Evening star., 1920-05-23
"A WEEK OF DEVEL LOPMENTS
FAVORABLE TO CONSTRUCTION
Evidences of Turn In the Tide From
Expansion to Healthy Contraction.
Securities Seem to Be Liquidated.

and nothing but more business for
the men.
Mr. Waller. cashier of the Ameri.
/ can National Bank. has been named
as song leader and will be busy every
| minute arranging for songs. choruses
etc.
George o. Watson. chairman of the
entertainment committee. has pre-
pared entertainment for every minute
of spare time and the assurance that
large delegation of women and
girls will go on the outing promises
to make the occasion doubly interest
ing.
The program committee. of which
F. G. Addison is chairman. has taken
great care as to the business end OF
the convention.
Discussing Credit Conditions.
j. S. Bache & Co, in the current
number of Bache's Review, make
this interesting comment:
The usual slackening in the de-
mand for credit during the winter
months, states one of the statistical
services. was not in evidence last
winter, and consequently the banks
were unable to improve their posi-
tion to meet the increased demand
which has come with the spring sea-
son. May not this continuation of
the demand for credit at high-water
mark during the winter months have
been due, not to imitation. but to just
this thing, of the physically frozen.
in freight? In the larger portion of
the Dakotas. for instance. winter be-
gan in october and is only now let
ting go it's grip.
Last spring. in the Review. we
referred to this situation. and said:
The northwest is suffering from
frozen transportation-tho of
cars winter stalled and liquidation of
debts long past due postponed (No-
vember being the normal time of
seasonal accounting). The lack of
cars has kept the running mills down
to 30 or 35 per cent of capacity. Four
hundred country elevators in the
states Of Minnesota, North Dakota
and South Dakota are closed to the
farmers because of inability to move
accumulated stocks. When this sit
uation thaws out, which will probably
be late spring. there should be flow
of money toward the federal bank
reserve.
The situation is extremely puzzling
to bankers. who have had no previous
experience on such a scale to use as
guide or warning. The financial
scale in the northwest is usually very
nicely adjusted. Fall demands for the
handling of grain are followed by
liquidation of debts to country bank
ers, to wholesalers. jobbers. imple-
ment dealers and lumbermen, and the
money automatically begins to flow
back to the city banks in plenty of
time to meet the succeeding spring
and summer needs: and the grain
handling lines are cleaned up as the
balance of the crop is marketed. This
year. these automatic processes have
failed to function normally. 1t is
hoped that within the next thirty
days, at the latest, the deadlock will
nave been broken. The opening Of
lake transportation at Duluth is a
favorable factor"
Tax Service Corporations.
As one method of making up the
loss due to the Supreme Courts de-
cision against taxing stock dividends.
the House ways and means commit
tee has decided to report amendments
70 tne war revenue act taxing per-
sonai service corporations the same
as other corporations. BY the amend
ment 1t is expected distribution of
large undivided profits can be forced
and taxes collected thereon.
To block suits for reimbursement
OF taxes paid before the Supreme
Court decision. other amendments
provide that taxes OF 80 per cent for
1918 and 20 per cent for 1918 shaIl
corporations if they start such ac-
tons.
RevievgB Developments. Ill.
The Federal Reserve Bulletin in It's
May issue. reviewing Developments
during April, says:
The great increase In the actual
cost of capital in the United States
and the cotemporaneous advance in
rates of interest on Treasury certifi-
Gates parallel a similar movement in
Great Britain and has been reflected
in the recent advance in the discount
rate at the Bank Of England, an
nounced on April Is. to per cent
Prior to such action it had been an
nounced that the rate for treasury
bills would be advanced to 6h per
cent The bank rate is thus set one
half of 1 per cent higher than the
rate on the treasury bills Taken
together, the two measures represent
a step which has been advocated by
many banking authorities for some
time past, notwithstanding that it
was opposed by a considerable sec
tion of the British financial public.
The fact that credit imitation has
continued to grow tends to empha-
size the arguments put forward by
those who have favored the taking
of more energetic measures against
imitation IT is supposed that the
higher rates will lead to an increased
demand for the treasury bills on the
part of investors, while at the same
time tending to discourage the dis
counting of paper protected by them
In this way it is intended to curtail
the steady growth of bank credit in
fation based upon holdings Of public
securities"