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A development drilling and bulk sampling program should furnish the following information: (1) geology of the mineralized zone, (2) quantitative data on grade and tons of material within pertinent cutoff limits, (3) physical size and shape of the deposit and areas underlain by waste as well as ore, (4) mineralogical and metallurgical characteristics of the ore, (5) physical characteristics of the ore, (6) bulk samples for metallurgical testing and grade, (7) data on factors that affect mining operations, such as ground water and ground conditions. The method and equipment best suited for a particular drilling job depend upon the geologic features of the mineral deposit to be tested.

Jan 10, 1967

By O. C. Wheeler

In order that the series of reports on oil and gas in Colombia may be complete, the report for the year 1941, which was not available for Volume 160 of the TRANSACTIONS, is given here. The report for 1945 begins on page 4o6.

Jan 1, 1946

By W. D. Smith

It has been 5 years since the writer left the Philippine Islands and while in that country his chief work did not lie in this field, though he has visited all but one of the localities mentioned in this article. The principal field studies relating to oil were M de by his colleague, Mr. Wallace E. Pratt. The writer's investigations ealt with the general stratigraphy and paleontology of the Philippines. with the exception of the investigations made by Mr. Pratt and the writer very little information on this subject is available. A number of geologists in the employ of large oil companies have visited the Islands from time to time but, following the general rule, the public has scarcely ever been permitted to learn anything of the results. The writer is indebted to the Bureau of Insular Affairs, Washington, for late information regarding recent legislation in the Islands relating to petroleum. All the known oil seeps, petroleum residues, such as ozocerite, and natural-gas emanations are associated with Tertiary sediments. The chief seeps and most promising prospects are located as follows: 1. Bondoc Peninsula (lower end), Tayabas Province, Southeast Luzon. 2. The west coast of the island of Cebü from Alegria north to, and perhaps beyond, Toledo. 3. Central Mindanao not far from Lake Lanao. 4. The ozocerite veins on the Island of Leyte in the northwestern part in the vicinity of the town of Villaba. 5. Natural gas from some deep wells in Tertiary shale formations on the eastern flank of the Cordillera and extending out under the plain on the island of Panay. The first mention in geological literature, to the writer's knowledge, of gas or petroleum in the Philippines is found in the description of the Island of Panay by the Spanish geologist, Abella, in the year 1890. In 1898, an oil well was being dug on the estate of Smith Bell & Co., an English concern, near the town of Toledo on the west coast of Cebu. In

Jan 1, 1921

By W. R. Crane

DRAINAGE in these mines has been discussed in papers, on mining practice,1 but the fact that water, varying from 0.16 to 3.46 and averaging 1.43 times the amount of ore mined, has to be pumped from the mines daily, indicates the importance of the problem and the advisability of making a thorough investigation of the source of mine water, its mode of entry into the mines, its effect upon mining conditions; and consideration of means of improving the conditions. While conditions are not serious, yet there is danger that they may become worse if present mining practice is continued, owing to the presence of formations, known to carry large quantities of water, that overlie the ore bed worked. Much detailed information has been collected regarding: rainfall, and run-off in streams draining the district; the effect of different kinds of formations, porous and non-porous; the inclination of the surface; the condition of the surface above the mines, i. e., whether or not disturbed by ground movement; the occurrence of the ore and character of associated formations, particularly with respect to presence of jointing or slip planes, faults, etc.; failure of top rock in the old stopes; and the conditions under which water effects entrance into the mines, i. e., whether as a natural or forced flow. The study furnished fundamental data on the source of waters now entering the mines and that which may later enter due to collapse of top formations in. abandoned workings. The presence of jointing, or slip planes, has a pronounced influence upon the whole drainage problem. These present lines of least resistance to the water and, by weakening the top formations, cause fracturing of the overlying rock, allowing both surface and deep-seated waters to enter the mines.

Jan 1, 1927

By William E. Ford, Edward Salisbury Dana

The monoclinic Wolframite Group and the tetragonal Scheelite Group are included here. Wolframite Group WoIframite (Fe,Mn)W04 a : b : c = 0.8300 : 1 : 0.8678 B = 89' 22' Hiibnerite MnW04 048362 : 1 : 0.8668 89' 73' WOLFRAMITE. Monoclinic. Axes a : b : c = 0.8300 : 1 : 0.8678; B = 89' 22'. mm"', 110 A 1TO = 79" 23'. ay', 100 A 101 = 62' 54' at, 100 A 102 = 61" 54'. $', 011 A 011 = 81" 54'. Twins: (1) tw. axis c with a (100) as comp.-face; (2) tw. pl. k (023), Fig. 449, p. 171. Crystals commonly tabular (1 a (100); also prismatic. Faces in prismatic zone vertically striated. Often bladed, lamellar, coarse divergent columnar, granular. Cleavage: b (010) very perfect; also parting (1 a (100), and 11 t (102). Fract,ure uneven. Brittle. H. = 5-5.5. G. = 7.2-7.5. Luster submetallic. Color dark

Jan 1, 1922

By D. L. McElroy, J. L. Schroder

Although the earliest use of rubber-tired haulage was in Illinois in 1936, the first unit of this type of equipment used in West Virginia was shipped into the state in 1938. All units placed in West Virginia mines have been of the shuttle-car type. The Katherine Coal Mining Co., at Lumberport, W. Va., was the second company in the United States to install shuttle cars and the Gay Coal and Coke Co., at Mt. Gay, W. Va., was the first company in the country to install the thin-bed type of shuttle car. On Oct. 8, 1940, nine companies in the state were using 41 shuttle cars, of which 10 cars at three mines were of the thin-bed type. All shuttle cars of the low type were in the southern fields and all of the high type were in northern West Virginia. At that time several units were in the process of delivery. The data in this paper were collected in the field by Mr. Schroder in connection with graduate work on mechanical loading of coal in West Virginia by mobile loaders. In the course of his field work he visited five mines in the state that were using shuttle cars. All of these mines were in high-volatile coal beds of strong structure. The more pertinent data obtained at the mines visited are given in Table I. The maximum distance of shuttle-car haul is the distance between the transfer station and the farthermost place. Tonnage per loading unit per foot of bed thickness is to some degree a measure of relative efficiency, especially if the different operations are working the same bed or have somewhat similar conditions. The thin-bed operation is well up in the higher bracket of the afore-mentioned column, which is as

Jan 1, 1942

By J. L. Schroder, D. L. McElroy

Although the earliest use of rubber-tired haulage was in Illinois in 1936, the first unit of this type of equipment used in West Virginia was shipped into the state in 1938. All units placed in West Virginia mines have been of the shuttle-car type. The Katherine Coal Mining Co., at Lumberport, W. Va., was the second company in the United States to install shuttle cars and the Gay Coal and Coke Co., at Mt. Gay, W. Va., was the first company in the country to install the thin-bed type of shuttle car. On Oct. 8, 1940, nine companies in the state were using 41 shuttle cars, of which 10 cars at three mines were of the thin-bed type. All shuttle cars of the low type were in the southern fields and all of the high type were in northern West Virginia. At that time several units were in the process of delivery. The data in this paper were collected in the field by Mr. Schroder in connection with graduate work on mechanical loading of coal in West Virginia by mobile loaders. In the course of his field work he visited five mines in the state that were using shuttle cars. All of these mines were in high-volatile coal beds of strong structure. The more pertinent data obtained at the mines visited are given in Table I. The maximum distance of shuttle-car haul is the distance between the transfer station and the farthermost place. Tonnage per loading unit per foot of bed thickness is to some degree a measure of relative efficiency, especially if the different operations are working the same bed or have somewhat similar conditions. The thin-bed operation is well up in the higher bracket of the afore-mentioned column, which is as

Jan 1, 1942

By H. 0. HOFMAN AND W. MOSTOWITSCH

I. INTRODUCTION. THE mineral gypsum, CaSO, + 2 H2O, has been used for many years as a sulphurizing and basic flux in several smelting¬operations. Thus, in smelting oxide nickel-ore in the blast furnace, it is commonly added to the charge to furnish the sulphur necessary for collecting the metal in a matte, and a base for slagging the siliceous gangue. In the concentration of lead-copper matte in the reverberatory furnace it has been used for years at Freiberg, Saxony1 for a similar purpose, and for producing at the same time a copper-matte with less than 0.15 per cent. Fe. The latest use gypsum has been put to is in the blast-roasting process of Carmichael-Bradford.2 The term "blast-roasting," given by A. S. Dwight3 to the Dwight-Lloyd method of roasting and agglomerating ,I is a happy generic term which covers the ground better than the " lime-roasting" of Ingalls' or the " pot-roasting " of Austin,6 in that it leaves the operation independent of the character of the flux and the form of apparatus, and retains the characteristic feature of this class of processes-namely, that of using forced draft. In the Carmichael-Bradford process the dehydrated material, mixed with galena-concentrate, acts as a diluent and a flux. The process differs in this from the Huntington-Heberlein7 and the Savelsberg8 processes, in both of which limestone is used.

Jan 1, 1909

By Willis Carrier

PARTICULAR interest in the ventilation of deep mines, especially those in South Africa, has been created by a very complete system of cooling of the world's deepest mine, the Turf shaft of the Robinson Deep ill Johan-nesburg. The writer visited this mine in January, 1936, and again in 1937. During these visits and subsequently, a considerable part of the theory involved in rock cooling in tunnels was developed and this has been checked by practical observations of the rates of rock cooling made within mines. The purpose of this paper is to set forth the method of attack of the mine problem. The cooling or air conditioning of mines by the use of mechanical refrigeration was not wholly new 1-5 when the Robinson Deep installation was made. The first mine to be cooled was the Morro Velho mine, in Brazil. The first installation in this mine was put into operation in December 1920, the refrigerant being ammonia.5 The surface cooling gave considerable benefit but it proved inadequate as greater depths were reached, therefore in 1929 two centrifugal refrigerating machines were installed at the 6000-ft. level. These were used in conjunction with the surface cooling system to furnish additional cooling at the lower levels. This later installation used Carrene as a refrigerant. This nonflammable refrigerant, having a boiling point of 104° at sea level, insured reasonable safety, since all parts of the machine operated At subatmospheric pressure. Very favorable reports have been received on the effectiveness of this installation, but no recent data are available. An interesting feature of that plant is that the condenser water is cooled by spraying it into the exhaust air from the mine at the base of the ventilation upcast, which permits the water to be cooled within a few degrees of the wet-bulb temperature of the air entering the upcast, and the only water that has to be supplied for condensing purposes is that lost by evaporation, or about 0.5 per cent of the volume circulating through the condenser. This plan affords an ideal means for the removal of the heat load from the refrigerating system, and of course also from the mine itself. In many mines, however, especially those in South Africa, there is no

Jan 1, 1938

New York Meets first Wednesday after first Tuesday of each month. J. E. JOHNSON, Jr., Chairman EDGAR RICKARD, Vice-Chairman D. M. LIDDELL, Secretary, 7 Wall St., New York, N. Y. C. A. BOHN, Treasurer JOHN V. N. DORR. LEWIS W. FRANCIS Boston Meets first Monday of each winter month. R. L. AGASSIZ, Chairman JAMES G. CARLETON, Vice-Chairman E. E. BUGBEE Secretary-Treasurer, Mass. Inst. of Technology, Cambridge,Mass. W. E. C. EUSTIS G. A. PACKARD Columbia Holds four sessions during year. Annual meeting in September or October. W. H. LINNEY. Chairman OSCAR LACHMUND, Vice-Chairman LYNDON K. ARMSTRONG, Secretary-Treasurer, P. 0. Drawer 2154, Spokane, Wash. STANLY A. EASTON S. SHEDD Puget Sound Meets second Saturday of each month SIMON H. ASH, Chairman I. F. LAUCKS, Vice-Chairman CHARLES SIMENSTAD, Secretary-Treasurer, 425 Lyon Bldg., Seattle, Wash. GLENVILLE A. COLLINS JOHN N. POTT

Jan 10, 1917

By W. L. Crentz, E. E. Donath, D. Doherty

Maurice Rey—The influence of cyclone diameter upon the fineness of separation is an important point which, however, cannot be discussed adequately if the injection pressure or the rate of flow are not specified. Perhaps some light can be thrown on the matter by using the formulas derived by Dahlstrom. Let us consider several geometrically similar cyclones where the apertures e and b are equal and proportional to the diameter D and which are operated with the same pressure drop. Eq 8 of Dahlstrom's paper can be written: Q Q = K D'. " or. if F is constant: Q = K D18 K is a constant of proportionality. Introducing this value of Q in eq 13 gives elimination efficiency = K D0' " Elimination efficiency, in the terminology of Dahlstrom, means the diameter of particles, in microns, which divide equally between the underflow and the overflow. This denomination is regrettable and it would be preferable to call it diameter of separation or characteristic size or any other name connoting a size rather than an efficiency. Whatever the name used, the above equation shows a slow increase in the fineness of separation when the diameter of the cyclone decreases. For example, if a 14-in. cyclone gives a 400-mesh separation (37 microns), geometrically similar cyclones, having the same pressure drop will give separations at the sizes shown below.

Jan 1, 1951

By E. E. Donath, W. L. Crentz, D. Doherty

Maurice Rey—The influence of cyclone diameter upon the fineness of separation is an important point which, however, cannot be discussed adequately if the injection pressure or the rate of flow are not specified. Perhaps some light can be thrown on the matter by using the formulas derived by Dahlstrom. Let us consider several geometrically similar cyclones where the apertures e and b are equal and proportional to the diameter D and which are operated with the same pressure drop. Eq 8 of Dahlstrom's paper can be written: Q Q = K D'. " or. if F is constant: Q = K D18 K is a constant of proportionality. Introducing this value of Q in eq 13 gives elimination efficiency = K D0' " Elimination efficiency, in the terminology of Dahlstrom, means the diameter of particles, in microns, which divide equally between the underflow and the overflow. This denomination is regrettable and it would be preferable to call it diameter of separation or characteristic size or any other name connoting a size rather than an efficiency. Whatever the name used, the above equation shows a slow increase in the fineness of separation when the diameter of the cyclone decreases. For example, if a 14-in. cyclone gives a 400-mesh separation (37 microns), geometrically similar cyclones, having the same pressure drop will give separations at the sizes shown below.

Jan 1, 1951

By Westwater, J. S.

The Mather mine of The Negaunee Mine Co. embraces nearly all of Sections 1 and 2, T47N, R27W. within the limits of the cities of Negaunee and Ishpeming on the Marquette iron range of Michigan's Upper Peninsula. Operations of the Negaunee Mine Co., the stock of which is jointly owned by Bethlehem Steel Co. and The Cleveland-Cliffs Iron Co., are under the direction of the latter company. The opening of the Mather mine was described by C. W. A1len. Mather "A" shaft was completed to an initial depth of 2352 ft in early 1943. The shaft capacity of over one million tons yearly is in prospect of being realized by orderly development and mining, and sinking of the second or "B" shaft then started in accordance with previous planning. Mather " B, " also a vertical shaft, was designed as a twin to Mather "A" shaft and the sinking technique developed at Mather "A" was utilized in "B" shaft operation.

Jan 1, 1949

By J. P. Witherow

The Clapp and Griffiths steel-process may be considered a pneumatic system, similar to the Bessemer, with the difference that the converter is fixed or non-tilting, and that the blast is introduced around the lower section of the converter instead of through its bottom. Mr. Griffiths was engineer-in-chief of the Gilchrist & Thomas basic dephosphorizing process during all the time those gentlemen were experimenting and working up their system, as Mr. G. communicated to me. After separating from these gentlemen, he began developing the present Clapp and Griffiths type of converter. Dr. Clapp, of Nantyglow, Monmouthshire, was a prominent physician in a large iron district. Previous to his association with Mr. Griffiths, he took out some patents on a process of his own for the manufacture of steel, which patents stood in Mr. Griffiths' way; hence the consolidation. Early in the summer of 1883, my attention was called to the experiments of Messrs. Clapp & Griffiths in Great Britain by a friend who had just returned from England. Later in that summer I went to Newport, on the border of Wales, where I met Messrs. Clapp and Griffiths and their friends. After visiting two small converters of their type which were in operation at different works, and spending a few days in the iron-districts of Wales, I went to London, where I met my friend Henry W. Oliver, Jr., who had already heard of the new steel-process. We decided to revisit Wales and examine more fully the process, more especially that Mr. Oliver might have the opportunity of coming practically in contact with the men and die process himself, so that his judgment might not be influenced by my sanguine feelings. On

Jan 1, 1885

By Anal J. Mehta, Theodore D. Tiemann

Growing demand for steel and increasing dependence upon foreign ore makes the need for developing the technology for treatment of low-grade iron ores greater than ever before• Representative of these added interests were the studies carried on at the University of Wisconsin• These studies included among others: anionic and cationic flotation, magnetic separation, roasting followed by magnetic separation, electrostatic separation, a hydrogen reduction process,6,7 and caustic digestion• The idea of removing silica by caustic extraction is not new•-1; The principle of concentrating siliceous iron ores by this method is based on the fact that silica is soluble in sodium hydroxide solution while iron oxides are essentially insoluble• For this process to be economically feasible, it is believed that some method of recovering silica from solution as a marketable by-product, with recycling of spent liquor is necessary. Precipitation of silica with carbon dioxide will allow subsequent causticizing of the spent liquor with lime• Caustic thus produced can be recycled for digestion• A flowsheet of the envisioned process is given in [Fig• 1] The purpose of this paper is to describe results obtained from the investigation of carbon dioxide precipitation of silica from sodium silicate solutions, which could be later applied to the caustic extraction process to treat low grade siliceous iron ores, particularly taconites.15 Theoretical Considerations The soluble silicates of sodium include sodium orthosilicate (2Na2O•SiO2), sodium metasilicate (Na20•SiO2), sodium disilicate (Na1O•2SiO2), and more highly siliceous products approaching Na2O•4SiO2• These materials have been described in detail by Vail•16 Stones has reported that the extraction of silica is not significantly affected by the amount of silica in solution until the Si02/Na20 ratio exceeds that of orthosilicate (Ratio = 1/2)• However, as the Si02/Na2O ratio exceeds that of metasilicate (Ratio = 1), silica extraction is significantly impaired• The present experimental work was confined to orthosilicate and metasilicate solutions, as to be successful the envisioned commercial process for the extraction of silica from siliceous iron ores would operate in this region. The mechanism of extraction of silica from aqueous sodium silicate solutions is complex in nature. For the carbon dioxide process-18 of core and mold making in which silica is also precipitated from sodium silicate solutions by gassing with carbon dioxide, the reaction of aqueous silicates with gaseous carbon dioxide has been represented by the equations: [ ] However, these equations are very much oversimplified• It has been shown that the reaction between aqueous sodium silicates and carbon dioxide gas is ionic in nature 18 Considering this fact and the mechanism for digestion of silica in aqueous sodium hydroxide, the overall conversion of aqueous sodium silicates to solid silica may be represented in ionic form by the following equations: [ ] Silicon in the silicate ion is shown here with a coordination number of 6• This may be in doubt, but it is known that ion (SiF°)-2 exists; it seems logical that the Si (OH) e 2 ion should be equally capable of existence•

Jan 1, 1977

By William D. Klopp, Joseph R. Stephens

Chromium alloys were coated with silicon, alumi-nuw, and boron by pack cementation. None of these simple coatings provided adequate nitridation/oxida-tion protection for a Cr -0.17pct Y alloy substrate as shown by a substantial Increase in the ductile -brittle transition temperature after air exposure for 100 hr at 2100°F. Iron-modified silicide coatings afforded good protection, holding the transition temperature of air-exposed specimens to 350° F compared to 200° F for uncoated unexposed specimens and 800°F for un-coated exposed specimens. Additional attractive cant-binations of modi-tying elements included Fe-mo, Fe-Mo-W, Fe-,Mo-W-Ti, and V-Mo-W-Ti. THE desirability of increased operating tempera-tures as a mcans of improving the performance of ad-vanced air breathing engines has resulted in emphasis on the development of materials with high operating temperature capabilities. Chromium, because of its relatively low density (7.19 g per cu cm), high melt-ing point (3410°F), and adequate strength upon alloy-ing, is a candidate material for turbine buckets and stator vanes of advanced air breathing engines. How-even, chromium is not without severe limitations, the major one being susceptibility to nitrogen embrittle-ment upon exposure to air at high temperatures.1,2 For example, a 25-hr air exposure of a Cr-5 pct W* * All compositions in wt pct. alloy at 2100°F produces a 600°F increase in the duc-tile-brittle transition temperature.' Although dilute alloying with such elements as yttrium, lanthanum, arid thorium3,4 or strong nitride formers5 has been shown capable of reducing nitrogen embrittlement, it is apparent that some additional form of surface protection, such as coatings or claddings, will be required for long time service in air breathing engines. Studies of aluiminide6 and silicide7 coatings and of nickel-base claddingsl on chromium alloys to date have suggested that these protection systems are inadequate. Of the aluminidc systems Studied,6 a simple aluminum and an Fe-Al coating on a Cr-5 pct W-0.1 pct Y alloy showed the lowest air exposure weight gains. However, the air exposures raised the ductile-brittle transition temperature of the coated specimens to above 1600°F from an initial level in unexposed specimens of about 500°F. A second in-vestigation for protection of Cr-5 pct W-0.1 pct Y employed gas pressure bonded alloy foils as protective claddings.1 An aluminized Ni-20 pct Cr-20 pct W alloy plus an unalloyed tungsten barrier layer gave the best performance with air exposure lives based on appearance and weight gains of over 600 hr at 2100°F. However, the bend ductile-brittle transition tempera-ture was increased to at least 1000°F after 100 hr at

Jan 1, 1970

By R. W. Rausch

BELT-CONVEYOR 'history in this country dates back to the end of the eighteenth century. Up to 1896 they were crude in design and application. The second era, dating from 1896 to about 1920, saw special study given to belt construction and idler design. The latter part of this era saw the beginning of the present-day antifriction idler. The third era followed World War I, when industry began to expand rapidly. Mines and quarries, steel mills, and power-generating plants became larger and greater quantities of ore, stone, and coal were being handled. It became vital that belts handle larger capacities, that they be longer, and that they be dependable for 24 hours per day. In this third era a radical change in belt conveyor design and application occurred. The design has became more scientific. Studies have been made to find out what factors influenced the power required for a belt conveyor and it was found that the sag of the belt between idlers and the flattening of the load between idlers had considerable effect on power requirements. So definite initial tension was put into the belt at the loading end and idler spacing was reduced at the foot end to limit this sag. Belt manufacturers made tougher and stronger belts.

Jan 1, 1947

By John L. Schroder, D. L. McElroy

ALTHOUGH the earliest use of rubber-tired haulage was in Illinois in 1936, the first unit of this type of equipment used in West Virginia was shipped into the state in 1938. All units placed in West Virginia mines have been of the shuttle-car type. The Katherine Coal Mining Co., at Lumberport, W. Va., was the second company in the United States to install shuttle cars and the Gay Coal and' Coke Co., at [ ] Mt. Gay, W. Va., was the first company in the country to install the thin-bed type of shuttle car. On Oct. 8, 1940, nine companies in the state were using 41 shuttle cars, of which 10 cars at three mines were of the thin-bed type. All shuttle cars of the low type were in the southern fields and all of the high type were in northern West Virginia. At that time several units were in the process of delivery. The data in this paper were collected in the field by Mr. Schroder in connection with graduate work on mechanical loading of coal in West Virginia by mobile loaders. In the course of his field work he visited five mines in the state that were using shuttle cars. All of these mines were in high-volatile coal beds of strong structure. [ ] The more pertinent data obtained at the mines visited are given in Table I. The maximum distance of shuttle-car haul is the distance between the transfer station and the farthermost place. Tonnage per loading unit per foot of bed thickness is to some degree a measure of relative efficiency, especially if the different operations are working the same bed or have somewhat similar conditions. The thin-bed operation is well up in the higher bracket of the afore-mentioned column, which is as

Jan 1, 1941

By AIME AIME

SINCE the preparation of the Fall Meeting announcement the Montana Section has extended an invitation to the members traveling to Spokane to make at least a short stop at Butte, en route. Accordingly, the train schedule below has been worked out as an alternative to that announced in the general circular. This will permit a half day in which to visit either mines at Butte or the smelter at Anaconda and an opportunity for an evening meal with our Montana members. An interesting time is assured either way and the chance to renew acquaintance with Butte friends will be well worth will

Jan 1, 1929

By Jan H. Hommen

TRENDS IN MINE FINANCE Reviewing historical trends may help in dealing with future funding strategies. The first trend is the increase in the use of debt to fund corporate America. Surprisingly, when comparing that with other corporates in the global marketplace, the U.S. does not look too poorly. Japanese, in particular, but also German companies, are much more leveraged than their U.S. counterparts. Note that in Japan and Germany the government and the consumer have shown substantial restraints when it comes to credit. Not so in the U.S. where the savings rate (4%) is much lower than that in Japan (20%) and in Germany (14%). As a result, the cost of leverage is substantially lower in Japan and in Germany than in the U.S. Lower debt costs in these countries allows one to obtain more of it for the same price. The close relationships between financial institutions, corporations and governments in Japan and Germany also make the risk of leverage more bearable and understandable. Also note that interest rate volatility in these countries is more subdued. The investor base in common stock is also changing. Private pension funds have been net sellers of equities during the last few years while public pension funds have been net buyers. Individuals are basically out of the market. It is estimated that over $330 billion of equity was retired in the U.S. through 1986-1988. The reasons are well known: restructurings, buy-backs, takeovers, mergers, and buy-outs. This de-equitization is likely to continue as the cost of equity capital is higher than the cost of debt capital, even on a before-tax basis. Because there has been no market for equity since October 19, 1987, junk bonds have replaced equity capital in the corporate finance structure. The non-investor-grade borrower has access to the public markets through high-yielding debt securities that often look like senior equity. Deregulation has also provided 24-hour markets; securitization can now liquify assets that before were rusting on balance sheets; information processing and communication tools give facts that are instantaneously available, creating the need for products to cover risk and exposures unknown before the start of the information and technology explosion. Thus we now have swaps, options, futures, options on futures, caps, as well as program trading, portfolio insurance, index funds, etc. Globalization will be unstoppable. Today's environment demands it. Corporations are now global competitors, even though they may have never shipped a product off-shore. Boundaries are disappearing and impediments have been removed. Stocks can be issued in a global offering with distribution in all major financial centers of the world. The high leverage of Japanese companies has made common stocks very scarce, which with the high savings rate, makes equity capital inexpensive in Japan. If markets were perfect everyone would issue stock in Tokyo and buy it back in New York. This would certainly stop the bleeding on the balance of payments. With the deficit balance of payments in America, it is no surprise that the cost of money is expensive here. The risk-return relationship on U.S. equity is not favorable enough to appeal to Japanese equity investors. The Tokyo-market, helped by a stronger yen, surpassed New York as the most important equity market in the world. The question is, will the Tokyo market hold up when Japanese domestic consumption increases at the expense of savings? In the U.S. debt markets, the plain vanilla debenture is making a comeback after a period of absence. Commercial paper has replaced short term bank borrowings for working capital funding by larger corporations. The banks have made an interesting comeback with loan sale programs that will continue to attract borrowers. There will be a continuing

Jan 1, 1990