cited. The following is quoted from the report: "Probably the most outstanding single industrial accomplishment since the war has been the reorganization of our American railways. Our transportation service was not only demoralized by Government operation during the war but had suffered chronic car shortages and Insufficient service, not only after the war but for many years before. The annual loos from this periodic strangulation In transportation was estimated in the Department's annual report of 1925 to amount to hundreds of millions a year. The insuffiency of transportation Interfered with steady Industrial operations. created intermittent employment, increased the cost of production and, through pelodlc strangulation, caused high prices to the consumer. Manufacturers and distributors were compelled to carry excessive Inventories as a protective measure, thus not only Increasing the amount of capital required In the business but multiplying the danger of loss by price fluctuation. "The railways, during the past five years, not only have built up adequate service and given complete correction to those ills, but they have, by great ability of their managers, greatly reduced transportation costs and thus made rate reductions possible which would not have been otherwise the ease. . . . The result of this great reorganization upon the whole economic fabric of the country has been far-reaching." As a further earnest of continuing efficiency and earnings under normal conditions of business, is the following declaration of the managements with respect to preventable waste: "The railroads are utilizing, and propose to continue to utilize even more extensively, their organizations in the field of research and experimentation and take all other available measures in order to secure the utmost In operating efficiency• They pledge themselves to avoid all preventable wastes in the competitive rela- Nov. 12 1932 tionships between themselves and to devise and apply the most feasible methods for meeting new competitive conditions. Thisis their part in tile solution of the transportation problem." Upon the foregoing facts, there may be fairly claimed to have been established the necessity of the American railroads as a transportation agency, the intrinsic value of the property, the efficiency and economy of their management and their earning capacity in normal times, and the integrity and morale of the men engaged in the service. What is the reason then that the market quotations on railroad securities do not reflect their real value as investments? Why is it that first-grade railroad bonds are selling upon a 5% to 6% yield and second-rate bonds on a much higher yield? The principal reason is, of course, the present depression in business. The Association of Railway Executives says that: 'While the present financial condition of the railroads is due In large part to the prevailing depression in business, the steam carriers have also felt in constantly increasing measure during recent years the competition of other transportation agencies, including the motor-driven vehicle operating on the greatly Improved highways and transportation by water. . . . "It Is evidence of the Inherent strength of the railroads that they have been able to support as well as they have this double burden of the depression and the Increased competition of other forms of transportation. "The public Is entitled to have and should have the most efficient system of transportation that it Is possible to create, including all available agencies, and to use each agency in the manner and to the extent Justified by its effectiveness and economic cost, but only upon terms lust and equitable to all." The American railroads are entitled to this "Equality of Opportunity." They ask for "a fair field and no favor." They do not believe that transportation agencies should be free from all regulation. They believe it in the public interest that reasonable regulation of these agencies should continue, but that it should be applied to all alike and not confined to rail carriers. I advocate changes in existing Federal legislation to permit railroads to make rates and adjustments thereof to the extent necessary to meet competition, however arising; that the Inter-State Commerce Commission should not be permitted to suspend rates and interfere with the discretion of railroad management, at least so long as the railroads are earning less than Q fair return upon the value of their properties. Railroads should be permitted to engage in any and all kinds of transportation upon substantially the same terms as their competitors, and among their competitors should be included the United States Government directly or indirectly. The Government should retire from the operation of barge lines in competition with private enterprise. It should stop improvements in inland waterways which cannot when made be operated without a continuing loss payable out of general taxation. Remedial legislation should also be applied to stop the useless expense in connection with the current valuation of railroads and law suits for recapture of income alleged but not proven to have been earned. All common and contract carriers engaged in inter-State commerce by highway should be placed under the jurisdiction of the Inter-State Commerce Commission or other Federal tribunal. The same regulations should be imposed upon them as upon the railroads as to publishing and adhering to just and reasonable rates. The railroads should be allowed to perform highway service and to co-ordinate the same with their rail service wherever in the opinion of the management of these railroads the public can so be better served. Legislation by the States should, in general, follow the same line as by the Federal Government with respect to Inter-State commerce, but, in addition, State legislation should distribute more equitably the cost of constructing and maintaining highways upon the users of such highways. To the extent that commercial vehicles are failing to share the burden of such construction and maintenance, they are currently receiving a subsidy paid at the expense either of the general taxpayer or of the users of private automobiles, especially of the less expensive type, which are paying taxes all out of proportion to the wear and tear which they impose upon the highways. There should be a more equitable distribution of license taxes based upon the concentrated weight imposed upon highways by heavilyloaded vehicles, and this burden should be maintained by those that operate the heavily-loaded vehicles, the railroads taking their share of the burden if they are permitted to operate highway trucks. There should be relief from the burden of taxes currently being paid. In the depression of 1931 the ratio of taxes paid by the railroads out of their operating revenue was raised from the average of 5.88% herein above quoted for the 10-year period to 31%, in other words, in the year 1931, out of every $100 earned from operation, the railroads paid $31 in taxes. Almost one-third of the railroad plant was operated to support the Federal, State and local governments. This crushing burden of taxation is, of course, due to the fact that generally speaking railroads are taxed on their gross earnings rather than upon the value of their property or upon their ability to pay. There should be some more equitable form whereby all transportation agencies shall be similarly taxed and at such a rate of taxation that none shall be required to bear an undue share of the support of Government. The railroads seek "a fair field and no favor"—"Equality of Opportunity." They ask for no more. They are entitled to no less. Report of Railroad Securities Committee by Earle Bailie, Chairman—Temporary Measures in Behalf of Roads Must Be Extended Pending Effectiveness of Constructive Forces—Association Asked to Refrain from Joining Those Deluging National Transportation Committee with Suggested Remedies. According to the report of the Railroad Securities Committee of the Investment Bankers' Association of America, "the temporary measures put into effect this year [in behalf of the railroads] must be extended unless we are to lose the benefits which they have provided. The whole structure of temporary relief must be continued until the constructive forces now under way can become effective." Preceding this statement the Committee said: "There seems good reason for believing that the worst of the depression has been seen, and that an improvement, even though slow and gradual, Is in the making. However, unless the rate Increase and wage decreases are carried forward, it Is estimated that a 10% increase in traffic in 1933 over 1932 would still show the railroads as a whole falling far short of meeting their fixed charges, to say nothing of the heavy maturities to be met in the coming year." The Committee notes that "it is an Important and difficult task which the National Transportation Committee undertakes," and it makes known its 3285 Financial Chronicle Volume 135 intention to present a report of analysis and recommendations as soon as the Transportation Committee's findings are made public. In the interim the Association is asked to assist the Transportation Committee in any way it may suggest, but to refrain from joining the host of those who will deluge it with suggested remedies and ready-made solutions of the problem." Earle Bailie, of J. & W. Seligman & Co., is Chairman of the Railroad Securities Committee, whose report, as presented at the annual convention of theinvestment Bankers' Association, follows in full: In presenting the report of the Committee on Railroad Securities, I shall attempt to outline the results of railroad operations in the present year, review the measures which have been taken to deal with the emergencies that arose, examine the present situation of the railroads and the outlook for the corning year, and present certain recommendations to the Association. Railroad Operations in 1932. The report of your Committee, presented at the February meeting of the Board, included an estimate of probable 1932 earnings which indicated that net income of Class I railroads as a whole would show a deficit after charges of about $200,000,000. NoW, with more than three-fourths of the year behind us, it appears that this figure is approximately correct. For the purpose of comparison there is set down the estimate of income this year as made in February and as of to-day contrasted with the actual income accounts of 1931, 1930 and 1916: (In Millions of Dollars.) February Present Estimate.* Estimate.* 1932. 1932. 1931. 1930. 3,660 2,920 3,200 2,500 4,188 3,225 5.281 3,931 3,596 2,357 Net revenue from operations Taxes Rentals 740 300 140 700 295 120 965 304 135 1,350 350 131 1.239 158 41 Net from operations Non-operating income 300 200 285 210 526 298 869 349 1,040 210 Total income Fixed charges 500 700 495 700 824 683 1,218 691 1,250 603 —200 1 1 ,7.. —205 11w. 141 2.0% 527 3.3% 647 5.9% Dperating revenues Dperating expenses Net for corporation Rath ni return on investment 1916. •Estimate prepared under supervision of the Chairman. Reflecting the seriousness of the business recession, estimated total gross revenues for this year will fall $460,000,000, or 13% below the figures which seemed possible of attainment last February, and nearly $1,000,000,000 below those of 1931. Fixed charges have increased slightly due to the building up of floating debt; and the burden of taxes remains practically unchanged. It is interesting to note that with operating revenues in 1932 about $400,000,000 less than in 1916, it will cost the railroads, in expenses, rentals and taxes, about $360,000,000 more to operate their properties, of which $140,000,000 represents an increase in taxes. The ability to obtain even the results shown in the face of a drastic further decline in traffic, and to operate throughout the year without the financial breakdown of a major railroad, has been due first and foremost to operating economies effected by the managements during 1932 to the extent of over $600,000,000, or 60% of the loss of gross revenue as shown above and, secondly, to the following emergency measures: (1) 10% reduction in wages of organized labor. (2) Rate increases. (3) The Railroad Credit Corporation. (4) The Reconstruction Finance Corporation. Each of these deserves a word of comment. Reconstruction Finance Corporation, provided for the giving of additional assistance to the railroads as one of its functions. Under the legislation creating the Corporation, it is empowered to make loans to railroads, or receivers of railroads, without restriction as to the amount, excepting that not more than $100,000,000 may be advanced to any one property. All loans must be approved by the Inter-State Commerce Commission, and must be adequately secured. To Oct. 1, applications for loans totaling approximately $432,000,000 have been made, of which approximately $333,000,000 to 66 roads were approved by the Inter-State Commerce Commission. The funds loaned by the Corporation have been used to pay, in whole or in part, bank loans, taxes, overdue vouchers, and other unfunded indebtedness, to meet in whole or in part maturities of funded debt and equipment trusts, and to finance improvements that had been interrupted. Advances also have been made to meet interest payments when it became evident that the revenues from the freight rate surcharge deposited with the Railroad Credit Corporation would be inadequate for this purpose. The Reconstruction Finance Corporation has been of major importance in assisting the carriers to meet the overwhelming financial problems that have confronted them and averting the financial breakdown of important systems. While the resources and machinery of the Reconstruction Finance Corporation for extending further aid will continue to be available provided the necessary order is issued by the President next January, it will become increasingly difficult, under the definition of "adequate" security, for many railroads to secure further assistance because most, if not all, of their free assets are already pledged under existing loans. These wise and timely measures have been effective but they are wholly and avowedly temporary measures, designed for the period of emergency and, unless extended, will shortly cease to operate. The wage decrease ends on February 1 1933; the rate increase ends on March 81 1938; the present Railroad Credit Corporation can make no loans after May 31 1933; and effective further assistance of the Reconstruction Finance Corporation will become increasingly difficult unless its present requirements concerning adequate security are amended and relaxed. So much for the present situation. The question arises as to what is the reasonable prospect of earnings for the railroads for 1933, and how their needs can be met during that year. Outlook for 1933. A continuation of the 1932 level of business obviously will not furnish adequate income for the railroads in 1933. The stabilization of traffic In recent months, however, gives some hope that the long decline since July 1929 has been checked and the more than seasonal gains of this autumn indicate the possibility of at least seasonal improvement. There seems good reason for believing that the worst of the depression has been seen and that an improvement, even though slow and gradual, is in the making. However, unless the rate increase and wage decreases are carried forward, it is estimated that a 10% increase in traffic in 1988 over 1932 would still show the railroads as a whole falling far short of meeting their fixed charges, to say nothing of the heavy maturities to be met in the coming year. The question therefore arises as to what Is to be done. Can the railroads be expected to make further substantial savings without further capital expenditures? In their retrenchment program, the railroads have made notable progress in the development of more economical methods which will be of lasting benefit. However, there Is doubt as to how far further retrenchment can be carried. In some instances the necessities of the year have required a deferment in maintenance expenses of considerable proportion. Service has not been interrupted thereby and nothing has been done to impair the safety of operations. These accruals of maintenance, however,.must be becoming a real handicap to near term earning power and upon many roads deferments are undoubtedly such as presently to require an increase in maintenance cod. It Is doubtful, therefore, that the near term offers a real opportunity for the railroads, as a whole, to achieve further substantial savings in operating expenses. It thus becomes apparent that the temporary measures put into effect this year must be extended unless we are to lose the benefits which they have provided. The whole structure of temporary relief must be continued until the constructive forces now under way can become effective. (I) Wage Reductions. (1) Wage Reductions. A 10% deduction from the wages earned by organized railroad labor became effective Feb. 1. This is not a new wage scale, but merely permits the railroads for one year to pay 90% of the payroll. Working agreements were not altered and no changes were made in the basic rates. On the basis of the payroll in effect at the time of the agreement, this 10% deduction would have produced a saving of about $120,000,000. The wage reductions now in effect terminate Feb. 1 1988. (2) Freight Rate Increase, On Oct. 16 last year the Inter-State Commerce Commission authorized an increase in freight rates of approximately 3%, which, it was then estimated, would provide the railroads with $100,000,000 to $125,000,000 additional revenues for the effective period of 15 months. A condition was imposed to the effect that the revenues from the increased rates be deposited in a common pool from which roads not earning interest could withdraw such funds as were needed for this purpose. The railroads found themselves unable to accept this condition, but, in order to take advantage of the increased rates, proposed that the moneys in the pool should be utilized for loans to railroads not earning their charges and submitted a proposed form of organization that would administer the funds. The Commission, on Dec. 5, accepted the railroads' plan and the rates became effective Jan. 4 of this year. The organization set up by the railroads is the Railroad Credit Corporation. (8) Railroad Credit Corporation. The Railroad Credit Corporation, a voluntary association, may make loans at the prevailing discount rate so solvent railroads for the purpose of allowing them to pay interest on their obligations to the extent that its resources are available. It may not obligate itself beyond the total of its estimated receipts. Total loans of the Railroad Credit Corporation to Oct. 1 amounted to $32,000,000, its receipts in this period being $36,000,000, and it is estimated that total receipts to March 31 1933 will be some $75,000,000. The successful administration of the affairs of this Corporation is due largely to the courage, resourcefulness, initiative and imagination of its Chairman. The increased freight rates cease on March 31 1933. No loans may be made after May 31 1938. Thereafter the work of the Railroad Credit Corporation until Dec. 1 1937, which is the period of its chartered existence, will consist chiefly of collecting the loans made and distributing the receipts therefrom to the contributing carriers. (4) Reconstruction Finance Corporation. As the resources of the Railroad Credit Corporation were limited in amount and restricted in application, the Administration, in planning the This Committee does not feel that it is within its province to make any recommendations at this time in regard to the continuation or alteration of the present wage agreements. It would appear, however, that a continuation of the present reduction in wages is necessary in view of the financial situation of the railroads, and, in the light of the reductions to which wage groups in other industries have agreed, it would seem that the further reduction recently proposed by the railroads must of necessity be very carefully and sympathetically considered by the railroad labor organizations. (2) Rate Increases. A continuation of the present rate increases seems essential in the period that is immediately ahead, if only because it forms an integral part of the present structure of temporary relief. (3) Railroad Credit Corporation. Whatever one may think of the principle of forced loans from profitable systems to unprofitable ones, it would appear that, if a continuation of a wage reduction is agreed to and a continuation of the increased freight rates is granted by the inter-State Commerce Commission, it is important for the carriers to extend the same assistance to the weaker railroads as has been extended this year, either through the Railroad Credit Corporation or a new agency. (4) Reconstruction Finance Corporation. Large sums have been advanced by the Reconstruction Finance Corporation and it is undoubtedly necessary that further large sums be advanced during the coming year to tide the railroads over the present crisis. The debts contracted by the railroads in the past two years, although substantial in amount, are not a burden that cannot be discharged when railroad credit is restored. At the end of 1920 short term loans, mostly from the Government, amounted to about $300,000,000, most of which were repaid within three years. At the present time loans of $333,000,000 from the Reconstruction Finance Corporation have been authorized by the Inter-State Commerce Commission (of which about $225,000,000 are for refunding or capital purposes), loans of $32,000,000 have been authorized by the Railroad Credit Corporation, and there are outstanding in bank loans some $200,000,000—a total of about $565,000,000. The amounts which the National Treasury have made available to the railroads are patently large. It seems only fair, however, that the public,— which, in the past and in their own interest, have insisted on the regulatory measures which have prevented the railroads from adequately preparing themselves for a period such as they are passing through, and which have hampered their adjustment to the radically reduced volume of traffic— 3286 Financial Chronicle airsild again in their own interest, in an emergency of the present magnitude, assist the railroads in meeting their temporary situation until a more permanent remedy can be devised and applied. Even with a sustained improvement in the results of operations, the railroads will need additional assistance from the Reconstruction Finance Corporation in meeting current interest charges and maturity payments. It must be recognized, bows.% er, that many of the carriers which most need help face 1933 with a considerable portion of their free assets pledged under existing loans. A more liberal method of appraising "adequate security" undoubtedly will have to be adopted, and the requirements of the Reconstruction Finance Act in this respect modified and relaxed, if the railroads are to be enabled to take advantage of the resources provided. It is suggested that perhaps the test of eligibility for assistance should be not the "adequacy" of the security but consideration of the fact whether, under minimum normal conditions, the railroad requesting the loan is a solvent working enterprise. Conclusion. The above temporary measures, the continuation of which is urged, are obviously palliatives which would not and should not have been necessary if a real solution of the railroad problem had been reached before this. However, they are of the utmost importance in permitting the carriers to carry on until such time as a permanent solution can be worked out. Now as to the permanent solution: As a result of a co-operative effort on the part of insurance companies, mutual savings banks, some of the great universities, and other organizations, of which your Association was one, a group of distinguished men have agreed to serve on a National Transportation Committee to examine the railroad problem in its relation to the entire transportation problem of the United States, and to recommend a permanent solution. This committee consists of Calvin Coolidge as Chairman, Bernard M. Baruch as Vice-Chairman, Alfred E. Smith, Alexander Legge, and Clark Howell, Sr. The willingness of this National Transportation Committee to undertake the vital task of outlining such a solution gives real hope that the present railroad crisis will be met on sound principles. Never has the country been able to command the services of a more able and distinguished group to assist it in coping with a major economic problem. As outlining the problem which the Committee faces, and the basis on which it will be approached, I think I can do no better than quote in full the letter of invitation extended to the Committee, to which your Association was one of the signatories. "The present financial position of the railroads of the United States is a matter of grave concern. Collectively the greatest and most important industry of our 00nntry, the railroads have operated In this year at staggering deficits. Only wise Slid timely Federal aid has averted the financial breakdown of important systems. "This situation touches every citizen. It affects directly the security or wage and employment of the 1.500,000 railway workers. It affects equally the many and Important Industries supplying railway equipment and supplies. It touches the financial problem of local. State. and National Government, to the support of which the railroads contribute over $300,000,000 annually in taxes. It has given rise to a severe decline lo the value of the $19500000000 of railroad obil"adons and shares, and has occasioned concern to Institutions which hold such obil"aBons among their assets, representing in part the savings of that thrifty portion Of our population which is to be found among the policyholders of insurance companies and the depositors in savings banks. The relief that the present emergency has made it necessary to grant to the railroads is a drain on the Federal Treasury, and any ultimate loss will constitute a burden on every taxpayer. —The present deplorable position of the railroads Is not due wholly to the stagnation of traffic resulting from the long-continued depression. Many of the present Ills are due to Governmental, financial, labor, and management policies, some wrong In conception, some wrong In application, and others rendered obsolete by radically chan"ed conditions. As a result, the railroads have not been in a position to adjust themselves, as well as have other industries, to present conditions. "There are many Msa, reements as to causes, many disagreements as to remedies; but unanimous agreement 84 to the urgent necessity of some thorough-going solution of the problem. No solution, however, will be effective unless the problem of the railroads is considered 89 an Inte-mitmart of the entire transportation problem of the United States, whether by rail, highway, waterway, pipeline, or air. "Every industry in the country Is entitled to fair treatment—the railroads no less than the others. The public interest must certainly be protected, but regulation should not place the railroads at a hopeless disadvantage with competing agencies and destroy flexibility of operation and management initiative. The railroad workers are entitled to a fair wage and the greatest possible security of employment. The holders of railroad securities are entitled to a fair and stable return on the true value of their investment. el "But more important than the interests of any one group, the people of the United States are entitled to the most effective and economical form of transPertation to meet their various needs, whether by land, water, or air. Each form of transportation should be unhampered to provide effectively at a reasonable coat and at a fair profit the service for which it is best fitted. NO form of transportation Should be favored either at the expense of another agency or at the ultimate expense of the people of the United States. "We, the undersimed ormnizatfons, representing many of the interests concerned, believe that there Is no more important present task than a thorou^h and satisfactory solution of the railroad problem, as an Integral but the most ur-ent part of the entire transportation problem. We beg that you examine all phases of the problem and recommend a solution which, with due regard for the public intermt, will ensure an opportunity for the railroads of this country to operate on a business basis, to the end that there may be a stabilization in unemployment of wwm-earners and In the values of investments made In behalf of Insurance policyholders and savin"s bank depositors, and a general enhancement of the prosneritY of the country which to so "rest a de-ree depends upon the prosperity of the railroads and of the many lines of business which in turn depend upon them." It is an important and difficult task which the National Transportation Committee undertakes. It is obvious that in view of the scope of its task, it cannot be expected to make kown its findings and recommendations for several months. It is equally obvious that even with unanimous public support it will require time to give effect to the suggested remedies and further time before their beneficial effects will make themselves felt. Therefore, it is neither fair nor pocsible to look to that Committee for a prompt solution of the general problem which would render unnecessary further temporary aid. • When the National Transportation Committee has made public its findings and recommendations, your Committee will present to the Association a report of analysis and recommendations. In the interim, it is our recommendation that the Association offer to assist the National Transportation Committee in any way it may suggest, but that we refrain from joining the host of those who will deluge it with suggested reardies and ready-made solutions of the problem. We couple with this suggestion an urgent recommendation that this Association utilize every possible mnans and every appropriate opportunity to urge the continuation of the present program of temporary assistance to the railroads. In order that the great good which has been done during the past year many not be dissipated. every effort should be made to keep the situation intact until a permanent solution of the railroad problem shall have been achieved. Earle Bailie, Chairman Arthur M. Anderson John A. Clark George W. Bovenizer Lee L. Daly Robert K. Cassatt Plerpont V. Davis George C. Clark Henry S. Sturgis Nov. 12 1932 Report of Committee on Government and Farm Loan Bonds by Chairman F. Seymour Barr—New Government Securities Approximating $8,900,000,000 Put Out Between Nov. 2 1931 and Oct. 19 1932— About $5,500,000,000 Government Issues Refunded Making Total of "New Money" About $3,400,000,000 —Demoralizing Influence on Joint Stock Land Bank Borrowers of $25.000,000 Appropriation by Congress to Federal Land Banks. The sale by the United States Government of new securities approximating $8,900,000.000 between November 2 1931 and October 19 1932 is noted in the report of the Government and Farm Loan Bonds Committee, presented by its Chairman, F. Seymour Barr, of Barr Brothers & Co., Inc., of New York, at the annual convention of the Investment Bankers' Association of America, at White Sulphur Springs, W. Va., on Oct. 24. During this period, said the report "a total of about $5,500,000,000 United States Treasury Certificates, notes and bills matured which were refunded," this, said the report, making a total of "new money" of approximately $3,400,000,000. The report points out that during the past year there has been no public financing done by the Federal Land Banks, the $25,000,000 appropriation this year by Congress to the Federal Land Banks is referred to in the report as to which it says the appropriation (to the Land Banks), according to officials of the Joint Stock Land Banks, "has had a demoralizing influence on a comparatively large number of Joint Stock borrowers who in some manner have gained the impression that the Government will also come to their aid and are showing a tendency of refusing to meet their interest Instalments." "Unlike the Federal system" says the report "there has been no appropriations by Congress to help the Joint Stock Land Banks either in extending time to worthy borrowers or in building up their capital structure." "Ostensibly, the Joint Stock Land Banks can borrow from the Reconstruction Finance Corporation" says the report, which comments on the several receiverships of several of the Joint Stock Land Banks (including the Chicago Joint Stock Land Bank) and says "the three receiverships occurring this year indicate very clearly that the Reconstruction Finance Corporation has not proven to be the practical help to the Joint Stock Land Bank System as was originally believed." The report follows: Between November 2 1931 and October 19 1932 the United States Government sold new securities approximating $8,900,000,000. These new issues included about $2,400,000,000. Treasury bills which ran approximately 90 days and were sold at 'various times on an average dl.. count basis ranging from 3.29% down to 0.14%. These bills were offered at frequent intervals to meet Government expenses between tax dates and to supply current funds. The last issue, dated Oct. 19, carried this low rate and consisted of $75,110,000, maturing Jan. 18 1933. There were sold by the Government during this period United States Treasury notes about $3,250,000,000, having maturities of one to five years, and carrying rates of VA% to 2%%. The Government also sold, during this same period, United States Treasury certificates approximating $3,177,450,150, having maturities of six months to one year, and bearing interest rates of 3%@ to 114%. The rates of interest on these certificates were higher than those for certificates issued during the preceding year during which period the rates ran from 2% to 1%%, but it is interesting to note that two of the most recent issues were brought out, one on June 15, at the rate of 11 / 2%, and on Sept. 13, at the rate of 1 14%. The Government sold issues of certificates and notes on four occasions between tax periods, once on Feb. 1 1932, when an issue of $227,000,000 31 / 4% six months' certificates and $144,000.000 334% one-year certificates were brought out, again on May 2, when an issue of 2239.000,000 2% one-year certificates and $224,000,000 3% two•year notes were brought out, again on Aug. 1 1932, when an issue of 2343,000,000 2%% two-year notes and $363,000,000 314% four-year notes were brought out, and again on Oct. 16 1932, when an issue of $500,000,000 3% five-year notes were brought out. These short-term securities constitute the total borrowing of the Government for this period as no long financings were resorted to. During this period a total of about 23.500,000,000 United States Treasury certificates, notes and bills matured which were refunded. This makes a total of "new money" of approximately $3,400,000,000, all of which was needed to meet current expenses. As a consequence, the total gross debt on Sept. 30 1931 of $17,320.606.057 increased to $20,810,000,000 on Oct. 19 1932. On June 30 1932, at the end of the last fiscal year, the total gross debt amounted to $19,487,000,000, an increase of $2,686,000,000 since June 30 1931. The Government must meet about sano,500,000 Treasury notes which come due on Dec. 15 of this year. Additional financing will probably be required to provide "new money" as the receipts for the first two months of the present fiscal year (July 1 to Aug. 31) were about $141,600,000 compared to about $142,600,000 in the same period last year. The Government deficit at the end of its fiscal year was in excess of *2.855,000.000, The Government short-term debt shows a substantial increase, and it now has obligations aggregating approximately 23,830,000,000 maturing within five years. Included in this figure are amounts totaling about $3,150,000,000 which must be met within one year from dote. On June 1 1932 2535,983,800 First Liberty 41411 and $1.392,228,350 First Liberty 314, were redeemable at the option of the Government, and can be redeemed at any interest date upon three months' notice to the bondholders. While it does not come within the present fiscal year, it is Interesting to note that $6,268,100,450 Fourth Liberty 4%s are redeemable at the option of the Government on Oct. 15 1933. It was pointed out in the interim report that long-term Government bonds were selling at extremely low prices, about the middle of January this year, Volume 135 Financial Chronicle and these prices on these issues sold within the last few years were the lowest on record. Your Committee wishes to call attention to the notable work done by President Pope at this time. Through many conferences with Treasury and Federal Reserve officials, he assisted materially in the establishment of the policy which practically limits Government financing to short-term obligations for an indefinite pericd. This policy has resulted in a sustained rise in the prices of long-ter.n Government bonds. For instance, in January 1932 long-term Treasury 4%s sold under 99; at the middle of April at 106%, and on Oct. 19 at 108. Treasury 3%s sold in January at 87%; in April at 9934, and on Oct. 19 at 101 6/32. Treasury Is, which was the last long-term issue to be put out by the Government, sold as low as 82 3/32 on Jan. 12 last; on April 15 at 95%, and on Oct. 19 at 96 20/32. Purchases during the year by the Federal Reserve Bank of short-term Government obligations naturally contributed to some extent to this rising price trend. Federal Land Banks. During the past year there has been no public financing done by the Federal Land Banks, the last offering by the System being the short-term 4%s of 1933, callable in 1932, which were marketed in November 1930. The banks, however, during this period, have been able to make limited advances to farmers. There has, however, been a small net decline in loans in force. Since the last report of your committee the marked increase in delinquent installments has continued, and real estate taken over under foreclosure is a very important item. During the past year the Federal Land Banks have been able to dispose of increased amounts of real estate holdings, and your committee is informed that at present depressed prices, real estate, while not readily salable, is being moved to an encouraging degree. Directly following your committee's annual report President Hoover asked Congress to substantially increase the capital of all the Federal Land Banks. It is important to record that his recommendation was promptly complied with, and $100,000,000 additional capital has been advanced to the 12 banks in varying amounts. This action by the Congress in appropriating these funds to increase the capital of the banks has been interpreted by the public as sufficient indication of the Government's attitude in relation to the Federal Farm Loan System, and the bonds have enjoyed a much improved market, with prices considerably up from the low point. Naturally, additional loans were made available to farmers as a result of this advance of funds. The Government received stock in these banks against this advance, on which it receives no dividends or interest. This stock may be retired in whole or in part at any time the banks have funds available for that purpose, and the money so repaid to the Government is to be held in the Treasury for the purpose of further advances to the banks should such necessity arise. This, in a sense, creates what amounts to a valuable revolving fund available to meet contingencies. You will recall in your committee's interim report rendered last May that there was an additional authorization made by the Congress of $25,000,000 which was earmarked for distribution to such banks that felt obliged to grant extensions to farmers who had tried to do their best to meet interest and principal installments, and who proved to be desperately in need of such extensions. This money was allocated among the 12 banks in proportion to their delinquent loans to the date of distribution. and was only to be drawn from the Registrar's account as the individual Land Banks confirmed such worthy extensions with the Federal Farm Loan Board. Your committee understands that as of June 30 this year extensions of over $10,000.000 have been granted out of the $25,000,000 provided for borrowers meriting time. At the time the above-mentioned $25,000,000 appropriation was made practical bankers of both the Federal end Joint Stock Land Banks advised your committee that they feared a situation had been created which might amount to a moratorium for a favored few and it would probably be a distinct influence in the slowing up of interest and principal installment payments generally. As a matter of fact, practically all the Federal Land Banks, foreseeing this condition, were definitely against this particular appropriation, and so stated at the hearing. Your committee feels that the original $100,000,000 appropriation for stock in the, Land Banks has put each Federal Land Bank in a much stronger financial position and has materially strengthened the collateral behind the Federal Land Bank bonds. A review of the position of the banks from Sept. 30 1931 to July 1 this year reflects pronounced difficulties in the collection of installment pay. ments which is perfectly consistent with existing general economic conditions, and delinquent accounts have increased after crediting partial payments, from $10,7n2.918 to $18,138,945. These total delinquencies are, of course, in addition to the extensions totaling over $10,000,000 previcandy mentioned, and it is pleasing to report that recent advices indicate a slight improvement in collections during the past month or so. So far this year there has been a net increase in the amount of real estate owned of approximately $9.000.000. In the aggregate the total amount of owned properties represents about 3% of the total assets, and an even lower percentage a'ter allowance for the reserve provided. An increase during the same period in sheriffs' certificates, &C., was also shout $9,000,000. and it is understood that something over 1% of the mortgages held by the hanks are under foreclosure. The banks have consistently followed the practice of setting up reserves against various asset amounts, end these specific reserves are substantial and are in addition to legal reserves and other items of net worth. By amendments to the Act, which became effective July 1 this year, reserve renuirements were more than doubled. It will be recalled that formerly the banks carried to the reserve account, semi-annually. 25% of net earnings until the aceonnt.reflected a credit balance equivalent to 20% of the outstanding capital stock of the bank, and thereafter 5% of net earnings were added. These reserve account credits have by the amendment been increased to 50% of such net earnings until the account equals the outstanding capital stock end thereafter 10% of the net earnings are to be added remi-anninclly. These reserve requirements, normally, should in time greatly strengthen the System. From recent published statements of President Hoover it is that he intenis to make additional recommendations to emir's...aapparent townyd further strengthening and broadening agricultural credit facilities. During the past six months a crest deal hos been broadcast in the mess concerning unreasonable forecloviires of mortgages on farms by the Federal Land Banks, but the fact of the creation of the $25,000,000 fund, above referred to. to grant extensions where borrowers were considered worthy, substantially refutes any motive of unreasonable foreclosures. Federal Intermediate Credit Banks. The Federal Intermediate Credit Banks had outstanding on Oct. 8 of this year about 8n8,000.0o0 of their debenturees as compared with $87,380,000 outstanding on May 18. when your Committee's interim report was rendered. The peak of suc-h outstanding debentures was s112.000.nno, which was reached during the summer of 1931. During the latter part of 1931 and the early part of this year the Federal intermediate Credit Banks had extreme difficulty in marketing their debentures. The market since 3287 then has strengthened materially and has broadened to a great degree. One reason for this is that the Reconstruction Finance Corporation underwrote the first four issues this year totaling approximately $83,000,000, and although such issues were underwritten they were all distributed quickly to the public and the Reconstruction Finance Corporation was not called upon to take any whatsoever. In May your Committee reported a bill, which had passed the Senate and was at that time before the House, to make these debentures eligible at the Federal Reserve Bank for fifteen (15) day loans by member banks, if running not longer than six (6) months. This bill was passed and these debentures are now so eligible. These features, combined with the fact that present outstanding debentures total only about 60% of their peak, have enabled the Federal Intermediate Credit Banks to borrow money at very low rates. Ninety-day maturities are selling freely on a 1% basis, six months' maturities on a 1%% basis, and one-year maturities on a 2% basis. Joint Stock Land Banks. Since your Committee's report to the 1931 convention the Joint Stock Land Banks have been unable to do any public financing, and as a result they have made practically no loans to the farmer. During this period the prices on Joint Stock Land Bank bonds have shown a steady and substantial decline, and at the time of this Committee's interim report last May these bonds were selling at the lowest figures in the history of the Joint Stock Land Bank System. During the sharp upturn in general securities, which started about July 15, the market on Joint Stock Land Bank bonds had a rise of about 8 to 14 points. This rise was not caused by any great buying power, but as securities in general looked as though they would go materially higher the holders of Joint Stock Land Bank bonds withdrew their offerings from the market. Beginning about Sept. 80 prices began to recede again, and at the moment .of writing they are only slightly higher than their all-time lows, which, as above mentioned, were reached during the month of May. Delinquencies have increased substantially during the past year, and Farm Loan statistics indicate that holdings of real estate taken over under foreclosure, sheriffs' certificates, &c., are the greatest on record. The officials of various Joint Stock Land Banks have stated that the $25,000,000 appropriation by Congress to the Federal Land Banks, above referred to, has had a demoralizing influence on a comparatively large number of Joint Stock borrowers, who in some manner have gained the impression that the Government will also come to their aid and are showing a tendency of refusing to meet their interest installments. An extrethely unfortunate development in the Joint Stock Land Bank situation has been the appearance, recently, of numerous articles here and there in the press, and various magazines, giving definite impressions to the reading public that Joint Stock Land Banks, generally, are ruthlessly' foreclosing on farm properties and dumping them overboard at unreasonable prices in order to obtain money to buy back their bonds at present depressed figures, thereby making a big profit for their stockholders. This impression, of course, is entirely erroneous. In a great many instances funds received from the sales of real estate have been necessarily used to pay bond interest and operating charges. Upon investigation your Committee has come to the definite conclusion that Joint Stock Land Banks have barely broken even as a result of their bond purchases, and that few, if any, of the banks are desirous of obtaining farms. Had profits been made to the degree indicated by uninformed writers, the stocks of the various banks would undoubtedly reflect this. For the stock of some banks there is no bid whatever; a great many of them are selling below $5.00 a share, and your Committee has ascertained from a prominent specialist in these securities that no stocks, selling in the open market, are selling above $10.00 a share. This, of course, does not apply to the stocks of Joint Stock Land Banks that are closely held by a small group of individuals or institutions. Without Government aid the buying back of bonds referred to is absolutely essential to avert receiverships. Such buying by the banks makes a market for the bondholders who desire to, or are forced to, sell bonds, and without such buying by the banks the markets would be either non-existent or at far be/ow prevailing levels. To the extent that bonds are purchased by the banks the remaining bondholders benefit through a reduction of the total outstanding indebtedness, and the banks, themselves, are saved the necessity of forcing land on the market at even lower levels than now exist. It is interesting to note that the Federal Land Banks have also purchased large quantities of their bonds. There were innumerable bills introduced at the last session of Congress affecting practically every phase of Joint Stock Land Bank operation. It is impossible to record these bills in this report, but your Committee has copies of practically all of them. They can be examined upon request. A great many of these bills will be re-introduced at the next session, and there will probably be many additional. You will recall at the last meeting of the Board a resolution was passed opposed to the enactment by Congress of House Bill 8167, called the "Hare Bill." This bill provides: "That any borrower from Federal or Joint Stock Land Banks may tender bonds issued be the mortgage bank at par value In payment of any Installment or In full satisfaction of a mortgage after it has been In force for a period of five years," At the last session hearings were held by the House Committee on Banking and Currency. The Joint Stock Land Banks and also the Federal Land Banks opposed this bill strongly, and your Committee feels that it would have been reported favorably had it not been for such strong opposition. Your Committee also feels that the enactment of this bill would undoubtedly cause immediate receiverships to a large number of Joint Stock Land Banks. We are informed, unfortunately, that this bill will probably be re-introduced at the next session. In the report of your Committee, Nov. 6 1931, it was stated that the bill dealing with the power to enforce the double liability of stockholders of banks in receivership passed the Senate and was reported favorably in the House, and was on the calendar at adjournment. Apparently nothing further was done with this bill during the last session, although the Board of Governors of the Association passed a resolution at the meeting held May 1932 recommending: "That the legislation be adopted by the Congress for the purpose of having the Double Liability of shareholders of joint stock land banks enforced by the Federal Farm Loan Board In the same manner as the Comptroller of the Currency enforced the shareholders liability under the National Banking Law," Your Committee belieses this hill to be a good one, and its passage would undoubtedly clarify the relationship of Joint Stock Land Bank stockholders to the bondholders. There are a number of bills, substantially alike in principle and differing slightly in detail, to reduce, over a comparatively short period, amortization and interest charges from the farmer and to provide the necessary funds to pay interest on outstanding bonds by advances by the Treasury. Some of these bills affect Federals only, and others Federals and Joints. Unlike the Federal System, there has been no appropriations by Congress to help the Joint Stock Land Banks either in extending time to worthy borrowers or in building up their capital structure. Ostensibly, the Joint Stock Land Banks can borrow from the Reconstruction Finance Corporation. It is interesting to note in this connection that the Southern Minnesota Joint Stock Land Bank. which defaulted on its coupons on May 1 this year, 3288 Financial Chronicle could have borrowed from the Reconstruction Finance Corporation the amount necessary to meet such May interest. The bank had applied for a loan, said application had been approved, and funds were made immediately available. The directors of the bank, however, after careful deliberation, decided that such a procedure would not be to the best interest of the bondholders. The Federal Farm Loan Board was advised of this decision, and upon default of payments promptly declared the bank insolvent and appointed Mr. R. A.. Nelson, Vice-President of the bank, as receiver. In your Committee's interim report you were advised that a Bondholders' Protective Committee had been formed in relation to the St. Louis Joint Stock Land Bank. This Committee was an extremely strong one and was endeavoring to work out a plan that would avert an actual receivership, involving the issuance of new bonds in an amount which would be soundly secured by interest-bearing assets and the issuance of participation certificates in a liquidating company which would carry the frozen and doubtful assets. It is understood that this Committee never submitted this plan to the Federal Farm Loan Board, and the bank was put into receivership on June 2 of this year. Mr. Mark Martin, President of the bank, was appointed receiver, but has since been succeeded by a Mr. S. L. Cantley. It is interesting to note that the same Protective Committee who attempted to reorganize this bank without receivership is now functioning in the Interest of the bondholders. On Oct. 1 of this year the Chicago Joint Stock Land Bank, which was originally the First Joint Stock Land Bank of Chicago, and was at one time the largest in the System, did not meet its interest payment due Oct. 1, resulting in the Federal Farm Loan Board declaring the insolvency of this institution and placing it in receivership. Mr. John B. Gallagher, who has been for many years President of this bank, was designated as receiver. It is interesting to note that there are two Bondholders' Protective Committees formed in this connection. It is understood by your Committee that this October payment, which was a comparatively small one, could have easily been met. The November payment was substantially larger, and adequate financial aid being unavailing from any existing agencies the directors decided that an immediate receivership would be the most advantageous course to pursue for the benefit of the bondholders. It is interesting to note the effect in bond quotations occasioned by Government assistance to the Federal Land Banks. In August of last year the bonds of these banks were selling at their lows, but, confidence being restored, in the investors' minds, by the additional stock appropriations of the United States Government hereinbefore referred to, has caused a marked rise in Federal Land Bank bonds. The present market shows increases of from 16 to 19 points from the August 1931 prices. In comparison with these figures the Joint Stock Land Banks, receiving no such aid, now see their bonds at almost their record low prices and having an extremely narrow market, such markets in almost all cases being the banks themselves. The three receiverships occurring this year indicate very clearly that the Reconstruction Finance Corporation has not proven to be the practical help to the Joint Stock Land Bank System as was originally believed, and your Committee feels that without help which will strengthen the capital position of these banks such as has been accomplished with the Federal Land Banks many more receiverships will inevitably result. Your Committee would like to quote a thought contained in the Whaley Eaton- Service of Oct. 8: "The effort to co-ordinate relief for farm mortgages has developed two main problems requiring different treatment, the easing of pressure towards foreclosure and the provision of new money for loans on unmortgaged farms." According to responsible advices, your Committee understands that up to the first of last year about 50% of all farm land in this country showed no encumbrances. An encouraging note was sounded by the "Wall Street Journal" who on Oct. 12 this year published the following: Fr "An amendment to the Farm Loan Act to permit Federal Land Banks to absorb Joint Stock Land Banks. with the approval of the latter, and a provision for refinancing delinquent mortgages probably will be incorporated in President Hoover's plan to ease the farm mortgage situation. The cases where Joint Stock Land Banks prefer to continue to operate individually financial aid would be given by the Reconstruction Finance Corporation to avert foreclosure." In President Hoover's Des Moines speech of Oct. 4 he stated: "The character of the organization of the Joint Stock Land Banks, whose business methods are not controlled by the Federal Farm Loan Board, has resulted in disastrous and unjust pressure for payments in some of these banks. The basis of that organization should be remedied. We have sought to further aid the whole mortgage situation by loans from the Reconstruction Finance Corporation to banks, mortgage companies and insurance companies, to enable them to show consideration to their farmer borrowers. As a result of these actions hundreds of thousands of foreclosures have been prevented: "But despite the relief afforded by these measures the mortgage situation has become more acute. There must be more effective relief. In it Iles a primary social problem. I conceive that in this civilization of ours, and more particularly under our distinctive American system, there Is one primary necessity to its Permanent success. That is, we must build up men and women in their own homes,on their own farms, where they may find their own security and express their own individuality. A nation on such foundations Is a nation where the real satisfactions of life and happiness thrive and where real freedom of mind and aspiration secure that Individual Progress In morals, in spirit and accomplishment, the sum of which makes up the greatness of America. Some will say this is a mere ideal. I am not ashamed of Ideals. America was founded upon them, but they must be the premise for Practical action. "And for prompt and practical action I have, during the past month, secured definite and positive steps in co-ordination of the policies not only of the Federal agencies but the important private mortgage agencies as well. These agencies have undertaken to give their help." The above expression indicates to your Committee that careful govern- mental consideration will be given the present agricultural situation, and particularly the institutions created under the Federal Farm Loan Act. Your Committee believes that at this particular time it is of vital importance that the Investment Bankers' Association go on record by adopting the following resolution: WHEREAS, It appears that due to the continued difficulty of agricultural borrowers in paying their mortgage obligations, strengthening of the entire Land Bank System is imperative and appears to be under consideration by the Administration at this time, and WHEREAS, All Land Bank bonds were issued under authorization of the Federal Farm Loan Act and all Land Bank bonds contain the inscription "That Farm Loan bonds issued under the provisions of this Act shall be deemed and held to be Instrumentalities of the Government of the United States." BE IT RESOLVED, That it is the expression of the Investment Bankers' Association of America that all Land Bank bondholders, including Federal Land Bank and Joint Stock Land Bank bondholders, shall receive equal consideration in any constructive legislation by the Congress of the United States. Respectfully submitted, F. SEYMOUR BARR, Chairman, JAMES H. DAGGETT, B. J. LARKIN, T. RAYMOND PIERCE, DUDLEY C. SMITH, CLARENCE B. JENNETT. Nov. 12 1932 Report of Foreign Securities Committee—Question of Establishment of Central Body to Act in Cases of Foreign Defaults—Brazilian Defaults.— According to the report of the Foreign Securities Committee of the Investment Bankers' Association "the Committee has been concerned with the default problem as a whole, and the advisability of the establishment in this country of some central body to act in all cases of foreign defaults in a manner similar to the Council of the Corporation of Foreign Bondholders in England. Consideration had been given to this problem," said the report, "and steps had been taken to the formation of such an association by the 1931 Foreign Securities Committee." The report dealt with the work of the Institute of International Finance and tated that in the opinion of the Committee "there is greater need than ever for the continuance of the Institute." The report was presented to the convention as follows by the Acting Chairman, Nevil Ford: It is with feelings of the deepest regret that I find myself the vehicle for bringing this report to you,as the reason for my presence is the grave Wiles' of the Chairman of the Foreign Securities Committee, Mr. Ellery S. James* To his interest, energy and devotion is due much of the accomplishment of the committee during the past year, and we desire to express our very real regret that he has not been able to carry through to conclusion the work of the committee which he has so ably conducted. The past year has been one of diverse and unusual problems for your Committee. Its members have been called upon to give freely of their time and have generously loaned members of their organizations to the variou branches of endeavor conducted by the Committee. The work of the Committee has divided itself roughly into three main categories:firstly the immediate problems arising from the default of specific issues of bonds entailing in some cases the provision of proper committees to protect the interests of bondholders, and the arrangement of disputes between committees when rival interests were involved. For example, in the case of Brazilian defaults, a study of the situation made it evident that there were certain common factors involved in the defaulted state and municipal issues. Through the medium of the Institute of International Finance a committee representative of the major portion of the houses of issue concerned was formed, and cooperative action thereby secured. Through this joint action assistance leading to the settlement of the problems involved has been obtained which could not be made available to individual houses or committees. In the caSe of Salvador separate committees were formed by interests involved on one of which was represented the house of issue, and upon the other of which was represented the trustee. Through the intervention of your committee unified action was obtained through the consolidation of the rival committees. Secondly, your committee has been concerned with the default problem as a whole and the advisability of the establishment in this country of some central body to act in all cases of foreign defaults in a manner similar to the Council of the Corporation of Foreign Bondholders in England. Consideration had been given to this problem and steps had been taken leading to the formation of such an association by the 1931 Foreign Securities Committee. With the growing interest in this question, arising from further defaults during the latter months of 1931, many suggestions were forthcoming from both public and private sources for the formation of such an association, and certain organizations sponsored by various individuals purporting to offer facilities along the lines of the British association appeared and sought public support. four committee investigated most carefully each of these organizations and came to the conclusion that none of them was possessed of the necessary qualifications. The advent of these various organizations attracted the attention of the authorities in Washington and informal conversations were held by them with various members of your Committee is well as with various prominent individuals in other lines of business. As a result of these conversations an informal committee was created consisting entirely of gentleman not involved in the problem and yet fully conversant with it and by experience qualified to deal with it. Your committee recommended that the Investment Bankers' Association of America offer the fullest cooperation to this committee and this has been extended. This committee is formulating plans for the organization of an association along lines which appear to offer a satisfactory solution to the problem of providing proper protection to American holders of defaulted foreign securities, and we understand are new engaged in attempting to secure the financial support necessary to the conduct of such an association. The third branch of your committee's work has been the dissemination of accurate information to members of the Association and the general public in regard to conditions surrounding American foreign investments. This work has been carried on as in the past largely through the medium of the Institute of International Finance which, as you know, is conducted by the Association in conjunction with New York University. As the Director of the Institute states in his current annual report, this year has marked a turning point in the development and operation of the Institute. At the meeting of the Board of Governors of the Investment Bankers' Association of America in November, 1931, the following resolution was passed: "That the Institute of International Finance be instructed to have records kept of foreign external securities in default, together with a record of the progress made towards the payment in full of past due obligations; tnat members of this Association be advised that this record is available to any- one: that in the future It will be the function of the Institute to use its good offices, through the dissemination ofinformation and other suitable methods, to oppose the issue of securities on the credit of a country or its sublivialons involved in an existing default when the issuing of such would be to the disadvarLtago of the holders of such securbka in default." This resolution comprised a significant change in the scope and character o the Work of the Institute. Under the previous arrangement the Institute had confined itself to furnishing factual information. The now arrangement extended its functions to include in some instances an expression of opinion and active participation in the problems involved by the default of foreign loans. This important change of policy involved the relation of New York University to the Institute. The concurrence of the University was readily obtained and at executive committee consisting of Dean Madden and Mr. Benjamin Strong Jr. representing New York University, and Mr. Ellery S. James, Mr. Robert 0. Hayward and Mr. Nevi' Ford representing the Foreign Securities Committee, was appointed and has conducted the Institute in accordance with the instructions contained in the resolution of your Board of Governors. Volume 135 Financial Chronicle A careful record of foreign external securities in default has been compiled and kept up to date. During the fiscal year 12 special bulletins have been published by the Institute, as well as the uual statistical quarterly bulletins. These bulletins, with one exception, dealt with countries in default, and, while strict attention has been concentrated upon accuracy and detail of information, it has been the endeavor of your Committee to make these bulletins readable and easily understandable to the layman. It is apparent from the demand for these bulletins that they fill a widespread want, as there has been a heavy demand over and above the number required by regular subscribers. In the case of Chile, this amounted to 9,500 copies, and in the case of Brazil, 6,500. Through the cooperation of the publicity department of New York University and the Investment Bankers Association of America press releases and advance copies of bulletins were issued to the press who commented at length favorably upon the bulletins. Requesst for bulletins were received from all parts of the world. Preparation of these bulletins has involved a vast amount of work by the staff of the Institute and it is only through the cooperation of public and private bodies throughout the world,including many members of theInvestment Bankers Association of America, that the information contained in them has been assembled. The staff of the Institute has also been assisted by a newly created research committee consisting of men drawn from the foreign departments of various institutions in New York whose services have been loaned by their organizations to the Institute. These gentlemen have labored seriously and faithfully, and the acknowledged excellence of the Institute bulletins is due in considerable measure to their efforts. In addition to the work entailed in the compilation and publication of these bulletins the labor involved in the supplying of other services rendered by the Institute has increased tremendously. During the past year the Institute has handled on an average of 100 to 150 letters per week in answer to inquiries from corporate and individual holders of foreign bonds. In addition to these written inquiries, the Institute daily has handled large numbers of telephone inquiries from New York and nearby cities, and from visitors to the offices of the Institute. Favorable comment has come to the Institute from many sources upon its service. A close relationship has been maintained by the Institute with similar bodies in other parts of the world, and there is a constant interchange of information between the Institute and these bodies. At the beginning of the fiscal year there was a marked falling off in the number of subscribers to the Institute due to the merging ,of a number of institutions and retirement from business of others, and general cancellation of services of this kind for economic reasons. As the year progressed t has been gratifying to note that the number of subscriptions from individuals, libraries and universities, as well as financial institutions, has steadily increased. The number of foreign subscribers has also increased and many countries are represented among the Institute's subscribers. The Institute has been conducted with the most rigid economy and has been able to return to the treasury of the Investment Bankers' Association of America $8,000 of the $20,000 subsidy granted the Institute by the Association, for the fiscal year 1931-32. This has been possible in large measure due to the generous co-operation of various members of the Association and of New York University in supplying personnel and other services to the Institute without charge. The annual report of the Director of the Institute Is appended to this report and gives in detail the activities which have been touched upon above. Dean Madden and Dr. Nadver,the Director and Associate Director, and their staff have worked long hours daily and deserve the highest commendation. It is the opinion of the Foreign Securities Committee that there is greater need than ever for the continuance of the Institute, as is proved by the ever widening recognition accorded it both in this country and abroad, and the steadily increasing demand for its services. Under existing conditions your Committee does not feel it can call upon the Investment Bankers' Association of America for increased financial assistance however justly deserved. It does strongly recommend that the Association grant the Institute an underwriting for the current year not less than the amount availed of by the Institute during the past year, namely, $12,000. and offers a resolution to this effect. It also asks that all members of the Association support the Institute to the fullest by subscribing to its services and by recommending that institutions and individuals outside the Association make use of its services. During the past year much has been done to make the Institute known to the general public and through courtesy of a member of the Association your President was enabled to broadcast a description of the Institute and its activities over a nation-wide radio hook-up. Your Committee begs further support of this nature for the Institute. As a result of its experience of the past year in considering the problems involved in the field of foreign financing your Committee has come to the following conclusions, and recommends them as the basis of policies to the Association and its members: 1. That in principal the formation of a council of foreign bondholders In the United States, along the lines of similar bodies existing in Europe, is advisable provided, firstly, that such an association is formed and conducted under the proper auspices and is composed of individuals of unquestioned standing. Due regard should be given for geographical representation and the members must be thoroughly conversant with he problems involved in foreign finance yet not directly representing any one class having to do with foreign finance. Secondly, the council must have at its disposal a sufficient fund to insure its financial independence. 2. That in most cases of foreign bond defaults it is advisable to delay the formation of bondholders protective committees. as the reasons existing for the immediate formation of such committees in the case of domestic securities are not pertinent in the case of foreign loans. The cost to bondholders involved in the formation of a committee usually is not warranted by the results that can be obtained until much preliminary work has been accomplished and a reasonably definite plan for the amelioration of the default has been conceived. It is the feeling of your committee that this preliminary work should be and can best be conducted by the original underwriters of the loan in conjunction with the governmental authorities involved. It is the duty of the underwriting houses to recognize this responsibility. 3. That the revision of public debts other than war debts owing by foreign governments or their political subdivisions to American investors at this time is premature and that consideration of the alteration of existing contracts should be deferred until economic conditions return more nearly to normal. It is the belief of your committee that with a return to more normal levels of commodity prices in most cases debts will prove to be not unduly burdensome upon the debtor and that they can ultimately be paid in full. Your committee considers that many foreign securities are selling at prices which do not represent the real and ultimate value of these securities and recommend that members of the Association guard their clients against the unwarranted disposal of foreign securities. It urges they be guided by facts rather than hysterical utterances of a type frequent during the past year. It appears that there is a wide-spread ignorance of the true acts not only among the general public but in supposedly well informed (quarters. Your Association has, through the Institute of International 3289 Finance, made it possible for anyone to obtain the facts accurately and at slight cost. We urge that for the benefit of the general public you make full use of this facility and in turn persuade others to do likewise. Ellery S. James, Chairman Donald Durant Nevil Ford, Acting Chairman John A. Fraser Harry M.Addinsell Robt.0. Hayward Hugh B. Baker John J. Rudolf T. J. Bryce Joseph R. Swan B. A. Tompkins. Report of Director of Institute of International Finance J. T. Madden—Records of Foreign External Securities in Default. In his annual report as Director of the Institute of International Finance, J. T. Madden noted the adoption of a resolution by the Board of Governors of the Association at its fall meeting instructing the Institute "to have records kept of foreign external securities in default, together with a record of the progress made towards the payment in full of past due obligations." The report observes that the resolution proposed "a significant change in the scope and character of the work of the Institute"—the new arrangement changing the character of the Institute "from a fact-finding body into one which was to express its opinion concerning bonds in default and the advisability of forming protective committees." Statistics of foreign dollar bonds in default as of Sept. 1 1932 are made available in the report which follows: To the Members of the Executive Committee: I have the honor to submit my annual report as Director of the Institute of International Finance for the fiscal year ended Aug. 31 1932. This year has marked another epoch of achievement in the joint venture of the Investment Bankers'Association of America and New York University. It has also marked a turning point in the development and operation of the Institute. At the fall meeting of the Board of Governors of the Association, the following resolution was passed: That the Institute of International Finance be instructed to have records kept of foreign external securities in default, together with a record of the progress made towards the payment in full of past due obligations: that members of this Association be advised that this record is available to any one; that in the future it will be the function of the Institute to use its good offices, through the dissemination of information and other suitable methods, to oppose the issue of securities on the credit of a country or its subdivisions involved in an existir g default when the issuing of such would be to the disadvantage of the holders of such securities in default. This resolution proposed a significant change in the scope and character of the work of the Institute. Under the existing arrangement the Institute had coniined itself to the publication of bulletins and information on foreign public securities outstanding in the American market but limited itself wholly to official sources of information. The new arrangement proposed an expression of opinion on the part of the Institute thereby changing its character from a fact-finding body into one which was to express its opinion concerning bonds in default and the advisability of forming protective committees. This important change in policy involved a change in the relation of the University to the Institute, and accordingly the Director sought the advice of the Chancellor of the University and the President of the Council of the University. It was decided to appoint a member of the University Council on the executive committee of the Institute and Mr!Benjamin Strong Jr., has served in this capacity. Mr. Ellery S. James acted as chairman, and under his able guidance,in addition to Mr. Strong. Mr. Nevil Ford. of the First of Boston Corp., Mr. Robert 0. Hayward of Dillon, Read & Co., and the Director served as members of the executive committee. Dr. Nadler, Director of Research, also attended all meetings. The Director cannot express adequately in words, his appreciation of the value of the services rendered by the executive committee during this year. The preparation of the foreword of each bulletin was an important task because it would serve as a basis of judgment and action on the part of bondholders who would read either the bulletins or the full and complete press summaries which appeared upon publication. The formal meetings of the committee were more numerous than usual and many informal conferences were held in addition. On every occasion the members of the committee responded to the call and the success of the year's work is due in no small measure to the careful consideration which these gentlemen gave to the difficult problems which arose. The Investment Bankers' Association and Foreign Bonds. The numerous attacks made upon the members of the investment banking fraternity during the year by persons who were not familiar with the activities of the Association suggested the advisability of preparing a statement of facts. Accordingly the Institute prepared for use of the committee a memorandum outlining the efforts of the Investment Bankers' Association from its very inception in establishing measures for the protection ofinvestors in foreign bonds. Not the least noteworthy of these steps was the establishment of the Institute of International Finance in 1926. During the past two years several associations or groups have been former or projected which announced their various purposes some of which were duplications of the work which the Institute had been carrying on for many years. Practically all of these associations were organized as business enterprises and for one reason or another most of these efforts seem either to have been abandoned entirely or greatly curtailed. Publications. During the fiscal year 1931-32, the Institute published the following bulletins: No, 46—Credit position of Yugoslavia. No. 47—Securities in default—Chile. No. 48—Securities in default—Peru. No. 49—Securities in default—Brazil. No. 50—Securities in default—Bolivia. No. 51—Securities in default—Supplementary bulletin on Chile, Peru, Brazil, Bolivia. No. 52—Securities in default—Hungary. No. 53—Securities in default—Colombia. No. 54—Securities in default—Sao Paulo. No. 55—Securities in default—El Salvador. No. 56—Securities in default—Greece. No. 57—Securities in default—Bulgaria. Statist cal Quarterly—Vol. II, No. 1, No. 2. No. 3, No. 4. It will be noted that 11 bulletins dealt with countries in default and only one bulletin, published prior to the passing of the above mentioned rest), lution, was along the lines of the bulletins previously published. Distribution of Bulletins. The bulletins were widely distributed as may be seen from the following table: 3290 Distribution of bulletins over and above number to regular subscribers to the Institute: No. I No. Distributed, Distributed.I No. No. 2.500 9.500 152—Hungary 47—Chile 3.500 48—Peru 4.000 53—Colombia 300 54—Sao Paulo 49—Brazil 6.500 300 55—El Salvador 50—Bolivia 850 450 56—Greece 51—Supplemeatary bulletin 200 57—Bulgaria on Chile, Pe-u, Brazil and Bolivia 3.000 Press releases and advance copies of the bulletins were issued to the press which commented at length and favorably on the bulletins. Newspapers throughout the country summarized the bulletins and in addition a number of magazines regularly reprinted part of the bulletins. Establishment of Committee on Securities in Default. In order to assist the Institute in the preparation of the bulletins in default as well as to make available the most recent and up-to-date information on the respective countries, a special committee on securities in default was appointed by the executive committee. The committee consisted of the following members: Mr. Raleigh S. Rife, Guaranty Co. of New York. Mr. W.A. Shelton, First of Boston Corp. Mr. Herbert von Metzler. Browa Brothers Harriman & Co. Mr. George F. Train. National City Co. Mr. Robert G. Payne. Dillon, Read & Co. Mr. H. B. Hurd, Chase Harris Forbes Corp. Mr. W.W. Ross, Chase Harris Forbes Corp. Mr.Stayman L. Reel, J. & W.Seligman & Co. The members of this special committee devoted a great deal of time to the work of the Institute and numerous meetings were held at which the problems involved in the preparation of the bulletins were gone over. Unless one has had actua' contact with the work of the Institute, he has little idea of the labor involved in the preparation of the bulletins. I can only say that the untiring and unselfish devotion to the tasks undertaken by the members of this committee reflects credit upon themselves and the profession to which they belong. We could not have made the record upon which we stand to-day if it had not been for the generous co-operation of the members of this committee. Compilation of Data on Securities in Default. Following the instructions in the resolution of the Board of Governors o the Association, the Institute has prepared a complete list of securities in default and this list is kept up to date as new defaults occur. The executive committee has decided not to publish this'1st for the time being. It is set forth in Append.x I. Subscription Record. At the beginning of the fiscal year, the number of subscriptions to the Institute fell off sharply. The decline in the number of subscribers Is due primarily to three factors: 1. The merging of a number of institutions, thereby reducing automatically the number of the subscribers. 2. Other houses retired from business or abandoned their activities In the field of foreign securities as a result of the business depression. in the 3. The economies instituted by banking houses which resulted of cancellation of all kinds of services, including that of the Institute International Finance. At the end of August 1932, the subscriptions of the Institute were as fellows: 311 Banks and investment houses 127 Individuals 74 Libraries 512 Total It is gratifying to note that the number of subscriptions from individuals and libraries is steadily increasing. The principal university and municipal libraries of the country are regular subscribers to the services of the Institute of International Finance. The number of foreign subscribers has also increased and the Institute foreign numbers among its subscribers banks, exchanges and individuals in Switzercountries. Germany, France. Italy. Holland, England, Sweden, land, Dutch West Indies, Colombia, Turkey, China are represented in this publications group. In addition the Institute has effected an exchange of with the leading financial institutions throughout the world. Inquiries in the questions specific concerning the work of the Institute and many field of international finance were received from all over the world. Inquiry Service. of the Following the radio address of Colonel Allan M. Pope, President the Investment Bankers' Association concerning the work of the Institute, tremendously. number of inquiries addressed to the Institute has increased 150 to During the year, the Institute has handled on an average, 100 large letters per week. These inquiries came from institutions holding volumes of foreign securities as well as from individuals who held only one or two foreign bonds. The inquiries were handled promptly and most of them were answered within 21 hours. In order to do this work, the staff of the Institute was often forced to work overtime. The members of the Committee on Securities in Default gladly volunteered information which was not available in the office of the Institute, thereby greatly facilitating the work of the Institute. In addition to inquiries by mall. the Institute handled large numbers of telephone inquiries from New York and the nearby cities. Let me add also that the number of representatives of houses in New York and other cities who visited the offices of the Institute for the purpose of getting information or discussing problems directly or indirectly relating to foreign securities has increased greatly. The inquiry service of the Institute has received favorable comment from subscribers and many letters to this effect are on file in the office of the Institute. Work With the Foreign Protective Committees. As in previous years, the Institute has continued its relations with the several associations for the protection of bondholders in other countries. The Council of Foreign Bondholders of London; the Association National de Porteur's Francais de Velours Mobilleres; the Association Pour la Defence des Detenteurs de fonds publics; the Steendige Kommission zur Wahrung der Interessen deutscher Besitzer Auslaendischer Wertpapiere; the Association Suisse des Banquiers. all are sending regularly their reports to the Institute which are carefully Indexed and translated. Direct communications from these associations are always brought to the attention of the Executive Committee and wherever action Is necessary, the Executive Committee directs the policy. Bulletins in Preparation. At the beginning of the fiscal year 1932-1933, the bulletins in preparation were: 1. Austria, 2. Germany, 3. Provinces of Argentina. Under the present working arrangement it is impossible to prepare long since they are now designed to deal In advance a list of studies to be made with some immediate and pressing problem. Nov. 12 1932 Financial Chronicle Speeches and Articles by Staff. There are many phases of the foreign investment situation which do not come under the scope of the Institute. To meet this situation, the Director and Research Director of the Institute in their individual capacities have endeavored to meet this problem through speeches and articles on various phases of international finance. Speeches by the Director and Research Director on topics directly or indirectly relating to the work of the Institute have been made before the Foreign Policy Association; the American Society of Certified Public Accountants; the National Association of Cost Accountants; the Institute of Public Affairs of the University of Virginia; the New York Credit Men's Association; hte Natioal Credit Men's Association; and before various forums. It is obvious that the director and assistant director under the customs of academic freedom can express themselves more completely as individuals than they may in their official capacities as representatives of the Institute. Articles by the Director and Director of Research along the lines of the work conducted by the Institute of International Finance were prepared for the Bankers Magazine, Burroughs Clearing House, Herald Tribune, the New York Journal of Commerce, the New York Evening Post, the Real Estate Record and Builders Guide, and others. Similarly, radio addresses of the same character, made by the Director and his associate, have been widely commented upon throughout the country. Staff. Throughout the year the work of the Institute has been under my supervision and direction but the work itself, as in the past, was in the hands of the research director, Dr. Marcus Nadler, Professor of Banking, to whom all credit is due. Dr. Nadler has declined several attractive offers from private firms at a financial sacrifice to himself and his ripe scholarship, untiring research and indefatigable labor are reflected in the quality of the work of the Institute. The active research staff of the Institute at the end of the fiscal year consisted of the following members in addition to Dr. Nadler: C. F. Carson..11. C. Sauvain, S. I. Helier. The University has granted 10 scholarships to gradute students who assist the Institute on a part-time basis. Library. The Institute has a complete library, comprising the most important foreign magazines. All articles of importance are catalogued and indexed. In addition, the Institute has on file complete statistical records indicating business activity through the most important countries of the world. Part of these figures appear in the quarterly statistical bulletin published by the Institute. Budget. At the beginning of the year, the Executive Committee adopted a budget although it was recognized that the details would be subject to change owing to the possible alteration in the program of work. During the fall, the flood of inquiries which the Institute received from all over the country made it evident that the original underwriting of the Investment Bankers' Association would not be sufficient to carry on the work of the Institute. The Board of Governors approved a tentative additional allowance of $10.000 of which only $2,000 was actually made available. The deficiency was partially made up by the sales of publications in excess of the budget expectation and by rigid economies in operation. The budget and the actual results for the fiscal year follow: INSTITUTE OF INTERNATIONAL FINANCE—PROPOSED AND ACTUAL BUDGET 1931-1932. 1931-32. 1931-32 Actual Proposed. Budget. Income— Budget. $12,000.00 I. B. A. underwriting $10,000.00 7,768.23 Subscription and sales 4,000.00 Expense— Research uirector Research Assistants Office salaries Office supplies and postage Miscellaneous (traveling expense, &c.) Pelouicals and publications Pi lacing Telephone. Telegraph and cables Office equipment $14,000.00 $19,768.23 $6.000.00 3.700 00 3.616.00 1,000.00 400.00 250.00 2,500.00 164.00 150.00 $6,000.00 5,319.17 3,640.97 782.88 499.43 34.34 3,.294.54 $17,780.00 $19,623.49 52.16 * Included in miscellaneous. As usual, the accounts will be audited by the firm of Haskins & Sells, whose report will be submitted in due course. New York University's Contribution.—The accounts set forth above are from the books of the Institute but they do not show the contribution which New York University makes to the Institute. In order that this may not be lost sight of. It is desirable to mention it here. Use of offices in the Wall Street Bldg. which if devoted to class-room use would bring in an annual ruveaue of 53,800 Use of telephone—annual rout 65 Lihrary appropriation—amounts necessary to purchase books. Institute, for &c., estimated annual amount manuals, 600 Tea graduate scholarships issued to employees of Institute staff. Value $200 each 2,000 Proeee Is of Bulkley Scholarship awarded to an employee of the institute 300 University budget for Appropriation in reasearch assistant and pail to H. C. Sauvain 1,700 Other expeaditures 600 Services of Director of Institute—part time—no charge $9,065 No estimate is made of the value of the service which Dr. Nadler renders over and above the extremely reasonable compensation paid to him. In addition the Publicity Department of the University arranges for the New York City press releases and the University Supervisor of Printing corrects all proofs and checks all printing bills—all without cost to the Institute. Conclusion.—The Institute has completed Its sixth year of successful operation, and has reflected credit upon the I. B. A. and the University. Its work has been accomplished at a phenomenally small cost in spite of many handicaps. It is impossible to develop an adequately trained staff upon an annual underwriting. The members of the Investment Banking Fraternity have an opportunity of rendering a valuable public service in placing the Institute on a permanent financial basis. The director realizes that financial conditions at the present time are different from those which existed at the time when the Institute was founded, but the need for the public service rendered by the Institute is greater to-day than It ever was. The credit for the accomplishments of the Institute is due to Dr. Nadler and his staff, together with numerous investment bankers an 1 their co-workers without whose generous assistance we could not have carried on. Respectfully submitted. J. T. MADDEN. Director. Volume 1.'75 Financial Chronicle SUMMARY OF FOREIGN DOLLAR'BONDS IN DEFAULT AS OF SEPT. 1 1932. Interest Technical Country-Default. Default. Total. Argentina $7.091.500 $7.094.500 Austria 8.171.000 $42.178,000 50,349.000 Bolivia 58.804.000 58.604.000 Brazil 331.469.300 331.4, 9.300 Bulgaria_16:500 16.989.500 Chile 326.557.500 326.557,500 China 11.000.000 11.000.000 Colombia 85.501.000 84W.300 170.058.300 Dominican Republic 16,715.500 16.715,500 Ecuador 10.722.000 10.722.000 El Salvador 9.033.100 3.877.500 12.910.600 Germany 32,000.000 32.000.000 Greece 26.942.500 26.942,500 Hungary 49.519.000 16.322.300 65.8',l.300 Mexico 273.571.029 273.574.029 Peru 91.286.000 91.286.000 Russia 75.000.000 75.000.000 Sweden 86,563.500 86.563.500 Uruguay 5.604.000 59.373,500 64.977,500 Totals $1.456.861.429 $272.013.600 $1.728.875.029 FOREIGN DOLLAR BONDS IN DEFAULT AS OF SEPT. 1 1932. I. Defaults on Interest Payments. Argentina. Provinces— Province of Santa Fe 78, 1924-42 Municipalities— City of Cordoba 7s, 1927-57 Total Argentina Austria. Provinces— Province of Styria 78, 1926-46 Industrials— Alpine Montan Steel Corp. 713. 1925-55 Total Austria Bolivia. Republic of Bolivia 68, 1917-40 Republic of Bolivia 8s, 1922-47 Republic of Bolivia 7s, 1927-58 Republic of Bolivia 7s. 1928-69 Total Bolivia Amount Out4aMoo Colombia. Departmental Governments— Department of Antioquia series A 7s. 1925-45 Department of Antioquia series B 7s, 1925-45 Departmeat of Antioquia series C 7s. 1925 45 Department of Antioquia series D 78. 192545 Department of Antioquia first series 7s. 1927-57 Department of Antioquia second se-ire 7s. 1927-57 Department of Antioquia third series 78. 1927-57 Department of Caldas 734s. 1926-46 Departmeat of Cauca Valley 7s. 1928-48 Department of Cundinamarca 614s. 1928-59 Peoartmeat of Santander 78, 1928-48 Department of Tolima 7s, 1927-47 Amount Outsornding. 95.068.100 5.042.600 2.100.800 4.940,500 3.716,000 3,670.000 4.121.000 8.591.000 3.865.000 11.537.000 1.791.000 2,112.000 Total Departmental Governments Muni orpal GovernmentsCity of Bogota 8s, 1924-45 City of Bogota 614s. 1927-47 City of Cali 7s. 1927-47 City of Meiellin 7s, 1926-51 City of Medellin 6368, 1928-54 Total Municipal Governments Banks— Bank of Colombia 7s, 1927-47 Bank of Colombia 7s, 1928-48 Mortgage Bank of Colombia 7s. 1927-47 Mortgage Bank of Colombia 6365. 1927-47 $56.575.000 $4.749.000 2.257.500 2.408,000 2,644.000 8.378.000 $20,436,500 $1,683.000 925.500 2.576.000 3,305.000 Total banks $8,489.500 Total Colombia $85.501.000 4,378.500 $7,094,500 $3,612.700 4.558,300 $8.171.000 $1,296,000 22,072.000 13.364.000 22.072,000 $58,804.000 Brazil. Federal Government— United States of Brazil 8s, 1921-41 $31,352,500 United States of Brazil 7s, 1922-52 17,503.000 United States of Brazil 614s, 1926-57 55.108.000 United States of Brazil 6145, 1927-57 39.709,000 Total Federal Government $144,672.500 State Governments— State of Ceara 8s, 1922-47 81.980.000 State of Maranhao 78, 1928-58 1,682,000 State of Minas Geraes 6148, 1928-58 8,132.000 State of Minas Geraes A 614s, 1929-59 7.812.000 State of Parana 78. 1928-58 4,648.01)0 State of Pernambuco 78. 1927-47 5,233.000 State of Rio de Janeiro 614s. 1929-59 5,921.000 State of Rio Grande do Sul 8s. 1921-46 5,900,500 State of Rio Grande do Sul 7s. 1927-66 9,713,500 State of Rio Grande do Sul Els, 1928-68 23,000.000 State of Santa Catherina 8s. 1922-47 4,704.800 State of Sao Paulo 8s, 1921-36 4.950.000 State of Sao Paul 8s, 1925-50 14,719.000 State of Sao Paulo 7s, 1928-56 6,914.000 State of Sao Paulo 68, 1928-68 14,698.000 Total State Governments $120,007,800 Municipal Governments— City of Porto Alegre 8s. 1921-61 $3.320,000 City of Porto Alegre 7%8, 1928-66 3,890,000 City of Porto Alegre 78, 1928-68 2.211.000 City of Rio de Janeiro 8s, 1921-44 7.815.000 City of Rio de Janeiro 61414. 1928-53 29.492.000 City of Rio de Janeiro 68, 1928-33 1.770.00(1 Rio,Grande do Sul Consolidated 3.912.500 City of Sao Paulo 6s. 1919-43 Municipal Loan 7s, 1927-67 5.620.000 City of Sao Paulo 88, 1922-52 3,156.500 City of Sao Paulo 13548, 1927-57 5.602,000 Total Municipal Governments $66,789.000 Total Brazil $331.469,300 Chile. National Government— Republic of Chile 7s. 1922-42 815.094.000 Republic of Chile 6s, 1926-60 40.116.000 Republic of Chile 68. 1927-61 25.935.000 Republic of Chile Its. 1926-Ian. 1 1961 44.152.000 Republic of Chile Its. 1928-8ept. 1 1961 15.577.000 Republic of Chile Sc. 1929-62 0.790.000 Republic of Chile 6s, 1930-63 24.475.000 Total National Government 8175,139.000 Municipal Gro,ernments— Clty of Santiago 7s, 1928-49 83.600 000 City of Santiago 724. 1930 61 2,175.000 Chilean Cons. 'Municipal Loan A 7s. 1929-60 14.664.000 City of Valparaiso Water Power Board 6s, 1915-39_a 232.000 Total Municipal Governments $20,691.000 Banks— Mortgage Bank of Chile 6141, 1925-57_a $18.612.00n Mortgage Bank of Chile 63‘8. 1925-61_a 18,622.500 Mortgage Bank of Chile es, 1926-31_a 10.000 000 Mortgage Bank of Chile 64, 1926-61 _a 19,353.000 Mortgage Bank o:' Chile 6s, 1929-62.a 19.582.000 Total banks $86,169,500 Industrials— Anglo-Chilean Consolidated Nitrate Corp. 7s. 1925-45-b_ $12.700.000 Lautaro Nitrate Co.. Ltd.. 6s, 1929-54_c 31.855.000 Total industrials $44,558.000 Total Chile $326,557.500 a Guaranteed by the Republic of Chile. b Assumed by the Compania de Salltre de Chile. c Incorporated in England. China. Chinese Government 6% Treasury notes. 1919-21 15.500.000 Chinese Government 6% gold notes. 1919-22 5.500.000 Total China $11,000,000 Ecuador. Guayaquil & Quito Ry. Co. 1st 55, 1897-32.d $10.722,000 Total Ecuador $10.722,0(10 d Guaranteed by the Government of Ecuador. El Salvador. Republic of El Salvador 78, 1923-57 $9.033.100 Total El Salvador $9.033.100 3291 Greek Gove-nment 7s, 1924-64 Greek Government 6s, 1928-58 Greece. $10,361.000 16,581,500 Total Greece $26,942,500 Hungary. Muni ipol Governments— City of Budapest 6s. 1927-62 Hungarian Consol. Municipal Loan 7s, 1926-46 $19.119.000 5.168.000 Total Municipal Governments Banks— British & Hungarian Bank, Ltd., 1927-62 City Savings Bank Co., Ltd.. A 7s, 1928-53 Farmers National Mortgage Institute 7s, 1928-63 Hungarian Central Mutual Credit Last. series A 78, 1927-37 Hungarian Discount & Exchange Bank 7s, 192843 Hungarian Italian Bank, Ltd., 7148, 1927-32 Hungarian Italian Bank, Ltd.. series AC. 1928-63 Hungarian Land Mortgage Institute series A 714s, 1926-61_ Hungarian Land Mortgage Institute series B 714s, 1927-61_ National Central Savings Bank of Hungary series A 736s. 1927-62 National Hungarian Industrial Mortgage Institute. Ltd., 7s. 1928-48 $24.287,000 $1.327,500 1.646,000 1,733,000 2,990.000 3,308.500 584.500 2.151,500 2,826,000 2,870.000 1,405,000 4,408.000 Total banks $25,252,000 Total Hungary- 849.539.000 Mexico. National GovernmentUnitei States of Mexico 4s, 1904-54 Mexican Guaranteed Irrigation Loan 436s, 1908-43 Total National Government State GorPrnmentsState of Jalisco 6s, 1896-1928 State of Jalisco 6s. 1900-30 State of Coahuila 6s, 1900-40 $37.037,500 21.887.100 $58,924,600 $1.500.000 1.000.000 752,000 Total State Governments_., $3,252,000 Railways— National Rys. of Mexico 4s. 1907-77 $50,748,575 National Rys. of Mexico 414s. 1907-57 84.786.115 Vora Cruz & Pacific RR. Co. 414s. 1904-34 7.000.000 National RR. Co. of Mexico 41413. 1902-26 23,000,000 National RR. Co. of Mexico 48, 1902,51 24.740.000 Mexican Idternational RR. Co. 48, 1897-1977 4.206.500 Pan-Amelcan RR. Co. 55. 1903-34 2.003.000 Pan-Ame-ican RR. Co. 58. 1907-37 1,484,000 Mexican Central Ry. Co. Es. 1889-1939 1.374.000 Mexican Ce ttral By. Co. 5% equipment notes and certifs.792,000 National Rys. of Mexico 6% gold notes 11.26.3.239 Total railways $211,397,429 Total Mexico $273,574,029 Peru. National Government— Republic of l'o-u 7s, 1927-59 $14.357.500 Republic or Peru 6.5. 1927-60 46.383.000 Republic of Peru 65, 1928-61 24,469,500 Total National Government $87,210.000 Therm -id I GovernmentsProvince of Callao 736s, 1927-44_e 1.189.000 Total Provincial Governments $1.189,000 Governments— City of Lima 614s, 1928-58 $ 2.887.000 Total Municipal Governments $2,887.000 Total Peru $91,286,000 e Guaranteed by the Republic of Peru. Russia. Russian external 530. 1916-21 Russian external 048, 1916-19 Total Russia $25.000.000 50.000.000 $75,000,000 Sweden. Kreuger & Toll 58, 1929-59 lireuger & Toll participating debentures Total Sweden City of Montevideo 78, 1922-52 Uruguay. Total Uruguay $47.596.500 38,967.000 886.563,500 $5.604.000 $5,604.000 Grand total $1.456,861,429 11. Technical Defaults.x Austria. Republic of Austria 7s, 1923-43 Republic of Austria 7s, 1930-57 Total Austria Bulgaria. Kingdom of Bulgaria 78, 1926-67 Kingdom of Bulgaria 710, 192848 Total Bulgaria $17.899.000 24.279.000 $42,178.000 $4.141,000 12.848.500 116.989.500 All violations of the loan contract than failure to make interest payments are classified as technical other defaults. Such technical defaults consist of failure to make the proscribed fund payments, failure to make current remittances to fiscal agentsMilting as stipulated in loan contracts. failure to meet maturities, &c. 3292 Colombia. Nrnional Government— Republic of Colombia 6s, 1927-61 Republic of Colombia 6s, 1928-61 Total National Government Departmental Governments— Department of Cauca Valley 730. 1926-46 Total Departmental Governments Municipal Governments— City of Barranquila series A 85, 1925-35 City of Barranquila series B 8s, 1925-40 City of Barranquila series C 8s, 1926-46 City of Barranquila series D 8s, 1928-48 City of Barranquila series E 8s, 1929-49 Total Municipal Governments . Banks— Agricultural Mortgage Bank 78, 1926-46 Agricultural Mortgage Bank 7s, 1927-47 Agricultural Mortgage Bank 6s, 1927-47 Agricultural Mortgage Bank 6s, 1928-48 Mortgage Bank of Bogota 7s, Oct. 1 1927-47 Mortgage Bank of Bogota 7s, May 1 1927-47 Mortgage Bank of Colombia 75, 1926-46 Financial Chronicle Amount Outstanding. $23,171,500 32,691,500 $55.863,000 $3,474,000 $3,474,000 $169.400 292,300 427,600 448,000 475,000 $1,812,300 $2,116,500 2,627.000 4,127.000 4,200,000 2,624,000 2,615,000 5.098,500 Total banks $23,408.000 Total Colombia $84,557,300 Dominican Republic. Dominican Republic 5Ms, 1922-42 Dominican Republic Ois, 1926-40 Total Dominican Republic El Salvador. Republic of El Salvador 8s, 1923-48 $8,419,500 8,296.000 $16,715,500 $3,877,500 Nov. 12 1932 lows: "No property, taxed according to value, shall be so taxed in excess of 1 3 % of its true value in money for all state and local purposes." Present taxes may be reduced but the return of prosperity will see them mount again unless restricted by a barrier beyond which they cannot go. Such restrictions should exclude from their application levies for the payment of municipal and state obligations lawfully incurred. It is extremely important to everyone that the value of real estate be reestablished on a better basis. Those who are engaged in reorganizing real estate securities are confronted with many problems and your committee can probably best serve the members of the Association by passing on to them such ideas as we may have gathered. There is no quick or clear cut path out of the difficulties that surround the situation, but there are some trails that lead in the right direction. In your committee's 1931 annual report there was stressed the necessity of bondholders' committees, the duties of such committees, and the absolute necessity of cooperation by the bondholders. Definite results may be obtained for bondholders by following one of two general methods in handling each situation: (a) reorganization of the real estate bond issue by modifying its terms; and (b) the acquisition of title either by deed or foreclosure, or a combination of both. Reorganizations. The reorganization of a real estate bond issue generally means the retention of the equity by the owner or his assigns and the revamping of the bond issue in such a manner that the net income from the property will maintain the integrity of the loan. The equity owner is not generally entitled to remain in the picture unless he adds value to it by cooperative service and such cash as he can reasonably raise. The ideal reorganization is one where the bondholders have good reason to believe that they will eventually receive full return of their principal and all the interest that may accrue, and that such payments will be met within a reasonable length of time. Those interested in the rehabilitation ofreal estate values are undoubtedy puzzled as to how this objective may be attained, with sales of real estate Germany. few and far between. The stabilization of real estate values even at a low $7,000,000 base is better than no stabilization at all. Your committee feels that real Saxon Public Works, Inc., 5% gold notes. due July 15 193225.000,000 Deutsche Bank 6% notes due Sept. 1 1932 estate values can be more or less stabilized even without a buyers' market if properly appraised and not forced on the market at lower than the appraised $332,000,000 Total Germany value. The intelligent and honest appraiser who has gone through the Hungary. decade of inflation, and has profited by his and the mistakes of others, is National Government— $7,646.300 the one best suited for present appraisals. Income property to-day should Kingdom of Hungary 714s, 1924-44 be valued from two standpoints:(a) capitalized income value; and (b) phys$7,646,300 Total National Government ical replacement value less misplacement, depreciation and obsolescence. Municipal Governments— The appraiser's report should show both valuations. The present Income $8,676,000 Hungarian Consolidated Municipal Loan 730, 1925-45 value in nearly every instance is far below the replacement value. Until $8,676,000 Total Municipal Governments these two values again meet there can be little new construction. The capitalized income value is the one to use for new credit. It is the one on $16,322,300 Total Hungary which money can be borrowed. The physical replacement value is what Uruguay. it would cost to duplicate the property under existing costs. It is what the National Government— $1,317,500 property should be worth if times were normal. Your committee feels bondRepublic of Uruguay 5s, 1915-54 7.294,000 holders are entitled to believe that this latter figure represents a probable Republic of Uruguay 8s, 1921-46 28,420,500 Republic of Uruguay 6s, 1926-60 recovery value of the security behind their bonds. 17,486,500 Republic of Uruguay 65, 1930-64 The income value of the larger apartment buildings is usually arrived at $54,518,500 by multiplying the net income by 14 or on a 7% earnings basis. As a usual Total National Government Municipalities— proposition net income is the sum left from gross income after deducting $4.855,000 City of Montevideo 6s, 1926-59 operating expenses and taxes with no allowance for depreciation or interest the invested capital. Varying income rates are used for different types on $59,373,500 Total Uruguay of buildings. Hotels, furnished apartment buildings, and special purpose $272,013.600 Grand total buildings are often capitalized on a 10% basis, which would establish their income value at 10 times the yearly net income. This method of arriving at income value may appear drastic in the light of present low rents and Report of Real Estate Securities Committee, Investment heavy charges, but it seems the only safe rule of measurement for new Bankers' Association, by Chairman Louis K. Boy- mortgage money which must eventually be repaid out of net income from property. It has been suggested that the capitalized income value on sen—Views Voting Trust as Logical Way to Handle the the better types of buildings should be on a 6% basis, on the theory that Foreclosed Property—Federal Home Loan Bank Act 6% is an adequate return on good real estate investments. Your committee Hardly Likely to Accomplish Desired Relief Since believes that this is a constructive suggestion. There are, of course, many where real estate produces a satisfactory return at lower figures, Loans Direct to Home Owners Are Seemingly Not cases especially where the Income is supported by a long-time lease of unquestioned The physical replacement value figures at to-day's costs, and al' value. Within Its Compass. lowing for depreciation and obsolescence, will usually average one-third of Committee Securities Estate Real the of In the report more than the present income value. Many real estate bond issues have broken down on serial maturities. the Investment •Bankers' Association, presented at the Others have reached their final maturity without mishap. There are no annual convention Oct. 24, it is noted that "the breakdown investment funds for such situations. Many of these issues have a good of real estate bond issues referred to in the 1930 and 1931 record. The present bondholders will have to continue their investment by It is often possible to rehabilitate these issues without annual reports of the Committee has continued during 1932 extending the bonds. the expense of a bondholders' committee. If the property shows a present standpoint," practical a in an ever-increasing volume." "From stabilized income value equal to or in excess of the mortgage indebtednesS, says the report, "there seems but one logical way to handle the bondholders are fairly sure of eventually getting their principal and back. If the present income value is below the mortgage debt the average foreclosed property for the best interests of the interest but the physical value justifies the hope of a better future, a reorganization report The bondholders, and that is by a voting trust." may be justified which obliges the bondholders to take a present reduction notes that "in Chicago under the leadership of an important In interest rate. In such cases, however, it is only proper that the bondholders' loss of interest be added to the mortgage obligation and fully trust company there has been developed what is called the liquidated before the owners of the property receive any. return. The Liquidating Land Trust," the base of which "is the ordinary equity owners on their part are, in many instances, justified In risking much form of land trust." The report contains a reference to the on the future, but this risk should include full payment to the bondholders. There are many issues where the borrowers and possible subsequent Federal Home Loan Bank Act, as to which it says,"the Act equity owners are personally liable for the debt as signers and endorsers. seems hardly broad enough to be able to handle loans direct One of the most difficult problems for a bondholders' committee is to to waive the present enforcement of such guarantees. In many when accomplish decide to home owners and for that reason will hardly cases it will be found advisable to keep these guarantees alive and extend the desired relief during the present period of distress." The the obligations with the hope of more favorable times. Each particular report as presented by the Chairman of the Committee, case must be fully studied and no specific rules are possible. The property may be of a type where a large loss to the bondholders is Louis K.Boysen,of the First Union Trust and Savings Bank, inevitable, where a willing owner is anxious to remain In the picture, and Chicago, follows in full: where his ability to handle it properly is evidently greater than that of an The breakdown of real estate bond issues referred to in the 1930 and outsider or a receiver. In such cases bondholders should be informed of an in 1932 during continued the certain loss and of the possibility of an appreciable saving through a 1931 annual reports of your committee has ever-increasing volume. Unemployment and the consequent inability to reorganization which effects a reduction in principal or interest, or both. Such instances, however, will be the exception. Where values are far below pay rent, together with excessive taxation, have forced many real estate the mortgage debt and the credit situation of the owner is hopeless, it Is bond issues into foreclosure that would otherwise have weathered the storm. prices fair at estate real probably best to effect as rapidly as possible a transfer of the title to the There is no reason to expect an active market for until there is some semblance of normal prosperity, accompanied by a subbondholders either by deed or by foreclosure. stantial reduction in real estate taxes. Purchase of Title. It is said that the average real estate tax paid by the railroads in this There are many situations where the borrower to all intents and purposes country and covering all types of real estate, both agricultural and urban, is insolvent and the security without present equity. Where there are no taxes colis over 2% of its estimated value. If this is a fair average of the liens it may be advisable at times to purchase the owner's Intervening equivthe that it United means States, the throughout estate real lected on equity for a nominal consideration rather than go through the delay and coffers alent of 2% interest is paid by the owners of real estate into the tax expense of foreclosure. The advantages are that title can be obtained also means that in arriving at the general oflocal and state governments. It almost immediately and the property is then susceptible of sale. In most higher average a large proportion of improved real estate pays a much the bondholders' cases where the owner of the equity offers to convey title toequity, real estate it if see to is therefore, expected important, seems percentage. It the bond committee for a consideration there is little or no real some method should be devised that basis sound a on reestablished values issue being in excess of the present income value of the property. In such of local and state governments. Ohio with powers taxing the restrict . bondholders to cases the owner's equity has but a nuisance value and the constitutional amendment in 1929 as folsuch a thought in mind passed a Total El Salvador $33,877,500 Financial Chronicle Volume 135 committee should pay only a fraction of the foreclosure costs for a deed. There are a number of objections to this way of clearing a title, the principal one being the lack of available cash. To complete title it is usually necessary to cancel and release the bond issue, which can hardly be done if there are non-depositing bondholders. In addition to acquiring title by deed from the owner of the equity it is therefore often necessary to continue foreclosure proceedings so as to adjudicate the rights of non-depositing bondholders. Deeds from equity owners should be absolute and include no options of repurchase. Unless the transaction is a bona-fide sale for a valuable consideration and a clear understanding that there is no repurchase agreement, the entire transaction is always subject to a subsequent attack by the disgruntled former owner. It is, of course, possible to secure a good deed from the equity owner and later give him an option to repurchase the property for a definite sum, but even then there may be a shadow of doubt as to the intent of the parties. Foreclosure. One of the important needs in the United States is a uniform foreclosure law. In a large number of States the old common law equity of redemption prevails, which results in a delay of from two to three years to perfect a foreclosure title. During the period of foreclosure the property deteriorates, rents are sacrificed, unnecessary expenses incurred, and the property frequently becomes a pariah to the community and to the parties involved. Redemptions are seldom made and the entire proceeding is therefore without profit or honor either to the owner, to the bondholders, or to the committee. As an example, in the Chicago area there are thousands of real estate bond issues in foreclosure aggregating approximately one billion dollars. These bonds are owned by a vast number of people and the delay in liquidating their holdings is one of the major problems in Chicago. The same condition exists in other cities. The liquidation of many of these bonds has reached what seems at present an insurmountable barrier. When the property is ready to go to judicial sale there is an accumulation of liens that must be taken care of before the property can be sold and good title delivered. These claims generally consist of several years of unpaid taxes, foreclosure costs, attorneys' fees, trustees' fees, depositary's fees, and the money needed to satisfy the non-depositing bondholders. To these sums may be added bondholders' committee fees and expenses and in many cases cost of the purchase of the equity of redemption. All this requires a considerable outlay of cash and there are normally no funds accumulated. That is why so little progress is being made with many foreclosure proceedings. It was hoped that investment funds could be found in sufficient quantities to make smaller mortgages on such properties, pay up such claims, and then turn the properties over to the bondholders, who would be the owners, subject only to such small first mortgages. Unfortunately funds of this character are not generally available at present. In Chicago a corporation has recently been formed to help such situations In the following manner. The leading trust companies have organized a mortgage company with a capital of $1,500,000 for the express purpose of making loans on masters' certificates of sale, or to buy first mortgages on distressed property. The funds thus furnished are to be used in paying up back taxes, reasonable attorneys' fees, costs, &c. The corporation in question does not expect to make any profit out of its present operations as it intends to make loans at 5%% interest plus a small service charge to cover actual expenses and to build up a reserve for losses. The maximum period of its loans is three years and the loans will be limited generally to 30% of the present income value of the property. It divides loans into two classes: Class A loans are on types of property that are usually acceptable as security by trust companies and life insurance companies. The net income from such properties must be sufficient to liquidate the loans in full in five years. Class 13 loans are on types of property not usually acceptable to life insurance companies, and on this type of loan the net annual Income must be large enough to liquidate the loans in two or three years. The mortgage company above referred to expects to rediscount its loans with the Reconstruction Finance Corporation and has recently made arrangements for that purpose. It is hoped through the operation of this Chicago company that many properties will be taken out of receivership. It is possible also that the Chicago company will be used as a model for companies of similar character in other cities. The problem, however, is not as simple as it may seem. Bondholders' committees should seriously consider whether it is advisable to borrow money on their properties and create a lien prior to the interests of the bondholders. If they do so the • committees should feel fairly certain that the income will pay off these loans within a reasonable time, thus returning the property to its owners (the old bondholders) without serious danger of loss. It is, therefore, unwise to secure too large a mortgage for if the income continues to decline a default on the new mortgage might occur, which would be a catastrophe. A foreclosure of one of these self-liquidating mortgages, thus wiping out the entire interest of the old bondholders, might subject the bondholders' committee, the mortgage company, and everyone concerned to bitter attack by the disgruntled bondholders, newspapers, &c. The safer way for a bondholders' committee is not to take such risks but to leave the properties to work themselves out in some way or other. On the other hand, such Inertia or lack of courage by the bondholders' committee often means a gradual disintegration of the property, more expense, and a final severe loss to bondholders. Bondholders are at present exasperated by what seems to them unnecessary delays in concluding reorganizations or foreclosures, and your committee thinks the sane course is to borrow sufficient funds as above outlined, but to borro v a sum so small that the danger of a foreclosure is a remote possibility oaly. The borrowing of these funds enables bondholders to bid in the foreclosed property for their own benefit and hold title to it until the real estate market improves or some other method of liquidation can be worked out advantageously. There are three ways of taking title:(a) deed the property to an individual; (b) to a corporation: or (c) vest the title in a corporate trustee. To let an individual hold title seems impractical and unbusinesslike. The individual might die or become involved financially, thus endangering the title. In many cases especially in the larger properties, it is advisable to vest title in a corporation and give the bondholders preferred stock and prior rights on all net earnings. The principal objection to the corporate idea is that many real estate bondholders are not generally familiar with stock and view it with suspicion. There is also the cost of incorporation, franchise, capital. and Federal income taxes. There is also the expense of maintaining the corporate structure and the salaries and expenses involved. Then there are the annual reports to the state authorities, and the necessity for directors' and stockholders' meetings. The average size of the foreclosed real estate bond issue does not justify all these expenses and the red-tape necessary. In many states a corporation can own but one piece of real estate. In those states where a corporation can own and acquire many pieces of property, the conveyance of a group of properties to such a corporation may work out satisfactorily, the bondholders receiving stock in the corporation for their interest. All such transfers should be closely scrutinized so that a bondholder gets the equivalent of what he surrenders. From a practical standpoint, therefore, there seems but one logical way to handle the average foreclosed property for the best interests of the bond- 3293 holders, and that is by a voting trust. In Chicago under the leadership of an important trust company there has been developed what is called the Liquidating Land Trust. The base of this is the ordinary form ofland trust. Title to the property is conveyed to a trust company as trustee by deed granting broad powers. A separate trust agreement is entered into which Is not recorded, which provides that instead of the interests of the beneficiaries being in the real estate, their interests are in the earnings and proceeds of the property if sold. Such certificates of interest issued by the trustee are purely personal property and title passes by assignment without the danger of claims that attach to real estate. In many ways such certificates are like the stock certificates of a corporation but without the corporate structure and the expense of maintaining the corporation. To satisfy the needs and demands which have arisen due to existing real estate conditions, three distinct forms of the liquidating trust have been evolved. These have been described by the managing trust company in the following language: "First, there is the type under which a board of managers has control of the operation and management of the property, collects the rents, pays the operation expenses, and turns over the net income to the trustee for distribution to the certificate holders. "Second, there is the type under which the trustee manages the property, subject to the direction of the board of managers and under the board's supervision and control. "The third type is known as the 'pure trust: Under this arrangement the trustee is charged with full responsibility for the management and operation of the property, and the board of managers is eliminated. It is probable that the trustee will not itself attempt actually to manage the properties, but will merely assume the responsibility of selecting a capable outside management organization for that purpose, limiting its own functions to general supervision and distributing of the net income among the certificate holders. "The 'pure trust' typo has a number of features which seem to indicate its utility in preference to the other two forms. Entire responsibility is here centered in the corporate trustee Bondholders have a central and permanent place to come for information and help. With the actual management in the hands of a capable real estate agent as property manager,and the trust functions in the hands of a responsible corporate trustee, the bondholders may expect to be well taken care of. Your committee is not sufficiently advised as to which plan may give the best results, but it is impressed with the first plan which provides for an independent board of managers. It is, of course, quite possible to conceive of other modifications of these plans to fit particular cases. Let it be assumed that the bondholders have become the holders of certificates of beneficial interest under the foregoing plan which entitle them to part of the net income of the property when, as, and if earned, and that the balance of the net income will be used to purchase such certificates at the lowest prices available. As the property regains in value it is possible that these certificates will be bought and sold and a market created for real estate certificates of beneficial interest. Are these certificates going to be a new form of security for the investment banker to consider? Will the title to many income properties be vested in trust companies as trustees and the management controlled by such trust companies, and will these properties eventually be sold again into private ownership and the certificates gradually disappear? These are interesting questions involving the future of income real estate, to which your committee has no present answer. Surety Guaranteed Real Estate Mortgage Bonds. Your committee has been unable to ascertain the exact amount of surety guaranteed real estate bonds outstanding at the present time, but it appears that an estimate of between $150,000,000 and $200,000,000 is conservative. Bonds of this type were originally issued at a time when the issuing mortgage company was reported in sound financial condition, and the earning capacity of the mortgagor indicated ability to meet interest and amortization of the mortgage. The mortgaged property carried appraisals representing a substantial equity and the guaranteeing surety company was operating profitably and was entrenched with reserves invested in sound securities. Many of the original safety factors protecting this type of bonds have been eliminated by the real estate situation and the depression in general, leaving the guarantee of the surety company as the principal safeguard so that the value of these guarantees has become of utmost importance to bondholders. It is not possible to judge from the published financial statements of surety companies their ability to meet the maturity of the bonds or mortgages guaranteed by them, because of their numerous other activities and the necessity to maintain reserves for every type of risk underwritten. It is the opinion of your committee, however, that surety companies would not be sponsoring the extension of bonds carrying their guarantee unless the urgency of the situation made such extension essential. It is obvious that liquidation of securities by the surety companies to meet these maturities weakens their financial structure at the very time when the retention of these assets is essential to the satisfactory conduct of their business. A situation which should be called to the attention of those interested in bonds of this type Is the fact that in many cases the bonds themselves are not guaranteed—only the mortgages securing the bonds being guaranteed as to principal and interest. The surety companies under these circumstances are not generally obligated to pay trustee's fees or general administrative expenses of a mortgage company, and in case of receivership of the mortgage company these heavy expenses must be borne by the bondholders, or charged against the assets protecting the bondholders. Your committee *believes that in every case where extension is requested the surety company should offer to directly guarantee the payment of principal and interest of the bond itself, thus eliminating the possibility of a charge against bondholders of the cost of administering the trust, A study of the various plans for extension submitted to your committee to date would seem to indicate that cooperation on the part of bondholders by assenting to extension is for their best interest, and while no definite recommendation may be made by this committee, it would seem that bondholders are justified in agreeing to the extension plans, if such plans are sponsored by the guaranteeing surety company and all the original distributors of the bonds. Federal Home Loan Bank Act, The Federal Home Loan Bank Act became a law on July 22 1932. The United States (and its dependents) is now divided into 12 Federal Home Loan districts. Each district will have its own Federal Home Loan Bank with separate officers and directors. The activities of the 12 banks will be directed and controlled by the Federal Home Loan Bank Board at Washington. which consists of five members already appointed by President Hoover. The primary purpose of the Act Is to discount "home" mortgages made by its member stockholders. To all practical purposes the membership Is limited largely to Building and Loan Associations. To such organizations it will undoubtedly be of some practical value. The Act seems hardly broad enough to be able to handle loans direct to home owners and for that reason will hardly accomplish the desired relief during the present period of distress. The Act provides for the issuance of notes. debentures or bonds which will be the joint and several obligation of all 12 banks. The security behind the bonds and debentures will consist of collateral mortgages supplemented by the obligatior of the borrowing members and the capital of all 12 banks. 3294 Financial Chronicle which has been initially set at $134,000,000 and which will largely be furnished by the Government. The bonds will have the same tax exemption as Federat and Joint Stock Land Bank bonds and they will be legal investments for the same character of trust funds. The notes. bonds or debentures issued by any bank will have a new and heretofore untried market, which might develop into a large one because the law declares those obligations legal tender at par in payment of or as a credit against the obligation of any home-owner debter of such bank. The Act does not provide for double liability of stockholders, nor are the obligations designated as "instrumentalities of the United States Government." In fact the Act specifically states that each bond must plainly state that they are not the obligations of the United States and are not guaranteed by the United States. The Act is still in its infancy and not as yet in practical operation. It therefore seems doubtful if any Federal Home Loan Bank securities will be offered until 1933. REAL ESTATE SECURITIES COMMITTEE. Edwin K. Hoover Louis K. Boysen, Chairman Earl W. Huntley William C. Bitting Jr. Norman Nelson Charles B. Crouse W. F..Finley C. B. Stuart Report of Municipal Securities Committee, by Henry Hart, Chairman—No Default in Bonded Indebtedness of Any State—Of 309 Cities of Population of Over 30,000, Only 3.5% Reported in Default. The status of municipal credit was dealt with in the report of the Municipal Securities Committee of the Investment Bankers' Association, which, taking cognizance of the fact that "in the minds of some people the stability of municipal credit has been challenged," submitted a limited survey of such credit to give " a more accurate picture of the standing of this class of investment." The report indicates that "no default is reported in the bonded indebtedness of any of the 48 States aggregating approximately $2,400,000,000. In the case of cities and overlapping school districts with a population of over 30,000, the Committee says that "out of the 309 cities in this class, 11, or 3.5%, are reported to be in default; six of the overlapping school districts are also reported in default." The report states that notwithstanding "this remarkable record in the prompt payment of municipal obligations during this period of adversity . . . the members of the Associa. . have been cognizant of a certain degree of tion responsibility to protect the interests of their cutomers, and it has been the aim of this Committee at all times to assist in the exercise of that responsibility." The following is the report in full as presented by the Chairman of the Committee, Henry Hart of the First Detroit Co.: STATUS OF MUNICIPAL CREDIT. In the minds of some people the stability of municipal credit has been challenged. The problems confronting municipalities in various parts of the country under present conditions have been given wide publicity in the press. This is inevitable by the very nature of the fact that municipalities are public bodies. Private credit does not share the same spotlight of publicity. Recognizing that unfavorable developments usually receive undue prominence, the Municipal Securities Committee considered it in order to make a limited survey of the present status of municipal credit in order to give its membership a more accurate picture of the standing of this class of investment. With the co- operation of the 17 members of the Municipal Securities Committee located in various parts of the country, the bond buyer and others, we have been able to gather the significant facts regarding the default status of States, and of cities and overlapping school districts having a population in excess of 30.000. It is estimated that the bonded indebtedness represented by this latter group comprises about 75% of the municipal indebtedness of the country. We have also been able to determine which States stand out as practically free from default. The probable existence of over 150.000 taxing districts, and the constant changes in the debt-paying status of many, renders impossible a more detailed study by the committee. We submit the figures as of approximately Oct. 15 1932 with reservations as to their complete accuracy. Slate Indebtedness. No default is reported in the bonded indebtedness of any of the 48 States, aggregating approximately $2.400.000,000. Cities and Overlapping School Districts Having a Population in Excess of30.000 Out of the 309 cities in this class, 11. or 3.5%, are reported to be in default. Six of the overlapping school districts are also reported in default. These 309 cities and their school districts have a gross bonded debt estimated at approximately $8.100.000.000. The 11 cities and 6 school districts reported in default have a gross bonded debt estimated at approximately 8153.000.000. or 1.8% of the total debt of the cities in this class. (No attempt has been made to ascertain whether the defaults apply to interest alone, or to principal and interest, or the amount of principal in default. It is obvious that only a very small portion of the $153,000,000 principal has matured and is in actual default.) Classification of States as to Number of Municipal Defaults. The following is a classification of the number of States which have reported no defaults up to and including those which have reported more than 10 defaults of counties, cities, villages and school districts with population in excess of 1.000 11 States None 17 States From 1 to 5 5 States From 6 to 10 15 States More than 10 48 States With a perfect record as to State obligations, only 11 cities and 6 school representing 1.8% of the total indebtedness of cities and school districts, districts in excess of 30.000 population in default, and only 42% of the States in the Union reporting more than 5 defaults in the group canvassed, we believe that municipal credit is still entitled to rank as the premier investment medium of the country next to United States Government obligations. Nov. 12 1932 Activities for Protection of Municipal Credit. Notwithstanding this remarkable record in the prompt payment of' municipal obligations during this period of adversity, the Municipal Securities Committee has constantly recognized the serious problems faced by many municipalities. The members of the Association who have handled municipal securities have been cognizant of a certain degree of responsibility to protect the interests of their customers, and it has been the aim of this committee at all times to assist in the exercise of that responsibility. This has required not only co-operative action among members to see that the legal rights of bondholders were upheld, but to assist the municipalities themselves in putting or keeping their fiscal affairs in a sound condition. The various methods of meeting this responsibility may be classified under the following headings A. Publicity.—Through pamphlets, magazine articles and contacts with municipal officials, we have endeavored to disseminate information which we believed would be of assistance to municipal officials in their fiscal operations. We have advanced suggestions on legislation to accomplish the same purpose. The interest on the part of municipal officials in these efforts has been gratifying. The school officials of one of the largest cities in the country printed in full. in one of their fiscal reports, one of our recent articles. There is much need for further activities in this field. B. Group Organizations.—We have previously reported on our study of plans to form a national organization for gathering financial statistics on municipalities. The magnitude of the task on a nationwide scale and the many practical problems to overcome lead the committee to the conclusion that it was not practical. In the absence ofsuch an organization, municipal dealers with certain groups of our Association have undertaken co-operative movements to accomplish the same purpose in particular localities or have formed associations with full-time field/nen. At the present time at least four of such groups are operating in the States of Florida, Ohio, Michigan and North Carolina, the latter having been just recently formed. These are proving to be an effective media for gathering accurate information, assisting municipal officials and protecting the interests of investors. C. Refunding.—Where the schedule of maturing obligations is proving too burdensome on the municipality under present conditions, refunding operations become necessary. If there is no market, the refunding must depend on the willingness of investors to take refunding bonds in exchange for their present securities. In a large majority of such cases the municipalities have no doubt been justified in requesting this extension of time. and the investors are showing an increasing inclination to co-operate. Unfortunately there are a few cases where, through outside influence or otherwise, municipalities have demanded the right to refund where conditions did not justify this privilege. In others refunding is proposed. although the fiscal affairs of the municipalities are being so operated that the investor is without assurance that the interest and principal on the refunding bonds will be met. There is a peculiar responsibility on behalf of the members of our Association to not only investigate for the benefit of their customers all the circumstances surrounding a proposal for forced refunding, but for such dealers who are assisting in the refunding operations to see that there be no cause for justifiable criticism of the activities of such dealers. To promote unnecessary refunding or to charge an excessive commission in cases of forced refunding is unethical. D. Bondholders' Committees.—The most acute municipal problems are necessitating the formation of bondholders' committees. Due to the absence of the single house of issue, the widely scattered location or retirement from business of many originating houses, expense involved and prejudice against bondholders committees, the difficulties of securing cooperative action in the formation of committees and the conduct of their activies have been manifold. The results already obtained by many of these committees in protecting the interests of investors are worthy of special attention. Through litigation they have obtained important court decisions which will serve as valuable precedents in other situations. Through a study of the economic and fiscal problems of the individual municipality and dissemination of such information to the bondholders, the committees have been able to create in the latter a sympathetic understanding necessary to secure the ultimate co-operation between the municipal officials and the bondholders and essential to the adoption of a Permanent financial program. It is to be hoped that the work of these committees will not be unduly hampered by the lack of co operation on the part of investors. The latter should bear in mind that the committees are not mere collection agencies, but are obliged to meet the fundamental problems of a sound and permanent solution of the present difficulties. The committee members in most CaSCR are acting with little or no compensation and on behalf of many bondholders to whom they owe no moral obligation. On the other hand. a responsibility rests upon such committee members to so conduct themselves as to justify the confidence and co-operation of the investors, essential to a successful culmination of their activities. FEDERAL LEGISLATION, 1. The Emergency Relief and Construction Act of 1932. This Act is perhaps the most important single piece of legislation affecting municipal credit that has ever been adopted. Under this bill the Reconstruction Finance Corporation was authorized to make available to States, territories and plitical subdivisions $300.000.000 for welfare relief, and the sum of $1,500,000,000 to States, municipalities and certain corporations for the financing of self-liquidating projects. The Municipal Securities Committee has followed this legislation from the time it was first proposed in Congress. and since its adoption has co-operated with the Officials of the Corporation with reference to certain of their problems of administration. While recognizing the demands for legislation of this kind, we have endeavored to emphasize the dangers involved in providing the means for a substantial increase in municipal indentedness without proper safeguards and restrictions. The demand for the expansion of State and municipal credit, under present conditions, for direct welfare relief and for the financing of projects which will give employment, conflict in many case; with the equally Insistent demand for relief of the over-burdened taxpayer through the curtailment of public expenditures and a holiday in the creation of additional debt burdens. The safeguards and limitations written into the law, and the policy of those charged with its administration, have evidenced a recognition of these opposing interests and the intention of meeting in part the demands of both. When a substantial portion of our population is facing starvation and want, and the normal relief methods are inadequate, it is obvious that the Government and its subdivision.s cannot ignore the opportunities at their command for meeting the problems. In order to do so without ignoring the rights of the taxpayer, sacrifices must be made in order activities of government through reduced expenditures and curtailed services. Title 1, Section 1 (a) to (d) provides a means for the advancement of the apporpriation of $300.000.000 to the States and territories, and the repayment of the same through reductions of the apportionments from future Federal aid for the construction of highways within such States, beginning in the year 1935. While the corporation is empowered to take Volume 135 Financial Chronicle the bonds of such States as security, it is possible under this provision to finance the present emergency without increasing the debt or tax turden of the States or their subdivisions. Under Paragraph (e) of this Section, the Corporation is authorized to make loans direct to municipalities providing the municipalities issue their own obligations for the amount of the loan. Due to the fact that many of the municipalities which have the greatest need for relief, have the most acute debt and tax burdens, it is to be hoped that this provision will be used sparingly, and the Reconstruction Finance Corporation and the Governors of the various States will take advantage of the opportunity to give and secure relief by the method which only involves the foregoing of certain highway construction beginning in 1935, rather than adding to the burden of taxpayers. Title II. of the Emergency Relief and Construction Act, under which the 31.500,000.000 is made available for self-liquidating projects, has defined a self-liquidating project as follows: . a project shall be deemed to be self-liquidating if such project will.be.made self-supporting and financially solvent and if the construction cost thereof will be returned within a reasonable period by means of tolls. fees rents, or other charges, or by such other means (other than by taxation) as may be prescribed by the statutes which provide for the project." The fact that the projects must be self-supporting by revenues other than taxation, is in line with the recommendations made by our Committee before the bill was adopted, and should prove to be a strong safeguard against the demands for unsound expansion of municipal credit. As anticipated there have been many applications for loans under this section by municipalities for projects which are not needed, are unsound. and would eventually create a tax burden on certain communities which are now facing severe delinquent tax problems. Applications have been filed by municipalities for the financing of new projects where the officials have evidenced their inability to administer their present responsibilities along sound and conservative principles. It is too early to ascertain what the policy of the officials of the Reconstruction Finance Corporation will be in passing on such loans. The questionnaires which they have prepared have indicated their intention to take these matters into consideration. Their responsibility in administering this section of the law is a difficult one. We trust that their expressed intention to give every consideration to the soundness and need of the projects,and to the danger offurther jeopardizing the ability of the local governments to perform their present functions and meet their obligations, will be maintained throughout their operations. 2. Jurisdiction of Federal Courts. The only other Federal legislation which the Municipal Securities Committee has been following are the bills to deprive the Federal Courts of jurisdiction of causes on the ground of diversity of citizenship. While this comes within the scope of the Legislative Committee, the importance of these bills to holders of municipal bonds prompts us to again call attention to the same. The advisability of litigating questions pertaining to municipal bonds in tribunals removed as much as possible from contracts with local prejudices and attitudes, has always been recognized. If the Norris bill which was favorably reported by the Judiciary Committee at the last session of Congress should be adopted, the holder of municipal bonds will be deprived of the needed protection of recourse to Federal Courts on the grounds of diversity of citizenship. A similar bill in the House is still in Committee. STATE LEGISLATION. Since the last report of the Municipal Securities Committee several State legislatures have convened in special session. We will not attempt to enumerate the various bills adopted affecting municipal securities. In view of the fact that at least 40 legislative bodies will be in session during the coming winter we deem it more important to bring to your attention some outstanding subjects of legislation affecting municipal securities which have been before the special sessions, or will no doubt be presented in many States, and to point out some of the pitfalls to be encountered. Some of these include constitutional amendments to be voted upon at the general election next month, or to be proposed by the legislatures. 1. Tax Limitations. When real estate taxes appear unusually burdensome, efforts are frequently made to impose limitations on the rate of ad valorem taxation that may be levied. The Indiana Legislature recently adopted a 15 mill tax limitation for all purposes. The voters of Kansas and Michigan will be asked to vote on constitutional limitations of 15 to 20 mills. By implication or express provision taxes for the payment of indebtedness previously Incurred, and. In the case of Kansas, contracted prior to July 1 1933. are exempted from the provisions of the limitations, but levies for the payment of future bond Issues must come within the limitation prescribed. Inasmuch as these limitations are usually promoted to actually reduce the amount of taxes now being levied, and provision is not made for giving preference to the payment of future bond issues. It may follow that the purchaser of such bonds where such limitations exist, can receive little assurance of the ability of the municipality to levy and collect taxes sufficient to pay the principal and Interest. Municipal attorneys in Indiana have already indicated that there will probably be very few bonds issued in that State which they can approve. Granting that taxes on real estate have in many localities been unduly burdensome, and may be properly subjected to limitation for operating expense, investors in municipal bonds have long recognized the dangers of such limitatins affecting the levy for bonds and interest. Limitations on the amount of debts to he incurred are highly desirable, but when bonds have been issued, there should be no.limitation on the power to levy taxes to pay the same. Those Statts which are considering limitations should realize that unless the levies for dens to be incurred in the future are not exempted, the municipalities will be obliged to pay a higher interest cost on future obligations, and in many cases will be unable to borrow at all. A holiday on the issuance of bonds may be desirable, but to jeopardize the ability to borrow money for absolutely necessary purposes, emergency is most dangerous. relief, 2. Exemption of Real Estate from Taxation.. In at least two States constitutional amendments are before the voters providing certain exemptions on homesteads from taxation. These are prompted by the same motives behind the tax limitation amendments and when accompanied by the latter may cause serious complications. Exemption of a substantial amount of property from taxation requires an Increase in the tax rate, while the proposed limitations may require reduction. It should be remembered that holders of municipal bonds have certain contractual rights to demand the payment of bonds through taxation on property subject to taxation at the time the bonds were Issued. Any attempt to take away this right through exemption may be subject to legal attack. 3. Laws Pertaining to Tax Collections. The desire to relieve the taxpayer is prompting various proposals for the waiver of penalties, postponement of tax sales, and a moratorium on the payment of delinquent taxes. The economic and p•actical problems involved where large numbers of parcels are going off the tax rolls and re- 3295 verting to the State are serious in some localities, and a satisfactory solution has not yet been found. As a general rule the tendency to relieve delinquent taxpayers, encourages further delinquencies and should be avoided. There are opportunities frequently available to re% ise the scheme of penalties, by Increasing the same in the early period of delinquency, which should discourage the withholding of tax payments until the last date of redemption approaches. The payment of taxes by instalments is in effect in many localities and is being widely proposed. While this method has much to commend its support. its adoption may also cause serious embarrassment if not properly safeguarded. Due to the frequent discrepancy between tax collecting periods and fiscal years, and to the necessity in many cases of borrowing in anticipation of the collection of taxes to meet requirements before taxes are collected, a further delay in the receipt of taxes through the adoption of the Instalment method of payment may temporarily embarrass the municipality and cause defaults. The Governor of Louisiana recently vetoed a bill passed by the Legislature providing for the instalment payment of taxes for this reason. This danger may be overcome at least in part by providing machinery for the prepayment of taxes through discounts, &C. In general, the instalment method of paying taxes should be encouraged. 4. Limitations on the Issuance of Bonds. Constitutional amendments to restrict, to taxpayers only, the right to vote on proposed bond issues are to be voted upon in Montana and Michigan. This would appear to be a sound and equitable provision. It has been suggested that the privilege might be llgically restricted to those who actually pay their taxes, but there are perhaps too many practical objections to the enforcement of such a restriction. Bala have been passed prohibiting the issuance of bonds for certain purposes, particularly highways, by local communities. This is in keeping with the tendency to consider the building and maintenance of highways as a function of the State. 5. Relief of Local Debt and Tax Burdens Through State Aid. The success of the gasoline and automobile license taxes as a source of revenue, and the many examples of the almost confiscatory burden of real estate taxes for the payment of highway bonds, have prompted the legislatures in certain States, notably Florida, Arkansas, Texas and Michigan, to provide a method for the payment of certain outstanding highway obligations of local communities through a diversion of the automobile and gasoline taxes. This has and should prove to be a most effective and justifiable method of relieving the oppressed taxpayer and insuring the payment of outstanding road obligations. It is also a recognition of the importance of paying for the highways already constructed before proceeding with the building of new highways on a scale inconsistent with present conditions. Care should be taken in the drafting of such legislation to avoid constitutional objections, and to insure the fulfillment of the purposes intended. The subject of new forms of taxation, such as State sales and income taxes, does not come within the scope of this committee. It will unquestionably be one of the most popular subjects for legislation, and may play a large part in meeting municipal credit problems where real estate taxes are proving an ineffective source of revenue. 8. Security for Public Deposits. The Municipal Securities Committee reaffirm; the statement made on previous occasions that bank failures constitute one of the outstanding contributing causes of municipal defaults and has continued its study of the problem begun two years ago. While it has urged the adoption of laws requiring the posting of adequate security for public deposits, in the form of corporate surety bonds or readily marketable collateral, the frequent refusal of the surety companies to handle this type of business, and the inability or unwillingness of many banks to furnish suitable collateral, under existing conditions, have made it impractical to secure much relief by legislation along this line. These difficultues have led to the consideration of other methods of meeting this serious problem. The plan adopted in Iowa in 1925 of establishing a State Sinking Fund for Public Deposits, has created National attention and has recently been copied in Indiana and Wisconsin. Under the Iowa Law the interest on public deposits is remitted to the State Treasurer and deposited in a fund to be used for the payment of public deposits tied up in closed banks. This fund is augmented by the sale of warrants up to a maximum of $3.500,000, which are a first charge on the interest revenues. Liquidating dividends from the closed banks in payment of the public deposits, are also paid into the State Sinking Fund. Up to July 1 1932. approximately 700 banks holding public deposits have closed, and over 3.100 claims aggregating nearly $21.500.000 have been paid from the fund. At the present time it is reported that there are less than ten municipal defaults in Iowa in communities of over 1.000 population. This record speaks for itself. While the failure to provide for the adequate security of the State Sinking Fund itself, and the failure of a bank in which a substantial part of the fund was deposited, caused a temporary embarrassment, the general success of the plan in Iowa under such a severe test, commends its consideration by other States when the legislatures convene. 7. Reduction in Cost of Government Through a Consolidation of Local Units and the Elimination of Obsolete and Cumbersome Forms of Local Government. The inefficiency of many forms of local government, particularly counties and townships,is receiving serious consideration by students of ,overnment. During the last year Virginia adopted a well-considered plan for the simplification of county government. Much remains to be accomplished in many other States and it is to be hoped that the deprssion will bring about many constructive changes along similar lines which should reduce the cost of government and strengthen the credit of municipalities. 8. State Supervision of Municipalities in Financial Difficulties. The need for adequate protection of the rights of the taxpayer and bondholder in municipalities which have permitted their fiscal affairs to get into serious difficulties, is becoming increasingly important. 'While the States hay( g substantial numbers of defaults are limited to a very few, the need for special laws creating some neutral agency with powers similar to that of receiver is apparent. While North Carolina and Massachusetts have pointed the way to a limited extent in this field, there is little precedent for effective means of meeting some of the existing problems. The constitutional inhibitions and political expediencies make the problem a difficult one, requiring a most careful study of the subject before drastic legislation is adopted. DEPOSITORY FOR LEGAL OPINIONS AND TRANSCRIPTS. The value of the official depository for legal opinions and transcripts to dealers and investors in municipal bonds is becoming increasingly important in these days when many of the former houses of issues are being replaced by organizations possessing none of the original files. The increased activity in the business of trading in old issues also presents new problems within this ,ategory. It is perhaps not generally known that the official depository—the M & T Trust Co. of Buffalo—is acting as depository for original trans- 3296 Financial Chronicle scripts, as well as opinions. This addition to their other functions is of particular value in case of litigation when the necessity of obtaining the transcript is imperative. These records usually take up considerable filing space, and whe lever any dealer would care to be relieved of the burden of maintaining such files they should communicate with the depository. Members of the Association are also urged to notify the depository whenever they hear of municipal houses or bond attorneys retiring from the active municipal business, or who, for some other reason, would care to dispose of their opinion and transcript files. In an effort to further support the excellent work of the depository through a lessening of competition on the part of members, and to provide some compensation for the increasing burden of supplying opinions to traders and others, the Group Chairmen's Committee and the Municipal Securities Committee in joint session have voted to recommend to the various groups the making of a charge for legal opinions on the following basis: That each member house make a charge for furnishing an opinion, where a sale of bonds is not involved, of $2.50 to member of the Association and $3.50 to non-member,this being the same rate now charged by the official depository. This is to be presented as a recommendation only, with the understanding that the groups may act independently on the same. UNIFORM QUESTIONNAIRE. A report has been submitted by the Special Subcommittee of the Municipal Securities Committee,recently appointed to prepare a uniform questionnaire to be used in obtaining information from municipalities. The demand for a uniform questionnaire is brought about by the complaint of municipal officials that they are swamped with all varieties of questionnaires, and the belief that they would be given better attention if submitted in the same form. In view of a request just received by a group representing municipal finance officers, that public officials be given an opportunity to be heard before a uniform questionnaire is adopted by our Association, the matter was deferred for the future consideration of a subcommittee to be appointed by the in-coming Chairman of the Municipal Securities Committee. Respectfully submitted, Henry Hart, Chairman. R. W. Knowles John S. Harris C. T. Diehl 0. S. Ashmun E. B. Sherwin R. Emerson Ayers E.F. Dunstan Leo Keyser Royal D. Kercheval Ross Thomson Joseph E. Chambers H. H. Fitch Meade H. Willis Francis B. Childress Gray B. Gray J. R. Kimball John W. Denison Report of Legislation Committee by Francis M. Knight, Chairman—Review of State Legislative and Congressional Action—Glass Banking Bill Regarded as Needing Further Revision. The report of the Legislation Committee of the Investment Bankers' Association of America reviews the legislation enacted in New York, Illinois, Kentucky, Louisiana, Massachusetts, Mississippi, Virginia and the District of Columbia, bearing on the sale of securities, and also points to outstanding Congressional measures of interest to investment bankers. The report, which was presented at the annual convention of the Association at White Sulphur Springs, W.Va.on Oct.25, surveys particularly the provisions of the Glass Banking Bill, as affecting the investment banking business, and says "in the opinion of some, if not of most of those who have made critical study of the bill, it needs further revision." The Chairman of the Committee is Francis M. Knight, of the Continental Illinois Co. of Chicago. The report of the Committee follows: A report of the activities of the Legislation Committee since our last convention necessarily includes a restatement of a portion of the interim report made at the May meeting, but brought down to date and supplemented by a report of what has occurred since that time. The regular schedule for the period called for only 9 State legislatures to be in session, as follows: Kentucky, Louisiana, Massachusetts, Mississippi, New Jersey, New York, Rhode Island, South Carolina and Virginia. In fact, however, the legislatures of 24 States have been in session—nine in regular session and 15 in special sessions. Those in special session are Alabama, Arizona, Arkansas, Illinois, Indiana, Maine, Michigan, New Jersey, Ohio. Pennsylvania, Tennessee, Texas, West Virginia and Wisconsin. Of these, one State held three extra sessions and one four, and one five, making a total of 32 State legislative sessions during the fiscal year. Each legislative session required sufficient attention in the first instance to determine what, if any, was proposed or to be proposed relative to the sale of securities or the regulation of the conduct of dealers or brokers in securities. In some instances this was easily done by reference to the executive call by which an extra session was assembled. In others the proceedings had to be watched from time to time. Omitting, for the most part, reference to bills offered but not enacted into law and confining this portion of our report to bills which were enacted, we report as follows; Illinois that section of the existing securities law providing for the registration of dealers and salesmen and for the giving of a bond by registered dealers was held to be unconstitutional by the Supreme Court in December 1931. At an extra session of the Legislature a bill was offered to restore the registration provisions for dealers and salesmen but omitting all reference to or provisions for a dealer's bond. The Central States Group Committee was afforded the opportunity to co-operate in the preparation of this bill through which a number of beneficial modifications from the original draft were effected. This bill passed on April 19 with an emergency clause, was signed by the Governor,and became effective on April 28. Kentucky.—In Kentucky a bill was enacted whereby the office of Securities Commissioner was abolished and the administration of the securities law was transferred to the banking Department under the consolidated title of Banking and Securities Department. The chief officer is designated as "Banking and Securities Commissioner." This was part of a program of State economy and does not affect the present securities law, except in administration. Louisiana.—In Louisiana a bill to supplant the existing securities law with another law of the regulatory type was presented. A careful study of the bill was made followed by efforts of local members of the desirable I. B. A. of A. and of the Legislation Committee to bring about amendments. The bill was finally amended in certain particulars. hut amended, As objectionable. appeared which features not as to all of the the Senate but was vetoed by the the bill passed both the House and Governor. Nov. 12 1932 Massachusetts.—In Massachusetts at least three bills were introduced relating to sale of securities and regulation of the conduct of dealers in securities. These bills provided numerous amendments to the existing securities law or a complete revision of that law through its repeal and the substitution of a new Act. As originally drafted, numerous objectionable features appeared from the standpoint of investment bankers. Many hearings were had on these bills. Close and painstaking attention was given to them by the local group committee. The result was an agreement on a new bill in the nature of a substitute for all existing bills, which contained compromise provisions reasonably agreeable to all. The substitute bill was enacted into law. Mississippi.—In Mississippi a bill amounting to a rewriting of the existing securities law and sponsored by the Secretary of State was enacted. The law as thereby revised retains a very large portion of the former law but modifies it in certain particulars. Opportunity was afforded the Legislation Committee to study the bill and offer suggestions. A number of suggestions were made both as to modifications embodied in the bill and for further modifications of the law in particulars not touched upon by the bill. These suggestions were submitted to the Secretary of State through Mr. Schroeder of the Legislation Committee. Apparently the Secretary of State was in accord with most of the suggestions offered. The committee of the Legislature, however, presented a substitute bill conforming neither to the original bill nor to all of the suggestions for modifications. The substitute bill was adopted. The principal amendments to the law thus made are: A revision of the fees for qualifying securities by raising the maximum fee from $100 to $250. The inclusion of a section providing for the canissue cellation of a permit to sell securities within that State where the has been disposed of or withdrawn from the market and upon application to a once effect that the Secretary of State and by publication of notice to week for three consecutive weeks. Any stockholder shall have not exceeding three months from date of last publication within which to file or adjust any claim by reason of any alleged fraud or misrepresentation In connection with the sale of such security or to file suit for recovery on the bond required to be filed at the time the permit to sell was granted. If no claim or suit is filed within such period of three months any liability shall cease. Provision is made for the suspension of any permit granted by the Secretary of State, and for cancellation of such permit after notice and a hearing. A provision is included requiring a registered dealer to file with the Secretary of State a list of the securities to be offered for sale by him. A provision was added requiring a bond in the sum of $5,000 by dealers upon being registered, conditioned upon the faithful compliance with the act by such dealer and by all salesmen registered by him. Authority is given the Secretary of State to make investigations of any dealer when in his opinion such dealer has violated or is violating the law. Such investigations to be at the expense of the dealer. Upon evidence of a violation he may suspend the dealer's permit and upon notice and a hearing may cancel the same. Likewise the Secretary of State is given authority to examine into the affairs of any issuer the securities of which have been qualified for sale under the law. New York.—It would be difficult to recite, in any brief report, all of the bills offered to and considered by the Legislature of New York of interest to investment bankers. Of primary importance to this committee, however, was the enactment of Senate Bills 778. 779 and 780, by which the Martin Act was amended. Collectively these bills, now a part of the law, provide for: (1) Permanent injunction against any person found actually to have been or then to be engaged in fraudulent practices, as defined in the Act, from selling or offering for sale any securities issued or to be issued; s sub(2) A provision for enforcement of mandate of Attorney-General' poena and the attendance of witnesses upon a hearing or investigation by the Attorney-General; and • the registration of all dealers (3) A provision requiring, as a prerequisite, when acting as principal, broker, agent or otherwise in the sale of securities within the State of New York. Such registration is effected by causing to be filed with the department of law (Attorney-General) a statement, duly verified, disclosing certain specific information. Thereupon such false registration, with certain exceptions, is as a matter of course. Any statements made in a dealer's statement for registration subject the maker of such statements to the criminal penalties of the law. These bills received the careful consideration and active attention of the New York Group Legislation Committee and their attorneys and were approved by that were enacted. committee in the form in which they Virginia.—Two separate bills modifying the securities law of that State were enacted in Virginia. One of these, Senate Bill 152, constitutes a appliseparate law and modifies the securities law only by reference and by cation. It provides for the filing of a written irrevocable power of attorney dealer who non-resident establishes any by process and consent to service of or maintains a place of business within that State: such power of attorney the agent of any such nonappoints the Secretary of the Commonwealth resident dealer upon whom may be served any proms against, or notice or proceeding arising out action any to. any such non-resident dealer in of attorney is not of the sale of securities within the State. Such power in proper form and limited unusual and not seriously objectionable when to actions arising solely under the essential provisions of a securities law. In this instance, however, it should be noted such power of attorney Is not purported fraud or violation of the restricted to an action occasioned by securities law, but Is inclusive of any action, whatsoever, growing out of a securities transaction. issuseec:ic eens matnoded nlle o afndthdeesi ordersecurities eer odw ; The other bill. Senate Bill 335 st law by giving to the Commission the any non-exempt State of without from sale and against the offering securities within the State or of any securities of whatsoever character where evidence of fraud exists. There is probably considerable question as to the legality of what amounts to a power of injunction and restraint in the Commission against the inter-State transactions in securities. The effectiveness, it may be noted, lies within the publicity which may be given to such cease and desist order as the Commission may see fit. It is with regret we observe that nothing has been accomplished to remedy the discriminatory Provisions of the securities law against nonof the law. residents in the dealer's registratio provisions for District of Columbia.—Three bills appeared in Congress providing as many forms of securities laws for the District of Columbia. They are as follows: type with some attempt 1. The Blaine bill—S. 3362—of the regulatory uniform bill but with to follow the general provisions of the so-called added stringent and, in our opinion, unworkable modifications, passed to the Committee referred was the Senate and went to the House where it at adjournfor the District of Columbia. It was held in the Committee ment of the session. 2. The Bowman-Reed bills—H. It 9065 and S. 3947—are identical bills Congressman Bowman introduced in the House and Senate respectively by and Senator Reed, are of the fraud type of law plus simple registration of of Columbia reported District the for Committee dealers. The House Volume 135 Financial Chronicle the Bowman Bill with recommendations that it pass. It had failed, however, of further consideration at the close of the session. 3. The Sabath bill—H. R. 8912—by Congressman Sabath of illinois, provides for a modified form of the regulatory type of law. No action was taken on this bill. Maryland.—In Maryland at the 1931 session of the General Assembly the Governor was authorized to appoint a Commission of seven to study Blue Sky laws of Maryland and other States and make recommendations on the subject to the Governor and the General Assembly not later than Jan. 15 1932. In appointing this Commisision the Governor named three members of the Investment Bankers' Association of America, viz.: Charles H. Baetjer, T. Stockton Matthews, and C. T. Williams as members of that Commission. The Commission has already been engaged in a preliminary way assembling data regarding the operation of Blue Sky laws In other States and in the preparation of its tentative report and recommendations. National Legislation. It would be extremely difficult to even mention all that transpired in Congress of interest to investment bankers. Items ordinarily attracting the attention of bankers and investors alike, this year were overshadowed by matters of grave and outstanding importance. With some consideration to the order of apparent importance, bills offered in the National Congress and National in character may be mentioned as follows: The Reconstruction Finance Corporation Act. The Glass-steagall Banking Act. The Emergency Relief Act. The Glass Bill or the Banking Act of 1932. The Norris bills to remove the jurisdiction of the Federal Court in certain cases. The Johnson bill of similar purport. National Blue.Sky bills (five or more in number) including the La Guardia Bill (H. B. 12898) proposing a Federal law regulating the sale of securities by requiring those making the original offering of securities to guarantee such securities against default in payment of principal and interest. The Revenue Bill with the tax on the issuance and transfer of stocks and bonds. An Act (H. R. 10244) fixing the fees and limit of indemnity for domestic registered mail based upon actual value and length of haul, &c. Reference to this legislation is found at page 308 of "Investment Banking" of Aug. 31 1932. The Muscle Shoals Bill. The Glenn-Smith and kindred bills relating to the refinancing of drainage and irrigation districts. The Federal Home Loan Bank Bill. Bills relating to foreign loans and short-selling. Since most of these bills will be discussed by other committees more specifically concerned with their provisions, we will here treat only of those to which this committee gave some major attention. The Glass Bill. By this time every one must be quite familiar with the Glass Banking Bin which, at the close of the session of Congress, was still pending in the Senate after having been twice revised by the Committee on Banking and Currency. In the opinion of some, if not of most of those who have made a critical study of the bill, it needs further revision. In substance this bill as it now exists and as it affects the investment banking business provides as follows: 1. That the Federal Reserve Board be given the power to prohibit the further extension of reserve credit to member banks which are making undue use of their lending power "for the speculative carrying of or trading In securities," &c. 2. It proposes to abolish security affiliates of member banks at the expiration of three years from the date of the enactment of the bill. 3. As a corollary to the requirement that security affiliates be abolished, the bill proposes that a Federal Reserve member bank, conducting the business of dealing in investment securities, shall be "limited to purchasing and selling such securities without recourse, solely upon the order and for the account of customers and in no case for its own account and shall not underwrite any issue of securities." These limiations, however, ar e not to apply to obligations of the United States or general obligations of any State or political subdivision thereof, or to obligations issued under authority of the Federal Farm Loan Act, as amended. 4. It proposes that a member bank of the Federal Reserve System shall not act "as the medium or agent of any non-banking corporation. partnership, association, business trust or individual in making loans on the security of stocks, bonds or other investment securities to brokers or dealers" . . 5. It proposes a certain form of branch banking and with certain limitations. 6. It provides for a definite legal status of "group banking." The Norris Bills. These Bills, S. 937 and S. 939, would affect the jurisdiction of the Federal Courts in cases arising out of controversy between citizens of different States. The one, S. 937, provides "That where a corporation organized under the laws of one State or more States, or under the laws of one or more foreign countries, carries on business in a State other than the one where in it has been organized, it shall for purposes of jurisdiction in a District Court of the United States be treated as a citizen of such State wherein it carries on business as respects all suits brought within that State between itself and the residents thereof and arising out of business carried on in such State." The other bill, S. 939, would abolish entirely the jurisdiction of the Federal District Courts in all cases based on diversity of citizenship—both in the case of individuals and corporations. Particular reference is made to a statement respecting these bills at page 198 of "Investment Banking" of April 30 1932. Senate Bill 939 has been favorably reported by the Senate Judiciary Committee while House Bill H. R. 10594, corresponding to S. 937, has bcon favorably reported by the Judiciary Committee of the House but later recalled for further consideration and hearings. Blue Sky Laws Survey. We have heretofore stressed the importance of having made, if and when possible, a broad and general survey of the operations of the several States' blue sky laws, their practical operations, economic value, cost and incidental expense to the business, comparative efficiency of the different types of laws and, in general, the value of such laws as compared to the public burdens. At the January meeting of the Board of Governors authority was given for the appointment of a special committee to make a preliminary perspective of the possibilities of such a survey. Mr. William W. Hinshaw Chicago, was delegated to and did make such of the Central Republic Co., preliminary survey. Although his report was favorable to the advisability that the cost would of a broader and more general survey, it has seemed outweigh the prudence of expenditure at this time. We hope and suggests however, that the matter be not forgotten, but kept well in mind for more 3297 definite action as and when circumstances will justify. In all probability legislative activity during the ensuing year will demonstrate the grave necessity for such a survey and for definite knowledge of the economic truths such a survey would bring to light. Rules and Regulations. It is not legislative enactment alone with which the Legislation Committee is concerned. Most of the securities laws grant certain discretionary powers to the administrating official of the respective States. It must be so, necessarily, if sufficient elasticity is provided by which the law and its administration may be adjusted to varying and unforeseeable conditions. With the large number of over-credulous investors who, unable to differentiate between losses through investment occasioned solely through fluctuating economic conditions and losses fraudulently imposed, constantly complaining and trying to assuage their feelings by blaming public officials, this discretionary power•has been brought into play to a greater extent during the past year than at any time before. This has brought on a number of problems of administration which have for the most part been dealt with by the appropriate group organizations and local committee members. Thereby much was accomplished of great value to the membership and to the business of investment banking generally. Looking Forward. That this committee may expect a busy year ahead may be judged from (1) the number of State Legislatures to be in regular session beginning early in January;(2) the apparent general public attitude to ask for new and more legislation with more stringent regulations and graver penalty provisions; and (3) the legislation now pending in Congress and more to follow. Forty-four State legislatures will be in session next year. Not one can be said to be immune from proposals for important and even radical modifications of the blue sky laws, amendments to the banking acts, to the laws respecting corporate control, laws respecting the conduct of dealers and brokers, holding companies, &c. In the National Congress the Glass Bill or the Banking Act, the Norris bills, the National blue sky bills, the bills providing a securities law for the District of Columbia, and bills attempting to provide some sort of regulation of the sale of foreign securities are pending as unfinished business. Already several bills have been introduced to amend the Revenue Act of 1932. It is reasonably certain others will follow. It therefore appears that if this Association is to have any voice in legislation relating to its business, we must be alert to the situation and ready promptly to give attention all along the line as well as lend our counsel as specific instances arise. LEGISLATION COMMITTEE, Francis M. Knight. Chairman, Vernon H. Branch John E. McKirdy Aims C. Coney Walter P. Napier Pierpont V. Davis Richard M. Price Charles B. Engle Walter W.Schroeder Benj. J. Frick Jr. W. S. Simonton Harry W. Kerr James T. Wachob Alex. I. Henderson Joseph T. Walker Jr. Alexander McAndres Meade H. Willis. Report of Federal Taxation Committee, Investment Bankers' Association by Edward Hopkinson, Jr. —Sales Tax and Beer Tax Among Means for Broadening Tax Base—Revenue from Latter Estimated at $754,000,000. The report of the Federal Taxation Committee presented to the Annual Convention of the Investment Bankers' Association referred to the increased income tax rates in the 1932 revenue bill, and pointed out that "undoubtedly each increase in rates accelarates the flight of capital from productive investment in business and industry to some form of tax-free securities." "It is manifest," said the report, "that the only way to raise additional sums is by broadening the tax base." The Committee notes that "one tax most likely to be turned to is some form of sales tax," and it also discussed the productivity of a tax on beer. As to this the report said: It has been estimated a tax on beer up to 40 cents a gallon could readily be levied without increasing the price to a point where bootleggers could successfully compete with legal manufacture. On this basis it is estimated the tax realized might even reach $754,000,000 per year, a sum roughly approximating three-fourths of the entire tax collected by the Government during the fiscal year ended June 30 1932. "The assistance such additional revenue would be in the present emergency, representing as it would a voluntary payment constituting a burden only on those who chose to become subject thereto, cannot be disregarded," says the Committee, the Chairman of which is Edward Hopkinson Jr., a partner in the banking firm of J. P. Morgan & Co. We give the report herewith: When the Interim Report of this Committee was made to the Spring meeting of the Board of Governors(May 14-17 1932), Congress was still in session and our report (see "Investment Banking," June 14 1932, Vol. H, No. 7, page 244) was directed particularly to the Capital Gains and Losses provisions of the Revenue Bill. It will be recalled that the bill originally adopted by the House did not recognize as deductions any losses sustained on the sales of stocks and bonds in excess of gains from similar transactions. Losses on stocks and bonds held over two years were offset against gains on such assets held over two years, and losses on the sales of stocks or bonds held two years or less were offset against gains on such assets held two years or less. Subject to certain limitations an excess of losses over gains in one of the above mentioned groups could be offset against the gains in the other group. In the bill as reported by the Finance Committee of the Senate. the limitation that losses on stocks and bonds could only be taken to the extent of gains from similar transactions was confined to the sale of such securities held for two years or less, while gains or losses arising from the sale of stocks and bonds held for over two years were in all cases treated precisely as under present law, whether such losses were incurred by a corporation or an individual. Section 23 (r) contained a proviso that these limitations should not apply "to a dealer in securities in respect of transactions in the ordinary course of his business with his customers." 3298 Financial Chronicle Nov. 12 1932 It was pointed out in the report of our Committee that this language was about 1234 cents per gallon. The Canadian tax on beer,according to governclearly not adequate to protect a dealer in many transactions "within the ment pronouncements, has been placed at a very low figure to encourage ordinary course of business," and a clarification of this sub-section was beer consumption and at the same time reduce the drinking of hard liquor recommended. It was also recommended that bonds should be entirely rewhich is very heavily taxed. But this plan has apparently not been particmoved from these restrictions as to deduction of losses, as presumably was ularly successful as beer drinking has remained fairly stationary while sales the original intention because the subsection of the bill was headed "Limitaof hard liquor have increased. How much of this sales increase in hard tion on Stock Losses." This was also advocated by Secretary Mills in his liquor represents purchases for export to the United States is impossible to Statement to the Senate Finance Committee on Apr. 6 1932. in which he estimate. recommended that this provision should "not apply to bonds, which are Based on the consumption of malt liquors in the United States,as reported normally purchased and held for investment purposes and which are not in Internal Revenue statistics for 1917 (the last full year before war-time susceptible of manipulation so as to create fictitious losses." Resolutions prohibition) approximately 1.885,000,000 gallons at the Canadian rate of containing the recommendations of the committee were adopted by the 12;i cents, would produce approximately $235,000,000. It has been esBoard of Governors and transmitted to each member of the United States timated a tax on beer up to 40 cents a gallon could readily be levied without Senate, Secretary of the Treasury, and Governor of the Federal Reserve increasing the price to a point where bootleggers could successfully compete Bank, reading as follows: with legal manufacture. On this basis it is estimated the tax realized might "Resolved, That bonds should be eliminated 'from the application of even reach $754.000,000 per year, a sum roughly approximating threeSection 23(r) of the Revenue Bill limiting deductibility of losses, as recomfourths of the entire income tax collected by the Government during the mended to the Senate Finance Committee by the Secretary of the Treasury. last fiscal year ended June 30 1932. The assistance such additional revenue "Further Resolved, That Section 23(r)(3) be further amended to remove would be in the present emergency, representing as it would a voluntary the discrimination against dealers in securities as compared with all other classes of merchants with regard to deducting all security losses in the payment constituting a burden only on those who chose to become subject ordinary course of business." thereto, cannot be disregarded. From all the data on the present estimated Fortunately, before final passage of the bill, the necessary clarification consumption of illegal beer, naturally approximate and subject to wide ofsub-section 23 (r) 3, was made so that the limitation on stock losses would variations,a very substantial portion of this tax revenue would not represent not apply "to a dealer in securities, as to stocks and bonds acquired for additional expenditure on the part of the American public but rather a resale to customers, in respect of transactions in the ordinary course of his diversion of funds now going into bootlegging channels. In conclusion, we desire to place all possible emphasis upon reduction business,. ." Unfortunately, the complete elimination of bonds from of public expenditures as whatever forms of additional taxation are availed the limitation on losses sections did not take place. of, they are at best only a choice of evils and cannot fall in greater or lees Recent Treasury reports clearly indicate a new revenue bill will have to degree to retard economic stabilization and recovery. be considered by Congress during the short session beginning in December. When the 1932 Revenue Act was prepared the Treasury estimated that Edward Hopkinson Jr., Chairman William H. Eddy over $1,100,000,000 in additional revenue would be obtained but the inHermann F. Clarke C. Edgar Honnold dications are now clear that neither the income nor the miscellaneous taxes T. Stockton Matthews" will yield nearly as much as had been expected. The new rates and taxes did not come into effect until after July 1 1932 but the figures just released Report of Committee on State and Local Taxation by for the first quarter ending Sept. 30 1932 of the current fiscal year, show total receipts amounting to approximately $437,000,000 and expenditures Chairman Charles E. Engle—State Income Taxof approximately $839,000,000, or a deficit of almost $402,000,000. This ation Maintains Position in Forefront of Legislathe end deficit compares with approximately $388,000,000 at of the first tive and Public Discussion-20 States with Personal quarter in the last fiscal year. These deficit figures as officially reported by the Treasury do not include advances to the Reconstruction Finance CorIncome Taxes—Injustice of Tax Burdens on Real poration which under the law are charged directly to the public debt. InEstate—State Taxation of National Banks. those of the come tax payments were only slightly more than half comparable quarter of the preceding year. Of course the increased Income tax rates of Stating that "recognition has been given by this Committee the 1932 bill are not yet reflected in the payments now being made which to the injustice of the tax burden borne by real estate" the are based on 1931 income at the old rates. However, the falling off in State and Local Taxation Committee of the Investment income for 1932 will tend to counterbalance the increased rates and lowered exemptions. Undoubtedly each increase in rates accelerates the flight of Bankers' Association pointed out that "the methods emcapital from productive investment in business and industry to some form ployed to correct this inequality should be constructive of tax-free securities. The gross public debt of the United States on Sept. 30 1932, stood at even in a time of stress like the present. According to the approximately $20,600.000.000 as compared with approximately $19,487.report "the abatement of penalties on tax delinquencies and 000,000 at the beginning of the current fiscal year on July 1 1932, and the re-assessment of delinquent taxes over a period of future approximately $17,320,000,000 on Sept. 30 1931. The all-time peak of public debt was approximately $26,600.000,000 on Aug. 31 1919. years have widening support, but these proposals involve such importance for vital it is the of If new taxes are to come, continuance of serious questions in fiscal administration and afford so many business recovery that these taxes be of such kind as to place the minimum chances for inequalities that it is felt the principle of'prompt burden upon productive industry, and should really produce the additianal funds required to balance the budget. Of course, raising additional money payment' should be generally supported. The pending reducing the is The other half is only half of the picture. Federal budget consitutional amendment in Texas which provides State ad to the irreducible minimum and there is no doubt that much can and must be done. The ways in which public expenditures may best be reduced is valorem tax exemption on all homes up to $3,000 assessed beyond the scope of this Committee but numerous public organizations, valuation is also viewed with much concern because of wideThe National Economy Including Chambers of Commerce and more recently spread use of such exemptions would materially narrow the League under distinguished leadership, are taking an active part to this end. At the last session of Congress the Treasury program, as stated by Sectax base, whereas the broadest consciousness of tax burden retary Mills to the Senate Finance Committee, comprised, generally speakis deemed desirable." The report observes that State income ing, a Progressive income tax at increased rates, a progressive estate tax taxation "maintains its position in the forefront of legislaat increased rates; a series of selective excise taxes, following in the main the lines of the 1921 and 1924 acts; and increased rates on postage adequate tive and public discussion.". There are now 20 States, the to put the Post Office Department on a self sustaining basis. The bill report notes, with personal income taxes. Since the report finally passed by the House increased income tax rates, estate tax rates, of a year ago, it is also noted, "four State Legislatures have together with the gift tax, at even higher rates than recommended by the Treasury, and provided a great number of manufacturers' excise taxes passed upon the addition of State income taxes to their tax directed at what might be described as luxuries, but did not include a general structure. In Illinois favorable action was taken, although manufacturers' sales tax based on the Canadian model which had been the law is being subjected to court review as to constitutionalrecommended by the House Ways and Means Committee. The bill finally passed by the Senate and approved by the President followed the general Arizona, Indiana and Louisiana failed to enact such a ity. lines of the House Bill, although many improvements in detail were made. law and the Supreme Court of the State of Tennessee has It is manifest from recent experience that the only way to raise additional sums is by broadening the tax base. This may be accomplished, in part, held the Tennessee law unconstitutional." In conclusion by a lowering of present exemptions but, in addition, new subjects of taxthe Committee states that "while it is regretted that much millions, approximately population 123 of ation must be found. Of our total of the existing tax agitation cannot now be directed into according to the 1930 Census, of whom approximately 65 millions are of voting age, less than 23i millions pay any Federal income tax under prior scientific legislation . . . there are afforded unusual law. Under the Revenue Act of 1932, which reduces the exemption from opportunities for guiding and creating public opinion which married for $3,500 to $2,500 $1.500 to $1,000 for single persons and from should eventuate in much sounder taxing systems in all of persons, it is estimated on the basis of incomes for the calendar year 1931 that only 1,700.000 additional taxpayers would be added to the roll. our taxing units." Charles B. Engle, of the International One tax most likely to be turned to is some form of sales tax. This has Trust Co. of Denver, is Chairman of the State and Local York New been recommended by the Chamber of Commerce of the State of at a special meeting held Sept. 29 1932, and in the appendix to the report Taxation Committee, whose report follows: submitted to that body by its committee on taxation, there Is an excellent Economic conditions during the past year have aroused a growing wave summary of the several types of sales tax tried by other governmental of interest in taxation which is very gratifying to your Committee even if a bodies, with a discussion of the advantages and disadvantages which have large part is due to the pinch of personal tax incidence rather than to a wideapparently developed in connection with the several types. This Committee spread desire for equity or science in meeting the fiscal problems of governhas not the qualifications to attempt to select the particular type of sales ment. But before discussing recent developments and prseent trends, there tax which should be adopted, other than to support the general principle are three subjects heretofore engaging the attention of the Committee which that the burden should be as broadly spread as practicable, exempting should be brought up-to-date: State taxation of National banks, reciprocity therefrom only the bare necessities of life. ininheritance taxes and State income taxes. In spite of the fact that recent political developments would seem to State Taxation of National Banks. assure the eventual repeal of the Eighteenth Amendment and to have practically eliminated it from party politics, it is obviously impossible for The decision of the Supreme Court of the United States (opinion by Mr. Justice Brandeis) in the case of Iowa-Des Moines National Bank vs. E. R• the repeal of the Amendment to be brought about in time to make a tax on Intoxicating liquors a source of revenue which might assist In meeting the Bennett, Chairman et al, handed down in December 1931,further strengthpresent emergency. This, however, does not necessarily apply to a modened by definite restatement several favorable decisions during the past 10 ification of the Volstead Act in so far as that Act might constitutionally be years. It is held to be a direct violation of Federal Statutes for a State to amended so as to permit the selling of non-intoxicating beer and beverages tax the shares of stock in a National bank at full book value when, at the Many in definition. excess of the content present alcoholic having some same time, there is a substantial amount of moneyed capital coming into competition with the business of National banks which is either not assessed political leaders in both parties have publicly expressed themselves in favor or assessed at much less than full value. of such action at the coming short session of Congress. The productivity of a tax on beer would, of course, depend upon conReciprocity in inheritance Taxes. reasons prohibition developed tax. during For our sumption and the rate of the Supreme Court of the United States (opinion by Mr. of 111 The -decision should not be so high tax rate of as to encourage the obvious it experiment, is Justice Sutherland) in the case of First National Ban
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