Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-09
NEW STOCKS CUT
BUSINESS LOANS
David Friday Analyses Great
Changes in Bank Assets in
Recent Years.
BY EDWARD C. STONE.

which has seen commercial loans grow
slowly while loans on securities have
mounted rapidly, is to be found in the
growing tendency of corporations to
avail themselves of the Stock Exchange
as a means of procuring the capital
and credit they need, according to an
article by David Friday, Washington
economist. in the current issue of the
Bankers Magazine.
"A slow rate of increase In CONNER
cial borrowing" states Mr.. Friday, us
the more surprising in view of the fact
that our industrial production has
risen, according to the Federal Reserve
Boards index, from 106 in July. 1927,
to 122 during recent months. This is
an increase of Is per cent, while COM
mercial loans have risen only 6 per
cent. The total of the two classes of
loans combined has, however, risen Is
per cent, thus keeping pace exactly
with the increase in industrial activity.
Similarly, comparing. the present
with 1920, We find that production has
risen from SO to 1872. an increase of
80 per cent, while total loans have risen
by Is per cent and commercial loans
have not risen at all"
Mr. Friday asserts that the explana-
sis probably to be found in the simple
fact that the nature of the securities
listed and traded in on the New York
Stock Exchange has undergone an i'm
mense change since 1920" He finds
that whereas the number Of railroad
stocks listed on the exchange has in
creased but slightly, the number of in
duStrial and public utility stocks has
grown from fewer than 800 to some
600.
During recent years manufacturing
and merchandising companies have
been listed on the New York Stock EX-
change at a rapid rate. AS a result their
securities have come to be valued on
this open market and have become an
acceptable basis for bank loans. The
public has found these securities at
tractive and has bought them, some
times with borrowed money.
Since these corporations now get the
credit they need by issuing securities.
they do not need to borrow as much as
before through the expedient Of COM
mercial loans. In this shift in financial
practice we have the explanation of the
change in the nature Of our banking
assets"
Riggs Bank Stock Again Climbs.
Riggs National Bank stock climbed
still higher on the Washington. Stock
Exchange today when Is shares
changed hands at 5e71a, up IA points
since the last sale last week.
Four other bank stocks also appeared
during the trading. Twenty shares OF
$50. five shares of District National
came out at $50 and 10 shares Of Union
Trust moved at $780, In the unlisted
division five shares of Departmental
Bank stock sold at 6.
Capital Traction opened the week at
931b. Potomac Electric Power 6 per cent
preferred sold at 112 and the 512 per
cent preferred registered 1865. Lanston
Monotype appeared on the board at
100. Forty shares OF National Mort
hands at 43s.
Bond sales were confined to two 81 900
sales in Capital Traction SIS at S41a and
two in Washington Gas IS. series A, the
first selling at 1o134 and the other
changing hands at 1912.
Washington Gas Light stock was
quoted today 100 bid and 140 asked.
The only two issues on the list now
selling exdividend are Mergenthaler and
Peoples Drug Stores preferred.
Broker Home From Vacation.
G. Bowie Chapman, resident partner
of Hartman & Co., has returned to
Washington after spending the entire
season at his Summer home at
Castine on the Maine Coast. He re-
ports that the resorts along PenobScot
Bay had a splendid season. On account
of the extreme dry weather: there was
a happy absence of fog all Summer.
It3was reported today by friend, that
MT. Chapman won two prizes at the
annual Castine flower show, the fax
which he raised carrying of first and
second honors.
Bank Debts Show Declines.
Debts to individual accounts as re-
ported to the Federal Reserve Board
by banks in leading cities for the week
ending September 4, which included but
five business days, aggregated $780,.
O0O, 900, or per cent below the total
reported for. the preceding week and
19 per cent above the total reported
for the corresponding week Of last year,
which also included but five business
days.
Aggregate debts for 141 centers for
which figures have been published
weekly since January, 1919, amounted
to approximately $15,204, 000, 900, as
compared with $16,385, 900 900 for the
week and $12,745, 000, 900 for
the week ending September of last
year.
Market VS.. Florida Booms.
Discussing the New York Stock Mar
ket and the comparison which Roger
Babson made between the market and
the collapse of the Florida land boom,
the brokerage house Of Harriss g. VoSe
says:
I'm the instance of Florida inflated
values were accorded barren lands
which could in no manner produce any
products of value SUFFICIENT to warrant
investment Of even a fraction Of the
price such lands sold for, or in no
way could support any business or en-
terpriSe returning sufficient income to
warrant such prices. Being founded on
an uneconomic basis it was natural to
expect collapse when the last pur-
chaser found no willing buyer"
Freight Firms Consolidate.
j. G. Nettleton, local agent, has re-
ceived word that the National Freight
Co., 80 Rector street, New York, re-
Gently formed to do general freight
forwarding business in conjunction
with the Pennsylvania Railroad and
other important rail lines, has acquired
by stock purchase the business and
property Of G. w. Sheldon & Co. of
New York and Chicago, one of the old
est domestic and foreign freight for
warding concerns in the country.
The National Freight Co. is controlled
through stock ownership by the Penn
road Corporation. .-'.--'-,
Financial District Notes.
George o. Watson, president Of the
Liberty National Bank and of the
Washington Stock Exchange, has re-
turned from New York where he went
to accompany his wife aboard the
Leviathan. Mrs. Watson is on her way
to Europe with Mrs. Thomas Littepage
and daughter.
Avon M. Nevius, vice president Of
Riggs National Bank, has been made
an honorary representative on the ad.