Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-06
INQUIRY ON CREDIT
BEGUN IN BRITAIN
Chancellor SnoWden Appoints
Committee to Examine Con-
ditionS for Government.
BY JOHN F. SINCLAIR.
Special Dispatch to The Star.


NEW YORK, November 6-Philip
Snowden, chancellor Of the British ex-
chequer, wants to know more about
credit, how it operates and who re-
ceives its major benefits. Prosperous con-
Germs sometimes get into serious credit
difficulties and are forced to the wall.
He wants to know why. So do other
business men in Great Britain.
So the fighting chancellor has ap-
pointed committee to look into the
matter and report back to the govern
ment.
It's a most distinguished committee
The banking profession is represented
by Lord Banbury and Robert Brand
both outstanding bankers of London;
Cecil Lubbock, the governor of the Bank
of England, and Reginald McKenna,
former chancellor of the eXchequer
and now governor of England's greatest
commercial bank, the Midland.
Industry and commerce are repre-
sented by Lennox Lee and Sir William
Raine. Labor is represented by Ernest
Bevin one of Labors big leaders.
The scholar in business is represented
by two of the keenest members of the
committee, John Maynard Keynes and
Prof. T. E. Gregory.
Its one of the strongest committees
ever gotten together in Great Britain.
It's report on credit Strangulation" will
be awaited with keen interest, not only
in England, but in every civilized nation.
For the problem of credit, after all,
is the most vital and important in the
business world.
What yardstick can be used in esti-
mating common stock prices? How much
should one pay for good conservative
common Stock2 Some of them have
five and ten times as much stock out
standing as they had few years ago.
ConServatively, a good seasoned
common stock should give the investor
a return of or per cent. This at
least was the accepted principle long
before the inflationary movement sent
stock prices skyward.
"a seasoned stock, selling at from 10
to IL times its earnings, is ordinarily
a good buy" says a broker friend of
mine, who has had quarter of CEN
tury'S experience in Wall street.
On that basis many stocks are SELL
ing far too high yet. OF course, in
some cases where corporations own val
liable basic patents which have not come
into their own-its a different prop
oSition.
Possibly such a stock Is Radio. It is
estimated that the net income of the
Radio Corporation of America for the
first nine months of this year will be
about $12,500,000. This is equal to $1.30
common share as against $7.53 on
1,155, 400 old common shares in the
same period of 1928.
While Radio made more money for
the first nine months of this year than
last, it had more partners to divide it
with. That is why its earnings for
the individual share this year are about
one-sixth of what they were last year.
This Is really the problem of the
common stock. Not how prosperous the
company-true, this is inportant-but
another factor must be considered:
How many shares has the company
now, compared with what 1t had last
year or five years ago?
Putting these two together, one
should have a good idea of when q
common stock should be bought.
John j. Raskob is one of the OUT
standing financial powers of the United
States. He is rich, young, as men of
his financial strength are reckoned, and
has been a distinct success in his
chosen field of business.
So his answer to the charges made
in Congress that he has been a stock
market plunger" is worth quoting. 1t
shows that his business philosophy is
full of common sense. Listen to this:
ST have always purchased stocks out
right" said Raskob, Investing in the
securities of those companies that 1
thought had an attractive future, and
have held the stocks until such time
as I felt they were selling for all they
were worth"
Could anything be simpler than that?
If every worker, mental or physical,
would take such a common sense view
of stocks~he would not find himself in
so many financial jams.
The obvious-the simple way-seems
oftentimes the hardest road to travel.
(CopyriRht, 1929. by North American News
paper Alliance.)