Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1913-11-05
SEES CREDIT !. ABUSE !
JAMES - HILL DECLARES IN
SPEECH THAT NATION is WA
TERLoGGED WITH BONDS.
MEANS FINANCIAL DISTRESS
Railway Builder Tells Bankers and
Men OF Commerce In Chicago
That Over.lssuance of Seeur-- ~
tiles Is Fiscal Debauch. y

Chicago, Nov. with plain words
and. blunt frankness, James ]. Hill, the
dean of the nations railroad builders,
told 900 financiers and men of COM
merce in Thursday that credit mad
been abused"-that the country IS
waterlogged with bonds" and that II
the present abuse of credit continues
an abyss of possible suffering ana
financial distress opens before US.
Mr.. Hill delivered his warning In an
address at the annual banquet OF the
Investment Bankers Association OF
America at the Congress hotel. At the he
same gathering Frank A. Vanderhp'
president OF the National City bank OF
New York deserving danger from an
other source, declared that the pass
age Of the Glass Owen bill in its pres
ent form would start the country on
the road to fiat money! possibility,
he said, "that contains elements OF g
national disaster"
Mr.. Hill characterized the over-issu'
ance of securities as financial de-
2bauch, but spared the railroads IN his
arraignment. The iquidating value OF
railroad property, he asserted, is SO
far in excess of its capitalization that
the margin of safety is plainly In
view 1t was on Industrial promo
lions and on the extravaganza OF
states and cities that he laid the bur
den OF his censure.
Formerly, he said, the limit OF
bond issue was the value of the prop
erty as an asset for immediate con
version by forced sale at any time into
cash. In days OF soberer. financing
an industrial concern was capitalized
at somewhere near the actual amount
OF cash put into the business.
Capital stocks, he said, might legitt
mately to some extent represent good
will and earning power, but finding
bonds would sell where stocks would
not, the promoter began issuing
bonds that, so far as security went
were only stocks. 4 A.
The attitude Of the investment
bankers toward the Glass-Owen cur
rency bill was treated In, a report o.
the monetary commission, which rec
commended changes along the lines
approved by the American Bankers
association. Salient features OF thu
report were:
Twelve federal reserve banks are
too many; the number should be re
duced to not more than five.
The proposition that the govern
ment should issue the currency Of the
nation Is violation OF Fundamental
principle Of finance and economy
Any currency issue should be the OBJ
legation of the banks.
The provision that notes shall be
redeemed in gold or lawful money
should be amended by striking out
the words "or lawful money"
CIV. McNear chairman Of the com
mittee on municipal bonds, read the
report of the committee, which con
tanned the following Recommendation:
ut is the opinion OF. your committee
| that there should be a united effort OF
the part Of the municipal dealers O.
this association to bring about legis
lation in many of the states enforc
ing by penalty or otherwise levying
collection and maintenance OF sinking
funds. The recent default Of the city
OF Atchison, Kan. emphasizes THU
matter. 81
r''We commend the recent. action OF
the legislature Of the state of Massa
chusetts, which we understand provid
ed that in the future all municipal
bonds be issued in serial form"