NIVRAHA149_00305 |
Vorige | 305 van 1308 | Volgende |
|
klein (250x250 max)
gemiddeld (500x500 max)
groot
Extra Large
groot ( > 500x500)
Hoge Resolutie
Allen (PDF)
|
Deze pagina
Allen
|
Ch. 3] BANKER'S CONTRIBUTION TO PROMOTION 281
turity. The market for short-term corporation notes is partly
in the hands of the institutional banker and partly in the hands
of the investment banker. The conditions of the money market
at any one time affect the relative influences of the tvi^o
groups of bankers. The supply of capital for the last two
classes, the long-term bonds and stocks, is entirely in the hands
of the investment bankers. It is these two classes of securities,
representing as they do a part of the market of capital
distinct from all other forms of capital obligations, that afford
a field of operations for the investment banker.* The shifts
of fashion in investment circles is seen from the variations in
investment taste during the last ten or fifteen years.
a This difference between the institutional banker and the investment
banker is further seen by the difference of attitude which they take towards
the balance sheet of a corporation. The institutional banker is primarily
interested in the net quick assets above current liabilities because it is from
these, rather than the permanent assets, that the business is able to meet
its current notes. Whereas the investment banker, although interested in
observing that the net quick assets are ample so that the business is not in
danger of failure, is far more concerned with the value of the permanent
assets, especially as this value is reflected in the continued earning power of
the business.
In 1911 and 1912, investment bankers were issuing practically no short-term
notes and the comparatively few issues that were coming onto the
market were readily absorbed by the banks and the few investors who had
a natural predilection toward this form of security. Whereas in 1913, owing
to general uncertainty in the market for all forms of securities and the
universal demand for capital all over the world, many short-term obligations
maturing in from one to five years were being issued and marketed
by investment bankers. In the early part of 1914, prior to the opening of the
Great War, there were comparatively few issues of short-term corporation
notes. But the comparatively small amount of corporation financing done in
the autumn of 1914 was in notes. During 1915, the long-terra bond market
steadily improved, and as a result the proportion of notes steadily declined.
Except in the case of foreign governments, comparatively few notes were
issued in 1916. After the entrance of the United States into the Great War
in April, 1917, practically all private financing was in notes, even the
strongest and oldest corporations being forced to temporary expedients.
From February, 1918, to November, 1918, the only new long-term bond
issues of any considerable size, except for a few municipals, were the government
bonds. Within a week of the signing of the Armistice on November
II, the general bond market advanced from two to ten points, an average
of at least 4 per cent. At the same time the investing public absorbed
completely the floating supply of long-term bonds and the long-term bonds
remaining on the shelves of the bond houses. Within three weeks, corporations
of high credit had begun to offer long-term bonds to general investors
at a low—relative to the preceding year—investment basis. By January i,
1919, a wide general market for long-term investment -securities had been
well established, by August it had disappeared.
Beschrijving voorwerp
| Titel | The financial policy of corporations |
| Auteur | Dewing, Arthur Stone |
| Jaartal | 1926 |
| Collectienaam | NIVRA Historisch Archief, UBVU gedigitaliseerd |
| PPN | 344552586 |
| Toegangsgegevens (URL) | http://imagebase.ubvu.vu.nl/getobj.php?ppn=344552586 |
| Signatuur origineel | NIVRAHA149 |
| Evaluatie |
Beschrijving
| Titel | NIVRAHA149_00305 |
| Transcript | Ch. 3] BANKER'S CONTRIBUTION TO PROMOTION 281 turity. The market for short-term corporation notes is partly in the hands of the institutional banker and partly in the hands of the investment banker. The conditions of the money market at any one time affect the relative influences of the tvi^o groups of bankers. The supply of capital for the last two classes, the long-term bonds and stocks, is entirely in the hands of the investment bankers. It is these two classes of securities, representing as they do a part of the market of capital distinct from all other forms of capital obligations, that afford a field of operations for the investment banker.* The shifts of fashion in investment circles is seen from the variations in investment taste during the last ten or fifteen years. a This difference between the institutional banker and the investment banker is further seen by the difference of attitude which they take towards the balance sheet of a corporation. The institutional banker is primarily interested in the net quick assets above current liabilities because it is from these, rather than the permanent assets, that the business is able to meet its current notes. Whereas the investment banker, although interested in observing that the net quick assets are ample so that the business is not in danger of failure, is far more concerned with the value of the permanent assets, especially as this value is reflected in the continued earning power of the business. In 1911 and 1912, investment bankers were issuing practically no short-term notes and the comparatively few issues that were coming onto the market were readily absorbed by the banks and the few investors who had a natural predilection toward this form of security. Whereas in 1913, owing to general uncertainty in the market for all forms of securities and the universal demand for capital all over the world, many short-term obligations maturing in from one to five years were being issued and marketed by investment bankers. In the early part of 1914, prior to the opening of the Great War, there were comparatively few issues of short-term corporation notes. But the comparatively small amount of corporation financing done in the autumn of 1914 was in notes. During 1915, the long-terra bond market steadily improved, and as a result the proportion of notes steadily declined. Except in the case of foreign governments, comparatively few notes were issued in 1916. After the entrance of the United States into the Great War in April, 1917, practically all private financing was in notes, even the strongest and oldest corporations being forced to temporary expedients. From February, 1918, to November, 1918, the only new long-term bond issues of any considerable size, except for a few municipals, were the government bonds. Within a week of the signing of the Armistice on November II, the general bond market advanced from two to ten points, an average of at least 4 per cent. At the same time the investing public absorbed completely the floating supply of long-term bonds and the long-term bonds remaining on the shelves of the bond houses. Within three weeks, corporations of high credit had begun to offer long-term bonds to general investors at a low—relative to the preceding year—investment basis. By January i, 1919, a wide general market for long-term investment -securities had been well established, by August it had disappeared. |
Tags
Toelichtingen
Geef een Toelichting voor NIVRAHA149_00305
