Ashland tidings. [volume] (Ashland, Or.) 1876-1919, 1913-07-14

safest will at once become the most
dangerous. Interest and principal
payments easily met on steady mar
kets are found harder to meet in pro-
portion to the per cent of decline in
markets. Liquidation is much more
laborious in panicky than in normal
times.
The government committee report
shows a banking custom that may
prove dangerous, or even ruinous.
under depressed conditions. Wall
street is the commercial heart of the
nation. Through Wall streets banks
much of what is called commercial
paper, and industrial stocks and
bonds, is distributed throughout the
country to investors. Country banks
like to keep their surplus employed
in these because they are quickly
convertible into cash. The Wall
street banks are aware of this. When
San Francisco, st. Louis or Chicago.
for example, find themselves with
more cash on hand than is needed to
meet the local demand they order
their New York correspondent to
send them a quantity of commercial
paper, say a million dollars worth
of it, and the correspondent sends it
to them, out of paper it may have on
hand, or by gathering up the amount
wanted from other New York banks.
They are supposed to use their best
judgment in the selection of good
paper, but they do not guarantee it.
In the same way country banks pur-
chase demand and short time COM
mercial paper from their correspond
ents so that much of the funds en-
ployed by the large corporations are
gathered from rural communities in
that way. During the 1907 panic the
rural distress was increased by the
New York banks. For some time be-
fore the panic they offered unusually
attractive rates for country bank bal
ances. In this way most of the sur
plus cash of the country was gath
cred into Wall street before the
panic was precipitated. 1t is this
kind of paper the wise country bank
ers, during the past few months,
have been converting as fast as it fell
due into other securities. And this
persistent conversion of industrial
paper will add force to the free tariff
measures in making it hard for the
big institutions to get ready cash
upon which to forward operations
Many persons have thought for
some time that this nation was com
mercially diseased. Practically every
party in the last presidential cam
pagin admitted it.. Taft thought the
best remedy was in administering the
Sherman law in moderate doses.
Teddy thought it would be better to
mix a new medicine called trust con-
/
troll, while Mr.. Wilson and Mr.. Brvan
maintained that the best way to treat
bad tooth was to pull it. Now the
dentist is busy with the Job and il is
apparent that it will not prove a
painless extraction. Without argu-
ing the good or bad ultimate effect
on the community, the fact is appar-
ent that during the operation and the
healing of the wound the patient will
be nervous and irritable. That part
of the commercial body which consti-
tutes the bad teeth, may go the way
of all bad teeth when thev are
pulled; we cannot tell; but we can
feel assured that paper, guaranteed
by bad tooth pulled, is not alto
gether as certain and satisfactory in
vestment as it was before the tooth
decayed.
And this has two local applica-
tions: That as INDUSTRIAL securi-
ties become less stable MUNICIPAL
! securities will become more attrac-
tive. AS industrials become less Sc
cure interest rates on them will rise,
and as municipal bonds grow more in
| demand interest rates on them will
decrease While Jackson county may
be able to float but five per cent
bond now, little later she will be
able to float bonds on a four per
cent basis. The interest on seven
hundred and fifty thousand dollars
in bonds, at five per cent, for twenty
five years, amounts to nine hundred
thirty-seven thousand four hundred
dollars. The same thing at four per
cent amounts to seven hundred and
thirty thousand dollars, a clear saw
ing, If it can be done, of two hun
dred and seven thousand five hun
dred dollars. In the minds of some
bond boosters not a large sum, but
to the writer a sum that we think
would make us comfortable for some
time.
The writer is not financial tip
ster. If he was he would have been
! rich or busted long aoo pu+ Ue