Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-11
STANDARD ACCOUNT
SYSTEM IS URGED
Experience of United Cigar
Stores Co. Brings Prob
lem Before Public.
BY JOHN F. SINCLAIR.

Special Dispatch to The Star.
NEW YORK, January 1.-THE drop
in the net profits of the United Cigar
Stores of America for 1928 from So
$4,000 to $4,525,O0o as a result Of "a
the new MANAGEMENT, headed by George
K. Morrow and his associates, insist
upon, is surprising.
When a drop Of almost so per cent,
amounting to millions of dollars, can
be handled in this fashion, it shows
the importance of q standardized audit
in the business world.
Probably no other problem confront
ing business is more important In de-
veloping confidence than this. WIN
millions of stockholders being added to
the lists Of industrial corporations an
nually. the word depreciation" should
mean in every balance sheet definite
thing. So should the word reserves
and so should the words gross" and
met" profit.
one of the best jobs that the Inter-
state Commerce Commission has done
has been in standardizing the bookkeep-
ing of railroads. This Is the great need
today in the field Of public utilities and
likewise in the field of business.
Business confidence is the most i'm
portant factor in success. An audit that
is standardized and means just exactly
what 1t says is q crying need OF bal
ance sheets today. whole volume
could be written on this subject, but
the United Cigar net being cut In two
by different theory OF accounting
brings the problem sharply to public
attention.
The Federal Reserve Bank Of New
York is the largest of the IL. 1t earned
net nearly 100000 more In 1929 than
in 1928.
come of S12,263 900 available for d1vl-
dends and surplus-better than $1,000
900 month.
The Federal Reserve act requires that
the capital of the Federal Reserve Bank
equal per cent of the capital and sur
plus of member banks in the district.
So the New York Federal Reserve
Bank capital amounts to $67 ,301 ,450,
compared with $50,123,950 at the close
Of 1928, and the surplus stands at $780,
900 900, compared with $71, 100000 a
year ago.
The Federal Reserve act also pro-
vides that the banks shall accumulate
a surplus amounting to 100 per cent OF
the subscribed capital. When this Is
completed, 10 per cent of the net in
come remaining after payment OF divi-
dends Is to be paid into the Federal
Government as a franchise tax. The
New York Federal Reserve Bank has
paid no franchise tax to the Govern
ment so far.
The ratio Of net earnings of the Fed
eral Reserve Bank to he capital PAID
in amounted to 207 per cent, against
241 per cent in 1928; while the net
earnings amounted to 9.4 per cent OF
the capital and surplus, against 10.l
per cent in 1928.
The other Federal Reserve banks all
show satisfactory net earnings.
With Dun's Review saying that the
bank failures in the United States IN
creased IT'S per cent in 1929 over 1928,
resulting in an increase Of liabilities
involved of SO per cent, the banking
situation has not exactly cleared up.
According to this review, the total
number of failures was 437, against 3I2
in 1928, with liabilities of $216, Toe, 582,
as compared with $129,609, sos in 1928.
simultaneously with this report comes
the report of the first annual meeting
of the directors of the Northwest Ban
corporation showing net profits OF S4.oO
per share on the 100000 shares out
standing.
This company has combined assets OF
$478, 100000 in the 81 banks. 1t mas
93 per cent of the total bank resources
of eight Northwestern States in which
1t operates.
Today in the United States 273 diff
ferent groups control 1858 banks with
total resources of over $13,275,000 600.
Still there is much opposition to such
development both in Congress and out
side. congressional committee to
study the whole problem will be the
next move.
President Decker of the Northwest
incorporation expresses himself in ia
vor of such joint Federal and congress
sional commission to consider the adj
visement Of the revision of the national
banking laws.
1t Is the contention of this North
western banker that there Is now
abundant evidence to show that group
banking, as developed in the North
west, is gaining in favor, and indica-
tions are that in the absence of legal
lied branch banking, the development
will continue.
Instead of a fair profit, we took a
considerable loss In 1929" a friend of
mine, New York cotton exporter,
said to me this week. "You want to
know why? I'll give you the problem
as see II.
Japan is responsible. We are de-
pendent, of course 1lpcn our foreign
markets for our business. and tlneSe