Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-01


Brazils present attitude toward her
foreign creditors is of especial interest
to the United States. The latter's
stake in Brazil was estimated, at the
beginning of this year, at 1928, 1922, 900,
Of which 1915, 424, 900 represented Gov
eminent, State and municipal obliga-
tions, $25 900, 600, various sterling, franc
and milreis loans, and 1922, 498 900 So
called direct investments. Prior to the
war, United States investments in
Brazil were placed at $50, 100000.
American Brazilian commerce aggre-
gated, last year, about $185, 600, 900, as
compared with $153,00o,o00 in 1913
United States exports to Brazil
amounted, in 1880, to $54, 900 900;
while imports from Brazil totaled
$l3l 900, 900, resulting in a favorable
balance for Brazil of about $1,000, 000
Announcement by Brazil that sink
ing-fund payments on her foreign loans
would be suspended, therefore, cannot
be received with complete indifference
by American investors in Brazilian
securities and enterprises. 1t is, how
ever. obvious that sinking-fund pro-
visions contained in some of the Brazil
ian loan contracts have proved too
onerous, with coffee - the republics
chief source of income-selling at prices
at the time the loans were contracted.
Brazil had to choose between complete
default, to which many of her neigh
bors have already resorted, and par
tial moratorium. She chose the lesser
Of the two evils, a step which, on care
full analysis, should prove satisfactory
from the standpoint Of the holder OF
Brazilian issues.
The country's decision to suspend
sinking-fund payments is the third
within a period of SO years.
It appears that other governments
and political subdivisions which find
themselves in position somewhat
similar to that in which the Brazilian
government finds itself could also, to
advantage, resort to a revision or even
temporary suspension of sinking-fund
payments In the present predicament,
q good deal of talk about the sanctity
of bond contracts may safely be dis
missed The duty of the bankers today,
in the course of lean years, is to save
investors who, in some instances, seem
to have listened incautiously to specious
recommendations made in the course
Of fat years.
Bank Closing Continues.
The closing of banks continues
throughout the United States, but the
institutions affected are small and the
influence which the closing exertS upon
as negligible Many investors seem,
however. to overlook the fact that a
relatively unimportant bank failure at
times may have more serious conse-
quences of a social nature than the
failure of a so-called important in
stitution at other times.
The other day a bank in Brooklyn,
N. Y, was ordered closed by the State
banking superintendent. The deposit
tors numbered $1,000. whereas the total
resources Of the bank were reported at
S.. 500, 900. equivalent to about $3.50 per
depositor. From this figure. one may
conclude that a very limited number
of the 81 900 are in possession of means
other than those tied UP in the bank
and that the failure is one of the
severest blows which could have been
dealt them.
What is needed is not more COM
mitteCs, and less accomplishment. but
fewer committees and more work. Why
could not one of the very numerous
committees which are supposed to be
operating Throughout the country be
charged with deviSing means of rem
dering immediate assistance and not
charity to those who have intrusted
funds for safekeeping, and who have
done so because OF the assurance and
protection they naively believed were
afforded through banking department
for the proper maintenance Of which
they have willingly and rather lavishly
contributed?
Gradual Change Seen.
The change for better business will
be very gradual, according to j. Frank
Grimes president of the Independent
Grocers' Alliance. the largest voluntary
chain grocers' association In the United
States, but If an advancement and
sterilization in prices could be effected
the recovery would be more rapid and
a more speedy return to prosperity
achieved
|. Mr.. Grimes is inclined to question
the efficacy of relief committees COM
posed almost exclusively of men promi-
nent in business and finance. In order