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Vol. 13 No. 13 July 16,1984 Des Moines, Iowa A t Dakotas Centennial, Malcolm Forbes Says: Lower Interest Rate Is Key to Long-Term Stability OWER interest rates will bring L stability to the American and in t e r n a t i o n a l business com munities and are achievable now, a c c o r d in g to Malcolm “ Steve” Forbes, Jr., chief executive officer of Forbes, Inc., and senior editor of Forbes Maga M. FORBES, JR. zine, New York. Speaking before the joint Centennial Convention of the North Dakota and South Dakota Bankers Associations at The Broadmoor in Colorado Springs, Colo., Mr. Forbes stated: “ You never have low interest rates and a stable economy without gold backup. That is attested to by our own economic history—post Civil War, ‘20s and post ‘60s. It sounds crazy to say we can have in terest rates of 5, 6 or 7 percent; if we do, we'll save $50 to $70 billion a year on interest on the public debt and we wouldn’t need to cut Social Security and other programs.” He takes issue with Fed Chair man Paul Volcker’s method of con trolling the economy, stating, “ Mr. Volcker takes his laudatory press clippings seriou sly.” He said “ Economists fear inflation is return ing, but are overlooking the fact that we can cause deflation.” Later, he said “ the Federal Reserve has no reliable gauge, no compass to tell them when we have too little or too much money. That’s the same as a carpenter using an elastic yardstick. Until they get it, interest rates will remain unnecessarily high. The ulti mate solution will be to go back to the monetary procedures and policy we had from the end of World War II until the late 1960s. Before 1968 we had a ratio of $2 of debt to $1 of real growth. Now it is $10 to $1. The tinkering of the late 1960s led to our economic downfall and President Nixon gave it the coup de grace with his wage-price control measure.” Continuing, Mr. Forbes said, “ Those who messed it up thought the government should stimulate the economy. Under the Bretton Woods agreement we had 20 years of unprecedented boom. The four pil lars of our prosperity were: “ 1. The Bretton Woods agree ment. “ 2. Fewer trade barriers—more free trade. “ 3. A tax system that encouraged success rather than punishing it. “ 4. Military stability. As a result of the Viet Nam War we lapsed, and now are trying to catch up. “ The true source of prosperity is people and economists lose sight of that.” Mr. Forbes gave these predictions for the future: “ 1. Interest rates one year from now far lower. Mr. Volcker thinks the economy is oblivious to the poison of high interest rates. I think the prime will be three points lower, but still high by historic standards. W e’ll see a surge in the stock mar ket—maybe 300 points. The time to buy is when others sell, and that break will come. “ 2. Inflation will stay around 3% or 4%, but the real threat is defla tion. “ 3. The dollar value needs to go down, but won’t go down in the magnitude of former drops. ‘ ‘ 4. The election. President Reagan will win, but the key is the kind of campaign he runs. President Eisenhower smiled, patted Nixon on the back and won, but the Republi cans did not. But if President Reagan campaigns like Roosevelt and keys people to the future, then he will be stronger and the Republi cans will do better and the nation will do better. “ Despite the next 18 months of turmoil, the United States economy has an underlying strength and re silience. Despite our recession, we created 20 million new jobs—and the MALCOLM FORBES, J R . . . . (Turn to page 3, please) RISMILLER, WEAVER AND YAKE Getting it done for you. ^ RislTliiier Chairman Warren Weaver Ernie Yake President Senior Vice Preside President Commerce Bank Kansasoty ■ 'M ^ NA MEMBER FDIC https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Tolonhnno Telephone (816) Tld-OnWl 234-2000 *r 2 Norwest Bank Des Moines , N.A. NORWEST BANKS Call (515) 245-3131 or toll-free (800) 362-2514 Member FDIC mmmmm n m T e a m w o rk: one o f the reasons w e’re firs t in Iowa. Tom Quin Iin Gary McClimen Two Major Missouri Bank Chains Plan Merger An agreement in principle has been reached for acquisition of Char terCorp, Kansas City, to be acquired by Boatmen's Bancshares, Inc., St. Louis, according to Donald N. Brandin, chairman and CEO of Boat men’s, and Gorden E. Wells, chair man and CEO of CharterCorp. Basic terms of the proposed merger pro vide for payment by Boatmen’s for each share of CharterCorp of $5 in cash and nine-tenths (.9) of one share of Boatmen’s common stock. At June 30, CharterCorp had approx imately 7.8 million shares outstand ing. CharterCorp’s lead bank is First National Bank of Kansas City. Boatmen’s lead bank is Boatmen’s ASK STAN FARMER to make MNB work for you. Toll free 1- 800 - 332-5991 Merchants A National Bank 151 Member F.D.I.C, A BANKS OF IOWA BANK https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1980-82 and had been a member of the board since 1947. DES MOINES: Gary Frandson has resigned as vice president in the cor respondent banking department at Norwest Bank Des Moines, N.A., to join First Interstate Bank of Ari zona, N.A. Mr. Frandson will be an assistant vice president in the Mid town Commercial Loan Center in downtown Phoenix. SIOUX CITY: Max J. Larson has been appointed president and chief National Bank in St. Louis. Both executive officer of First National holding companies have a statewide Bank. Mr. Larson was most recently presence. senior vice president of Brenton Na tional Bank of Des Moines. In that position he was responsible for all Iowa News The Iowa Bankers Association is lending and commercial banking sponsoring a Financial Planning In functions. He began his banking ca stitute to be presented in six parts reer at the Brenton Bank in 1971. through the months of August to Prior to that time he served as vice January at the Scheman Center in president and director of Federal Discount Corporation. Ames. The six areas to be covered at the institute include: Introduction to Fi nancial Planning; Risk Manage ment; Investments; Tax Planning and Management; Retirement and Estate Planning, and Counseling Skills, Computer Analysis and Case Studies. The institute will run from 8:00 a.m. to 4:30 p.m. on August 28-30; September 25-27; October 23-25; No vember 27-29; Januay 2-4, and Janu ary 29-31. Registration, which in cludes lunches, and textbooks ma terials, is $1,398 for members and $1,750 for subscribers. Deadline for accepting registrations is August 1. For more information contact Lee Schenk at the Iowa Bankers Associ ation in Des Moines. CLARION: Mark S. Johnston has resigned as cashier at Security State Bank in Hubbard to take a similar position with Brenton Bank & Trust Company at Clarion. He will replace David M. Olson, who resigned as vice president and cashier at Clarion to move to United Central Bank of Cresco, N.A. CLEAR LAKE: Roger Walston has joined Clear Lake Bank and Trust Co. as a vice president to fill the vacancy created by the recent retire ment of Robert Grabinski, a long time employee of the bank. Mr. Wal ston formerly was assistant vice president and ag rep at United Cen tral Bank of Greenfield. CLEGHORN: Paul Egger, 79, passed away on June 23. He served as presi dent of Cleghom State Bank from Nebraska News The Nebraska Bankers Associa tion is one of the co-sponsors for an “ International Trade Documentary Credit Workshop” for Handling Documentary Credit Effectively to be held at three different locations through July and August. The work shop will run from 8:00 - 5:00 on Ju ly 19-20 at Lincoln-NBC Center, 3rd floor, 13th & “ O” ; July 26-27 at Omaha-First National Bank Center, 9th floor, 16th & Dodge, and August 2-3 at Grand Island-Holiday Inn, 1-80 & Hwy 281. One of the two leaders for the course is Brad Korell, vice president, National Bank of Commerce, Lin coln. Registration can be made through Susan R. Rouch, Nebraska Department of Economic Development, P.O. Box 94666, Lincoln, Neb. 68509 or call (402) 471-4668. LINCOLN: The state’s largest in dustrial bank, State Security Savings Co. of Lincoln, filed July 10 under Chapter 11 of the Bankruptcy Code. Nebraska Banking Director Roger Beverage said his first know ledge of the action was when a State Security representative called him late July 10 to inform him of the fil ing. He said the firm is “ pending re organization in the courts and has not been declared insolvent. We are working with potential purchasers.” The most serious of the latter group is a Nebraska financial institution. Mr. Beverage said, “ My only concem is that depositors are protected • • # m £ ^ £ % # • • ® ® ® Supplement to Northwestern Banker Newsletter 7-16-84 W here success is etched in quality. he success of your bond portfolio is a function of quality investments. After all, quality is your best assurance of growth in earnings. United Missouri’s Investm ent Banking Division can m ake sure you’re investing in high quality securities. W e offer exactly what HU you want. And, for over 50 years, our track record for making successful recom m endations has been excellent. Undoubtedly due to our consistently high standards. Call or write us today. W e ll hold your investment information in the strictest confidence. Investment Banking Division U N ITE D M ISSO U R I BANK o f Kansas C ity, n.a. Member FDIC C ■W ^ U nited w e grow.Together. 1Oth and Grand o P.O. Box 226 o Kansas City, Missouri 64141 (816)556-7200 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis C A LL ON THE “PERFORM ANCE TEAMIJJ where common transactions are handled uncommonly well. ■ FIRST NATIONAL LINCOLN 13th & M Street • Lincoln. Nebraska 68501 • Member, F.D.I.C. 0 .n all possible manners.” To that LAKE ANDES: The Andes State carbon of Kennedy’s in the early end, Mr. Beverage’s department has been working to assist State Securi ty to obtain FSLIC coverage, for which the company applied last De cem b er 19. “ W e’re ready to issue an emergency charter as a savings and loan,” Mr. Beverage stated, if re quirements can be met. • Minnesota News Nearly 200 bankers from five states will be attending the 18th an nual Midwest Banking Institute Ju(}y 22-27 at the University of Minne sota, Morris. The Institute is de signed for management level agri cultural bankers and is sponsored by the state bankers associations of S^innesota, Montana, North Dako ta, South Dakota and Wisconsin. MINNEAPOLIS: Norwest Bank Central has named Michael G. Schrantz as president, effective July He succeeds William S. Solberg, who has resigned his position to take retirement. Mr. Schrantz pre viously served as executive vice president and a member o f the board cit the bank. He began his career in 1958 at Norwest Bank of Slayton. Illinois News ^PHICAGO: Fred W. Hawk has joined Lakeside Bank as vice presi dent in marketing. Mr. Hawk has been associated with Harris Trust and Savings Bank the past 26 years, #n ost recently as vice president in the commercial loan department. South Dakota News Members of the South Dakota ^Bankers Association met at The Broadmoor in Colorado Springs early this month and elected the following new officers for 1984-85: Pres.— John A. Haerter, chairman and pres id e n t, Farmers State Bank, Hosmer; Pres.-Elect—Burdette C. Solum, president, Norwest Bank Watertown, N.A.; Vice Pres.—B. Michael Broderick, Jr., president, First •American Bank, Canton; Immed. Past Pres.—Charles W. Ekstrum, president, First National Bank in Philip. J.I. Milton Schwartz con tin u e s as executive vice president in •Pierre. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bank has announced the addition of Sally R. Winckler to the bank’s staff as assistant vice president. Ms. Winckler has eight years of banking experience, most recently with American State Bank of Yankton. North Dakota News New officers of the North Dakota Bankers Association for 1984-85, elected at the 100th Anniversary Convention July 7 at The Broad moor in Colorado Springs, are: Pres.—Les Nesvig, chairman and president, The First State Bank of La Moure; Pres.-Elect—William M. Sanger, chairman and president, First Bank of North Dakota, N.A.; Vice Pres.-Treas.—H arvey H. Huber, president, Union State Bank, Hazen. Mr. Nesvig succeeds Darold Petersen, chairman and pres ident, Lakeside State Bank, New Town. Harry J. Argue continues as executive director, headquartering in Bismarck. FARGO: Thomas G. Schmallen has been named executive vice president of Dakota Bank & Trust Co. of Far go. He joined the bank in 1975 as vice president and commercial loan officer, most recently serving as se nior vice president. MINOT: Jerry Hahn has joined First American Bank & Trust as vice president of commercial creditreal estate. Mr. Hahn was employed by First American of Minot for over 17 years before resigning to accept a position in Montana. Montana News BILLINGS: Norwest Bank Billings, N.A. has promoted Wade L. Pehl to assistant vice president. He joined the bank in 1980 after graduating from the Montana State University with a BS degree in agriculture. MALCOLM FORBES, J R . . . . (Continued from page 1) Japanese didn’t do that! This was unprecedented in human history. “ So, our real problem is making government leaders realize they should stay out of the way and not try to tell people what to do. Presi dent Reagan’s tax cuts of ‘81 were a ‘60s, and the Democrats criticism of Reagan is the same made by Repub licans of Kennedy. The same with our military defense. It amuses me that Teddy Kennedy doesn’t see the resemblance. Even if someone on his staff of 400 told him, he wouldn’t understand it. “ The American economy will again take it’s rightful position as the leader in the civilized world.” When asked later what he would substitute for the Fed’s “ lack of a compass,” Mr. Forbes said, “ There is no way to measure accurately the money supply.” He mentioned, as an example, the complications in volved in that process in connection with the rapid influx and outgo of OPEC money. “ I would ignore the money supply. I would measure by the gold price. We don’t need a clas sical gold standard, but just mea sure it against the world price. If it hangs between $400 and $500, there’s no worry. If it goes below $400 the Fed should buy bonds; if above $500, it should sell bonds. Likewise, the Fed could increase reserves below the $400 price and decrease reserves if the gold price goes above $500. The problem with the money supply is that everyone has a liquidity crisis— cash flow is the problem.” Earlier in his talk, Mr. Forbes said the most serious problem is that “ people in policy m a k i n g power positions are traditionally hypo chondriacs—they can’t believe the economy is so good or good enough and they want to tinker with it. We all read about the deficits but no one talks about the fact that the deficit will fall 20-25% this year, as it should in this type of economic re covery. Our state governments alone are building a $40 to $60 bil lion surplus. Our recovery will lead other nations to recovery. What we don’t read is that our exports get better each quarter. Thanks to our economy and low level of inflation we have a nation that attracts in vestment. We read a lot about our nation being a debtor nation because of foreign investment, instead of realizing we’re so healthy as to at tract this investment.” He warned again that we should 4 “ look for politicians to want to per form malpractice on our economy.” Mr. Forbes listed these four cau tions to watch: “ 1. A dramatic fall in commodi ties (such as metals) prices—this happened in the ‘ 20s, ‘30s and ‘80s and recession followed. “ 2. The same for real interest rates. “ 3. The fall of strong currencies— Japan, Germany, etc., against the American dollar. “ 4. Finally, the stock market has taken a tumble. “ This is a recipe for turbulent times ahead and if it is not heeded in the next 12 to 18 months, then they could cause another recession.” But Mr. Forbes concluded that if interest rates can be brought down to reduce federal deficits by a great ly reduced interest rate load, and to alleviate interest rate pressure on all segments of business, then the longrange economy of the nation will lead the world in a sustained re covery. □ W ANT ADS Rates are $5.00 per line per insertion. Add $3.00 for file letters per insertion. Identity of file letter advertisers cannot be revealed. N or th w ester n B anker 306 - 15th Street Des Moines, Iowa 50309 Phone 515/244-8163 Ag Banking Positions Let us help you. Call the ag lending personnel specialists w ithout cost or obligation. Confidential. Employers pay us to hire the best. CORRESPONDENT BANKER—for Metro area bank. W ill call on country banks, do on site inspections and new business development. 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Handle majority of in stallm ent credits and assist w ith commercial loans. $ 2 7 1 ^ SENIOR LENDER - work directly w ith CEO in administra tion of loan portfolio. $75MM com m unity bank with chance for advancement. $36K Additional opportunities available in midwestern states for experienced bankers. TOM HAGAN & ASSOCIATES f 2024 Sw ift - Box 12346 North Kansas City, MO 64116 816/474-6874 W “ Serving the Banking Industry Since 1970” Vol. 13 No. 13 Northwestern Banker Newsletter (USPS 873-300) is published weekly by the Northwestern Banker Company, 306 Fif teenth Street, Des Moines, Iowa 50309, (515) 244-8163. Subscriptions $1.00 per copy, $15.00 per year. Second class postage paid at Des ® Moines, Iowa. Address all mail subscriptions, changes of address (Form 3579), manuscripts, mail items to above address. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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