U. S. Margin Accounts

Ready for stockholders' approval last week was a plan by which Manhattan's Manufacturers Trust Co. will pay off $25,000,000 of notes now held by RFC. The bank will offer its present stockholders $25,000,000 worth of a new preferred stock in the ratio of three shares of new stock for each ten shares of old. A curious feature of this plan is that Jesse Holman Jones's RFC will carry any Manufacturers Trust stockholder who wants to subscribe to 100 shares or less on what amounts to a 10% margin. On listed stocks the Government requires a margin of 55%.

All that the subscribing stockholder has to do is make a 10% down payment. Mr. Jones will put up the rest. Every six months another 10% payment must be made, thus clearing up the debit balance in five years. Stockholders have to pay interest to Mr. Jones just as they would to a broker, though incoming dividends from the shares will in the end more than cover outgoing interest.

Mr. Jones has nothing to lose by carrying this type of margin account in RFC. Even if he has to take over the stock he will stand all even. Instead of possessing Manufacturers Trust notes, he will hold Manufacturers Trust preferred stock, which the bank would have issued to RFC in the first place had not New York State banking law, since changed, required the use of notes.

Mr. Jones has a particularly warm feeling for Manufacturers Trust because President Harvey Dow Gibson was the first big Manhattan banker to accept RFC money when Mr. Jones was staging his great campaign to build up the capital of the nation's banks.

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