Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-01
CORPORAT|ONSA|D
CALL MONEY MART
Wealthy individuals Are Also
Heavily Represented iR
Moans by Others"

Special Dispatch to The Star.
NEW YORK, August 31-Individuals
and corporations contribute the greater
part of brokers' loans by Others" ac-
cording to H. G. Parker, vice president
of the Standard Statistics Co, writing
in the American Bankers Association
Journal for August. Basing his survey
on an examination of the balance sheets
Of 1000 corporations, Mr.. Parker comes
to the conclusion that savings banks
are among those who profit by the
call rates and that investment trusts
are large lenders.
Mr.. Parker has titled his article
Where the Call Money Comes From"
He attributes the ability of corporations
to be large lenders in the call money
market to the EZRA of general prosperity
enjoyed by American industry in the
past two years" A greater amount of
surplus cash has been accumulated in
this period than can be profitably en-
ployed in their businesses.
Conditions Almost Ideal.
The financial conditions of these cor
poratlonS have become almost ideal, he
says. Whereas a few years ago it
was normal for manufacturing indus
tries to show a quite considerable item
of loans payable" he points out, rep
resenting borrowings from banks, it is
now next to impossible to locate any
really large industrial corporation Show
ing this item in its balance sheet.
1.-The action of the Federal Reserve
Bank in frowning upon the custom of
number of banks of supplying the
funds necessary to maintain the specu-
lative fever, which has been rampant
in the last two years, while continuing
to rediScount, naturally resulted in
diminution Of funds supplied by sucn
institutions, with, of course, a CORE
spending advance in the call loan rate.
This has opened the door to loaning
by corporations of their surplus funds Ill
the call loan market at very attractive
return. eve wish to make clear here
that the term call loans in this article
is intended to cover both call and time
loanS-in fact, loans for stock market
purpoSeS). The investment of these
surplus funds in the money market By
corporations has been attractive, not
only because of the very satisfactory
profits derived from the operation, but
because OF the safe character of the
investment as evidenced by the fact
that the loans are secured by highly
liquid Stock Exchange collateral"
Balance Sheets.
In analyzing the balance sheets of
the 1000 corporations whose assets
exceed $1,000,000 each, Mr.. Parker mar
rows the group down to lit companies
that had a considerable amount of sur
plus cash. That is, their total cash
items were in excess of all current
liabilities by substantial amount.
while their general current position was
excellent. The lit companies were
divided into four groups, as follows:
Those that do not invest surplus cash
at all, those that invest surplus cash
in Government securities only, those
that invest in marketable securities as
well as in Government securities and
those that put their excess cash out
on call in addition to investing in
marketable and Government issues.
The first group consists of nine
companies, the F. w. Woolworth Co.,
American Tobacco Co., Gillette Safety
Razor Co. and the Public Service Cor
poration of Illinois making up the large
part of the total cash of about $751;
100000 shown by the nine concerns.
of the lit companies analysed, a
group comprising companies that in
vest their surplus cash in Government
securities numbers only 81 and exam
nation of these 81 shows that they
retained $161 100000 in cash and in
vested practically the same amount in
Government securities. Prominent in
this group" Mr.. Parker stated, ARE
the automobile manufacturers, such as
Hudson, Nash, Hupp, REQ, White and
Continental Motors. The mining in
dustry is represented by Calument &
Arizona, Calumet & Hecla, Homestake
Mining, Mohawk Mining and Cerro de
Pasco. Other prominent companies in
this group include r. j. Reynolds To-
bacco Co., United Fruit, Westinghouse
Air Brake, Marland Oil, Burroughs
Adding Machine and Commonwealth
Edison Co.
There are As concerns in the group
which invest in marketable securities
as well as in Government securities, but
not in call loans. This group COM
and includes such corporations as
United States Steel, General Motors,
American Telephone & Telegraph, Cen
eral Electric, Allied Chemical & Dye,
Standard Oil of New Jersey, Interna-
tional Harvester, Bethlehem Steel,
Standard Oil of Indiana, Liggett &
Myers Tobacco, Radio Corporation. Sim
clair Consolidated Oil, and many others.
This group showed total cash assets,
including marketable and Government
securities, of approximately $2,000,00O,-
one-half that amount. Their combined
working capital is approximately So
soc, 100000.
"In the last group, companies which
have made practice of loading money
on call as well as of investing in mar
ketable and Government securities, and
which comprises 43 corporations, are
found such we'll known names as E. I.
du Pont de Nemours & Co., Inter-
national Shoe, American Can, Good
year Tire and Rubber, American Smelt-
ing & Refining, Corn Products, Inter-
national Nickel, Standard Oil of Cali
fornia, Westinghouse Electric & Manu-
featuring, Eastman Kodak and many
others. The cash assets of this group
comprise approximately 100000, 900,
against current liabilities of about $780,
100000, while their net working CAPT.
tai totals about 100000.
Combining the four groups analysed,
we find that cash was about $780,
100000, Government securities about
$625, 000, 900, marketable securities, $780,
O00, 900. and call loans, $175,000, 900. or