Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1914-09-23
NUMERICAL ALPAPER
SITUATION AS 1T
EXISTS HERE TODAY
p,oker Takes Up Problem at
Close Range and Tells
How and Why Such
Transactions Are P II t
Through.

,orsons realize how many millions
:, ao,,srs have come into Philaoeipnit
-, since the European war began
49,, ,he sales of commercial paper "or
e,reet" A member OF a hrm mana
@ ,his form OF security was asked to-
a.v "'V to explain the situation.
o1r a time like this" he said' tine Wise
.h.,t who has built up his credit
.r.r period when 1t was least needed
,.,,osd NJ bothering his own bank, whicr
-. bo none too glad to welcome him
,,,st NOW as borrower, will go as usual
=. Sh,s commercial paper broker. The
.o,.s are made to fall due a few months
sorce when things may have roster
,,o and when at least the merchant will
have money coming in from his quick
assets"
,,put how does the transaction increase
.ho funds in Philadelphia banks?" he
was asked.
"Well, in the first place the merchant
WAS kept from being a borrower. In the
rex, place the money obtained by him
vss used to create very welcome bal
snce instead of loan at his own bank;
and the actual cash came into Philadel-
nhia from the sale Of the paper by the
broker for the most part to country
hanks which are relatively very strong
at the present time.
"The Philadelphia banks have acted
tai nf hot In
own customers, in numerous cases they
have even purchased paper made out
side of the city, when, of course, the
money goes out of Philadelphia. But the
cause is common one; in fact, 1t Is
International in scope, and anything that
the banks do here to help elsewhere is
certainly to the credit of Philadelphia" p"
"Do brokers like the high rates?"
thing consistent with good banking to
get money in and thereby force down
the dates. Today the best names are
selling at I and ~ per cent, and $
is not at all unheard of. Were the
rates to go much higher they would be
almost prohibitive and general business
would suffer. OF course the names not
SO well known require the higher rate,
and yet some OF the best notes are those
OF comparatively small concerns, which
have less liability and no contingent
liability. The individual investor some
times prefers this type of commercial
paper
rs this good time for THE individual
TO buy paper?"
III he goes to an established broker
whom he can trust he will get his cap
ital back at par when the notes fall due
4 few months from today and the dividend
can't possibly be cut"
And YOU think the notes will be paid
at maturity"
AN aeroplane causes more commotion
than Ford car because of its rarity.
The Clafn failure caused a stir because
1t is so very seldom that u note of such
reputation goes astray.
1T Is estimated that of the billion or
30 dollars worth of bought commercial
paper that falls due each year in the
United States an almost negligible duan-
MY is not met promptly at maturity.
The experience of the banks in the 1907
panis In this regard was so gratifying
mat as direct result the Federal re-
serve bank act was framed so that the
currency of the country will in the future
be based almost entirely upon commercial
paper"
note?"
mat is too long story. Suffice 1t
10 say that such a small matter as too
huch sunday golf may tempt a pur-
Inaser to turn instead to a name of un-
oIemlshed intergrity."
AS the latch of the private office door
'uuuenly reminded of the old adage about
.he banker of Philadelphia-he is so con-
,s,Natlve in time of plenty that he can
'"oru 10 be liberal in time of stress.