Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-18
MEN AND MONEY
BY NJ. S. Rukeyser.
Copyright, 1927

!
dom to big financiers, but as a matter
Of fact the best of them is not in.
| fallible
One of the ablest Judges of business
risks in the country told me the other
day that he took a 100000 loss on a
proposition which he had entered with
! high hopes year ago.
William G. Durant. who is one of
| the most conspicuous bull operators
| In the present speculative cycle in
| Wall street, found it necessary to re-
| linqush his holdings. in General Mo
tors to bankers in 1920 when the mar
ket went against him, having once
| previously lost control of the com
pany of which he is now a rank out
slider.
Jesse Livermore. speculative wizard
of the current period, went into bank.
ruptCy before the war. incidentally,
he later paid off his creditors 100 cents
on the dollar. although he was not
legally obligated to do SOL
I Heads of great corpora tons must
stake a great deal on their own judg-
ment, and occasionally they err. Sue.
cess means only high average of
correct decisions on crucial matters.
The head of a great railroad sys-
tenn. in discussing the future of inter
est rates with me, said that he was
watching for the propitious moment
TO buy money.
He propounded this question: Would
it be better to refund bond issues ma
turing between 1880 and 1892 this year
or TO wait until they actually fall
due?''
The question was merely another
way of asking whether the fall in in
terest rates had touched bottom.
In recent years there has been a
pronounced decline in the wages of
capital.
The future of interest rates is of
great concern, not only to investors.
but also to borrowers.
How far the decline will go is q
matter of opinion. but there is no
sign that the movement has thus far
completely run it's course
The railroad executive eau there
fore afford to wait and watch the
market
Must Bide His Time.
Later he can continue to hide his
time, or can hedge by taking advan-
tage of favorable prevailing condi
lions to raise part of the capital which
will be needed for refunding purposes.
!. IL he could induce the public to
buy stock it would be good business
to pay off some of the outstanding
bonds with funds raised by the sale
Of stock.
AS whole. the railroads need rela-
lively more partners-stockhold
and fewer creditors-bondholde
The time to sell new stock is when
outstanding shares are in public favor,
as measured by substantial premium
at the market place.
In deciding the financial policy OF
ia at
the market from the reverse side
from which the investor observes.
Yet buyer and seller alike are deal
ing in business risks, and their action
depends on their opinion concerning
the future.
A brake on speculative security
prices in recent sessions has come
from floor brokers.
Their market position was revealed
by their outward expression of emo
ton. When stocks rose. they were
silent. When they reacted. the brok-
ers became vocally enthusiastic.
Floor traders. however, are mer-
curial in their switches They are in
and out of more lines of enterprise in
single day than the average man in
vests in in a lifetime.
Bankers i'm Overalls.
Bankers in overalls continue to
grow to bigger stature. Thirty four
continuing labor banks in 1925 showed
an increase in total resources Of /
$15,218.911; in deposits of $f3,487 JOY,
and in capital. surplus and undivided
profits Of $471,9S5. ...
According to a survey by the in
dustrial relations section of Prince
ton University, there were 36 banks in
existence at the close of the year. Two
had been added. and two eliminated
during the year. The combined re-
sources of the 36 banks reached
S126.792.4 36. a gain of nearly ST.
900 900 over the figures for 1925.
The growth is striking, in view of
the newness of the movement. The
first labor bank in the United States
was established hardly more than six
years ago.
The resources of the labor banks
are symptomatic of the economic
power of organized labor. Many work
ing men still use non-labor CONNER
cial and savings banks and invest in
ordinary capitalistic railroad, public
utility and industrial corporations. On
the other hand, not all the deposits Of
labor banks belong to employees, for
numerous employers of labor keep de-
posts in the cooperative banks.
In actual dollars the combined re-
sources of the labor banks represent
scarcely 10 per cent Of the strength
of the leading national bank in New
York.
The main social significance of the
labor bank movement lies in the fact
that it gives organized labor a new
grasp of the meaning Of capitalism
and of the problems of management
The old IA ShiOped ha pkS have recoQ.
nized this aspect OF the development
and have for the most part had the
good sense to be willing to cooperate
wit h labor hanks.