The Connecticut labor news., 1922-12-29

brought to false conclusions on most i important matters.
 1 The publication issued by the Ma
 tional City Bank is issued monthly
 and averages about Io. pages The l National City Bank represents specu
 lative finance just as Morgan & Com
 pany represents industrial finance
 The National City Bank, better than
 any other institution, typifes Wan Street.
 Nothing has so disturbed the Ma , tional City Bank as the recent election ir which progressives hostile to rail , road profteering and to plundering in general were so uniformly successful if we are to believe the December issue of the publication issued by that bank
 Here's Why Finance Is Worried By Outlook.
 It will be interesting to know why high finance looks upon the progres- sive victory as such a menace. The explanation is in the following quota ton from the National City Bank publication:
 Notwithstanding the evidence that the depression of agricultural prices has been directly related to the world situation policies are proposed in the name of relief for agriculture, which if carried outhmust tend to check the improvement III agricultural cond1- tions which Is under way, and throw the country back into a state of dis organization, uncertainty and confuc- ion --
 "The stock market, which is quick to sense developments unfavorable to orderly business progress. has shown decided weakness since the election, railroad shares leading in the decline. Although the country evidently is sui fering from the inadequacy of rail- road facilities, due to the fact that railroad investments no longer com mand the confidence of the public, one of the objects of the revived agita- ton IS the repeal of the transpofta- ton act defining what in the opinion of the legislative authority, is fair return upon railroad property. Moth ing more would be required to make the railroad situation helpless. Rail- road service cannot be had without the facilities, and these cannot be had unless the investing public IS assured of a return corresponding to what can be had in other fields of investment. One view commonly held at the sources of this agitation seems to be that the railroads are owned by few rich bankers who are able to put their hands in their opockets for all the money needed to provide the neces- sary expansion of service. The rail- roads, however, are not owned by bankers; the ownership is widely dis tributed and will respond with addi- tional capital only as 1t believes the investment to be safe. The strongest companies are able to borrow, by giv-. ing mortgages ot obligations that rank ahead of their stock, but this is just like putting a second mortgage on d farm. This process cannot be carried indefinitely, because the mar gin of safety grows smaller. Proper financing of the railroads requires that approximately oneI1alf of the capital shall be represented by capital stock: in other words, that proportion should be proprietary capital, in order to ob- tain favorable terms upon borrowed money Very little new capital has been raised for railroads by that means recently. { Expenditures for rolling stock are financed mainly by equipment being nortgaged for about 75 per centiof it's cost:
 It will be noted that the stock mar ket is set up as an indicator which | quickly detects unsound departures | What is really the case is that the l stock market quickly detects develop 1 ments unfavorable to speculative in | terests. The stock~narket IS no in dictator at all as to the real sound ness of economic proposals.
 What Finance Forgets Is Good t
 Management.
 The National City Bank assumes that we have an "inadequacy of rail- road facilities" because railroad in vestmcnts no longer command the | confidence of the public" Upon this | the bank bases plea for retaining the 1 Esch- Cummins law. It IS all very clever, but it is also all very mis- leading.
 Nothing is said about railroad man agement and there is no explanation as to why the bankers wish to have kept on the books law under which, according to their own statement, rail- road investments have not been able to command the confidence of the public" Apparently what the bank CTS want is a guarantee of income and a government guarantee that la Dor will stay in it's. place.
 Regarding the idea which the public is alleged to have that the railroads are owned by few rich bankers" something very much to the point is to be said. Railroad stocks of course are owned by large groups of people. Stockholders are scattered all over the country and the great majority of stockholders own very little stock Whether or not "a few rich bankers" or a~few powerful banking groups actually own con trolling interests in great railroad systems they actually do exercise con trol through devices which are per. fectly well known to bankers and which are in common use throughout the whole financial world
 It IS interesting to note that the ( Matinna1 (,it,, Ranl1,S 1rhn1e di 1