Full text of Basic Business News : April 30, 1957 to May 6, 1957

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April 30, 1957

to

May 6, 1957

TREASURY OFFERS HIGHEST
RATE SINCE '33

The Treasury offered yesterday the highest
interest rate since 1933. It gave investors
a choice of two new securities in exchange
for $4.2 billion of securities maturing May 15. One will be an eleven
and one-half month certificate maturing April 15, 1958, and bearing
3-1/21:, interest. The other will be a four-year, nine-month note, maturing February 15, 1962, and paying 3-5/8/fo. Both new securities will be
dated May 1, though they will not be issued until May 15. T~is gives
holders of the maturing securities an added incentive to take the new
ones since they would collect the higher rate after May 1. (N. Y.
Times, 5/3 p.37)
BOND MARKETS
FIRMER

The bond markets closed last week on more solid footing.
The pace-setting long-term U.S. Government issues worked
back to near the levels of the preceding week after
slumping to near record low prices earlier in the week. The 3-l/4's
were priced at 97 bid. "The Treasury's financing announcement had
little effect on the long-end of the list," one trader commented after
Friday's trading. "You still can't rule out the possibility of a new
long-term bond to replace the F- and G-bonds that are coming due," he
added. Municipal traders reported a better feeling in their market.
Fractional gains were posted in the tax-exempt revenue bond section
with some turnpike bonds a point or more higher. High grade corporate
issues marked time; convertible bonds were mostly firmer on the week,
mirroring the higher stock market; and foreign bonds were quiet with
prices little changed. (Wall St. J., 5/6 p.19)
Consumer instalment credit increased by $40 million
during March to an estimated total of $31.3 billion,
the Federal Reserve Board reported. This compares
with increases of $447 million in March 1955, and $197 million in
INSTALMENT CREDIT
UP $40 MILLION

Selection of these items does not imply this bank 's guaranty of thei r accuracy,


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nor agreement with the views expressed.

March 1956. The Board noted increases of $91 million in a uto cr e dit
and $61 million in personal loans. Other consumer credit de cline d $10
million. On a seasonally adjusted basis, instalment credit incre ased
an estimated total of $139 million during the month. Seasonally a d justed extensions of credit during March amounted to $3.3 billion,
while repayments amounted to $3.2 billion. (N. Y. Times, 5/3 p.39)
RESERVE STUDY
ON CAR CREDIT

The staff of the Federal Reserve Board concluded in a
study made public today that "there is real que stion "
whether there can "soon" be another surge of automobile
buying on credit like that of 1955. The ~onclusion was reached in the
final volume of the Board's massive six-volume study of consumer credit
The other five were made public several weeks ago. This volume comprised a survey of the automobile market and financing practices i n
1954 and 1955. The study went into considerable detail in its anal y sis of why another 1955 was unlikely. It suggested that there wa s not
much more "mileage" in further liberalization of terms, because extension of maturities would result in very little reduction in the monthly
payment. (N. Y. Times, 5/3 p.37)
CORPORATE
PROFITS UP &{o

Early reporting corporations turned in an earnings
gain of almost &{o for the first quarter of 1957 over
a year earlier. A total of 536 companies grouped in
28 classifications of business reported for the first three months
aggregate net income of $2.9 billion, compared with slightly less
than $2.7 billion in the 1956 first quarter, the Wall Street Journal's
quarterly earnings study shows. While that is a satisfactory gain
of 7.8/fo, it somewhat overstates the actual improvement because of
special circumstances in two industries--petroleum (Suez closing) and
electrical equipment (strike). Since these unusual influences will
not be present to the same extent in the second quarter, and since
some big industries now are showing a slight softening, the second
quarter might produce little i f any improvement over a year ago.
(Wall St. J., 5/3 p.1}

Farmers gained a little economic ground in the month ended April 15 as prices climbed slightly faster than costs .
The Department of Agriculture has reported that prices
received by farmers rose 1.7% to 241% of the 1910-14 average compared
with 235 a year earlier. Prices hit their highest level since last
July's 244. Farm cost of production and living edged up to 29f;fo of
the 1910-14 average--setting the fourth straight monthly record--compared with 284 a year earlier, the Department said. Climbing costs
offset only part of the price gain, so the mid-April parity ratio rose
to 81 but remained below a year earlier level of 83. This was the
first rise in parity since December. (Wall St. J., 5/1 p.18)
FARM PRICES
UP SLIGHTLY


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COMMODITY PRICES
MORE STABLE IN APRIL

Sensitive commodity price indices extended their
declines during April, but the rate of decline
was small in comparison with earlier months of
this year. There are no indications, as yet, however, that the price
decline in the basic materials has been checked. At the present time,
the sensitive commodity price indices are at their lowest since the
downturn began last December. (J. of Comm., 5/1 p.1)

The Interstate Commerce Commission has authorized six
Eastern railroads to increase their first-class passenger
fares 15%. The higher fares may be put in effect after
five days by the New York Central, Pennsylvania, Chesapeake and Ohio,
Norfolk and Western, Pittsburgh and Lake Erie, and Pennsylvania-Reading Seashore Line railroads. These same railroads increased their
first-class fares by 5% on January 9. The 15~ increase applies to
rates in effect prior to that time. Thus the increases total 2C/fo over
first-class fares in effect before January 9. (N. Y. Times, 5/4 p.1)

RAIL FARES
HIKED 15%

Defense Secretary Wilson told a press conference that
the Administration is afraid increased defense spending will wipe out the $1.7 billion Federal budget
surplus this fiscal year. No estimate was made of how high Pentagon
outlays would climb above the original forecast of $36 billion for the
year ending June 30, but Mr. Wilson said they are "creeping up". (Wall
St. J., 5/3 p.1)
DEFENSE OUTLAYS
RISING

High interest rates in the tax-exempt market have
not slowed down school financing. A report released
by the Inv~stment Bankers Association of America
shows that $1,546 million of school bonds came to market in the nine
months ended March 31, more than had ever been offered during a similar
period. Of the total, more than $1.5 billion of bonds, or approximately 97%, were sold. The IBA study notes that educational bonds
seem to have "social priority", in that school construction issues are
rarely postponed, while borrowing for other purposes is often put off
to await better market conditions. (Wall St. J., 5/1 p.15)

SCHOOL FINANCING
UP DESPITE COST

MANUFACTURERS' SALES

Manufacturers' March sales and new orders rose
less than seasonally from February, while inventories went up more than usual, the Commerce Department reported.
Actual dollar volume of manufacturers' sales totaled $30 billion in
March, marking a monthly gain for both durable and non-durable goods
industries. The Department's monthly report, which does not- cover earnings, showed that the actual dollar volume of manufacturers' new orders
rose to $29.5 billion in March, up from $27.4 billion the month before
and $28.6 billion a year earlier. (Wall St. J., 5/2 p.7)

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EXPORTS HIT
NEW RECORD

U.S. exports in March easily hurdled the $2 billion mark
for the first time in a single month. A preliminary estimate by the Census Bureau set the value of exports during the month at $2,127 million. This is close to 7fo greater than the
previous record of $1,993 million set in December 1956. (J. of Comm.,
5/1 p.21)
The stock market in April had the greatest monthly gains
of the year and trading was the largest since May 1956.
Stocks recovered about 75i of the losses made in the
first two months of the year. Prices, as measured by the New York
Times combined index, had a net gain of 13.32 points, compared with a
net gain of 3.63 points for the previous month and a net decline of
1.87 points in April 1956. (N. Y. Times, 5/1 p.59)

STOCK TRADING
UP IN APRIL

STEEL OUTPUT GOAL BELOW
9CJ1i _OF CAPACITY

Operations of the nation's steel mills are
scheduled at 8g/o of rated capacity (for the
week beginning April 29) according io the
report of the American Iron and Steel Institute. This is calculated
to produce 2,278,000 tons of ingot and steel for castings. Last week
the industry operated at 88.71i of capacity. (N. Y. Times, 4/30 p.37)
STEEL SCRAP
PRICES RISE

A four-month decline in the scrap market in Pittsburgh
was reversed as a major steel producer began buying
steel-making grades of the material at substantially
higher prices. Orders were being negotiated at an increase of $5 a
ton in each of the secondary grades. The transaction marked a turnaround in a steel scrap decline that began in early January and took
the price on No. 1 heavy melting down $25 a ton from the record high
of $67 it reached last November. (Wall St. J., 5/6 p.24)

ELECTRIC POWER
PRODUCTION

Distribution of electricity slumped again last week
to the lowest lev2l since Christmas week of 1956.
The Edison Electric Institute reported power consumption at 11,310 million kilowatt hours, only a slim 114 million kwh
above the week ended December 29, 1956. The E.E.I. attributes the
drop to moderating industrial production, particularly in the Eastern
and Central states where current consumption is barely li above the
like 1956 week. (Wall St. J., 5/2 p.11)
KLM STOCK OFFERED
FOR SALE HERE

KLM Royal Dutch Airlines is making public offering
of 250,000 shares of common stock at $29 a share.
Other European companies have had stock listed in
the U. s., but the KIM financing represents the first public sale of
newly issued stock here by a European company in over a decade. (J.
of Comm., 5/1 p.3)


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