Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-08-30
PRICES ARE FIRM
ON D. {. EXCHANGE
Pepco Preferred Stock Sells
at III 1-4-0ther Trans
actions Recorded.

on the W1S4l3lSVon SNoSk ENCf1Sllgi
today on a comparatively small volum
OF trading.
Potomac Electric Power 6 per cen
preferred stock rose TO ma on a turn
over of ten shares. while Potomac 81.
preferred held steady at l06A on a
five-share sale. Sanitary Grocery pre-
ferred sold at 1851, the same as
prior sale,
on the bond side of the market
washington Gas 6'S "B" showed the
strongest advance from the prior sale
of loo to l06Ss in $4,000, while Wash
incton Gas SIS "A" rose to 1885 on
$1,000 turnover.
CAPITAL Traction SIS dropped to lol i
on a $500 deal Barber g. Ross held
firm at 81.
Ruling on Loans.
The Federal Reserve Board IS opposed
En- Federal Reserve Banks granting PREF
erential discount rates on loans secured
hv Government bonds as against othef
forms of collateral -
Tnis announcement came in letter
from Secretary of the Treasury MELON
chairman of the Federal Reserve Board.
in answer to an unnamed clearing
I1o,,se association which had suggested
that loans secured by Government oonos
bear the same rate OF interest as the
bonds. The letter was mace puoilC os
Gov. Young OF the FeoeraI heselNe
Board.
Noting that the recommendation OF
the association for a preferential rate
had been laid before the board, tne
Treasury Secretary said the legal pro-
redyre was for directors OF the reserve
banks to initiate rates. ~
when such rates are initiated, ne
continued they are laid before the
hoard for review and determination
yvhile the board undoubtedly has the
mower 10 fix rates of discount for reserve
hanks, we see nothing IN the present
situation to require such arbitrary aC-
ton -, ,,.or
Secretary Mellon said the board was
not attempting Ito sloetraCk any
suonsibility it may have lot Fessrne
hank discount rates" and added: we
edvfsa YOUR association that IL any re-
serve bank should initiate SUCH prefer,
entail rates as you suggest the poaFo
would be opposed to such procedure
He cited six reasons in support OF the
boards conclusion. as follow:
s11il 1t would not care to discriml-
nate against commerce and industry oy
annroyal of rediscount rate OF as low
&c al. ner cent on collateral notes Sc
cured by Government obligations while
s;nultaneously certain Reserve Banks
ro,,ld be permitted to charge per cent
on eligible commercial, agricultural ana
industrial paper.
situation which would justify lower
rate on one class OF Government Sc
c,Irities over another. The previous
action of the Reserve Banks tnat you
refer to was wartime measure ony.
"t3) II your proposal was put nlso
effect at the present time IL Woulo
Merritt a member bank to buy United
states bonds in the present market on a
Weld higher than the bonds bear ana
fhn member bank would be prompted
IN rediscount to make such purchase
solely for profit
af4A Member banks own over four
billions of United States Government
bonds. and upon reflection we believe
your clearing house viii agree with us
that the invitation for profit would De
too great for many of the banks to re-
sist and only result in imitation thas
eventually would work widespread dis
aster to our entire financial structure
and indirectly to the business interests
Of the country.
"(5) The proposed plan would have
a strong tendency 70 appreciate the
market value Of the outstanding United
States obligations bearing low rates ana
simultaneously depreciate those bearing
higher rates. developing artificial and
unwarranted prices for the various Gov
eminent issues. :,
"f6l Under normal peacetime conoi-
tions the Treasury Department should
and does pay the ordinary market rates
for money the same as any other Dor
rowers. Moreover, the credit OF the
United States Government Is so gooo
that there is no occasion whatsoever OF
attempting by artificial means 10 place
United States Government securities IN
A favored position as compared with
commerce, industry and agriculture.
B. & o. Earnings.
The report of July earnings Of the
Baltimore g. Ohio Railroad shows that
they are on the upgrade. but stu unoer
last year. The decrease OF signify
more than $500 600 in gross. the small
est such loss since June, 1917, repre-
sents a decline OF only per cent, COM
rared with nearly per cent in June
Of this year. and more than IL per
cent in March and January.
Increase of well over 100000 In
net operating income was the f1rst
gain in that item the road has made
since May. 1927 July net was the
largest since last September, though II
was stin about $500 900, or is per cent
below the net of the corresponding
months Of 1926 July's results reduced
this years cumulative loss IN operating
net from the S4,a34,5i0 as OF the emo
Of June, to 1881 $40 for the seven
months. Whereas, in the flrSt SIX
months the road did not quite earn
accrued common dividends, the seven
months showed earnings Of roundly
"a. TOO 900 for common dfyldends, after
allowing for other income and fixed
charges as estimated for the period and
the seven months proportion OF per
cent dividends on Just under 100000
900 preferred stock.
The July gross this year stood at $i9,-
gii.a74. q decrease Of per cent under
July last year, while the net operating
income was s4,8ss.775. a decrease OF
3i.s per cent as compared with July,
1927.
Insurance Co. Stocks.
Stocks Of the IS leading FIRE and
casualty insurance companies are selling
81 an average price Of $3.50 snare az
compared with an average selling price
Of 5000 share in January. 1927, and
a hiQfl Of 1915 last May, according tc
q survey q the insurance stock MARKER
made bY Gilbert Elliott ~ Co.
A decidedly encouraging" view o.
the Fall outlook for business Is taker
By the Iron Trade review. THE sum
xler season Of 1923 appears destined
to go down in industrial history al
falling 10 bring the customary seasonal
dip in business activities" says thu
review Not only has the let-dowE
been almost imperceptible, but the
after recovery has starter weeks earlier
than is usual and 1t is displaying q
great deal more than the normal vigor
Heard in Financial District.
Robert v. Fleming. president Of Rigs
National Bank. and president OF thu
District Of Columbia Bankers Associ'