New-York tribune., 1919-08-29

Question-W Would you advise huv;nc
kennecott Copper at the present nricc'
and DO YOU think the stock will nd
vance? Can you give me anv infor-
nation regarding the companv's stand
ing Mrs. j. II. G..
Ans"er-ihc main factor to considcr
IN Judging the possible future value of
hennecott and the other copper stocks
Is the extent to which Europe will he
aule , 70 come INTO the market AS a
buyer. Before the war, Euronean
countries bought onc-half the outnmt
OF American copper mines. GERMANY
IS beileved to be in especial need Of
copper. Heavy European huying of
the metal provided credit ARRANGEMENTS
could be made, would enhance tho nros.
perlty or the copper companies. Al
present copper is selling at 23t5 cents
mound, an increase Of almost 10 cents
pound over the extremely low price at
when 1t was selling for several months
aiter the armistice. kennecott par
tlclpated to some extent in the down
"aro movement of stocks since the be-
ginning OF August and is now selling
around S37 share, comoared u;th >,
ni%h Tor the year of 1873. The stock
carrier in the year sold as low az o9I5
IL pays a dividend Of So share. The
company is low-cost producer. In
vi" the company earned $3.50 a share
compared with $414 in 1917.
Question Will you please inform me
wnether the American Mailing Com
pany is still in existence? II was
bought some months ago bv the Amer
lcan Malt and Grain Company. Is that
company taking care of the common
s[otk .1 1 nave some Of the common stock
". n. '''' e00u
Answer-As result of vote by
stockholders on January Q. 1910 tho
american Mailing COMPANY was dis
So''ed on February 9. 1919. The trans
fer books og the old comnanv closed
on juno D, 1919, and it was said at the
once OF the American Malt and Grain
company that the common stock of the
oid company is now worthless. The
american Malt and Grain Comnany
was Incorporated last April to take
over the assets of the old company
",'lch were only half large enough to
take care OF the preferred stock. The
f'S'efrVd stockholders got the right to
subscribe to stock Of the new company
up 10 10 per cent uf their holdings.
ou' no provision was made for the
common stockholders.
Question -(a) | don't understand the
p1ncinle of buying securities on mar
sln' and Vour definition does not seem
NN'tc clear. Can you give me ii con
crete example? Say hav. So eco
with which want to buy General
Motors quoted at 230. Under ordinary
conditions, how many shares could
ouy' or what is the usual percentage
necessary to be actually paid in sueh
q transactlcn? What is the "margin"
m inns case tb) What rate Of intcr-
cS' is usually charged by the broker
;oi 'he amount be puts up lcD VIII
ne carry 1t as long as | desirco
ArsNer-~The stock YOU have selected
for purposes of illustration is by no
means typical. Owing to it's wide
fluctuations, margin requirements
are much larger than on any
other standard issues. Some hrok
ers now demand as much as
$50 share margin on Genera! Motors.
Let US take, instead, for an example, a
standard industrial stock, say, United
states steel common, selling at 100.
lhe usual margin requirement is 10
per cent of the par value--that is, $40
share. The 5000 would thus provide
sufficient margin to buy 200 shares.
The broker would !auy the stock, in his
name, not yours, and hold it as collat-
erai security for the difference between
the amount he paid for the stock
that is, in this case SECONDHAND the
amount advanced by you. (b) The
usual rate of interest on the balance
Sie,o00-is per cent AS a rule, the
broker advances part of this sum out
on his own funds and borrows the bal
anCe at his bank. using the stock as
collateral. (c) The broker Will carry
the stock as long as you like, provided
YOU protect your margin--that is, pro-
vidcd that, on the brokers demand.
YOU put up more money if the price of
the stock goes down. Your other in