Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1914-01-02
Banking Business Was Pro,
fitab|e But Its Trend
Unsatisfactory
We're Strained
Continually to Make De.
sired LOa0S
By James q. Forqan.

BY James q. Forqan.
Commercial banking has been OK
tremely profitable during 1913, but
its trend. has been neither satisfac.
tory nor comfortable Tor bankers. The
borrowing requirements of customers
have been persistent and banks have
been under an almost continuous
strain to meet them.
Cattle feeding and the holding back
of crops by the farmers have created
a strong local demand for loans on
country banks and have contributed
to the tightness OF the money mar.
ket. Balances carried by these
banks with their central correspond.
ents have consequently been abpor.
mally small, and they had to redis.
count or otherwise borrow more than
usual this fall. When the cattle and
crops are shipped to market and real,
lied on bank balances at the centers
will again increase and rediscounts
will be paid. which should certainly
contribute to easier money in the
spring.
These conditions have caused high
rates of discount to prevail through
the entire year. At no time during
the year have the banks at the GEN.
ters accumulated any substantial
surplus of money, and at times they
have had to dip under their legal re-
serves. As a rule loans to customers
have been warranted by their state.
ments Of assets in excess of liabili-
ties, but in too many cases borrow
ers have been unable to make their
annual cleanup with their banks,
have required too many renewals, and
in some cases have had to arrange
for definite extensions running into
next year. ~
Strong Demand For Loans.
These pOstpOnements of the day of
payment have tended to make assets
less liquid and have caused some ap.
%prehension on the part of bankers as
to the final outcome of the abnormal.
ly prolonged pressure on the INFO:
loans. 1t will be the part of prudent
and conservative bank management
at this time to apply surplus earn
ings in not only providing, as usual.
for actual loss on deprecated and
doubtful assets, but for such loss as
may reasonably be anticipated on
loans extended under the pressure of
circumstances and conditions.
The railway situation is another
factor contributing to the prevailing
feeling of depression. Unless the rail-
ways are permitted to readjust their
tariffs to their constantly increasing
operating expenses, there is inevita-
BILE trouble ahead for them, which
will reflect itself in a still further
depression not only in the market for
securities, but in general business.
Bankers interested in railway tinanc-
ing and investors both at home and
abroad are alive to this situation and
are a%nxiOusly awaiting the action of
the Interstate commerce commission
in regard to it.. Present sentiment
in this connection is such as TO re.
pei capital from railway financing
and development except at rates that
are almost at rates that are almost
prohibitive and is principally respon.
sible for the depression which has
developed during the last year in the
securities market.
Much Money Tied Up.
Good railway securities have been
regarded as standard investments,
and depression in their market price
invariably reflects itself in the mar
ket quotations for other. securities of
all kinds. Under these conditions
investment banking during 1913 has
been neither profitable nor satisfac.
tory to those engaged in it. This
could not be otherwise when the en-
tire pears income on the best avail.
able securities has been insufficient
to Offset the years depreciation in
their quoted market value.
During the last three months OF the
year there has without doubt been a
falling off in the volume of business.
So far this has been most evident
in the iron, steel and lumber indus.
tries. which, with the crops, form the
basis of general business. New con-
%struction for further industrial expan.
sion is practically at a standstill, aud
1t has become, evident that too much
money, borrowed for temporary use,
has been tied up in brick, mortar and
machinery.
The %cOncensus Of opinion seems to
be tnat the business recession al
ready noticeable is likely to continue
until the demand for bank credits
falls off, producing easier financial
conditions and reducing money rates,
and this is the generally accepted
forecast of the financial conditions to
be expected for next year.
Two Important Factors.
The tariff legislation and the un-
certainty which has prevailed as to
the shape the banking and currency
legislation would finally assume have
been positiev factors affecting bust
ness conditions.
This tariff with its income tax ap.
pendix is now a settled fact and bust.
ness is gradually adjusting itself to
1.-THE new conditions established by it.
The effect of the new banking and
currency system, however, is still an
unsettled problem. II it should prove
to be such as the administration at
Washington believes it to be and such
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