Milford chronicle., 1928-03-23
URGES LOWER RATE
OF INTEREST ON
SAVING ACCOUNTS
[Continred from fri taael

Trust Company. Mr.. Laird was un
able to attend, due to illness.
The tendency of some State bank
ing institutions to invest in high
yielding bonds and bonds of pool
marketability was noted by Mr.
Horsey. This tendency, he said, un'
doubtedly will become more pro
nounced in some institutions as
savings deposits continue to in
crease and as the margin of earning
over expenses and dividends de-
clines.
Used as Savings Banks
Delaware, outside of Whining
ton, being a rural State it necessar-
lily follows that the banks in rural
New Castle, Kent and Sussex cOun-
ties are. to a more or less degree,
used as savings institutions. Mr..
Horsey said, This is true to a
less degree in rural New Castle, to
a greater degree in Kent and to a
large degree in Sussex. In conse-
quence of being a rural State south
of Wilmington, agriculture and
business interests principally de-
pendent on agriculture supply the
only large demand for credit. This
being true it is readily understood
why Delaware banks are compelled
to invest a large portion of their
. resources i'll investment securities.
Therefore. in a period of low money
rates such as we are now expert
encing, banks with large amounts of
savings deposits drawing 4 per cent
interest which have but little local
demand for credit are forced to in
vest their surplus funds in securi-
ties. commercial paper or call loans
at the prevailing low rates. This IS
Improbable.
Paper by Walter J. Laird
Me-. Laird in his paper said i'll
mart: "The large reserve of pur-
chasing power which has been
built up in the agricultural as well
as in the industrial and financial
centres, will probably support an
amount of business in 1928 that
will prove to be greater than III
1927. even though possibly not as
great as that for the abnormally
good year of 1926.
ct is furthermore probable that
this will be another year of great
variation in earnings among the
different industries, the majority OF
which will show very satisfactory |
earnings. while the minority Will |
have trouble in more than earning |
their expenses.
I'VE might now consider the ef-
feet of this years probable business,
and other influences, on the secur-
ity markets.
"Taking bonds first, we note that |
the average prices for bonds sagged |
somewhat during February, but this
was due mainly to the lower grade
bonds. which usually move more or
less in sympathy with the STOCK
market. These prices have strength
ened within the last week or two !
since the stock market suddenly
turned upward.
at is probable that after the
financing of the spring trade, inter-
est. rates may work lower and cause
a strengthening in the bond mar
ket.
while prices are high, as com
pared with last year, it is probable
that bonds will advance further dur
ing the fall. Furthermore, it is
generally conceded that money
mates will be easy for period OF
years, and that the longtime trend
of the bond market is upward.
considering the trend of the
stock market in the light of prob
able 1928 developments, we are
again forced to the conclusion that
this years market will be very
selective one in which there will be
little or no improvement in prices
of some stocks, while number OF ,
others will end the year with con-
advances. In many cases
these advances will be justified by :
improved earnings, though in other =,
cases such increases will not be =
justified. c
Among the favorably situated in p
lustries whose stocks may in many
Instances reflect better 1928 earn G.
ngs, we find the following: =
"The farm implement companies, -
who reported a considerable in 3
,rease in business during 1927, have 7
shown a further increase during 7.
January, 1928, and should continue a
O show improved earnings. Like n
wise, public utility companies as a i
Whole sold 10 per cent more power =.
n January of this year than in the NJ
anne month a year ago, and should NJ
ontinue this gain through the M
ear. c,
"The leading automobile compan- n
ent improvement in production OF ~
ars and trucks for January over d,
anuary, 1927, and will likely con- =,
nue. with larger sales than in NJ
927. It is true that some of them of
re meeting such keen competition b-
lat they will end the year with a no
cry small margin of profit. W.
"The railroad equipment compan- ~,
s, which experienced a very poor -
ear in 1927, expect some improve II,
ent in 1928. MI
"The companies supplying build ~.
G and construction materials in - -
ost cases expect very fair earnings m1 -no
is year. NO
mot only are most stocks actual 10
higher than year ago, but they nio o
e relatively higher when we take S,' ~.
e ratio of market price to earn
gs. r
However, with the generally D.
osperous condition of the country ~ ~
d the abundant supply of funds ~, ~,
ailable, I find that most authori- ~ ~,
S lean to the following conclus- boI LIZ
Is: OIL,
L. That such reactions as occur % aU
the stock market this year should
/ be of such major proportions as -, -
forecast business depression. Wv ~"
2. That it is improbable that L. u,