The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1925-06-12

intended to check the tide of the bank
reserves to Wall Street for stock
speculation. Twelve years AGO. Con
gresS established the 12-district re-
serve system to prevent the Wall St.
bank reserve concentration. More
than that, a check was placed on the
Stock Exchange gambling by estab-
fishing high rate on "can loans"
The average "call rate" on stock ex-
change loans for five years prior to
the fall of 1924 was 6 per cent.
What was the call rate for the
1S24-l925 prosperity" picture? The
I'D was taken off and the call rate"
cut down to 2 per cent. "Call'' loans
got an interest rate not only less
than half the current commercial
rate on gilt-edged paper, but half the
amount named by Secretary Mellon
on his new issues of government
bonds"
This tide of Stock Market loans
at the low "call rate" of , per cent
TO 3 per cent, was the yeast of tbe
prosperity boom. In 80 DAYS the lev
el OF leading stocks was lifted 25
points and added six billion dollars
to their picture" value.
The public is too familiar-per-
maps unhappily too familiar-witb
the history of that melodramatic
scenario. In a brief article enc can
only touch few high spots. Let us
see what happened, for example. to
the Leading iron and steel shares
Inc common stock listed on the
exchange for four big iron and tin
companies aggregates approximately
SfoO,0OO,OOO. The aggregate inia-
ton of value for the January March
nigh point above the 1924 @lox'' i
500, 100000, or an average "pros-
perty" margin of about IS per cent
of par value.
Then what happened? It was moi
until February that the public GOT
the full data of the calendar wear Dro-
duction. During the four months he
ginning with the November election
down to February, the press had been
hooded with prosperity" news issued
not only from the Street but from
government departments. 1t had
been taken for granted that the in
dustrial production for the full calen-
dar year 1924 was the basis of the
stock market boom.
.SWINDLED BY
BULL" PROPAGANDA.
Then came the February "Survev
OF Current Business by the L. S.
Department of Commerce and the
calendar year summary BY industrial
journals. Official industrial facts
now loomed up behind the camou-
hage. This is what the amazed in
vestorS in iron and steel stocks then
saw-as an industrial basis Of pro-
duction for the skyrocketing Of their
shares:
"The Z. S. Steel corporation had
mined 20 per cent less ore; produced
20 per cent less steel; employed 20
per cent less men and had Is per
cent less earnings than in 1923.
The investor had been swindled BY
bull" propaganda in the case of in
dustrial stocks, as in the case of
grain. The whole thing was camou-
fage.
However, the hopeful investor
at least, the public that is, the
Thanksgiving on yet awhile, think
ing that when the L. S. Steel Cor
pOration annual report came out there
would certainly come forth some en-
cOuragement.
Finally, in March came the
Steel" annual report; and when the
screen had been removed, this is
what the startled investors in 'Steel
common saw:
Iron ore production for 1924 was
Is, 749,O 900 tons less than for 1923.
Pig iron was 1881 900 tons less.
Stel ingots was 6,S41, 900 tons less.
BOOM
C0LLAPSES
''The "SteeP' report was the final