Twin city review. [volume] (Champaign, Ill.) 19??-1929, 1922-12-29
WALL STREET
: OPENS FIGHT ON
PROGRESSIVES
rnrsrER n. WRIGHT

- and the New tOth Atust ~oaa
ae.A .rs among banking concerns
pa nubIish periodical reviews O
- hi economic financial and poii
NJ .,erts. Il appears to be the IN
z..5r - to give these reviews the ap
is...i@.' emu of impartiality and TO create
.5-.,,,,ysssion that they speak as tns
x s5rd of authority. fresumapi,
M M arc distributed among stock
s3.~s u and depositors but they nnt
s[,,ing circulation outside ol
INKS and they may De had bs
m ,ybo will inquire for them
a. he Cleveland Trust Company als'
.gbIisbes such a review ana the re
- - published by that company L
as.bably one Of the best IN the heid
III a great many persons un'
a.,e,silv DO not realize is that these
aoss,S .a';.S-s m time of need serve as pro
Is.srjs agencies for high finance
tbst their dignity and seeming
An,se,jiv an makes them the more Ell
49, ,yben a real need arises. The
iasssss....,,inatine reader will find mncf
e.se.it ..,tarest and value in the pages oi
- neriodieals, but those who DC
,jscriminate are likely to be
p.,gbt ~. 10 false conclusions on most
innortant matters. ~
i''sr H. publication issued by the Ma
snaai CITY Bank Is issued monthly
ssd averages about sixteen pages
TIE National City Bank represents
SPECULATIVE finance just as Morgan q
snanany represents industrial I'M
saes sg. The National City Bank, bet
sar than any other institution, typl-
6es Wall Street. ~
a's Notbing has so disturbed the Ma
ssnal CITY Bank as the recent cleo
tan in which progressives hostile 70
ssgl,aad profteering and to plunder-
no In general were so uniformly sue
ssesfnl il we are to believe the De-
sember issue of the publication Is
sued by that Bank.
Here's Why Finance is Worried by
Outlook.
II will be interesting to know why
bigb finance looks upon the progres-
i've victory as such menace. Inc
exclamation is in the following quota
dan from the National City Bank
Notwithstanding the evidence that
tho depression of agricultural prices
has been directly related to the world
situation policies are proposed III the
name of relief for agriculture, which
II carried out must tend to check the
Improvement in agricultural condi-
tions which is under way, and throw
the country back into a state OF dis
organization, uncertainty and con-
fusion. :,
aThe stock market, which is quick
to sense developments unfavorably to
orderly business progress, has shown
decided weakness since the election,
railroad shares leading in the decline.
. Although the country evidently is
suffering from the inadequacy OF
railroad facilities. due to the fact
that railroad investments no longer
command the confidence of the public,
one of the objects of the revived agl-
tation is the repeal of the transporta-
ton act defining what in the opinion
of the legislative authority, is a fair
return upon railroad property. Moth
ing more would be required to make
the railroad situation hopeless. Kali
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 pockets
for all the money needed to provide
the necessary expansion of service:
The railroads, however, are not owned
by bankers; the ownership is widely
distributed and will respond with ad-
ditlonal capital only as it believes the
investment to be safe. The strongest
companies are able to borrow, by
giving mortgages or obligations that
rank ahead of their stock, but this is
Just like putting a second mortgage
on farm. This process cannot be
carried indefinitely, because the mar
GIN OF safety grows smaller. Proper
financing OF the railroads requires
that approximately one-half OF the
capital shall be represented by capl-
ial stock; in other words, that pro-
portion should be proprietary capital,
IN order to obtain favorable terms up
on borrowed money. Very little new
capital has been raised for railroads
oy that means recently. Expendl-
lures for rolling stock are financed
mainly by means of equipment trusts,
the new equipment being mortgaged
ior about 20 per cent of its cost.
II will be noted that the stock mar
ket Is set up as an indicator which
quickly detects unsound departures.
mhat Is really the case is that the
STOCK market quickly detects develop
ments unfayorable to speculative in
lefests. The stock market is no in
ueatof at all as to the real soundness
q economic proposals.
What Finance Forgets is Good
Management.
:, Ihe National City Bank assumes
mat We have an "inadequacy of rail-
road facilities" because railroad in
sestments no longer command the
eohhaence of the public" Upon this
me Bank bases a plea for retaining
me ESeh-Cummins law. 1t is all very
eleEer but it is also all very mis-
leading
Nothing is said about railroad man.
agement and there is no explanation
q to why the bankers wish to have
Aep1 on the books law under which
4eeof0lng to their own statement,
lgifoad / Investments have not been
aoie 70 command the confidence of
me public" Apparently what the
oahS-r5 want is a guarantee of in
come and a government guarantee
maj LABOR will stay in its place."
T. Regarding the idea which the pub
ne Is alleged to have that the rail
.gsqs are owned by a few rich bank
- something very much to the
punt Is 10 be said. Railroad stocks