Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-21

BY CLINTON COFFIN,

Recent marked increases in the total
OF borrowed money going into stock
exchange transactions and brokers'
loans have served to accentuate the
view of certain members of Congress
that the National Government must
take action in the field. Senator Nye,
Republican, North Dakota, who took a
positive position on the subject early
last Summer, when borrowings uf New
York brokers We're much less than the
$4,000 100000 total announced for them
this week by the Federal Reserve Board,
has developed measure for dealing
with the situation and considers the
loan growth as necessitating its intro
0uctiOn as soon as the regular session
ConVenes.
The conclusion cannot be escaped
that the greater attractiveness of stock
market loans is literally siphoning the
bank deposits from all the interior of
the country into New York" Senator
Nye said. The magnetic effect of the
10 per cent and greater interest rates
offered there is having the result of de-
priving industrial and agricultural
operations in great areas of the coun-
try, in my State as we'll as others, of
credit to which they are legitimately
entitled. DiSregarding all the other as
poets of speculative lending on the
scale We are now seeing, this simple
is the one that interests me.
In shaping Federal statute to deal
with it have tentatively proposed that
the Government use its taxing power to
make the business law attractive to the
interior banks now embarking in it.
One method would be to impose a
heavy Federal tax on all bank earnings
that came from accepting interest rates
greater than the legal interest rates al
Stafn Hnf10iNiIp
A second method would be to require
banks making these collateral loans at
greater than commercial interest rates
to pay the extra earnings they attain
out to their depositorS. A law incorpo-
rating either of these requirements
would perhaps encourage banks to keep
their lending more at home.
"Of course, 1 realize that the bulk
of the funds now going into brokers'
loan comes from the treasures of great
corporations. and is only handled by
banks as agents and would not be
reached or limited by legislative pro-
posals affecting strictly bank credits.
Yet the bank participating in the lead
ing is important enough alone to justify
considering curb upon it."
While for some months the proposed
construction of ship canal into the
Great Lakes via the st. Lawrence has
been somewhat dormant, it is under
stood that the project is now going to
be given renewed attention. Admins
tration officials attending a gathering
in Washington this week assured in
quirerS that an official conference to
be held in Ottawa some time this Fall
was now being arranged, for a canvass
not only of engineering reports on the
matter, but also for consideration Of
the state of Canadian and American
opinion touching it.
Western Canada, like a large part OF
interior territory in the United States,
is said to be still warmly in favor of
the construction, though there are OPP
position drifts in Eastern Canada as
we'll as in New York State. It is said
on good authority, however, that the
Hoover administration intends to keep
the enterprise up in its program of
undertakings. and that the quiescence
during the last few months does not
mean abandonment.
Secretary Lamont told a gathering
of technical news writer's in Washing
ton this week that though the steel in
dustry had abated the extraordinary
activity which has marked its 1929
progress, there was pretty good reason to
suppose that this was temporary lull
rather than a real slowing down. He
based his opinion on some rather eX-
tensive data gathaIcd SIM Officially as
to the outlook for new STEEL orders. IN
one line alone, that OF steel rails. orders
are said to be shaping up for quantities
far beyond these normally required. due
to railroad requirements that have in
creased heavy traffic. Likewise there
are several other items Of steel products
he mentioned as likely to come into
heavy Fall demand, and the potential
work for the industry he regarded as
sufficiently high to require it to keep
Its record up Tor the balance of the
year.
While steel isn't 30 important a bust
ness barometer I'll the eyes of business
watches as it vas a decade or so ago,
1t is still of primary Importance to gen.
eral prosperity. The steel output for
the first eight months of 1929 has been
OF an almost unexampled magnitude,
and the prospect for its continuance on
the same scale will engage q lot of
attention.