Evening Star Newspaper, July 14, 1931, Page 12

A—12 FRANCE HOLDS REIN ON PURSE STRINGS Continued Flight of German Capital Becomes World Trade Menace. Bpecial Dispatch to The Sta NEW YORK, July 14—The situa- tion in Germany grows darker. The flight of German capital continues, and there were more withdrawals of French and other foreign credits Saturday. Dr. Hans Luther's attempt to negotiate an international credit apparently is un- successful, and there is some doubt whether certain American credits fall- ing due in the next few days will be renewed. Before extending help to Germany Prance would llke certain political guarantees. She wants Germany to stop building battleships and to end the economic agreement with Austria. It is considered improbable that any German government can give these guarantees. Many European statesmen think Prance is pursuing a relentless policy which history may justify, but which et this time looks absolutely selfish These critics of the French say that because of her enormous stock of gold France is in an impregnable financial position. Here is the situation as they see it. Balances Withdrawn. The first taste of power came to France in 1927 when without any rea- sonable excuse, she started to draw down her balances in England, thereby embarrassing _the Bank of England The Federal Reserve Bank had to go to| the aid of England then. To prevent the union of Austria and Germany last month France withdrew her balances from Austria, thereby pre- cipitating the present trouble. To force Germany to do her bidding France is now withholding financial aid to that country. To force England to use her influence with Germany to give in to the French wishes France is again withdrawing money from England. There have been heavy withdrawals of French money from London during the last two or three days. The ex- change rate on Paris has been forced to 123.89, which is near the gold ex- rt point. Should the rate go a little m&her. England will be forced to ship gold to France she sadly needs at home. With a long history of invasions the French have always yearned after abso- lute security. They believe that at last it is within their power to secure guar- antees against attack for generations to come. Every French loan made abroad Tas political strings. Investment in pri- vate enterprises, which forms the basis of American and British financial pol- jey, is not done in France. Money loaned by France to other countries must bring in return some political ad- vantage. With such political ideas and the ready money to put them into prac- tice, Prance has become the greatest political power in Europe today. But France can make the very serious mis- take of forcing Germany to complete desperation. Market Profit. ‘The United States has become a great ereditor nation now, but has a lot to learn about international banking. American investors subscribed to $1.082,- 000,000 foreign securities last year and foreigners bought back at a great dis- count stocks and bonds previou: placed here in the amount of $806,000.- 000. In other words, the foreigners sell securities in the United States at or around par and then buy them back at greatly reduced prices, saving interest charges, leaving fewer bonds to be re- | deemed at maturity and making a nice | market profit in the bargain American tourists spent $811,000.000 abroad in 1930, against $868.000,000 in 1929. The Department of Commerce finds that this decrease was not caused by fewer tourists but by greater indi- vidual economy in expenditure. As a matter of fact, more Americans went abroad last year than ever before. Maybe Americans have dropped “the drunken saflor” ideas about spending money abroad. Such spending earns the contempt, not the respect, of for- eigners. One man who went to London for @ few months hired a chauffeur. “How much a week do you want?” He asked the English driver. “Two pounds sir,” sald the Englishman respectfully. “I'll give you four pounds,” said the Ameri- can employer who could not under- stand why his chauffeur took advantege of him right and left. Short Sale Menace. ‘The financial world does not entirely agree with President Hoover regarding short selling in the grain market. Try- ing to teach the President Wall Street's | particular brand of economics brokers | are telling him how selling is. circumstances, valuable short Maybe it is, under controlled but unbridled short selling is a menace and there is no | argument about it. The president has been particularly | incensed over the short selling in the stock market and perhaps, if the truth could be told, his power was behind the New York Stock Exchange when it sent out questionaires on the bears. If short selling is absolutely necessary it might be helpful at least to declare a moratorium on the practice during this period of stress and let the system function normally when the world is on its feet again. The false rumors spread in Wall Street and in the finan- clal district in London in recent months shows plainly that there are certain people making capital out of the world misfortunes. Bank Earnings. Essential but unprofitable services rendered by American banks levy an annual cost of approximately $300,- 000,000 against bank earnings, accord- ing to Frank W. Simmonds, deputy man- ager of the American Bankers’ Associ- ation, in a book on commercial bank management issued by the Bank Man- agement Commission of that associa- tlon. Much of the money is expended in competition for new business which i8 often unprofitable. “Future gains in bank income,” says Buying for Profit BY GEORGE T. HUGHES. A stockholder is not individually re- sponsible for the debts of the corpora- tion. Every one knows that, and stocks are bought in small lots on that under- standing. But many forget it when it is a case of one corporation buying stock of another corporation. Somehow we get the idea that be- cause one railroad, for instance, buys a large interest in another railroad that the purchaser assumes liability with reference to the road into which it buys. When a public utility holding | company acquires & block of siock in an operating company, it does not thereby guarantee expressly, or by im- plication, the profits of the corporation in which it invests. And yet specu- lators, and very often investors, follow the example of the holding company and buy shares in the operating com- {pany, thinking that the investment Is isafer by the very fact of the acquisi- tion by the holding company. | Of course, if there is an actual con- one organization is assumed by the other, it is quite a different matter. But simply because a corporation makes an | Investment is no more indication that the investment is sound than if an in- dividual makes it. As a matter of fact, corporations make mistakes, not per- haps as disastrous ones as the average small, uninformed investor, but they make them just the same, and some- times on a large scale. Recent history furnishes many examples of such mis- takes. ‘The point here is that in buying stocks, whether for investment or for speculation, the buyer should look into the merits of the commitment and not rely solely on those who happen to be assoclated with him. Very probably the corporate buver can afford to take a Inss which would be ruinous to the in- dividual. Possibly the corporate investor has other objects to serve than safety of principal and continuity of income. It may be profitable to the corporation to pay a large® price for stock in a smaller competitor because of trade rea- sons, whereas there is no such compen- sation to the individual. This is a principle constantly lost sight of by in- experienced investors. Buy securities because they are sound, not because some one else is buying them. (Copyright. 1031.) [A. T. & T. EARNS $4.89 PER SHARE IN HALF YEAR By the Associated Press. NEW YORK. July 14.—The American Telephone & Trlegraph Co. in the first six months this year earned 39 cents & share in excess of its dividend require- ments of $4.50 a share for th> period. Net income for the six months ended June 30, as reported today, was $89.- 109,843, ‘equal to $4.89 a share on the average sharcs outstanding during the period compared with $81.796.812, or $572 a share on a smaller capitaliza- tion for the corresponding period of 1930. June quarter net income was $43.- 924,430, equal to $2.38 a share on 1 480,174 sharcs, compared with $41,17 873, or $2.77 a thare on 14,897,506 shares in the June quarter of 1930. solidation, and the indebtedness of the | THE - EVENING IWILL GIVE BANKS ADVICE ON BONDS Minneso'ta Defiartment | Forms Division to Protect Smaller State Institutions. | BY C. B. UPHAM. ! An experiment in bank supervision in { the State of Minnesota is attracting | the attention of bankers throughout { the country. The new commissioner of banks in that State, J. N. Peyton, a successful Duluth banker, who accepted the position in the hope that he might be able to work out some plan for bet- tering the condition of State banks, hes set up in the department a bond ad- visory division. Heretofore country bankers, in Min- nesota as in other States, have been de- pendent upon their own judgment as to the bonds which they should buy for their secondary reserve, It has fre- quently been elleged that they have not_“bought” bonds, but that bonds have been “sold” to them. Corre- spondent banks in the financial centers SPECIAL /| 6-DAY | | ALL EXPENSE TOUR JULY 18th TO CHICAGO, i DETROIT CLEVELAND WITH A CRUISE ON LAKE ERIE $49.50 Covers all expense from Wash- ington, including railroad fare, sight-seeing, meals and hotel accommodations. Lv. Washing- ton 12:30 noon July 18th. Re- turning arrive Washington, July 23rd. Deseriptive Folder at Ticket Offices ROUND-TRIP EXCURSIONS JULY 18th-19th $10.50 | Akron-Cleveland Lv. Washington 7:50 P. M. Sat- urday. Returning lv. Cléveland 9:15 P.M. Akron 10:25 P.M. Sunday. $12.00 " CINCINNATI Lv. Washington 4:05 P.M. Sat- urday. Returninglv.Cincinnati 6:13 P. M. Sunddy Tickets Good in Coaches Only SUNDAY, JULY 19th || $6.00 PITTSBURGH McKEESPORT BRADDOCK | Lv. Washington 12:18 A.M. | Returning same day. | Store Closed Saturday 79 | USE YOUR CREDIT- have in many cases been helpful, but it is true that many bonds have been bought by country banks in complete reliance on the word of the salesman. Lists Valuable ‘Securities. The result has been that banks in the Ncrthwest, and probably in other sections as well, where investment in bonds is a relatively recent practice, have accumulated a portfolio of | troublesome character, purchased most- | Iy on & yleld basis. It is referred to by | Commissioner Peyton as “the present | unfortunate bond situation in the ma- | jority of the State banks.” | 7 The Minnesota commissioner has not been content, however, to stop Wwith the criticism of bond holdings. While in- isting upon write-offs on present in- restment accounts, he is setting up an agency to be of constructive value in substituting a really valuable list of securities which he believes to be es- | sential as a secondary reserve for coun- | try banks. Many country bankers have |adopted the attitude that, having suf- | fered in their initial venture in bond | buying, they will revert to their former practice of omitting this item from the investment portfolio altogether. Several States have legal lists of |bonds that are eligible for purchase by | savings banks. Others have statutory | requirements with respect to the pur- chase of bonds by savings institutions | without _actually naming the specific | ssues. |on record to set up as a division of |the bank supervisor's office an organi- |zation which helps country banks in ‘Lhelr bond purchases. If supervision is to include advice on room. 100-pc. set of dishes. But Minnesota is the first State | STAR, WASHINGTON, D.. C,, TUESDAY, investments it might also include ad- vice on loans and the extension of credit generally. Indeed, some see in this Minnesota plan a step toward govern- mental management of banks. Mr. Peyton, of course, has no such goal in mind. He is merely trying to remedy one of the defects that the banking fra- ternity has not itself removed. The country banks in Minnesota that are connected with the group banking sys- tems have a bond advisory group to consult. The State is now supplying a similar organization for those outside of groups, available also to the group units if they so desire. Other States are watching the ex- periment with interest, and its success is likely to mean that it will be adopted elsewhere. The count?' banks will then have available a®State agency which will provide them with the same sort of security analysis that the re- search departments of the city banks | place at the disposal of those insti- tutions. (Copyright, 1981 P CAR DEMAND DROPS. NEW YORK, July 14 (#).—The Great Lakes Regional Advisory Board esti- mates freight car requirements for the third quarter for the region will be | 472,968 cars, compared with 598,443 cars jn the like period of 1930. BOURSE CLOSED TODAY. PARIS, July 14 (#).—Holiday on the Bourse today, Bastille day. JuLY 1931 14, cents per thousand cublc feet at the | city gate. This is the same price charged by transporting companies to | distributing companies in Kansas, and similar contracts are being presented OPPOSITION T0 GAS PIPE LINES GROWS, . oo co=e. .. pal Utilities is up in arms because rep- | Tesentatives. of natural gas pipe line companies entering that State have de- clared it to be their policy not to sell gas at wholesale to cities for distribu- | tion through municipally owned sys- tems, but only to private holders of | franchises. The association has adopted | a resolution calling upon Congress and | the State Legislature to enact legisla- | M(})‘n ;10 c(‘)n:pl‘l the pipe line companies. - whether interstate or intrastate, to sell BY GEORGE E. DOYING. to municipalities without discrimina- The forward march of natural gnsjflOH- | through pipe lines extending hundreds| The Illinois group has been investi- | r ” gating “the situation with respect to OfR:?:'S‘:::m '::l'm:e;zp;:‘m::x“;“:‘::gfi’uml gas imported into Kansas and Targely” results Trom the popular belief | have been made i c’:nfltifiuflwe?;{c‘: th-‘g'c natural gas is tfheapert e :Y:e‘pt;‘ldh by the distributing companies, | artifieial produet, whereas the distri- | which amount is used as the basis ft buting utilities are undertaking to make | fixing rates to consumers. It w;s Lg: the substitution without & consquent | consensus at the organization meeting reduction in rates. {of the Illinois municipalities that un- Forty municipalities in Illinois have less the contract price between the car- ;rganlapd the “People’s Natural Ges rier and the distributor is controlled rotective Alliance of Illinois” for the . before the contract is made, there w avowed purpose of learning something | be no opportunity to regulate it there- about the actual cost of natural ges to | after. ¢ the local distributing companies before| The Panhandle Tllinois, which is a the Tllinois Commerce Commission ap- |subsidiary of the Panhandle Eastern | proves contracts between the local utili- | Pipe Line Co. and affiliated with the tles and the Panhandle Illinois Pipe |Columbia Gas Co. has received au- | Line Co., providing for a rate of 40! thority from the Illinois commission to lllinois Cities Form Alliance to Probe Cost of Pro- ducing Fuel. construct a pipe line across the State and to serve 78 municipalities. Thise service may be rendered directly in communities that now have no gas service, but is to be given only through local utilities in territory now served. Contracts Offered. Contracts have been submitted for approval of the commission for service to the utilities serving the Springfield and Peoria territories, but at hearings before the commission no positive evi- dence of the cost of rendering the service was presented. A Panhandle representative stated that gas will cost 6 cents per 1,000 cubic feet at the wells and that it will be transported about 860 miles, involving “very large ex- penditures.” Strenuous objections to approval of the contracts were made by the cities of Springfield and Peoria in the absence of any provision for lower rates to con- sumers. Opposition also is developing to the adoption of the Therm basis for fixing rates for gas. This is a method of meas- uring gas by its heating value, and util- ities in the Central States, particularly Ilinois and Indiana, are adopting the newer system. It is claimed by the util- ities thath the term rates have been ar- ranged so that there will be no change in the consumer's bill, and in cases where the new basis has been approved it bas peen provided that a customer shall have the option of continuing on the cubic foot basis if he desires. (Copyright, 1621.) Australia plans to help the small man who has mortgaged his home. 10-Piece Living Room Outfit, $79 A roomful of furniture including the following: Settee, Bunny Chair and Clud Chair upholstered in lovely velour, occasional table, bridge lamp and shade, maga- zine rack, smoker and two fancy pillows. A room-size rug FREE. NATIONAL outfit § AL [E 10-Pec. Bed Room Qutfit As Pictured Below Dresser, vanity, chest of drawers, new style bea,$ bench, ‘spring, mattress, bed lamp and 2 pretty Ces= ol = 114-Piece Dining Outfit, $99 A handsome dining outfit that will completely furnish your dining The outfit comprises buffet, server, china closet, extension table, 5 side chairs, 1 armchair, buffet mirror, 2 buffet torchieres, table lamp and Consists of the following guaranteed pieces: boudoir lamps. A beautiful room-size rug free. ,s’||’20ubf“b SALE During July single N 11-Piece Davenpdrt Outfit Just look at the handsome pieces 9 E shown below! Full size bed-dav- enport, armchair and bunny chair, coffee table, 2 book ends, end ta- ble, smoking stand, magazine rack, bridge lamp and lamp shade. - <y | Beautiful Rug Free with the purchase of any on this page. and August FREE (hONE outfit advertised Mr. Simmonds, “Must be derived l'l"}mJ oo | = he(relv;;vfr;’rfd little tapped sources, while . A% _— 10 P B d O tf't established revenues are conserved by | ¥ B \ 2 m the elimination of wasie and loss. NEW YORK ’\ ne kg a/ Y {'«f‘ 4 = = Ce €edroo utix el Lo S - wo s amount! rge dresser, Ol . the willingness of bank customers to | ELIZABETH semi-poster bed, graceful vanity, roomy 3 Radio meet reasonable demands. Institutions | chifforobe, coil spring, mattress, bench, bou- that have taken the leadership in th Lv. Washington 12:00 Midnight. doir chair and a pair of boudoir lamps. Free movement to transfer the costs of sor ice to those for whom they are peI- | formed attest the ability of equitable | charges to transform loss into earning power. | (Copyright, 1931. by the North Newspaper Alliance, Inc Returning same day. $3.00 Cumberland $2.00 Martinsburg INDUSTRIAL POWER SALES. | $2.75 Hancock oF consoLIDATED DRop| | $1.50 Harper’sFerry ’ Lv. Washington 9 AM. Sunday. Returning same day. Tickets Good in Coaches Only Week-End Excursion $8.50 to NEW YORK AND RETURN Go any Saturday. Return to and including 7:00 P.M. train Sunday from Jersey City Ter- minal. All Times Shown Standard BALTIMORE & OHIO with the purchase of any three outfits shown on this page. ) Amerizan Bpecial Dispatch to The Star. BALTIMORE, July 14.—Industrial! wer sales of the Consolidated Gas, ectric Light & Power Co. of Balti- ‘more, exclusive of power Aqulled to the Bethlehem Steel Corporation and the ¢ Baltimore Copper Smelting & Rolling ! Co., amounted to 35.886,659 kilowatt | hours in June, as against 37,989,601 kilowatt hours in June, 1930, a decline of 5.4 per cent, it was announced today. | Industrial power saies for the first | six months of 1931 totaled 211 5 kilowatt hours, as against 231,959,336 in the corresponding half last year. Sales of gas in June for industrial and commercial purposes totaled 221,- 602,000 cuhic feet, as against 215,758,100 cubic feet in June a year ago, an in crease of 2.71 per cent. For the first these sales totaled 1.629,773,- 700 cubic feet, a st 1,616,399,100 in initial half of last year. 7-Pe. Outfit Three-piece suite, covered all over in 100% mohair, with artistic tufted backs; walnut veneer Colonial sec- retary, end table, bridge lamp and shade. Al seven pieces for— *129