Evening star. [volume] (Washington, D.C.) 1854-1972, 1916-07-16
BY I. A. FLEMING.

Liquidation In stocks during the last
two weeks have been very large. and Sc
rious losses have been sustained. re-
hected largely In the rails as well as
in the more erratic and sky-rocketing
industrials. on the New York market.
Many influences brought about the
conditions that prevailed. The bank
ers were partly responsible by rea-
son OF their discrimination against
munition stocks. making it necessary
on the part of brokers to call mar
gins heavily, and in some cases insist
that stocks be taken up or sold.
Higher money rates shared with the
belief that war shares and industrials
generally should be adjusted to a peace
basis, as cause for weakness and de-
clines in values.
Cheap money is an aid to business in
that 1t is the brokers' profit and stirs
him to activity In pressing for orders.
It Is not the fractional commission
board boys. cigars. papers, rent and
many other expenses Of conducting
stock brokerage business-it is the
interest the customers pay on the diff
ference between the cost Of the stocks
purchased and the margins which they
put up to secure their trades.
With call money fuctuating around /
to ~ per cent. and customers paying
to per cent, there Is a profit Of
to per cent on interest alone,
commission charged both against the
purchase and the sale.
Some OF the large commission houses
unquestionably use tens Of millions Of
toners, on which they may pay 1 per
cent. perhaps a little more. and charge
the customers 4, or even s per cent.
and make thereon a profit, based on
yearly averages Of 100000 thus en-
and the average amount Of cash Dor
rowed for customers in some of the
larger houses would be nearer SIS .000, 900
than any smaller amount.
On a s2s,ooo,ooo average the profit
would be $250,000 on each / per cent
charged above the borrowing rate.
Naturally. too, lower than per cent
is frequently charged. and some ia
vorite customers demand the lowest
rates obtafnable.
It will thus be seen that the money
market 10 always a very important fac
tor In the security business.
A local banker made the statement
the other day that he believed it would
pay one to run a brokerage business in
New York stocks, charging customers
the same price for borrowed money that
the New York rate warranted. which
brought the response from another
broker that, you would quickly go
broke on wire charges alone"
Local Securities.
Despite municipal ownership argu-
ments, criticism OF capitalization. ply
steal appraisements etc. values for To-
cal securities have presented a. steady
front to all efforts to force recessions
in values, and the week closed as 1t
only change Of importance-Grapho
phone also, ruled purely by New York
action.
Business has lessened perceptibly.
a. might BE- supposed sup s. ,p With SO many
bankers and brokers. The strength in
the money market, although more theo-
retical than actual In this city. has been
effective in lessening the demand OF
banks and trust companies for invest
ments in the local market.
There were no changes worthy OF es-
pecial comment in utility shares or
bonds.
The New French Loan.
Notification Of allotment of under
writing to the new French 500, ooo. 900
gan q Co. The arm desires information
by tomorrow Of any allotments that are
not desired.
The loan 10 covered by three-year
notes, bearing per cent interest and
secured by securities, convertible, at
their maturity. in blocks of $4,000, 900
into French twenty-year per cent
bonds.
These notes are issued by the Anne -
can Foreign Securities Company, and
the privilege OF exercising the CONVEX
tible option lies in the company, and
holders Of the notes may avail them
selves Of the privilege only in the
event Of the company 80 electing.
II is expected that the notes will be
offered on the market this week at SO.
q price that will yield the investor SIS
per cent
studying the Collection System.