Word: moneymen
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...Treasury securities are regarded by moneymen as excellent investments. After all, those bonds, notes and bills are issued by the American Government. But for a brief and unnerving period last week, the business of buying and selling them gave Wall Street jitters aplenty. The problem was not the creditworthiness of the U.S., but rather the solvency of a tiny and little-known Wall Street securities firm, Drysdale Government Securities...
Chase Manhattan Chairman Willard Butcher then called together the heads of seven of the brokerage firms from which it had obtained the securities. Butcher told the moneymen that his bank would not be making the interest payments that were supposed to be due to them that day because Drysdale Government Securities had not paid Chase. The banker said that Chase could not be considered legally responsible for the money owed by Drysdale, but was willing to go ahead anyway and and put put $90 million into a $250 million pool until the situation was cleared up. Included among the astonished...
...bonds." By buying an AAA-rated corporate bond issued by a blue-chip company like American Telephone & Telegraph or International Business Machines, an investor can count on making 14% on his money for ten years or more. If inflation stays at about 5%, that represents a good return. Some moneymen recommend buying U.S. Government bonds. Although they pay only 13%, the securities are practically risk free and, unlike corporate bonds, hold no danger that the Government will decide to redeem them early if interest rates decline quickly...
Corporations as well as individuals suffered. Up to then, companies had been financing new factories and equipment by issuing long-term bonds paying well under 10%. By the late '70s, however, the pension fund managers, insurance company executives and other moneymen who bought the bulk of the bonds began demanding interest of 15% or higher to make sure that the value of their investments was not eaten away by inflation. Not willing to pay 15% on a long-term basis, most companies turned to the banks for short-term loans...
...Although moneymen worry about the increasing number of bankruptcies among American businesses, they are still confident that the fall of one company will not also mean the collapse of several banks or other firms. Largely because of the unexpected Penn Central bankruptcy in 1970, the financial status of corporations is very closely watched today. In addition, a number of companies have stand-by bank credit lines that can be used if they have to withdraw from the commercial paper market...