Evening journal., 1920-01-29
FEWER OUTSTANDING CORPORATE SECURITIES.

5 partial answer to the question whether the great
N volume OF securities that have been issued since the
armsce in OF the legitimate needs Of business
the Bankers Trust Company presents some conclusions
based Information compiled for special studies OF
american financing by lts Securities Department Prob
ably the these conclusions Is the de-
ducon that productive units represented today by
Of corporate securities than were produce
tive units before the
During the months Immediately following the sign
ing Of the armistlce there offered total OF sli6
100000 OF railroad public utility and industrial securities
according the tabuatons presented by the company.
These securities have been grouped in three sections rail-
roads s262OOOOOO public utilities s35iOOOOOO lndustrals
s77iO00O00 In addition to the above issues which
bonds notes and preferred stocks only there
keied approximately s326OOOOOO par value Of
stocks. The financing for industrial has been
preponderant with total issue Of Sii5 10000 Of public
utilities and ndustrials against s262OO0OOO Of railroads
It may be assumed that the normal in the de-
for products requires relative In 1nanc
ings TO create plant capacity and carry heavier nyen-
tories With this comparison In mind the Statistical De-
partmen Of the Bankers Trust Company has prepared
chart which Is published in a pamphlet important FL
nanong Since the Armstice" TO be issued this week in
which they have shown for each year from 1905 through
1918 the par amount Of securities issued by railroad
Industrial and public utility enterprises in comparison
with figure indeXng the Of commodity units pro-
duced each year the units produced 9ii and the
aoue value Of the output Of commodities each year
the actual value Of commodities provided in 1914
Examination Of the chart shows that from 1915 through
1918 industry in this country increased It's productivity
under the stimulus Of out Of all proportion TO any
normal requirement II also indicates the surprising fact
that the amount OF corporate financing during the four
years 1915 to 1918 inclusive, less than the amount
done in the preceding four years and Of course quite sub
stantay less than what might have been normally anc-
pated from study Of the trend Of business for many
years previous.
"The explanation Of this apparent contradiction OF the
premises OF the chart says the Bankers Trust Company
pamphlet presumably can be found by analysis Of the
amount Of surplus Of industrial enterprises which was
available for renvestmen business and Of course the
money contributed by the government to increased pro-
ductye capacity for materials The undistrbuted
surplus during the four years. 1915 10 1915 inclusive al
lowing siO0OOOOOO0 for corporation and excess-pro0t
taxes aggregates sisO0OOOOOO against s335OOOGoO for
Inc preceding four years we hnd therefore, that cor
portons had undsirbued surplus available for renves
ment in plant and inventories in the years approx
nately sio0000O0 in of the amounts available in
The preceding fouryear period The significance OF this
statement becomes apparent when we discover that the
aggregate par value Of securities issued in the four years
1911 to 1914, inclusive, was S359i 10000
Add TO this unusual source of capital inyes,able IN
plant capacity and inventories the large expenditures naa
by the government for these purposes-vhch has IN hu
small part been capitalized by issuance Of corporate a
curities-and we come upon the conclusion that taking
no account OF the increased level vanes for nlant
critics, which is likely to remain considerably above The
pre-war level OF values each productive unit In the rnd
states is today covered by lesser outstanding amount ~
corporate securities than was each productive mi, o.
to the war"