Evening star., 1936-07-02
VITAL ROLE SEEN
FOR BANK SYSTEM
MouIton Calls 1t Absolute
Essential in Financing of
Government.
BY EDWARD c. STONE.

BY EDWAkD Z. SIONE.
The commercial banking credit
system of this country is an absolute
essential in facilitating financial
operations of Government, Harold G.
Moulton, president of the Brookings
Institution of Washington, told 400
bank officials last night at the Gradu-
ate School of Banking at Rutgers
University.
IF the fexibility and expansibility
provided by commercial banking
credit we're eliminated" DR.. Moulton
declared, lit is scarcely too much to
say that the economic system itself
would shortly be destroyed"
Speaking from charts to illustrate
his points, Dr. Moulton asserted that
"even in normal times commercial
banks facilitate the financial opera
tions of governments and in times of
emergency they play a role OF vital
Importance.
But in periods of war and acute
depression, when the financial re-
quirements of government expand with
great rapidity, the expansion OF
commercial bank credit is on a tre-
mendous scale. Such is, Of course, the
case at the present time.
TT is not true that the world de-
preston was caused by breakdown
of the American banking system
which did not, in fact, occur until the
depression had been under way more
than three years. Nor is 1t true that
the world maladjustments existing in
1929 can be explained simply by
undue extensions of commercial
banking credit in the preceding years.
The maladjustments involved world
agriculture, industrial, commercial
and financial relations"
Taking up the question of interest
rates, Dr. Moulton said that the real
cause of low interest rates and yields
on securities is the large volume Of
investment money available as COM
pared with the volume of new Sc
curities available for purchase. This
situation will continue until such time
as the increasing f1otation of new
securities for private capital develop
ment furnishes a normal outlet for
corporate and individual savings.
AS soon as new corporate issues
reach considerable volume. interest
rates will begin to rise and the prices
of high grade securities-and of
Government bonds-Will decline. In
view of still existing business uncer-
tainties it may be quite some time
before significant change occurs,
he asserted.
Booker Firm 10 Years Old.
Y. E. Booker g. Co., investment firm
In the American Security Building was
10 years old yesterday, having opened
for business on July l, 1925. 1t has
been decade of steady business eX-
pansion and the members deserve
many congratulations.
Since the concern was organized
the country has passed through the
greatest stock market boom ever
known and also the most far reaching
world depression in all history, two
most interesting, exciting and trying
financial periods.
The partners in Y E. Booker g. Co.
are Y E. Booker and Harry W. Finney,
and George Hewitt Myers, special
partner. 1t is worthy of special note
that all the members of the staff
who went with the company at the
time of organization are still connected
with the firm today.
Y. E. Booker, head of the concern.
Is president of the Washington Stock
Exchange and is also on the board
of governors of the Investment
Bankers Association of America, being
especially active in the southeastern
group.
Market Trend Still Upward.
In mid-year appraisal of business
and security market prospects, pre-
pared for E. A. Pierce & Co. New
York Stock Exchange firm with a
Washington office, by Standard Sta
tiStics Co., it is held by Lawrence H.
Sloan that the upward business trend
which started in 1888, should con-
tinue for the next two or three years.
That does not mean, he says, that
there will not be temporary setbacks.
He says the recovery in the demand
for new automobiles has been the
greatest single factor in the recovery
in aggregate business activity. He
thinks it is time to quit talking about
the capital goods industries being
permanently stymied' because of po-
litical conditions. although the con-
suner goods industries have played
the stellar roles in the business re-
covery so far.
In his opinion the main trend in the
stock market should be toward further
expansion. This cannot be guaran-
teed, the writer adds, although he be-
lieves it the safest premise for the
common stockholders. If this is a
valid premise, he comments, larger
corporation earnings. larger corpora
tion dividends and enhanced common
stock prices should logically follow
in due course.
Honestly managed, competently
operated American business enterprises
still have period of growth ahead
Of them" the author declares in con-
clusion.
Sales and Collections Up.
Market gains in total net sales and
a slightly higher rate of collections
on accounts receivable in May, 1886,
as compared with May year ago, are
reported by manufacturers to the Ma
tional Association of Credit Men and
the Bureau of Foreign and Domestic
Commerce.
Total net sales of 588 maaufac-
turers throughout the country report
ed an increase of 18 per cent in May
over May, 1885. Eight of the IA in
duStry groups reported higher aver
age collections, the meat packing in
duStry having the highest percentage.
Another joint report from the Ma
tional Credit Mems Association and
the Commerce Department states that
while wholesale trade was better in
May this year than last, collections
ratios were practically unchanged.
Collections we're the best for electrical
goods, furniture and other house fur