Evening star., 1924-08-03
Commercial Paper Medium
For Financing Big Business
s., 200, 600, 900 Raised IN 1923-Method
Little Used in This City-Buyers
Chiefly Ba',ks-Adpantages.

| day every stable line of industry uses
| the open market for it's financing.
| Every regional division of the Fed
eral Reserve system sells commercial
| paper in the open market: In all
about $500 of the very latest business
institutions furnish the paper for the
great market.
Chicago leads with 522 borrowed
for 20:l per cent Of the 1928 business;
New York is second with 44s Dor
rowers for 17.2 per cent of the total
borrowings; Boston is third with 307
borrowers and lis per cent of the
business.
This means packers, bootmakers
and manufacturers of cotton goods
and dry goods borrow very largely.
named.
:, Textiles s call for 80 per cent of the
leather. s per cent. with the balance
scattered among leather, lumber
chemicals, paper, tobacco and other
lines OF endeavor.
High Percentage Paid.
Bankers still recall with shivers
the great liquidation or def1ation era
OF 1s2o,21 when business trembIed
broke1a soes plentiful
per and s3,ss6. 600, 900 was paid. with
out discussion at maturity. Later
SS4'270,OO0 of the balance was cared
for f7r ,pr properly. Io leaving a net loss of
s1S,720,0O0 to the entire banking com
| munity. at time when inventories
were dropping so to so per cent
Losses through commercial paper
were lower than through any other
form OF bank credit.
| AT that time banks all over the
country were taking enormous losses
on their investments, fortunately for
many OF them, only paper losses. as
.ney were able to carry the securities
showed a profit before-liquidation.
Il of the zoo concerns ] i'o1; oirerine 9u1
their paper-notes-in the open mar.
sed Red were forced to ask for extensions,
ment leaving but with outstanS-
ing paper to the amount of s357.(,o
outstanding, nan,s a percentage of but
n.Uao ;ovOao On on the @ tota! sales Of commercial
In 1?2e the percentage OF losses
through paper was 214: in 1921. I'm.
in 1922, o.47, and in 1928, .o24. 'o'
National Bank Lospes.
per cent of the banking strength Of
!ns June eSanifS go 1sss Pstona1 S5 she ended
amounted to s1so. o.o0O. 900, of which
100000 was charged to loans and
discounts. s21.S90. 900 on investments
in securities, $2.o64,000 on foreign ex-
cndnSe ana $io,U46,0O0 CHARGED to
miscellaneous losses
Even these figures allow for recoy-
cries In the prices of investments of
$51 100000.
National banks closed the fiscal
year 1928 with net earnings Of
| $303, 900, 600.
Paper Safest Investment. ->-,-..
Commercial paper is safer than
| loans and discounts made by national
| banks, although the lower rate %of
interest demanded by the high-gratie'
| makers Of paper would not give the
proper returns to banks, and only
secondary, reserves or surplus funds
are placed in the low-rate market.
Moreover. the volume of loans and
discounts outstanding is much greater
than the volume of paper outstanding
| IN banks. June 80. 1928. the national
banks of the country had outstand-
ing $11,S1T67l, loans and dis
counts. while there was existing
| $850000, 900 paper, with a loss, of .012
per cent on the former and .00O42 ON
the latter-a ratio of about "a to /
losses on loans and discounts COM
pared with losses on paper.
Tr1nsacfions Are Easy.
In buying paper the banker does
/ not have to eonalder anything but the
rating and reputation OF the maker
and he may make his selection from