Evening star., 1921-02-20
ROAD TO RECOVERY IS NOT
BOULEVARDED ENTIRE DISTANCE
Many Great Corporations Need Financial
Assistance7Some Comment on Heyday
of Prosperity-Bond Markets Need.
By I. A. FLEMING.

BY 1. A. FLEMING.
but in business, at least, the road is
by no means boulevarded for the en-
tire journey to prosperity.
There are numerous rough spots and
where decided improvement is noticed
in one direction an adverse happening
is reported elsewhere.
So many great corporations require
financial treatment, expensive and not
wholesome to the shareholders. that
one may we'll wonder what has be-
come of the enormous profits that
piled on top of each other in the hal
cyon days Of high profits. high wages
and high cost of living.
1t has appeared to many during the
past week as il all this great wal
prosperity. all the big profits and the
taxes that they resulted in. were more
or less the result of fooling ourselves
Every one knew that our allies were
large borrowers from the one great
lender. but the fact has been brought
home with nude plainness during the
week just past. through tee airing ir
Congress Of our financial relations
with important and on-important
more or less, participants in the world
war.
1t has begun to dawn on the Ameri-
can people that We, as nation. used
our entire energy for several years In
production, and bought the product OF
our energy with the money we paid
into the government either in sub
scriptions to liberty bonds or in nor
NAL and excess profits taxes. giving
our production to other nations.
To date $9.5S0.s23.677 has been ad-
vanced to foreign governments. MOI
does this great total, almost beyond
amount Of money lent and credits
extended through other than govern
ment channels. This is estimated al
81, 200. .OOO, 900, which, with the 100000
900 interest owed by foreign nations on
their direct debt. actually makes a
staggering obligation. And manufac-
turers and merchants put up prices
and the American people settled the
bill.
Scores Of corporations, managed by
optimists, seemed to consider that
it was to be a case of never-to-be-
forgotten prosperity. lasting and
therefore warranting the issuance OF
millions of new stock. given away as
stock dividends. upon which they
hoped to pay the same dividends they
had previously been distributing. A
decision of the United States Supreme
Court paved the way for these stock
dividends, and very many OF the cor
presents to their shareholders are to-
day seeking assistance from sellers
of credit, expensive and impera-
ative, while passing dividends as
well.
And then the Federal Reserve
Board called halt, recognizing. long
before the average business man, the
feverish pulsation in business.
Pioneers Of Recovery.
1t is more or less of a positive
statement. Many corporations have
in order. Many retailers have cleared
their shelves and pocketed their
losses; many investors have gone
through the clearing house also and
charged off losses, offsetting credits
to experience.
Out in Chicago the other day the
bankers of that city considered how
best they should proceed in a large
advance of credit to aid building
not business. but housing. so that
families might have homes and cover
ing. Material men were willing to
meet them part way. but labor de-
manded wartime compensation and
the promising housing plan fell
through then and there
Further out west, some banking
heresies led to many small financial
failures, the buying power of the
community was reduced, the lessened
planter. helped along unfavorable
conditions.
Rehabilitation Slow.
OF necessity the rehabilitation OF
business is at a slow pace. The gov
ernment must be maintained and the
material and expensive departments
In the various activities conducted.
hence taxes must be continued and
business must produce the needed in
come. In time we will recover from
our generosity.
II we were sure of our interest an
nLally. on the big foreign debt it
would help materially and the load
could be carried much easier.
Fa lure to meet business obligations
results in failure and bankruptcy. Ma
t'onal insolvency is not desirable,
avoidab BILE. In time we shall collect in
large part of our foreign credits and
when this time comes there will be a
surcease of taxes, until then taxes
will be dependent more or less on ma =
tional economy.
In the meantime orderly liquida-
tion is steadily progressing.
PROFITS Of Reserve Banks.
The federal reserve regional banks
the law. per cent dividends must be
paid on the stock, all of which is
held by the member banks in ratio
to their capital stock. The law pro
vides that one-half of the profits up
to 40 per cent of the paid in capital
shall go to the regional bank. while
the balance of the earnings shall be
paid into the United States Treasury.
The $1SO,O00.o0O was net profit.
1t has been suggested by some bank
ers that herein is an opportunity for
tho reduction of the funded debt Of
the liberty bonds. OF course. the net
profit was but little more than
per cent Of the total issue of liberty
bonds outstanding. Most of the re-
gional banks have accumulated ex-
cessive surpluses now. If the banks
were permitted to retain their entire
profit for y few years. using It as
capital, they would then be able to
make a great reduction in the debt,
while one banker suggests that the
purchase Of liberties to the extent OF
8 10000. 900 year, with the normal in
vestment demand, would go far to-
ward stabilizing the market for the
issues. little federal assistance in
the bond market Of today would be
a help TO the liberties, which are do
ing well.
VIII Once he AbOllshedf
Local bankers are asking these days
whether the Office Of controller OF me