Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-07-29
BY I. A. FLEMING.

| Call money" Is one of the things
| that the average layman knows less
about than almost any other financial
subject Many know all about de
mand loans" as made between borrow
ers and banks and yet are entirely ig-
norant of the ms and outs of the great
| call MOI ~ market holding its sessions
every business day at exactly IL o'clock
| at the money post" on the New York
| Stock Exchange.
Wall street often has been blamed for
manipulating money. for controlling
money, for rigging the stock market
and for a doZer and one things. And
vet Wall Street is n necessity, a money
market Is a necessity to business. stocks
| are necessary that corporations may be
| financed-and the conduct of all Is con-
Quoted without much friction and with
distinct. positive benefit to many and
losses to only those who seek for prof
its and 20 wrong in their guessing.
The direct beneficiaries of the So
called money rool. are bankers who
find at he post" market for their
surplus reserves. where loans can be
quickly made and SIS speedily called and
paid off. where proper and Acceptable
collateral is available for security for
their loans.
Interior banks have the same privi-
leges at the call mart as the largest
city institution and New York City
banks themselves, save that they have
to meet , small commission exacted by
the New York correspondent who makes
the loan. examines the collateral. lists
1t and notifies the correspondent whose
money has been loaned.
Corporations Lend Millions.
Great industrial corporations. Great
ures OF this day and age. have long
since reached the stage where they, too,
| have more cash than they require in
/ their business-that is at certain sea-
! sons of the year General Motors, du-
| Font. United States Steel Corporation.
! Baldwin Locomotive and many other in
dustrial and railroad corporations
A study Of the situation in the in
| dustrial corporations shows that 106 of
! the leaders in this field have ceased to
/ be borrowers and have become lenders.
/ Fortunately a circular on this sub
/ iect Of recent date on tho authority of
! Stone Webster a. Blodget of New York
! Is ar hand and Is reproduced herewith.
! That the great manufacturing and
industrial corporations have revolu-
| tioniSed their financial policies since
| the postwar def1ation period. and are
| no longer dependent on the money
market is disclosed by a study lust
completed by Stone, Webster e. Blodget,
| Inc, covering l06 leading companies
engaged in l8 major industries. The
inference may be drawn from the an
alysis that substantial proportion of
/ the funds formerly required to finance
the current needs of industry have be-
| come available for stock market opera :
! tons.
Owed Much in 1921.
THE 100 companies owed s586. 627. :
/ 600 at the close of 1921. On December
| 81 last the total had dropped to S14s,-
] $4,000 The majority OF the COM
/ panieS making railway and electrical
! equipment fertilizer. industrial chem
| icals. apparel and automobiles entirely
| eliminated the notes payable item in
| the six years. In the same period the
| l06 companies increased their cash and
marketable securities from sT07 .574,-
! 600 to $l,7l8.492 900. and their net
working capital from S2,63l,i94, 900 to
! So, 760.746 900. In addition the large
/ industrial corporations have become
important lenders of money in the
/ market.
/ Sales records. obtainahle In full from
only 40 of the l06 companies, show an
i Increase from s3,724 .o63. TAO In 1921 to
6,320.092070 in 1927. coincident with
an increase in inventories from s902.~
/ 066.4i0 to $l,14l .4o4 200. In brief, a
10 per cent greater sales volume was
handled with an increase of only 20
/ per cent in inventories"
Naturally when call money rates are
high more cash is seeking temporary
/ investment ut the money post than
/ when rates are weak and lower. Ma
aurally ST. per cent rate will bring
out more offerings than a 81 to 4 per
| cent. but many banks use the call loan
market at all times, because they re-
/ plarc the money in their vaults or use
/ Il to care for debit balances in the
clearing house recalling 1t to their own
needs when wanted almost instantly.
/ Prolonged activity in the New York