Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-07
LOAN LIQUIDATION
IS HELD NECESSITY
Kinks Still Exist in Stock
Market Credit Situation,
Lewis Haney Thinks.
BY JOHN F. SINCLAIR.


Lewis Haney, former economist of the
Federal Trade Commission thinks that
further liquidation of collateral loans
in the banks is necessary before all the
credit kinks are ironed out.
The Haney line of reasoning about
stock market cycles is somewhat as
follows
/. Spectators bid money rates up.
2. New funds pour in from all over the
world. 3. Next. as the market gets
wabbly, some foreign funds are hastily
withdrawn and a market crash follows.
4. The banks in New York City then
step in and take up the credit load,
increasing their loans to make up for
the loss of outside funds. 5. Finally,
the banks get their collateral loans down
as the continued liquidation occurs.
Mr.. Haney believes the New York
Stock Market credit situation is now
between the fourth and fifth stages Of
this process. While outside funds are
being withdrawn, the interior banks,
too. are cutting their loans and as a
result, While b. RS loans are going
down, collateral loans of the New York
banks are right now S788,000,000 larger
than year ago.
Says Mr.. Haney:
Further liquidation is required and
this means that there must be more
selling of -ecurities. That probably
will mean still lower prices for many
stocks"
Last week saw cut of about 10 per
cent of the total brokers' loans. So
now they are, in volume, about where
they were in October, 1927.
As brokers' loans drop, collateral
loans of the banks rise. They stand
at nearly $4,000 0000 greater now
than they were in october, 1927.
Further liquidation in collateral loan
accounts may be expected in the next
few weeks.
Raw sugar prices are lower now
than they have been in a hundred
years, which is as far back as re-
liable records are available. Refined
prices are down below the 1914 levels.
Trustworthy estimates place the
worlds supply of raw sugar on hand at
100000 tons more than it was year
ago.
Willet & Gray, world sugar experts,
say the total world production of raw
sugar for 1929-30 will amount to &c.
724,000 tons, about 2 per cent under
the record production of last year,
when 27,279,000 were indicated.
But consumption is about per cent
under that of year ago.
Russia has contracted for 135 900
tons of Cuban sugar, and is again
negotiating Tor an additional tonnage
estimated from $4,000 to 365, 900 tons.
Standard Statistics, in its report of
the survey at the present time, says:
mo reduction in surplus stocks on
hand is indicated in the near future"
A good time for the housewife to put
up fruit preserves.
Must a corporate trustee exercise
more Judgment and skill in handling
a trust relationship now than was eX-
pected of the old-fashioned individual
executor or trustee?
In 1923 a trust was turned over to a
New York company. Certain common
stocks in sugar companies we're among
the assets turned over. In September,
1928, one sugar common stock was SELL
ing at So a share 1t dropped steadily
until now the market is less than SO
cents a share.
Should the trustee be held respon-
sible for the loss?
YES" said the New York court
THE law imposes" said the surrogate
Judge, upon trustees duty to employ
such diligence, prudence, sagacity and
vigilance in the care and management
of an estate as prudent men Of diScre-
ton employ in their own like affairs.
This necessarily excludes all specula-
ton, all investment for an uncertain
and doubtful rise in the market and, of
course, everything that does not take
into view the nature and object of the
trust, and the consequences of a mis-
take in the selection of the investment
to be made"
The trust company today has a much
harder job than had the old individual
trustee, because trust company adj
vertiseS to the world that it is quail
fed to act in such matters
= he ALL %
ness, it puts an added job on trust COM
panies.
The New York surrogate ruling on
the responsibility of the modern
corporate trust is a healthy omen-for
those who leave their estates in trust.
Recently asked C. r. Palmer. presi-
dent of Cluett-Peabody g. Co., how he
had moved up from the lowest position
to the highest in his organization, in
so short a time.
II know of no success rules" he re-
piled. Il am always interested in a
chap who likes work for the sake of
working. Give me the plugger-that one
who keeps on working irrespective of
obstacles. That type of young fellow
will succeed"
knowing that Mr.. Palmer had at
tended the University of Iowa, asked
him If he thought a college education
was essential for business success.
Helpful, but not essential. The i'm
portant thing is to pick a leader in your
line, company headed by man of
character-a square shooter. Then
stick to that leader"
Mr.. Palmer, the son of a Hawkeye,
Iowa, storekeeper, quit the university
TO help his father. He dreamed of larger
things. So he moved to Davenport,
Iowa, and later to Chicago There he
started to work with the company, OF
which he is now president, as assistant
house manager"
BY 1914 he was made manager of
the Kansas City territory. Eight years
later, in 1922, he was sent to San Fran
cisco, Los Angeles, Seattle and Denver
In 1925 he returned to Chicago with
more territory under his supervision
than ever Two years later he was
called to the main Office at Troy. A
year ago he moved into the presidents
office, hung his hat on the rack and
was ready to work.
"How's businesS?" asked him.
Our business is ahead of last year
end our inventories are in excellent
shape. June has shown a slight let-up
but we haven't a kick coming" was
his quick response.
Copyright, 1900