Evening Star Newspaper, December 9, 1934, Page 75

News of Markets Pages 1 to 4 Part 5—12 Pages D.C. BANK REVIFWS STEADY GAINS ON I5TH ANNIVERSARY ‘American Security Has Seen Deposits Climb Above $40,000,000 Mark. 132 ACCOUNTS TOTALED $260,000 IN EARLY DAYS More Than 76,000 Now Repre- sented—Corcoran Thom Is Third to Serve as President. BY EDWARD G. STONE. Today is the 45th anniversary of the opening of the American Security & Trust Co. In contrast with 132 depositors and $260.000 in deposits in the early days, the trust company has recently witnessed deposits mount to new high levels above the $40,000,000 mark, resources of $47,757,971, and the number of individual depositors in- crease to more than 76000. These figures represent only the banking department and do not include as- sets controlled through the trust de- pertment, which at the present time are in excess of $119,000,000. Present deposits are about 150 times greater than in the pioneer days. Chartered originally under the laws of Virginia on October 12, 1889, and later under the general incorporation law enacted by Congress for trust companies within the District of Co- lumbia, the company was authorized to conduct a general banking, trust, safe deposit and storage warehouse business. It was also authorized to, ect as fiscal and transfer agent and registrar of securities. On December 9, 1889, the company opened its doors for business at 1419 G street northwest, where it continued to operate until the Fall of 1891, when the business was transferred to a new location at 1405 G street northwest. On this site a new building, designed especially for banking purposes and large enough to adequately care for the company’s young, though promis- ing, bpisiness, had been erected. But it was not long until increased facili- ties were needed, and in the Fall of 1895 an annex of the same style of architecture was built. This new ad- dition provided quarters for the execu- tive offices, trust department, and the newly established women's depart- ment, which at that time was con- sidered an innovation in local bank- ing practices. Larger Offices Required. In 1905, the company transferred its business to a new and commodious home on the northwest corner of Fif- teenth street and Pennsylvania avenue northwest. For a quarter of a cen- tury this building housed the main office departments, but was finally outgrown, and in April, 1930, work was begun on anether extensive build- ing program which had ‘as its ob- Ject the remodeling of this banking room and the erection of a combined office and bank building adjacent thereto. This building program cov- ered a period of more than two years and on May 9, 1932, the enlarged main office building was opened to the public. The interior of the new banking room is an outstanding achievement of beauty. Enlarged through its con- nection with the main floor of the new addition, the banking room is one of the finest and the most spacious in this section of the country. ‘The first, second and third floors of the new building are used by depart- ments of the company, while the lunch Tooms and board room occupy the entire tenth floor. The board room is the scene of frequent meet- ings of financial and civic organiza- tions. The safe deposit department occupies the downstairs floor where more than 30 coupon rooms have been provided for the convenience of cus- tomers. Four Branches Maintained. In addition to the main office, the company maintains four branch of- fices in principal sections of the city. Three of the offices were acquired at the time of the merger with the Home Savings Bank in 1919. They are known as the Central, Northeast and Bouthwest Branches and located, re- spectively, at Seventh street and Mas- sachusetts avenue northwest, Eighth d H streets northeast and Seventh d E streets southwest. The North- west Branch, located at 1140 Fifteenth street northwest, was established in 1923, The original capital stock of $1,250,- 000 was increased to $3,000,000 in 1903 and in 1919 was further increased to $3,400,000. The surplus account has been built up to equal that amount and now the combined capital, sur- plus and undivided profits total more than $7,400,000. ‘The storage department, located at 1140 Fifteenth street northwest, re- mained an integral part of the com- pany until January 16, 1907, when the stockholders approved a proposal to organize a storage company to take over the greatly increased storage business. The Security Storage Co. was soon ircorporated and the ware- house properties and storage business transferred to this company. Since its inception the trust com- pany has kept pace with modern ideas and practices in banking. Among its many departments are: Commercial banking, savings, trust, foreign ex- thange ard securities, safe deposit and real estate departments. In more re- cent years there has been a further centralization of working units of the company through the establishment of the department of public relations, which includes the divisions of busi- ness extension, credit, central files and analysis; trust investment, purchasing, personnel departments and the library. Corcoran Thom President. Corcoran Thom is president of the nstitution, succeeding the late Charles | J. Bell, who in 1228 relinquished the post after 35 years as active head of the company. Mr. Bell's predecessor was Alexander T. Britton, who served as the first president of the company. Mr. Thom is also connected with many well known companies, being director of the Washington Gas Light Co., Security Storage Co. and Real Estate Title Insurance Co. He is treasurer and member of the Chap- ter of the Protestant Episcopal Ca- thedral Foundation, on the Board of Trustees of the Corcoran Gallery of Art, National Symphony Orchestra Association, Louise Home, American (Continued on Third Page.) Active Banker THOM PRESIDENT OF TRUST COMPANY SINCE 1928. CORCORAN THOM. 443 MORE LOANS ADVANGE HOUSING DRIVE IN CAPITAL Building and Loan Group Reports Further Gains During November. A gain of 1,121 new accounts in the month of November by the building and loan associations of the District was reported by the District of Colum- bia Building and Loan League Sat- urday. The gain in assets for the month was $748,000, making the total gain for the last 11 months $4,456,000 and bringing up the total of all assets to $94.614,000. There were 445 new loans made dur- ing November, for a total o~ $1,707,000, making the total of loans made since the first of the year 4,255, totaling $14.270,000. In commenting on the report. Carl J. Bergmann, president of the league, said: “These figures are convincing evidence that the long-awaited up- turn in the home building, buying and repairing field has definitely come. The average American family always has been ‘home conscious’ and, as a rule, only postpones the owning of a home or neglects the maintenance of it in times of distress or financial insecurity. This normal interest has been greatly stimulated and encour- aged in recent months by the pub- licity program and materials put out by the Federal Housing Administra- tion, and the Better Home Exposition, which has been in progress the last two weeks, has been a practical dem- onstration of the possibilities of im- provement in all types of homes. “Every indication points to an in- creasing demand on the part of the home owner, or the prospective home owner, for funds with which to buy, build or improve their property: and the building and loan associations of the District, with ample funds and with their long-time amortization plan of loan, anticipate no difficulty in meeting all demands and speeding the drive for re-employment in the con- struction and building trades.” CHRYSLER BUYS SHARES OF COMMERCIAL CREDIT By the Associated Press. NEW YORK, December 8.—The Chrysler Corp. was reported in Wall Street to have acquired a substantial minority interest in the Commercial Credit Co., a leading installment financing organization, with headquar- ters in Baltimore. Commercial Credit finances sales of leading Chrysler products through its approximately 140 local offices in the United States and Canada. It also finances sales for other au- tomobile makers and for products out- side the motor field. INDIA TO SHIP GOLD. NEW YORK, December 8 ().— India supplied another $1,000,000 to the tide of gold flowing to this coun- try yesterday, with the arrangement by a local banking institution for such a shipment from that country. This transaction brings the total shipped or engaged during the present movement to $161,000,000. OPPOSES CURB SALARY. NEW YORK, December 8 (#).—E. Burd Grubb, president of the New York Curb Exchange, stated the ex- change governors have given no “offi- cial consideration” to the proposal of individual members that the presi- dency of the organization be placed on a salaried basis. He added that he would oppose the proposal if it came before the governing board. FINANCIAL AND CLASSIFIED he Sunday Star WASHINGTON, D. C, BRITAIN EXPECTS YULE BUSINESS 10 REACH NEW HIGHS Royal Wedding Launches Most Liberal Spending in Many Years. NEW DEAL IN FRANCE TO FOLLOW U. S. PATH Flandin Hopeful Despite Signs of Trade Crisis—Louvre Loss Is First in 79 Years. Special Dispatch to The Star. NEW YORK, December 8 —Cables and radio dispatches to Business Week give the following survey of business abroad for the week ending today. LONDON. — “Christmas shopping, which got an early start this year when the crowds which came up to London to view the royal wedding utilized the visit to buy in the capital, is expected to touch new highs this year. Spending is freer than in many years. And in the provingial centers there is a revival of the old custom of pantomime casts in the shops and in the social centers. “Aviation shares are buoyant on the continuing pressure from the public for a better organization of civil avia- tion. The Parliamentary Air Com- mittee has now taken up the plea and proposed the appointment of an un- dersecretary for civil aviation, pro- vision immediately for more landing fields and better ground organizations at airports, “London has been considerably stirred over the announcement last week of a plan to form a British com- pany to go after cheap transatlantic passenger business, and over the gov- ernment's firm opposition because of the subsidies granted to the Cunard- White Star Lines. Project of the new company was to purchase the three old Red Star liners now on the mar- ket (Pennland, Westernland and Bel- genland) and build two new vessels before 1937. With these five ships, it was proposed to offer $50 crossings. Although the project has been banned, it has done good by emphasizing the possibility of cheap competitive At- lantic fares.” PARIS—“In the same week that the great Paris department store— Louvre—announced the first loss in 79 years of business, thus reflecting the seriousness of the economic crisis which has finally reached France, and control of the great Citroen automo- bile works passed to creditors, Premier Elandin told his fellow countrymen over the radio that ‘deflation in France is nearly over,’ that ‘France must work by every means to adjust her internal production and consump- tion in such a way that all producers should reap equal benefits,’ that agri- culture will be regulated as severely as industry for the good of the coun- try so that ‘our gift to poor children can be cheaper bread.’ “Flandin’s new deal for France will frankly follow the example set by President Roosevelt’s N. I. R. A. In- dustries will be grouped under codes. Production will be regulated. Credit will be extended. with or without the aid of banks. Surplus wheat will be purchased by the government through 4 2,500 million franc loan whose serv- ice charges will be met with proceeds from a processing tax of 7 francs a quintal for flour, paid by mills. “Colonial trade will be pushed fol- lowing a great colonial conference now in session in Paris. Foreign trade will be encouraged in a series of new trade agreements to be negotiated as soon as possible. Soviet orders are ex- pected to double following the trade conference now in session. Special credits are likely soon to finance Soviet business.” BERLIN.—“Being at the debtor end of the agreement, Germany's satis- faction over the Saar pact is registered with a little more reserve than in the rest of Europe. The settlement is, nevertheless, the best bargain that Germany could expect, and is an im- portant move toward the impyovement of Franco-German relations and gen- eral easing of European tensions. It is also considered in Berlin a good omen for the armament parleys. “Securities tended to react favorably to the Saar settlement, but were held back by the simultaneous announce- ment of drastic new government reg- ulations of the banking system and limitation of dividends to 6 per cent. Banks are not to be na. -nalized, de- spite a Nazi tendency in this direc- tion in the last two years, but they are to be strictly regulated by a central government office. Stock exchanges will be reduced in number. Dividends will be limited to 6 per cent and the balance of profits beyond this figure must be deposited in the Gold Dis- count Bank, through the purchase of government bonds. It is estimated in Berlin that this regulation will bring 40,000,000 marks into the hands of the government for relief purposes.” MARKETS REFLECT IDLE FUNDS GOING INTO INVESTMENTS Bonds and Preferred Stocks Strong as Common Shares Waver. STEADY DOLLAR SPURS DEMAND FOR SECURITIES Wheat Ends Week 13 to 31 Cents Higher and Corn Soars Nearly 2 Cents. BY FREDERICK GARDNER, Associated Press Financial Writer. NEW YORK, December 8.—Bonds and preferred stocks were stalwart pillars of financial markets this week as idle funds sought investment out- let. Common stocks wavered toward the end of the week, after a moderate advance, but demand for income-pro- ducing securities continued good. Rather active trading In shares, without much progress in the list generally, spread the impression that some distribution was taking place following the recent upswing. Traders became cautious and reduced their holdings. Stocks on the whole, in consequence, lost a little ground, while bonds on the average held most of their gains to the end. Highest grade issues as a group virtually duplicated peak levels made last Summer. The Standard Statistics Co. average for 90 stocks | inished the week 1 point lower at 74.7. The bond index was up nine- tenths of a point. Week's Volume Jumps. With Wednesday's turnover {n stocks the largest since July at 1,630- 913 shares, the week's volume in the Stock Exchange increased to 6,232,451 from 4,861,100 the preceding weex. The Thanksgiving holiday the week before partly accounted for the dif- ference. Trading in bonds was broad and active. The market was stirred by the success of the Treasury’s offerings at the start of the week. Heavy de- mand for the Treasury obligations and the evidence they presented that yields on investments were dwindling, set in motion buying through the bond list. A good deal of investment demand spilled over from bonds into preferred stocks and dividend-paying common shares. Most stocks moving into new high ground for the year were in those categories. Latest trade statistics continued to build up a background of business fm- provement for the security markets. But visible gains were not dramatic enough to excite much speculation in stocks. Stimulated by Grains. Wednesday’s broad share market drew much of its inspiration from a sharp rise in grain futures. Corn, wheat and other grains have been swept by recurrent buying waves as imports of foreign grains and small domestic deliveries focused attention on the limited supplies. Wheat futures in Chicago ended the week 17 to 3% cents a bushel higher and corn held gains ranging nearly up to 2 cents. Elsewhere appreciation in commodity prices was slow and re- stricted. Cotton futures in New York for the week lost 5 to 25 cents a bale, The healthy appearance of the dol- lar in foreign exchange dealings en- couraged the flow of capital into se- curity markets and attracted more funds from abroad, as was apparent in the engagement of additional amounts of gold for shipment to New York. European gold currencles had diffi- culty maintaining their ground against the dollar and the British pound fell 2 cents to around $4.95. But foreign exchanges were not visibly perturbed by the Balkan dispute and the resur- rection of war fears in that sector of Europe. INCOME TAX EXPERT TO ADDRESS BANKERS Charles H. Furst, jr., of the Audi- tors’ Division of the Income Tax Bu- reau, will address the auditors’ sec- tion of the District Bankers' Associa- tion at the December meeting to be held next Thursday evening at the Hamilton Hotel. He will talk on “De- preciation,” a subject of particular importance to all aduitors. An un- usually large attendance is antici- pated. Earle Haycock is chairman of the section this year. BUDD TO INCREASE SHARES. NEW YORK, December 8 (#).—The New York Stock Exchange has re- ceived notice from the Edward G. Budd Manufacturing Co. of a pro- posed increase in authorized common stock from 1,100,000 shares to 1,600,~ 000 shares. Intense Interest Aroused in Plant Modernization At Eleventh Annual Power Show in New York BY JOHN A. CRONE. Special Dispatch to The Star. IW YORK, December 8.—Ex- ecutives today are showing more interest in plant mod- ernization than ever in Ameri- can history. They realize they must make better use of their raw materials, such as coal and water, if dividends are to be maintained, ac- cording to Charles F. Roth, co-man- ager of the eleventh National Power Show. “Industrialists today reslize,” Mr. Roth said, “that they must make im- provements in power, in its genera- tion, distribution and use.” They tell me that our show is more interesting this year. Exhibitors have put more thought on educational displays. The show is designed more to educate than to sell. The transition of energy was por- trayed at the show through a talking beam of light. In this apparatus, sound vibrations are converted into current changes, which in turn are applied to a special Neon crater lamp. ‘This lamp gives off light that changes P in intensity with the current or, in this case, with the sound vibrations of a phonograph record. The light is reflected, over a dis- tance of 46 feet, by a parabaloid mirror on a phototube. The phototube con- verts these light changes back into current changes, which, when ampli- fled, operates a loud speaker. You “hear” the light that strikes the photo- tube. A person or object crossing the beam of light at any point stops the music. ‘This experiment, as developed in the iesearch laboratories of the General Electric Co., has been performed over a distance of 46 miles from mountain top to mountain top; also between a Navy dirigible and the ground and from a headlight on a moving loco- motive to a railroad station several hundred feet away. It remains to be seen how widely this principle will be practically applied. “What may now appear to be a scientific curiosity often is put to many practical uses within & short time,” Dr. Roth observed. “As you recall, it was just a few years ago that = the photo-electric cell was shown here as a scientific curiosity. Today it has hundreds of applications.” At one booth is shown what is prob- ably the smallest steam engine ever constructed. The engine measures 2% by 1% inches, the flywheel being less than an inch in diameter. It is a horizontal reciprocating type of engine. Contrasting with this baby engine was a new model offered by a mid- western company and said to be the highest speed steam engine ever ex- hibited. Only men directly from the factory could fully explain its com- mercial advantages. This four-cylin- der engine, weighing 3,150 pounds, was capable of delivering 165 horsepower at 900 revolutions per minute. It re- quires from one-sixth to one-tenth the floor space required by most steam engines of equivalent capacity. Another engine used any sort of low grade oil. Its advantages were said to be low initial cost, low operation costs, longevity and small space required for its horsepower capacity. (Copyright. 1934.3 A SUNDAY MORNING, DECEMBER 9, 1934 Classified Ads Pages 5 to 11 THE WONDERING SEASON NN W) TN TR S, (Copyright. 1934, New York Tribune. Inc.) ADVANTAGE SEEN FOR BANK LOANS Customers Likely to Receive Easier Margins Than Security Traders. By the Associated Press. NEW YORK, December 8.—Impor- tant distinctions in the loan values of securities which will give the indi- vidual banking customer permanent advantages over the security trader operating on margin are being pre- dicted in informed banking quarters here on the basis of private Wash- ington advices. Power to regulate the extension of credit on securities through the banks was given to the Federal Reserve Board in Washington under the secur- ities and exchange act. While margin requirements of brokerage concerns already have been prescribed by the board under this power, to date no regulations have been issued covering the granting of credit by banks directly to their own customers. Prepares New Rules. The Federal Reserve Board is said to be preparing new rules allowing substantial differentials in favor of individual banking customers as to the collateral value of their securities even when the loan requested is for the purpose of carrying the security. A still greater value for borrowing pur- poses is expected to be allowed when the customer wishes credit for other than speculative purposes. The securities and exchange act now limits the credit which a broker can extend to a margin customer to 55 to 75 per cent of its value, with most securities falling into the former class. Following banking eriticism that such requirements were excessive where the loans were under direct supervision of the individual banks and where the purpose of the loan and status of the borrower could be scrutinized, the new requirements are expected to be easierd High Percentage Talked. Borrowers wil be required to declare the purpose of the loan in advance, and if their bankers agree, a loan of as much as 85 per cent of the cur- rent market value may be permitted, it is said. This high percentage probably will apply to loans where the customer has signified his intention in writ- ing to use the funds for commercial or personal purposes. Individual loans for use in carrying securities are expected to have a higher collateral requirement, but still substantially less than that required by brokers. FOREIGN EXCHANGES NARROW AND DULL Dollar Eases Slightly Abroad and Pound Later Holds Steady at New York. By the Assoclated Press. Foreign currencies were quiet and showed little change in terms of the dollar in exchange markets yesterday. In London the dollar moved nar- rowly and closed a fraction lower at 4.94% to the pound sterling. In New York the British currency held un- changed in later dealings at 4.945. In Paris the dollar was unchanged at an equlvalent of 6.592 cents to the franc, and in New York francs like- wise held unchanged in later trading at 6.59%5 cents, Bar gold advanced 4, pence to 140 shillings 8 pence in London, at which price ($34.77) a fine ounce approxi- mately $746,745 was pusshased, ’. Rayon Firms Rush Orders for Yarns; Supplies Are Low By the Associated Press. NEW YORK, December 8— Rayon makes a sharp contrast with the slowness of most indus- tries in emerging from the depths of depression. According to Dun & Bradstreet, Inc., most of the larger rayon producers are oper- ating at capacity and deliveries on many types of yarn cannot be made because stocks have been reduced to a minimum and old orders are absorbing the current output. Rayon, one of the new indus- tries of the post-war decade, con- tinues to expand on a world scale. World cutput this year is ex- pected to set a record, with ap- proximately 575,000,000 pounds turned out in the first nine months against 445,000,000 in the like period last year. | TAKOMA SAVINGS REDUCES INTEREST | Home Owners Will Get Six Per Cent Loan Rate, Beard of Directors Decides. Directors of the Northwestern Sav- ings & Loan Association of Takoma Park, Md., have voted to reduce in- terest rates to home owners to 6 per cent, in order to help the recovery program, it was announced yesterday by Secretary Howard S. Gott. The reduction is to be ratified by the sharehalders and it is to become ef- fective March 15, 1935. It will apply to existing loans and future loans. The association is more than 30 years old, has aggregate resources of $2,000,000, is a member of the Mary- land League of Building Associations, United Ststes League and Federal Home Loan Bank System. E. V. Crit- tenden is the president. The interest reduction will mean a reduction in the 7 per cent dividend rate to shareholders which has been maintained for more than 25 years. The company loaned $111,000 from July 1 to October 1, 68 per cent of this’ money being assigned for new construction or reconditioning, as an aid to the national housing program. —e CAPITAL TO BE REDUCED. NEW YORK, December 8 (#).—The New York Stock Exchange has re- ceived notice from the General Out- door Advertising Co., Inc., of a pro- posed reduction in capital represented by common stock to $10 from $20 a share. PLUMBING PRICES AT 20-YEAR LOW Boilers and Radiators Sold at About Half of Cost in 1926. BY FRANKLIN MULLIN, Associated Press Staff Writer. CHICAGO, December 8.—Prices of staple plumbing fixtures are at the lowest level in 20 years, a survey made | by the Plumbing and Heating Indus- tries Bureau showed today. Boilers and radiators are selling at approximately half of what they cost in 1926, tendency has occurred in the rela- tive prices of kitchen sinks, the sur- vey indicated. Using the 1926 price level as basic, with the index number of 100, the | bureau found that the index indi- cating relative prices for a 5-foot corner built-in bath tub varied from 97.1 in 1914 to 112.1 in 1920, 85 in 1928, 619 in 1932, 65 in 1933 and 55.1 in 1934. The incex for a 20 by 52 inch roll Tim one-piece sink, which stood at 65.8 in 1914, advanced to 91.1 in 1920, touching the high in 1926 and then declining to 93.2 in 1928, 71.5 in 1932, 75.1 in 1933 and 55.2 in 1934. The bureau said reports to it in- dicated the public is engaging n extensive modernization of plumbing and residential business properties, stimulated by unprecedented low prices, attractive credit provisions of the Federal Housing Administration and the Nation-wide interest in modernization. A leading manufacturer of plumbing fixtures reported sales for October, 1934, were 114 per cent in excess of sales the same month last year, |SUGAR REFINERS GET LOWER NET RETURNS By the Associated Press. NEW YORK, December 8.—The re- cent reduction in the price of refined sugar to 4.40 cents a pound brings the net return to refiners to the lowest point since May, 1932, according to statistics of B. W. Dyer & Co., sugar brokers. After deducting a cash dis- count of 2 per cent and the Pederal processing tax of 53'; cents a hun- dred pounds, the net return to the re- finer is 3.7777 cents a pound. In May, 1932, before the processing tax went into effect, the company states, the net return to refiners was 3.675 cents a pound, but since that time the price has been higher than at present. American Superpower Suspends Dividends on Special Dispatch to The Star. EW YORK, December 8.—The American Superpower Corp. is notifying its first preferred stockholders today that the market value of its assets as of November 30 pad fallen below its total capital, aking it necessary to suspend dividends under the pro- visions of the corporation laws of the State of Deloware. At tne same time the corporation announces that it is prepared to pur- chase for retirement first preferred stock at $53.50 per share from such holders as may wish to sell. It is depositing with the New Eng- land Trust Co., Boston, a sum of $3,000,000 with instruction' to pay $53.50 per share for such first pre- ferred stock as shall be tendered to it before the close of business Jan- uary 5, accepting and paying for the stock in the order of its receipt. The corporation reserves the right to accept more stock if tendered snd 4 First Preferred to extend the time for the tendering of such stock. All stock thus acquired will be retired and the capital of the corporation and the total dividend requirements of the first preferred stock will be correspondingly reduced. A similar situation, requiring the suspension of dividends on the first preferred stock, arose in July, 1932, when the market value of the corpo- ration's assets fell below its stated capital. Previously dividends had been paid continuously on the first preferred stock from the time of its issuance in 1924. During the latter part of 1932 the market value of the corporation’s net assets increased and made possible the resumption of dividends on Octo- ber 1, 1932, at which time a payment of $3 per share was made to cover the July 1 and October 1 dividends. Since that time dividends have been paid regularly up to and including the dividend which was pald on Oc- tober 1, 1934, and a similar downward | f TREASURY GIVEN STRONG SUPPORT; TRADE STILL RISES Heavy Oversubscription Is Hailed as Inflation Move- ment Recedes Sharply. GAINS BRING QUESTION OF INVESTMENTS SHIFT Expectation of Larger Profits Turns Attention to Common Stocks—Commodities Jump. BY CHARLES F. SPEARE. Special Dispatch to The Star. NEW YORK, December 8—The support which the banking community gave this week to the unexpected issue of long-term 3!y per cent Treasury bonds reflected the same sort of con- fidence in the administration and in its fiscal policies that revealed itself in the election figures last month. It is true that the new issue was properly primed to excite the sup- porters of this form of investment, for it was offered better than 1 per cent under the 3'i per cents out- standing. The Treasury officials used the method previously so popular, and frequently so suceessful with corpora=- tion managers, of asking bids under the market. However, had there not been a feeling that the administra- tion is moving in a more conservative direction as to expenditures and in its monetary plans, this bait would not have been taken. Another fact on which the heavy oversubscription of the issue was based was that the inflationist ele- ment in Congress and among certain industrial and agricultural interests has ceased to be active and, tempo- rarily at least, has given the field over to those who are endeavoring to promote recovery. There appears to be less occasion for alarm over pos- sible further devaluation or issues of “non-interest-bearing bonds” than for months. The rise in commodities this week has had its legitimate cause in scarcity resulting from the drought and the excessive zeal in destroying what today we need for food. A similar move- ment in common stocks finds its ex- planation in the growing expectation of larger business profits, not in ine flation. Investment Problem Seen. If this premise of Wall Street is correct, it creates a number of in- teresting problems for those who would speculate or invest. These in- clude the proper course to be pursued by those holding the highést-grade corporation bonds, quoted at premiums of from 7 to 15 points over par; by owners of industrial preferred stocks selling on a yield basis equal to that of a normal average for first mortgage bonds, and by those who have held their funds liquid awaiting the day when the outlook appeared clear enough to warrant their venturing again into the market for “equities.” For if the industrial momentum is to gain headway, there cannot be postponement much longer of the usual movement to discount its bene~ ts. During 1929 the public—and the term is here used in an inclusive sense, as the institution as well as the individual was involved—was 95 per cent stock-minded. For the last year and a half, with a slight inter- lude in the Spring and Summer of 1933, it has been bond-minded. It is not conceivable that the in- dividual who has been hugging safety of capital, through investment in un- | derlying issues of the strong corpo- rations, will suddenly reverse his pol- icy and jump into the middle of a stock speculation. But he might re- vise his ideas of security under in- creasing recovery and go from bonds of an “AAA” rating to those of “AA" or even “A." For the average person this seems a wise policy. There are plenty of railroad and public utility operating company mortgages, whose margins of safety are sufficient to guarantee the con- tinuous payment of interest and prin- cipal, to satisfy the demand. It is not so0 easy for the preferred stockholder to escape into a lower level of quality, for the supply of those secondary issues worth examining is small. Be- low this level is a strata that is crum- bling. Under such circumstances, a radical shift from what seems an over- valued senior issue into a common stock, with reasonable expectation of advance under recovery, would appear advisable. All Groups Affected. It has been repeatedly stated that certain groups of common stocks would not benefit from an inflation- ary movement in ‘“equities.” Among them were rails, public utilities and bank shares. We are dealing here, however, with the expectation of im- provement in the prices of common stocks from business recovering by normal methods and not the kind of unhealthy uplift that would accom= pany currency inflation. Conse- quently, while these three groups of stocks would lag behind industrial issues, they would not fail to make reasonable response to a bullish tem- per and might even on occasions lead the other group. Along with this movement would be one in distinctly junior bonds of railroads that might be showing a defictt for this year, but were in no danger of default. There is some paraHel to -this in the public utility secondary - mortgage list, though in general the opportunities for safe in- vestment in junior liens of holding compenies are limited. Real estate is supposed to be one of the best investments with which to offset -the capital ruin of inflation. Apparently few have followed this doc- trine. On its intrinsic value and its future prospects, good improved prop- erty, on the present deflated price scale, represents one of the most prom- ising outlets for idle capital available. No one has ever developed a better systém for creating individual wealth than that of buying tbings when no one else wants them and of selling them when there is a mad scramble to buy them. The weak elemient in this recipe is that the mass of investors act alike; few break out of the ranks and operate independent of the crowd. It is not improbable that many good speculative and investment opportuni- (Continued on Fourth Page.)