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An Historical Sketch

land, most of the banking capital of the country is held, there were few banking defaults and the losses resulting from them were comparatively small. All of which is encouraging and is another proof of the strength of our banking structure. The largest number of banking suspensions occurred in those sections of the country where difficulty was found in marketing the crops, the farming districts where the troubles of the farmers affected the banks which serve them.

For the past ten years the yearly .average of failures among all concerns doing business has been .86 of one per cent; and it may be interesting to examine briefly some of the reasons why failures occur, what are the causes for what Dun calls "commercial mortality."

Bad luck may be described as one of them and bad management another, al. though it is practically impossible in many cases to distinguish between the two. Of course a business may be ruined by conditions over which its managers have no control, as many businesses in Russia were ruined. That is bad luck. The rapid decline in the value of farm products without a corresponding decline in the cost of other commodities ruined the business of many a farmer. That too was bad luck. The unsettled state of trade throughout the world has brought about the insolvency of numerous businesses in recent months, and that in many cases was also bad luck. And conditions under which business must be carried on are far more difficult at certain times than at others. Periodically years roll around when readjustments must be made, and if a business has not prepared itself to withstand the shock of them it is liable to be forced into bank. ruptcy. Such a year was 1921, the "rainy day” year for business, when 19,652 commercial failures were recorded. Every business, however, should prepare for these rainy days.

Everyone knows that business is largely conducted on credit. A manufacturer or wholesaler finds himself in need of cash to purchase machinery or supplies, and he goes to his bank and borrows the amount of cash required to finance these purchases. Then with the aid of his new machinery the manufacturer turns out more work, and with the proceeds obtained from the sale of these services pays off his loan at the bank; or the wholesaler sells the goods his loan has enabled him to buy and liqui. dates his loan with the money received in this way. Suppose, however, after the manufacturer has borrowed money to buy new machinery, that business suddenly slumps and he cannot get work to keep his machinery busy. Under such circumstances it becomes a liability in. stead of an asset. It must be paid for, and the loan at the bank must be met when it falls due. Without earnings there is no cash, and unless the bank is willing or able to extend his credit the manufacturer becomes insolvent. He cannot pay the bank and he cannot pay his other creditors, and he is forced into

This timely treatise by Edwin R. A. Seligman, Ph.D., LL.D., McVickar Professor of Political Economy, Columbia University, has been published by The Equitable Trust Company of New York, with a prefatory note by President Alvin W. Krech. It is a volume of unusual interest at this time, because it offers a clear and concise historical background, enabling bankers, statesmen and business men better to understand the present economic situa

tion with its perplexFrom the New YORK

ing problems of taxation, price fluctuation, currency instability and the dislocation of foreign exchanges.

A limited number of copies are available for distribution upon request.

EVENING Post: " Both Dr. Seligman's paper and Mr. Krech's comment are a constructive effort to throw more light on present-day conditions, and both are a timely and valuable contribution. Such enlightened discussion represents a distinct service to the community.”

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have enough cash on hand for any emergency which may arise in connection with its business; if not cash, it should have enough "quick assets"— that is merchandise, securities, commercial paper, etc., which can be readily converted into cash-for such a purpose.

A company should not have too many fixed obligations-bonds, for instance, issued in such volume that the average earnings are only barely sufficient to meet the interest, which must be paid. A company which does not observe this rule is in a position similar to that of a man who has a big mortgage on his house, notes outstanding against him, and an income barely sufficient to cover the interest he must pay, to make no mention of paying off the loans when due. He is continually "in the hole" and is not conducting his affairs on a businesslike basis.

A business which is not managed conservatively, which over-extends itself in additions to its plant, or stocks of goods on hand, is in danger when the rainy day comes. An individual who spends more than he is justified in spending is also going to find himself in difficulties when the day of reckoning stares him in the face. In other words, the man. agement of a business differs very little from the management of individual affairs. The principles which apply to the one are equally applicable to the other.

In our opinion, the seat of the trouble is in the majority of cases the failure of the business or of the individual to take the rainy day into account, and prepare for it. Many businesses were unprecedentedly prosperous during the war; demands for their products seemed to be limitless and profits were enormous. Easy money poured into their treasuries, and the management lost their heads in many instances. They reasoned that if they could make large profits with the plant and equipment they had, why would it not be possible to make profits twice as large if their plants were doubled in size and they were possessed of twice as much equipment. Why not? It seemed reasonable, and they immediately set to work to increase their facilities so that their profits would be increased in proportion. The only difficulty was that these companies failed to realize that the conditions which created the demand for their goods, and made it possible for them to do business on such a profitable basis, were only temporary. They forgot that the time was surely coming when, instead of demanding their goods in unlimited quantities and being willing to pay any price for them, the world would get along with as small a quantity as possible and would further inquire very carefully into the cost before it committed itself to buy. When this time came, many concerns found themselves equipped with enormous plants for whose output there was no call and great stocks of raw materials for which they had paid high prices and with which there was nothing to do because no one wanted to buy the finished prod



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businesses, accounts for many of the 19,652 failures in 1921. And how many thousand individuals were affected by these 19,652 failures it is of course impossible to say. How many other individuals were affected by the decline in value of the securities of companies which did not actually fail is even more impossible to state with any degree of accuracy. Every one has been affected in some measure by the business depression of course, but it is safe to say that those who knew the storm was coming and prepared for it were the ones best able to weather it.

One of our largest corporations gave an excellent demonstration during the past few years of the reasons why it is one of our largest corporations, and of how a business should be conducted. It made enormous profits, like many of the others, but, instead of spending all this money or investing it in additions to its plant, it allocated a large portion of it to surplus, until now its surplus account has nearly three times as many millions in it as it had before. Consequently this corporation is in a stronger position than ever, its security holders are better protected, and the shareholders really have more valuable stock than they had previously, even if it does not pay as large dividends as during the period of prosperity.

This corporation merely kept sight of the fact that its unexampled prosperity was not permanent. It therefore saved a large part of its profits to safeguard itself against the hard times that it realized must come later. In other words, it prepared for the rainy day; and if all businesses and all individuals would learn the simple truth that it is bad policy to spend all they earn there would be fewer rainy days for all of us.

This Handy Investment Record saves unnecessary trips to your safe deposit box and quickly furnishes complete information-amounts, interest dates, maturities, prices, taxable status, etc, of your investment holdings.

It is made in loose-leaf form so that
pages may be added as required- the
pocket size is handy and compact.
Included is a bond interest table, also
a chart of information on all issues of

Liberty and Victory Bonds.
Ask for "Loose Leaf Security Record"

• or mail the coupon

Income Tax Data

Is Readily Available when you use the convenient forms provided in this looseleaf booklet for recording purchases and sales of securities, income derived, tax provisions, etc. :....... Mail This Coupon.......: HALSEY, STUART & CO.

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Q. Please advise me if the preferred stock of the Standard Oil Company of New Jersey is considered a good investment. Is this issue callable? What dividend does it pay?

A. Standard Oil of New Jersey preferred is rated a high-grade investment. Dividends are payable at the rate of $7 a share a year. It is callable at 115 and dividends on any quarterly dividend date three years after date of issue.

Q. Will you tell me something about the City of Tokyo J per cent bonds, due 1932? Are they considered a good investment? I A. There are outstanding £5,175,000 of the City of Tokyo 5s, due 1952. They are a first charge upon the annual net revenues of the electric tramways and electric lighting undertakings of the city and a general charge upon other revenues subject to the charges for an underlying loan of £1,500,000. There is a cumulative sinking fund of 1 per cent a year by annual drawings at par or purchase below par, with an option to the city to accelerate the fund at any time or repay the whole or part of the loan beginning with 1922 on six months' notice. The bonds are rated as highgrade investments.

MOVING FORWARD! THE business of America de

I mands at this time the best banking services obtainable.


Complete Banking Service
More Than $55,000,000 Invested Capital



25 January




DERHAPS it was not "Marse Henry"

I who wrote the following paragraph printed a few weeks ago in the Louisville "Courier-Journal,” but at least it must have been a writer trained in his school: “A ‘prominent author' is the novelist who wrote this year's bestseller. An obscure writer is the novelist who wrote last year's best-seller."

Something unique in travel publications Contains birds-eye map of state in color

From an unexpected source comes this recommendation that the railways should observe Sunday as a day of rest. It is signed "Assistant Superintendent" and appears in the "Railway Age:” “I know that many old-time railroad men will not agree with me," the writer says, "that it is practical to operate a railroad on an eight-hour basis and without Sunday work. But I claim that such a thing is possible and that the railroads of this country would save millions each year if they would come to an eighthour day six days a week, from the president to the section laborer. I was yardmaster on one of the lines [during the war] which practically tied up from seven o'clock Sunday morning until midnight. By Monday night we were just about as far ahead as if we had worked every engine in the terminal on Sunday.”

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The "Personal" column of the London "Times" recently printed these peculiar "wants:”

Society Gossip wanted by highclass weekly paper. Gossip must be good-natured, accurate, and by one who is actually in Society, not a professional journalist. Address Times.

Live Snakes (Cobra di Capello and Exchies Coronata) urgently needed for the preparation of Anti-Tuberculosis Serum. Officers of I. M. S. specially appealed to. Address --, Times.


Referring to a passage in “Silhouettes,” by Dr. Lyman Abbott, a subscriber says that he personally saw Barnum's famous "whale" in the basement of the old Museum at Ann Street and Broadway, New York City, but at the time he was not old enough to perceive that a whale could not have been brought through a door only two and a half feet wide. “Barnum and 1,” our correspondent continues, "had a table together one winter at the Sturtevant House. I asked him about the whale. He told me that it was made of rubber.”

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When an oil well “comes in" after the final drilling, Mrs. Clare Sheridan says in describing a' visit to Mexico in the “Metropolitan,” the drillers first let the well “clean herself out,” which it does with a roar and rush of gas that sometimes throws the drilling tools out of the hole. "The gas is very inflammable, and not even an automobile is allowed to pass within a radius of 300 meters during the incoming of a well. When the big fire was raging in Amatlan, the only method of closing the well was to tunnel to the casing that incloses it and

(Contimed on page 160)

Tours and Travel

Tours and Travel | Hotels and Resorts





36 old world cities on a GATES TOUR that takes you

to Oberammergau

Conducted Tours to SICILY, GREECE

SPAIN | Sailing March 4, April 6 and 12

OUR | Scholarly leaders TOURS | Interpretive talks have | Leisurely itineraries

For details write BUREAU OF UNIVERSITY TRAVEL 15 Boyd Street, Newton, Mass.

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EAVING New York by one of the regular

Gates Tours, sailings beginning in May, you may have 14 days in France before seeing the Passion Play-afterwards there come 6 days in Switzerland and almost two whole weeks in Italy. In all 36 old world cities will be visited. Optional dates of return and Extensions may be arranged. Gates European Tours

$395 up Covering Steamship and Hotel accommodations as well as all ordinary sightseeing exlenses. Gates Tours, founded in 1892, have a character that makes them pleasant and congenial. Get the Gates Complete Tour Booklet. Tours from $395 upwards. Write direct or apply to Raymond & Whitcomb Co., Gen'l Agents, in New York, Boston, Chicago, Philadelphia, Detroit, and Toledo. Ask for Booklet "A-19."

All Gates Tours icithout era cost include Paris, the Argonne and

the other American Battlefields GATES TOURS-Founded 1892

World Trarel at Reasonable Cost" 225 Fifth Avenue, New York. London-Paris-Rome


Sanford Hall, est. 1841

Private Hospital For Mental and Nervous Diseases

Comfortable, homelike gurroundings; modern methods of treatment; competent nurses. 15 acres of lawı), park, flower and vegetable gardens. Food the best. Write for booklet. Sanford Hall Flushing New York The Bethesda White Plains, A private sanitarium for invalids and aged who need care. Ideal surroundings. Address for terms Alice Gates Bugbee, M.D. Tel. 241.


Limited parties enrolling noir. TEMPLE TOURS 65A FRANKLIN ST.,


THE beauty, fascination, and mys

tery of the Orient lures visitors from all over the world to


JAP Aitorio e noteresting of an


The quaintest and most interesting of all countries. Come while the old age customs prevail. Write, mentioning “Outlook" to JAPAN HOTEL ASSOCIATION

Care Traffic Dept.


for full information Rates for a single room without bath and with 3 meals, $5-6 in cities and popular resorts, $4-5 in the country


Country Board WANTED Country board

and room, by professional woman, for few weeks' rest; cannot afford high suburban prices. 6,239, Outlook.

ROARD for one or two persons in an ex

ceptionally pleasant house in the country, near Wilton, Conn. Every convenience, hot-water heating, electric lights, bathrooms, telephone. Special attention paid to diet. Fresh eggs, poultry and milk from the farm, References exchanged. 6,211, Outlook.

Organize a party and
travel without expense.

Little Bldg. Boston, Mass.

Parties sailing in April, May, June and July. Comprehensive itineraries, moderate prices.

Send for Booklet A-10. BENNETT'S TRAVEL BUREAU

Official Agent for Oberammergau Passion Play 506 Fifth Ave.

New York City EGYPT AND

PALESTINE Sailing March 4, 1922

Little Bldg. Boston, Mass.
The European Summer School

offers for 1922
Fifty Scholarships

of $200 each

in connection with its Study Courses in Europe Address : BUREAU OF UNIVERSITY TRAVEL 15 Boyd St.,

Newton, Mass.


Apartments of the Y. W. C. A. 14 East 16th St., New York City | WANTED housekeeping apartment,

fully furnished, A homelike hotel for self-supporting from early February until June, between 59th women. Rates, $1.00 to $1.50 per day. Send and 90th Sts., 5th and Lexington Aves. Must for circular.

have three master's rooms, sunny exposure.
Must be reasonable, and absolutely first class.
Tenants are most desirable, being two ladies.
Best of references can be given. 6,231, Outlook.

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an organizer of a small party. Established 1900, BABCOCK'S TOURS, 13 Halsey St., Brooklyn.

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Europe Beckons | The foothills of the Berkshires. A restiu

British Isles, Switzerland, Passion Play,


Eleventh H I L E

Season 821 Centre St., Boston 30, Mass.

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I am offering for sale the following property :

2% acres in grove, facing Indian River, at Merritt, on Merritt Island, opposite Cocoa, near new casino, with 8-room two-story bun. galow, also 3-room bungalow, both completely and newly furnished, modern improvements, garage, dock, boathouse, $12,000.

Also new white brick store, two stories, both rented, with adjoining lot facing Indian River, with riparian rights, at Cocoa, opposite best hotel, for low price of $20,000.

Five-room cottage, bath, facing Indian River, at Rockledge, for $7,000, furnished and rented. BLAIR, Cocoa, Fla., Box “ M."

EUROPEAN TOURS $650 upward including Passion Play

Best Hotels only Personally conducted; established twenty vears. Special rates to organizers of par

ties. Accommodations limited. Book now. E. D. QUICK, 488 Nostrand Ave., Brooklyn, N. Y.

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Rock Ridge Hall

Popular Routes; Abundant Sightseeing :
First Class Hotels ; Skilled Interpretatiou of
European Art, History, Literature, Music;


Boston Travel Schools for Intensive Language Study. Fine location. Hot and cold running water in

INTERCOLLEGIATE TOURS nearly all bedrooms. Private baths. Sun-room. 65-A Franklin St.. Boston, Mass. I Our table a specialty. Terms moderate. Tel.

to 71st St., New York 300 rooms, each with bath. Absolutely fireproof. One block to 720 St. entrance of Central Park. Comfort and refinement combined with moderate rates. Send for illustrated booklet J.

NEW HAMPSHIRE To Lease for Boys' or Girls' Camp large farm bordering on Lake Winnepesaukee, N. H., with large house and necessary outbuildings. Write Fred A. Young, Laconia, NH,

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