The Birmingham age-herald., 1914-02-11
One Sold Four Million Dol
lars Worth in Last Days
of January
GOOD PAPER is NOW
IN URGENT DEMAND
Will be Employed to Much Greater
Extent Than in Past for Profit
able Employment of Ma
tional Bank Funds
BY HOLLAND

|
New York. February 1o-fSnecial o-If
there be any relation between the making
and marketing of commercial paper
"mch represents values or bills reoeiv-
able and the business situation as a whole
theer should be some encouragement dis
covered in recent features of this COM
mercial paper market. For instance. this
morning one of those whose business 1t is
to sell commercial paper spoke of a
recent experience He marketed between
the middle of January and the latter
part of the month the notes of mer-
chants, manufacturers and others occu-
pied with trade or commerce aggregat-
ing little over s4,000,000. The pur-
chasers of these notes or, as they are
commonly called. commercial paper. were
CHIEFLY banks-not so much the banks
of New York city as those located in
other parts of the country
This is only one instance and the
common understanding is that at this
time the demand for high grade CONNER
cial paper exceeds the supply of it. For
that reason the rates charged are be-
tween and Az per cent, in a few in
stances per cent. The makers of ne
gotiable security of this kind find that
If their credit be good, and il their repu-
tation be such as to justify the belief that
they issue no more paper than that which
represents value bills receivable they
are able to sell their paper at from 4 to
41a per cent.
This demand is reported to exist in
many parts of the country. To what ex-
tent 1t can be accepted as showing inn
proved business conditions is a question.
For II there be great demand for COM
mercial paper one inference might be
that business is so slack that paper of
this kind is not issued in great quanti-
ties. On the other hand the demand for
the paper, which comes chiefly from the
banks, proves that the banks have money
in plenty, but it also proves that the
banks are anxious to secure something
which is a quick asset. Much of the
paper is drawn at 80 days or 12O days 1t
is easily rediscounted, and the banks find
it to be good a quick asset as they
can hold.
Under the New System
Merchants and bankers expect that
under the new national banking and cur
rency system commercial paper will be
utilized to a much greater extent than
In the past for the probable employment
of national bank funds.
One of the larger banks of New York
which has been identified in the public
mind with what is vaguely regarded as
the money power edit-holding mo-
nopoly, began some years ago to make
speciality of handling commercial paper
And while this bank has focused public
attention somewhat by its participation
In large financings nevertheless the un-
derstanding in banking circles here is that
the institution finds as profitable and sat
is factory banking business In its
handling of commercial paper as in any
other of the several departments organ
lied under this bank directly
The Bank of Discount
There seems to be not entire agreement
among bankers respecting teh success of
the bank of discount which it is proposed
TO organize under state charter with a
capital of not less than $10000,000, whose
sole business is to be the accepting or
indorsng of commercial bills The pre-
sumption has been that with the indorse-
ment of an institution which possesses
great resources and is ably managed COM
mercial paper will find an instant and
constant market with the national bank
ers of the United States and furnish much
| of the assets or resources. One of the
reasons given for the establishment OF
/
be able to keep track of the commercial
bills issued by corporations or partners
or mercantile houses so that the banks
which buy these bills can feel assured
that there has been no overissue of them
This means undoubtedly investigation
and scutiny similar in some respects to
that which characterize the responsibility
of the credit men employed by banks and
mercantile institutions After all, it is
felt that there can be no absolute guar
antee of overissue of commercial
paper. especially as this is often done
in perfect good faith. Furthermore the
best authorities upon credit agree that
Judgment respecting 1t, or at least the
best Judgment, is often based upon in
tuitive action of the mind. For this rea-
son, it is sometimes said that the best
credit men are those who are born to
that vocation
Yet the preponderating opinion among
bankers seems to be that it is indispen-
sible, and therefore inevitable, that an
institution having large capital and re-
sources and offered by men whose repu-
tation is high, and especially those who
will not be willing to show favoritism
when line of commercial paper is Of
fered for acceptance. will be OF great ad-
vantage to the national banks and Will
facilitate the utilization of commercial
paper to far greater extent than was
done under the old national banking sys-
tenn
The Encouraging Hint
Nearly six weeks of the new year have
passed, and the time is come when II
there Is to be any change in the business
situation there should be some har-
bingers of the coming of the new order
of things. While business men are care
full not to speak in such manner as to
suggest that their hopes have run away
with their Judgment, nevertheless they
| do hat bey hepiu IN 1afa
signs of change from ebb to flood.
They do not like the reports which
have come from Washington which tell of
our international trade in December. The
particular feature of these reports which
is unpleasant to read is found in the sta
tistics of our trade with South America
the latter part of last year. superficial
reading of this report would suggest that
we are losing some of the South Amer
lean markets which we gained year
ago. Importa tions were in the latter part
! of last year considerably in excess of ex- +,