The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-09-07
Get OUR MONEY.
Kansas Bankers Snap Up East
ern Commercial Paper.
Furnish an Outlet for Hoards
of Cash.
ROYCEWANTS TO KNOW
Asks for a Description of This
Paper.
TO KNOW
Supposed Fifteen Millions Have
Already Been Invested.

John Q. Royce state bank COMMITS
sioner. today sent to each of the $50
state banks of Kansas a request for a
detailed statement of the amount and
full description of the Commercial
paper on hand.
This action is for the purpose of
checking any tendency which may ex-
list on the part of the banks to load up
with an undesirable class of CONNER
cial paper. When the. banks have re-
ported what paper they have, an in
vestigaticn may be made to deter
mine the character Of this paper. In
this way the bank commissioner may
be able to prevent trouble in case of
financial stringency leading to a
commercial panic in the east. ~,
kansas bankers have never before
held such enormous amounts of COM
mercial paper. 1t Is. estimated that
the banks of the state have at least
$15,000,000 invested in this class of
securities, and it is considered gilt
edge investment. 1t pays 6, 6 "a and
Ter cent interest. and is the most
profitable form of investment the
bankers can find. The paper in most
general circulation in Kansas is that
of Swift. Armour, Cudahy, Schartz-
child & SulZberger. and other big
packers, of Doggett, Emery. Bird &
Thayer, and other dry goods houses,
both wholesale and retail, in Kansas
City, Chicago, st. Louis, New York
and other points.
The peculiar thing about the pres
ent situation is that Kansas is now the
creditor of the east instead of being
its de btor and the big commercial en-
terprises of the country are coming
here to get money which can't be OBJ
tanned at the financial centers. A few
years ago, the commercial paper of
the big mercantile and manufacturing
concerns bore only or 5 per cent in
terest and was issued in notes of not
less than $4,000 or 100000. At that
time, the smaller Kansas bankers
were unable to handle such large
loans because of a rule which pro-
hibited carrying so many securities Of
one concern. The people who issued
commercial paper had no trouble in
getting ali the money they wanted at
the big financial. centers, and were not
at all dependent upon Kansas banks
for funds to carry on their business.
Since then there have been some
startling changes going on in the
financial word-changes the signifi-
cance~of which is even now not fully
understood. These changes have
driven the commercial paper out OF
the eastern markets, and the concerns
menced to issue their paper in $1,000
lots. and peddle it out among the
oapkers of Kansas and the west. The
CO.. stantly growing business of the
merchants and manufacturers has
made it essential that they get more
funds. Nearly all of these concerns
operate mainly upon borrowed morey.
If they can't get enough money to keep
going, they are likely to meet disaster
as did the Pope-To1edo automobile
concern. which went into the hands of
a receiver because 1t could not bor-
row money fast enough.
The Kansas bankers have the money,
and were anxious to find place to in
f7e, nd nIvv
nothing. The farmers did not want to
borrow money. Nearly all of them had
bank accounts of their own and the
money piled up in the vaults of the
banks The commercial paper furnish
ed the outlet for the surplus funds. and
Kansas bankers have been buying
greedily. One wealthy Kansas bank Is
said to hold an even 81 900, 900 worth OF
commercial paper bearing not less than
&c per cent. Ex-Governor w. j. Bailey,
who now runs one of the big banks at
Atchison was in Topeka a few days
ago. In speaking of the situation he
said:
"There never was a time when such
great quantities of absolutely first
class commercial paper could be
bought. This paper is gilt-edged-there
income, and the Kansas banks are get
ting large quantities of 1T.
1t is understood that the national
bank examiners have commenced TO
carefully list all of the. commercial pa
ner on hand in national banks, and are
making reports to the comptroller OF
the currency of everything on hand.
The comptroller has had the govern
ment experts at work investigating the
stability and credit of the concerns
which have issued the paper. and when
he finds a bank carrying a load or
doubtful paper, he will see that It Is
converted into some other form of as
set. The same policy will be pursued
regarding the state banks.
%There is nothing in the present sit
uation to cause anybody to get excl
ted" said Bank Commissioner Royce
today. Rather we should feel gratff1ed
that Kansas banks are in such a con-
dition of prosperity that they can loan
money to the people who in the past
have been loaning money to us; We
simply want to keep track of what Is
going on so that banks will not get
hold of paper which will prove to be
Issued by some irresponsible firm. AT
the present time the commercial paper
fs the most profitable investment. and
oftentimes the only Investment. which
is offered to the bankers of the state"
Weekly Bank Statement.
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