Full text of Commercial and Financial Chronicle : April 13, 1950, Vol. 171, No. 4898

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ESTABLISHED 1839

BUS. ADM.

IIBRARY

Reg. U. 8. Pat. Office

Volume

171

New

Number 4898

:

EDITORIAL

J

Price 30 Cents a

York; N. Y., Thursday, April 13, 1950*

Cop>

~

'

%

V: As We See It

«

'

'»

.

"

'

:r

'

*2"**

i-r v

»fc '

.

I

^

?

1

*

rv-

:

And the

.

A Belated but Still Rather Unrealistic

j

Analysis
.Vi

Indications

4

•

to

some

York University

' New

•4;

av"

..

high business level will continue for
at least six months, with subsequent developments un¬
clear. States Treasury's policies in imminent refunding

enduring world order cannot be achieved by
This, so fat as it goes, is, of course, en¬

announced in advance,

desired
ment.

be
we

It

a

soon

man

side and the

more

of the discussion

level.

We

activity today is at
measure

high

a

business activity

Board of Governors of the Federal Reserve System.

February it

was

•Special
Nadler

transcript

before

for

the

April it ought to be

"Chronicle"
of

Association

the

Wr'

f

§

W

this in
and

of

Customers'

an

by

address

Dr.
York

New

Brokers,

f <0
f I

on

page

Continued

36

PICTURES taken during the course of

States Group of the Investment

Van Camp

on

page

The

question

Common Stock

Established 1927

available

a

free

is

not

is not

governmen

anarchis-,
really whether
an

what

kind

of

action

government

is

legitimate, what should be its range and how it shouh
be

limited.

Letting in the Wedge
The instinctive aversion which every believer in a free
economy

feels about admitting this, is only too under¬

standable.

It

seems as

if,

abandons the opposi-

once one

Continued

34

the Fourteenth Annual Conference of the

R. H. Johnson & Co.

of

government should ever concern it¬
self with economic matters at all, bu ,

Fried rich A. Hayek

on

page

41

Central

27 and 28.

State and

550 Branches

Company, Inc.

of

opponent

the

"interference"

>...

Bankers Asjociation appear on pages 25, 26,

Sea Food

advocates

must

again,

City, April 6, 1950.

Continued

a

economic

in

government
The

of course have never meant
literal sense. They all count

count, on the government
enforcing some laws. Although it U
really ridiculous that it should be
necessary
to state this again and

about 180; in March, in all likelihood, it

will be between 182 and 185; and in

considered.

In

of

economy

will

by the index of industrial activity as presented by the

The shortcom¬

specific and concrete elements

are

'y%0'

farmer and not teacher.

Business

Dr. Marcus Nadler

action

want to leave early, I do

or

t

general stated in less question-

in

matters.

do, and if I did know I wouldn't tell
you; I would act accordingly and my
profession would be one of gentle¬

glittering generalities are left to one

as

train

were

the forces operat¬

not know what the stock market

•

much to be

ings of official thought become readily apparent
as

as

ing in the equity market.
\ I will tell you right now, for the
benefit of those who have to catch

•

brought down to this very real world in which
all live and in which such plans as are set on
necessity, operate.

well

it

;

.

free economy would be so much.more

a

n

possible to understand bet¬
operating in the money

as

for

if

ter the forces

market

from unwittingly sliding;

begging terms. In the way in which it is usually stated
it is only too easy to distort it into a caricature and
expose it to ridicule.
Especially the
time-honored phrase about "non-in¬
terference" of government with busi¬
ness can only too easily be misrepre¬
sented as a demand for complete in¬

ent, what the outlook for business is,
it will be

case

effective

"business activity" because the security markets,
both stocks and bonds, are influenced
at least in part by business activity.
3 Therefore, if we analyze, first, busi¬
ness conditions as they are at pres¬

optimism finds little nourish¬
is still essential that current conceptions

foot must, of

The

as

into collectivism.

^

.

I say

and would prevent

economy;

thought that you might be interested primarily in
those developments which have a direct bearing on busi¬
ness activity and on the security markets.-....

real

that

of maximum selectivity.

and advises exercise

ments
I

larged and amended, particularly the indicated
thinking of the Chief Executive, leaves a good
so

of government activities to fixed rules
together wiih genuine equality
before the law, are indispensable to preservation of free

Statesr limiting

given for all this, the

It leaves

.

_

by laws and government by men, constitute crucial tests
fixing proper degree of government interference.

of taxhigh grade bonds. ^ Regarding stock
market, he cites both favorable and unfavorable ele-:

present status of the thinking, even as thus en¬

be desired.

-

etc.

Road to Serfdom,"

in

exempts and other

—?

deal to to

Author "The

operations will have important bearing on price

couraging.
It is perhaps particularly hearten¬
ing to hear someone in a position of influence and
responsibility talk as plainly about the economics
of importing foreign goods as Mr. Hoffman has on
some
recent occasions
presumably iwith the
blessings of the President.
And the President
himself apparently has included in his thinking
some
recognition of the economic necessity of
balance in the dealings among the countries of
the world.
Too often, it has appeared that the
politicians have confined their attention to the
encouragement of exports, and have indulged in
sham and balderdash when the subject has turned
to how exports were to be paid for.
But when full credit is

By F. A. HAYEK

.

Internationally prominent economist maintains equality
before tbe law, and the distinction between government

Dr. Nadler predicts

alms.

i '

;;

his ECA Administrator,

has rather belatedly come
sort :.of realization that restoration of

'

School of Business Administration,

a Graduate

that the President, as well as

are

Security Markets

By DR. MARCUS NADLER* 5

/

Municipal

INVESTMENT SECURITIES

across

Canada

Bonds

Monthly Commercial Letter
upon request

Prospectus

request

on

THE

White,Weld&Co.
Members New York Stock

Exchange

64 Wall Street,

Albany

Buffalo

Wall Street, New York 5
CHICAGO

BOSTON

CANADIAN BANK

OF NEW YORK

OF COMMERCE

Harrisburg
Scranton

Providence

40

Williamsport
Springfield

Washington, D. C.

Bond

Dept. Teletype: NY 1-708

New York
Seattle

Portland, Ore.

San Francisco Los

THE CHASE

PL

Angeles

OF

BONDS & STOCKS

stocks and

■

Northern
New

England

Company

Distributors of Municipal

bonds

and

■

THE CITY OF NEW YORK

•M

CANADIAN

canadian
Underwriters and

Agency: 20 Exchange

Department

NATIONAL BANK

Head Office: Toronto

~

Wilkes-Barre

Bond

THE NATIONAL CITY BANK

PHILADELPHIA

BOSTON

Troy

New York 5

Corporate Securities
Prospectus from authorised

dealers or

VANCK, SANDKKS is.

OTIS & CO.

Goodbody & CO.

(Incorporated)

CO.

Ill

Devonshire Street

Established

1899

MEMBERS NEW YORK

BOSTON
•

-

Los

Angeles




New York

Cincinnati

Chicago
Columbus

Denver
Toledo

Gkporaxkvi
40

Dallas
Buffalo

115 BROADWAY

105 W.

NEW YORK

*

Exchange Place, New Yoark 5, N.Y.

ADAMS ST.

T

CHICAGO

IRA HAUPT & CO.
Member* New York Stock

end other

STOCK EXCH.

CLEVELAND

Chicago

New York

Doxcaox Secorihes

ESTABLISHED 1891

—

Teletype NY 1-702-3

WlfitdbaH 4-8161

111

Exchango
Principal Exchangee

Broadway, N. Y. 6

WOrth 4-6000

Teletype NY 1-27WI

Boston Telephone!

Enterprise 1826

2

THE

(1510)

MARKETS

TRADING

The

IN

in the investment and

'

•

Recent

A'

S.

JOHN

Moody's opinion available

,

-

which, each week,

Hew York Hanseatic

'

of experts

Thursday, April 13, 1950

This Week's

Participants and

Their

*

particular security.

a

be

years

considered

Machines

Corp. — John S. Borg, Partner,
May Borg & Co., N Y. City.

may

as

Business

International

'
recent

Alabama &

Selections

''

'

in-

cash distributions.

.

,

custom of

tribution

Since 1937 the

Eisineer4

5% annual stock dis-

a

was

pretty

well

estab-

/

.

Cohen

Partner

& Co., N. Y.

monson
»

;

hshed, with more important splits
m 1946 (5 for'4) and 1948 (%
share additional for each share
held). One hundred shares bought

Selected

ties

120 Broadway, New

York 5

Teletype NY 1-583

BArclay 7-5660

at the 1939 average

Columbia Gas System, Inc.—J. W.

name

one

for all. I have

chosen

the

better

others

than

,

particular

purposes, and
none
is
best

Rights & Scrip

Inter¬

075.50

national Busi¬

as

the

fills

Members
New

r

|

York

Curb

Exchange

2-7815

000 to

S.

Borg

all "point to contmued sound profits expansion.
Last
year's sales and service
and

about 3%

of

by retained

by

income has

net

Tele. NY 1-1817

improvement is

sales-

whereas

n

increases

earnings

American Turf Association

labor

are

Common

Preferred

effect
the

BANKERS BOND ^

features

of

..

KENTUCKY
Bell Tele. LS 186

less

which

is

than

sales

of

/

^

RUDOLPH

WURLITZER

of

IBM

equipment include

whose

of

activities

The

request

f

.

growth

almost without

of

has

IBM

been

interruption, there

having been only three years since
1925
(namely,
1932,
1933
and
1942) that the net profit did not
This
both

outstanding
from

the

record resulted
factors

already

mentioned and from the development of new and improved prod148 State St., Boston 9, Mass..
Teletype BS 259

Mexican Railways

ucts created by the large research
and

engineering laboratories. Not
only are more and more large corporations installing additional
IBM equipment, but smaller concerns
as
well are becoming customers
in
large numbers. The
domestic
and

market is still growing,
foreign markets offer almost

unlimited

BONDS

new

from the last

fields.

annual

To

quote

report "The

growth of IBM's business abroad

Bought—Sold—Quoted

resulted

IBM

Analysis

f:

on

request

!

zippin « vvmrnill
& COMPANY
in
mi

i

208 South La Salle St.,
Chicago 4
Tele.

RAndoIph 6-4696

addition

statistical

to

tests,

do

an£ear
Jt

h

gi

Tel. CG 451




in

the

formation

of

the

World Trading

Corporation,
wholly owned, but independently operated subsidiary company,
for the purpose of conducting all
a

meeting
possess

up

+

f

having

I

special

a

re-

Portland, Me.

Tele. BS 142

Enterprise 2904

Hartford, Conn. Enterprise 6800
Open End Phone

Winters & Crampton
Atlantic

City Electric

Harshaw Chemical

can

Philadelphia Electric Common

that a special order is made
for her. Other than this at¬

Philadelphia Transportation Co,

attendant

an

workers

no

who

a

Issues

visible.

are

rear room

a

studio

environment.

The

economy, which is passed
the customer,

nPr.

^

j

^

**

*

to

on

Henry B. Warner &. Co., Inc.

Members National Assn.

123

Phila. Telephone

PEnnypacker
New York

which

Securities Dealers

South Broad St., Phila. 9, Pa,

displays

Bell System Teletyps

-

5-2857

PH 771

City Tel.: BOwling Green 9-4818

Always well lighted and orderly,
it shows the customer, at a glance,

~

where
can
be
found the
jello,
mayonnaise, cereal, puddings
flour, sugar, ketchup, and a host
of other prepackaged items. She
,

vaiue,

reaches
r

TT

fl

,

that

<^ana

.

into

chain of 288

retail

s

the

available

her.

another
the

the

Stix & Co.

one

force

By

package

vacant
to

Vegetable

of

offer

are

mar-

;

interests

removes

of

INVESTMENT SECURITIES

slides

*

509

a

S.

fruit

and

bountiful

products

of

prices.

The

jove

the product

of

the soil

at

clerks

charge of these items know

wag°n routes going out to serve
rural customers lend a measure

•St. Louis l,Mof

counters

display

attractive

Eisinger

street

readily
shopper.

beautiful
Jacob

813

olive

place,

next

food

which 200
k e t

and

up

gravity,

n 10 n UomParW .opei*a
a
stores,

„

to New York Canal 6-1613

Allan Wood Steel Com. & Pfd.
she

wrapping and sealing are done by
junior employees. As is obvious,
this method results in substantial

jmi?nrtaripA
.

Inc.

Penna. Power & Light Common

most

certain
elements

MEMBERS

in

MIDWEST

STOCK

EXCHANGE

and

they handle,

,

if^pri™dtau3uie S'Structure mam

dekrthei opera-f
stability to am

tion. These latter radiate from 47

warehouses in 36 states, and offer taiaed m these stoies. The savings
tea> coffee, spices and other gro- ?f larJe..scale buying, efficiency
ceries, as well as premium house- *n' distribution and selling, are
hold products to rural customers.
^ consumer. In
;
The most attractive feature to
of
me about this company is the the net profit was $1,780,000, a
quasi-public utility nature of the Profit ratio of a trifle over 15%.service it renders. It offers the
°ther words, on a sale of $10
housewife savings of 15% to 20%,
u.groce"1f,
avl housewife,
as contrasted with the cost of (which might seem like a pretty(
purchases at the corner grocer. An substantial transaction), the net ,
inspection of one of the modern ProflJ to the company is approxi-fi
super markets offers a revealing mat(fjY lac- This is really passing
object lesson in the kind and
.e bene"ts of an efficient,
quality of service available at an farseeing operation to the conextremely attractive price level. suaier'
seems to me that an
Here, in a well lighted area, one enterPrise so conceived and so
sees spread out a vast
variety of uianaSeu rests on bed rock. Its
_

buy
u.

s.

savings

bonds

,

clean, fresh food products. Many
of them are prepackaged in sanitary containers. This is true of

ventional items.

some vegemany

con-

•

-

The meat counter illustrates the

So consistent has the company's

cleanliness and efficiency of new
methods; long, low refrigerated

growth been that its annual stock

lamb

Dealers

or

The butchers work in

Jj

t

itg

,

liver,

Securities

Tel. HUbbard 2-5500

picks

whatever
her needs. She sees

Food-O-Mat,

and

pos-

She

of

Assn.

hundreds of packaged items, again
is a
saver
of time and energy.

cheese, meat products,
tables and, of course,

and

line.

and

Nat'l

75 Federal St., Boston 10, Mass.

wU1

tQ

tendant,

.

business outside the U. S,
territories

con-

J. B. Magniie & Co., Inc..

Members

quietly and without strain, in al¬

wWV.

IBM

sessions."

There

in

weilstocked' cases,

the

see

+he

.

Q

in

down

beef steak,
hamburger,

mjght

gpeak

not

jn

.

her.

engage

wait

nor

persons

progressive

like best must,

onjllrintf

..

exceed that of the previous year,

:

and

security I

super
.

.

analysis available

fluctuate

less than volatile industry, acts as
yet another support for volume in
periods of declining general busi¬
ness.

:

S

(Grand Union Company)

important sustain-The fact that large

government and public agencies,
banks, and insurance companies,
all

Tel. CA. 7-0425

elge

New York City

haps

neither

Bought—Sold—Quoted

in

wrapped

all» including weight and price at
iw a single glance. She can complete
w" her Purchases within a few sec-,
onds, saving time, energy and a
?n substantial amount of money. If
accrued in h should be in the rare category

Members, N. Y; Stock Exchange

an

factor.

&

great variety

a

interests

reaches

the

Partner, Cohen, Simonson & Co.,

The

need

chopS)

JACOB S. EISINGER

in

that

mereiy

equipment. Furthermore the
large sale of cards for use in its
machines is

Henry

—

McGinnis

item

each

versatiom;

Held of operations.

of revenue,

source

fluctuates

users

on

sbe

new

ing

Revised

.

is the steadying
income

rental

principal

and

Incorporated

Floor, Kentucky Home Life Bldg.

Long Distance 238-0

,

foreseeable

vorable

2,

.

future, the demand for products of IBM should
be very strong.
Among other fa-

Kentucky Stone Co.

secti0n

company
alone at the head ot its special

par¬

basic_trend is apt to continue for
the

LOUISVILLE

a

ticularly ready market. Since this
.....

1st

find

savers

contain

cases

meats,

tbe Past to stockholders of this
,■ all*Lariaf,.,,
Qrl,
P*

ex¬

branch offices

COMCQHnr.oi

^al gaiI?s which have

enterprises during the
same years.
In a period of rising
expenses and labor costs, devices
which

m

only $71,000,000

T

[a^£°cr

standing

Common

1960

of

Partner,

our

Convertible

cellophane and bearing clearly a
legend showing weight, price per
pound and total price Thus> the
housewife may go directly to the

re-

dividends,

stock

show
0f

Jjcarmg issues totalling $85,000,°W- -?a ?nc(L?f c#pita

ceeded those of either of these out¬

American Air Filter Co.

-

in-

during this expansion period and
now consists of three low interest

percent well-managed

times. The

leading growth company as du
Pont, and only a little short of the
sales!growth of General Electric;

Street, New York 5

5%

the

earnings

NY 1-1557

New Orleans, La. - Birmingham, Ala.

SACO LOWELL

under $79,000,$267,000,000 financed

times the

greater than that of such another

Members New York Curb Exchange

Co.

3s

Exchange

Mobile, Ala.

Pacific

Oetjen,

Stock

St, New York 4, N. Y.

Co., N. Y. City.

from just
over

w

figure

age

Members New York Stock Exchange

DIgby 4-7140

4%

^z,uuuuuu in iy*y,

or

P. McDermott &

44 Wall

about

risen from about $9,000,000 in 1939
to
than
1° more man $32 000 000 in
1949

I Peter —Sold—QuotedCo.f
Bought
I Tel.

sheet

ing(.,

industry,

1939

&

Purcell

York

New

HAnover 2-0700

of

the

were

A.

Edward

Debentures
,

comprised solely of the 2,632,007
shares of capital stock outstand-

rentals

Members

Direct wires to

almost

management, its capitalization, its
industry, and its position within

Request

Steiner, Rouse & Co.'

Co., N. Y. City.
Southern

$17,-

total

a

balance

Debt increased by

believe in growth equities, and
secondly, that I think this company's record and prospects, its

Insurance Co.
on

to

fleeted
John

I

Report

worth

largely

,

American Mercury

the

on

creased

re-

quirem ents
for long-term
holding.
My reasons
are first, that

120 BROADWAY, NEW YORK 5
Tel. REctor

the

received

shown

nearly ful¬

York Stock Exchange

be

of

William

25 Broad

Jackson,

something like $10,100 additional.
During these years, total assets

lieve most

New

would

dends

security

which I be-

McpONNELL&fO.

investment

Col.

—

$79,000.00 exclusive of cash divi¬

Machines

ness

Since 1917

initial

Issues

Freiday, Partner, J. RobinsonDuff & Co., N. Y. City,

price of 170%
(half way between the high and
low) and before that year's stock
dividend, would today have in¬
creased
to
roughly 339 shares.
With the current price about 233,

for

Specialists in

Bought—Sold—Quoted

Si-

City.'

security as the
one I like best requires some definition of terms, since it is clear
that everyone likes certain securi-

To

1920

Established

Louisiana Securities

come supplementing the modest Grand Union Company—Jacob S.

(International Business Machines
Corp.)

Corporation

group

„

of

reasonably

Vo„r

*

Exchange
.

.

dividends
„

Curb

York

different

a

for favoring

reasons

BORG

s

„

CHRONICLE

advisory field from all sections of the country
•,

\

FINANCIAL

Forum

participate and give their

Utility 5V2/52S

&

Security I Like Best

A continuous forum in

Central Public

COMMERCIAL

^u^ure ]s clear and assured, be-

N. Q. B.
OVER-THE-COUNTER
INDUSTRIAL STOCK INDEX
11-Year Performance of

35 Industrial Stocks

?aVse. °* me nature of the service
ln P?sltl0n to render.
-

BOOKLET

The third element that strikes
Pe as being Particularly interest-y
ing is the fact that this company f

has vef.y wise.ly retained a large
Pr°P°rtion of its earnings, instead
Continued on page 38

•

ON

REQUEST

National Quotation Bureau
Incorporated

46 Front Street

New York 4, N.Y.

.1'turn urn

Volume

171

Number 4898

COMMERCIAL

THE

A

INDEX
Articlet and New§
The Meaning

the

and

to Commercial Bankers

them to

4

-

4
5'i>

'

■

...

of

Competition and Economic Progress—Geoffrey Crowther__

.

____:

6

.

moments

Informing the Investor—Edward T. McCormick________^_-_^^

of

8?

about

have

Consumer
fruitful
loss

us

heard

that bank

Lawrence.11^

unkindly

it

,

of

Full;1'

Imports to Business Activity and

credi't.

7.'

Employment—Maurice Heyne
On Teaching Factory

17

the

C
Small Business Group Opposes Frear Bill

Prices

Consumers'

in

:

;

9

•

of

r

Otis & Co. Ordered to New Hearing by SEC

Signed

,

funda¬

of

could

Saturdays From June to September

Consumers' Buying

21

_

Expectations Surveyed_____

fies

Business,

V

It is

Bawl Street Journal Invites Contributions

fact

credit

24

Heimann

37

Regular Feature•

Bank

(Editorial)

Insurance

and

Man's

Business

Canadian

Bookshelf..

Securities

___—__

Dealer-Broker Investment Recommendations

Mutual Funds _______!

News About Banks and Bankers.

Our

Reporter's

16

•

Salesman's

Corner

_"_ 46

Security I Like Best___l_

the

fore

Drapers'

land

and

U.

25

C.,

'

S. Patent Office

28,

Eng¬

a

climate

8,

as

1942,

25,

ary

Park Place, New York 8, N. Y.

which

;■

2-9570

to

N.

Y.;

1879.

9576
.

[ERBERT D. SEIBERT,
'j... WILLIAM

••

-

and
bank

extremely low

consumer

International Cellucotton

of us expects this

none

that

practices

in

Products Co.

continue

Iowa Public Service Co.
*

have

gone

recent

WILLIAM D. RIGGS, Business

Manager

Possessions,

*

13, 1950

in

result

can

a

crop

of

of very doubtful

paper

quality, and if banks with inexpe¬
rienced

credit
such

or

over-eager

departments

WilliamA.Fuller&Co.
Members

Tel. DEarborn 2-5600

holding

are

the
under

at

post

the

,'

office

at

Pan-American

:

Dominion

of

in

Competent Personnel Needed

For

bank
which
engages in
this business
must
recognize that it requires
competent personnel — men and
women who possess
both techni¬
cal training and credit sense, who
Consequently,

in

interested

more

are

every

Other

Union^ $35.00 per year;
Canada,

$38.00

per

potential corporate financ-.
ing consult

3,

111.




our

"Securities

Registration'* ~ section.

in

soundly

sake of volume, profit, or selfaggrandizement; men and women

realize

who

credit

the nation,
focused

on

effect

the
on

the

of

I;:.

con¬

economy

of

and hence keep an eye
the probable future—

But

difference

the

ment

is

credit

consufrier

few institutions may make

even a

our

control

between

and

relatively
banks

new
—

field

the

for

greater emphasis
on increasing the

ABA's

American

Credit

govern¬

self-control.
the day when

will be placed
number of di¬

Bank-to-individual consumer
loans, rather than on the acquisi-

rect

Mr. Robertson be¬
Bankers Association Con¬

Conference, Chicago, March

;

Continued

;t;

on page

30

FIRST FOR YOU
-

because it reaches

interested in offerings

of

:

;

For43 yearsTheNewYorkTimes

-

are

has been the world's largest

^

High Grade Public Utility and Industrial

cial

■■

Spencer Trask & Co.
New

York Stock Exchange

25 Broad Street, New York

(

4

for for--

eign subscriptions and advertisements
be made in New York funds.

must!

-

Chicago

-

■

Hubbard 2-8200

Glens Falls

story

where it counts

most.

50 Congress Street, Boston 8

Teletype—NY 1-5
Albany

whole

community... tells your

Members New York Curb Exchange

HAnover 2-4300

account of the fluctuations In :

the rate of exchange; remittances

Because it reaches the
financial

the

-

m

.

All

1

> Note—On

advertising medium. Why?

advertising

Members

Other Publications

finan-

*

ir

year.

,

South La Salle St.,
(Telephone: State 0613);

Offices;. 135

complete record of:

meeting actual needs of the pub¬
lic than in "selling" credit for the

S.
of,

ertising

Ihicago

a

;

PREFERRED STOCKS

Statee, U.
and Members

United

Countries, $42.00 per year.

,

corporation news, bank clearings,
tate and city news, etc.).
;•

Tele. CG 146-7

when an economic
downturn occurs, these banks are
in for some painful education.
paper

New

March

Act of
• '/

j

ecords,

of Midwest Stock Exchange

209 S.La Salle Street'Chicago 4

consumer

<

(general news and ad- i
Bank and-Quotation Record
Monthly, '•
issue) and every Monday (com- ,
$25.00 per year. (Foreign postage extra.)
!»'
lete statistical issue — market quotation
Every Thursday,

Prospectus Available

,

second-class matter Febru-

Territories

?

Other

Thursday, April

Southwestern Pub. Service Co.

years.

is off the sellers'

cream

consumer

credit

is in

country

Subscription Rates

r

Subscriptions

Editor & Publisher

DANA SEIBERT, President

TRADING MARKETS

I

,

REctor

Mass;

Tel. HUbbard 2-1990

too

good!

paper

state of affairs to

dealers

1950.

We

Company

York,

Publishers

IS Post Office Square, Boston S,

c/o Edwards & Smith.

Reentered

Reg.

E.

LERNER & CO.
Investment Securities
i

ex¬

on

Copyright 1950 by William B. Dana

FINANCIAL CHRONICLE

RDLLIAM B. DANA COMPANY,

London,

Gardens,

$9.50

market, competition among retail

♦Part of address by

Published Twice Weekly

Selling about

of

cannot

based

I look forward to

still

sumer

COMMERCIAL

the

commercial

1

It

are

bad

even

After the

—_______

•___

*Not available this week.

The

of

of

banks.

(Walter Whyte Says)

field.

"unpunished"

_______

The State of Trade and Industry

Tomorrow's Markets

try available on request.

the

paper

Washington and You.

on

.few banks saw

a

•

review of the Cement Indus¬

bandwagon, irre¬ knowing the dire results of sud¬
den changes of attitudes at the
spective of whether they were
wrong times; who realize that un¬
equipped to do so. Today, a large sound relaxation of standards by

35

__

Securities Now in Registration
The

Finally,

get aboard

24

__

interest,

light, and then almost over¬

portion

_______

a

night most banks felt obliged to

24

Public Utility Securities

a

emphasized that mo^t of

economic

ah

sumer

the

49

__

___

_____—

rates.

23

___

______—

Offerings

For

was

operating

funds borrowed at

51

___

of

Southern

times.

credit field.

rates

sometimes

_________________

Railroad Securities
Securities

scionable

29
♦

Governments

Security

Prospective

18

___

Report

Our Reporter on

6

st-growing

Analysis of this Company and

.

statistics

the

statistics

shod

lead to eco¬

relatively
untouched by commercial banks.
Small loan companies and finance
companies stepped into the breach
—s o m e t i m e s charging uncon¬

44

——_—

Observations—A. Wilfred Ma,y____

wrong

consumer

fa

forever, and I hope that we are
all avoiding the unsound and slip¬

at the slowness of banks to enter

__i

—

____

______

__

or

-

STOCK

California.

during
!

stimulant

For years some of us wondered
the

with

hope that

instability, depending upon

long time the field

___________

NSTA Notes

a

right

„__

of Business Activity

Indications

in

the way it is handled and whether
it expands and contracts at the

14

From Washington Ahead of the" News—Carlisle Bargeron.

as

8

___

be

these

creating

the

in
•

perience of the past fifteen years,

increased

or

CLASS B (common)

A leading producer of cement

satisfac¬

easy

5

Revolt?"_*__

British Taxpayer's

Einzig—"A

——

i_L

up¬
even

—

consumer

22

___

—.

con¬

22

___

Coming Events in the Investment Field____

nomic

21

___

that

economic stabilizer

.Cover

—

Stocks..-^

often

employment,
additional pur¬
power.
In short, it has
become a very definite part of
our
economy.
Its importance is
manifest from its rapid expansion,
and
today rits
position' is
so
strategic that it can serve as an

Greater Jobless Benefits Recommended by President Truman- 32
The Senator Is Right! (Boxed)

to

thereby
chasing

30

—

at

WE SUGGEST

,

RIVERSIDE CEMENT-GO.

as

—

department

credit

sumer

production, which in turn has

led

times

the

functioned

successful

made

served

has

good

"historical experience" in the con¬

accepted and recognized

an

economic

to

Farm Subsidy Surplus Deplored by

we

manner.

23

___

CPA's Recommend Important Tax Reforms

As We See It

askance

23

Says F. D. Newbury

Hence,

credit, as long as it satis¬
legitimate demand in a con¬

structive
Better Forecasting the Key to Good

people.

look

not

a

of

has

ourselves

sumer

22.

.____

the

been

Too many of us have drugged

;

mental duties of banks is to meet
the credit needs of the people—
all

a

Robertson

the

20

*

been

less favorable times.
L.

J.

>of

one

18

:

New York State Act to Broaden Trustee Investing
on

a-,

19

Conference Board

NYSE to Close

the

rency

that

has

of bank profit. The

torily in the recent^ past is no
proof that he has either the ability
or
the understanding to operate

firmly .believe

Industrial

National

by

Reported

u

For

of Bank

might, in view of the

vidual

Comp-

troller

Dip

We

who represent
the Office of

14

^_

Workers—Roger W. Babson_____

WHitehall 4-6551

Large Appreciation Potential

credit

has

trend

-

YORK

is

though in many banks this type of
paper has been handled by un¬
skilled employees.
But the times
will not always be trending up¬
wards, and the fact that an indi¬

to

—

record

ward

—on consumer

Contribution

STREET, NEW

-

Source

source

well it

su¬

understate

in Our Tax System—Jy Cameron Thomson!_ 12 •;

Needed Changes

WALL

99

Profits

pervisors look
Point Four—Foreign Aid Forever—Joseph Stagg

of those stocks that don't count.

you

...

.

banking

T, All of

Timing—Bradbury K. Thurlow—___ 10 !

Fruitful

A

of

>

Department

only 10 years old.

some

you

relieve

We'll

today.

Telephone:

few Consumer "Credit

a

business,

Many Railroad Securities Are Attractive—James B. Tannahill 10
The Pitfalls of Formula

take

speak

kinds

.

8
-

to

to

titude of bank supervisors toward

7

------

like

portfolio

your

do

obsoletes

many

Conduct your own census

possible misconceptions of the at¬

■

Depression—Harold G. Moulton

a

hold?"

delinquencies with growing- laxity.

would

certain

Measures Needed to Forestall

equip themselves properly.Warns satisfactory loss

v

„

I

Misconceptions About Reserve System's Management Policies
—Harold V. Roelse.

ff)

AND COMPANY

DIDN'T ASK
—"How

Obstructing

Security

Individual

mmmmm

WHAT THE

guide to future, citing alleged carelessness
in current lending on television sets and automobiles. ' Reports
40% of instalment credit held by banks, who are handling

,v

Tax Problems Involved in Pension Plans—Herman C. Biegel__
■
'
t '
I'
■*

Overemphasis

Consumer Credit

record of past is no

4

Understanding the Balance Sheet—George F. Shaskan, Jr.____

Britain's

[lCHT£HSTtlH

B.S.

Stating commercial banks felt obliged to get on the consumercredit bandwagon, Deputy Comptroller of the Currency urges

3

_

_____________

—Robert S. Byfield___

;

on

3

CENSUS MAN

Steel Report—A Political Grab for Control!

O'Mahoney

(1511)

By J. L. ROBERTSON*

Consumer Credit

on

i_

CHRONICLE

Deputy Comptroller of the Currency

Cover

:_

—J. L. Robertson

The

Bankers

Security Markets

—Marcus Nadler
A Warning

FINANCIAL

Warning to Commercial

Page

of Government Interference—F. A. Hayek__Cover

The Business Outlook

&

-

Schenectady

-

Worcester

the News That's Fit .to

Print'*

I

■

.

4

(1512)

'

•

COMMERCIAL

THE

-

The

O'Mahoney Steel Report

—A Political Grab for Control!
Y. Stock

at

American

capital

will

decade

of

ball

the

ity

the

now

and

Economic

Report

Re-

o n e

March

last

it

its

y

report on

the

steel

S. * Byfield

Robert

industry a c companied by a violently dissenting minority report which, together with appendices and certain

individual

prise in all
66

a

comments, - comprinted pamphlet of

hearings themwhich the report was
based, were held on Jan. 24 to 27,
inclusive, and, with exhibits, fill
a volume of 567 pages.! The principal findings of the majority, ineluding the Chairman, Senator
Joseph O'Mahoney of Wyoming,
were, in brief, that the steel price
The

pages.

selves,

of assets and liabilities, and elaborates

the part of the major¬

given in the minority

which

cites

such

re¬

on

corporate reserves, analyzing in detail

example

typical balance sheet.

of

the

board

that

was

CIO

of the committee

conscientious

while

the

the functioning of

Turning now from last week's
pleasant and easy-to-take discus¬
sion of "How to Read (and How

counts

by

rhetorical

really

were

and

vigilant

readily turn into cash and which

cash,

marketable

securities,

ac¬

notes

receivable

and

and

guest

our

lecturer

in

and

wage

(3)

There is

Mr.

it might possibly in the course of
its operations turn into cash. Ac¬

to

costs

the

what

™d

and

and

of

the

realized

—

"Un-

which

the

raw

are

corporation

expected

are

in

receivable
the

owe

operations.

derstand ing
Balance

the

Sheet."

notes

others

parts

adequate de"

preciation charges.

counts

difficult

course

to the function

as

of

one

more

frightening mis¬

a

understanding

Eco-

pension

being raised?

were

the Nathan

on

a

Inventories

be

to

of

course

normal
the

are

materials, work in process
goods that a corpo¬

and

finished

The

ration uses in its normal opera¬
The colloquy between Mr. A. B.i balance sheet
tions...-,
;.•>:;..
Homer, President of Bethlehem
and its close
-V/;
•/.!/' Fixed Assets
(Fourth Round Wage Increase. For Steel Co. and Messrs. O'Mahoney.
associate the
'years: the f steel companies have. and: Patman of the majority is a
Profit & Loss /
'"J' The assets listed next are gen¬
ilived in a statistical goldfish bowL/ classic
demonstration • that,if • Statement are " Geo. F. Shaskan, Jr... erally Fixed Assets. Fixed assets
/Yet, • in a large measure, steel translated into law, Welfare State s o I
important
v.A 7 v i \ ;!■ consist of land, plant, equipment
jwhile having attracted to itself economics might make it impos-; to sound
investment, that if we and machinery. You will usually
(more rough handling than per- sible
for American industry to can
really make these understand¬ find that most corporations list
haps any .other industry, has nev-* expand except by. selling new se-j
able and usable to you. this series the gross or total value ( of the
ertheless shared the arena with purities or borrowing ■>£ The ma-Y
of lectures will have served its land, plant, equipment and ma¬
other important industries. In the j°rity, in brief, questions the pro-;
purpose.
'
1. v '
1 ' " * chinery and then deduct from this
Flanders hearings of 1948 the food Priety or fairness on the part of
In brief, the balance sheet is the gross figure an amount to allow for
processing, automotive, oil, tex- a business to use reinvested proffinancial statement stating the the wear, tear and obsolescence of
tile and electrical goods people,its for expansion or replacement,
condition of business as of a speci¬ such assets to provide a corrected
were called in to testify regarding it does not or will not understand
fied date. It is so important to the or net figure.
This allowance is
their profits.
^
that whereas plant, equipment investor because it
provides the described as "Reserve for Depre¬
and facilities are. as a matter of
basis for determining salient fea¬ ciation, Amortization and Deple¬
Recent Anti-Trust Actions
accounting convention, stated on
tures
of
a r company's
financial tion" and we will be reviewing
The anti-trust front has again its books at cost and depreciated,

reply of Dr. Jules Back-'
the Economics of

a

'

„•

..

.

.

... „

27

issued

price increases
in

Mr. Shaskan explains the fundamental principles and details of
the company financial statement. Details the various categories

1949,

after

SHASKAN, JR.*

«.*

Co mmiltee.

On

to

iman entitled

.

h

.

try 1949 and the well documented

Congress
general 1 y
known as the
a

report

•287 page

81st

O'M

,

nomic Position of the Steel Indus-

of the

port

the

September. There

the

on

X

By GEORGE F.

Partner, Shaskan & Co., Members N. Y. Stock Exchange

same

trickery as implications, selectiv¬
inventories. I think we all know
ity in quoting witnesses, distortion Not to Read) the Financial Sec¬ what cash is.
Marketable securi¬
of facts and the manufacturing of
tion," so cap¬
ties would include those securities
prejudice. If the majority mem- ably handled
which
the
corporation
could

Fact-Finding
July and August, 1949,

in

Board

Joint Committee

x.

Understanding the Balance Sheet

hurled

were

its third

public
is the

prints

.

on

was

port

of the steely automo—
other industries in De—

tive and

and prominent

in

...

and profits

The

Thursday, April 13, 1950

cember, 1948. Besides these three guardians of the consumers of
A. Wilfred
Carrying the there were the hearings before the
why did they remain silent May, we come
Presidential
Steel

activity.

just

of

invested

enter

soon

^

,

sector

Example

of bias

Declares Committee Majority's views con¬
a blueprint for enfeeblement of U.
S. heavy industry
degree where State finds easy excuse to take over.
x

The

States."

in December,

steel

profits.

of those in power.

world-wide assault upon

CHRONICLE

as in
December, 1948, at the time of the
Flanders hearings on corporate

likens O'Mahoney Committee hearings on the steel
industry to the totalitarian "demonstration trials" in which
verd-ct is prejudged and objective is to propagandize ideology

to

United

charges and epithets

Exchange

Mr. Byfield

stitute

FINANCIAL

vestigation was made.
Chairman
O'Mahoney baldly stated on Dec.
15 that "the steel industry is not
justified in levying an increased
tax upon the whole economy of
the

By ROBERT S. BYFIELD
Member, N.

&

upon

condition. For example, Professor this
account
in
greater
detail
annually on an original cost rather
Prime lists five major facts which somewhat later.
At. this point,
than a cost of replacement basis,,,
are
derived from the balance however, it is important to know
in an era of rising prices addi- sheet. These are: the
amount of that occasionally the Reserve for
tional amounts of money must be
capital invested; the working cap¬ Depreciation,
Amortization
and
found merely to replace physical - ital
position; capital structure; in¬ Depletion is sometimes carried on
assets as they wear out. They will
come-providing assets; and ade¬ the liabilities side of the balance
n°t acknowledge the truism or
■
quacy of reported earnings.
We sheet.
increases of last December were tic of enforcement of the Sherman basic
principle that ^the more
will study the' application of a
If the corporation owns any in¬
untimely and unwarranted, that a Act prior to 1938 which ushered business is "affected with a public.
balance sheet in a later lecture,
new
vestments which it intends to re¬
Congressional investigation in the Thurman Arnold era. They interest," to use a
neo-liberal
devoting this lecture to seeing just tain on a more or less
of the steel industry be launched involve new concepts and pat- cliche,{ the
permanent
greater its primary, what it contains.
'.V'. '.'V-. basis
with subpoena powers to force the terns which go far beyond the-duty .to stay in business as a gothese
will
generally
be
shown
submission of requested data and simpler, one firm monopoly pros-, ing concern, maintain its plant, :v.
next
among
the- assets.
;..v- Principal Sections
that steel producers be required ecutiona exemplified in the Stand-(and equipment > and improve its ,
Such investments might represent
The balance sheet is generally
in the future to file with the Fed- ard Oil, Tobacco Trust, Pullman technology. Congressman Patman I
the securities of a subsidiary or
divided into two principal sec¬
era! Trade Commission schedules and Alcoa cases. ' Just before La- flatly accused Bethlehem of ask-!
they, may be securities of other
tions—Assets and Liabilities. EachOf any proposed price increases 30 bor?Day 194ft it became clear that ing the "consumers of America to',
companies.
In the. latter event,
of these main sections, m turn, is
days before they went into effect; the £1948*1949 ustyle of
attack subsidize it" because the funds for.
particularly, they may be as fully
;
*
divided into sub*groupings. which
against business would
be
marketable as the securities listed
re- replacement at present day costs;
we; shall examine in a few mo¬
t
;
..Must Reading
v.4i placed by a new tactic.
Pre-empt->and expansion came out of "sales:
among Current Assets but the fact
ments.
In terms of its make-up,
The blow-by-blow story of the ing the
that the

been, active in recent months,
There are the actions against DuPont, General Motors, U. S. Rubber, Western Electric and the A.
& P. by way of example.
Such
suits are not the old-style simple
attacks such as were characteris-

,..

,

'

;

,

,

style of the late

George

revenues." If not out of the

pro- ;

most

for

corporation

American

has

/in¬

no

corporations
investigation/ if such it can be Orwell in his novel "1984" we ceeds of the sales of goods they-;
tention of turning them into cash
assets are shown on the left side
called, should be required reading would say that in 1948-1949 the produce or services they render, ;
will dictate that they be listed as
of the page and liabilities on the :,
for
security analysts, investors, chant of the business baiters was where would: American- business ;
Continued on page 31
businessmen and serious Students f'PrOfit Equals Sin." In 1949-1950 obtain funds to operate; provide right side of the page, although
you will occasionally find the as¬
of the great socio-economic strug- it is "Business Equals Badness." jobs and grow?
Borrowing or'
sets stated at the top of the pagegle of our time, namely, the re- While the following are merely selling securities cannot be the:
A COMPLETE
distribution of wealth and income coincidences we recall that Con- answer, because they would lead - with liabilities listed below*•••;
Taken as a whole the balance
in the United States by political gressman Emanuel Celler, Chair- to
excessive , indebtedness and
TEXT BOOK!
-

,

.

action.

It

would

serve

no

pur-

pose to superimpose our own factual and statistical analysis upon

the opinions of the

majority and

of the House Judiciary Committee and of the Subcommittee

summer

report of the Federal Trade Com-

cal

to

appeal to

any

but

small

a

missison

became very active. The

Productive

two

self,

Facilities

(4)

pub-

Inference that the steel in¬

lished.

feel, however, that some purpose
may be served by
pointing out
the significance of what has already happened in the battle of
Big Government and Big Labor
vs. the steel
industry and where
it may lead not only that industry

the "New Republic" took

dustry may hgve developed tech¬
nological and economic similarity
to
public utilities may be the

crack

opening

at

an

the

article

was

Aug. 22

on

war-time

a sharp
activities

"Economic Outlook" in

one

of its

but all

in

campaign for
ouasi-nationalization of all basic

of large corporations.
Interviews
and articles about business size

began to multiply in the press. In
its October, 1949, issue the CIO

gun

a

.

...

(1)

The

is only
ment

in

elusive
'

a

O'Mahoney

onslaught

single localized
a

war

lsrger

and

engage-

more

in-

against business.

Sphere
£848,

current

was

and

a

the

hearing

in

March,

Subcommittee

on

Chairman

examined




prices

"THE CHARTCRAFT METHOD
OF POINT AND FIGURE TRADING"

a

since
that

maintained

that

years

American

for

many

nationalization

of

you

likely

are

liabilities

if

"The

great as
balance

has

are

worth.

no

this will not be

6x9
'

is

not '

only

is

mai

ket

trading

100

over

to a

97 pages,
descriptive

T

(10 day return privilege}.

$2

as soon

what

easily read
practical method that

inches;

charts

r-

However,

problem

a

a

mechanical science."

a

from

copy,

WILLIAM FREDERICK PRESS

realize that included in its

you

on

reduces slock

as
on

concise and

most

book

protest

to

always
assets, the corporation

313 W. 35th

Street, New York 1, N. Y.

"owed" to creditors but also what
the

corporation

"o wes"

its

to

industry in the British stockholders,

that is the stock¬
equity in the corpora¬

tion's assets.

coneeive

-

that

owners
of
steel
be forced to ex-

Established

1856

I think this will be¬

clearer

come

as

we

examine

the

Gettl"S Bigger. The torn- equities would
balance sheet in greater detail.
toms were beating, the heat was
change their stock certificates for
the neo-liberals and their aux- government bonds, but an almost
The Current Assets
iliaries were now officially alerted,
gquivalent result mipht be brought
Turning now to the asset side
(2) The case against the steel about
by a series of events cal- of the balance sheet we will find

H. Hentz & Co.

on,

27

report.

One

was

warned

in

advance by the vigorous denunci-

Profits of. which Senator Flanders ations
was

TRADERS

always be equal. This may
difficult concept to grasp

liabilities
have

We

T

hearings brought companies was completely preout comparatively few new facts judged.
<
about the steel industry or the
It needed no clairvoyance last
conduct of its operations. This is December to
predict almost exthe third, not the first time, the actly the
type of bludgeoning the
Joint Committee on the Economic steel
companies received at the
Report has investigated price in- hands of the majoritv members
creases in steel since V-J Day. of the committee in their March
The

corporation/,

a

figures—assets and liabilities

holders'

i?nrn=°//7hi^it
w-d°Zen obServa~ object under the title "Big BUsiat t
'<

be

as

industries in the United States.

In the

txons

what

—must

segment of our readership. We do

In

shows

which it grew and maintained it-

the Concentration of

on

sheet

the majority believes that owns—its assets, and what it owes
American industry has been wrong. —its liabilities. For any corpora- "
all these years in the methods by > tion that is "not bankrupt these

Monopoly Powers who had
been investigating monopolies all

a

We therefore

assume

on

minority.

To do so would require
brief too lengthy to find a place
in these columns and too techni-

overcapitalization.

man

which

issued

from

Wash-

ington when the call for the in-

culated to reduce the s^rehold^rs
to the status of landlords

or

les-

Title would remain
but returns would bear

a

tionship to investment at

cost

sors.

to
,

net worth

and

as now

relaor

would be fixed

o

by a government approved form^
ula-

A11 Sains through growth,

technology
accrue

■ or

efficiency

to * labor,

would

consumers

Continued

and

a

course

vide

page

45

generally described

are

assets which

in

Chicago
-

claims

of

means

of

current

generally

include

meeting

And

other

a*

series

Women,"
New

on

&

Co.,
York City.

such

under
-

Inc.

Exchange

;

the

items

as

N.

the

auspices

Y.

Cotton

Exchange Bldg.

CHICAGO

the

Hotel

DETROIT

4, N. Y.
PnTSEURGH

of
.

at

•

Trade

creditors. They

sixth lecture of
"Investment
Planning for

given

of

Exchanges

the

of

Exchange
Exchange

Exchange,

Board

NEW YORK
•Transcript

Exchange

Curb
Cotton

New Orleans Cotton

of business operations pro- •'

the

York

Stock

Commodity

as

the normal

York

New

category is usually Current Assets
which
those

York

New

number of categories. The first

Shaskan

on

Members
New

Barbizon,

.

GENEVA,

SWITZERLAND V

•

V

Volume

171

Number 4393

THE

COMMERCIAL

CHRONICLE

Electric Output

Carloadings
Retail

Stave of Trade

EVENTS

„

In Pension Plans

Trade
Field

Investment

In

Commodity Price Index
Food Price Index

and

By HERMAN C. BIEGEL*

Auto Production

Industry

Business Failures

APRIL 20,

Attorney-at-Law, Washington, D. C.

(N. Y. City)

1950

Security Traders Association of
New

York

Bowling

Mr. Biegel cites

Tournament

and

initial,

in the week ended

March 25

APRIL

capacity,

since the

an

or

rate

is

reveal

New

is scheduled at 97.8%

21, 1950

increase of 1% above the previous week. The

understood

to

represent

the

Southeastern

greatest production

ing from tonnage lost in the coal and steel strikes.

en

^largest amount of foreign iron
in

ever

Bond Club of New York annual
field day at

Sleepy Hollow Coun¬
try Club, Scarborough, N. Y.
June

brought to the United

the

June 8,1950 (Boston, Mass.)

Boston Securities Traders Asso¬
ciation

with golf at the
Country Club nearby.'

Twin

the United States,

:■

June

26,400 trucks in Canada in like period of 1949.
■

•'••/ < Y'Y-"'

Y.rY<

" 7/"

•,

'/X'YYYY.

view

Security Traders As¬

Gull

Lodge,

Brainerd, Minn.

a

dollars to pay for their purchases here;

cated careful

the

Lake,

/

.

V

near

'

•

„

Herman

However, he advo¬

at

■

Traders Association

The

1949

Hempstead Golf Club, Hempstead,
Long Island.

the

This is one of the salient conclusions ob¬
tained from a financial analysis of the industry just completed
by "The Iron Age," national metalworking weekly. Ihtal income
for the industry was $554 million on sales of about $7.7 billion.
industry last fall.

The

decline

in

ability to shake off the depressing effect of a month-long shut¬
down, and increased operating efficiency through modernization
and better production planning, states this trade authority. < The

ing

Continued

on

page

33

back"

"

'

adopted an entirely new
statutory scheme relating to the
type of plan which would qualify

Qualification Aspects

taxwise, and the extent to which
deductions

allowable.

be

would

contained

The

statute

statutory

both
The
with

on /

phases
of
the
problem.
Treasury implemented this

detailed set of regu¬
n" ;*; f
*
by Mr. Biegel before the

an even more
.

,

*

An

address

Pension

is

Ohio,

of

the

March

associated with

United

29,

States, Cincin¬

1950.

Messrs.

vord, Washington, D. C.

of

Chamber

of- the

Conference

at least five points
give rise to difficulty
in qualifying a union negotiated

There

which

are

may

pension

pension plan under the
provisions of the law:

.

pre¬

very

criteria

,

Mr. Biegel

d) Permanence:
The
statute
refers to plans for the exclusive
benefit

of

implies

permanent,

a

Continued

on

.

page

:

pleased

are

Annual

Nov.

telephone wire to
■

.

.

•

,
"

.

H. A. RIECKE & CO., Inc.

Mr.

Ray Allen will service Philadelphia
and surrounding

territory

X

•

;•

Troster, Currie & Summers
Members

New

York Security

74 Trinity

Dealers Association

Place, New York 6

Associa¬

Cavalier Hotel.

26-Dec.

1, 1950 (Hollywood,

Fla.)

Frederick W. Vogell

Investment Bankers Association
annual

'

/

Convention of the Na¬

Security Traders

at the

llie installation oL-

to announce

direct private

a

«

Va.)
tional

distin¬

as

guished from a temporary, pro¬
gram; and that while the employ-

Al-

Alvord &

(§165(a),

employees.

The Treasury Department
has stated that the term "plan"
IRC.)

Plum

at

•

convention

wood Beach Hotel.

at

the

Holly¬

announces

the formation of

Y

I N CORPORATED

With Woolfolk & Stober
ANNOUNCES THE REMOVAL
OF

NEW

ORLEANS,

LA.—James

A.

20 PINE STREET
NEW

YORK

5,

Lindsay is with Woolfolk
Shober, 839 Gravier Street. ;

NUMBERS

to transact a

general unlisted business

PUBLIC UTILITY SECURITIES

"OBSERVATIONS"

REMAIN UNCHANGED.

Wilfred

I05O




New York 5

specializing in

A.
lO.

37 Wall Street

&

N. Y.

TELEPHONE AND TELETYPE

APRIL

VOGELL & CO., Inc.

(Special to The Financial Chronicle)

ITS OFFICE TO

.

not

May's column

available this week, -

so

ability
of many union negotiated plans
to qualify as exempt. Moreover,
the provisions dealing
with the
applicable limits of allowable de¬
ductions also present tax obstacles
to the union negotiated plan.
I
shall
attempt
to
discuss both
phases of this problem.
.X;':
that they cast doubt on the

PHILADELPHIA

Sept. 26-30, 1950 (Virginia Beach

tion

GEO. B. GIBBONS & COMPANY

of these restric¬

"kicked

Trading Dept. Phones: Kl 6-0631—0632—0633

outing

golf

and

Hollow. '

;

some

now

(Detroit, Mich)

Security Traders Association of
Inc., and Bond
Club of Detroit joint summer out¬

earnings, less proportionately than the 9.2%

Ironically,
tions have

gress

Detroit & Michigan,

slump in net sales and operating revenue; reflected the industry's

accident, vacation and dis¬

V;

;-

June 26-27, 1950

"Rube

a

Accordingly, the Treasury De¬

•

earnings of the nation's steel' companies fell/only

not

and

missal pay.

partment recommended and Con¬

We

(New York City)
New York Security Dealers As¬
sociation Annual
Outing at the

2.3% below the 1948 level despite the strike that crippled most of

death,

the

to

June 23, 1950
WEEK OF MARCH 14, 1949

Act

1942,

benefits

Philadelphia annual field day
Whitemarsh Country Club.

study before any action is taken or policy adopted.

STEEL OUTPUT SCHEDULED AT HIGHEST LEVEL SINCE

ment

Prior to the

of

.

Biegel

highly paid em¬

Goldberg" conglomeration of un¬
related
benefits such as health,

provisions ap¬
pension plans were
general in scope and simple in
detail.
The
Treasury ,; Depart¬
ment's
regulations
and
rulings
were equally broad.
With the ad¬
vent
of
the excess
profits tax,
many taxpayers had recourse to
pension plans so as to defer high
profits earned during the
war
years to a later and perhaps lower
tax period.

plicable

Commerce

(Philadelphia, Pa.)

16, 1950

Investment

of

r

C.

plans did not discrimi¬

in favor of

ployees; that plans were adopted
not as a temporary expedient to
avoid high taxes, but as a longrange
retirement program; that
covered only those who
plans
were employees in the strict sense
of the word; that plans were ac¬
tuarially sound and not mere de¬
positaries for excess funds; and
that plans provided true retire¬

has

plot

Revenue

nati,

June
.

.

nate

taken.
v

sociation summer party at Grand-

previous statement he said that business would
be good during the first six months this year, but had avoided
making any forecast about the second half.
Mr. Sawyer declared
the United States should increase imports to help foreign nations
earn

,

Twin City

Secretary Sawyer of the United States Department of Com¬
predicted business in the. second half of .1950 will be
In

(Minneapolis,

1950

16-18,

discern

like turn that

:

cise

Minn.)

merce

"excellent."

the

club.-

69,400 cars and 25,300 trucks in Canada.
This compares with
1,181,000 cars and 362,000 trucks in the United States and 38,700
ri

Club annual
White Bear Yacht

Bond

City

picnic at

f

(Minneapolis,Minn.)

June 14,1950

the statement made by Ward's the

and

and

Tedesco

Mass.,

•

"

Thirty-first Annual Outing
Swampscott,

at New Ocean House,

■

cars

Montebello,

Club,

Seigniory

Quebec.

past week which stated that so far in 1950, an estimated 1,460,000
and 320,000 trucks have been turned out in

Dealers Association

of Canada 34th Annual Meeting at

from Sweden, Chile and Canada.

was

5-8, 1950 (Canada)

Investment

ne¬

immediately
the
O'Henry-

(New York City)

2, 1950

pension

gotiated plans

k

on

tain that

has

relation

can

the subject.

the

union

to

Texas Group Investment Bank¬
Association annual meeting at

June

Simultaneously, the Institute pointed out, steel companies
were active in exploring and developing large iron ore deposits in
South America, in exploring the Quebec-Labrador iron range and
in constructing facilities for shipment of ore from Liberia.
Encouraging indeed

their

a

tions

Running through all of this was

provisions and

Outing at the Kenwood Coun¬
try Club (to be preceded by a
cocktail party and dinner May 25
for out-of-town guests).

That was an increase of 22% from 1948,
imports totaled 6,800,000 net tons.
In 1947 about 5,492,000
tons were delivered and in 1946 the imports totaled 3,085,000 tons.

cars

X of the

\ ;

,

bul ecin,

graphs,

the Treasury's desire to make cer¬

development

and

year

came

...

and

in

who

one

for visiting dealers and wives
route
to
Texas Group
IBA
•

But

promulgated
mimeo¬
and instruc¬

rulings

any¬

all

of
'

followed

Club, 4:30-6:30

Municipal Bond Dealers Group
Party

when

largest supplies

Downtown

of Cincinnati Annual Spring

Iron and Steel Institute.

The

laws—least

tax

pension provisions.

May 26,1950 (Cincinnati, Ohio)

Tuesday of this week that the

ore

the

the Plaza Hotel.

arrived during 1949, with receipts of
8,300,000 net tons from 18 countries, according to the American
single

a

hardly expect to
a
literary plot

for

ers

nation's

our

would

material

May 4-5,1950 (San Antonio, Tex.)
v

a note of caution persists for
Leveling off in activity is expected once
consumer inventories are replenished.
Possible serious automotive
labor trouble is cause for some apprehension. Nevertheless, market
opinion today overwhelmingly anticipates no summer slackening
in pressure.
Vacation shutdowns in July and accompanying pro¬
duction losses, are thought likely to extend supply-demand /imbal¬
ance to Labor Day at least.
By that time normal seasonal upturn
may be under way to assure continuance of high-level steel pro¬
duction through remainder of the year, this trade paper observes.

on

One

find

the

(Dallas, Texas)

spring meeting.

Despite the accelerated demand,

revealed

Association

of

scores

Introduction

in

the

p.m.

Demand-supply

what effect foreign imports play in

and benefits.
lations and has since

In¬

Dallas Bond Club cocktail party
at

the last half of the year.

was

Group of the

Inn.

conditions, especially in the light, flat-rolled products, are reminis¬
cent of the immediate postwar scarcity period.
Conversion deals
are increasing, gray market offerings are more numerous at some
.points and more rigid distribution controls are being applied even
.on such products as bars, plates and shapes.
Sales of imported
steel are also making headway, the magazine notes.

States

:

age

Spring Meeting at the Sedgefield

The steel supply situation the current week shows signs of
tightening and demand booming, according to "Steel" magazine.
; Seasonal expansion in requirements is adding to stringency result¬

supply, it

pension

the

Dinner at

Bankers

vestment

record

the

With regard to

(3) keeping unrelated general welfare benefits away from
purposes; (4) devotion of plan to benefit of employees
of a particular employer; and (5) non-discrimination in cover¬

(N. Y. City)

York Annual

May 2, 1950

steel

Ten

April 28-30 (Greensboro, N. C.)

output attained in the week of March 14, 1949,
industry's capacity was lower and operations were at
102% of that capacity.
when

the

Waldorf-Astoria.

Steel production for the present week
-current

at

Security Traders Association of

fractional declines.

of

Philadelphia

con¬

potential pitfalls in qualifying union-negotiated plans
under tax laws: (1) permanence; (2) actuarial soundness;

Pin Alleys, New York.

.

continued

of

tion

Total industrial production for the country as a whole declined
fractionally from the previous week's high level the past week.
However, it managed to hold moderately above the level for the
corresponding week a year ago. Unemployment insurance claims,

following elements, disregard of which

stitutes

with Investment Traders Associa¬

-both

5

(1513)

Tax Problems Involved

COMING

Steel Production

The

FINANCIAL

&

Telephone

Teletype

WHitehall 4-2530

NY 1-3568

'V

36

6

COMMERCIAL

THE

(1514

ing

Britain's Overemphasis oi
Individual Security Obstructing

flash

FINANCIAL

&

conversion

of

They
main

—

direct

servation

work of human freedom and rep¬
resentative institutions, but also

only
half
50

but

records

to

situ¬

ation of the British market by the

the

a

the

which

brought the tobacco in¬

now

American

tobacco

those

of

trust

days.

operate within

we

highly-developed,

us,

industrial

economies, and

there

Indeed,

very

was

towards

this

competition
riod

pro¬

should

one

subject

in industry

short

as

general

in

attention

to

that

favorite

graph of mine from

the

ing and socialistic but

one's mind the
possibility
something of the same sort
might conceivably happen else-,

Still

'

Factors in

>

4 l

Change

rarity.

of Nations" which I will take the
trade seldom meet

even

but

for merriment and

the

conversation

garded

in

tries

or

prevent such meetings by any law
which either could be executed or
be

consistent

justice.

But

not hinder

can

with

though the law

people of the

as

jubilee

a

school

a

in

sort

no

prices

or

of

agreement

production between

pause

work

and

the

an economy

business

where

the

market

is

sells

was a

be

the

with

quite

approach

to

a

con¬

reality

15

competition

that

the

old

common

many

their future

of

Britain

exists

am

in

thinking

will

you

prices,

selling

ranged,

are

to

find

prices,

managed,

that

are
are

ar¬

coor¬

a

degree which you
in this country would find
quite
astonishing.
-

_

Those tendencies

visible, and reached
even

before

recent

very

war,

the

clearly
high point

were
a

outbreak

of

the

they have been
intensified by ten

and

greatly

which

we

have

hardly yet fully emerged.

Now, why has this happened?
and
had, in practice, What has produced this really
quite astonishing change of prac¬
lapsed, but it had lapsed because
there was no need to apply it. tice and opinion in so short a time
Indeed, as one looks back and of human experience? The major
against

combinations,

restraint of trade

reads the literature of that
period
now

seems

so

remote,

you

that in England
monopoly
and the restriction of
competition
see

regarded

as

being American

ideas, that both trusts and trust
busting
were
American
ideas

point that I want to submit to you
morning is that it is not due
to a species of
softening of the

this

brain

or

congenital idiocy; human

foolishness and mistakes of policy
have played their part in
it, yes,
but

they have done

only by in¬
complex play
of external
circumstances, and the
teraction

address

by

Mr.

Crowther

before

convocation to commemorate the Golden

Anniversary of the School of Commerce,
Accounts, and Finance of New York Uni¬
versity, April 11, 1950.




all.

Some

companies

are

supplies.

ore

In the first place they are well heeled

in the Mesabi range for
many years to come and

they have made
augment their supplies from foreign sources,
Venezuela.
The other companies, some of which have

arrangements

laissez

notably

to

gotten

ore from U. S. Steel in the past, are not in such
good shape.
Manifestly, if this country is to continue to have its own ore
supply and not be dependent upon Canada, Venezuela, Liberia,
Brazil, or any other foreign country, the so-called new ore of the
-Mesabi, that is, the taconites and low-grade ores, must be devel¬

minimum

conditions
now
are

with

with

that

so

the

exist

respect

evidence

to

in

to

country

prove

which

depends

for

taken

ters

Britain

competition

not corrective by some blind¬

organization for

a war economy is
in a continental coun¬
try like this is far more necessary

necessary

beleaguered

island

such

as

Great Britain, and the two essen¬
tial elements of production, ma¬

waterway

labor, were and had to
be much more tightly controlled
by the Government in Great Brit¬
in

wartime

than

would

ever

be necessary in the United States.

Now, when

you

set up wartime

controls of that sort

they

dif¬

are

One

v

\

;
i

the

a war

blockading

German

economy, though

power

submarines

now

so

is not

much

as

financial difficulties.

For

another 'reason,

ment

officials,

them,

have

a

always

certain

of

tentiveness
not

even

power

the

on

.1

as

long

Continued

•'

natural

which

government, through the RFC, to finance the

re-

is

as

ours

on

page

has

45

no

new ore

Joins

a

Merrill

Lynch

With John R. Schermer

(Special to The Financial Chronicle)

COLUMBUS,
Williams
with

has

Merrill

GA.

—

become

John

(Special

associated

12th Street.

He

formerly with the Rome, Ga:,

office of Courts & Co.

,

,

to The Financial Chronicle)

GRAND

W.

Lynch, Pierce, Fe!n-

& Beane, 101

ner

RAPIDS,

,

MICH.

—

James D. MacGregor has become
associated with John R. Schermer
&

*

Co.,; Grand

Rapids

National

Bank Bldg. He was formerly with
the .Northern Trust Co. of Chi¬

*.

7 7

;;

7

With J. H. Goddard

of

it

\

be crystal clear and that is there is

cago.

best

very easy to overcome

for

to

seems

same time, spend a billion
waterway to help another steel group. The RFC loan
is much the cheaper of the two propositions and the only one
designed to insure our own ore supply.

Govern¬

and also when your war
economy
goes

sought to be aroused by the argument he could ship

thing

dollars for

was

Government Officials Hang On

be

a

development of the Mesabi and at the

said—I

amounts to

should

Europe cheaper.

need for the

ficult to dismantle after the
war,
partly because the war conditions
last—and a minute or two ago I

suggested to you that we
in England are still living in what

was

his grain to

terials and

ain

steel

imagine what sort of

marine infested waters—whatever

a

war.

that

sort of a semi-public utility, you can
political stew seems to be ahead.
Certainly the situation isn't made any calmer by the agitation
by another group for the St. Lawrence waterway to protect their
investments. They are claiming, indeed, that if the
waterway isn't
built the Mid-West will lose its steel industry and that the farmers
of Nebraska, for example, will have to
pay higher prices for their
-farm implements. Years ago the Nebraska farmer's interest in the

of
its
life
upon
imports
brought by ship, because of sub¬

in

by the government and sealed off for an ore supply in
Taking this together with the attitude in some quar¬

over

time of

so

much

in

still

years of war from

It is true

at

What is bound to happen though is that Congress' and
political
Washington's interest in the steel industry is going to be consider¬
ably whetted. U. S. Steel and Bethlehem have no worries about

waste, and I need hardly labor
point, because the last, ten
have produced
plenty of

a

industries

there

even

so

years ago.

industries

draw

service, in quality—I

a

affect the price, and
definition which would

used

other

dinated

can

business-like

advanced by the leftists in the government, that Mesabi should be

in

which

very

in particular of the retail trade-

many

being

been

/financing foreign ore ventures with loans from the Export-Import
Bank.; :7 777
7/7;7777777,'-v- 7777' 7777.77;7-

But that general proposition is
quite especially true in the case of

competition

In

almost

as

not

a

oped and undoubtedly this will require RFC assistance.
But the
seekers of the RFC loan are bound to run into the
argument, long

where

of small

and

have

is

of

to

still,

was

Borrowing from the RFC in these days and
perfectly business-like procedure, or at least
things, it is. Some loans granted by that organiza¬

course,

it, within this

they
their supplies.

years ago,

the

country.

Half-Century Ago

a

room

for

from

which

siderable

tt

and

ores into commercial production
brought out and also to be able to

considerably restricted by the lack

Fi¬

and

the operations
of any one seller that
nothing that

•An

trade

mum

upon

large, relative to

were

free

be

cheaper.

the face of

tion

faire.
It is necessary to have or¬
ganization to produce the maxi¬

There

'

"perfect competition"

will

of

industry, the British automo¬
industry was, and still is, in
itself,
a
competitive
industry.

perfect
competition prevailed—and I am
using the classical definition of

that

basis

grade

can

ernment assistance.

two

of

ore

But what is interesting is that at a time when the
government,
strong elements in it, are looking enviously at the steel indus¬
try, a large segment of it is coming to Washington asking for gov¬

it

bile

Convocation

this, I will not

industries,

law

effect

the

low

and

or

devastating wars. Now, wars com¬
pel organization.
It is impossible
for any country to fight a war on

Nevertheless, they find their
competitive maneuver is

or

in the main,
independent

still

is

and

loan
competition via the subsidized St.
Lawrence waterway, and the developers of the
Labrador-Quebec
ore have no objection to the other
group getting assistance in the
development of their ores.

ing to explain that has happened
in Europe in the past 40 years—
one

,

compete in the Mid-West markets.

first in anything that you are try¬

the first

,

is needed for the loan because the
loans beyond ten years. These gentlemen
between $50 and $100 million. They promise

The two groups insist there is no conflict between them:
taconite low-grade ore
developers say all they want is their
and they are not afraid of the

on

put

must

;

As compared with the loan which
they want, the promoters
of the Labrador-Quebec
project must spend upwards of $200 mil¬
lion themselves and then
they say the St. Lawrence waterway, the
eventual costs of which are estimated at more than a
billion, is
essential for them to

a

a

is

15 years

get taconites

sell them

":.77;;

Effects

War

77777.

in

extend

now

before the Canadian

each:

on

an

same

to

years

Britain, 50

that

quickly, with

7

group,

Congressional authorization
want

that

Britain

one

Industry

very

first—and you

The

the British automobile companies.

inquire.

state

you,

another

with their invest¬
they think it would be

now,

the scramble for
of ore, wants money from the RFC to develop taconite
and low grade ores in the Mesabi range in inexhaustible
supply.

times, of

have

nance,
such

before

minimum of comment

exactly what Adam Smith

thought of
Commerce, Accounts

of

me

them¬

For example, if I may give you

sometimes assembling
together, it ought to do nothing to
facilitate such assemblies, much
less to render them
necessary."
Just

in

not

were

Automobile

liberty

trade from

would

which

those indus¬

even

competitive
found
that
ability to cut their costs and
to enlarge their market was very
severely limited by the lack of
competition elsewhere.

contrivance^ to
raise
prices. It is impossible, indeed, to

and

as

mit

atmosphere,
are

new sources

RFC can't

and my time doesn't per¬
to do 'more than put them

seven,

selves

a

some

would

very

their

conspiracy against the public,
in

few in¬
really be re¬
working in a competi¬
were

that could

tive friarket and

together,
diversion,

ends

There

dustries

this

Heretofore, they have

ments in Canadian ore,
in the national interest.

Carlisle Bargeron

that

"V.;

in

companies

been against the waterway as wasteful spend¬

from

•;

but

wary

Quebec and Labrador.

pe¬

40 years, pershaps
not" dismiss
wholly

as

about

para¬

"Wealth

liberty of reading: "People of the
same

days

less

Lawrence waterway so they can bring in more
cheaply the ore which they plan to develop in

of

a

about them,

and

walking
right in to get the Washington embrace.
One group of smaller companies wants
Congress to authorize the long pending St.

a
complete somersault,
a
complete overturn of the approach

Therefore, I- think perhaps the
of competition
conditions in 'the United States, most useful thing that I can do
in
business
for you this morning is to set
pointing out how the existence of
from that of
a
protective tariff made it pos¬ before you that—in a very sum¬
the
Great
sible for restrictions upon compe¬ marized Way—some of the factors
Geoffrey Crowther
B ritain o f
tition to arise and that a country that seem to me, looking back, to
1950.
been
which had the common sense to have
responsible for this
In 1900—and, indeed, right up
work a free trade system need not great change in the British ap¬
to the outbreak of the first World
towards competition/ so
bother its head about the existence proach
War, in 1914, Great Britain was,
that I won't attempt to draw any
of such evils.
still, in the most literal sense of
conclusions from them, but it will
Well, that was the picture of
the word, a free trade country
enable you, perhaps, to form some
50 and, indeed, of 40 years ago,
with a competitive economy.
It
opinion in your own minds as to
still professed and followed, more and the picture today could not
whether any of these things could
be more
different. Even before
fully than any other nation in the
the outbreak of the recent war, happen here.
world,
the
doctrines
of
Adam
Well, in trying to think what
the really
competitive industry
Smith
and, in particular,
paid
were the major causes, I put down
in Great Britain had become a
those

in

comments

other

duce

certain

a

slight selfrighteousness in British

different view

B-;<;

if it is

possible for circumstances to

all

got
*-dhi-£

mature

where.

Britain of 1900
took

in

Britain,

sistance against a threatened

ample volume,
and

in

of

movement

be a highly organized
industry, was originally started as
a movement of protection, of re¬

there in

are

the

combination
trade

dustry

that

of

years,

the

has

that,

on

tobacco

about

to

application in Eng¬

general
and social

same

political

to

and human

the

each

world, not only be¬

share the

approach

small and interesting

a

towards

goes

back

as

sidelight

affairs

Because of this, U. S. Steel and Bethlehem,
too, wouldn't mind it at all if Washington for¬

in the
we

to

because economically we are, both

And

of

public

problems, not only be¬
a frame¬

other

cause

similar

nearest

are

cause

land.

ob¬

own

The steel

industry is likely to be very much to the fore in
Washington during the next few weeks. First, there is a group,
most articulate spokesman of which is Senator
O'Mahoney,
who would like to make the industry, particularly U. S.
Steel,
sort of a semi-public utility,
making periodical
reports to the government and posting any
planned price increases for 30 days in advance
so the Congress could shoot at them.

that

Notes individual's passion for security, and/
asserts it is blocking material productivity and thus enhancing
his country's critical difficulties as the dollar gap.

My

By CARLISLE BARGERON

econ¬

omy and the British economy, our
two countries are still the two

nical progress.

celebrating.

between the American

ences

elaborates on long-range decline of competition
England, resulting in material sluggishness and halting tech¬

has changed very considerably in
the 50 years that
we
are
now

Ameri¬

an

all the manifold and great differ¬

British publicist

no

Washington
^
Ahead of the News

audience, because in spite of

can

Editor-in-Chief, "The Economist" of London

which had

From

are not due to—not in the
to ideological differences,

Now, I think that ought to be of

By GEOFFREY CROWTHER*

competition

true

/.

,

considerable interest to

The British view of

Thursday, April .13, 1950

but to the force of circumstances.

Competition and Economic Progress
in

to

doctrine.

CHRONICLE

(Special to

BOSTON,

The Financial

Chronicle)

MASS. —John

MacDonald

has

with

Goddard

become

<

-

R.

affiliated

With
(Special

Chace, Whiteside
to The Financial Chronicle)

Co., Inc.,
85 Devonshire
Street, members of

BOSTON, MASS -—Whitman M.
Chandler,
Jr.,
is
with
Chace,
Whiteside, Warren & Sears, Inc.,,

the Boston Stock

24 Federal Street.

J.

H.

&

Exchange.

Volume 171

Number 4898

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1515)

7

ations

during the postwar infla¬ rise to strong inflationary pres¬
tionary period with complete sat¬ sures. The problem for the sys¬
isfaction or complacency, by any tem, then, was that of exerting

Misconceptions About Resexve
System's Management Policies

means.

*

System
have

By HAROLD V. ROELSE*

.

last

System's

year's

business

Mr.

recession.

Roelse

many of the
important factors tending to
produce or accentuate inflationary
pressures during the early post¬
war period were
nonmonetary in

character.

states

faced

pursuit of alternating programs of restraint,
and ease, might generate risks for investors

proper

"neutrality,"

mon¬

etary policies of the Federal Re¬
System

serve

policies

agement

subject
most
ous

the

and

debt

have

man¬

been

the

al¬

of

years,
knew.

as

been

that

actually

the

circumstances?

The

securities

most

complicated.
The dilemma
primarily out of the fact
there

a

little

a

than

more

the

—

period

of

ernment

regarded

pletely

sub¬

otherwise

A False
V.

which

than

efits

an

as

not

the result has been to hold inter¬
rates

down to

the

at

artificially low
of any

expense

ef¬

as

rates

as

would

have

Paul.

pro¬

great effects on interest
were

in

common

1920'S, because of the great

in

this

country
a

areas

severe
war-

for materials and

for

reconstruction,

accentuated

were

Impression

then, did the

which

only

involved

supporting

disabled

than

ment

impression

because

develop that the Reserve System

mands

had

been

the

"cold

of

from

the

anticipated
war";

more

de¬

backward

mainly engaged during the
inflationary
period
in ; making
huge purchases of Government

countries for materials and equip¬
ment for their economic develop¬

securities to hold

ment; and, to meet all these de¬

was

should

we

the

mag¬

on monetary ex¬
pansion during the postwar infla¬

contended

had the

effect of

ing fuel to the fires

add¬

of inflation.

The fact of the matter is that
the general effect of the opera¬

;

tions of the Federal Reserve Sys¬
tem since the end of the war fi¬

R.

Bennett, Jj M.

of the Club*

of Governors

the BOard

and

extending

their prices

up

was,

tween

November, 1947, and No¬
vember, 1948—nearly half of that
amount during the three months,
December, 1947, through Febru¬
ary,

1948.

that

tends

the

But
to

be

second

to

considerable

a

backed

by

savings

as

an

well

extent,

accumulation

of

high current
income in this country and, to
some extent,
abroad, and the im¬
possibility of meeting all the de¬
mands within a short time, gave

fact

overlooked

or

nancing has been to hold

forgotten

terest rates and

move as

war

rapidly

to

the

tion

Reserve

credit

Oscar

made

available

banking system at its op¬
initiative, and at excep¬

tionally low rates—the preferen¬
tial

discount

rate

loans

on

to

secured by

shortTreasury
obligations;
the
fixed buying rate for Treasury
bills; and the general maintenance
of a "pattern of rates" within nar¬
row limits, which, in practice, be¬
came virtually a ceiling on inter¬
term

est

for the various maturi¬

rates

ties, without

a

definite floor.

The War-Time

•

Obstacle

see

an

of

abandonment

which

arrangements,

had

as

Robbin Operating Co.

made

Robbin Operating Co., Inc., has
formed with offices at 200 West

easier,' is

was

stacle to

Pillsbury, First National Bank of'
Minneapolis, publicity; Fred Gotb,
Irving J. Rice & Co., St. Paul,
special prizes; Leo Quist, Harold!
E. Wood & Co., St. Paul, registra¬
tion; Willard Jones, Jamieson v&
Co., St. Paul, tennis; and James "E.
Klingel, Juran & Moody, St. Paul,

these

the financing of the war so much
but it

57th Street, New

the

gage

Officers

Shortly afterward

Continued

on

page

38

York City, to en¬
securities business.

the
are

Jos. J. Robbins, Pres¬

and

G.

George

Vice-President.

Mr.

Wynne,

Wynne was

formerly with Bache & Co.

buying rate for Treasury bills was
eliminated in July, 1947, a year
and a half after the end pf the
financing.

in

ident,

had first been proposed; the fixed

war

Allison-

Bergman,

is general chairman
of the picnic.
Arthur H. Rand,
Woodard-Elwood
&
Co.,
is
in
charge of
the
cocktail
party,
Charles C. Rieger, Jamieson &
Co., is in charge of entertainment;
Mortimer H. Stanford, CaldwellPhillips Co., St. Paul, golf; Rob¬
ert S. McNaghten, Williams-McNaghten
Co.,
prizes; R.
K.

transportation.

The reluctance of the Treasury
to

M.

up in¬
to raise them

moderately,
except
during
period of business recession

the
last

to which I shall refer later.
To verify this conclusion one need
year,

the

is

that

Reserve

deemed

in

those

Banks

about

$6

three

sold

or

Ralph Langley Opens
WASHINGTON, D.C.—Ralph S

Langley is engaging in

a

securi¬

ties business from offices at 2460
16th Street, N. W.

re- r

billion

of

the

Just

Published—"Why a Wave of Bankruptcies
Will Sweep the Country." In the current flood of
bullish opinions on Stock Prices and on general
business, this Special Report by GAYLORD WOOD
may save you a lot of money.

short-term Government securities,
only consider what would have so that its total holdings were
happened if the Reserve System actually reduced by about $1 bil¬

had done nothing at all

past

four

that

the

Let

years.

Reserve

during the
us

suppose

Banks

had

neither bought nor sold securities,
but had merely exchanged or re¬

lion.

Over the whole period from

November,

1947,
to 1 November,
1948, total Reserve Bank holdings
Government

of

'

securities

in¬

by about $1 billion, but in
period the reserve re¬
placed their holdings of maturing
issues, and that they had neither quirements of member banks were
raised nor lowered their discount increased
by approximately
$3
rates.:
A review of the factors billion through action taken by
creased

the

affecting the monetary and credit
situation during that period will
make it clear, I think, that inter¬
est rates would have gone consid¬

erably lower, or that there would
have been
financed

much greater credit-

a

inflation,

both.

or

same

the

Board

Federal

You

remember

may

that

:

the

main question concerning interest
rates that was under discussion

early in 1946

whether the

was

tificate rate would

cer¬

be reduced to

SA of 1% (and perhaps eventually
even

for

48,

there

gold

a

was

1946inflow of

years

nearly $5 billion, plus smaller ad¬
ditions
to
bank reserves from

System'.

rates.

There

ernment bonds.

lower), and whether the rate
subsequent
long-term

ing that, in the three

Reserve

of

r

the

Un¬

was

great

uncertainty at that time concern¬
ing the prospective trend of in¬
terest rates and widespread dis¬
position on the part of investors,
and especially institutional invest¬
ors, to shift out of long-term Gov¬
:

Anti-Inflationary Activity

any

Treasury financing would be re¬
duced from 2V2 to 21/4%.
Follow¬

Governors

doubtedly the effect of the sys¬
tem's purchases of Treasury bonds
during that period was to prevent
a
further fall in bond prices and
a corresponding rise in long-term
interest

Interest Rates in 1946

of

But

so

far

as

bank

reserves

and :

the

availability of credit were
concerned, the over-all effect of
the

system's security operations
during the period from the end

of the war financing to the early».
if part of 1949 was clearly (if only
the
Reserve
System
had
done mildly) anti - inflationary.
Not
nothing, a tremendous growth in only the effect of the system's
the already high level of member operations on the volume of bank

other sources.

bank

In

other words,

have

would

reserves

oc¬

reserves,

but also the

curred, and competition for avail¬

ties which

able loans and investments would

ing

have increased

some

The

effects

greatly

on

as a

result.

interest rates

easily be imagined.
:
What, then, did

can

Federal

that
♦Remarks
Savines

New

by

Bank

York,

Mr.

Bond

April

Roelse

Men

12,

of

1950.




before
the

State

the
of

prospects,

almost

unprecedented.

It

may

pay

you

to

outlining week by week in great detail the

pected

read

he

this survey of business. It contains some startling
ideas that do not fit in at all with current nuijority

thinking.
It

V::'-."'-.-

/'• •\V'

had

that

the

Reserve

System did at that time, or does
now, regard the record of its oper¬

BAROMETER"

THEORY

DOW

"THE

has

of stock prices for 1950. You

course

considerably surprised at

Better read it—NOW, when
of

•

is

usually advantageous to read Gaylord
Wood, particularly when you think him most
wrong.
He is usually right!
Will stocks test
the 1942-1932 lows over the period ahead? Will
business continue at its present high-tide level?

the

greatest

when it may

The
years

Dow
ago

we

can

too

Theory,

service,

now

DOW

THEORY

BAROMETER"

in its 12th and most-successful year.

may

opinion.

possibly he
on,

late.

evolved

as

more

than fifty

by Charles H. Dow, has stood the test

caught

getting

with

stocks

bear market crash since

each and

every

And it has

in

1899.

made

millions

of

them

buy stocks early in each bull market.

to

dollars

for

investors

is

a

advising

by

Special Report:—"Why a Wave of Bankruptcies Will Sweep the Country"
"THE

is
ex¬

It has enabled Dow theorists to avoid

of time.

Or will business go into one of its recurring
periods of extreme low tide?
Will panic and
bankruptcy sweep the country? What plans have
you made for your business, and for your invest¬
ments, if the many current optimistic business
and stock market
forecasts prove erroneous?

be

our present

assistance, rather than later

.

.

$2Q

weekly stock market (and business)'advisory

SUBSCRIBE NOW—and

read

our

ideas

on

the

possible approach in stock prices of a buying-spot comparable to those of 1921, 1932 and 1942. With
each subscription at the rates below, we will include FREE a copy of "Why a Wave of Bankruptcies
Will Sweep the Country," and a free copy of our "Forecast For 1950 and After."
One Year

,...$45.00 □

(52 issues)

Six months (26 issues)
Three months

.

(13 issues)....,

$25.00 Q

$12.50 □

/

r

One month

(4 issues)

........$ 5.00 □

on ex¬

on financing
security and mortgage mar¬
I do not mean to imply by

statement

BAROMETER"

Special Report concerning the
Business Outlook for 1950. Conditions today are
a

created concern¬

rate

tensions of credit and

kets.

DOW THEORY

uncertain¬

restraining influence

in the

the

were

interest

"THE

just published

GAYLORD WOOD
Dept. X,

din¬

is $25 for guests,

Williams Co.,

and

member banks

The tariff

ner.

that

as pos¬

which

arrangements

Federal

will include break¬

golf tournament, swimming
in the pool and in the lake, sailing

months of heaviest support buying?
in the Government bond market,

even

are

cordial invitation for

a

The program

quite understandable,
unquestionably an ob¬
prompt adoption of
tionary period. The most vigorous and to hold down interest rates? mands, the urgent need, first for an effective
anti-inflationary pol¬
attack from some quarters was on
reconversion, and then for ex¬
Undoubtedly that impression is
icy by the Reserve System.
The
pansion and modernization of our
the system's support of the Gov¬ based on the fact
that the Reserve
preferential
discount rate
was
industrial plants.
ernment bond market at the end
The fact that
Banks did buy a total of about
eliminated in the spring of 1946,
this huge aggregate of demands
of 1947 and in 1948, which it was
$10 billion of Treasury bonds be¬
several months after the action
fective restraint

Charles

Dain & Co., President

sible to eliminate the special war¬
time

huge backlog of

the world;

System at the end of the

so

the

of

veterans, but
those out of work or wishing to
complete their education; the need
for a bigger military establish¬

Roelse

Why,

only

over

equipment

Treasury debt
Harold

a

close

demand for all kinds of

devastated

anti-inflationary influence in the
monetary field.
-i':-^V.
:

levels

faced:

the

that

in

do

to

by the
holdings of Gov¬ disruption of prewar channels of
securities can hardly be trade; a program of veterans' ben¬

com¬

that

At

not

all

much

so

Bank

tem have been

management

duced

arose

shortage of housing; needs of

by
an
additional
This reduction in

made

est

time.

but

1948

Reserve

policies;

was

little

by nearly

goods,

of

Reserve

to

that

measures

and boat rides, luncheon and

anti-inflationary policy on the
other, but something much more

consumer

to

policies of the

servient

MINN.— The
City Bond Club is holding
annual picnic at White
I think it is fair to say that the Bear Yacht Club on
Wednesday,
predominant feeling in the Fed¬ June 14. On Tuesday, June 13, a
eral Reserve System at that time cocktail
party will be given at the
was that it was too risky to take
Casino
Room
of
the Hotel St,
29th

Nevertheless, the belief was
prevalent throughout the Reserve

financing of the Government
low cost, on the one hand, and

war, we

1945

subsequently
$2.5 billion.

Sys¬

MINNEAPOLIS,

omy.

facilitating

an

in

do

heaviest gold inflow—and that it
has reduced its security holdings

has

comment

its

fast,

spring

type of

Twin

needed.

all to attend.

$20 billion at the low point in the

you

29th Annual Picnic

in¬

on

into firm hands, and its pervasive
influence throughout the
econ¬

end

A fre¬

quent

System

important single fact is that the
system
reduced its holdings of

of

di¬

could

nitude of the public debt, the fact
that much of it had not settled

half years, from $24 billion at the

recent

difficult

ernment securities and

$4 billion in less than two and

discussion

in

most

a

was

it

at

Government

continu¬

system

as

flationary tendencies without in¬
terfering with the growth of pro¬
duction
which
was
so
badly

the

Reserve

these

with

the

taining the market value of Gov¬

long-term bonds.

The relations between the

But

lemma—a dilemma involving not
merely a choice between main¬

wanting long-term rates for short-term holdings or seeking
trading profits, but need not worry genuine long-term holders
of

monetary and credit

though

even

most

widespread-

impression, Reserve System operations since the end-of-the-war
financing have held up and raised interest rates, excepting

during

preferred to
vigorous meas¬

more

the

in

field,

Reserve Bank official declares that, contrary to

would have

taken

ures

Vice-President, Federal Reserve Bank of New York

restraint

such

Unquestionably the Reserve

Fort Lauderdale, Florida

/

8

(1516)

THE

COMMERCIAL

:

^

striking fact about Ameri¬

business

can

since

the

the very high and well-sus¬
tained
level
of
production and

solete

ing.

to mitigate the
prevailing pessi¬
mism, and to tide the economy as

industrial

has

I

do

possess

future of these

tries.

I

ness

will

sharply, notably in the heavy in¬
dustries. A substantial part of this
increase in capacity represented

recession.

the

of

the substitution of

the

war

pessimism
wide¬

was

1946 and

reduction

Harold G. Moulton

again

1947

some

observers conceded the

occurred

of

as

a

or

year

possibility
of good busi¬

more

but still the keynote

ness;

metals,

was one

of confidence that depression was

and

With tne coming of

at hand.

near

iron

the

was

in

basic

that

provided
will

by

these
in

wane

Over the

steel,
the lighter
automobiles, electricity,
electrical public utilities.

the

may

now

that

have

the

of

the

accounted

the

briefly

very

factors

and

the

of

nature

forces

which

the

market

expansion was facilitated
by what amounted to Government

are

operating in this particular post¬

export

E.

the

void

to

be

than

greater
because

the

of

forced

filled

after

much

curtailment

peacetime

production

the

This

first phase

of the

been

the

buying

power

American

in

an

real

of

families.
con¬

standards

in¬
of

such

war

counted

These

which

or

process

remarkable improve¬
This has been

1939.

part to the increased

num¬

ber of workers per

but

we

of

short

of

minor

a

makes

realm of

industry^

tion of plant

and

passage

time

had

intense

and

use,

made good promptly.

large

business

.

were

goods.

The

hanced
of

in

It is understood that the
to

send

interested

firms mentioned will be pleased

parties the following literature'.

be

factor in

the

demands

goods.
can

Leverage

in

Railroad

Bulletin-Smith,

(1)

lation and
of

from

expanding

an

Als<)

Potential future

come

popu-

existing

is

-1950

population,

and

United

States made it imperative

that foreign aid be extended on a
much vaster scale than was the
case in 1919.
Moreover, economic
and political conditions combined
to make it necessary to continue
such aid for many years.
♦An

address

convocation

to

by

effects

buying

millions

of

of

power

this

en¬

in the hands

families

were

felt

:

sumer goods.
This in turn fur¬
nished the stimulus required for a
great increase in plant capacity.
-

As

already. noted, the recession

of last year did not

to

a

tide

degenerate in¬

full-fledged depression, the
turning strongly in mid-sum¬

mer.

The

production

decline

in

industrial

was

only about 12%,
employment was off less
than 4%, and
wages and salaries
while

Dr. Moulton

commemorate

Anvtlversary of the Sch^l

before

the

of

a

Golden
ce,

Accounts, and Finance of New York Uni¬
versity, New York City, April II, 1950.




Municipal

Securities

reference

book:
secu-

rities—D.

on

Wall

J.

of

Devine

&

Co., 48
Street, New York 5, N. Y.

statistics

as of
March 31, 1950— New York 4, N. Y.
Laird,
Bissell
&
Meeds,
120
Broadway New York 5 N. Y.
Stock Market Appraisal—Leaf'
*
*
let—Ira Haupt & Co., Ill Broad-

We have recently had a sharp inin the birth rate.
In the
decade of the '40's there were 30
crease

,

and

edition

for investors in tax exempt

5, N. Y.

circular

a

State

Co.,

&

New York City Bank Stocks—"
Steel Industry — Analysis — H.
Comparison of earnings and other Hentz & Co., 60 Beaver Street,

(2) the unfulfilled de-

the

avaiiable

Stocks—

Barney

s<mlhern Pacific Co.

two

■

way,

Ne\v

York

available is

an

6,

N.

Y.

Also

analysis of changes

in portfolio of the Lehman Corp.
f

;

Utilities — Bulletin

on current
developments—Eastman, Dillon &
15 Broad Street, New York 5,
•

N. Y.

.

Preliminary

levels «jl Mivvmc .All buui siuuics
of income.
such studies

indicate
come

that

as

the

fevel

of

in-

rises

M

the

42

Recommendations and Literature

New

York

less than 3%.

The

readjustments

goods would be increased
lows:

Food

times;

shelter and

and

1949

re¬

sembled those which had occurred

fol¬

education
and

of

travel,
course,

15

Rayon

recreation

_

of

Celanese

Analysis of

American

York

«

Viscose

Co.,.

in

Broadway, New York 6, N.

complying

Guides for

with

expenditure

patterns.

gate

the

In

aggre-

expansibility

of

great—being
availability of

very

limited only by the

Continued

on

page

43

*

available :
Propane

Gas

pany—Detailed

use

studies

Corporation.

analysis

'

Tn,mctmnnt

Investment CompanyAct

.

Brush/
;

Caterpillar Tractor Co.—Circu& Co., 14

Wall Street, New York 5, N. Y.
■ A'so avaiiable is a circular on
Aircraft Engineering
corp. and Kansas City Power &

Grumann

1940, and Investment:Advisers Light Co.
Act of 1940—Ebasco Services, In-

—

Street, San Francisco 4, Calif.

Securities Act of 1933; Secu- lar—Shearson, Hammill

,oqr.

of

California Water Service Com¬

Y.;

requirements I

= are

Dean Phipps Stores, Inc. and Sob-;
urban

Corp.,' and v Industrial

Securities Acts:

:

5, N. Y.

Also

common

Rayon Corp.—E. F. Hutton & Co.,
61

York.

Arden Farms Company—Study

iN* x*

16 times.
These are, rities Exchange Act of 1934; Pub-'
rough approximations i lie
Utility Holding Company Act -

but they are in line with present

terms

stocks

home mainte¬

times*

New

—Cohu & Co., 1 Wall Street, New

v

™dy» 1New Iwr*

four

nance, eight times; attire and per¬
sonal care, ten times; health and

consumption is
of

as

nutrition,

Bank

Ywk'^anseatic Co^

,

of

page

Dealer-Broker Investment

.,

position

on

to

plant and

preeminent

a

.

in¬

ing character of the conflict

play

of these laws

,

be

the

names

Continued

April 6, 1950.

expenditures for all;
the
readaptation
of all
along the line—notably in bet¬ classes of consumer goods increase,
equipment as producter quality meats and other
foods, though in
tion was shifted from war
varying proportions.
goods in
household furnishings and sup¬
to peace goods.
Here again the
plies, in textiles, in a wide range were eight times as high as at
situation was like that after other
of luxury goods and
services, and present
wars only more so.
expenditures
for: the
even in
high-priced durable con¬ major categories of consumption
The world-wide and devastat¬
volved

The

was this
The magnitude of the unful-lover an eleven-year period—Narapidly rising level
American Mercury Insurance Co^
family incomes which provided filled desires of the existing popu- tional Quotation Bureau, Inc., 46
—Report—Peter P. McDermott &
basis : for the expanded and lation is
revealed by studies of Front Street, New York 4, N. Y.
£ • Co., 44 Wall Street, New York 5,
sustained t demand for consumer
jfamily exenditures at different;

In addition,

outlays

into

the

of

to

call

investor

of

re¬

sulting both from the

f

operate

of

It

The; deteriora¬

equipment,

and

of

diversity of regulatory tech¬

niques.

^"cfVcoS

u;°P!
we
field

any

picture

which

the

over

protection
wide

sketchy

a

under

range

therefore, that I should be talking

actual

must

.

tne

than

tion

sense,

of this

you

r.

family, and in
part to the extraordinary rise in million births in the United States
Over-the-counter Index—Bookup the pipelines.
It may
called that the view was widely wage rates. Aggregate wages have and a net increase of 18 million,'let showing an up-to-date comheld that the slump would occur nearly tripled. The cost of living as compared with only 9 million parison between the thirty listed
Thus for a long pe- industrial stocks used in the Dowas
soon
as
these pipelines had rose roughly 70% during the dec¬ in the '30's.
riod of years we are now assured Jones
been filled.
It turned
out
that ade; but weekly wages increased
Averages and the thirtythey were not only filled once but more than 120%.—As a result of of enlarged requirements for the i five over-the-counter industrial
these developments there has been necessities, conveniences, and. lux- stocks used in the National
continuously refilled.
Quo- *
a vast
upthrust of families to suc¬ uries of life for a rapidly growing tation Bureau Averages, both as:
A vast replacement or rehabili¬
;to yield and market performance
cessively higher levels of income. population.;
tation program occurred in
filling
be re¬

as

economic

our

course

talk, I hope to show how we must
constantly keep those broad purposes in mind and view them in

more

Our best
keen ft-

nancial analysts are adept at legal

It

in the

and.

historical perspective,
I can't hope to give

rarely present
problems either of law

economic policy.

basic to

are

the

products

expenditures

as

consumers

sires

a

since

poses

welfare

nature

5En5-Juof additional markets lor }14 Wall Street, New York
TH5SI- UPT L"e, ^r
sibilily

sources:

due in

m^° the Sen"

statutes

interpretation.

our future
prosperity apto depend upon the expan-

has shown

this

heip

importance of the statutes

clear-cut

once

Thus
pears

over
the high cost of
living, the
position of working class families

en¬

can

situation.

years

extraordinary

the

production;

vast

living of the American people.
Despite the persistent agitation

ment

is commonly referred to

of

was

crease

normal

which

the

masses

there

had necessitated.

war

in

has

During the war period and
tinuing into the postwar

wars

greater
of

increase

much

was

former

situation

war

mean

ously the command of these stat-

I

eraj

V
it,
McCormick

T.

post¬

stimulus, as after for¬
mer wars, came from the replen¬
ishment of depleted stocks of con¬
sumer goods—in
homes, in retail
and wholesale trade channels, and
in the inventories of producing
corporations. This time, however,

not

improvises

firmly

than justified.

foreign countries should decline
as
European conditions improve
the forces present after former its program of public construc¬ or, for that matter, as
they grow
wars
but others were essentially tion.
worse.
A high level of armament
different.
expenditures will prove a sus¬
The factor of paramount and
First Stimulus
taining factor for some lines of
continuing importance in the
The first

does

utes that their provisions shall be
give you construed in order to carry out
some insight
their stated purposes.
Those pur-

underwriting of home mortgages.
Finally, the Government expanded

Some of them resembled

war era.

That

Commission

to

not

Third,

the

tablished.

our

possibilities.
of American

objectives.

now

If

horizon and helped to crowd the
again
became
wide¬ industrial stage. Finally, residen¬ variety. First, the deficiencies in
spread that "this is it."
Yet after tial construction held in abeyance consumer supplies have been al¬
a mild recession lasting little more
by the depression as well as the most wholly ; if not completely
tnan six months business recov¬ war, had to be rapidly
expanded made good.
Second, we are over
to provide living accommodations the crest with respect to the
ered, and it is still strong.
bulge
To
understand
this
business for a greatly increased number of in expenditures for
capital expansion to catch up with the
phenomenon it is necessary to re¬ families. In this field the financing
enlarged
of

room

es

view

view

expert body the working

it needed in order to achieve those
that

postwar. lawyers at the SEC are
prosperity are of
prosperity are of the disaDDearine nancial analysts and our best fidisappearing

readjustments at the end of 1948

the

an

business policy. It does mean that
the Commission must take seri¬

administer my effort will be more

factors

for

in

is

Crest

It will be noted at

some

and

practices

two

the

inim-

corporate

light of this story we
look forward for a few

moments.

a

broad objectives in the
regulation

nance

and

In

requires

of finance and corporate
practices
and were intended to
provide to

portance in fi-

the

In any case,
that the general

seem

support

industries

came over

believe

distant future.

and

New industries also

would

industries

so

such

these matters

it

Commission

than

terest. Its

another year or so.

exigent that
rapid dieselization, for example,
was
regarded as an imperative
necessity.
Great expansion also

of

end

more

especially true in the railroad in¬
dustry, where the need for cost

spread and
deep-seated.
At the

and

new

efficient plant and equipment for
old and obsolete types.
This was

the

academic

automobile industry is near the
period when downward readjust¬
ments in production schedules will
occur, but that the housing boom
may be expected to continue for

ness

the

combination of legal and business
talent.
The statutes under which
the
Commission
works
set
out

you

find

a

of

and

men

more

basic indus¬

of

At the end

future busi-

as

gather that those expert

early busi¬

pectation

in

citizens and

as

the

in

ex¬

combined group of law and
business students,
It is no accident that the work

likely to be that of the student.

But

special

any

knowledge with reference to
near

to

Commission of

not

increased and in many lines very

sustained

an

is

precarious period.

a

and

compre¬

hend them.
Your present interest in the Securities ad Exchange Commission

Automobiles Down, Housing Up

be called the second stage in
postwar business development. In
nearly every line of American in¬
dustry productive capacity was

been the well-

over

content of prospectuses,

confidence in investor's ability to
digest and

lawyers,

expansion movement marked what

casting

whole

a

fying and streamlining form and
expresses

hous¬

tries served, in my view, to arrest
the general downward movement,

hard

may

fore¬

the expan^

was

'

^

and

major sectors of the

The very high level of ac¬
in these two basic indus¬

tivity

about

business

two

economy—automobiles and

striking

fact

in

and Exchange Commission

improving the prospectus provisions of the Securities Act.
Defends necessity of
delivering prospectuses to buyer in ad¬
vance of
committing him to the sale. Stresses need for simpli¬

re¬

'..m

;

sharp contrast to the declines

sion

plant equipment
came
a
great expansion of new
capital construction.
This capital

employment.
The

In

:,

in numerous lines

upon
the re¬
placement of depreciated and ob¬

has

war

been

end.

By EDWARD T. McCORMICK*

,

Commissioner McCormick outlines the main
provisions of our
existing Federal securities legislation. Cites need for
revising

rap¬

sustained level of sales at the
tail

V

Member, Securities

char¬

was

idly in consequence of the well-

managerial functions.

Following

recession

inventories, which proceeded

.

boon waning, our future
prosperity depends on the expansibility of consumer goods
markets, which is only limited by availability of purchasing
power
among
the masses.
Holds increasing productivity
requires constantly broadening distribution of national purchas¬
ing power through improved ratio of prices to wages. Warns

The

Infonning the Investor

industries af¬

acterized by heavy liquidation of

states with the postwar

government must desist from

The

fected.

,

President, Brookings Institution

Thursday,-April 13, 1950

.

Depression

a

By HAROLD G. MOULTON*

Dr. Moulton

CHRONICLE

types of household "utilities.
The
chief difference was in the much

greater number of

'

,

FINANCIAL

in previous years in special
lines,
notably, the textiles and: certain

Meanies Needed to
Forestall

&

.

;

.

„n,en„

^

.

corporated, 2 Rector Street, New
.-Analysis—Bache & Co., 36 Wall
York 6, N. Y.
~
I
Street, New York 5, N. Y.
.

*

Volume

Central
1952

Public

available—New

Corp.,

Utility

5!/2S

Recent.;., Moody's

—

120

THE

Number 4898

171,

of

Broadway, New York

5, N. Y.

FINANCIAL

&

CHRONICLE

Bill;

basis of

these reports,

should, be

up

now

unavailable to them, and

and

to

buy

them out or

powers
on
the SEC, enterprises through dictating cf in¬
and instead order major study of formation required in proxy forms.
.Walt Disney Productions—Anal¬
the adequacy and shortcomings of It would require detailed reports
ysis—Batkin
&
Co., 30
Broad existing securities legislation, the from small firms at great expense

Conference

cies."

ception

of

legislation

this

is

Westerlic

to

extend and expand the control of

SACRAMENTO, CALIF.—Wes¬

,

terlic Corporation,

"One

.

J.

O.

•

*

1

-

•

President;

Lacy,

Paul

C.

Wright, Vice-President and Treas¬

'

Cook, Jr., Vice-Presidents.

''

(Special to The Financial Chronicle)

over

MASS. U Joseph fB.

BOSTON/

added

been

has

Araerena

''

authority

7

Harris, Upham Adds

,

t

would extend SEC

H. Harold Leavey and Peter

urer;

,

*

Ltd. is engag¬

ing in a securities business from
offices at 926 J Street. Officers are

,

t

*

Corp.

(Special to The Financial Chronicle)

and

Small

American

of

Business Organizations passed the

every

encouragement by

"The main purpose in the con¬

SEC regulations beyond interstate
great burden to them.
commerce and beyond Wall Street
of the greatest dangers to
'Main Street.'
It is an invasion,
Allen B. DuMont Laboratories,
following resolution in Washing¬ implicit in this legislation is the of State control of questionable
Inc.—Study—Tyson & Co., Inc.,
threat it holds to level competi¬ value and doubtful constitution¬
7
Lewis Tower Building, Philadel¬ ton, D. C., March 29, 1950:. ■
tion
among
competing smaller ality.
"The Frear Bill would extend
phia 2, Pa.
businesses and between small and
and expand the powers of the SEC
"This is either a brazen -and un¬
large enterprises.
Small compa¬
Elect rolux Corporation — Anal¬
warranted, or naive,* attempt to
beyond the intent of the law¬
nies falling within the scope of
ysis—Kiser,, Cohn & Shumaker, makers when they enacted the
extend and expand the jurisdic¬
the proposed legislation and con¬
Inc., Circle Tower, Indianapolis 4, so-called 'truth -in-securities* leg¬
tion of the SEC to control of all
trol of the SEC would be required
Ind.
.v.- •
islation in 1933.
It would bring
business, interstate and intrastate
'
*'
to furnish quarterly, anhual and
alike. "
within the scope of control and
:
Kaiser Aluminum & Chemical
supplementary financial " reports
operations of the SEC thousands
"We recommend Congress not
and to file registration statements.
Corp.—Circular — Walston, Hoff¬
of small businesses and industries
vote any additional legislation to
man & Goodwin, 265 Montgomery
They would be required to give
which
formerly have not 7.been
increase the powers of the SEC.
out detailed information on sales,
Street, San Francisco 4, Calif. <
subject to SEC control., The Bill
We believe Congress should direct,
Also available is a circular on
costs, working capital and other

Street, New York 4, N. Y.

given

incentive
the Con¬
and ally governmental agen¬

gress

to pressure

them into selling.

additional

„

(1517)" 9

to

of life and death over such small

Urging that Congress not confer

the

on

Small Business Group Opposes Frear

opinion
Hanseatic

York

COMMERCIAL

to

staff of Harris, Upham &

the

Co., 30

tutions and dealers—Ira Haupt &

a study and authorize hearings to
a
general
State Street. ' 7 7.
determine the adequacy or inade¬
Competitors
000,000 in assets and 300 or more
quacy of present securities acts,
would be able to use this informa¬
security holders, even though such tion
Slay ton & Co. Adds ;
against each other in a con¬ especially as affecting raising of
;
(Special to The Financial Chronicle) >,
securities were not transacted on stant war
equity capital and the develop¬
among small business.
ment
of
small and
localized
CHICAGO, ILL. —William B.
the national securities exchanges. Larger enterprises, constantly on
industry.
We believe changes Gramlich has been added to the
"I brief, the SEC would invade watch to buy up small prosperous
should be made in the present acts,
the
intrastate
field of
control. enterprises, would be in a posi¬ and small business, which is the staff of Slayton & Co., Inc., 135

Co..

The

Western Air Lines, Inc.

all

Mexican Railways — Analysis—
Zippin & Co., 208 South La Salle
Street, Chicago 4, 111.
•
j
New

Public

England

Co.—Booklet

Ill

available

Service
insti¬

for

Broadway, New York 6,

financial

SEC

-

South La Salle Street.

backbone of the nation's economy,

to evaluate the smaller ones

tion

the power

would have

in

matters,
public 7 statement.

enterprises having $3,-

such

N. Y.

Philadelphia

•

portation
&

Co.,

Co.

Suburban

15th

Trans¬

Circular—Brooke

—

Interest exempt,

Streets,

Locust

&

in the opinion of counsel, from all present Federal Income Taxation

v

/

• 7 -

Philadelphia 2, Pa.
Puget Sound Power & Light Co.
—Circular—Shields & Co., 44 Wall

;J7 7v; $19,500,000.:77'7:;7':;:'-v:7:-U

Street, New York 5, N. Y.
Richfield

Oil

Corporation

—

Memorandum—Newburger & Co.,
Walnut

1342

City of Baltimore, Maryland

Street, Philadelphia

7, Pa.
Riverside

Cement

analysis—Lerner

&

Co.—N

e w

5%, P/2% and 1%% Bonds 7

Co.,

10 Post
Office Square, Boston 9, Mass.

■'

7

""'■•v..

'*

'-:v.

7

•' '

-

.

":•••• ^,7

•

'

'

•

•

*.

.

\

'

*

'

'

*

•

•

•

..

V

" •

•

■ ■

'

*

.

Also available is a brief review

$10,000,000 Due Serially September 1, 1952 to September 1, 1976,

of the Cement Industry.
Sanger Bros.—Circular—Demp-

$ 9,500,000 Due

North
Eighth Street, St. Louis 1, Mo..

sey-Tegeler

&

Co.,

Circular

Air

Line

Railroad

Study

•

•'

,1..

"W

.

■

.

'

•

r•

—

for

r-

,

'V.

;

,7

*

'• ''7.

V

"

*

'

1

.

*

.

/ ;*\

,

#

#

_

in the opinion of counsel, will constitute valid and legally binding

water purposes,

Pat-

1952

levied against all the

N. Y.

.60%

1955

i

Analysis—The First Boston Corp.,

1957
1958

1.10T

i

1963

iy2

1.15

iy2

100

on

America and the Russian Menace.

1964

iy2

'IVl
1

-.

7

l/2

1

1969-70

1%

1.70 :

1.35

iy2

1965-66

77-77

1967-68

1.30

1962

5

1956

I960

1.20

5

1961

.90

1954

article

1.2552

.80

5

Inept

Prince's

reprints

are

Yield

~V2%

.70

1953

available

7.1

1959

Y-e'd

Maturtv

Rate

Maturity

Yield

-5%

Afaturitv

Street, New
of

Mr.

opinion, for Savings Banks and Trust Funds in New York and Connecticut.

obligations of the City of Baltimore payable from ad valorem taxes which may be
taxable real property therein without limitation as to rate or amount.

as
a convertible
opportunity — Theo¬

dore Prince, 30 Broad
Also

our

\

\;

them

of

investment

York 4,

1960

7\vfV.

*

These Bonds, to be issued

Street, New York 5, N. Y.
Pacifie 3s of

~

::;;v

^

on

Southern

y

Legal Investment, in
;

..

—

Equipment Trust Se¬
ries G—Harriman Ripley & Co.,

63 Wall

,

407

7

Seaboard

Inclusive

Serially December 1, 1955 to December 1, 1979, inclusive

1971-72

l3/4

1.75

1973-74

i

.

A7;;. I.45.7V77^

1.65$g

%% '

1.80

7

'

Travelers Insurance Company—

Broadway, New York 5, N. Y.

y%

-

.77.
Warner

Company

Analysis

—

(accrued interest

to

1977-78

7.

1.60

he added)

;

l3/4

1979

1.55

i'

1.85

1975-76

1.50

•'

i

7

»

,

;

7

-

1.90

-i*'

vz

1.90

7

•'

.

■

.

—

H. M. Byllesby & Co., Inc., Stock

Exchange " Building,

Philadelphia

whose

Rudolph

:

analysis

—

Wuriitzer

*

Raymond

148

Co.,

&

"-\7. -7--

is circulatedfrom

Revised !

—

are offered when, as and if issued and received by ns and subject to approval of legality by Messrs. IVoodKing Id Dawson,.
opini&n will be furnished upon delivery. The Offering Circular may be obtained in any state in which this announce nent
only such of the undersigned and other dealers as may lawfully offer these securities in such state. ..s

These Bonds

2, Pa.

State Street, Boston 9, Mass.

W. E. Darnell Opensr

\

SAN

ANTONIO,

TEX.—W.

E.

C. J. DEVINE

BLAIR, ROLLINS & CO.

Darnell is engaging in a securities

-

THE FIRST NATIONAL BANK
OF CHICAGO

THE FIRST BOSTON CORPORATION

HALSEY,STUART & CO. INC.

*

■

UNION SECURITIES CORPORATION

& CO.

incorporated

business from offices at 1528 Con¬

Drive.

tour

He

was

in

with

Tyler, Tex.

John
.

^

G.

(incorporated)

George

;

.

'

-

/

„

y

Davis Bros, in Tulsa

COFFIN &. BURR

Leon

Davis

Bros,

with

formed

have

offices

at

and
Davis

14

Now

•

Corporation

a

■

7 v 7, 'J'''

V

'■>

(Incorporated)

'

'

-

NEWARK •

AMERICAN TRUST COMPANY
"■

.

-

.

"

v

;

--

THE FIRST NATIONAL

BANK

Joins Barrett Herrick.

F.

Messman

is with Barrett

rick & Co., Inc.

*

.

;. "




Her¬

* ' x

".

NEWARK

ILL.—Elmer

-

April 12,1950

■.; " 7

7

'

,

•

*;

■' 7

i

7-;:

'

WM. E. POLLOCK &. CO., INC.
...

THE MILWAUKEE COMPANY
7;7

^

;

7,71(.7.7';/
-

-

' * >

.

-

■

•'

^

l'.'

*•

v

•

r-

,NCO"'0"ATED

/

7
•.

-

'

,

.

.STROUD & COMPANY
^ '
incorporated

•*'"

A. WEBSTER DOUGHERTY A CO.

JULIEN COLLINS & COMPANY

' "77. "7

" '.

:; :

-

NATIONAL STATE BANK

(Special to The Financial Chhoniclk)

BLOOMINGTON

f.

FRANCIS I. duPONT & CO. v A G. BECKER &. CO.

OF MEMPHIS

.

;

■

INCORPORATED-

■

incorporated

/'

ROOSEVELT & CROSS

■

BIdg., is now doing business as a -

corporation.; >"

.r,

". "

•

■,

.

ELDREDGE & CO.

»'

7

''

SCHOELLKOPF, HUTTON &. POMEROY, INC.

LAIDLAW &. CO.
.

G. H. WALKER & CO.

Sheerin & Co., Fletcher Trust

■

1

TRUST COMPANY

incorporated

OTIS &. CO.

•; 7

COMPANY

GEO. B. GIBBONS A.

'

'7''

'

FIDELITY UNION
-<

"

ADAMS, McENTEE &. CO., INC.

HEMPHILL, NOYES, GRAHAM, PARSONS &. CO.

•'

HORNBLOWER & WEEKS

INDIANAPOLIS, IND.—Thomas
D.

.

WHITE, WELD &, CO.

BEAR, STEARNS &, CO

COMPANY

SHIELDS

East

securities
'v 7-''7.v' V- 7'

3d Street to engage in a

business.'r •

CO.

L. F. ROTHSCHILD

incorporated

OKLA. —Elliott

TULSA,

HALLGARTEN & CO.

EASTMAN, DILLON & CO.

HARRIS, HALL & COMPANY

formerly

*

associated

•'

.

•

•

V

.

.

;

,

,

BOLAND, SAFFIN &. CO.
7.
'r.

7

:

'

10

COMMERCIAL

THE

(1518)

FINANCIAL

&

CHRONICLE

Thursday, April 13, 1950

could improve on its 1949 showing
of

Many Raiboad Securities

vestments and efforts may soon be

Are Attractive

made

accounting
give consideration to
the much larger consolidated re¬

'

Dillon & Co., New York City

$8

have

a

There is also the
possibility
of
dividends
being
placed on
a
regular quarterly
1950, he recommends specified selected bond, preferred and
basis, perhaps 50 cents, as com¬
common stock issues.
pared to the single payment of
I believe selected railroad se¬ the
Supreme Court for review. $1.50 made from 1949 profits.
curities are attractive for purchase Final reorganization may be long
Speculative Commons
at this time. The rail list general¬ delayed
but additional interest
My more speculative situations
ly is behind the market and there payments on the 5s, 1974 are possi¬
(18);
in
the
interim.
Meantime include Western Maryland
are
sound reasons for believing ble
Nickel Plate (100); Northwestern
on
the
present proposal,
that any further upward move in based
(14); Chicago, Great Western pre¬
the general market may be spear¬ bonds could work out around 90.
ferred (26) and common (17), and
would
headed by the carrier list. Invest¬ Values
probably be in¬
New York Central (13). Full de¬
ment money can purchase more creased under any revised propodollars of profit and more dollars
of income per dollar invested in

railroad

the

field

than

industries that

other

of and it is

one

I

•/•::

■

;

think

tails

'

its

on

industry that can

1949

of business and stand to make ad¬

ditional gains if the absorption of
freight rates by manufacturers is
again made legal under pending markets,
legislation.

Unfavorable

the

I

side

can

is the

,

be

placed in

possibly

a

equal to

earnings could make sharp
gains in 1950 and generous divi¬

of

$1 extra.

the

under

best

condi¬

of

The Chicago, Great Western

tions.

equities have considerable longer
attraction.

term

Debt

reduced

substantially

has

ditures

been

property
and
large
scale dieselization. Another strong
on

is

to

$7.50

a

preferred

share

on

stock.

the

Highly

market

been

sessions.
Based on improving ef¬
ficiency and/ prospects of well sus¬
tained revenues, earnings could
mount sharply this year to possi¬
bly $3 a share from about $1.50
a

share in 1949.

tion

is

a

Dividend resump¬

possibility late

in

the

business.

basis

On

results

a

ble.

City

The

of

one

!

ed Louisiana

steel

&

Arkansas

ANGELES,

joined

R.

C ALIF.—

Livingstone

Crowell,

has

re¬

&

Co.,

Weedon

land,

is

another

before

sys-

for

s

"beating
market"
so

owner

should again do well in 1950. The

his stocks

of

B. K. Thurlow

in¬

our

in

third

a

early 1922 when

the

(are

manifest that those who would

has any such object in mind.
Be¬
fore we begin our present attack
we must first make the admission

Their function in the

world,

that

cline), he would have sold

the

historically

investment

and

psycho¬

averages reached 85 and an¬
other third in late 1922 at 100.

The rest of his stocks would have

been

sold

when

the

time

in

December,

averages

high

120

at

1924,
made an all(just prior to

beginning
a
further
five-year
tripling of prices which was the
biggest bull market in history).
So far, since the end of World
War
II, the stock market has
shown a tendency to imitate the
pattern
which
followed
World
War I.
It is not inconceivable

that

in

the

inflation
the

fear

Dow-Jones

some

of

visible

the

dollar

presence

and

of

could
It is certain
plan
anything else ever
averages

day rise to 500.

that few

who

investors

or

were

formula

thought before 1926 that the DowJones Industrials could rise above

medicine.

150.
Yet this didn't keep them
Now, to present applications.
Today the
Perhaps the most fashionable of from reaching 381.
dollar is manifestly worth less
today's systems is the theory of

"unemotional investment through
timing."
The principle
behind formula timing is the ageold precept of "buying cheap and

formula

dear"—certainly

very

a

suc¬

than

market

are

determined

empirically

by

as

be just as short¬
their fathers who pre¬

The real

an

stocks, while at historically
high levels he should be mostly
in cash or bonds.
High and low

that 200
limit of this bull

ferred cash to stocks in 1926.

Industrials

should

those who

assume

may

sighted

not

investor

then and

was

marks the upper

typical formula plan
provides that at certain historic
cally low levels of the Dow-Jones
the

it

dogmatically

The

cess.

warning in all this is

against missing

a bull market,
against putting one's faith in
empirical system which may go

but

drastically wrong at the crucial
moment, depriving the investor of
his
emotional
equilibrium and
subjecting him to the well-known
speculative danger of buying
stocks

has been, any substitute in
investing money for individual
judgment and intelligence as the
investor who allows his judgment
to be superseded by a few paral¬

can

be worked

Industrials

are

1930

vested

degree

never

lel lines

American Securities

Open Chicago Br.

/ American

Securities

Corpora¬

branch

office

devotees

sheet of paper may

ap¬

of

Childs Co. Announces

in¬
certain

mostly
a

a

New York Promotions

respectability to their
among those millions of
.

investors who

modity
War

I

are

dubious

on

the

At

the fiscal

119.62.

boom
following
World
(about two years have
now since the top of the

Industrials
It

seems

year-end

of C. F. Childs and

Government

outlook

commodity boom following World
War II).
As of 1921, the preced¬
ing 10-year range of the DowJones

tion, 25 Broad Street, New York

present $3 dividend rate may be
increased to $4 later in the year. City, will ooen a
This year the Northern Pacific in Chicago May 1.

are

cash, imparts

of

market's

passed

To

in

the

row

on

day discover, to his great sor¬
and expense.

meeting
Company, Inc.,
because of de¬
security dealers, the
teriorating
business
conditions. following promotions affecting the
Let us suppose, however, that we firm's New York office, 1 Wall
apply formula plan technique not Street, were made:
Formerly assistant vice-presi¬
to the customary past 10 years,
but to the'stock market as of two dents, T. F. Cantwell, D. B. Fraser,
J. A. Latimer, and M. S. Smith
years after the top of the com¬
system

C. R. Livingstone

and

timing

when they are much too
There is not, and

high in price.

back

the past 10 or
The fact that the

over

years.

Dow-Jones

*




past
m

one

The Rock Is¬

efficient

approved .operated property, showed profits
the Florida of close to $10 a share in 1949 and

now

e

ical when it

to

commission

case

t

successfully

Island

rate is anticipated.

mate par.

courts and the

of

Hindsight Logic

,

in the current $5 annual dividend

consider what hap¬

us

Assuming

becoming 75%
invested in 1921 (the averages did
not quite reach 65 in their de¬

Like all empirical systems,
formula timing sounds very log¬

in¬

early change

Historical Experience

Now let

and

since

bond conversions. No

ditions the workout could approxi¬

plan,

wards

formula

due

lot

plan would have

perhaps the last full market cycle.

grade commons I
would pick Southern Pacific (52);

con¬

Coast would become part of
the Atlantic Coast Line. This
plan
has been rejected by the lower

The

back-

in the dividend rate from the pres¬
ent $4 to $5 a share.

Rock

the

eminently reasonable

formula

a

between

convince

of

,

proximately at the highest levels

medium

market
will

appeared in 1921.

showing is likely in 1950. There
talk of a possible increase

In

the
1921

what has been high and low for a
reasonable period in the past—

(41), and Northern
(20).
Southern
Pacific 650 South Spring Street, members
over $8
a share in
1949 of the Los Angeles Stock Ex¬
of any reorganization may be de¬
and
could
show around $10 in
layed by efforts to have present
Mr. Livingstone was re¬
1950. Earnings on the new money change.
plan changed, Mop 4s, 1975, sched¬
gained in the current bpnd sale cently an officer of Livingstone
uled to receive approximately 16
should go far to offset any dilu¬ & Co.
shared of new preferred, have a
tion of the common stock

East

such

mon

LOS

always make a good Pacific
showing. Although consummation
earned

reorganization

b i 1 i t y

of

and

reader how

illogic, of
plausibility
and
impossi-

more

bonds

a

and

is also

specific selections in spec¬
bonds
I
would
suggest
Central 4y2s, 2013 (63%); Mop 4s,
1975 (73), and Florida East Coast
5s, 1974 (66). In periods of rising
earnings and markets Central ju¬
ulative

Under

1897

logic

looking

led to believe that

we are

ations

of

cluded, consolidated net exceeded
$18 a share.* Another favorable

value

consis¬

tion

few

are

(today

figures for form¬
plans might be 105, 195 and
155).
A brief look at the fluctu¬

a

have most of his capital in com¬

(Special to The Financial Chronicle)

were

the

position at 55 and a fully
position
at
115,
with
an
evenly balanced position at 85
cash

tent combina¬

highly efficient Kansas

Southern,

vested

ula

basic axiom for investment

than $21 a share last year.
A stock split-up is always possi¬

Specific Bond Selections

issued

fairly

<

fully in-

the comparable

we

in them

see

selling

better

As to

when

amples),

shares
have logically, is paralleled by that of
favorites in recent patent remedies in the world of

a

in the oil

also

consolidated

strike.

about 86 and under favorable

of

leveraged' Central

$20 a share in 1950. Through a Charles
wholly owned subsidiary, the road

absence; from work

current

theories

periods (the
New
Era,
Technocracy, the Dow Theory, are
classic ex¬

recent
propound new and similar systems
years
and
operating
efficiency must
preface their sales talk with
greatly improved by heavy expen¬
vigorous denials that their method

owner
managed rail properties,
mild winter and a
fall off in demand for coal, soft earned over $12.50 a share in 1949
and if results of the wholly own¬
coal miners'

nior

financial

earlier

in

a

110 days and a prolonged

'

ionable

imperfections

stantial

.

a

vestor succeeded in

were'

$6 regular and $2 extra, earned
than $18 a share in 1949."

would have advocated

As of 1950 the

Charles Livingstone
$6
share in 1949,"
to the situation. The
With Crowell, Weedon
paying dividends

over

judgment and intelligence.

the fash¬

over

policy is followed.
Capital gains could be rather sub¬
if past

Earnings from

This could be lifted to better than

upset by declining business

on

look back

we

pened.

likely

any

better

Last year carrier operations

spring,

As

forecasting.

would

strength
Atchison, now

likely to be particularly favor¬

in the

substitute for individual

appear

treatment

dend

$2.50

allow continuation of

add

months earnings comparisons

were

How¬

ever,

amount

oil and gas operations which

and automobile industries and the

are

bond interest in 1949.

the regular $5 dividend rate plus year.

consequent slow-down in industry
in general, net income in 1950 could
easily approach $500 million as
against $436 million in 1949. Over

able.

our

properties.
overly fond of the North¬

not

am

come

Common Stocks

This would

for non-operating workers as of
Sept. 1, 1949 was considerably less
than originally estimated, the cost
of an increase to operating work¬
ers may also be
considerably less
than
presently anticipated
and
taken in stride by the industry.
On balance despite the poor start
resulting from strikes in the coal

near

in

western which barely covered in¬

Good grade common stocks that

Side

unfavorable

available

recent studies of these

' " '

.

investment
include Union Pacific
prospect of a 1950 increase in portfolio
wages for operating workers, their (85); Atchison (108), and Kansas
total ^payroll
said to constitute City Southern (54). Despite a poor
because
of
bad
weather
only about one-third of the in¬ start
Union Pacific earned better than
dustry's total wage cost. However,
since the cost to the industry of a $10 a share in 1949. Results this
wage increase and a 40-hour week year may approach $13 a share.
On

are

Cites historical record of stock

show how dogmatic assumptions based
on
preceding range of price fluctuation go completely awry.
Concludes "a few parallel lines on a sheet of paper" are no

point is the close relationship be¬
tween
the
management of the
that every system for "playingKansas
City Southern and the
beating the market" or its more
Chicago Great Western which may
respectable synonym of "invest¬
some day lead to a merger of the
ing scientifically" has the real
properties. Earnings have
been
earned by fair margins in 1949
showing sharp gains in recent advantage of preventing the in¬
and better coverage is possible in
vestor from following the dictates
months and the trend is likely to
each instance in 1950.
Issues of
of his own emotions.
This has
continue.
Dividends
are
being
this type are quick to respond to
usually accounted for whatever
paid on the preferred stock from
improved prospects
and rising
success
such systems have had.
time to time and arrears now

petitive picture. The carriers are
winning back a substantial volume

The

the Western Maryland and

on

Nickel Plate

showing in
1950, barring any unforeseen eco¬
nomic developments. On the fav¬
anticipated in 1950. A tax feature
orable side is the belief that busi¬ of income bonds
selling flat is that
ness activity in 1950 is not expect¬ interest is taxable as income
only
ed
to
change much from 1949 from the date bf
purchase. Inter¬
levels; freight rates are moderate¬ est accrued prior to purchase is a
ly higher than in 1949; great quan¬ return of capital and used to re¬
tities of grain are stored in pro¬ duce
original costs.
All three
ducing areas; outlook for crops is bonds now carrying 4% points in
favorable; prospects for the steel, interest for 1949 payable on April
automobile and building industries or
May 1, appear attractive for in¬
are
favorable and large savings come and
appreciation.
are possible from the operation of
Lower Grade Preferreds
new
equipment and expenditures
for roadway improvements. Fur¬
In
the lower grade
preferred
thermore, selective freight rate group, I would call attention to
cuts and improved service by rail¬ the senior
equities of Rio Grande
roads and rate increases by motor (48); Frisco (46), and
Gulf, Mobile
carriers have changed the com¬ & Ohio (55). Dividends
($5) were
improve

self, to the patent medicine.
market price ranges to

ually reported.

Among income bonds, I like Rio
Grande
iy2s, 2018
(75); Frisco,
41/aS, 2022 (63), and New Haven
4t4s, 2022 (50). Interest protection
on these bonds in 1949 was ample
and a favorable showing is again

most

in

can

v.:,y

Analyst likens market-beating systems, whose main use is
merely to keep the investor from emotionally misleading him¬

well

averaged

share

annually in the
past 10 years as against results of
less than $5 a share annually act¬
over

Analyst maintains rails are generally behind market, and will
join any further general upward market rise. Holding carriers
constitute one of few industries likely to improve earnings in

sal.

Analyst, Minsch, Monell & Co., Members New York Stock Exchange

to

which

sults
Rail Analyst, Eastman,

Timing

By BRADBURY K. TIfURLOW

modernize

to

methods

Bv JAMES B. TANNAIIILL

The Pitfalls of Formula

approximately $4 a share.
.
road has large outside in¬

The

a

53.17

to

reasonable

as¬

was

were

Vice-Presidents.

name

Latimer

was

designated

Mr.

manager

of

the New York Sales Depart¬
ment, and Mr. Smith, manager of
the

Trading

Condict

was

Department,

r

J.

K.

appointed New York

Office Manager,

with the rank of

Assistant Vice-President. All these

sumption, therefore, that typical
formula plan investors in. 1921 changes

are

effective immediately.

Volume

171

Number 4898

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

public of continued dollar therapy

Point

outflow of American

means

move

acute

an

was

case

for

the

diplomacy.

for

reason

hardly

Vice-President, Empire Trust Company
enormous

and

compensate

American

By JOSEPH STAGG LAWRENCE

Terming

industrial

to

Four—Foreign Aid Forever

the

of

error

The

Marshall

real

Plan

have

particularly buffers between

cial

Some

huge

has

one

outward

means

as

nancial

described

flow

American

of

extreme

an

hemophilia.

the

of

case

Since

fi¬

1914

the difference
between what
have

abroad
what

sent

return

in

Twothis

of

total
sents

clear

accounts for

little
than

a

less

3%

log. Stag* Lawrence

of

total

the
fol¬

date

will

attempt to

any

tend this aid

Four

is

in.

where

Said

the

".. .

embark

'7iv

na-

tional income during

war

!

and in part

to

and

is

Presi¬

eign

war

form

was

to

bold

expected to collect the loans made
to

a

violation of faith and purpose.
The same may be said of a con¬

queror's right in ravishing the de¬

aid

We

program.

allies

our

during

actually

the

First

World War. The investments dur¬

ing

the

interwar

period

were

made for

us by bankers. However
disappointing
they
may
have
proved ultimately, the fact is they

made

were

of

pose

originally for the

profit

and

Miscalculation

of

This is under

dable in many respects
we

aggregate

were used to sepa¬
rate American citizens from their

their

believed

government

desirable.

which

purposes

to

be

The

than those
just defeated.
It is this
tardy discovery by a State De¬
partment, plagued by a profound
internal schism, which provides
a clue to Point Four and Foreign

"It

sometime

members

international

understand¬

family.
:

.

difficulty
It

is

is

not

having

easy

to

explain

it is
necessary for us to reconstitute,
economically, allies whose sov¬
ereignty was preserved by our in¬
why,

tervention.

won

It is

war,

a

not easy

to

ex¬

plain to the American public that
the war imposed upon this coun¬
try

an

among

obligation
our

allies

production

and

comparable

to

an

to
promote
increase in

economic
that

power

which

we

gained during the war.
Said the
16-nation Paris report in the sum¬
mer

of 1947: "The production ex¬

pansion, which is envisaged by
1951, is similar in general scale to
that achieved by the United States
in the

mobilization years

1940 to

can

the

layman

cided

Japs

no

Can

the

it be

there

than

to

the

and

American

confronted with

income
nearer

a

tab

personal

as

devote them to

or

mounted

projects

idealism,

a

stage in

sublimation

where,
chargers

the

on

white

joust for the good,
beautiful, rais¬
ing calorie intakes in areas sub¬
the

true

we

the

and

ject to famine, providing plumb¬
ing where none now exists, and
improving living standards until
"the

last

Hottentot

has

a

Rolls

Under conditions of free choice
and free

capital

movement the

could

which

take

the

he

It meant that

the event of real

and

oj

an

this; pwiier
contrived

or

receive

adequate

compensa-r

tion.

-

Generally
ments
ence

times

did

speaking,
govern¬
not attempt to influ¬

this movement of capital. At
the great powers foqnd
i%

necessary

insure

to use

"fair"

"big stick" to

a

treatment

for

any

and

reers

fortunes

to

in

were

to

1943

the

the

on

the

veloped areas."
Volume of Capital Movement;

During the century between the
of the Napoleonic Wars and

end

the First World War approximate¬

ly twenty billions of British cap¬
ital
the

invested

was

whole in

this

it

owner

where

of

he

results

for

well

as

which

English

as

the

British
the

for

capital

mitted.

weaken

the

last four years.

What
this

the

vast

ultimate

volume

of

Continued

results

private

vestment abroad may

page

andria
the

the

as a

Light and Power
Company

40,000 Shares $2.36 Cumulative Preferred Stock

was

new

first

the
and

munist-led

skirmish

This

struggle.

'

.

.

share

Plus accrued dividends from March 1, 1950

in

was com¬
no

was

more

spontaneous than the recent strike
of coal miners in this country.

It was not until the late
of

that

1947

came

aware

understood

125,000 Shares Common Stock

spring

government be¬

of this

new

war

$5

the

value

Price $13.25 per

armored

the airfleets, and the
navy

par

\

and

its

implications.
By
columns,
magnificent
which had brought our re¬

time

that

our

share

cent foes to their knees had been

demobilized.

Their reconstitution

politically impossible.
Our
diplomats discovered that their
voices carried less and less weight
was

It

Copies of the Prospectus may be obtained from any of the several underwriters,
including the undersigned, only in states in which such underwriters arc qualified to
act as dealers in securities and in which the Prospectus may legally be distributed.

then that Marshall made

was

famous

his

Harvard

speech

in

which which he revealed that "Europe's
they planned and started, it be¬ requirements for the next three or
Japs and Germans in a war
comes

the

American

taxpayer's

duty to underwrite their econo¬
mies until they again become vi¬
able entities.
No conqueror in

four years . .. are so much
than her present ability

that

help

she
or

must

have

t

With

rare

exceptions the great

This

conquests of history have con¬
tributed to the power and wealth




an

men
an

language

invitation to

Blyth & Co., Inc.

Merrill

Lynch, Pierce, Fenner & Beane

Stone & Webster Securities Corporation

1

constituted both
a

Corporation

of a very

European states¬

to formulate

explanation

The First Boston

additional

face economic, social and

history has ever displayed such political deterioration
solicitude—if that is the word— grave character. . . ."
for the vanquished.

greater
to pay

request and

to the American

Dean Witter & Co.

Refsnes, Ely, Beck & Co.

of

in¬

be remains

on

Central Arizona

Price $50.50 per

in

com¬

*

April 12,1950

?50 par value

in¬

Starting in the last decades of
the 19th century a similar move¬
ment
of
American
capital de¬
veloped. By the end of 1949 this
had reached an approximate total
of $16 billion, about a quarter of
which has been invested during

then

and

area

was

„■

the,

and

was

constructive, with tangible, bene¬
ficial

as an offering oj these securities for
sale, or as an offer to buy, or
of such securities. The offer is made only by means of the Prospectus.

to defeat;

way

On

overseas.

movement

Soviet de¬

Germans

ca¬

"'underde¬

reasonably clear now that
that

their

nationals who had committed

pleased without the prior consent

offer to buy,

same

brought

would

vestor

reached

we

moral

our

them

areas

home."

Or have

of

underdeveloped

retain

with

gains suffi¬

assured,

that

so

in

with

violence;

could with¬

owner

circumstances to be construed

sailors in the Greek fleet in Alex¬

readily,

understand why, having licked

domestic

funds

NEW ISSUES

at conference tables.

1944." i.e., 88%.
Nor

It is

was

This

able.

Are

progress of

need¬

destroy
their current allies—particularly
the United States. The mutiny of

the

Four?

and

a year, can say:
better to spend these bil¬
accelerate the material

to

that the next task of communism

of

merits

tangible,

was

lions

should foster

Air Forever.

the

and

the

are

Royce"?

solicitation

had

variety of these
originality of
some, indicated difficulty in sell¬
ing to those citizens a program of
permanent aid to less prosperous
devices

his

Communist

Character

institutions.

for

against

T

subscriptions to the Bretton Wopds

wealth

The dif¬

investments

no

these devices

own

proposed
preamble at least,

of several billion

a

The miscalculation of commur
amounting to $50
billion was frankly a subsidy to nist character led to the shocking
wartime allies.
It was followed discovery, after the Germans and
or accompanied
by other devices Japs had laid down their arms,
—UNRRA, GARIOA (relief in oc¬ that we had merely helped to clear
cupied areas), ECA, loans and the field for a foe more formi¬

the

The

"A" for candor.

an

taxpayer,

more

areas

foreign

prompt

be* disclosed.

valuable,

ing development.

lease

In

we

.

that

would be given adequate protec¬

nationalization

dapgled in
The real purpose had to

ciently

cooperation of busi¬
Victory,
therefore,
be¬
liability.
It denies the ness, private capital, agriculture,
privilege of spoliation and entails and labor in this country, this
the liability to support, rehabili-, program can greatly increase the
tate, and protect the conquered.
comes

-

Lend

.

which

.

interest?

"With the

political.

or

.

capital investment in

feated.

pur¬

in

were

eleemosynary

sense

better life.

preamble

rationalized in terms of American

of

a

em¬

ganda;
tion

them in.

as

What

pros¬
fought to preserve
society against the perous areas.
"I believe that we should make
In the earlier stages this flow of threats posed
by the dictators. To
American material did not involve retain the territory seized by force available to peace-loving peoples
of arms—even though such a title the benefits of our store of tech¬
any considerations as broad—and
nical knowledge in order to help
as vague — as those which
have has always been, clearly recog¬
been applied to our current for¬ nized .V as valid—would constitute them realize their aspirations for

the

our

period of

a

35 years.

Bill

Kee

against

he would not be subject to vicious
and inspired "anti-gringo"
propa¬

freedom

gets

are

them

minded

ference between Presidential
rhetoric and statutory preamble is
the
difference
between
horsefeathers and solid masonry.

"More than

the world

both

the

a

-

statute, in its

Point

on a

high

rigged to discrimi¬
the foreigner; that

follows: "To promote the

to

half the people of
living in conditions
grave miscalculation of the
Their food
character of one of our "allies.'!- approaching misery.
They are victims
To engage in war for the purpose |s inadequate.
of disease. Their economic life is
of territorial
aggrandizement ; is
primitive
and
stagnant.
Their
repugnant to the American people.
They believed—and still do—that poverty is a handicap and a threat

concept of

a

has

faults of Point

we must

of

be

heaven.

ex¬

.

.

Yet

nate

not

not nibble at bait that

new

of

duty to

that domestic laws

assurance

draw

.

dent:

Christian

note

a*

able

would

that the alien

.

beyond the terminal

This

comes

on

will

stable and honest
currency. The
sovereign of the area to which the
capital moved had to give reason¬
a

foreign policy of the United States.
Evidently Congress would

encounter

necessary.

the

in

is

starts

of

rough going.
Elaborate projections of minimum
future needs indicate a continuing

by

our

to

t ion. It

o n a

of
not

that

triumphal processions,
spoils, the cre¬
ation of new orders of nobility,
deficit in dollars beyond 1952.
the expansion of territory.
Al¬
"Obviously a new formula
though the foe was completely

in

repre¬
a

end
was

indicate

It

a
foreign exchange control
board. An essential condition was

bodying the ideas of the Adminis¬

terminates
some

sermon

11

of

tration

■

the beneficiaries, notably Eng¬
land, and the mood of Congress

the distribution of

wreath

$102

billion.

thirds

War

believe

program
for
making
the
victory has become a
chain of thorns, r; v o >: ■ .''-'".V -i. '- ■. benefits of our scientific advances
How do we explain this aston¬ and industrial progress available
for the improvement and growth
ishing metamorphosis of the vic¬
tor?
It is due in part to a change of underdeveloped areas..

the

of

World

lowed

r

staggering total

Second

The

Plan

The behavior of

:

C

capitulation un¬
conditional, it is a reasonable
question five years later whether
we
actually won the war.
The

has

reached

victor.

'

defeated and his

have

received

the

t

.

Marshall

in 1952.

Formula

,

and

we

of

The

• -

New

a

a

man.

share with the less fortunate. The

idealism.

for

like

brotherhood of

note

Europe.

-V Need

sounds

Heaven

an
immediate
appeal
to
thousands of sincere citizens who

and the sickle erupted into West¬
ern

in

make

temporary roadblocks, if and
when the legions of the hammer

beneficiaries; and (3) Point Four is kin of, and will be
unsuccessful as, previous hand-out
techniques as Bretton
Woods, UNRRA, British Loan, and ECA. Insists it is only
necessary to abide by well-known rules to attract private
capital, American Government intervention being unnecessary.

the

This
the

our¬

as

greatest

d

Bait

selves and Russia which might act

(1) Our most reliable anti-Kremlin allies have had negligible
aid; (2) The weakest links in democratic defense have been

we

standards of

allies—

of "Financial

Hemophilia," Mr. Lawrence estimates our finan¬
bleeding at $102 billion. States as realistic conclusions:

substantially their
living."

is

to dispute.
It was a
dictated by weakness.
It

to

activity in other nations
raise

can

open

necessary

(1519)

40

12

THE

(1520)

,

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 13, 1950
\

*

'

-

rates, which

Needed Changes in Oar Tax System

The

used

we

looked

at

to be

cal

here

today
to talk to you about the biggest
figures of all.
Taxes >and
the
budget have grown steadily more
important
as -.
;
»
:

has,

consider

do

ditures
to

equal' '

ab0ut

fifth

of

national
c

0

m

;

i

*>

n- <

impact of,
g o v e rnment

spending
the
i

s

i

m

-

n

o

handle

J. C. Thomson

the

in

ways

stifling the growth of

Expenditure

latest

policy statements
In it

we

our

Economic

for

in

1950."

series

a

of

fiscal policy.
have recommended a net
on

tax reduction of about $2% billion
and cash expend ture cuts total¬

ing $3.7 billion below

the

Presi¬

dent's

recommendations for the
fiscal year.
We of CED be¬
lieve that this is a feasible pro¬
1951

gram, and is consistent with sound
fiscal principles.
It is the latest

expression

of

CED

a

philosophy

oh fiscal policy that, has been de¬
veloping for about eight years.
These figures mean very little
by themselves, and before we go

into

them

you

the

CED

I

want

looks

budget.

to

principles
at

outline

under

taxes

In passing I

for

and

the

Government, including the trust
funds, and because it shows only
For this

rea¬

son,
only the cash-consolidated
budget gives a reasonably accu¬
rate measurement of the impact
of Federal financial operations on

the economy.

call

CED the

CED's

the

budget

concern

tablishment

has

since

been

its

with

es¬

the

problem of economic stability. We
have

as

our

need be.

This does not

subscribe

financing;

to

than

tional debt.

But

we

must

all

be

by now that, balancing the
budget
in
a
depression
takes
money out of the nation's spend¬
aware

ing stream at
ness

time,,when busi¬

a

activity should be stimulated

rather than constricted.

will

main goal

the devel¬

Actually,

for

pressure

pressions is

limited stock of goods.
In short,
the annually-balanced budget pol¬

icy

tends

to feed
and deflation.

both

inflation

econ¬

high level of
employment, to continue the dy¬
a

namic growth of the
economy and

through
rising
productivity to
bring on a continued trend toward
higher living standavds. ■.

a

stabilizing

set up in

broad

CED

1947

greater

as

one

policy
part of

by which
help to pro¬

program

the government
mote

budget

can

economic

stability.

It is the fiscal side of a
program
Which relies largely, as far as the
government is concerned,

on

fis¬

Compensatory

Because
economic

perfect

the

forecasts

CED

science

for

to

us

of

is

the

Budgeting

believes that
still

address

by

M~. Thomson before
the
New
York
Society
of
Security
Analysts, New York City, March 23, 1950.

dollars

amount

under

that

set

of

Substantially

of

make

be.

And

can't

conditions

materialize

sell stocks.

That

there
toward

The next step in the stabilizing

budget policy is to set tax rates
to

meet

this

standard

tax

rates

to

balance

budget and provide
debt retirement at

the

surplus for

a

agreed high

an

level of employment and national
income.
«we

go

this

and

on,

is

where the policy takes on its sta-

bilizing aspect: "Having set those
rates," we said, "leave them alone
some

When

tax

rates

a

forecast of change in the nation¬
For example, if a de¬

pression

is

foreseen,

tax

rates

would be reduced in order to pre¬
vent the depression from mate¬

rializing.

icy's

Of course, if the fore¬

In

practice,

dependence

on

this

pol¬

impossibly

accurate forecasting

and frequent
changes in tax rates makes it un¬
reliable.
Our

fluctuate.

government

In

will

when there is

will

this

budget policy
the failings of

revenues

depression. Mean-

a

be

expenditures

increased,

set

economic

stability.

Sec¬

ond, it promotes economy in gov¬

debt

Third, it provides for

reduction.

avoids

frequent

And

fourth,

changes

in

it
tax

high

as

President Truman calculated his
the

on

assumption of what
of

basis

the

of

con¬

fiscal year

the

would

be
as¬

the

economic

economy

activity

at

the

on

level

which prevailed in the latter
part
of 1949.
Obviously, the actual def¬
icit might well be far different
from

the

deficit

programs

then

and

This

the

in

time

leave

hands

when

kept

deficit

a

will

will

the

the

In

shown

in

the

time of

pile

up a

will

be

surplus

funds

at

should

a

be

tirement.
more

than

The

will

we

for

public

debt

will

re-

pay

into the Treasury
needed for the day-to-

revenues
are

day operation of the government.
drawmg-off of purchasing
power and
he
both

retirement of debt

anti-inflationary.

There is

a

If
depression

should

act

a

would

depression

into

get

be

inflation.
them had

raised
'

Once

a

to

tax

work

the

-

rates

against

need

for

passed, these temporary

rates .would
we

and

be

The Problem

surplus at high employment? Ore
way would be through a tax in¬

should

we

the

look

solidated

on

at

the economy
cash-con-

the

budget.

This

is

the

budget which is buried in the official budget document under the
forbidding title "Payments to and
Receipts from the Public."
As I

said earlier, the cash-consolidated

budget shows only actual cash expenditures and receipts in the fisyear in question; no merely
internal transactions between dif-

cal

government

agencies are
a budget which
the whole Federal Govern-

included. And it is

When

we

the

use

cash-consoli-

dated

budget we can see the approximate effect the budget will
have on the economy.
It follows

But the CED believes that

crease.
our

tax burden is

the

danger

economic

ously

menaced.

crease

when

determine

we

abandoned

And

expect the need for using this

how

we should do
the basis of the impact these
taxes will have on the
economy,

and the impact of government expenditures.
We should, accordingly, use the cash-consolidated

taxes,

js

a

than

in¬

our

present tax sys¬
is long maintained in force it

tem

would, I think, slow down the
growth of our national output and
make

it

harder

and

harder

business to provide sufficient

jobs for

for
new

constantly rising labor

a

force.
CED

has

also
concluded, after
study, that the Federal Gov¬

ernment is
at

trying to do too muck

time.

one

I don't want to soend

too much time

side

of

the

the expenditure

on

budget,

gentlemen asked
But

possible

to

because

me

I

you

here to

taik

don't think

decide

it

how

high
taxes should be without
knowing
how high expenditures should be.

the

system which will yield sufficient

is

budget.
in this day oT huge

useful>

Rather

think they should

we

If

budget. It,

budget

administrative-control
j00

beyond which
will be seri¬

I am going to quote a few words
the President himself used in his
Tax Message. He
said, "Our gen¬
eral
objective should be a tax

budget.
traditional

already nearing

point

progress

be lower.

much

ment, including the trust funds,

It

necessary

is

goy_

in times of

revenue

high employ¬

ment, production and national in¬
to

ernment expenditures, as a tool
for government officials in admin-

penditures of the government and

istering

leave

and

agencies.

controlling

their

But the administrative-

control

budget is not a satisfactory economic tool, and we should
break away from its use as an
overall budget for all purposes,
President

Truman

submitted

beginning

July 1.
He foresees cash receipts of $43.1 billion. This would
on

leave

a
deficit of $2.7 billion
cash-consolidated budget,

the

come

the

meet

some

necessary

surplus for

debt

duction."
The CED would
with
not

ex¬

re¬

'

that
agree

certainly

statement.

that

recommended
a

budget in which he plans for cashconsolidated expenditures of $45.8
billion in the fiscal year

"safety valve" in this

we

That is far less than the $3 billion
we of CED think is desir¬
able under those conditions.

Federal

at

see

spending will be

This

are

would

which

is

and that surplus

earmarked

the

at

there

what the impact of
government's
taxing
and

look

we

bucjget to

appear.

inflation,

look

a

So

surplus in the cashconsolidated budget presented in
the President's Budget
Message of
$800 million at high employment.
a

about taxes.

a

a

take

actually be

so on

position to buy as many
goods and services as possible.
in

lef>s

unemployment.

high taxes should be

public

public

na-

unem-

as

additional

of

trend

the

that

other

greater

defined

budget estimates

except

or, an
inflation that
up
with
cannot be kept
in 'check suffibudget policies in mind.
It
eientlybythe combination of fiscal,
was designed to meet four objec¬
monetary and debt management
tives, which incidentally should
policy, we would make a tempobe the objectives of any budget
rary change in tax rates.
The tax
policy. First,
it
contributes
to burden would be eased to
counterwas

have

we

The problem boils ctown to this:
How can we get this $3 billion

when

the

way

lose

comes.
In a depression, the surplus will dwindle, there will be a
momentary balance of the budget,

policy.
stabilizing

Now

covers

future,

al income/

what

employment?

situation this year and see how
our policy would deal with it.
First, let me remind you that

changed, > while the national income fluctuates, it is obvious that
revenues

of

individuals alike

ferent

government's

definite

a

reduction

unsettling to business and

so

un-

left

are

be

the

policy also avoids the fre¬
changes in tax rates that

quent
are

the

Then

such

compensatory budget policy tax
rates are changed when there is

higher taxes

other expendi-

debt.

The

condition.

w?y /e e>cPressed 'I.

"iJo is.
'Set

will

tional

Balance Budget

under

stock." In the managed-

budget produce if
unemployment of about 2Vz
million persons; that is, if we had
had

.

this

works.

ours

Tax Rates Set to

government

the risks with the whole economy
an
individual can take with

deficit

1951. This
sumption happens to be based

tures, the public will have to
weigh the advantages of the new
against the burden of
higher taxes. In this way the sta-

will

you

is the way

not

afford to take

budget

of

in

income,

program

,.

ployment compensation, which are
automatically operating devices
well that help to sustain private in-

we

of

-

while,

gentlemen are as
acquainted with the perils of eco¬
nomic forecasting as anyone could

test

amount

our

.

would

I think you

for

•

reliable

economic

outlined

more

..

also reject the so-called man¬
aged compensatory budget policy.

.




retire

to

im¬

too

we

ernment.
*An

suitable

a

de-

we

billion

of

have

dition

expenditure

mean

curtailment

or

national
new

Be¬

budget.
\
b!lizing budget policy puts a price ;
If we use the CED definition of
debt retirement than that might
tag on every government activity,
high employment, and apply it to
bring on deflation or restrain eco- After all, every single thing the
the President's budget
estimates,
nomic growth*.
" ; /
.
government does is paid for by
revenues will prove- to be about
Before I go on to describe the the
public.
f' v
;
Y
"
'$3.1
billion
higher than those
stabilizing budget policy I want to
~
•
V''
■'"'<v'• shown in the budget estimates.
make it clear that the CED is not Debt
Reduction * Imperative
in
They would be about $46.2 bil¬
forecasting "such & situation " of I
Good Times
lion instead of $43,1 billion in
high employment; We merely use A' The stabilizing budget
policy, as the
budget estimates, because per¬
it as a standard on which to base I have
pointed out, makes debt re- sonal
and > corporate- incomes
our policy.'
When you set up a duction imperative in good times,
would be higher under bur
formula timing plan in which you The
high
surpluses of good years will
employment
definition.
Unem¬
will sell common stocks at a cer- be used
to erase the deficits of
ployment compensation payments
tain point, you don't predict that; bad
years.
As long as we have a
would be about $400 million low¬
that point will be reached; you
healthy economy, with reasonably
er, because there would be
less
merely say that when arid if those high employment on the
average,

also

Rejects

inflation.

to maintain

be

three

conditions.

the

sible, to strengthen the free

was

debt

earmarked

so

cast proves wrong the government
will have stimulated the forces of

The

would

be

retirement, and

that

unless there is

opment of public and private poli¬
cies designed to flatten out the
business cycle as much as pos¬
omy,

debt

surplus of moderate
would

of

cut.

surplus would the President's

an

high-employ-

a

be

recommended

we

other

neces-

I

apply
What

policy.
or

tax

a

of

This is

program.

program

cash

a

which

should

we

for

in order to produce the de-

every

said,

we

major change
deficits in de¬
in national policy or condition of
strong that the an¬
national life."
nually-balanced
budget
theory
does not work.
And in inflation,
Everything revolves around the
the system gives away the poten¬ setting of tax rates and
expenditial surpluses of prosperity, leav¬ tures at levels that will
produce
ing more money in the public's the desired surplus at such times
pockets with which to bid for a as we enjoy high employment,
the

new

sary

level

deficit

program

our

the

we com-

Let's

the cost of

cover

Because

that

mean

eternal

it

provides
for long-term reduction of the na¬

a common

policy of
stabilizing budget policy.

first

more

that

Stabilizing Budget Policy

We

unstable

economy

tThen

call

curtailment

ment

level,

policy of

pol¬
icy of annual budget balancing to
be impractical and to make the

would like

the budget for the whole Federal

A

First, I want

which

to say that we use the cash-con¬
solidated budget because this is

cash expenditures.

into

The CED considers the old

we

for

Policy

the

un¬

I'll go

aging the Federal budget.

Development recently issued a
policy statement called "Tax and
is

except under

moment.

a

to talk about other ways of man¬

responsibility

budget

free economy.
The
Committee

This

alone

usual circumstances.

this in

which will not upset the
economy
and
to
provide
adequate taxes

without

left

are

economy

extremely
p o r t a nt.

The govern¬
ment has a definite
to

The

stabilizing--budget/ policy
consists; basically of setting tax
rates to balance the budget and
provide a surplus in times of high
employment. Once set, these rates

the'

e,

would

or

surplus at

cided

.allocating goods and services in
the most efficient possible way..,. *

a

policy

also believe

we

can

recommendations is the

philosophy

expenditure pro-

sired

for

con¬

of

the ;

this

And

budget

our

you.

policy

desired by the public
stage of the business cycle,

at any

expenditures to

what the level of national

budget

were

new

increase

have

of greater

direct

on

gram

a

that

,

back

If

income would be when 4% of the
labor force
is unemployed.
At

trols over, prices and production
and they allow the free market
system to carry on its. function

Govern*-*,

eral

fall

not

stabilizing

ment.

em-

(Today
this
would
unemployment of about 2%

million persons.)

governmental
end

,

Fed-.}

ment's expen-

best

The

the

puted

stability, is that they involve no
hew powers of government, they

;.r

grow

With the

the

will

money out of the

also promotes economy in govern¬

mean

monetary policy and
policy.
The
these policies

toward the

means

Federal;-

Gov ernment

be

to

would

the

hind

spending stream in inflation and
leaving it in depression,

time of high employWhen loughly 4% of the

country to be enjoying high

believe

-we

reasoning
up.
We

ployment.

management

reason

..

the''

policy,

debt

of

set it

the budget as it

we

lion dallars.

rare

that

stability, taking

a

said,

we

size

honored

am

sort
we

only at

occur

This policy, then, will promote

civilian labor force is unemployed,

.

I

the

at

ment.

Development, which
compensatory budget policy, but proposes elimination of taxes
that penalize individual segments of the economy and stifle
business growth, incentive and productivity. Says present tax
structure is 3 mass of jumbled measures passed merely to pro¬
vide revenue and without regard to their adverse effects on
nation's economy.
Contends Federal expenditures in fiscal
1951 could be reduced $3.7 billion, and thus make possible
$2 billion tax reduction.

budget

when

appear

of the Committee for Eco¬
rejects the so-called managed

safety valve to
intervals.

explain the
policy is to

to

way

with

start

Mr. Thomson outlines tax program

f

best

stabilizing

By J. CAMERON THOMSON*

upsetting to busi-

are

and individuals.

ness

President, Northwest Bancorporation, Minneapolis
Chairman, Subcommittee on Fiscal and Monetary Policy, CED

nomic

i.

'

the

by

But

agree

we

do

expenditures
the President

are all
necessary. The impression
is sometimes
given that our Fed¬

eral Budget is so dominated
by
postwar and defense expenditures

that

its

size

in

is absolutely deter¬
necessity for survival.
That is not the
way'I see the sit¬

as

uation.

mined

by

The

President's

budget

compared with the $5.1 billion in

calls

the

itures, on
a
cash
consolidated
basis, in fiscal 1951. In fiscal 1948,

administrative-control budget,

The President believes that there

should

be

net

a

about $1 billion.

with

of

some

tax

increase

of

The CED agrees

the

for $45.8 billion

spent $36.5 billion. The Pres¬
ident's 1951 proposal is $9 3 bil¬
lion higher than actual 1948
ex¬

penditures.

there

are

crease

ences:

instead of > the tax increase

he
tax

asks

for

we

reduction

two

big

recommend

of

about

differa

$2V4

net

bil¬

expend¬

we

points in the
President's recommendations. But
these

of

-

is

How much of this in¬
in

whatSecretary

Snyder calls "war-or-peace" items
defense, international
affairs, veterans, interest?
Only

—national

Volume 171

$1.1

12%

billion,

or

war-or-peace

is

in

these

categories. The rest,

$3.2 billion, is an increase in do¬
mestic peacetime
programs.
If we
leave out the new social insurance
program on the ground that
a re

they

self-financing we find that 85%

of the increase is still in domestic

peacetime
self

budget

This by it¬
prove
that
the

programs.

does

not

be

can

show shat

*

the

cut.

size

But

it

does

of the

budget
rigidly determined by the
costs of waging the war with the
Axis or waging the peace wi&i
is

not

Russia.

.

-

Cuts

in Expenditures

Recommended
In view of the small amount of

time

available, I shall discuss

our

recommendations for expenditure
cuts briefly. We have concluded
that expenditures
be

cut

$3.7

and should

can

billion

below

the

President's recommendation.

.

In

National Defense

believe that

we

expenditures

can be reduced be¬
low the 1950 level without reduc¬

ing the effective strength of the

"

armed

forces.

Our

recommenda-

*

tion

for

1951

is

about

below the President's.

•

billion

$1

We believe

that Veterans

Readjustment Pro¬
grams can decline more rapidly
than the budgete envisages—to the
extent of almost $500 million—
without sacrificing the basic pur¬

*

;

poses of the program. RFC pur¬
chases of guaranteed home mort¬

have

gages

far beyond the
intention to provide a

original

gone

secondary market. These expendiiures, we think, can be reduced

■

'

Number 4898

about

$340

million

below

the

COMMERCIAL &

THE

of

jumbled

time to
vide

an

taxes save those

line and tobacco.

revenues for a

ernment.

now

growing

of the taxes we
paying. What we should
better tax sys¬

a

itures; this
used

We

have

ferring

should not be

reserve

unless

absolutely

also

necessary.

recommended

de¬

eliminating the increase
public works, we have advised

/ of

or

against

rapid

expansion of new
programs until old ones decline or

-

national

the

.

ther, and

grows fur¬
believe the Hoover

Commission
■;

has

that all programs

demonstrated

be more ef-

can

of $300 million can and should be

obtained
of

<

by stricter enforcement

the

tax

added

When

laws.

for'

recommendations

these

1951

are

the total cut comes to
$3.7 billion.
'

'

.

.

up,

I don't argue that this is all
out

cut

can

of

the

we

President's

budget. There is undoubtedly a
greater saving possible. But

taxes that

to

bad in themselves.

are

These taxes
tend

bad because they

are

stifle

the

growth of the
They put obstacles in

economy.

the way of increasing

our

recommendation is

practicable first

a

be taken

step

that

can

this year.

incentives

to

develop

new

indus¬

tries and to allow existing enter¬

prise to grow.
there

But

is

high hurdle in

a

the process of tax reform.
Many
tax reforms will cost the govern¬
ment

I

revenues.

think

our

tax

the, tax

proved

structure

will

im¬

be

the burden is lightened.

as

We should also take

steps to plug
the loopholes in the structure

up

which

enable

companies

people
escape
their
some

to

and

fair

share of taxes.
of these opportunities for
approach to overall tax reform

One
an

is

present today, and the CED has

recommended

year.

there is

a

think

we

series of reforms
should

As I have said,

be

made

we

think

this year for a net
tax reduction of $2% billion.
We

have

room

reforms that will

proposed

effect this reduction to the bene¬

of

fit

economic

growth.

And we
have also proposed some reforms
that
will cost
the
government
little or nothing in lost revenue.

First,

Wartime

we

reduction

or

excise tax

Excises

.

:
•

have recommended
repeal of wartime

rates to the

extent of

you add
it all up, the about $1 billion of net revenue
recommendation,
so
far, loss.
These taxes were imposed
looks like this; under conditions or increased to provide additional
of high employment, the cash - revenues for the war effort and
consolidated budget for fiscal 1951 also to discourage the production
should call for expenditures of of goods that were not essential to
about $40.3 billion and receipts of a war production economy. Today
$45 billion.
This would leave a output of these goods is still being
surplus of $4.7 billion.
;
discouraged, yet the war has been
over for over four years. This is
This is too big a surplus to meet

conditions

the

of

high-employment surplus down to
$3 billion. We have recommended
tax reduction that would amount

a

;

to

billion in a full year. If
cut were
applied to fiscal

$2%

this

1951, it would result in a net loss
of revenue of

only $1.7 billion, be¬
cause of the lag in tax collections.
This would leave the desired surplus of $3 billion at high employ¬
ment. Obviously, if we don't get

.

high

level of employment,
billion surplus.
don't have high em¬

to

a

we

won't have a $3

'But

if

we

$3 billion surplus is
not desirable. <■-' '
vV
,

ployment a
;

.

"

Present Tax Structure Is
Now
taxes.

Jumbled

get back to
Our tax structure is a mass
I'd

like

to




reforms

we

ing I
today.

recommend

.

cpnsidei ed
distributed
is

the

withholding tax

a

income.

rate

This

applied

to

the

first
under
the

income

of

individual

present

on
16.6%

income

tax.

achieved

nave

for

summarized

you

Geo. B. Gibbons Co.

In New Quarters
Geo.

Gibbons

B.

1914

since

&

Co.,

Inc.,

underwriters, * dealers

arid distributors in state and

gen¬

eral market municipal bonds, an¬
nounce

office

the removal of the firm's
to

commodious

and

new

quarters at 20 Pine Street, New
York City.

Troster, Gorrie Wire
To H. A. Riecke Co.
Troster, Currie & Summers, 74
Trinity

New

Place,

merribers

York

City,

of trie New York Secu¬

the

of

that

consumers

companies making
subject to these

are

And it has hurt the

excise taxes.
of

these

industries by

adding to the price of their prod¬
ucts.

tual

removal

double

of

taxation,

and

inflations

and would cost about $1 billion in throughout
full year at
is discussed

a

high employment. It
more
fully in our

policy statement.
These
ones

two

measures

which would

cost

are

the

the gov¬

ernment ' considerable
revenue.
CED also proposed several other
steps toward a sensible and fair
tax system that we think should
be taken this year, and that would
cost the government little.

CED

does not believe

rity Dealers Association,
the installation of

a

announce

direct private

telephone wire to the offices of
H.

A.

Riecke

&

Walnut Street,

Inc.,

Co.,

tjbat

1528

Philadelphia.

Ray Allen will

we

have

endured

history.

You are
strong advocates and useful rep¬
resentatives of the free enterprise,
capitalist system.
The CED pro¬
gram,
of which I've described
only a small part, is designed to
strengthen
this
system,
and
1
our

think it is constructive.

published

a

statements

on

We h&ve

of policy
National problems,

number

Phila¬

service

delphia and surrounding territory,

Boyce & Co. Formed
In New York
Boyce

with offices at 40
New York
and

Exchange Place,
as

dealers

railroad,

public

City, to act

brokers

in

bonds and

utility and industrial
stocks.

Frank

City

& Co. has been formed

Principals of the firm
Boyce,

who

charge of the

stock

partment,

and

John

will

be

are

in

trading de¬
A.

Singler,

who will be manager of the bond

Mr. Boyce
be delighted to send trading department.
much of our material as was foimely a partner in L. H.
you want.
And because I have Rothchild & Co.
Mr. Singler in
High on the list is the removal had to be so brief today, I would
of the tax exemption from future like particularly to send you a the past was head of Singler &
issues of state and local bonds.
copy of our latest policy state¬ Co., Inc., of Minneapolis.
Briefly we see this controversial
subject in this light: the exemp¬
☆
tion, because it benefits primarily
the
wealthy investor, tends to
keep him out of the stock market,
although the wealthy man is just
NEW REFERENCE BOOK ON TAX EXEMPT SECURITIES
the

man

and I would

you

as

who is most able to take

the risks of common stock owner¬

if

"State and Municipal Securities"

These risks must.be taken
economic system is to sur¬
There is also the question

ship.
our

vive.

inequity;

exemption

the

EDITION

1950

en¬

their full share of taxes under legal sane-,
tion.
A

.

This 32 page

form

of the

we

advocate

costless

re¬

is the revision

treatment of business losses

of

carry-back

the

and

two-year

muni¬

cipal and housing authority

present two-year

forward of business losses.

reviews impor¬

tant facts about state,

by.froth corporate and non-corporate business.
We recommend the
revision

book, issued for

the first time,

.

second relatively

■

obligations, including:

carry¬
In its
•

Review of the 1949 market

•

place we want a five-year carry¬

Chart of

forward against subsequent earn¬

to the risk-taker.

•

yields 1940-49

Aggregate debt by type of
obligor, holder and issue
Outlines of local

•

Statistics on State, Municipal

•

Table of

•

Major bond flotations in 1949

housing au¬

thority financing programs

and Revenue issues

\ -

Present limitations

State commercial

deprecia¬
tion allowances may prevent the
reduction in the value of capital
on

off
we can afford complete repeal of
against taxable earnings, or from
the wartime excise rates this year; being charged off in a reasonable
other reforms are also desirable period.
As a result, tax may be
with the limited amount of feas¬ imposed when a company has no
ible tax reduction.
Accordingly, net earnings. This is unfair, and
a deterrent to investment. Present
we lean strongly toward reduction
particularly of those excises which revenue requirements will
enter -into the cost of production probably
not permit, any basic
and
thus hurt the people with change in depreciation policy, but
low incomes, such as the taxes on v^e believe that the administra¬
transportation * and * communica¬ tion of the present policy could
tion.
And we should look toward be improved to make its applica¬
eventual
repeal ' of
all
excise tion more reasonable and clear.
The

are

stockholder

business which faces losses in its

owners

year

.

early years. - It would encourage
the development of small busi¬
ness and also give encouragement

the

one

his income tax

hardship to employees

goods

any

by the revenue require¬
ments of the government.
But if
we seize each opportunity for re¬
form we can eventually reach our
goal, '.■'
\

You gentlemen are concerned
computes
liability, he would with the growth of our economy
include in his income his cash within the limits of the free en¬
income plus the tax withheld by terprise system that has made our
the corporation.
The amount of nation the wealthiest and strong¬
I am sure you
the tax he pays would then be est in the world.
the tax on his income, calculated also share the deep-rooted desire
of the public at large for a more
in
the
ordinary
way,
less the
stable economy in which we can
amount of tax withheld.
avoid the disastrous depressions
This plan is a step toward even¬
When

(or would-be employees), and to

has caused

in

limited

ings and a one-year carry-back.
policy. discrimination of the worst sort. It This would greatly benefit a new

CED's

Accordingly, there is room for a
tax cut which would
bring the

.

Other

for this year include the amend¬
ment of the law on penalty taxes

ables investors to escape

CED
•

of the

the corporate income tax would be

of

Repeal

>

When

:

aware

patent unfairness

employment
bracket
productivity, and they kill

and

still

I do think

all

are

,

ficiently operated.
Furthermore,
this
we think that additional revenues

,

You

,

that

j

dends.

to the vital ques¬
of divi¬

taxation

This could be done without sig¬ ment "Tax and Expenditure Policy
nificant loss of revenue,
for 1950.'* That is the place where
you will find, in greater detail,
Other Tax Reforms
the recommendations and think¬

4

income

we

double

13

,

■

,

we come

of

tion

(1521)

of double tax¬ for accumulation of earnings
(Sec¬
ation, and the way in which it tion 102) to put the burden of
duction to reduce tax burdens in impedes
industrial
growth.
I proof on the government rather
such a way that the growth oi* think the myth that corporation than on
the corporation in the
the
economy
will be fostered. income can be taxed is one of the case of operating companies. The
There are two basic things to co. worst possible distortions of fact.
, law as it now stands has caused
First, we should eliminate taxes Corporations no more pay taxes/ uncertainty and confusion,
that penalize individual segments on their own income than luggage
We
have
also
recommended
of the
economy.
There are so pays the excise tax on luggage.
elimination of the notch rate of
People pay corpora don taxes and
many inequities in our present tax
53% on corporate incomes be¬
structure that I don't feel that I it's time they realized it.
CED
tween $25,000 and $50,000.
This
have time to go into all of them believes that the
corporate in¬
rate does not increase total cor¬
here. Besides, you gentlemen .are come tax is a basically bad tax
porate tax liability in that bracket
familiar with
them.
These in¬ and we think that any further
beyond 38%, but it does work
equities work for both sides: some increase in the corporate income
hardship on the small business.
of them protect one part of the tax would be a step in the wrong
We suggest instead the application
r
•
economy
while others discrimi¬ direction;
of a gradually rising scale of tax
nate against another part.
There are several ways to at¬
We
rates to the first $50,000 of in¬
shoulct
strive lor removing
the tack double taxation, but what¬ come.
/v*
hidden subsidies to some taxpay¬ ever way is used will increase the
These
reforms
are
suggested
ers just as much as we should
t.y incentive of investors to invest
to remove the burdens of unfair and will encourage equity financ¬ only as a step toward eventual
achievement of thie kind of tax
taxes on other groups.
\
ing.
CED has .proposed a step
structure we would all like to
toward removal
of double tax?
Second, there are a number of
have.
The reforms that can be
ation in which the first 16.6% of
tem; we should use every oppor¬
tunity for tax reform and tax re¬

■) President's figure without creat¬
burden today is heavier than it
ing stringency in the supply of
should be.
But the government
credit for housing. Our figure for
does need adequate revenues to
unemployment insurance is $370
support its essential functions. The
million lower than the President's
best we can hope for is a gradual
because we base our calculations
lightening of
the tax
burden.
on
a
lower level of unemploy¬
Every time there is an opportu¬
ment. We also consider it prudent
nity for reducing taxes, we should
to allow a substantial reserve for
reduce them in such a way that
unforeseeable emergency expend-

gaso¬

,y

Question of Double Taxation
Next

many

work toward is

liquor;

on

CHRONICLE

gov¬

There is little rhyme or

to

reason
are

passed from

effort to pro¬

measures

time in

FINANCIAL

new

issue volume

bank in¬

vestment limitations
Tax status

by States

assets flom being fully charged

Available to Investors

on

request.

C. J. DEVINE & CO.
48 Walt Sheet,
Chicago

•

Boston « Philadelphia *
Cincinnati

☆-

New York 5, N. Y.

•

Washington • Pittsburgh * 0000(004

St. Louis • San Francisco

14

(1522)

THE

COMMERCIAL

terials

Contribution oi Imports to Business

which

in

poison and exports

a

Declares in

a

cover.

country's meat, world trade cannot
world

centers

the world.

Almost

re¬

1948

of full

from all

in

half of your imports in
in crude foods and ma¬

were

terials.

Another

quarter

semi-manufacturers,
70%
imported

was

total

a

for

over

in
of

further

fabrication. Without such
I do not know how many

picked

ever

weed, the nettle.

saying that if
der-hearted

stings

that

of

ished

it

ten¬

it

re¬

a

Maurice

Heyne

follow the advice of the old
adage
and tackle the subject

boldly, in
achieving the desired

the hope of
results.
Now

might

we

well face the

as

this situation

as

exists, world trade will continue
to be

jeopardized.
the hope of

In

dollar

gap,

narrowing
countries

some

the

have

adopted policies to restrict imports
from hard currency areas.

Tradi¬

tionally, however, and rightly or
wrongly, restrictions on imports
stem

from

desire

a

to

safeguard

domestic
ards

employment and stand¬
living.

of

This is amply supported
by cur¬
rent
economic
theory that im¬

ported goods absorb domestic pur¬
chasing
power,
and
therefore
exercise

a

negative effect

mestic income and

and

completing

prod¬

on

do¬

employment.

Today,

economic

when emphasis

is rapidly moving from the
prob¬
lems of production to the

prob¬

distribution,

our economic

viewpoints need to be revised in
light of new conditions.

enough to

for ECA in

an

Plan

feet.

,

to

what

they

the bill

pay

turn

are

have

being

now

around

and

helped

buy
other

By

of

reason

their

interdepen¬
upon the other, imports
and exports
alike, contribute to
the well-being within a
country.
It can hardly be said that one
cre¬
one

ates business

activity and employ¬
ment, and that the other detracts
from it.

A

high level of domestic

activity and full employment is
always accompanied by a similar
level in world trade.
is also true.
.

I

am

forded

The opposite

taking the opportunity af¬

in
addressing this profes¬
sional organization to elaborate on
this broad aspect of

international

marketing. Your acceptance of a
high level of imports is to your
advantage. It is also of worldwide
importance.
Imports and exports—in terms
of physical commodities and
mer¬
chandise—fall
gories.

They

materials

—

into
are:

such

several
raw

or

cate¬

crude

as

cotton, hides
and skins,
oilseeds, iron ore, alum¬

inum.

Semi-manufactures
steel
ingots, iron and steel rods, wood
pulp, coal tar products, and so on.
—

Then there

factures.
use

—

Part

such

are

finished

are

things

for

manu¬

industrial

*An

ports




Bureau

nearly half of these

cur¬

engaged

directly or
indirectly
in
agricultural industries in the
duction

of

goods

durable

for

author-

non-

pro¬

export.

In

goods

11

e s.

whether

i

s

was offered by Hollywood
£ 15,000 for the film rights of one

would be pre¬

plays.
Owing to his high in¬
however, he pays a very
high rate of surtax, so that the

pared

net

other

nation

come,

to put
with
a

up

burden

of the arrangement
only have amounted to a
negligible amount. He approached
the Treasury with the suggestion

of

magni¬

tude

in

that the amount taken away in
taxes should be spent on archaeo¬

time

whether

In

character

1948,

of

only

States

we

con¬

your

22%

ex¬

all

-r were

exports

of

in

foods and materials; 11%;
semi-manufacturers, and 67%

crude
in

in

manufactured

finished

In

goods.

two-thirds
the

of

other

labor.

If

we

include

the
75%.

over

Normally,

7

were

high content of

a

propor¬

semi-manufacturers,
tion rises to

and

words,

exports

your

product of

American

foodstuffs

to

10%

of

your

is

it

Yours

is

an

trucks

country

a

machine.

the

which

and

enormous

productive
half

It

world's

has

dynamic
accounts

output.

Be¬

of the dominant position of
United States, what happens

cause

the

here, and the policies

adopt,

you

penetrate every nook and cranny
of world trade.
The world needs what America

produces. It does not have enough
dollars to pay for it,
however,
unless
of

what

the

in

you,

Despite

the

turn,

buy enough

world

the

has

eminent

Marshall

Plan

to

sell.

of

success

and

the

able

administration of ECA, the dollar
gap is still of such ^ proportions
that items such

shipping, tour¬

as

ism, investments and loans • that
help to make up the international
balance sheet, cannot
possibly be
expanded

to

trade

sary

achieve

balance.

accomplished

the

This

only

neces¬

be

can

by

closing

what Mr. Radcliffe has' called the

merchandise gap.

Thus,
every
In

the

1 *

'

attention ,of

country is

United

States

as

almost

focused

the

on

market,

a

:

y

•

spite of the rich bounty with
your
country is blessed,

which

imports

are

important

to

you.

You

recognize that fact. For in
1948, 60% of your imports were
free of duty.
Only 40% were con¬
sidered in protection of American

industry.
The major share of
duty-free
imports is, of course, in raw ma¬

terials
are

and

either

United
domestic
uses

commodities.
not

available

States,

or

supply.

about

proceeds

would

perpetual
that

goods, export workers accounted
for 14% of the employment.
the

A

that

in

Sheriff,

of peace. And

This is borne out when

end.

an

pointing

his

any

industries, in
mining, and especially in capital

sider

incident

direction received much publicity.
The well-known
playwright, R. C.

doubtful

Statistics,

were

recent

by

esti¬

is

of your

Labor

local

Patience Ending

,

patience is coming to

gov-

and

increases

Dr. Paul

logical research in the district of

Einzig

doubtful

his

the

residence,

failing

which

he

the

would refuse to sell the American

British taxpayer to put up with it
is an unmixed blessing, or even

film rights of his play. The Treasury refused to agree, for fear that

a

willingness

good thing
with

ease

reduce

balance.

on

which

collect

can

of

the

For the

the

government
billions tends to

the

inducement
to
cut
down expenditure which is main-

tained, at

level. It
is
too
tempting to take the line of least
top

resistance

and

allow

the precendent might be followed
by many taxpayers. Accordingly,
Mr. Sheriff decided not to sign the
agreement.

Needless to say, this is an isolated instance. Nevertheless, there
indications

are

that

other

cate-

gories of taxpayers are growing
tired of paying taxes at the pres¬
to pressure for further
increases, ent rate. For instance, there seems
so long as the
money is flowing in to be a strike of beer consumers,
for meeting the inflated expendi- Owing to the
high level of the
ture.
beer duty, the amount consumed
:declined sharply during the past
Lax Parliamentary Control
12 months, and the
Treasury sufThe British Parliament origi- fered a loss of revenue,
nated and developed mainly bei c
,
cf
cause the British people was unA Savers Strike
willing to allow its Kings free
Nor are taxpayers alone who
expenditure

to remain high, and even to yield

,

promoted.

are

address

by Mr. Heyne before the
American Marketing
Association, Wash¬
ington, D. C., March 28, 1950.

collected

the

„

as

machinery,
window glass, textile
equipment,

forms of taxa¬
tion

than offset by

more

of expenditure in other directions.

There are, however, some indi¬
cations that the British taxpayer's

produce, in order to output
is
exported.
Averages,
keep the ball rolling. Why, they
however, fail to reveal the degree
ask, should they be required to of
dependence of the American
accept foreign merchandise, which
economy on its export trade.
may be in competition with do¬
; i American cotton represents 45%
mestic products, or which may be
of the international trade in this
imported in such quantities as to
commodity;
American
tobacco hand
in matters of public finance,
cause dislocation in certain indus¬
42%. Although your production of
Yet British Parliamentary control
tries?
V -C :v\!
rice is only a small
percentage of over
expenditure
is
amazingly
This is important, because the world
production, your exports lax.
The
House
of
Commons,
attitude toward imports is a ma¬ since the
war have accounted for
having fought hard for centuries
jor factor in selling them. 1 The almost 16% of all rice
moving in to secure control over
expendi¬
very
publicity necessary to de^ international trade.
ture, exercises its control very
velop a market is likely to in¬
In 1948, 25% of your production
casually.
It
is
true,
it
goes
crease resistance in proportion to
of machine tools, 20%
of agri¬ through the gestures of checking
the aggressiveness with which im¬
cultural machinery, 15% of motor expenditure
estimates
with
the

the

dence

It

40%
is absorbed

by various

i t i

of

y

countries to

picture.

are

I

About

country.

look

and

over

the rate

exports

United

all-out effort to put
countries back on

They

asked

for

new

be

that

ports.
.

sistance to imports. It must seem
the American people as if. it

brought

forward

con¬

other

any

of the nation's earning

b y

the

the

to

built

lems of

coun¬

In your country, a double-bar¬
force to the re¬

The shift riom agricultural to
industrial economies, in the
prog¬
ress of the Industrial
Revolution,

theories.

importing

reled effect lends

country, and abroad. In fact, in
almost every country, exports are
considered its meat, imports its

long

or

million jobs.

most
part
luxury
merchandise which is

with respect to imports.

Marshall

As

items

stitute the real bone of contention

their

entirely,

provides some five
In 1947, according to

mer¬

completing

made in the

fact that there is considerable re¬
sistance to imports here in
your

poison.

completing

this

export

mated
rent

turn

us

the

at

the

or

should

Let

those

—

ucts of other countries which

Today,
going to

am

and

competing

the

stings.
I

kinds

It is important that we make
these distinctions, because it is the

it

down

LONDON, ENG. — Taxation is
higher in Britain than in

much

ment

foreign

try.

and

suffer

of

and those which
them — in .effect,

The

for

not

close

greatly restrict production.

in competition with do¬

are

goods,

we

p p r o a ch

of two

are

chandise.
are

your

to

as consumer

goods

complement

inclined to

gingerly,

have

Exports Provide 5 Million Jobs

competing

question

imports,

and

be classed

may

which

dealing
with the high¬
ly controver¬

are

fresh

of

many

wide va¬
processed

in

mestic products,

In

Of

foods,

origin

mains.

sial

plus

Consumer

pains.
Grasp it firm¬
ly, and it soft
silk

products. Other fin¬

manufactures,

goods.

for

you

steel

riety,

your

as

certain

old

an

stroke

you

you

prickly

There is

imports,
industries 'would

By PAUL EINZIG

Noting that taxation is much higher in Britain than any other
country, Dr. Einzig criticizes public's willingness to put up
with it. Regards a possible savers' strike as best means of
compelling government to resort to long-overdue economies.

the cap¬

was

recent advertisement

a

Taxpayers' Revolt?

\

magazines.

your

employment, specialized
production, and a high standard of living, imports are benefits,
not dangers to the economy.
have

A British

in¬

"Thirty countries

furnished this room"

considered

are

allied

States, import materials
over

imports

as

and

of employment
in the United

source

many

tion of

long

a

Thursday,- April 13,-1950

inter¬

,

•

automotive

The

dustries,

By MAURICE HEYNE*

as

CHRONICLE

,

Belgian Minister and Commercial Counselor

states

into

enter

national trade.

Activity and Full Employment
Belgian trade official

FINANCIAL

&

half

of

These
in

the

supplement

Your
the

country
raw

ma¬

were

centages

exported. These per¬
not out of line

are

with

the

proportion of production
ported before the war.

ex¬

1

Because your economy is geared
to your

mass-production industry,
sharp cut-backs in exports of

any

these industries would be
felt, not
only in the labor market directly

affected, but in the entire econ¬
omy. A considerable drop in pro¬
duction

would

mean

higher unit
costs, less profit to industry, price
fluctuations at the

consumer
level,
unemployment in both agri¬
and industry.
Moreover, the size and com¬
plexity of American industry and

'and

culture

production, and its importance in
world trade, are such that
reper¬
cussions from any curtailment are
over the world.
We are all

felt all

utmost

1949

for

mild
to

me

recession

enlarge

point.

'

.;

all.

at

tention

to

a

at¬

your

report

published by
the O.E.E.C.
early in March. The
New

York

"Times"

"Decisive

say:

the

dollar

being
from

measures

gap

taken

where

Canada

are

are

the

on

drastic
the

had

cuts

United

expected

this

to

to

narrow

apparently
dollar

side,

in

exports
States
and
to

account

for

more than 57% of the antici¬
pated reduction of the deficit."
...

As the flow of the Marshall Plan
aid diminishes, the

report

tinues,

exports

countries will

from

be

these

confined

con¬

two

to

the

What

happens is that

on

days

which are allotted by the
government for the Opposition in
order

drawals

the guardian

as

of the nation's purse,

are

general

nature

but also to raise

investment.

against various government poli¬
instead of examining details
of expenditure.
On most "Supcies

ply days"
eral

last

the

debate

grounds all
'minute

into

is

on

expenditure

billions

gen-

day, and in the

of

dollars

running
is

passed

formally in matters of minutes.
...

Scandal

point

here

is

that decreases in your
exports are

Continued

on

page

51

revenue

savers'

of

present

sypmtoms

effective

But the

possibility of
it cannot be ruled out altogether,

Henry Milner With

in

Parliament

on

as

Estimates

Accounts

expenditure

a

or

is

resort

was

office

for

raising
efforts

firm

in

formerly with the
of

the

Mercan-

Hugh Johnson & Co.
Formed in Buffalo

be

BUFFALO.
Johnson
of

no

undue

an

drastic

present

A

econo-

level

of

N.

announces

_

^

A.

the formation

Hugh Johnson & Co., Inc. with

offices in the Rand
new

firm will

office
&

Y. —Hugh

Building. The

assume

the Buffalo

of

George D. B. Bonbright
Co., members of the New York

Stock

Exchange,

Johnson

was

a

of which
partner.

Mr.

budgetary deficit
tolerated
a

for

any

period of

public opinion

if it

revenue.

at

the

Department,

Louis.

wonder

length of time during

expenditure

St.

without

to

the

expenditure.

and

York

It is

Things would be otherwise

not

with

Bond

Mr. Milner

passed

Treasury encountered dif¬
ficulties in raising the large sums

would

Municipal

by

the

needed

its

Committee.

the government is not in
to

associated

come

overwhelming majority of

adequate control.

mies.

Dickson & Co., Inc., 30
Street, New York City, announce that Henry Milner has be-

of

investigation by the Se¬

Public

haste

S.

Broad

some

lect Committee
But the

R. S. Dickson & Co.
R.

outstanding
extravagance receives

attention

result of

if

the

a

fully-developed

a

movement.

Two With

is

it
as

is,
are

such
made

CALIlk

OAKLAND,
L.

As

economies

would

incapable of

Stephenson Co.

(Special to The Financial Chronicle)

force the government to cut down

materials.

Hith¬

tile Commerce Bank & Trust Co.

,,

and

significant

of with¬

savings.

funds for capital

But

New

.

Gets Attention

Occasionally
scandal

the

from

way

to

voiced

peace,

raw

an excess

new

not only>to collect

easy

criticisms of

a

rigid requirements of basic foods
The

over

that the latter should fulfil

its traditional role

due

But I do want to call

the

practice the overwhelming majority of items is never checked

in

this

on

of

instances

many

erto the government found it very

strike,
civil
estimates
is
checked,
in together with a taxpayers' strike,
theory, not less than twenty-three might easily compel it to resort
times by Parliament, by means of to much-needed and
long-overdue
a highly elaborate
procedure.
In economies.
It is, of course, a long

too familiar with the effect of the

comparatively

item

Each

care.

inclined to revolt against the
unduly high expenditures. There
has been, during the past year, a
noteworthy fall in savings. Indeed
the
weekly figures
showed
in
are

Hardy and

—

Norman

Howard

D.

Nord¬

strom have become affiliated with

Stephenson,
1404

Franklin

Leydecker
Street.

-V

&

Co.,

Volume

171

THE

Number 4898

COMMERCIAL

CHRONICLE

FINANCIAL

&

(1523): 15

Newsweek

looks

A.

—"Metropolitan... paid about 5769,000,000

Leroy

Lincoln, President of the Metropolitan

Life Insurance

increased
whereas

and I

...

policyholders last year)

"

—"For

our

33,000,000

—"In

policyholders in the

United States and Canada, the total
The tremendous role that Life insurance

insurance in force in the

Life

the end of last

interesting institutional material developed

000,000—an increase of 4 percent over

during the discussion, are so important that

80

since

percent

1939,

operating expenses have increased

1949, Metropolitan

000,000 in dividends to

.

paid 5164,-

.

.

policyholders—the

largest such amount in the Company's his¬

Metropolitan at

plays in the national economy, and the

about

only 71 percent."

might add further that... (this in¬

cludes) 5502,000,000 to living policyholders."

Company, on the subject of

Life insurance.

Life Insurance

(to beneficiaries and

Recently members of Newsweek maga¬
zine's editorial staff interviewed Mr.

at

tory. Dividends payable to

policyholders in

preceding year."

motion

a

pictule has been made of this

interview. This film will be
tribution in line with

Book"

year was

almost 542,000,-

1950 will be somewhat

the

gate than 1949."
—"Dividends would be

—"Metropolitan's assets totaled 59,700,-

given wide dis¬

000,000,

Metropolitan's "Open

the

an

increase of about 6 percent over

which have
States and

—"Through the combined efforts of the

49

3.07

Metropolitan

on

percent, compared with 3.03

1948, and with 5.18 in 1929."

years—while right now it is about 67."

Metropolitan's Annual Report to Policy¬

customarily included in the

—"Expenses for the Life insurance com¬

holders for 1949 will be sent to anyone on

Report to Policyholders. According¬

panies have gone up the same as for every¬

request. In addition, copies of the

complete transcript has been printed

body else. For example, in the Metropoli¬

be borrowed for

fact, the interview developed the informa¬
is

that

Annual

ly,

a

as

the

are

in

interest returns

prevailed throughout the United
Canada. For example, last year

since 1900. At that time it was about

years

Metropolitan's achievements in 1949. In

substantially higher

low

interest earned

net

assets was

pectation of life at birth has improved 18

editors, Mr. Lincoln made many references

tion

the

health organizations, the average ex¬

many

Naturally, in reply to questions from the
to

it not for the

were

figure for 1948."

policy.

larger in the aggre¬

tan

Company's Report for 1949. Here
of the

some

highlights of that report:

..

last

year

civic,

they increased about 4 percent
Metropolitan has

insurance in force in

.

or

film

may

showing by local business,

other groups in which

policyholders are interested.

Metropolitan
-

METROPOLITAN STATEMENT
OF

OBLIGATIONS

AND

OBLIGATIONS

TO

POLICYHOLDERS,

BENEFICIARIES. AND

Statutory Policy Reserves
This amount, which is determined in accordance with

legal

$7,298,735,485.05

Bonds

Canadian Government

quirements, together with future premiums and reserve inter¬
est, is necessary to assure payment of all future policy benefits.

Policy proceeds from death claims, matured endowments, and

Reserved for Dividends to Policyholders

Set aside for payment
to

.

.

ment

in 1950 to those policyholders eligible
35,804,438.43

of settlement, and estimated claims that
have not yet been reported.

Policy Obligations
received

in

.

advance,

reserves

36,825,574.00

.

on

.

.

Special Surplus Funds

.

.

Unassigned Funds (Surplus)
TOTAL SURPLUS

.

FUNDS

.

.

.

.

....

.

.

.

.

Assets

amounting to $456,197.535.92

Massachusetts Insurance Department,




aggregate) ....

.

are

.

.

J
.

.

1B50

LIFE

/.«

.

.

.

Accrued Interest,

Rents, etc.

V

.

.

.

COMPANY

Insurance

TOTAL ASSETS

1

(A

MUTUAL

..

...

TO MEET OBLIGATIONS

,/:V-i

150,379,081.15

,

137,886,883.07

.

.

72,831,829.99

.

:'f;

$9,707,947,682.50

In the Annual Statement filed with the
All Other Obligations are $42,183,185.0(1

CO.

Please

send

!
me

a

copy

of

your

Annual Report to

Policyholders for 1949.
NAME

COMPANY)

STREET.

Y.

.

Madison Avenue, New York 10, N. Y.

Company

1 Madison Avenue, New York 10, N.

247,728,331.90

558,631,879.03

$9,707,947,682.50

Gentlemen:

Metropolitan Life

"

.

...

Collection

deposited with various public officials under the requirements of law or regulatory authority.
are $8,252,353,652.00. Policy Claims Currently Outstanding arc $35,863,091.43, and

INSURANCE

.

35,987,813.07

sale)

Deposits

Statutory Policy Reserves

"METROPOLITAN

.

acquired for investment
$198,151,779.86
Properties for Company use
.
,
.
.
38,588,738.97
in satisfaction of mortgage in•' '..V
debfedness (of which $7,166,352.46 is

METROPOLITAN LIFE INSURANCE
COPYRIGHT

:-

by adjustment of $25,000,000.00

,

Premiums, Deferred and in Course of

474.379.879.03
.

>.

Acquired

Cash and Bank

$ 84,252.000.00

.

$1,164,238,419.48
106,829,132.49

.

393,258,765.52

Estate (after decrease

in the

$9,149,315,803.47

FUNDS
.

1,271,067,551.97

,

policyholders on the security of their policies.

under contract of

V

TOTAL OBLIGATIONS AND SURPLUS FUNDS

—

21,000,000.00
42,355,959.00

.

SURPLUS

NOTE

.

Obligations

TOTAL OBLIGATIONS

Guaranteed.

Housing projects and other real estate

1947

pending bill.
.

or

Policies

on

Made to

Real

'

.

Mortgage Loans on Real Estate

Loans

Including estimated amount of taxes payable in 1950 on the
1948 income under

121,095,071.93
136,059,753.85

Preferred

Mortgage Loans on Farms

equalization dividends on weekly premium policies, etc.

Contingency Reserve for Mortgage Loans

.1,322.222,366.98
.2,167,230,348.06

...../

Mortgage Loans on City Properties

for mortality and

business of 1949 and $10,000,000.00 for Federal Taxes

.
.

.
..

64,879,400.04

.

Taxes Accrued

All Othor

.....

Company's housing develop¬
corporations .
.
.
.
.
.
.

All but $4,534,643.85 are

morbidity fluctuations, reserve for continuing the program of

and

492,569,747.96

Utility

Stocks

Claims in process

Premiums

69,029,148.93

.

164,260,999.00

.

Policy Claims Currently Outstanding

Other

.

.

Bonds of the

receive them.

have ocurred but

.

Railroad

Industrial and Miscellaneous

dividends—left with the Company by
policyholders to be returned in future years.

payments, and

beneficiaries and

242,548,827.19

......

Provincial and Municipal

531,949,902.00

Public
other

$2,884,039,974.00

U. S. Government

re¬

Policy Proceeds and Dividends Left with Company

of the State of New York).

ASSETS WHICH ASSURE FULFILLMENT OF OBLIGATIONS

OTHERS

$8,252,239,531.00

.

31, 1949

ASSETS...DECEMBER

(In accordance with the Annual Statement filed with the Insurance Department

CITY

STATE.

?

'*

16

t(1524)

THE

,

CHRONICLE

FINANCIAL

COMMERCIAL

Thursday, April 13, 1950

M.

Ergood, Jr., Stroud & Co., Philadelphia; Landon A. Freear,
N. Edwards & Co., Ft. Worth, Texas; Henry L. Harris,
Sachs & Co., New York; Gilbert Hattier, Jr., White,.
Hattier & Sanford; New Orleans, La.; Harold B. Mayes, Hendrix &
Mayes,.Birmingham, Ala.; Don A. Meyer, Foster & Marshall,
Seattle, Wash.; Frank P. Meyer, First Michigan Corp., Detroit,
Mich.; Edw. V, Vallely, John N'uveen & Co., Chicago, 111.

$19,500,000 Bonds

Wm.

Goldman,

NSTA

Notes

Public

The Security Traders Association of New York, Inc., announces
hold its Fourteenth Annual Dinner on Friday, April 21,

will

1950,

at

Waldorf

the

Astoria

Hotel.

All

indications

M.

Hudson,

Chairman;

Of

City of Baltimore

7/ Offered to Investors

Thayer, Baker & Co., Philadelphia, Pa.; Frank Bowyer, Schwabacher & Co., San Francisco; George J. Elder, George A. McDowell
& Co., Detroit, Mich.; John F; Glenn, Courts & Co., Atlanta, Ga.;

SECURITY TRADERS ASSOCIATION OF NEW YORK

it

John

Committee:

Relations

'

point to

Offering of $19,500,000 City of
Baltimore, Md., 5%, \lk% and
1%% bonds maturing $10,000,000
serially Sept. 1, 1952 to 1976, in¬

John

clusive,

Graham, Brainard-Judd & Co., Hartford, Conn.;

Publicity

a

capacity crowd.

E.

E. T.

from

Parry, Atkinson-Jones & Co., Portland, Oregon.
Milton J.

Committee:

Isaacs, Chairman,

$9,500,000

and

Dec.

1,

1955

serially
1979,

to

in¬
clusive, is being made by a group
headed jointly by Halsey, Stuart

Straus &

Blosser, Chicago, 111.

& Co.
NSTA ADVERTISING COMMITTEE

Inc., The First Boston Cor¬
poration and the First National

;

priced

Vice-Chairmen:

First California Co., San Fran¬
Rauscher, Pierce & Co., Dallas,

Canavan,

•

John Latshaw, Uhlmann & Latshaw, Kansas City, Mo.;
C. Sloan, Donald C. Sloan & Co., Portland, Ore.; Glen A.
Darfler, Kneeland & Co., Chicago, 111.
Tex.;

Affiliate

Charles O'B. Murphy-

Nat

John

Krumholz

M.

Mayer

Arrangements Committee
is headed
by
Charles O'Brien
Murphy of Merrill Lynch, Pierce, Fenner & Beane as Chairman
and Nat Krumholz of Siegel & Co. as Vice-Chairman.
John M.
Mayer of Merrill Lynch, Pieice, Fenner & Beane, President of
STANY, will preside.
THE

NATIONAL

SECURITY TRADERS ASSOCIATION. INC.

The National Security Traders Association announces the fol¬

lowing Standing Committees for 1950:
Advertising: Committee:
&

Harold B. Smith, Chairman,

Pershing

Co., New York.
Constitution Committee:

Wm. Perry

Brown, Chairman, New¬
man, Brown & Co., New Orleans; Stanley Roggenburg, Roggenburg & Co., New York.

Chairmen:

Edward H.

Jolley, Johnson, Lane, Space
& Co., Inc., Atlanta, Ga,; George Placky, L. J. Schultz & Co.,
Cleveland, Ohio; Henry J. Blackford, A. M. Law & Co., Spartan¬
burg, S. C.; Clair S. Hall, Clair S. Hall & Co., Cincinnati, Ohio;
Hubert Bernard Jr., Schirmer, Atherton & Co., Boston, Mass.;
Everett W. Snyder, E. W. Snyder & Co., Syracuse, N. Y.; John Wi
Bunn, Stifel, Nicolaus & Co., Inc., St. Louis, Mo.; Joseph W. Weil,
Weil & Arnold, New Orleans, La.: Chas.B. Murphy, Merrill
Lynch,
Pierce, Fenner & Beane, New York City; Sidney J. Sanders,
Foster & Marshall, Seattle, Wash.; Orville C. Neely, Merrill Lynch,
Pierce, Fenner & Beane, Denver, Colo.; John M. O'Neill, Stein
Bros. & Bo.yce, Baltimore, Md.; Paul Moreland, Moreland & Co.,
Detroit, Mich.; Henry G. Isaacs, Virginia Securities Co., Norfolk,
Va.; Fred K. Kirkland, Hermitage Securities Co., Nashville, Tenn.;
Albert W. McCready, Gej'er & Co., Inc., Los Angeles, Calif.; E. C.
Hawkins, Rauscher, Pierce & Co., Inc., Houston, Tex.; Clyde C.
Pierce, Clyde C. Pieice Corp., Jacksonville, Fla.; Chas. C. King,
The Bankers Bond Co. Inc., Louisville, Ky.; Leslie B. Swan, Chas.
W. Scranton & Co., New Haven, Conn.; Early F. Mitchell, First
National Bank, Memphis, Tenn.;
Oscar M. Bergman, AllisonWilliams Co., Minneapolis, Minn.; Herbert H. Blizzard, Herbert H.
Blizzard & Co., Philadelphia, Pa.; Harry J. Steele, Fauset, Steele
& Co., Pittsburgh, Pa.

Legislative Committee:
Jay L. Quigley, Chairman, Quigley
Co., Inc., Cleveland; R. Victor Mosley, Stroud & Co., Inc.,
Philadelphia; Thomas Graham, Bankers Bond Co., Louisville.
&

Membership

Committee:

Alonso

H.

Lee,

Chairman;

BOSTON

SECURITIES

The

77:-7

necticut.

(Inc.); Eastman, Dillon
& Co.; L. F.
Rothschild & Co.; Shields & Co.;
Bear, Stearns & Co.; White, Weld
& Co.; Coffin & Burr, Inc.; Hemp¬
hill, Noyes, Graham, Parsons &
Co.; Adams, McEntee & Co., Inc.;
Hornblower
&
Weeks;
Fidelity
Union Trust Co. (Newark); Roose¬
velt, & Cross, Inc.; Geo. B. Gib¬
bons & Co., Inc.; Laidlaw & Co.;
&

G.

Heimerdinger,

The BSTA

Swampscott, Mass!,

Golf Cup will

again,

petition

Chairman,

Vice-Chairman, Bankers Bond Co., Louisville, Ky.; Herbert Petty,

well

as

etc.,

duPont & Co.;
Inc.; G. H.
Walker & Co.; Eldredge & Co.,
Inc.; Wm. E. Pollock & Co., Inc.;
Stroud & Co., Inc.; The First Na¬
tional Bank of Memphis; Julien

contests and

Allison, Williams & Co., Minneapolis, Minn.; Russell

Six
and

on

g.

tariff, for both

Inc.; The National City Bank
Cleveland; The National City
of Minneanolis;
The First
National Bank of St. Paul; City
Bank

National Bank & Trust Co., Kan¬

Co.; Thomas & Co.; G. C. Haas &
Co.; The Illinois Co.; Glover &
MacGregor, Inc.; Moore, Leonard
& Lynch; Singer; Deane & Scrib-

guests

ner;

liam

G.

&

for the annual meeting of the Twin City Security
Association, to be held June 16 through June 18 at the
Grand View Lodge, has been announced.
The cost of the outipg
is $30, which includes transportation, green fees, food, lodging,
boats, and beer.

Notice of Offer of

Exchange

*

.

at

2 p.m.

Company
Mortgage 4% Bonds, due July 1, 1952:

Atlantic Coast Lin* Railroad

Company offers to holders of
its First Consolidated
Mortgage 4% Bonds, duo July 1,1952,
the opportunity to
exchange said Bonds for an equal principal
amount

March

of

its

General

Mortgage 4% Bonds, Series A, due

1, 1980

(to bear interest at the rate of 4Va%
per
annum from March 1,1950 to
September I, T952) in accord¬
ance with its Offer of
Exchange dated

May 10, 1950 and

may

he terminated

with
at

dinner

9 p.m.

at any

Series A Bonds.

supper

■'

at

7

and

p.m.

accept the Offer of Exchange are re¬
quested to execute the Letter of Assent and forward it to Atlantic
Coast Line Railroad
Company, c/o Morgan Stanley & Co., 2 Wall
Street, New York 5, N. Y. If the Offer is not declared
operative on or
before June 1, 1950, the Letter of Assent will
no
longer be

binding.

Copies of the Offer of Exchange and the form of
Assent may be obtained at the Office of
the
New York 6, N. Y., and at
Morgan

New York 5, N. Y.

the Letter of

is

scheduled

of entertainment to

•

•

*

,

noon

,

Minneapolis

scheduled for 2 p.m.
As

reservations

are

limited

to

Stanley & Co., 2 Wall Street,

C. McD.

Davis, President.

Corp.,
Bryan,
Ohio, has been invited to Wash¬
ington by Secretary of Defense
Louis Johnson to participate
in
the

.

125, those planning to attend

should contact R. K. Pillsbury, First National Bank of Minneapolis.

Joint

Civilian

April

17th

will

(Special to The Financial Chkonicle)

SAN

LOS

DIEGO, CALIF.—Glen E.
Gilpin has become associated with

Arthur V. Ullman has become

Revel

sociated

Miller

&

Co., 536 South
He was formerly with
Walston, Hoffman & Goodwin and
Buckley Brothers.
Broadway.

ANGELES,

C A LI F.—as¬

with

Paine,
Webber,
&
Curtis,
626
South
Spring Street.
He was formerly

Jackson

with Dean Witter & Co.

Orientation

member

from

Mr.

Markey
other
representative
industry,: labor, pub¬

of

licity media, finance and the pro¬
fessions in the discussion of prob¬
lems of national defense.
7
The program

for the group in¬
two-day conference in
Washington with top government
officials, followed by visits to
a

Army,

With Paine, Webber Co.

a

24th.

to

join

leaders

as

cludes

Joins Revel Miller

President of The

Equipment

Conference

••••••

with the return to

C. Markey,

Aro

Sunday, June 18, transportation has been arranged to various
Dinner will be at

Markey Will

Join Defense Council

start

•'
'

•

Inc.;

for
J.

7

■

Navy,

Air

Force

Marine

Corps,

and

in

the

installations

field.
The

joined

conference

in

the

field

group

by

will

Fairman Co. Adds

W ATER VILLE,

MAINE

—

be

President

Truman and his Cabinet, the Sec¬
retaries of the Army, Navy, and
Air

Maine Investors Serv.
(Special to The Financial Chronicle)




Lodge

Company, 71 Broadway,

ATLANTIC COAST LINE RAILROAD
COMPANY
New York, N. Y, April 10, J 950.

J. G,

p.m.

program

a

(Special to The Financial Chronicle)
to

View

Grand

at

will be held at 7

\ '

churches.
on

time thereafter by the
Board of Directors bf the
Gmipany. The Offer of Exchange is
contingent upon being declared operative by the Board of Directors
on or before
June 1, 1950 and is also subject to authorization of the
General Mortgage by the
Company's stockholders and to authoriza¬
tion by the Interstate Commerce
Commission of the issuance of the
Bondholders who elect

Buffet

Saturday, June 17, following breakfast, there will be a golf
tournament, fishing by launch or small boat, with lunch on board
(noon lunch at lodge for golfers) and sightseeing trips by boat
and car.- Arrangements have also been made for
tennis, pool,
ping-pong, swimming, etc. At 5 p.m. there will be a cocktail party,

April 10, 1950.

The Offer will remain
open at least until the close of business

arrival

and

noon,

Corbett,

&

Loeb & Co., and Tilney and Co.

Friday, June 16, those attending will leave Minneapolis via
they will lunch at Blue Goose on Lake Mille Lacs

To Holders of Atlantic Coast Line Railroad

Burns

Graves & Co.;
&
Co.,
Inc.;

Minsch, Monell & Co.; Newburger,

bus at 10 a.m.;

First Consolidated

Hawkins

Martin,

The program

•>

Gordon

Sons;

Robert

Traders

Comply

George K. Baum & Co.; Wil¬
R, Compton & Co.; Dolphin

Co.; Ellis & Co.; Robert Garrett

&

TWIN CITY SECURITY TRADERS ASSOCIATION

Mltilic Coast Lino Railroad

City; The Peoples National
of Charlottesville; Hirsch &

sas

Bank

Woglom, A. G. Woglom & Co.,
is Chairman of the Outing Committee.

Woglom

Webster Dough¬

Co.

;

the

Co.,

of

members.

Albert

Albert

is

&

Collins & Co.; A.

be up for com¬

prizes.

dollars

Becker

erty & Co.; National State Bank,
Newark;
The
Milwaukee
Co.;
Boland, Sal'fin & Co.; Weeden &

Softball, tennis, quoits,
also be available, with

will

I.

Francis

G.

A.

between

members.

as

swimming,

Vice-Chairman, Equitable Securities Corp., Nashville, Tenn.; Oscar

Pomeroy,

Otis & Co., Inc.; American Trust

Co.;

picked teams from
New York, Philadelphia and Boston, starting
at 1:00 p.m., as will the Walter J. Connolly
Trophy. Only BSTA members are eligible to
compete for the latter, but there will be addi¬
tional prizes for all winning players, guests

Walter, Woods & Heimerdinger, Cincinnati, Ohio; Thomas Graham,

M. Bergman,

in

Hutton &

Schoellkopf,

8, 1950, with golf at the Tedesco Country

House

Hallgarten

Co.;

Inc.

Club nearby.

Cincinnati, Ohio.
John

Ocean

the offering

of

are:

Hall & Co.

Associa-

June

Sterne,

Inc., Lynchburg, Va.; Charles A. Richards, Field, Richards & Co.,
Committee:

Traders

New

Co., San Francisco; Walter G. Mason, Scott, Horner & Mason,

Municipal

Securities

-

members

Blair, Rollins & Co.
Incorporated; C. J. Devine & Co.;
Union
Securities
Corp.; Harris,
group

ASSOCIATION

Boston

7\ 777

Other

v,v; tion will hold its 31st Annual Outing at the

Agee & Leach, Birmingham. Ala.; Ernest E. Blum, Brush, Slocumb
&

TRADERS

They are legal
the opinion of the
savings banks and

trust funds in New York and Con¬

Lex

Welch, Chairman, Sincere

Co., Chicago; Herbert H. Blizzard, Blizzard & Co., Philadelphia.

in

for

bankers

,

Convention Committee:
&

to

eral income taxes.
investment

Donald

Local

.60%

from

are

John F. Egan,

Calif.; John L.

The bonds are

yield

to

1.90%, according to maturity, and
interest exempt, in the opinion
of counsel, from all present Fed¬

Chairman: Harold B. Smith, Pershing & Co., New York City.

cisco,

of Chicago.

Bank

The National Security Traders Association, Inc. announces the
membership of the Advertising Committee for 1950:

Force.

and

the Joint Chiefs of Staff.

Congressional

leaders,

(Special to The Financial Chkonicle)

Ar¬

LOS

ANGELES,

CALIF.—

With John G. Sessler

thur B. Levine has formed Maine

Walter W. White has been added

Investors

Service

76 Maine

Street to engage

to the staff of Fairman & Co., 210
West Seventh Street, members of

MASS. —Joseph R.
Sparrow is with Jbhn G. Sessler &

Los

Co., 10 Post Office Square.

securities business.

with

offices

at

in the

Angeles Stock Exchange.

(Special to Tiie Financial Chronicle)

BOSTON,

Volume

171

Number 4898

COMMERCIAL

THE

&

FINANCIAL

CHRONICLE

in the world—in spite of its im¬

Teaching
Factory Workers

ica.
in

Why?

cf

have

who

lived

needs./

Let

him

own

under

and maintain

to

know

It

.

taken the time to

the front
fice

and

the

soak

be hard to prove

faith
What

About Profits?

There has

been

lot

a

of

:

ceeds

enterprise
the

when

system

white

suc¬

employer with taxes is

>;

in

the

intelligence

of

our

employees; but management must

loose

build

Co.

j

at

First Boston &

Blylh j
Groups Offering

.

$50.50

per

of

value,

of
Power

&

priced!

share plus accruet"

i Dividends have been paid on
company's common stock in

}

ejach

on

the

[Which there

40,000 shares of $2.36 cumulative

dend

1920

since

year

dends

on.

par

Light

shares

The preferred stock is

First Boston Corporation
Blyth & Co., Inc., are joint
managers
of • two" investment
banking groups which on April
12 offered publicly a new issue of

$50

Arizona

par

the

divi-f

and

preferred stock, of
will be three series

Outstanding, have

and

stock,

$5

$13 25 per share.

The

:

additional

stock

17

dividends from March 1, 1950, and;
the common stock
is priced a t?

Cent, Ariz. Stock

friendly bridge between preferred

a

125,000

Central

blue

and

collars work together.

that

,*

bridge the
gap between

-

won't

repair and replace equips just soaking himself in the long
provide power, labor and run. Every employee should know
materials, the cost of waste—and. how much capital.it takes to pro¬
don't forget taxes!: •
vide him with his job.
• *
'
*.
I have
I

workers.

common

free

the fellow who thinks it is "OK to

fac¬

a

,

and

The

on

it

what

the front office and the back shop.

should

tory,

Because Management has

never

We

ment,

ownership has lost the*
millions

D.P.'s

costs

•

j of the free enterprise system.
of

profits.

reserves mean

worker information he wants and

labor, and urges
lhat they be told the real facts

Private

Amer¬

protection foi; their
up the facts.
Toss out jobs, how they,, should. encourage
comparative statistics. Bring venture capital.
A few statistics
took?

advertising should be helpful
Communism and Socialism to tell reminding workers that the fellow
how they fared as workers.
Use on the next machine got his job
your
PA
the result
of
the
system, house
organ, as
company
posters, supervisors to give the spending more on advertising.

and treatment of

support

to sell

about:

Dig

some

Babson

charges manage¬
ment with responsibility for work¬
ers' great illusions about profits

show wage workers how company

The time is

By ROGER W. BABSON

Mr.

talk

perfections;

On

(1525)

never

been

i>i

In 1949.! dividends total*

arrears.

ing 72*& Cents per share were paid;

value,

the

paid

common!

of
on

20

cents

stock.
per

A

divi-;

share

was

March 1, 1950.

of¬
the

shop with the
romantic story of the Ameri-

free

c a n

terprise

Norfolk and Western

sys¬

Summary of Fifty-Fourth Annual Report for 1949

tem.
We have

schools

have

been

giving

our

youth

un¬

an

derstanding of
W.

Roger

Various

Bnbson

e C O

nomic

5*

pointing

out

American

schools
Ask

a

one

in

will

see

-

sys-

the

advantages of
enterprise.
The

free

have

done

not

the

job.

few simple questions of any

family and

own

your

what I

failed in this

you

They have
in teaching spell¬

mean.

as

Freight traffic suffered a substantial reduction during 1949 prin¬
cipally as the result of stoppages in bituminous coal production and

COAL
While the

decline, although the
mile increased slightly due to increased

average revenue per passenger
fares.
v
'
'

■'

Total expenses reflected the

1949 of

year

wage

increases for all employees at rates effective for the last
quarter of 1948.
The 40-hour work week for
non-operating employees caused a further
substantial increase in expenses after

■

September 1, 1949.

Balance of income, after deducting sinking funds and miscellaneous

appropriations account retirements in connection with relocation of
main

line,

ear to the ground in
shop and I will warrant
you
will be plain scared when
you find how many workers be¬
lieve management is just raking
in the dough.
They will even
quote you figures: "The boss gets

decreased

$16,798,000, or 47 per cent. After deducting
Adjustment Preferred Stock, the balance transferred to
surplus, $18,013,000, was equivalent to $3.20 per share of $25
Common Stock, compared with $6.19 in 1948.

dividends

on

MILLION TONS

earned
par

60)

Graph showing
production of rev¬

your

CONDENSED INCOME

your own

75c

of

each

dollar

and

we

think about

profit reserves!

convinced

are

have

that

rich

enue

INCOME:

Per

Decrease

1949

Cent

1925

Freight-Coal

...$ 81,097,614

$29,910,028
5,460,790

9

Passenger

5,497,523

723,127

12

Mail, Express and Miscellaneous

6,547,587'

498,^39

worker,

stockholders

all stockholders!

give

would

Talk

him

the

money it spends for advertising!
In short, too many wage workers

Total Railway
Rent

Operating Revenues....... $148,946,972

Income—Equipment and Joint

in 1948.

1925

20*

$36,592,384

rightful living; they

think that the government should
take
over
and
do
away
with

profits.

Facilities— Net

7.761,657
1,975,416

Total

Can

292,484

>

with

working

force?

OTHER

$41,580,562

21

INCOME

* The

answer

to

1,842

Maintenance

$ 22,888,219

$

381,206

2

Equipment—Repairs and Maintenance../.

31,845,351

2,089,038

49,664,036

8,482,974

9,646,249

206,479

2

$114,043,855

$11,159,697

9

Other

Expenses
Railway Operating Expenses.

f

$14,471,242

-

State, County and
Local

•

7 7,399,181

v

-

Total dividends amounted to $23,383,000.

times in
.

;

/

•'

'

21,870,423

•

•••

12,413,773

36

1,838,480

61,347

$137,752,758

NET INCOME..

^

SINKING

MISCEL-

U

$23,634,817

$ 20,931,287

..........

$17,945,745

v

/

.

APPROPRIATIONS

46

>

2,037,895

1,147,767

$ 18,893,392

$16,797,978

*

36

acy.

how

wonder

I

business¬
have recognized the signifi¬

men

of what General Eisenhower

cance

said

the

about

"inseparability of

freedoms.".: If you

the

all

many

believe that
cannot

be

some

really

of our freedoms

kept while others

BALANCE

OF INCOME................

DIVIDENDS ON ADJUSTMENT

^

/

/

47 /

BALANCE TRANSFERRED TO

-

V..•/'*7—-//
$16,797,978

vive

48

are

can

sur¬

only with the survival of our

economic
cludes

freedom— which

freedom

to

work, to

in¬
own,

to sell, to buy, to com¬
pete, and to bargin honestly with¬
out the use of force by either side.
to

■

Total Taxes amounted to

CONDENSED EARNED SURPLUS-UNAPPROPRIATED

/

Ifr you

are

really

BALANCE, JANUARY 1,

1949.........;,..:....

CREDITS: J

.

''!

..

-Balance Transferred from Income

that

enables

6%

of

the

ployees learned that the Ameri¬
can
system provides more goods
and services for the wage workers
themselves than any other system




CHARGES:

•

$227,425,919
V-'
!;'

;

fund for taxes which

were

accrued in 1949, payable in

1950, and for contingencies totaled $23,302,000 at the end of the year.
The fund is invested in United States Government obligations.
EMPLOYEES

155,594

i..........

.*'••• .v«* i

/''•■

,

•'■/-/ ■ / '

y.! //„/;" / '

.......

Common Stock
Miscellaneous

Charges

^

f

•

V

' t

"

T /

Appropriation of Surplus for Dividends

;

/

'

,"

.

".$245,595,297";

<*.

' '.

/■

on

.

.

.....

v

18,169,378

-y

,

number of employees during the year was 21,174. Total
payroll for 1949 was $71,730,600, an average of $3,388 per employee,
compared with $79,916,000 and $3,441, respectively, for 1948. In addi¬
tion to wages and salaries, the Company paid $5,878,000 Railroad
Retirement and Unemployment Insurance taxes and for employee relief
and pension funds, an average of $278 per employee.
The Company expresses its appreciation of the continued loyalty,
efficiency and cooperative effort of both employees and officers through¬

■.

.

' '
"

;

.

' /;

$22,503,728

.;75,669

.

-

/

>

,,.

'

"

,

revenues.

reserve

The average

Total.

world's

to
out-produce1 the
other 94%, why have you kept it
a
secret?
Why haven't our em¬
population

$1,033 for each employee, $4 for

$18,013,784

Miscellaneous Credits.

•

enthusiastic

operating
A

CREDIT

Sell America

about the American way, a system

were

each share of Common Stock and fifteen cents for each dollar of

save,

\

years.

$21,870,000, a decrease of $12,414,000, 'or 36.21
per cent; Included in this amount were Federal income, retirement,
unemployment insurance and excise taxes, $14,471,000, as well as State,
County and local income, property and miscellaneous taxes, $7,399,000.

;

$ 18,013,784

of 14.39 times for the last ten

TAXES

;

-

EARNED SURPLUS

average

market value of $6,876,000.

Total taxes

879,608

flung to the winds, then you be¬
lieve that all our personal, polit¬
ical, and social freedoms

a

/

;PREFERRED STOCK.

an

During 1949, additions and improvements to fixed property were
progressed at a total cost of $15,866,000, and $20,398,000 was expended
for new and rebuilt equipment. In the four postwar years,
capital
expenditures for improvements, modernization and new and rebuilt
equipment amounted to $90,823,000, all of which were made from the
Company's Treasury. Uncompleted authorized improvements and mod¬
ernization at beginning of 1950 will involve capital expenditures totaling
approximately $14,304,000.
"

15

'

1949 and

At the end of the year, appropriations to the voluntary sinking fund
for retirement of the Company's Funded Debt and income from invest¬
ments totaled $6,314,000, and investments, largely Company securities,

3

••

Total

FUNDS AND

on

.'t
Total Funded Debt was $44,390,000 and represented 21.44 per cent
of total outstanding capitalization. Fixed charges were earned 11.79

had

Funded Debt

LANEOUS

year.

paid quarterly

were

were

15

on

the previous

the outstanding. Adjustment Pre¬
Quarterly dividends
paid on the outstanding Common Stock at the annual rate of
$3.00 a share, and*an extra dividend of $1.00 was paid in December.

;

6

Transportation—Operations

Interest

over

Dividends

ferred Stock at the annual rate of $1.00 a share.

this question

is an emphatic "No."
Management has too often looked
upon the worker as a "hired man."
With this attitude, management
must/defend its prerogatives, or
"good-bye" to American suprem¬

1950

Capital Stock outstanding was $162,638,500, par value, which
represented 78.56 per cent of total outstanding stock and bond capital¬

Way and Structures—Repairs and

antagonistic

an

1945

FINANCIAL

13

CHARGES:

free "business

responsible

survive

1940

ization. Stockholders numbered 19,328 at the year end, an increase of
AND

Taxes—Federal

Management's Attitude

1935

4,695,694 /, 38

$158,684,045

EXPENSES

Total

-

1930

»•': ••"/

Other Income—Net

honestly believe that stockholders
rob them of a

from
1949, in¬

years

to

7

really interested in the

it

in net
lines of

clusive, with the
highest annual
production

27

55,804,248

Other

advertising—that is a fool¬
ish waste of money.
If the com¬
was

by

ern

about

pany

on

Norfolk and West¬

with 1948

REVENUES AND OTHER

coal,

tons,

They

only one interest: to grow
by exploiting the workers.

Down with

STATEMENT
Comparison

poor

suckers get a miserable 25c!" And
wait
until you hear what they

use

past several years prior to 1949 was at its highest level, influenced by
expanded industrial development and increased population. Factors
favorable to the production of coal at mines served by the Company
are the excellent qualities of the coals and their
suitability for essential
needs. The greater portion of these coals rank high for metallurgical
and coke making use. Of the total produced in 1948, 33 per cent was
used at steel plants and other coke plants, 29 per cent was used at
public utility power plants and for other steam and industrial use, and
38 per cent was for domestic and other use.

7/

impact for the full

of oil and gas

in the production of heat and power
has increased substantially, the production of bituminous coal in the

strikes in steel and other industries. The number of
passengers carried
as well as total
passenger revenues continued to

ing and arithmetic.
Get

j

as-

that

d

s u m e

the

Railway Company

en¬

Total....

-

out the year.

22,579,397

/
CREDIT BALANCE. DECEMBER 31.

1949.......

.$223,015,900

-

,

'

v
„

;

R. H. SMITH,
President.

18

THE COMMERCIAL & FINANCIAL CHRONICLE

(1526)

Thursday, April 13, 1950

Dip In Consumers' Prices

Mutual Funds

NATIONAL
m&m

your

upon

Street

Broad

NATIONAL

&

SECURITIES

At their annual

120 BROADWAY, NEW YORK 5, N. Y.

holders

the investor does not obtain man¬

three

agement supervision for nothing.
There is an annual recurring cost
and

there

that

such

are

who

some

expense

be

directors

saved

The

time.

of

Prospectuses

Dow-Jones Industrial Average

from

which

30

the

been

Established 1894

!

First

First

First

15 Years

20 Years

1/1/30-

1/1/30-

1/1/3012/31/49

12/31/34 12/31/44
Dow

Avge.,

Street

—

Investment

r o a

Street

d

Investing

■

Ac-

'

.

:

tual

Results- —30%

"Based
after

vestment

flexible

and

other

investment

dealer,

or

to

local

has

and

Company

48 Wall

Street, New York 5

CHICAGO

LOS

job

results

ANCELES

evidence
sional

serve

as

value

the

of

Thus,

1929.

since

shown

t
.eystone

Reserves
Industries

Gas

:

"How

do

the year ended

Custodian Funds on
reached a new high
of $205,731,800, it is disclosed by
Fund

report

Kl,

Key¬

of

made

Dec. 31,

res.

bution

1949.

to

of 12/31/48—
during 1949_„

have

res.

•'

Withdrawals
Total

proved

during

res.

as

booklet

scription

-

Component—

1950-February, 1950

of

data

&

Eaton

Martin I.

tired

investing tlieir capital

IN
BONDS

From

January, 1950, to Febru¬
1950, the food component,
most
heavily weighted item in
the indexes, dipped 0.6%. Other
decreases were noted in clothing
down
}

0.3%,

0.1%.

sundries,

and

Increases

were

down
in

noted

(up 0.3%) and
Housing remains

is

in

PREFERRED STOCKS
(Series K1-K2)

larger

(Series S1-S2-S5-S4)

dustry in spite of the huge with¬
that

have

The skeptics of the
the

oil

been

may

Changes

February,

from

1949

to

"Recent
the

50

Congress Street

Boston 9, .Massachusetts




thus been
'

j
|

type
de--

time

search

sake.
a-

placing

facilities of
disposal

the

of his dealer friends.

Spencer Trask to Admit

&

New

York

New

36

Co.,

York

Street, New York City, members
of the New York Stock Exchange,
will

admit

Nichols

Acosta

Brittin

Adele

on

Eustis

Stock

Wall

Street,

Exchange,

an¬

>

have brought on
for its own
it is no longer just

T.

Gordon

for

gas

substance

having

no

market, the search for it is being
at least as aggressive¬
ly as for oil.

chief of

former

Section

of

the

OPA,

Fats

has

May 1.

M

v>xv.vx:>xw:>:<:<

3.4%

from

February,

1949

■v.v.v,

to

declines 111
year
were
noted
in WM
clothing (down 6.2%) and housefurnishings (down 5.3%). During
the same period rises were re¬
corded for housing*
(up 2.4%),
February,

1950.

Other

the

over

The

5on

3t

1.6%) and fuel** (up
base
date
of
the
1939

Ill

an

as

INC.

The

Board's

Conference

"Con¬

m

An

Open-End Investment
Company

Bache's

new

+»:<

Prospectus
your

may

be obtainedjrom

authorized dealer

Wallace,
and

been

'

■m

HUDSON DISTRIBUTORS
1

'■'»

'

:

Inc.

.

•

*

ft**;
.

,

Principal Underwriter

135 S. La Salle St.

Chicago 3. Illinois
'

prospectus from
your

investment dealer

I

Financial 6-3223

Teletype: CG 1141

"115

*

New York 6, N. Y.
+

2, PA.

EATON & HOWARD

EATON & HOWARD

BALANCED FUND

STOCK FUND

PROSPECTUSES OF THESE TWO MANAGED INVESTMENT FUNDS MAY

BY REQUEST TO

YOUR INVESTMENT DEALER OR TO

EATON & HOWARD
.....

...

.

Fats and

Oils

trend

increases, addi¬

tions to natural gas reserves
more

than

should

Division. Mr. Wallace has 20

experience in

INCORPORATED

BOSTON
TWENTY-FIVE YEARS OF INVESTMENT MANAGEMENT

years'

this field and will

direct the firm's activities in these

keep pace with ever¬ commodities.

<

24 Federal Street

BOSTON

333

j*

REcior 2-8356

TTt'pe:NYi-3347

4*

BE OBTAINED

ffj|L
I#'

Broadway

or

PHILADELPHIA

Oil
em¬

jW V .

W-jfr

or

conducted

"As this

||§

WAV/

Wellington®

ployed by the firm to organize and
direct

and

limited

to

City, members of the

that

:

Spencer Trask & Co., 25 Broad

years

Because

useless

to

February, 1950

Howard

Staff of Bache & Co.
Bache

re¬

Mr. King

vavXVXX-:

Consumers' food prices declined

Gordon Wallace Joins

nounce

be obtained from

Tke Keystone Company
of Boston

made.

early days of

have

industry

answered.
Prospectus

today
of the in¬

from

he

reserves

than in the early days

drawals

COMMON STOCKS

known

King

throughout the

widely known

Gas

"The search for oil has resulted

&

King

short time ago.

a

partnership

unchanged.

withdrawals.

(Series B1-B2-B5-B4)

King

the

of

country through his arbitrage ana
situations in which he has spe¬
cialized and now will devote his

comments,

INVESTMENT FUNDS

when he

which

the

to

since

Street

Sutro Bros. & Co. at the

including informative

relative

Wall

in

Howard

brief

a

has

King

been

ary,

objectives,,
Industries Fund
policies, management, and record
"additions to natural
of the Fund.
Charts graphically
gas
reserves
during ; 1949 were
more
than double
withdrawals, [ depict the growth and develop¬
and the known supply at the year I ment of the Fund.
end
was
nearly 30 times 1949 !
"Thus,"

Index

100.

as

Yearbook,

similar

a

containing

6.25 i Stock Fund

180.38

&

Fund: 1950

produced

173.87
12.76

1949_„____

of 12/31/49—

Eaton

the

of

Balanced

Trillion }

as

by

1939

of

dealer

o w n

Mr.

the

the

as

department.

100.

186.63!

proved

t

firm

1949)

Board's index is January,

Eaton & Howard Issues

often;

Ex-

out-of-

their

Changes

(February,

sundries (up

53,073.

you

Cubic ft. j

Total

<

Participation in

the

ten Keystone

semi-annual

Stock

the

for

of

the New York

its level

158.9

at

fuel* (up 0.2 %).

of

City,

members

represents

over

New

way,

1920

housef urnishings

>

'' •.;,//

.

Additions

Certificates of

•'■/.?• J.'"'J-V*;.■v\

assets

This

as¬

Co.,

change,
Manager

161.2. Base date of the

January,

ago

Funds Reach New High
net

of

&

Broad¬

York

(January, 1939
62.9 cents in

Number

was

Changes

;

•/.

.

value

Bros.

120

was

1950.

ago

1.0%).

Fund,

dollar

series is January,

over

year

know that
Stock Fund Booklet
the supply of natural gas will not
Eaton & Howard, Inc., Boston,
run out in a few years?" cites the
latest figures just published by1 Mass., investment managers, fol¬
the American Gas Association for lowing the publication and distri-.
asked,

%'•

Funds

•.

Combined

of

'

Custodian

a

Sutro

"

stood

index

ended

public
April 4.
This total represents an
increase of $38,240,300 over the
combined assets of $167,491,500 on
Feb. 28 of last year.
Total share¬
holders also reached a new high

super¬

Gas Fund Cites Increased

ff1

stone

of profes¬

and
vision during the period."

months

King has become

with

February, 1949, when it stood

year

of

the

increase of 110%

an

Martin I.
sociated

oc¬

weighted average of all items. A

Keystone Custodian

the

the i

concrete

management

months

..n

Francisco-Oakland,
where
the
index

cents)

Feb. 28, 1950,

portfolio supervision its full-

time

INCORPORATED

its}

research

investment

made

the three

gas.

Martin I. King With
Sutro Bros. & Co,

The Board's index for February,

money

in

were

**Fuel includes

15, and Oct. 15;

San

Index

largest quarterly sales in the
..

Its management

20-year history.

from

throughout

them,

New

public

the

Prices

formed

Vice-Presi¬
& Co., na¬

Fund's 21-year history.
.

objectives, and the same *
policies as regards the

achieve

and

Hugh W. Long

and

recent

different classes of securities used

descriptive

by

in

477,000,

Broad
Street
Investing
Corporation has had the same in¬

Stocks, Inc.

available from your

incomein

investment

on

distributors.

the like three

years,

York

L.

15, July

electricity and

was up

decrease

of

March 31, 1950, amounted to $14,-

in liquidating value,
profits distributions.

back

adding

tional

Fund

+44%

"Except for the added emphasis

j

Prospectus

+15%

changes

on

J.

W.

invested

,

Manage¬

ment

A Series of

—18%

—31%

—45%

unchanged
*B

Wilkins,
Morgan

A.

dent,

Food

at 62.0 cents.

reported

were

+

,

Retail

—

West

increase of 1.5%

1950

sales

quarter

Fund

by

Portfolio,

ing

first

Wellington

Invest¬

Diversified

Fund

Record

—19%

—39%

58%

Broad

Huntington,

sharpest

February,

Wellington Fund Has
Record Quarter Sales

In¬

Jones

-

dustrial

Original

Quoted

those of Jan. 16, 1950, and Feb. 15, 1950;
*
Rents surveyed quarterly: Jan. 15, April

in

increase

an

,

-

of

Consumers'

sur¬

recorded

greatest

purchasing

100

as

has

EXPERIENCE

5 Years

-Inquire about=

The

stocks and 40% in fixed-

income securities.

Footnotes

Purchasing Value of the Dollar

shareholders and
$51,000,000 of
60% is in high-grade

which about

■'

were

dipped 0.9%.

L.

14,000

common

YEARS'

The

California,

that net assets total

have

%,'/•

cities

59

were

in

noted

curred in

Kelley Anderson, President,

nearly

;

index

Virginia, where the index

Inc.

now

'•,//.

Missouri;
Spokane;
Toledo, Ohio),

The

consumer

O.

•

:v'/. 7'.1

material

Robert

for

and

increases

0.6%.

Board

monthly. The index re¬
unchanged over the month
cities (Cleveland,
Ohio;

cities.

was

the

of

Louis,

17

O. Kel-

announced that the Fund

justified.

TWENTY

New

Boston,
were

38

Washington
while

Charles F. Eaton,
Osgood,
Mayo
Adams Shattuck, Robert S. Swain,
and Henry T. Vance.

representa¬

the past 20 years

of

ley Anderson,

with the Broad Street
actual results for the
same periods to see if the Broad
Street
Investing management

costs for

of

Fund

Bond

Jr.,

Investing

CALVIN BULLOCK

Shelley,

Directors re-elected

compared

or-

F.

Public

four

St.

Related
to
Health, and
President of

Chemistry
and

William

tive well-known stocks. These are

Investment
Dealers

of

consists

in

are

Treasurer

Bump,

Medicine

periods from Jan. 1, 1930 through
Dec. 31, 1949 of two "static" hold¬
ings: (1) the Broad Street Invest¬
ing Jan. 1, 1930 portfolio held un¬
changed for 20 years and (2) the

available

newly elected members

Physical

experience for four different

the

Securities

veyed

number

Holyoke College; Powell
M.
Cabot, Business Manager of
Harvard University Laboratory of

below shows

table

The

in

noted

of

Mount

holding them intact for a period

Dividend Shares

the

/•%

the

in

Decreases

mained

Boardman

by dispensing with management,
buying a sound list of stocks and
Bullock Fund

increasing

board

National

the

1.4%,

dropped

found.

added

Fund

the

to

the

to

12

past

prices

meeting stock¬

Boston

Index

compiled monthly.

according

months < (February,
1949—February, 1950), consumers'

nine.

to

claim

can

of

members

Price
Prices

Retail

Goods and Services Purchased by
Moderate
Income
Families"
is

1950,

On Boston Fund Board

"Obviously

states:

Fund

sumers'

the

ment.
The

1950 to February,

January,

Industrial Conference Board. Over

Bump, Cabot and Shelley

own

CORPORATION

Nation-Wide

from

in ex¬

Investing,

record, indicates
the value of professional manage¬
amining its

Consumers' prices dipped (0.3%)

growing withdrawals, assuring an
natural
gas
supply
for
many years."
%;
•'}
ample

Management

from
from

retfuest

investment dealer, or

RESEARCH

decline from

By ROBERT R. RICH

The Value of Professional
Prospectus

Conference Board Survey shows .slight
January to February; with purchasing power up
ll/z% in last twelve months.

Industrial

National

Montgomery Street

SAN FRANCISCO

WM

mv I

Mm II

**VWWtoSW4I«ir*^H«<v mm

►fir

\

THE

Number 4898

Volume 171

COMMERCIAL

Saralyn Bailey Marcum, Coffin &
Burr, Inc.; Willis Martin, Kidder,
Peabody - &
Co.;
James
Edgar
David
Miller, Hornblower &
Weeks; Gilbert H. Osgood, Blunt

Devine Issues

Study
Of Tax Exempt Sees.

A

W'w,«

comprehensive study of
tax-exempt state and municipal

Ellis

securities

John

new

&

Mullaney,

Wells

A.
Co.;

&

CHRONICLE'.

for

Hearing by SEG

aftermath of the abortive

an

offering

the basis

was

withdrawal of Otis &

the

Co.

prepared by

C.

J.

De-

&

Co., 48 Wall Street, New
York City, nationally known spec¬

H.

Continental Il¬

Perkins,

linois National Bank & Trust Co.;

ration
Otis

grounds that

Harry

man

of

Kaiser-Frazer

missioners

issue of Kaiser-Frazer Corp. com¬

Paul

mon

stock in

February, 1948. Otis
comply with the

& Co. declined to

SEC's demand

Corpo¬
in
February, 1948,
Co., investment banking would violate the confidence of
Joseph Robert PrezorSki, Central firm of Cleveland, Ohio, was on attorney-client relationship. If the
ialists in United States Govern¬ Republic
Co.; ' William
Edward April 7 ordered by the SEC to ap¬ courts were to agree with the
ment, state and municipal securi¬ Strasser, Kebbon, McCormick & pear at a new hearing. This hear¬ SEC's dictum in this respect, it
ties is now being distributed.
De¬ Co.; Deane R. Tubbs, Kidder, Pea- ing is scheduled to take place would mean, in effect, that a per¬
and
will
determine son would be obliged to testify
signed principally to aid investors body & Co.; Frank S. Whiting, Jr., May ■ 22,
interested in this field, the 32- Hornblower & Weeks; Charles M. whether the firm's broker-dealer against himself.
page
compendium contains ma¬ Whitmore,
Jr., J Paine,
Webber, registration should be revoked.
vine

the

on

from its contract to underwrite an

New
As

(1527)

holder's lawsuit that

Otis & Go. Ordered to

Simmons; William F.

Palmer,

FINANCIAL

&

the ground that
the disclosure of such information

stock

_

on

Rowen

the

Chair¬
Com¬

M^cEntire,
Edward

T.

disqualified

to

and

were

case.

B.

and

,

on

&

f

R.

Richard

McCormick
sit

SEC

McDonald

1»

Manning, Shanley Go.
To Admit Partners,

NEWARK, N. J.—On April 20,
Manning, Shanley & Co., 11 Commerce
Street, members
of
the
New York Stock Exchange, will
i
It is assumed that revocation of
admit Maurice J. Ferris, William
the firm's NASD membership will
J. Lange, Jr. and Otto J. Fink to
seriously cripple the firm's activi¬
ties, if not completely put it out general partnership, and Elizabeth O'Neill Shanley to limited
of business.
partnership: Mr. Lange will ac¬
The SEC; in issuing the hearing
quire the Exchange membership
order, denied several motions by
held
by the late F. Sheppard
Otis counsel.One motion asked
.

terial

obtained

for

the most

part

Jackson & Curtis.

.•

The

directly from government officials
and agencies.
The new study

marks another
original contribution in the secur¬
ities

information

Devine & Co.

the

firm

field

by

began

issuing

report
Government securities.

Major topics in the
are

J.

annually
of U. S.

comprehensive

a

C.

Sixteen years ago,

new

whether

Midwest Exchange

Member

will

SEC

Otis

is

also

decide

be

to

then

suspended

National
Association of Securities Dealers,
CHICAGO, ILL.—The Executive

Committee

of

the

Midwest

Stock

Inc..

W.

Grammer McLeish "of
Evansville, Ind.

Slade & McLeish,

V

.

„

The SEC has been insistent that

Exchange has elected to member¬

ship

the

from

expelled

or

Otis

&

Co.

supply it with infor¬

mation in connection with

a

stock¬

proceedings be dismissed Shanley.

that the

.

booklet

analysis of the salient fea¬

an

tures of state and

gations with

municipal obli¬

and
monthly summary of the

types,

form;

maturities

status,

tax

a
state and

SALES VOLUME

description of their

a

Expansion Program Proves

'

;

municipal bond market

UP, PRICES DOWN...I
The 1949 Record of

in

1949; a description of major
Federal, state, and city-assisted
public housing programs in effect

early in 1950 and a
special

types

summary

tax-exempt

of

[INDIANA!

of

'

se¬

curities.
In

addition,

the booklet con¬
of statistics in tabu¬

tains 21 pages
lar form,
including

of

ume

state

nancing
estimated

15 years;
municipal

past

state

fi¬

municipal

and

the

for

vol¬

annual

and

debt outstanding; major bond flo¬
tations in

1949; trend of the mu¬
nicipal bond market from 1940 to
1949 in chart form, tax status of
state

by

municipal

obligations,

and

and

commercial

states,

state

expansion

Company (Indiana) and its sub¬

that has been the primary objective
of our post-war program.
New refining units operated at
high efficiency, transportation costs were reduced because of
expanded pipeline systems, and increased sales of natural gas
and natural-gas liquids were made possible by new facilities.
These factors helped Standard Oil to hold its earnings at a
high level despite lowered prices and a sharp reduction in
the quantity of crude oil production permitted in most states.
2.

Sales

in

program

totalled

1949

$1,125,411,841, compared with
$1,205,957,775 in 1948. The volume of product sales in¬
creased 3% in 1949 over 1948, and the decrease in dollar
sales

investment limitations.

bank

1. In 1949 the Standard Oil

sidiaries reaped the benefits of the extensive modernization
and

was

due to reduced volume of crude oil sales and lower

to more imports. With production curtailed, it was neces¬
for us to purchase a larger percentage of our crude-oil
requirements than in recent years, but we had the ability to
produce more crude than ever before.
sary

5. Capital expenditures in 1949 were $135,000,000, down
sharply from the $252,000,000 required in 1948. This reflects
the passing of the need for rapid expansion.
Capital ex¬
penditures in 1950 are expected to continue close to the

1949 level.

;:r

v

....

6.

Employees at the end of 1949 numbered 46,736. Total
wages and benefits averaged $4,600 per employee in 1949.
Back of each employee there is an average capital invest¬
ment of

$30,100.

product prices.
3. Net

CHICAGO, ILL.—Twenty-four
of
member
houses,
Central States Group, Investment
Bankers Association of America,
employees

Certificates

received

the

for

ment

tion

petroleum products
containing
of the nation's population, the company is the
largest refiner and marketer of petroleum products.

our

rels

day,

a

a

production in 1949 averaged 184,967 bar¬
decrease of 16% from the record high levels of

1948. This resulted from cuts in the

in

comple¬

cooperation

in

group

University School
Graduation exer¬
held at the Drake Hotel

were

with the Four¬
Conference of the

conjunction

teenth

Annual

Central

States

Albert T.

Group.

Coffin & Burr
President of the

Armitage,

Boston,
made

the

been

sociation

Inc.,
IBA,

1,800

enrolled

program at

trainees

since the

established

as¬

22 leading universities
throughout the coun¬

immediately following the
war.
Originally inaugurated by
the association to meet the un¬

try

postwar training require¬
ments of the industry, the training
courses in fundamentals of invest¬
usual

banking have proved ex¬
tremely valuable and are now an
established feature of the associa¬

$1,236,957,533

12,158,388

8,828,558

.$1,170,283,161

$1,245,786,091

Dividends, interest, and other income
Total income

.

....

J.

Harris, Sills, Fairman

Chicago, Chairman

of the Central States Group Edu¬
cation Committee, is
course

in charge of

offered in cooperation

used, salaries and wages,
operating and general expenses
other than those shown below... .$

Members of the

graduating class

were:

Fred E. Adams, Jr., Hornblower
& Weeks; Roger
Becker

Church,

913,812,614

$

15

&

Co.

Paine,

O. Brown, A. G.
Inc.;

William

Webber,

S.

Jackson

955,481,976

36,353,710

43,922,623

Depreciation
Depletion, amortization of drill¬
ing and development costs,
loss

and

on

The First National Bank of

Jack J. Korff, Paine,
Webber, Jackson & Curtis; James
Thomas Lundberg, Merrill Lynch,

Beane;




Mrs.

1947

1948

$1,170,283,161

earnings..

$1,245,786,091

$922,810,305

102,668,228

140,079,286

94,880,715

.....

Dividends

paid—in¬
cluding, in 1949 and
1948, dividends in
capital stock of

38,045,956

40,441,410

30,570,249

64,622,272

99,637,876

64,310,466

$6.72

$9.16

$6.21

$2,687*

$2,878*

$2.00

Earnings retained in

v

...

..

earnings per share
Dividends paid per
..........

34,540,641

42,311,000

Capital expenditures.$

worth, at the year
y
end.,..,.......,. 1,083,343,199

30,566,355

27,990,567

6,803,285

4,489,264

3,933,445

4,539,647

$1,067,614,933

$1,105,706,805

paid

Total deductions

$

Net earnings.

102,668,228

$

140,079,286

$60.51

84,106,429

73,190,806

8,241

7,772

-

$70.88

...

'/I',

;

PRODUCTION

.

Crude oil and naturalgas

Minority stockholders' interest in net
earnings of subsidiaries

end

924,870,060

'

Book value per share,
at the year

$220,000,000

V
,$66.65

$

252,000,000
1,018,721,446

135,000,000

Net

agencies)

liquids

pro¬

duced, net, barrels.

71,102,587

Oil wells owned, net,
at the year end. ,. .

8,440

Gas wells owned, net,
at the year end....

807

738

579

150,048,716

156,206,614

134,663,854

465,275

403,400

$1,205,957,775

$886,290,397

'

MANUFACTURING

(Indiana)Regular and extra dividends paid
wholly in cash—$2 per share in
1949 and $2,125 in 1948
$

Extra dividends

(New Jersey)
carrying

value

36,600,611

(exclusive of taxes
amounting to $168,022,672 in 1949
and $155,853,420 in 1948 collected
from customers for government
taxes

Crude oil

run

at refin¬

eries, barrels......

30,569,564

$

32,480,351

paid in capital
Company

Crude-running capac¬
ity, at year end,
barrels per day.....

J

472,270

stock of Standard Oil

Total sales in dollars.$1,125,411,841

,

MARKETING

(New

Jersey)—127,249 shares in*
127,583 shares in 1948

Bulk plants

operated,
end
Retail outlets served,
at the year end.. *.

carrying value—to¬
gether with equalizing cash
payments in lieu of fractional

at average

shares.

Market values

of distribution

were

on

dates

TRANSPORTATION

equivalent

to

in

1948 per

share

on

Standard
stock

7,961,059

7,476,392

paid...

$

.

38,045,956

$

40,441,410

$

Total dividends

the business at

64,622,272

$

99,637,876

Earnings retained and invested in th
business at end of year

422,928,319

587,188,467* $

522,566,195

i

$

^Including $197,000,000 restricted by terms of
loan agreements

4,490

29,612

•

4,515

30,278

,

Pipelines owned, at
the year end, miles.
Pipeline traffic, mil¬

15,403

15,267

14,114

117,069

116,756

96,678

97,589

87,483

58,513

96,808

97,073

97,495

46,736

48,692

45,967

Tanker

and

barge

traffic, million bar¬
rel miles

522,566,195

•

beginning of year

30,871

:

lion barrel miles...

$0.6865 in 1949 and $0.7534

Oil Company (Indiana)

4,511

at tne year

Savings Bank; Frank G. Her¬

Chicago;

Net

share

abandonments

Interest

FIGURES

including $0,687 and $0,753 as the market values on Dec. 12. 1949,
and Sept. 10, 1948, respectively, of the dividends in capital stock
of Standard Oil Company (New Jersey). *
-

and

Federal and state income taxes

Other

IN

31,976,000

retirements

l

Fletcher, William Blair & Co.;
Leo F. Garrity, Shields & Co.;
Robert C. Hawley, Harris Trust

&

Central states,

1949

Net

Curtis; James W. Ewing, Harris,
&/ Co.;
Donald
Truman

Fenner

North

STORY

THE

the business

properties—

Hall

Pierce,

In the

states.

than V\

at average

Depreciation, depletion, and amorti¬

1949 and

with Northwestern University.

man,

8. Standard Oil and its subsidiaries sell

in 40

more

pany

Materials

pany

David

and

paid. Through the years the equity of
steadily by plowing back a

substantial proportion of earnings.

Standard Oil Com¬

DEDUCT:

Dividends paid by Standard Oil Com¬

tion.

&

1948

1949

$1,158,124,773

Sales and operating revenues

ment

the

been

have

stockholders has been increased

Total income

the training

and colleges

& Harris, Inc.,

much

so

FINANCIAL

for the Years 1949 and 1948

zation of

awards.

Approximately
have

individual owned

the 56th consecutive year in which divi¬

of Earnings Retained and Invested in the Business

with

Commerce.

in

no

was

CONSOLIDATED STATEMENT OF INCOME AND EXPENSES

And Summary

Northwestern

cises

5% of the stock and
1949

Achieve¬

of

successful

eighth course in in¬
banking sponsored by

vestment

of

production permitted
was due largely

states. The reduction in allowables

some

as

1%.

dends

the

of

the

as

4. Net crude oil

Group ISA Course

earnings for 1949 were $102,668,228, second highest
history and equal to $6.72 per share. These earnings
were 9.77% of average book value. The 1948 earnings were
$140,079,286 ($9.16 per share) and 1947 earnings were
$94,880,715 ($6.21 per share).

much

in

Graduates of Central

7. The company was owned by 96,808 stockholders on De¬
cember 31, 1949.
No institutional stockholder owned so

PEOPLE

Stockholders, at the
year end.

Employees, at the
year end...

.•

debenture and bank-

of subsidiary companies and about $22,800,000 of

earnings of pipeline subsidiaries segregated under
sent Decree in Elkins Act suit.

provisions of Con¬

...

as

Copies of the 1949 Annual Report available on request
long as the supply lasts. Write Standard Oil Company,
910 S. Michigan Avenue, Chicago 80, Illinois.

VM:

dhaiU

<

!
/

\
1

?

<

'•

20

(1528)

THE

Alvin Berndt Joins

H.

associated
Co.

Berndt' has
with

the

on

wholesale

Lord, Abbett &
Coast, in the
iated

ently

in

is

as a

law

on

$3,800

the law.

also

a

Law

He

3000

is

(2) To authorize

member

to invest

of the Illinois

'

Bar. He was
recently asso¬
ciated with the City National Bank*
and Trust Co. of: Chicago as a
representative of the Trust De¬
partment special'zing in personal-

planning and

to
.

-

securities

tion and
able

as

that

would

investments

be

intelligence in such matters who

income and

will,

result of the

as a

their way into listed

been made for the annual election

The

Exchange

full

text

of

the

Act,

Robert

term of

one

P.

Boylan,

year.

for

a

Governors:

-

POTENTIAL,

now

new

INCREASE

2000

reason¬
f

IF

*

as

(three

term)
M. Becker, Jr., FahneCo.; David S. Foster, Per¬
shing & Co.; James C. Kellogg,
3rd, Spear & Leeds; H. Van Brunt
year

ter

subdivision
1.
same

a

billion

dollars of

v

provisions, eventually find

'

194 9

1000

Gratuity Fund:
term) Thatcher M.
Brown Brothers Harri-

term);

Dominick

Dominick; Robert Bennett

Ber-

Berman; Wil¬
Sbearson, Ham-

&

Co.;
F.

J.

John

Charles

.

C.

E.

J.

&

Roth

Sons;
Co.;

&

Wisher, Wisner &
deClairville; Walter F. Blaine,
Goldman, Sachs & Co ; F. Malbone
Blodget, Spence** Tra*k & Co.;
H.

Walker,

Jr.,

G.

the
on

Co.

firm
the

of

Los

Lee to rep¬
S. Walker

M.

Angeles Stock

Exchange was announced by Ex¬
change President W. G. Paul.
Lee's

fected

membership

through

transfer

of

the

M. S. Walker.

the

was

ef¬

shall

intra-firm

membership

I

of

■*

Partnership Change
William

partner

Post

Haring,

in Lawrence

Co.-Blyth

&

Bonner,

limited

Turnure
50

&

Broad¬

way, New York City, members of

New

York

Will become

a

Stock

■

Exchange,

general partner ef¬

fective May 1.




)

as

Subdivision

one

of section

twenty-one of the

one

forty-eight, is hereby repealed and a
place thereof, to read as follows:

preceding said

per¬

new

fiduciary holding funds for investment

or

banks.

Obligations,

excluding,

however,

non-negotiable

war¬

or

,

paragraph

include any city, town,
borough, village, township or other
incorporated municipality.
(e)
Obligations issued or guaranteed by the international
bank for reconstruction and
development.
if) Obligations of the Dominion of Canada or those for which
the faith of the Dominion
of Canada is pledged to provide for the
payment of interest and principal, provided that the
principal and
interest of such obligations are
payable in United States funds.
(g) Obligations of any province of the Dominion
of Canada,.,
provided that within ten years
immediately preceding the investment such province has not been in
default for more than ninety
days in the payment of any part of
principal or interest of any
debt duly authorized
by the legislatuije of such province, and
provided that the principal and interest of such
obligations are
payable in United States funds; and
obligations of any city in the.

investment

inhabitants and has

such

may invest the
of securities described in the sue-

or

ADJUSTED

of not less than one hundred fifty
not within twenty-five
years pre¬
ceding said investment defaulted for more than one hundred
twenty days in the payment of any part either of
principal or
interest of any bond,
note, or other evidence of indebtedness, and
provided further than the principal and interest
of such obligations
are payable in
United States funds. No obligations
of any such
city shall be an authorized investment under this statute unless
thousand

is added in

the kinds and classes

ACTUAL

1937

1949

follows:

pality shall have power to levy taxes on the taxable real
property
therein for the payment
of such obligation without limitation of
rate or amount; and
obligations of any revenue or tax supported
authority, commission, department or district, including, but not
by way of limitation, any sewer authority,
bridge authority, sani¬
tary district, water department, electric
power, highway or port
improvement project created under the laws
of any state or states
of the United States. The term "city" as used in this

LOS ANGELES, CALIF.—Mem¬

&

1926

the State of New York, represented in Senate
enact

by any city, county, school district or other
municipality of any
state other than New York shall be
an authorized investment here¬
under unless such
city, county, school district or other munici¬

Los Angeles Exch. Member
bership of L. Gibson

IN

LIVING

Dominion of Canada, provided that said
city has a population as
shown by the last official census
of the Dominion of Canada next

thirty-eight

H.

Walker & Co.

resent

OF

($1,680)

-

or territory
of the United States or of any city,
other political subdivision of
any state of the United
States, provided (1) thai such obligations were issued
pursuant
to law, (2) that the
faith and credit of the issuing city, county or
political subdivision is pledged for their
payment, (3) that the
issuing state, territory, city, county or political subdivision has a
population as shown by the last federal census next
preceding
such investment
of not less than ten thousand inhabitants, (4) that
no obligation issued
after the year nineteen hundred

county

H.

George

INCREASE

COST

omitted.

rants, of any state

Henderson,

Henderson

Roth.

be

banks; and bonds, debentures, consolidated debentures

(d)

man, Neuberger &
liam J. Denman,

Charles

is new; mat-

Obligations of this state issued pursuant to the
authority
of any law of the state, and obligations
of any city, county, town,
village, school district, poor district, or fire district in this state,
provided that they were issued pursuant to law and the
faith and
credit of such issuing
municipal corporation or district is pledged
for their payment.

Nominating

year,

to

(c)

Co., and John M. Young,
Morgan Stanley & Co.

Jr.,

j is old law

other obligations of
any federal home loan bank

&

Batcbeller

A
in

credit

year

Adams

[

-

Trustees of the

of

ACTUAL

INCOME ADJUSTED
FOR

signed by Gov. Dewey, follows:

ceeding paragraphs of this subdivision, provided that investment
is made only in such securities as
would, be acquired by prudent
of discretion and intelligence in such matters who are
seeking
a reasonable income and
the preservation of their
capital:
(a) Obligations of the United States or those
for which the
faith of the United States is pledged to
provide for the payment
of the interest and principal.
^
: r
(b) Farm loan bonds, including consolidated bonds issued
by
federal land banks; federal intermediate credit bank
debentures
including consolidated debentures issued by federal intermediate

ley & Co.

(one

2^%

effective in 20 other",

-

city shall have power to levy taxes on the taxable real
property therein for the payment of such obligation without limi¬
tation of rate or amount.

(h)

men

Booker, Corlies & Booker, and Jay
N. Whipple, Bacon,
Whipple &
Co., Chicago;
(one year term)
William E. Hutton, W. E. Hutton
& Co.; William
Bayne, F. S. Mo.se-

members

FROM

FUND

INCREASED 6Y

sonal property law, as last amended
by chapters six hundred eignt,
six hundred twenty-five and seven
hundred forty-four of the laws
of nineteen hundred

Hugh B. Baker, Baker,
Weeks & Harden; Joseph Klingenstein, Wertheim & Co.; James
E. Hogle, J. A. Ilogle & Co. Salt
Lake
City: C. Palmer Jaffray,
Piper, Jaffray & Hopwood, Min¬
neapolis;
Chapin
S.
Newhard,
Newhard, Cook & Co., St. Louis;
(two
year
term)
J.
Marshall

Nine

Assembly, do
Section 1.

Co.;

Committee

in brackets

The People of
and

McKeever, Goodbody & Co.; Otto
A. Schreiber,
Hsydock, Scnreiber

Brown,

OF

re¬

EXPLANATION—Matter in italics

Sherburn

(three

($525)

INCOME

35%

-

>

stock &

the

a

To amend the personal property law, the domestic
relations law,
the decedent estate law and the
banking law, in relation to the
investment powers of fiduciaries

Fourteen members of the Board

I'

seeking

AN ACT

Chairman of the Board of Gov¬
ernors:

Mr.

$2,205

in

and preferred stocks.

common

to be held May 8:

Emil

"only

of discre¬

men

typical course of trust fund income since
1926, with the increased income derivable from the new law.

following nominations have

of the New York Stock

mill

made

The Chart shows the

The

&

are

investment experts estimate that at least
trust funds

Of NY Stock Exchange

be

the

rule of prudence which is similar to that
states.

Nominees for Election

man

must

acquired by prudent

preservation of their capital." It I has long
been settled under the law of New York that
a trustee
confining
its investments to the
legal list was nevertheless subject to this

tion.

&

.$2,800

are the equivalent of the present
legal list; and...
the remaining 35% in listed stocks and bonds not

invest

otherwise eligible.
The Act provides

such

taxa¬

estate

fiduciary under the Rule of Prudence
65% of the fund in stated investments; that is, rough¬
a

ly those which

Alvin H. Berndt

of

4000

(1) To disassociate fiduciary investments from those of
savings banks and to cover all fiduciaries in one section of

School.

estate

5000

July 1, 1950.

Marshall

„

TO

$ 4,700

and The John

sity of Illinois

„

LIMITED

INVESTMENTS

legislation is the result of a study covering nearly four
years by a special committee of the Trust Division of the New
York State Bankers Association. It has two main
purposes:

of the Univer¬

...

*

$100,000

The

Berndt

graduate

a

OF

Important impact on stock market fore¬
seen.
Text of bill presented. -

effective

come

San Francisco.
Mr.

TRUST

The

be

resident

OF

LEGAL

so-called McGovern-Demo bill to
modify the restrictions
surrounding the investing powers of fiduciaries in New York State
was signed
by Governor Thomas E. Dewey on April 5. It will be¬

Inc.

will

INCOME

legal list.

on

Business

He

INCOME

Modified "Prudent Man" law enlarges investment
powers of
35% of fund in stocks and bonds not pres¬

Inc. and Amer¬

Snares,

Thursday, April 13, 1950

TRUST

trnstees to invest

Affil¬

Fund,

ican

CHRONICLE

Trustee Investing Signed

become

of

FINANCIAL

,(1926-1949)

Pacific

distribution

&

New York Act to Broaden

Lord, Abbott on Coast
Alvin

COMMERCIAL

Bonds and mortgages and notes and
mortgages on
property in this state worth fifty per cent

cumbered real
than

amount

unen¬

more

loaned

thereon, provided that such restrictions
location and percentage of value
of the real property shall
not apply to bonds and
mortgages or notes and mortgages insured
by the federal housing commissioner; bonds and
mortgages and
notes and mortgages on unecumbered real
property in this state
provided that such bonds and mortgages and notes and
mortgages
are guaranteed to the
extent of fifty .per cent
thereof under title
III of the servicemen's
readjustment act of nineteen hundred
as

«

the

to

forty-four and provided further that such real property is im¬
proved by a completed dwelling constructed
for use by not more
family units: mortgage bonds and notes insured by the
federal housing commissioner, or any part
of an issue thereof;
and first lien
bonds, or any part of an issue thereof, of housing
companies organized pursuant to the public
housing law, when
than four

secured

value

by

or

a

mortgage not exceeding two-thirds of the appraised

actual

cost

of the housing
company project, whichever
less, as certified by the state commissioner of
housing_
(i) Deposits in the special interest or thrift
department of
national banks located in this state or
of banks defined in sub¬
division one of section tiro
of the banking law, or trust companies
organized under the laws of this state,
provided, however, that the
full amount of any such deposit shall be insured
by the federal
deposit insurance corporation; or deposits in
savings banks incor¬
shall

be

porated vvder the laws of this state.

(j) Shares of a federal savings and loan association
organized
under the home owners' loan act
of nineteen hundred
and

having

lars

or

thirty-three

accumulated capital of one hundred thousand dol¬
more, and in the shares of a savings and loan association
an

having

an accumulated capital of one hundred thousand dollars or
organized under the laws of this state,
provided, however„
that no such investment
for any one fund in any one association
shall exceed ten thousand dollars.

more,

(k) Bonds, notes and other obligations of a public
housing
authority or agency located in the state of New York when such
obligations are (I) secured by a pledge of the revenues of a
project
and

additionally secured by

a

pledge of periodic subsidies

or of
authority by a government,
first mortgage lien not exceeding sixty-six
and two-thirds per cent
of the value of the property covered, or
(3) guaranteed by a municipality as to principal and
interest; and
in bonds, notes and other
obligations issued by any public housing
authority or agency in the United States when such obligations
are
secured by a pledge of the revenues
of the housing project
or projects
for which the obligations are issued and additionally
secured by a pledge of annual contributions to be
paid by the

annual contributions to

(2)

or

secured

by

be paid to an

a

United States government

or any agency thereof.
All investments authorized by or pursuant to subdivisions
fourteen and nineteen of section two hundred
thirty-five of the banking law.
■

(I)

seven,

thirteen,

(m) In addition to those investments made eligible
by the
preceding paragraphs of this subdivision, other securities of
corpo-

Volume

Number

171

4893

COMMERCIAL

THE

rations organized and existing under the laws of the United States

of

the provisions of

Frederick W. Vogell announces

formation

this/ paragraph (m) which, at the time

be made, will cause the aggregate market
of the investments not made eligible by the preceding para¬
graphs of this subdivision to exceed thirty-five per cent of the
aggregate market value at that time of all of the property of the

Inc.

o

v

r-t h

e

fund held by such fiduciary; (2) no bonds, debentures, notes, equip¬
ment trust obligations or other evidences
of indebtedness of such
corporations shall be purchased under authority of this paragraph

(n) unless such obligations, if other than issues of a common car¬
rier subject to the provisions of section twenty-a of the interstate
commerce act as amended, shall be
obligations issued, guaranteed
or assumed
by corporations which have any securities currently
registered with the securities and exchange commission; and (3) no
common or preferred stocks, other than bank and insurance com¬
pany stocks, shall be purchased under authority of this paragraph
(m) unless currently fully listed and registered upon an exchange

lic

ness,

Last

in pubutility

izing

Indicated

period

common

stocks.

maintain
fices
Wall

*

Frederick W.

'

Mr*

Vogell
formerly was

Vogell

in

as

his

best

judgment

fair

seem

and

NYSE

(n)

.

•

■'.■■■>.

'Y

1949

Robert

P.

0.73

Trust

2.39

1.50

1.50

National

0.71

0.63

219,507
1,304,930
4,224,990

0.76

0.75

1.340,032

1,325,645
4,067,177
1,326,728

0.72

0.81

169,945

165,922

Chase

Boylan, Chairman of

*

——

Bank

...

—

Commercial National

Presidents and Edwin B. Peterson

tion of

Secretary

Manufacturers

1.24

740,470

2.04

136,252

17.72

17.00

5.13
0.31

5.41
0.30

575,531
2,189,814
976,919
2,128,289
559,785
4,622,011
592,744
469,112
120,093

Empire Trust

Guaranty Trust
Irving Trust

1.28

2.16

Corn

or

the property under the fiduciary's

other instrument

care.

,•

cre¬

i

dent,

'

,

pro

Exchange,

the

of

•

§ 2.

Subdivision

six

section twenty-one

Mr.

property law, as amended by chapter

Coyle, who is director of
the Department of Member Firms

laws of nineteen hundred

and will continue in that

follows:

■

No

6.

of

of

the

personal

f

/

seven hundred fifteen of ther
forty-five, is hereby amended to read as
;

.

fiduciary [trustee,

or

v

-■

.

,

;.y\:*.

y";4

has been

since

dent

1949. He has
Exchange since
1^22, has served as Manager of
the divisions of Member offices,

other person] holding [trust] funds
incurred with respect to

.any investment not eligible by law for the investment of trust
.funds if such ineligible investment was received by such fiduciary
.pursuant to the terms of the will, deed, decree of court, or other
^instrument creating the fiduciary relationship or if such ineligible
investment was eligible when received[,] or when the investment
was made by the fiduciary; provided such fiduciary exercises due
care and
prudence in the disposition or retention of any such
-ineligible investment.
■■
...y: V-

March,

with

been

for investment shall be liable for any loss

assistant

director

He

ment.

N. J.

in

the

of

depart¬
York

born in New

was

lives

and

Quotations, and

Hasbrouck

Heights,

- ; •
West is director of the De¬
....

V Mr.

partment of Stock List, which of¬

Subdivision seven of section twenty-one of the personal
property law, as added by chapter seven hundred fifteen of the

been

an

laws of ninteen hundred

since

February, 1948.

follows:
7.

*

forty-five, is hereby amended to read as

•

used

in this

Section eighty-five of the domestic relations law,

§ 4.
amended

chapter eight

by

hundred

forty-eight of the

as

laws

acting director. Mr. West
in New Jersey and re¬
sides in Piainfield, N. J.

of

Mr. Peterson has been Assistant

A guardian

Secretary of the Exchange for. four

Investment

of

trust funds by guardians.

/

by law
-cash

awaiting

meeting
invested

investment

or

the purpose

-

;

provided

that

if

any

a

be ineligible as an investment

trust company maintaining

a

Vanderbeck,

1.25

^National

1.16

3.44

3.34
0.66

<

0.80

City

1.70

U. S. Trust-.
'Includes

totals

of

deposits for the

seasonal
the end

at

10.15

City Bank Farmers Trust Company.

trend

The

reflecting

0.99

9.79

;

—

1.55

1.06

New York Trust—^

Public National

In

influences.

of

March

were

quarter

generally

was

down

number of cases, however,
higher than they were a year
a

previous, although the changes from year to year were not par¬
ticularly significant.
level of

lower

A

requirements

reserve

allowed an

increase

The additional funds were invested primarily
in U. S. Government securities and, in some instances, loan totals
were higher.
•
f
■J:'
The totals of loans and discounts and U. S. Government securi¬
in

earning assets.

ties

follows:

of March 31, 1950 and 1949 were as

as

U. S. Government

Loans and Discounts

of Manhattan*—i_

Bk. of N. Y. & 5th Av.

113,850

Trust

Central Hanover

National

Chase

Chemical

——

——

Bank

Commercial National
Corn

563,849
95,725

28,896

30,133

Brooklyn Trust

477,488

444,507'
1,379,485
468,285

1,524,426

41,361

_

76,078

Exchange

$343,284
485,731
161,115
125,662
125,071
491,795
530,961
1,334,139
1,655,932
386,884
528,922
95,602
92,880
462,675
468,004
65,455
73,848'
315,801
317,343
920,758
938,423
370,705
420,134
939,831
1,061,247
217,636
221,441
1,676,405
1,898,480
174,310
253,899
213,330
189,246
76,614
57,859
$323,594
512,254
165,861

$416,811

$430,004
567,712

Bank

Bankers

.

540,439
46,034
70,140

25,073
136,495

24,719
104,344

Guaranty Trust

964,941

Irving Trust

371,414
551,656

1,012,290
419,701
572,764
183,076

Empire Trust
First

—

National

——

—

Manufacturers

Trust

_

191,584

Morgan, J. P. & Co.—

1,379,939

<!National City

244,609

Trust
Public National
New York

175,543
55,639

U. S. Trust
♦Includes

figures of City

1949

-1950
(000s Omitted)

1919

1950

-

1,397,011
233,255
152,972
38,703

Bank Farmers

Securities

—As of March 31—

—As of March 31—•

Trust Company.

di¬

to

Procedure, J. W. O'Reilly, to as¬
sistant director of
that department; Albert B. Stranahan, to director of the Department of Re¬
search and Statistics; and A. D.

Following

consideration

of

Most of the above banks were

securities.

of U. S. Government

able to show gains in holdings

Among the institutions to report

the totals of a year ago
Trust, Bank of New York &

increase in loans and discounts over

an

were:

Bank of Manhattan, Bankers

Ave., Brooklyn Trust, Corn Exchange, Empire Trust, First
National, J. P. Morgan & Co., Public National, and United States
Trust. The other banks showed only small declines.
5th

Board

Governors

of

of

the

New

York Stock Exchange has

decided
will be closed
on
Saturdays during June, July,
August and September.

that

the

The

NATIONAL BANK

Committee,

ap¬

Bankers

for such common

pointed
whole

on

of

the

days

and

hours which the Exchange should
be
*

open

for business, will, upon

completion of its study, report its
recommendations to the
Governors.

Board

of

19 NEW YORK CITY

the Government In

BANK STOCKS

26, Bishopsgatet,

London, E. C.
Branches

in

March 9 to review the

subject

to

Office:

India,

Bnrma,

Kericho. Kenya,
and

Paid-up

Available

£4,000,00®

Capital

.

£2,000,000

Fund

£2,500,000

description fit
and exchange business
,

The Bank conducts every
,

banking

on

and

Executorship*-^,

also undertaken

31}

request

Laird, Bissell & Meeds
Members
ISO

New

York

BROADWAY,

Telephone:
BeU

Trusteeships

19S0

March
Kenya

and Aden

Zanzibar

Subscribed Capital

Reserve

Ceylon,

of earnings
statistics

and other

Kenya Colony and Uganda
Head

Colony.

legal common trust

A comparison

of INDIA. LIMITED

Exchange

Special

the above loan totals
relatively favorable.

liquidation of inventories and bank loans,
compared with those of a year ago are

re¬

from members and mem¬
ber firms to a questionnaire, the

.




K.

sponses

investment

§ 7. This act shall take effect July first, nineteen hundred fifty.

W.

of

Exchange to Close Sat.
June Through September

fund shall invest the same in the manner in which fiduciaries are

y'

r

Trust

750,858
121,053
511,379
2,309,540
1,037,114
2,111,-308
554,198
4,534,193
566,423
484,018
127,620

Considering the sharp adjustment in business which took place
second and third quarters of last year and the resulting

of

authorized to invest by section twenty-one of the personal prop¬
erty law. A trust company maintaining a discretionary common
"trust fund may invest the same in such investments as it may select
in its discretion.
V
/

'

,

.

;

in the

subdivisions of said section two hundred
thirty-five as the same existed on such date shall cease to be au¬
thorized for investment by savings banks any such investment
shall thereafter

Stock

the

Stone, arbitration director.

authorized by any of said

.trust funds.]

—

Morgan, J. P. & Co

rector of the Department of Floor

twelve, thirteen, four¬
teen, fifteen and nineteen of section two hundred thirty-five of the
banking law as such section existed upon the first day of January,
forty-three

of

Corp.,

Officer

tion;

cash requirements | legal common trust funds shall be
solely in the same kind of securities as those in which

hundred

Vice-President

to active Execu¬
the corporation,
Francis W. - Curran, to Assistant
General Manager of the corpora¬

two, three, four, five, seven, ten, eleven,

nineteen

a

that
have
been
.made,
Mr.
Boylan
an¬
nounced, include George F. Mul-

tive

savings banks in this state are authorized to invest by subdivisions
one,

as

promotions

Clearing

Except for uninvested

kept for

Secretary

Brooklyn 34 years ago, he lives
in Rockville Centre, Long Island.

ler,

or a

authorized to invest trust funds.

balances

the

of

entered

the following year. Born in

Other

trust fund shall be known either as a legal

discretionary common trust fund. A trust
company maintaining a legal common trust fund may invest therein
the moneys of any estate, trust or fund which is eligible for invest¬
ment in any common trust fund pursuant to subdivision one of
.this section. A trust company maintaining a discretionary common
trust fund may invest therein the moneys of any estate, trust or
fund where the instrument or order of court under which such
estate, trust or fund is held shall authorize the investment of
moneys of said estate, trust or fund in any of the following: (a) in
a
discretionary common trust fund; (b) in such investments as
the fiduciary thereof may select in the discretion of such fiduciary;
(c) generally in investments other than those in which trustees are

first employed in

*

-

amended by chapter six hundred two of the laws of nine¬
forty-three, is hereby amended to read as follows:
common

was

messenger, and

a

Office

the

teen hundred

trust fund

as

clerk

,

Each

He

years.

-1933

forty-eight, is hereby repealed. !
V.
''■».I..'.'
§ 6. Subdivision three of section one hundred-c of the banking

3.

born

was

National

-

that

thirty-six, is hereby amended to read as follows:

Section one hundred eleven of the decedent estate law, as
llast amended by chapters six hundred eight, six hundred twentyfive and seven hundred forty-four of the laws of nineteen hundred

common

His 25-year
Exchange has

the

with

has

and

Vice-President

tor and

§ 5.

as

continue,

department, first as
a
clerk, and then as statistician,
chief statistician, assistant direc¬

last

Sholding [trust] funds for investment has the powers provided by
section [one hundred and eleven] twenty-one of the [decedent
:estate] personal property law [for an executor or administrator,]
'and must not invest the funds in any other securities or manner.

law,

will

Assistant

in

been

-

*

nineteen hundred

§ 85.

he

service

section, the words "person holding trust
funds" and the [term] terms "fiduciary" and "trustee" shall include
fa] an executor, administrator, trustee, guardian and committee
of the property [or estate] of an incompetent person.
As

fice

Exchange

First

the

Commissions and

§ 3.

?

capacity,

Assistant Vice-Presi¬

an

$1,080,920
1,360,714
'•
376,725
210,628

2.18

—

tern., has announced
that Frank J. Coyle and Phillip
L. West have been appointed Vice-

will, agreement, court order

1949

1950

$0.44

5.19

Bankers

the Board of Governors and Presi¬

any

7

195(1

$1,042,607
0.63
1,348,036
4.47 ;
369,523

ating or defining the investment powers of a fiduciary, or to restrict
the authority of a court of proper jurisdiction to instruct the fidu¬
ciary in the interpretation or administration of the expressed terms
of any will, agreement or other instrument or in the administra¬

effect of

(000s Omitted)
-As of March 31-

•.

$0.52

i •

Manhattan

of

Bank

Chemical

Nothing in this subdivision shall be deemed to limit the

Deposits

First Quarter

i

Central Hanover 7——

Three Officers

according to available information.
V

few <
than last {.
a

comparative purposes the

Brooklyn Trust

Appoints

reasonable

fairly;^

The showing was not uniform, however, and

Bank of N. Y. & 5th Ave.

under the

;

higher than for the same *

Per Share

■

investments

cases

Indicated Earnings

value

provisions of this paragraph, a fiduciary may rely upon
'published market quotations as to those investments for which
such quotations are available, and upon such valuations of other

in most

were

and in some instances the changes were

-

of those investments made eligible by this paragraph ^with Geyer & Co.- Inc., in that
Wfirm's public utility trading de¬
(m) and those made eligible by the preceding paragraphs of this
partment. '
' V ^-Vy'v' '
subdivision.
In determining the aggregate«market value of the
property of a fund and the percentage of a fund to be invested

,

their.,

indicated earnings per share, £
making allowance for dividends paid, of the various New York,v
City banks for the first quarter of 1950 compared with those for*;
the same period of 1949 are presented below. Also shown are the|,
deposits at the end of the respective periods.
For

York

City.

registered with the securities and exchange commission as a national
securities exchange. No sale or other liquidation of any investment
,shad be required solely because of any change in the relative mar¬

issued

City

year.

37

Street,

New"

New York

banks in

institutions showed earnings unchanged or slightly lower

of¬

at

earnings

year ago

a

significant.

The

firm will

new

Week—Bank Stocks

week the major

quarterly statements for the period ended March 31. In general,
the balance sheet figures and results were favorable and about in
line with previous expectations.
'

e-

busi¬

special¬

,

This

«

general

a

counter

'

Co.,

trans¬

to

act

JOHNSON

By H. E.

of

Vogell &

value

ket

21

Bank and Insurance Stocks

Formed in New York

preferred stocks of such corporations,
(1) no investment shall be made pur¬

investment shall

such

(1529)

common and

subject to the following:
suant to

CHRONICLE

Vogell Co., Inc. Is

of the District of Columbia or of any state of the United States
including, but not by way of limitation, bonds, debentures, notes,
equipment trust obligations or other evidences of indebtedness,
or

and shares

FINANCIAL

&

L

A.

Stock Exchange

NEW YORK 5, N. Y.
BA relay I-S500

Teletype—NY

Gibbe.

Mmnssrer

1-1248-49

.

Trading Dept.)

22

THE

(1530)

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 13, 1950

Consumers' Buying Expectations Surveyed
Poll taken under supervision

durables

1949

on

scale.

the northern Peace River District,

sizes

Great

the importance of

more

once

Canada's

but

vast

neglected
Northern
Empire.
It
is
now
recognized that the Arctic top of
the
world
is
likely to figure
prominently in world military,
economic, and political develop¬
of

ments

the

future.

Russia

has

the

Mackenzie

Slave

Lakes

of

Alberta

pulsion

of

opening

up

alone

tensive efforts have been directed

military necessity the
of Canada's great Em¬

endeavor.

to their

question

few

decades. Control of this

the

in

air-age

perhaps

of

the

area

future

can

be

compared with pre¬
vious domination of the vital sea-

routes and its

history-making in¬

fluences in the past.

With

the

Canada

<

the

of

most

Russia,

extensive

holdings of Arctic territory which
cover

about

miles.

Whereas

this

ago

looked

is

IV2

area

as

million

Northern

the

frontier

beginning
greatest

era

velopment.

So

only

strides

have

been

will

of
of

Dominion's

far

made

between

the South and the

the

repository

2

this

discoveries
of the

cities

of

in

construction

the

addition
of

sesses

and

northern

River

for

of the

area

are

the

incalculable

turned

to

also a series of airfields
strung
along the Alaska Highway which

account

following

ment of

means

constituted

with the

the

wartime

North

West Staging Route to Alaska.

Much, however, remains to be
accomplished before the Canadian
Arctic

can

be considered

an

ade¬

quate bulwark against aggression
directed along the convenient air
routes
the

over

world.

hope

to

the

northern

Canada

achieve

alone

this

top

herculean

task.

Although this country
largely responsible for the
strirction

of

the

of
not

can

was
con-

Alaska

Highway
and
is
cooperating in military
maneuvers in the Far North, fu¬
ture efforts must be planned on
a vastly
more ambitious scale to
match the progress made on the
Russian side of the Arctic Ocean
The first necessity is a northern

commercial

establish¬

of communication

South.

concerning the difficulties of hu¬
survival in the frigid regions

of the Far North. It would
appear
therefore that no insuperable ob¬

stacles
the

stand

now

tion

and

of

would

dull

and

realiza¬

that

week

the

Canada

popula¬

a

the

bond

>

external

market

was

slightly easier. The in¬

Dominions

hand

civili¬

millions.

the

of

ternal

possible

day support

tion of 200

During

path of

of

prophecy of the late

Leacock

one

section

advance

the

the

Stephen

the

the

on

firmer

were

other

following

a

resumption of institutional invest¬
ment

demand.

weakened

to

Free

9%%

but

funds

the

cor¬

porate-arbitrage

CANADIAN BONDS

rate

141/2%-13%%

strong U. S. de¬

mand

.

for

oils

ern

Government

on

rallied

r

to

Canadian stocks. West¬

were

generally

heavily traded in

firmer

stock

a

market.

Provincial

Royalite, Anglo-Canadian, Pacific

Municipal

Petroleum, and Federated Petro¬
leum, were especially prominent
in

Corporation

this

group.

Imperial

Oil

also

a new 1950
high. Among
industrials Standard Paving,
Canadian Industrial Alcohol, and
Algoma Steel and Steep Rock Iron
were
notably active. The base-

the

metals

were

likewise

high. The golds

to firmer
among

Teck-Hughes,

A. E. Ames & Co.
<

INCORPORATED

Two Wall Street
New York 5. N. Y.
WORTH 4-2400

NY

1-1045

Fifty CongreNM Street
Boston O, Mhhu.




in

with East Sullivan
again
a new

this

and

type

(1)

analytical

Approximately
10

every
to be

of

spending units

consumer

larger than in 1949; less than
in 10 expected them to be

smaller.

There

was

little

change

in these proportions from the sur¬

in early 1949.

vey

of

of

ed

(2)

With regard to current rate

earnings, about three in every
spending units report¬
a higher rate in early 1950 than

10 nonfarm

a

year

prospects.

same

always

rate.

Survey findings should
be viewed along with a

three

expected their total 1950 incomes

sents only one body of data indica¬
tive
of
tendencies
in
economic

earlier

while

almost

proportion received

the

lesser

a

In the two previous annual

wealth of other statistics reported

demand

reaching

were

steady

incomes than

"

ago.

(3)

•

'

//

a

year

v"; i;

..

With regard to the general

business

months,

outlook

for

the

consumers

12

next

be
better
compared
months earlier than in

vious

postwar

evidenced

with
some

in

surveys

FRANCISCO,

firm

a

partnership

name

investment

of

Nearly

believed

that

five

business

sacrifice

some

income.

current

in

Data

their

on

this

point,

on a comparable basis, were
not obtained in previous years.

(5)

Consumers

were

not

quite

uniform in their expectation of
lower prices in the following 12as

month period as they had been at
the beginning of 1949 or at the

midpoint of last year. The pro¬
portion of those looking for price
declines dropped from about onehalf

to

one-third

viewed.

of

those

inter¬

On the other

hand, there
seemed to be a slight increase in
the
group
who
thought prices
would probably rise in the coming
months.

12
pre¬

which

consumers had
complained about
greater uncertainty than at the be-,
increases in the cost of living.
ginning of 1949. However, they

somewhat

were

more
optimistic
July following a series
business
adjustments in the

than
of

Consumer Attitudes

last

on

the

Business Cycles in

General Economic Outlook

(1)

first half of the year.

Consumer

attitudes

on

the

general economic outlook for the
(4) A belief that prices will fall
year might be characterized as be¬
coming year is widely held,
ing somewhat less optimistic early
especially with regard to automo¬ in 1950 than at
the beginning of
biles and large household items,
1949, but at the same time there
but the number expressing this
was
also somewhat less outright
belief is down sharply from six
pessimism.
Many more persons
in the

months and
.

Consumer

a

year ago.

Plans to

and Durable

(1)

Consumer

seemed

Buy Houses
Y

Goods

plans

to'

buy

houses in the current year—newly
built
and
existing houses com¬

Plans

uncertain
an

opinion

or

as

structed

were

homes

were

the

same

while

greater than in
there was no change
decline

Davis

under
&

counsellors,

fices in the Russ

the

Barnett^
with

Building."

of¬

units

or

1949

in

reported

or

a

inten¬

priced

Federal
A

a

favorable

in

mid-July of last

year.

.

many consumers indi¬ tions
come

than

did

groups.

those

in

lower

in¬

On the whole, there

Policy-Making

Knopf, Inc., 501
New York 22,

Local Tax Legislation

in 1949—

March issue of "Tax Policy"—Tax

Institute, Inc., 150 Nassau Street,
New York 7, N. Y.—Paper—25c/
Preparation and Certification of

(2)

viewed

A.

Avenue,
N. Y.—Cloth—$3.

Financial Statements—B. Bernard

Greidinger—The * Ronald
Company, 15
East
26th
New

Press

Street,
10, N. Y.—Cloth—$6.

York

Savings and Loan Annals, 1949
—United States Savings and Loan
League, 221 North La Salle Street,

Chicago

below

intentions to buy new homes

Reserve

Study in Government Eco¬
Policy Formation-^- G. L.

Madison

expressing

Ac¬

nomic

Bach—Alfred

those

$10,000 good or bad. As in previous sur¬
purchasing veys, those in
high income groups
for
homes
tended to be more optimistic in
priced above this level.
* r
their appraisal of current condi¬
as

Eakin—Economic

counting, Inc., Citizens Building,
Decatur, 111.—Paper—50c.

proportion

little change in
intentions was noted

About

Doctrine for Economic Freedom

—Franzy

unwilling to

while

cated

Haynes Foundation,
Los Angeles, Calif.—Paper—25c.

slightly

somewhat

for

enbach—The

economic
wind
might blow
during the coming 12 months. The

of

Los Angeles

-—Philip Neff and Annette Weif-

to which way

the

opinion regarding the
business outlook (four of every 10
larger in units) was the smallest for
any of
1950 than in
early
1949. the annual
surveys
since early
to
purchase
newly
con¬
1946, but about the same as it was

bined—

early

hazard

Nearly half of those inter¬
thought times were good
tions to purchase existing homes. at present—about the same pro¬
portion as in July,1949, but some¬
Preliminary survey data justify what less than
gave that answer a
an
estimate of over one million
year earlier.
About two in every
consumers having "definite"
plans 10 considered
present conditions
to buy new houses in 1950.
Com¬
were unfavorable, and three in 10
pared with a year ago, a some¬ held
to a middle position or could
CALIF.— what stronger demand was evident not decide whether times were

Norseman

John L. Davis and Hamilton Barnett have announced the forma¬
of

10

their current financial situation to

Davis & Darnell,
Inv. Counsel Firm

tion

were

earlier.

year

'

slight

which Mclntyre,

and

figured prominently.

SAN

in

thought

good at
less favorable

were

surveys,
approximately twice as
(6) There continued to be a
currently through various govern¬ many units reported higher as re¬
sharp divergence between con¬
ment, private, and nonprofit or¬ ported
lower
current
earnings. sumer expectations for prices in
ganizations. <y
:/;;
However, it should be noted that general and for prices of automo¬
in these earlier periods increases biles and other
durable goods. Al¬
Conclusions
also occurred in prices and the
though only a third of the spend¬
(1) Consumer plans to purchase cost of living.
ing units were looking for prices
houses, automobiles, and other se¬
(3) In their own opinions, the in general to decline, more than
lected durable goods in 1950 ap¬
financial position of consumers in half were of the opinion that re¬
pear, on the whole, to be at least
early 1950 was similar to what it ductions would take place in the
equal in early 1950 to those ex¬
had been a year earlier. About as hard goods lines.
pressed at the beginning of 1949
many
currently said they wervS
and again in midsummer,
i
better off than in early 1949 as
(2) Personal income expecta¬
said they were worse off.
In the
tions for 1950 were
generally as two
surveys conducted at the be¬
optimistic as a year earlier de¬
ginning of 1950 and 1949, a higher
spite some increased frequency of
proportion of consumers reported
lower current

touched

CANADIAN STOCKS

1949

r

northward

zation

in

a

without

research can
be of maximum usefulness.
The survey information repre¬

the

Recent
developments both in
Russia and Canada,
moreover, have
shattered previous misconceptions
man

than

Financial Position of Consumers

varying two

under

conditions, together with

statistical

before

fertile

and

the

from

testing of results, will be needed

of the Canadian North

areas

could. be

derived

the

grounds

value

the present
further expe¬

-

repeated

surveys

careful

northern

vast

present, they

method¬

at

however,

economic

British

fishing

known

Considerable

rience,

agricultural production.

constitute

forest

of

The

the

and

extensive

are

Furthermore
of

the Great Slave Lake

time.

fuel

Within

district

valleys

Columbia

with

North West Territories. There

adequate

Shield

of

source

supplies.

power

areas

and

mineral

strategically situated oil re¬
that would provide a con¬

venient

research.

believed to be among the most

are

Mackenzie Valley pos¬

are

Valley

the

Laurentian

economic

consumers

times

are

ology and techniques being used

sources

lakes

Mackenzie

to

the

upper

designed to link Northern Alberta
the

economic

necessity of more intensive
development in the Far North.

the

which

gold
neighborhood

the

the

In

com¬

in

Great Slave Lake point to

northern

of

square-mile

and precious

indirectly connects Edmonton, Al¬
berta, with Fairbanks, Alaska, and
course

million

consumer
*

midsummer

f

of trans¬

means

world's

wealth

towards

are

mineral

have been exploited. Despite
fact Canada is already the

area

the

frigid Northland

roads

of

portation only the fringes of this

Peace

new

Pre-

world's

the

of every description. Ow¬

wilderness. The Alberta Highway

several

is

ing to the lack of

de¬

small

the establishment of lines of

munication

Shield

greatest

little

now

Lake and the base-metal and

Canada's
mark

Cambrian

wealth

is

Canadian

years

opening

a

There

that the

over¬

only a few
largely

was

growing belief that the
up
to
civilization
of

now

that

justify the utmost possible

leading producer of base
metals, but the pitch¬
blende deposits of the Great Bear

square

economic asset there

an

economic opportunities

fabulous

>

exception

has

of the im¬

pire of the North offers tremen¬
dous

the past

Bear

British

and

in the absence

Even

long recognized the value of her

over

the

and

Great

Many
while

units

following

in

current

highlights in 1951 as reported such intentions
conditions
were
worse
than
in
from the Fifth Annual
Survey of for 1959. Purchase plans for 1951
early 1949 while two in 10 thought
Consumer Finances sponsored by were more
frequently uncertain
they were better and three in 10
the
Board of Governors of the than those pertaining to
1950, re¬ believed that
general conditions
Federal Reserve System and con¬ flecting in part at least the re¬
were about the same.
In mid-July,
ducted
by the Survey Research moteness of the time period.
1949, in answer to a similar ques¬
Center at the University of Mich¬
(2)
Considerably
more
than
tion, only one in 10 believed times
igan.
twice as many consumers intended
were better and six in 10
thought
These preliminary findings are buying television sets during 1950
they
were
worse.
The
entre¬
based
on
simplified
tabulations as reported similar intentions for
preneurial group—farm operators
from
approximately 3,000 inter¬ 1949. Buying plans for other se¬ and
self-employed persons — had
views made during January and lected durable goods (furniture,
the largest proportion of units that
February in 66' sampling areas refrigerators, and other large ap¬
believed times were less favorable
throughout the country, including pliances) were not very different
in early 1950 than a year earlier.
the 12 largest metropolitan areas. from those expressed in
early 1949,
(4) Somewhat more than half of
Consumers were queried regard¬ with some showing small increases
all employees thought it would be
ing their opinions about their own and others showing no change or
difficult, if not impossible, to get
financial positions at the begin¬ small decreases.
another job paying about the same
ning of 1950, and on economic
(3) Preliminary data on con¬ amount
of money if, for any rea¬
matters
in
general.
They were sumer intentions to buy new au¬
son,
they were to lose the job
asked also about their plans to buy tomobiles in 1950 indicate no sub¬
which they had at the beginning
houses,
automobiles,
and
other stantial change in number of units of
the year. About two in every
major durable goods during 1950. from 1949, a year of record sales.
10 felt absolutely certain that
they
Jn
sponsoring the Survey of There is also some preliminary
could get a job with equal pay,
Consumer Finances, the Board of evidence that middle and low in¬
but a slightly
larger proportion
Governors emphasizes the experi¬ come consumers comprise a larger
were equally certain it would
be
mental nature of this relatively part of the prospective demand
impossible
to
get
another
job
new
development in the field of in 1950.

Columbia.

extensive Arctic territories and in¬

development

the

The

with the existing rail¬

areas

roads

Valley,

and

(3)
that

demand for

Alaska,

linking

system

Strong

of

from

the beginning of 1950.

to

lower-priced
Generally lower prices expected.

houses noted.
growing realization of the
vulnerability to military attack of
the Territory of Alaska empha¬

of Reserve Board reveals nation's

plan to buy houses, automobiles, and other selected

consumers

By WILLIAM J. McKAY
railroad

change

conditions

Canadian Securities
The

little

was

evaluations

Tax

1,

111.—Cloth—$5.00.

Institute

liographical

cent Literature

of

Public

Bookshelf

Classification
on

—

of

Bib¬

Re¬

Various Phases

Finance—Tax

Institute,
Street,
New
York 7, N. Y.—Paper.
Inc.,

150

Nassau

jfcft&f,VWUSifiSSS WWJffl.WKlJWot iHWttAcWfttfMWitiWvtawtyW WW

Volume

wtHWv'M

THE

Number 4898

171

COMMERCIAL

&

,

Belter

Frank D. Newbury points out

and

forecasting

Is

to better business in the
a study just
Controllership
Foundation,

according to

future,

completed

in which successful,

ways

>

by
>'

Inc.,

\

research
the

of

arm

industrial management in the
direction of more and better planning, analysis
and control
of

operations of which the
chief financial officer is logically
the initiating and administrative
company

The quality: of planning
improve as the quality, of

center.

Controllers

will

forecasting

of

is

improved

and

—

America, New
York,
and

forecasting will improve in some
proportion to the number of pro-

based

gressive

on

an

companies

that

take

;

it

-V

analysis of the

UP"

forecasting
methods of 38

The Foundation's report, * entitled "Business Forecasting," ineludes detailed case histories on

selected

the

practices

and

tions in a variety of fields. dius

the

dustry

of

results

the 38 studied corporations in reSard to the kinds of forecasting
Frank D. undertaken;
whether
external

survey,

in

research

-the

President

by

body

-Newbury, former

Vice-

director,

forecasting is done by each corn-

pany's;:Own staff or by outside
Company, service;
to whom reports are

economist

and

em-

prepared for

report

a

Westinghouse, Electric

help's

declares'""It

stabilize

renort

production ' and
by
ironing out

employment
seasonal

variations

sales.

of

Sat-

isfactory control of inventories of
raw materials, of work-in-process
and of finished

goods is dependent

satisfactory

upon

future

sales,

raw

of
and

forecasts

materials

parts requirements, as well as of
raw
material
and
parts prices,
Successful

planning of long-term

construction

and of the

programs

corresponding

capital

new

re-

quirements depends on reasonably
accurate
long-term
forecasting,
which
also
makes
possible the
selection
of

of

a

for

output

good normal level

applying

in

use

market

products."
Controllers
Institute members supervised the
panel

project from first start to final
manuscript-A. A. Buzzi, Assistant
Controller,
New

York;

Controller,
Ontiral

Shell

Oil

Company,

S.

Edmond
Bausch

&

LaRose,
Lomb
W

Rnrhp<;tpr*

Cn

c

Marks, Controller, General Foods
Corp., New York; Allen Ottman,
and
* dirppfnr

Virp-Prpsidpnt

Hard

American

Rubber,

New

York; Keith Powlison, Vice-President and Controller, , Armstrong
Cork Co., Lancaster, Pa.,

and H. H.
Scaff,
Vice-President,
E b a s c o
Services, Inc., New York.
The Need for Forecasting

casting

varies

and

industry

irom

from

y

1

company

man

as a

essary

company

in degree

ganized

the

most

ager

of

casualty

to

<

>

v

•

the

other hand,

bia

general supervision of the
company's investment functions.
He is a director, and member of

v

?

much

comprehensive,

so

stable than

more

of business

activity that

are

Four

"■'<

LONG

^

.

„

the

based

fmdings show, is more necessary

■

,

related

customers or
urged
to send

Morgan & Co. Inc., Chair¬
this
year's publication
to John A. Straley,

or

editor..

Working with Mr. McElroy and
Straley to turn out the 1950

Mr.
„

Bawl Street Journal are L. Walter

Dempsey, B. J. Van Ingen & Co.,
Inc.; Ji Raymond Smith, Weeden
&
Co., Inc.; Edwin H. Herzog,
Lazard Freres & Co.; F. Kenneth
Stephenson,
Goldman,
Sachs &

'

V

n;;

••

.,'4", t

; •

.

.

Co.;

214s IN DEMAND

an<* P*ans that will lead to gov-

Walt Thomas of Horn-

u. s.

TREASURY

the most distant eligible at currently prevail¬

should give
bought. V

★

★

★

The l%s of 1954 at present levels do

1960/65s

,

and

blower & Weeks.

are

4

bills

certificates
notes
bonds

still being very well bought.

"ess situation: (1) the forward
looking plans of private business

production
stabilized
by transferring the

1952
1967/72.

not appear to be en¬
tirely unattractive to many of the commercial banks, because
some fairly sizable blocks of this issue have been taken out of
the market by these institutions.
In a not dissimilar way the
iy2s of 1955 have also been moving into strong hands, although
there are at this time quite a few holders of the V/2s that
appear to be willing to take their funds out of this obligation,
while it is at a slight premium.
There has been switching in
the partials, with the 2%s favored by some, although the

„

...

,.

firms,
are

of

sophisticated large money center deposit institutions have not

;

affGct the total busi.,

'

ing quotations, the feeling seems to be that if prices
some ground, larger amounts of this bond would be

r

which seasonal
cyclical
fluctuations
are
violent, while even the smallest
manufacturing companies find it
desirable if there is a seasonal

who

Hugh W. Long & Co., now cele¬
brating
his
twentieth
year
as

and December 1967/72 have over the longest

volved in purchasing

or con-

sideration to four closely

men

about them¬

at

exactly been spectators as far as the 2V2S of September 1967/72 are
concerned.
While it is no doubt realized there is price risk in¬

conditions should give con-

fac^ors

P.

committee,

September 214s of 1967/72 have plenty of takers when
they come into the market and as a result of this the price action
of this obligation has been better than the market action of all the
other long-term bonds.
The smaller commercial banks continue
to be the leading buyers of the longest-term eligible issue but even

adequate forecast.of general business

J.

man

The

According to Mr. Newbury, an

increases in

con¬

"news" items, advertising or car¬
toon ideas to David B. McElroy at

This is in spite of the favorable price spread which

bank obligation.

Factors

Important

editorial

bond

and

selves, their
competitors

?

There has been some swopping from the September 1967/72s
into the longest tap issues, but not in sizable volume.
It is not.

the 214s of June

it is

perishable goods."

or

the Bond

of

has issued its an¬

wish to write, in fun,

place of the 2J/2S

those who believe the

feature

invitation for

Bankers

number of money mar¬

being switched for the 214s of June and December

the Vies.

»X,,S'*5, K£

—"
durable

are

a

Journal, which

1950 appearance on

its

as

tributions.

1959/62 be¬

easy to get holders of the most distant eligible obligation to
part with their small amounts of this bond in order to take on

measures

manufacturing, mining

l

>

so

ac¬

measure

is

nual

for contiderable

tory bonds. " Also the 214s that become bank-eligible in

production in money
umts it includes the effects of
tivity

there

2

Club Field Day,

1959/62s should be sold and the proceeds invested in the Vic¬
are

the

Invites Contributions
The Bawl Street

ideas about both sides of this obligation.

other side

the

of

Heart Association.

Bawl Street Journal

eligible in 1952, has brought buyers into both of these issues with
the Junes apparently the most favored obligation for the eligibil¬
ity buyings.
on

Committee

Finance

the

New York

1956/59, because of the difference in the price spread between
these two securities.- Also the fact that the 1959/62s are bank-

Then

of

Co.

ent has

activity, probably

This activity has been mainly in the 2V4S of

it appears as though there are a large

;

Trust

States

New York since 1928 and at pres¬

of

™res

yeM-toryegr,price changes. of
Because this

shown much

Some believe this issue should now be bought in

industries. Because GNP

service

United

June

less than the shorts, but sizable enough to account

/ :

Ltd.

has been associated

Mr. Martin

with

there are others that are

Intermediate maturities have

r

Palatine

The

Co.;

ish General Insurance Co.,

J

ket followers that have

In¬

Fire

Co., Ltd.; Union Assur¬
Society, Ltd.; and The Brit¬

will make

cause

Union

Co. of New York; Colum¬

Casualty

ance

at

MARKET ACTIVITY

volume.

Martin

Insurance

possible for many owners of gov¬
which could

been, made

J.

Augustus

the

com¬

Commercial

surance

higher levels of prices.. The
be divided into about four segments, the shorts,

have

a n-

panies: Commercial Union Assur¬
ance
Co., Ltd.; The Ocean Acci¬
dent and Guarantee Corp., Ltd.;

selling the
near maturity bonds and are putting the proceeds into bills
and certificates.
It seems as though the uncertainty which is
overhanging the money markets has resulted in considerable
activity in the near-term securities.
It is quite evident that
nearly everyone who is interested in governments wants to be
in a good position to take advantage of any changes which may
come soon in the financing policy of the monetary authorities,

"i

inclusive

one-third of the labor force,

to

of decentralization. Orforecasting, the survey

M

its compensating

had

has

S.-

United

States

The

trend

and

Jones,

yields and maturities are going from bills and certificates
1950/52s, the 1951/53s, and the 1952/54s.
; ; ;

On

fjnte it omits farming, construetlon .^bor on the site, and all the

the report points out—
practice becoming more nec¬

size, in variety of products, in the
number of marketing channels or

panies,

into the

^

company,

the

not

seems

certain

cruized economic relationships.,
Pointing, out that forecasting
should be based on total business
measures, as compared with partial or isolated factors, the author
Products

on

ust
iff SXSSS&SZ

price

the

com¬

Laurence

longs, the eligibles and the taps, when it comes to these ex¬
change operations. ■ The eligible shorts are being moved about, al¬
most like checkers. Mn some instances, those that are looking for

For those who wish, to know
about the tools of general
business forecasting, the report
mcludes an explanation based on
Mr. Newbury's own experience,
which he prefaces with the observation that forecasting is not
an exact science save to the extent that it can be based on gen-

Peasure of business activity, "It
mcludes the production of the en}ire. labor force,
he explains,
~in. farming, m manufacturing
an<* in the service industries and
occupations. By contrast, the Federal Reserve Board Index of Industnal Production covers less

of

pricing

fire

m°re

to

advisory

declining

Man¬

of

ager

the

forecasts and budgets, etc.

(GNP), , as

logical

would

and

the latter is based, and whether it
js used as a basis for financial

standard costs to cost control and

An

The

United

ler,

States

ernment securities to consummate switches and swops

the sales forecast; how

approves

compan ies
according to
Harry W. Mil¬

moderately with the Zy2s of September 1967/72 still

features because it has made it

made; the primary function of the
starting point of intelligent busi- research staff; the field of reness planning, and is essential to
search activity — economic, cornsuccessful budgeting and control mercial or financial; the method
of expenses, costs and profits,
.
preferred by the company; the
"Successful forecasting obviously status of general business forereduces
the
area
of
avoidable casts; the extent of outside servrisks connected with every busiice5 who initiates, reviews and
the

insurance

good performance.

securities.

emphasize that forecasting is the

ness"

Group of fire
casualty

Although the market continues to be on the defensive, business
a
whole has not been unfavorable for operators in Treasury

as

«'■ nl^t

and

GOOD BUSINESS FOR DEALERS

the

of

a

'•

Commercial

2Hs'of June and December 1967/72 continue to hold
the spotlight, despite fairly sizable selling in the other 2y2%
tap issues.
The 214s due 1959/62 give ground grudgingly,
indicating the buying is of good quality. The long bank issues
giving

,

Union-Ocean

The

declined

1

the

in

panies

issues. The beginning of deficit financing through in¬
offerings of Treasury bills Is according to expectations."

creased

tables revealing the practices of

of

director

Nonetheless, the greater part of the price decline is believed to be
over and
sizable scale buying is appearing in many of the de¬
pressed

1

York, has been elected a
of
the following com¬

of New

Uncertainty still hangs heavy over the government market,
prices of long Treasuries continue to" decline in an orderly
way.
The authorities and life insurance companies have jointly
been supplying the pressure that is keeping the market on the de¬
fensive. Pressure by the money authorities is not likely to abate
very much as long as economic conditions and inflation psychology
are as strong as they are now and. are likely to be for some time
yet. Liquidation of long-term obligations by the Central Banks
now will put them in a good position to buy back these and other
issues in the future if unfavorable conditions should develop.

business

The

cross-

section

Newbury

!

,

.

in-

a

wide

bodied

Governments

on

and

forecasting methods
of
small
single-unit companies,
complex single operating unit cor¬
porations and multi-unit corpora-

cor¬

porations in

D.

Reporter

^

,

can

Institute

F.

Our

f

By JOHN T. CHIPPENDALE, JR.

Cites four forecasting elements.

employment.

business

Better
the key

various

n

Augustus J. Martin, Vice-Presi¬
dent of United States Trust Co.

reduce avoidable risks, and stabilize production 4"

can

I

Martin Director

A. J.

Forecasting the Key to Good Business,

forecasting

23

(1531)

CHRONICLE

FINANCIAL

in

companies

in

and

factor

in sales, and if

and employment can be
over

the year

fluctuations in sales from produc-

finished goods inventory.
"The
need for business fore-

tion

to

casting arises from many specific
situations in which an appraisal
of the future
an

informed

is necessary before
decision

can

be

"Organized forecasting is a part of

made,"
that

the renort declares.

broad

movement

in Ameri-




that result in private investment

McCurdy Pres. of

Spen(jing; (2) government policies
7

.

,■

,

.

ernment spending of an investment nature; (3) current consumer
deman(j an(t

expenditure for both
,

.

,

investment goods and consumption goods and services, and (4)
the

money

and credit and govern-

ment fiscal
,

conditions that affect

PVPrntinn

ftf investment

clans

the executl0n °* investment plans
a"d that make consumer demand
effective.

Thayer, Baker & Go,

w

-

Stanley Heller Co.
ARO Exposition
Stanley Heller

PHILADELPHIA, PA.—Thayer,

Commercial Trust
Building, announce the retirement
of Albert R. Thayer, one of the
firm's founders, as President and
Baker

the

&

Co.,

election

of

Wallace

Mc¬

M.

Curdy, formerly Executive

Vice-

President, as President.
Mr.

Thayer

will

continue

his

association with Thayer, Baker &
Co.

as

a

registered representative.

&

Co., 30

Pine

Street, New York City, members
of the New York Stock Exchange,
will have an exhibit of the prod¬
ucts

manufactured

by

the

Aro

Equipment Corp. to be held April
19

and

20

at

87

the Main Banking

Wall

Street on

held in Wall Street.

-

& Co.
incorporated

15 Broad St., New York 5,

N. Y.

Telephone WHitehall 3-1200

Floor. This ex¬

hibit is the first of its kind to

Aubrey G. Lanston

be
'

Teletype N. Y. 1-3690

,1

24

(1532)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

of Transport Economics and

reau

Statistics
about
hour

ICC

in

had

this

,

miles

ton

gross

to

cial interest should in all-instances
be

say

train

per

its

August, 1949, edition
'Monthly
Comment
on
Transportation Statistics': 'Gross
miles

ton
!

for

Federal

taxes)

of

the

miles per

major carriers. It has also been
pointed out that the relative ef¬

vide

ficiency of the individual carriers
may
change over a period
of
years, influenced by the type of
traffic, the nature of the business,
terrain

which

over

as

able

train hour figures pro¬
good a basis as is avail¬

for

and train

GROSS TON

is

handled.

The

combine both the train load

ures

operates,
status of motive power, etc.

traffic

ton mile per train hour fig¬

gross

it

the

Railroads

figures
and

miles

ton

gross

hour

for

as

various

of

speed factors.

MILES

PER

We

have

1947,

also

tabulated

1949

TRAIN

as

well as

32,808

38,462

35,741

.47,643

23,100
30,044
27,186

Atchison, Topeka & Santa Fe
Atlantic

Coast

Line-

Baltimore & Ohio—

—

27,428

27,769

31,785

32,933
35,105
30,078
53,546
48,377

Boston & Maine

:

Central of Georgia.

54,855
1

present

——————

—

—

'

Kansas City Southern^

—

Lehigh Valley—„i—
Louisville & Nashville—

-

_

Missouri-Kansas & Texas—
Missouri Pacific
New

York

-

.

—

Central—*.-

_

_

N. Y., Chicago & St. Louis—
N. Y., New Haven & Hartford-

Norfolk & Western—
Northern Pacific

Pennsylvania

Reading

—

——^

—

St.

Louis-San

St.

Louis

Francisco—

South

Seaboard

Western_i__„

Air Line

Southern Pacific

*

The

Pacific

Wabash

—

_

Western Maryland——
Western Pacific

29.20

be the

20.79

If

8.81

36,291
37,064
30 000

waiver.

a

36.33

7.77

27.76

V

55,616

51.93

48,840

loss

a

is

donor, should

in the

of prop¬

case

34,474

34,645

37,054

24.47

31,879

33,772

34,825

17.48

38,767

40,915

54,576

53,257

42,034

37,848

43,972
40,606

55,205

55.973

35,229

>

52,046

are

closely

because

related,

the

the

45.44

18.00

2.83

43.18

15.26

22.37

7.54

43,561

22.84

57,076

59.81

43,705

44,056

47.18

54,785
52,536

63,641

62,516
59,598
30,756
40,221

49.11

26.33

'*

to

adjacent

service

48,696
63,490

in

areas

43,344

43,645
38,217
35,314
36,432
45,208

36,882
34,974
33,139

45,653
33,234
41,584
27,912

-

11.23
23.22

14.43'

14.79

1.22

37.39

2.73

15.83

9.67
31.35

30,575

54,392'

Previous years unavailable.

46.90

45,395

38.63

substituted.

Carry-over, carry-back and
privileges should be

de¬

43.68

been

a

were

:

more

successor

corporations.

46,088

26.74

Utility Securities

the

Hudson

because

Kingston, and
The company's

Valley.

:

high

costs,

but

operations

in

1949

advent

very

stock:
% of Rev.

Percentage

Com.

E'ec.

Gas

Com.Stk.

1949

84

__

1948

82

1947

81

1946__;_

4.72

94

•

81

Mkt.

Rate

1 %

Price-

%

Earns.

Avge.

Divid.

Price

Payout

■

Yield

520

8

13

6.3

80

52

8

14

6.8

99 ;

52

9

59

7

Ratio

650

52

11

20

•

16

t

5.7

94

r

'

26.67

29.03

28.88

5.03

8

94

•;

/

*

1945____

81

94

7

1944

81

93

8

49

48

>

4.5?

'
.

88

48

11

22

4.5

99

43

:

8

17

5.7

99
100

,

1943____

American

of

Accountants-suggests

tax laws and for better

Twenty-eight recommendations
designed to correct inequities in
the

tax

laws

and

surance

provide

better

is

becoming

cerned

purposes

nual

"The accounting profession
:

increasingly

con¬

with variations
between
were rules imposed
upon taxpayers for
submitted to the House
Ways and the determination of taxable in¬
Means Committee on
April 4 by come and principles
developed by
the Committee on Federal Taxathe
accounting profession for the
tion of the American Institute of
business
community,
in
many
Accountants, national professional cases with the
cooperation and ap¬
society
of
certified, public
ac¬ proval (and sometimes under
the
countants.

,

mandate)

of

Federal

and
.

money

he

puts

all

of

immediately into the

the
new

home.
out

that

most

of

the

recommendations would have little
effect on the
revenues, the com¬
mittee
urged
consideration
and
action at the
present session of

Congress.
In

submitting the

tions,

Mark

E.

recommenda¬

Richardson

of

Washington, Committee Chairman,
and

-Thomas

J.

Green

York, Chairman
mittee

on

of

New

.

deductions, have

little
cance

long-range revenue signifi¬
directly, but they impose an

enormous

Pointing

nity and

burden

on

must
are

be,

on

the

68

68

8

12

8.5

12

72

68

7

9

10.2

94

194U___

74

; 93

12

77

,71

10

12

7.5

93

such

heavy,

so

'overhead'

as

"fiscal

73

91

14

87

80

15

17

5.4

year"

wastes

on-

102, which levies

The principle of
non-recognition

a

surtax

1950-52

further

equity

debentures

92

r

income.

finance

to

financing
converted

are

construction,
except

into

the

as

■

■'V

"

'

v:

'

■„

.

does

and
$6

not

million

financing
plan

1952,

are

yf

follows:

as

Dec. 31, 1952

undistributed

corporate prof¬
its, should be liberalized and re¬

Without
Dec. 31. 1949

vised to grant the taxpayer addi¬
tional alternatives.
■

any

convertible

stock. The present capital

common

structure, and the estimated projection for

development costs.

Sec.

of

The company expects to do bond and preferred stock

during

The taxpayer should be given a
wider option in treating research
and

reservation

'

an¬

accounting periods consisting

Mortgage Bonds end Notes

Conversion

35%

.___

.

With-Full
•/

Conversion

50%

50%

-

Convertible Debentures

The basis of property should not

Preferred

be reduced by excessive deprecia¬
tion that resulted in no tax benefit.

Stock

Common Stock

13

-—

20

__—

9
•

19

;

32

Equity____—__.

19

22

™

—

31

•••.*.

vl.
:

:

Deductions for unpaid expenses
1

and interest by a

taxpayer

on

Total

an

100%

__

100%:

100%

accrual basis should be allowed to
a

related taxpayer

if

consented

such

related

to

on a

be

taxpayer

The

cash basis

reported
on

by

con¬

a

sent basis.

to

LIFO

use

have the

inventory

right

retroac¬

reduction.
a

the

6%

in

its

Assuming

5%

return

per

Bad
an

ness

debts arising in the course
individual taxpayer's busi¬

or

representing loans

or

ad¬

"

a

1951

gas

to

return

4%

a

plant,

return

after

an

the

on

11%

rate

6% rate of return from electric operations

from gas in

both

on

have

service

company

1952, and with full conversion of

expects

outstanding 2,100,000 shares of

Bad Debts

of.

expects in
natural

debentures, the

then

tively to Jan. 1, 1941.

company

investment

and

Retailers should

recommenda¬

tions submitted by the committee
are the
following:

-'After

,

it

of vital concern."

Among the other

of

weeks instead of months (e.g.,
13 four-week periods, etc.). .
;

commu¬

the Treasury in time,
irritation.
With

manpower,
and
the tax burden

definition

of the Sub-com¬ of gains on
involuntary conver¬ vances to business
organizations in
Current Tax Legislation, sions
should also cover replace- which
the taxpayer has a finan-




11

92

of

State

,
One of the glaring inequities
governmental agencies
v Con¬
cited by the committee is the
pro¬ troversies on
accounting matters,
vision that an individual who
sells so
frequently concerned merely
his home to buy another must
pay with the fiscal period for
recogni¬
a
capital gains tax on the sale, tion of income
or

though

anticipation of in¬

condemnation receipts.

should be extended to include

accounting for tax

wrote:

The

for

corrections

accounting for tax purposes

even

or

92

75

1940

Institute

inequities in

ments made in

76

1942____

CPA's Recommend Important Tax Reforms

.

55

.

6

112

Avge.

Divid.

53

7

110

Com.

Shaie

•Earns.

Oper. Ratios Avail, for

15.67

21.18

River

of natural gas later this year
helpful. The following ratios picture the Com¬
pany's history over the past decade, with reference to the common

16.36

37.33

Electric Corp.

N

of

the

and

22.09
>

Gas &

with gas.

normal

will prove

10.83

44.28

37.25

i

not

problem

13.13

42,539 '^ 48,954
58,085
59,062
45,094
47,116*
\ 39,450
31,424
55,710
57,127

in tended to

ex¬

.

—0.57

37,599

is

area

14.46

34,077

-

to

Company's revenues in 1949 were 82% electric and 18%
gas, with a small amount for steam heating. The gas business has

2.34

37,930

44,920

51,063
44,994

cor¬

$25,000

The

6.25

29,577

42,070

from

important for manufacturing activity, but
industrial customers include
North
American
Cement, Inter-;
national Business Machines, Alpha Portland
Cement, Schatz Manufacturing, New York Trap Rock, DeLaval Separator, Firth Carpet,
DuPont, etc.
;'•
' /;' '' •
I.■.'£;
.•
>

3.24

26.50

>

served

are

This

t

-

43,090

35,563

provision for

income

267,000, and about half that

9.83

35,794

•

porate

begins about 40 miles from New York and expends

area

number

■

12.86

44,526

63,118

;

10.54

36.07

50,276
36,186
62,718

32,601

13.13
32.52

41,361

49,922

31,621

3.67
17.47

v

45.389
'

be eliminated.

"notch"

miles along the Hudson to within about 10 miles of
Albany;
the strip is about 25-40 miles east and west from the river.
Population served with electricity is»about

13.44

38,928

inter-corporate divi¬

I 85

14.11

43,429
' 38,475

on

Central Hudson Gas & Electric supplies
gas and electricity to
the cities of Poughkeepsie,
Newburgh, Beacon and

2.09

38,886

The

parties duction

Central Hudson

—2.67

43,861

52,182

The tax

dends should

By OWEN ELY

10.26

63.22

-

" 54,855

28,845

a

price

Public

9 24

48,586

28,003
36,387
40,216

credit to individual

a

recipients of dividends.

v

7.46

-

,

43,154 *

41;925
47,175
27,185
30,350
33,356
37,184
40,80128,605
54,638
32,408
39,290
27,251
25,820 V
32,745 k

of corporate in¬
alleviated by the

be

26 53

42,019

'

taxation

should

$50,000 should be eliminated and a
gift. straight graduated scale to $50,000

the sale of property

on

disallowed

10.27;

66.36 >

-

Dual
come

allowance of

of property acquired

same as

1.94

-

37,378

42,760

payer.

1.63

1.39

34,230

;

the computation of net
operating
loss to deduction of losses on dis¬
posal of assets used in a trade or
business by a
non-corporate tax¬

6.61

29,528

31,144
44,326

—

*1941.

gives

basis

Recognition should be given in

the

remove

11.69

54,719

to

refund

a

> 52,57

35,667
43,006
38,882

——

for

is the lesser.

ever

by gift, but subjected to estate tax

9.26

36.94

23,619

—

—

45.64

62.24

36,364

————————

—

Union

52,053
29,846

39,089

37,107

options,

prop¬

waiver is involved

in the estate of the

10.09

."54,317

26,168

—

Southern Railway
Texas & Pacific

29.12

37,150

*35,715
29,934

—

time
a

viously made the subject of

44,036

y\

of employees' stock

case

erty of the employee, at the time
he exercises the
right, or at the
time he sells the option—which¬

Internal

inequity against the tax¬

payer who

1947-1949

29,642
28,131
32,628
37,264
28,359
45,742
35,462

Denver & Rio Grande Western—

Illinois Central

35,600

193.9-1949

29,770

'

Northern—

34,996

33,479
22,468

Chicago, Rock Island & Pacific

Great

44.290

28,545

"

Delaware, Lackawanna & Western

Gulf, Mobile & Ohio__.———

54,555

,

32,145

Delaware & Hudmn

Erie

29,529

of

when

should be clarified to

per¬

42,343

;

usedi

erty passing by death and not pre¬
1949

39,905
49,126

34,393

*

23,489

Chesapeake & Ohio——Chicago, Burlington & Quincy
Chicago & Eastern Illinois
Chicago Great Western-———.—
Chicago, Indianapolis & Louisville
Chicago, Milwaukee. St. Paul & Pacific
Chicago & North Western——

1948

the

purchase

/

,

provisions of the

claim

Tncreas"1947

be

not

or

extension

I

HOUR

1939

.

should

basis for taxing gain.

a

basis.

,

1947 and 1949."

•

Class I Railroads—

sale

Employees' Stock Options

*

In

income

on

deficiencies and refunds.
The provision with respect

1949.

the

levy tax

on an actuarial

should be amended to provide for
consistent treatment between such

the

and

1948

as

credit

Revenue Code with respect to in¬
terest on deficiencies and refunds

centage increase between 1939 and

The Bu¬

FREIGHT

1939,

years

to allow

stockholder-employees.
The

per

Class

and

1 Partners

ascertaining quickly the
efficiency
with
which larger individual railroads for the

relative

freight

train

a

later

taxing annuities /

be revived

cost

computed

.

present

income

such

bad

compensation
income, if any, should be limited
individual proprie¬ to the
spread between the option
tors should have the same partici¬
price and market value at the time
pation privileges in pension plans the option
right becomes the

train hour is fre¬
referred to as the best
per

In connection
with
the
widely recognized, and has
great
consistently been stressed in this importance of the efficiency factor
in the analysis of railroad securi¬
column, that the answer to the
combines the speed factor with
level of earnings of the individual ties there were some interesting
the total weight of the train be¬
railroad carrier lies to a large figures contained in a recent bul¬
hind the locomotive and tender
extent in the degree of operating letin released by
Goodbody & Co., and reflects the
average perform¬
efficiency. We have from time to New York City, on gross ton miles
ance for each hour of train
oper¬
time
run
comparisons
of
the per freight train hour. In the in¬
ation.'
transportation ratios and profit troductory statement to the tabu¬
margins (per cent of gross carried lation they said, in part:
"In the tabulation below we
to
net
operating income " before
"In our opinion, the gross ton
.

business

as

,

The method of
should

quently
single measure of railway freight
transportation efficiency since it

It is

recognized

debts.

the

of

Thursday, April 13, 1950

electricity and

to

earn

common

gas,

about
stock.

it might

900

on

the

Assuming

earn

a

about 95£

share.
The stock is

Acker

currently selling at 103A to yield 4.85%. President

recently stated that

an

be considered

later this year

anticipated.

•

•

increase in the dividend rate would

if earnings continue to improve

as

Volume

171

Number 4898

THE

COMMERCIAL

&

Central States

Murray Hansen, Washington, D. C., General
Counsel

for

the

I.B.A.

D.C.;

Reissner, Indianapolis Bond & Share Corp.,

Joseph T. Johnson, Milwaukee Co., Milwaukee; J,
Alfred S. Wiltberger, Blyih & Co., Inc.
'■

Indianapolis, Ind.

John L.

Kenower, Miller, Kenower & Co., Detroit;
Olderman, Olderman, Asheck & Co., Cleveland

DeWitt Davis,

Welsh, Davis & Co.




Group of I. B. A,

Bank, Washington, D. C.; Dr. Edwin G. Nourse,
Washington, D. C.; Mayburn F. Landgraf, Indianapolis Bond & Share Corp.,
Indianapolis; Hempstead Washburne, Harris, Hall & Co.

•

Russell J.

CHRONICLE

Louis Mudge, International

George L. Martin, International Bank, Washington,
Frank L.

FINANCIAL

Arthur E.

r

'

.

'

\

1

'

'

.i

i

k

'

Farrell, H. M. Byllesby & Co., Inc.; James Day,

George W. Davis, Davis, Skaggs & Co.,
San Francisco

Albert T. Armitage, Coffin & Burr, Inc., Boston, Mass.,

President of the I.B.A.;

julien H. Collins, Julien Collins

& Co., a former President of the

Robert L. Holt,

President of the Midwest Stock Exchange

Graduating Class of Eighth Training Course in Investment Banking offered by the
Central States Group

I.B.A.

Blair, Rollins & Co.; William D. Kerr,
Bacon, Whipple & Co.

Charles R. Perrigo, Hornblower & Weeks

26

(1534)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 13, 1950

Holds Fourteenth Annual Conference

Hi
m

I

'

i

■■zy/'-A'

Phillip Collins, Hemphill, Noyes, Graham.
Parsons & Co.

Hempstead Washburne, Harris, Hall & Co., Chairman of the Central States
Group
Conference; Dr. Edwin G. Nourse, Washington, D. C.

Pat

G. Morris, Northern Trust
Company
Harry R. Greenway, Central Republic Co., Omaha, Neb.

Gilbert H. Osgood, Blunt Ellis &
Simmons;
L. Osgood, Boston
Fund, Boston, Mass.

Robert

Emmett

F.

Connely, American Securities

Corp., New York City




Albert T.

Frank

Osborn Elliot, Harris, Hall

Lore W.

& Company;
Alford, Harris, Hall & Company

Blair A. Phillips, Sr., The
White-Phillips Co., Iric.,
Davenport, Iowa; Albert T. Armitage, Coffin & Burr, Inc.,
Boston, President of the I.B.A.

W.

S.

Sanford C. Miller, A. C. Allyn & Company,
Inc.

Gilbreath, Jr., First of Michigan Corp., Detroit;
E.

Cummings Parker, Glore, Forgan & Co.

George S. Channer,

Armitage, Coffin & Burr, Inc., Boston, President of the I.B.A.;
Mayo Adams Shattuck, Boston

Jr. Channer Securities Company;
Hale V. Sattley, H. V. Sattley &
Co., Detroit

Robert L.

John, Woodard-Elwood Co.,

Minneapolis

Volume

Number

171

THE

4898

COMMERCIAL

At Drake

&

FINANCIAL

(1535)

CHRONICLE

27

Hotel, Chicago

/(»«»>;*«,

John F. Bolger,

Shillinglaw, Bolger & Co.

Robert P. Walker, Eastman, Dillon & Co., Chicago; Charles Frye, Chicago Journal of

Dr. Edwin G. Nourse, Washington, D. C.

Commerce; Wm. J. Lawlor, Jr., Hornblower & Weeks

■K?

Wm

W-'.-

h

A

fc..
life,

I
,

Clark, Dodge & Co.,
City

York

John S. Loomis, The

Illinois Company




P. Frye,

Charles Frye,

Vance, Sanders & Company

New

v,'y.

Newton

Mayo Adams Shattuck, Boston, Mass.; Mark L. Baxter,

William M. Rex,

;

Wm. J. Sennott,

Central Republic Company;

Chicago Journal of Commerce

George G. Harrison, Harrison & Austin, Inc., South Bend,
Ind.; Hubert S. Conover, F. S. Yantis & Co.

Jr., Shields & Company; Donald B. Sherwood, Stifel, Nicolaus & Co.;
Fuller & Co.; Harry L. Nelson, Blyth & Co., Inc.

Jerome F. Marquardt, Wm. A.

Jack

R.

Dempsey, Dempsey & Company;
John G.

James V. Sullivan, Reynolds & Co.;

White, Reynolds & Co.

Robert Mason,
Merrill Lynch, Pierce, Fenner & Beane

Ralph S. Longstaff, Rogers & Tracy, Inc.,
Chicago
-

28

(1536)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 13, 1950

*

March

Hempstead Washburne,

Manning E. Handler, Stern Bros. & Co., Omaha, Neb.; Gordon B. Duval, Guaranty
Trust Company, New York City; C. W. Laing, John Nuveen & Co., Chicago;
Pat G. Morris, Northern Trust
Company

Harris, Hall & Company, Chairman of the
Central States Group Conference

*'

'

'

'

4

'

•

Paul A.

Television Shares

Just,
Management Co.

'

Sampson Rogers, Jr., McMaster Hutchinson
Co.; Donald E. Nichols, Ames, Emerich
&

Co., Inc.




"

}

i

r

.

.'

•

'

Arthur C. Sacco, Detmer & Co.

Paul

William C. Gibson, W. C. Gibson & Co.,
Chicago; Henry D. MacFarlarie, First
Securities Company of Chicago

>

Clarence F. Davis, First Cleveland Corp., Cleveland; Walter C. Cleave,
Blyth & Co.,
Inc.; Dana F. Baxter, Hayden, Miller & Co., Cleveland

Edgar A. Peck, W. C. Gibson & Co.

&

29th-30th, 19S0

Rowland H. Murray, Ketcham & Nongard

Shroeder, Merrill Lynch, Pierce, Fenner & Beane; Robert Hunaker, Merrill
Lynch, Pierce, Fenner & Beane; Robert L. Myers, Coffin & Burr, Inc., Chicago

■

.

r

.

f.

.

•

David J. Harris, Sills, Fairman & Harris,
Inc.; Lee Ostrander, Wm. Blair & Co.

Cecil O.

Condit, F. S. Yantis & Co.

Charles W. Ritter and Andrew M. Baird,
A. G. Becker & Co., Incorporated

Volume 171

1 ,'i

if

t

■

Number 4898

V

.

k

,

"

'1.

,

*1

t

A

.

.*•

THE

*'

1%

1

* '•,

t*

u

4

-

COMMERCIAL

FINANCIAL

The election of Baldwin

n

..

&

Vice-President
Midland

Nkws About Banks
CONSOLIDATIONS

'

NEW BRANCHES

■

NEW

'

■

•

;

f

CAPITALIZATIONS

Trust

board

Marine

Co.

of

of

Co.

President.

Mr. Maull is

G.

in 1928 and his Graduate Certifi-

street ■ investing corp.

cate

in

1940.

board

of

Chapter,
in

served

1945,

and

President
this

three-year term

a

tive

Council

served

of

on

both

the

on

of the

1946.

*

of

New

York

tified

committees

and

to Vice-President.
Mr. DeNike has been closely iden-

company's branches. He is at

chapter

or-

ganizations.

with

the

ent

a

at

activities

Rockefeller

of

the

pres-

senior officer in the branch

Plaza

and

48th

Street.

'

■

Vice-President

*

*

•t':

'

1

'

S.

Govt,

Manufacturers

York,

Henry

G. Diefenbach F. G. Von

Vice-President
States
it

Trust

is

of

Co.

of

announced

Strong,
bach

the

E.

Emigrant

Industrial

Sav¬

ings Bank of New York, with main
offices at 51 Chambers Street, ob¬
served

April

on

10

the 100th

an¬

niversary of the granting of
C
J! -y Ui "1C r T i %

its

T
c^ai^er» according to John T. Mad-

Building, 3-chome, Maru- den, President. Mr. Madden indi¬
cated that the bank, as part of its
nouchi, Tokyo, Japan. The representative's office is not a branch anniversary observances, would
Naka 7

York,

Diefen-

trust

Tristan

Representa¬

the

anc*.
,n°f engage in banking
in
1917, was
appointed Assis- business in Japan.
Its function
tant
Comptroller in
1933, Asbe primarily to maintain
sistant Vice-President in
1940, and
ialson with coi respondent banks
company

publish
pers

in

metropolitan

He is

*n

the Far East and Southeast
Asia-and to asslst in ti;e devel°P"
ment of trade between the United
States .and the countries in that

the

on

series of historical adver¬

a

Research

Committee of the National Association of Bank Audi-

.tors and Comptrollers and was
formerly Chairman of the Direct diea
Verification

Committee

association.

He is

also

of

that /

NEW

Mr.

Kummer became

von

ciated

with the

1936,

asso-

in
Assistant

u.

appointed an
in 1938, and Assistant

was

Secretary

Vice-President
Kummer is

in

1943.

Mr.

s.

Govt,

46,323,909

56,072,647

54,249,516

60,253,435

se-

curity h idings

^dKounted
cap."

von

i

55,005,124

49,564.532

14,025,284

surpiusl

&

Dec. 31, *49

$233.501.039
199,742,262

14,005,284

graduate of the U. S.

a

31, *50

i93,4o4,337

from^anks"6

tiust company

co.,

&

YORK

March

York, City
Conference
of Total resources
Comptrollers and Auditors. Deposits

Bank

it

■f

and

is

Point

member

a

the

of

West

of

Society of New York.
*

4

*

At

the

regular

directors

of

meeting of

the

National

the

Bank

tute

Institute

of

to

the election of officers to be held
next June 16 at the AIB Golden

the

Convention

Minn.
will
and

elect
four

Institute

Dr.

Barker

member

a

of

Massachusetts

the

vice

award.

been

to

the

assistant

Since

President

Executive

1945

and

office thus far

Alton

are:

P.

manufactures electrical

Ala.; and Edward J. Damstra, As-

*

sistant

*

thousands

of

National

Philadelphia.
President

-

The

election

Watkins

he

Bank

the

nounced

13.

Street and

Four

other

<

pro-

some

of their

sav-

the

received

bank

opened

its

charter,

it

qu'ar-

its doors in rented

Chambers

Street

Savings
office

Todav

Bank

at

5

the

has

East

a

42nd

and

the

number

has

305,000

its

of

increased

to

de-

more

its deposits

and

to

$535 000 000
'
*,

*

the

' ^

1716 Arch Street.

nut

Streets

(main

office),

Broad

and

Cambria

Central-Penn National

000,000

among

banks.
than

more

four

for

Maui ice
serve

Executive

Bank,
&

Conn.;
Trust

are:

Allendoerfer, Federal Re-

Edward H.
Bank

candi-

Council

in

Kansas

City,

Mo.;

Fowler, First National

Trust

Paul

Co.,

E.

New

Jones,

Haven,
Indiana

Co., Indianapolis, Ind.; and
Lunt, The Fort Worth
Bank, Fort Worth, Tex.

Bernard J.

National

?a£r .f?.ceive<?

J
Standard

Certificate

has served

as

President of

AIB, and

dency
elected

term.
several

in

ATTB
He

elected to the Presi-

1937.

to

Council

1931.

the
1946

Mr.

Barr

AIB
for

He has been

Executive

a
a

was

three-year
member

AIB national and

Committees.




of

chapter

London,

which

he

served

representative
was

as

Mr

New

York

Watkins

born ;n Eneland

came

who

to New

York in 1920 and became
0f

the

ment

Manager
exchange departAnglo South Amer-

foreign

0f

the

jcan Bank

during

He travelled in

the

early

Europe

1930s

as

an

American bank representative

and

jn

1932

Treasurer and Vice-

Birmingham Chapter,

was

in

in

with Barclays Bank, Ltd
the last 10 years of

years

0f

became

associated

with

of

Plainfield, N. J., celebrated his

40th anniversary as an officer of
the bank on April 1. Now in his
63rd year as a banker, Mr. Pond
Plainfield from Vineland,

came to

_;N. J., to
as

succeed J. Herbert Case

Secretary

Treasurer

and

The Plainfield Trust Co.
1, 1910.

He

was

elected

of

April
director

on

a

~

.

T

.

the Bankers Trust Co

In London.

He

New

to

later
direct

change
.

.

.

returned
that

to

bank's

department.
Barrlavs Bank

York

foreign
In

1934

ex-

he

rranadaV in

3
y Bank (Canada) in
Montreal, returning to New York
in

1936.

bank to hold that office. He was
elevated to Chairmanship of the

Board of Directors on Jan. 15,
1946- Mr- Pond was one of the
organizers of
the
New
Jersey

Bankers Association and held the
Presidency of that organization
f°r the year 1911-1912. Since that

time he

has

been

honorary

an

Vice-President and member of the
^
J
1

Committee

Executive
served

on

In

various

and

other

1913

he

was

Vice-President

of

the

tees.

~

m

Fred S.

geles,

$140,-

and

than $14,500,000.
President
Sienkiewicz has made known that

Bank, is

Vice-President of the

a

has

commit¬

elected

a

Mechanics

sorbed

that

of

Chase
York

in

Na¬

1926,

bank

Pond continued
Gf the

the
New

as

,,

now

Central-

larger institution. On April
1, 1930, he resigned from that of-

named

was

First Vice-Chairman;
Neusehaefer, Vice-Presi¬

en¬

dent, Union Bank & Trust Co. of

'.:f.

is

now

■

' '

$

part of

the

*

,

Plans have

the

*

been

;

Los

Angeles, Second Vice-ChairB. W. McPheeters, Assistant
Vice
President, Security - First
National Bank of Los
Angeles*
Secretary; Charles H. Landis, As¬
sistant Cashier, Union
Bank &
-

,

completed by
Company
for

Pennsylvania

a

Trust Co.

of Los Angeles, Assist¬
Secretary. Following estab¬
lished custom, retiring Chairman

ant

new

building at Sixth and Chest¬
nut Streets. This, it is
stated, will
be the first privately owned struc¬
ture designed to conform with the
specifications of the proposed mall,
which
will
eventually
extend
north from Independence Hall to
the

Delaware

Ground for the
be

River

Bridge.
building will

new

broken

by
William
Fulton
Kurtz, President of The Pennsyl¬
vania

Company, at

a ceremony to¬
Construction will

day (April 13).
be

started

immediately

be

completed next
building
will
be

and

will

March.

The

a
red-brick,
Georgian style structure,
three stories
high, conforming in
architecture
with
Independence
Hall and Congress Hall.
It was in

colonial

1783

that

gress,

the

the

meeting

street

diagonally

from this site

Hall,

gress

Continental

granted

Con¬
across

in

Con¬

charter

a

to

the Bank of North
America, mak¬
ing it the first bank founded on

this continent.

merged with The

G.

was

Pennsylvania

and

thus, in

a

Pennsylvania

Company

now

lo¬

A.

Long

it

'

it

President

Merchants

Beach,

elected

was

of

the

Bank

of

Treas¬

urer.
it

tt

«

Robert M.

Alton, Vice-President
and head of the trust department
of

the

Bank

United

of

elected

dent

National

Oregon,

by

Announcement

E.

of

C.

the

Sammons,

bank.

Alton

served

Trust

Division

Bankers

In

of

the

a

member

on

was

Presi¬

1948

President

as

Mr.

of

the

American

Association.

present

was

director of the bank

27.

made

States

Portland,

a

March

He

the

of

is

Exec¬

at

utive Committee of that
groujM
He joined the staff of the United

States National Bank in

coming

an

1922, be¬
Assistant Trust Officer

in 1925 and Trust Officer in 1933.
Four years later he was named

a

Vice-President.

'He

the bank's trust

department since

has

headed

1933An

house

open

opening of the
.United

Last

at

marked

National

Athena

the

home of The

new

States

branch

Bank's

18.

March

on

"September the United States

National

purchased

Shaffer
since

building

then

the

in

Preston-

Athena

and

has

completely
re¬
modeled the one-story structure.

Wm.

Lohrman, Jr. Is

Admitted

it

of Governors of the

Board

&

1

cated at 511 Chestnut Street.

The

Walker.

Farmers

This old financial

institution

E.

man;

Banking and Trusts of Philadel¬

William

E.

Partner

as

Lohrman,

Jr.,

has

Federal Reserve System announces
that effective March 27 the Turtle
Creek Bank & Trust Co. at Turtle

Wm. E. Lohrman & Co., 76 Beaver

Creek,

Pa.,

Street, New York City.

tional

Bank

State member, has
been absorbed by the Mellon Na¬
a

Pittsburgh.
the

and

In

absorption,

tablished

by

Creek

Co.

of

branch

was

bank
as

*

Tur¬

Rudolph Adds

to The

JOSE,

Financial

Chronicle)

CALIF.—Paul

,

C.

Rudolph & Co., 40-D South First
Street, have added to
E.

on

appointment

officers,

partnership in

their staff

it

National

Washington, D. C., announced
trust

SAN

at

of

new

Paul C.

to

es¬

Bank

March 24 the

admitted

with

Branch.

Lincoln

been

(Special

a

the Mellon

it

The

Trust

connection

Creek, to be known

ab¬

Mr.
Vice-President

of

Paul

tle

when

Chairman

en¬

staff

York,

Bank

elected

Penn, and that Mr. Pitman's

Turtle

and

Hanson, Vice-President

was

tire

and Metals National Bank of New
tional

if

were
F. D. LeBold, Vice-Presi¬
dent, Citizens National Trust &
Savings Bank of Los Angeles, who

Pitman, former Presi¬

dent of The Charter

at

it

Group 5, California Bankers As¬
sociation, at the spring meeting
April 1.
Other officers elected

more

W.

a

of the California Bank of Los An-'

It

deposits
of
about
$124,000,000 with capital funds of

Ralph

27,

by the
Woodland to

Bank, it is

Philadelphia's national
has assets of

March

the Woodland office.

as
*

stated, is the fourth in size
now

Trust

be known

con¬

established

was

American

In

absorption, which

effective

branch

The

m\

dates

became

Fif¬

Streets.

non-member.

nection with the

Streets, Broad
Passyunk Avenue, and

Street and

insured

an

offices

teenth and Sansom

Board of The Plainfield Trust Co.

;

N.Yb.

Gerald

land,
National
Association,
of
Wroodland, Cal., and Yolo CountySavings Bank, also of Woodland*

South

Central-Penn

,

the Federal Reserve
System*
has absorbed the Bank of Wood¬

located at Seventh and Chest¬

are

*

Francisco, Calif., a State member

The

located at 21

«

of

bank

Harry H. Pond, Chairman of the

raw

*

of

*

The American Trust Co. of Ban

Central-Penn,

March

on

are

$200,000 by the sale of $100,060
new stock, effective March
ML

of

completion of the final step
the
purchase agreement an¬

phia for the construction of

of

jngS to the country from which
they had come. Five months after

of

apparatus
and

method to send

has

of

Vice-President

as

to

of

upon

in

#

tional Bank at Coral' Gables,
FfaL,
been increased from
$100,000

This announcement

of

if

capital of the Florida Na¬

has

by C. A. Sienkiewicz,

Company in 1929
sense, is returning
to the scene of its origin.
The
3,
u
xr?
^ \
J. rr
Kaye Ewart, Vice-President charge of the foreign department in 1912 and in 1913 he became a proposed building was designed by
0f tbe American Trust Co. of New Vice-President. On June 21, 1923,
of the National Bank of
Sydney E. Martin, r Philadelphia
Washing- York was announced on
April 11 Mr/ Pond was elected President
ton,
architect, and will be erected by
Tacoma, Wash., has been
by Harvey L
Schwamm
Presi- succeeding
the late Orville T. the Turner
nominated
for
Construction Co. When
the:
Presidency." dent. Mr, Watkins has been
in Waring/ thereby
becoming
the
Mr. Ewart is now Vice-President
completed, it will replace the In¬
retirement since Jan. 1, 1949 after second man in the history of the
of- the Institute. The
dependence Hall offices of The

Vice-President, Chicago
City Bank and Trust Co., Chicago,

The

Philadelphia became part of the

Central-Penn

Yoik, most of
means

tecting the savings of these emigrants, and to afford them a safe

over

ents, extends research grants, and

Vice-President,' Security for smoke abatement
Commercial
Bank, Birmingham, material conservation.

5,251,447

*

society, joined

them active in the

than

non-profit

Barr,

merchants in New

nositors

institution which administers
pat-

The two candi-

office

a

the

nanciai aid> and frequently for the
safekeeping of savings. The bank
: was a natural outgrowth of this
socjety when, early in 1950, 18

area

to

Chairman

Committee

of

street to serve the Grand Central

Secretary of the Navy from
1945, he received the U. S.
Navy Distinguished Civilian Ser-

national

a

special

5,441,386

assume

April

on

sjt

made

Assistant

post

new

70,575,619

coming into the city. larged personnel. Reference to the
plans
incident
to the
The society, founded in
purchase
1841, was
a
focal point to which the emi- agreement appeared in our issue
of March 16, page 1112.
grants had come for advice, fi-

midfown

University. On leave

as

Emlgrant Society for

welfare

Emigrant

1941 to

the

members

serve

a'centufv

being

result of the concern felt

the Irish

nn

the

Min-

b

into

came

asca

Savings

ters at the site of its present office

Insti-

of

Executiye Council, Research Corporation,

is Vice-President.
lor the

in

Although

the only contested

dates

of

at Columbia

Banking will be the highlight of

President

York.

Central
National

3 Vice-President was Dean of Faculty Engineering

American

convention

Grand
Chase

Technology and Lehigh
University, and from 1930 to 1946

,

Anniversary

Advisory Com-

the

New

in

been^ appointed

the

the

of

faculties

.

neapolis,

of

of

Corporation

has

of

formerly

was

Assistant Cashier. He is associated
with the Caribbean District.

tor

York,

member

Branch

York, held on April
11, Daniel J. Walsh was appointed

Barker, President

Research

mittee

City

of New

^
f,
°ice
the

the

New
,

a

Bank

.

Dr. Joseph W.

^

to discuss further

_

Military Academy, Class of 1917,

®

during the last 100

occurred

Rank

67,400,081

,

emigrants

erothers^hariuman

of the Executive Committee of the

New

yelfs

the

■

BROWN

member

a

tisements dealing with the impor¬
tant local and Iiauuiiai events that
national CVC1IIS
h

83,393,865
70,297,291

__

proiits—

was

and

Mr. Benfer will

17.
Mr.
Rice
has
been
associated
with
Lincoln National for 41 years."

58,117,141

Effective April 10, the two for¬
branches of The Charter Bank

newspa¬

.

Comptroller in 1946.

48,150,547

mer

of

Officer

a

Cashier.

215,978,152

a

The

New

company, has estaba representative's
office for
Manufacturers" Trust at 305

the

Benjamin

Mr.

Eastern

of

lished

United

New

by

President.

joined

Kummer

the

Far

of

Co.

that

announces

Beplat,
tive

Trust

Rice,

National Bank Exam¬
district, and J. Frank
promoted
from
Assistant

Trust

$242,045,689

bills

discounted

UndiV;

James P. Benfer,
Jr.,

are

iner in this

se¬

and

12th

Harvey D. Gibson, President of

banks—

branches

:

<

"They
formerly

CO.,

his

curity hidings

.*

Irving Trust Co.

Execuhas

from

Washington "Pa#*
25 by S. Oliver
Goodwho stated;
/
.'•/

March

man,

due

if

He

AIB.

numerous

national

in

completes

year

and

/

in
1938, and as has announced the promotion of
1944, Vice-President George J. DeNike from Assistant

Damstra

Cash

Loans

*

Chicago

of

of

Dec. 31, '49

$248,545,895
220,160,578

Deposits

Advisory Committee of Wall,

the

on

of

TRUST

March 31. '50

Total resources!

5?

AIB,

Treasurer in
Mr.

He

directors

director

a

PHILADELPHIA, PA.

director

a

National Varnished Pr°d-

Hi

been

FIDELITY-PHILADELPHIA

U.

°^+

Ferdinand

has

2t

known in the

The Plainfield National Bank.

Lehigh Valley RR. Co., Indeco
Corp., and Fidelity Safe Deposit
Co., and is Chairman of the board
-

time

more

Plainfield Trust Co. Since

he

of

Kummer has been appointed

von

1928

the

Trust

Midland

Mr. Damstra has been associated with the AIB since 1923. He
received his Standard Certificate

-and

to The

of New York,

directors

(1537)

fice in order to devote

Marine

of

.

Henry G. Diefenbach has been
appointed Vice-President and
Comptroller

Maull,

The

Binghamton, N. Y., was announced
on April 10 by Thomas A.
Wilson,

Bankers

and

OFFICERS, ETC.

REVISED
,

the

to

!|

of

CHRONICLE

it

was

of two
made

Earle

Barney, Guido E. Cera-

soli, Lyman Dyson, Dwight Gray,
Alfred E. Holter, Ray
and Fred M.

E. Humiifel,

Senkpiel.

t

30

COMMERCIAL

THE

(1538)

Continued

page

FINANCIAL

&

CHRONICLE

about that banks are not meeting

fr
3

the

the

of

needs

credit

"small

Thursday, April 13, 1950

into the small business field, you
will find that in too many cases

for the economy

sake of profit,
genuine concern
of the individual,

depositors' funds
public whose funds are.be¬
ing used should get the profit, and
you should be paid for your servr
ices like any other civil servant.
It was exactly four score and
seven years ago, come November
—just half the lifetime of our na^

the

or

the nation.

tion—that Abraham Lincoln dedi¬

businessman," and that the rea¬

loans

will

is bankers' fear of examiner

those

banks whose exclusive

son

A Waning to Commercial
Bankers on Consumer Credit

I repeat that it is the

criticism.

duty of banks to meet the legiti¬

made

be

volume^for

the

rather than any

A bank is not measur¬

munities.

ing up to its responsibilities if it
fails to do so. However, a banker

under

it

by
in¬

centive is and will continue to be

needs of their com¬

credit

mate

out of the use of

community,

—the

Never forget that the more gov¬ cated us to the task of seeing that
of consumer
credit
most
careful is at least equally remiss if he ernment is called upon to partici¬ "government of the people, by the
by persons concerning whom the consideration is one on which our promiscuously hands out deposi¬ pate in your business, the nearer people, and for the people shall
To¬
bank has no information whatso¬ views are perhaps farthest apart. tors' funds to every applicant who we come to an end of banking as not perish from the earth."
All of you are familiar with the happens to fall within the current a vital part of our private enter¬ day the task is even greater than
ever. The safe course from a longIf government is to it seemed then, and the perpetua¬
term point of view is for the bank procedure whereby a bank buys definition of "small businessman." prise system.
An important part of my job is assume the risks of banking, to do tion of the effort to which he re¬
to know the borrower, his finan¬ the "accounts" of a retailer, repre¬
balances due on goods to observe whether national banks what it is your duty to do, banks ferred is your job and mine. We
cial status and his needs.
This senting
More frequently than not are fulfilling their responsibilities should not be permitted to profit dare not shirk.
is especially true today, when sold.
high-pressure
advertising
and those accounts, dressed up as "ob¬ to the public, and notwithstanding
salesmanship have made many ligations," remain in the pos¬ all the brickbats that are being
session of the retailer, the bank
thrown, I have been unable to pin
people so credit-conscious that
facts
which
show
that
they
have
heavily
mortgaged receiving only a schedule of them. down
their future earning power—have Often, the bank does not even ex¬ American banking is falling down
Credit leader maintains farm subsidies for the wastage of food
amine the "paper" in the seller's on this
committed to credit obligations all
phase of its job. Undoubt¬
is morally indefensible.
Calls Brannan Plan a temporary
The rate of interest edly there are would-be borrow¬
but
a
trifle of their probable possession.

tion

Another

aspect
deserving

of

large batches of paper
from dealers or retailers, executed

Farm

future income.
Banks

Carrying the Ball

The extent of this

development

is impressed on every train rider
sees' on either side of the

who

vast number

tracks the

tele¬

of

vision aerials on top of hovels ap¬

parently devoid even of indoor
plumbing!
The chances are that
the sellers of these television sets
not

whether the

ever pay

purchasers
their notes, because they

are

in the hands of

care

now

which has

no

one

bank

a

but the buyer

charged by the bank is sometimes
too small to permit it to spend
anything for supervision and still
make
a
profit.
Certainly, the
bank doesn't know the purchasers,
i.e., the obligors. And as a gen¬
eral rule, the retailer is exclusive¬
ly interested in selling his appli¬
ances
or
gadgets,
and
is not
interested

whether

in

the

pur¬

chaser is entitled to credit.

should

Why

he

be, if the banks are
willing to undertake most of the
financing risk? What started out
as
a
fairly sound venture may
come
to be extremely unsound,

ers

Subsidy Surplus Deplored by Heimann
camouflage.

here and there who would like

to have more credit to work

with,
market.
This
means
Farm subsidies and the piling the retail
but who can't get it from banks
then that the retail business and
up of huge stores of surplus crops
because they are not creditworthy.
present tragic consequences
for normal farm markets are affected.
Perhaps it would be nice for them the
destruction, spoilage, or wast¬ In the end, is the government
to have it—but not out of de¬
going to turn back some of the
age of food is
positors' funds; and I personally
pork to the farmer?
*.
morally inde¬
doubt that it would be in the
fensible, Hen¬
The Brannan Plan
public interest for them to be fi¬
j.
other source.
let me stick to the
bank end of the problem, and say

nanced from any

However,

emphatically

as

as

I know how
not pre¬

that bank supervisors are

ry

Hei¬

H.

"Now

mann, Execu¬
tive
Manager
of

the

method

Asso¬

ciation

of

reserve"; but

believe

those reserves can
at the most inoppor¬

me,

evaporate

tune times, and we have seen a
number of cases where dealers—
not

only television dealers!—have
flagrantly failed to live up to oral
"understandings."
Turn to "floor-plan" loans to
dealers.

In

the

last

few

years

alert bankers have been conscious
of

hazards

the

involved

in

such

financing, but turn-overs were so
rapid that, they refrained from
exercising stringent control and
supervision.
Present-day trends
warn
us,
however,
that
the

,

seller
bank his own note,
secured by the accounts; a little
later he endorsed the obligations
Twenty
gave
the

with

secondary liability.
many
instances,
the

businesses which themselves

the most careful credit
practices, but little by little paper
is being acquired from concerns

withering, and that the buyer is
rapidly getting his choice of mer¬
chandise—even in the automobile

reliability — and
justified by some
ground that if they
volume, the profit

to

prescribe

and exercise

suitable conditions
rigid and intelligent

supervision may prove costly.
The other day I noticed a too
frequently seen comment in a Re¬

port of Examination.
It related
to a loan secured by a number of
cars which were to be "floored,"
and not used

as

demonstrators. A

check

by the examiner revealed
that only a few of the cars were
on
display; the remainder were
being driven as demonstrators by
the dealer's employees, or used
for
pleasure driving by their
wives.
This sort of trifling with
security reflects discredit not only
on
the dealer, but also on the
bank's
management, ' Lack
of
knowledge on the part of a bank
officer is often as reprehensible
as misuse of knowledge—in view
of the fact that the bank is using

depositors'
funds,
for profit.

the

people's

money,

The Installment Aspect

I

should

mention

at this time

another aspect of concern
consumer

in the

credit field—the install¬

em¬

ployed

of

And from here out, failure

assumed

full

Now,
in
seller
doesn't even do that—ostensibly
in order to avoid showing the lia¬
bility on its balance sheet. When
this practice first started, it was
confined
almost
exclusively to
a

"bloom" of the seller's market is

field.

thus

and

recourse

the

ago

years

more

doubtful

efficiency and
the practice is
banks on the
get a sufficient
will more than

offset the losses.
This

type of banking is a far
from the time-honored bank-

cry

to-individual

credit relationship.
camouflage them as
you will, such transactions more
nearly
resemble loans to the

In

essence,

seller,

for

which he should be

fully obligated and which should
be subject to statutory limitations;
or, if the seller is not so obligated,
they resemble unwarranted dele¬
gations by the bank to the seller
of its responsibility in lending
bank funds; and I prophesy that
either by law or supervisory ac¬
tion, they will be so considered
eventually.
"Controls" in Banks' Hands

Finally,
"controls"
now

let
on

me

in your hands.

that

the

credit

are

say

consumer

If you are to

retain

them, and it is to your ad¬
vantage to do so, you must police
your policies and exercise the de¬
gree of control and supervision
necessary to the maintenance of
continuous sound

consumer

credit

business. Banks must insist—more

During the so than at present—upon compe¬
last
amount of tent, well-paid personnel, work¬
installment credit—the major ele¬ ing closely with top management,
informed
concerning the
ment in consumer Credit—has in¬ fully
economic
creased at an average rate of more general
picture, and
than $2 billion per year, 40% of those employees must be required
which is held by banks— a volume to establish adequate standards
of assets which cannot be dis¬ and procedures for (1) originat¬
missed by a bank supervisor as ing loans,
(2) supervising out¬
negligible, I regret to say that our standing credits, and (3) collect¬

ment

payment aspect.
four years the

examinations of this phase of bank
operations have revealed a grow¬
ing laxity in dealing with delin¬
quencies. The hazards involved in
this laxity are obvious.
A pre¬
requisite of safety in installment
lending is timely collection of
every installment.




ing them—in bad times

as

as

Small Business Loans

just
of

a

like to turn

moment, to

the

banking

business loans.
statements

have

I

now,

incompetent and

so

been

has been criti¬

Possibly he
doesn't know how to set up such a
cized

loan

as

or

such.

how to supervise it, or he

In

and

What

is

camouflages the real
payment, that is for a
the

end

it

cannot

be

People

holding government bonds are not
going to sit id^y by and see debts
accumulate year after year due to
subsidies and other debatable ap¬

propriations. Their

consumer

lar is

now

their

raw

material

dol¬

worth about

50

60 cents,
dollar about

cents, their building dollar 46

cents and their labor dollar about
43

cents.

value

That is the

measure

of

they

get in terms of the
present dollar compared to the
prewar value of the dollar. How
much longer are those holding re¬
ceivable investments going

by and

to sit
their investments de¬

see

teriorate?"-

.

;
The great lessen from the recent
of it, nor under¬
objective other than as a coal strike is that the failure to
political policy," continues Mr. obey the law presents a trend that
may be very dangerous, the head
Heimann.

consequences

stand its

is operating on a capital structure
which is too small to warrant haz¬

of

the

nation-wide

organization

"Presently our government is
of
credit
and
financial
officers
holding about 25 million bushels
declares.
arding greater amounts of deposi¬ of
barley, 100 million pounds of
"It is a well-established axiom
tors' funds in loans of any de¬
butter,
20
million
pounds
of
scription, in view of the calibre of cheese. It also has under loan and in business, in the armed services
and in almost every other under¬
the bank's management and the
in possession a combined total of
local economy.
taking, that when a group works
approximately 500 million bushels
together, each expresses his or
I would not be overly concerned of
corn, 6 million bales of cotton,
her views, but once the policies
about such allegations if it were 500 million pounds of beans. The
are
set by top management or
not for the structure which some government has 75 million pounds
would build thereon.
I refer to of dried eggs and about 500 mil¬ leadership, arguments over policy
the proposals to extend the gov¬ lion bushels of wheat in inventory cease," Mr. Heimann says. "From
the time the policy is set, it be¬
ernment-guarantee procedure to or under loan. The potato situa¬
enable an uncreditworthy busi¬ tion has been on the front page so comes the duty of everyone to
execute it. When a law is enacted,
ness
to borrow from banks in long that it needs no comment.
whether it is good or bad, we
order to compete with its credit¬
"Consider the confusion gen¬
must respect it. We dare not ig¬
worthy neighbor.
I cannot bring erated
by the present farm pro¬ nore it.
We
can
work
for its
myself to believe that any good gram. The government has bought
change, but while it is on the
economic purpose would be served
potatoes at an average cost of books it is the law of the land
thereby.
It would not transform
$2 a hundred pounds. It now dis¬ and should be enforced. The vi¬
unsound
businesses into
sound
poses of
these surplus potatoes cious criticism of the
Taft-Hartley
ones, but it might lead to reck¬ for limited
use—namely as feed
Act was wholly unjustified but
less
and chaotic competition
for animals—at on£ cent a hun¬
which could drag down all the
dred pounds. The farmer, let us officials from top to bottom di¬
concerns in the field—weak and
assume, feeds these
potatoes to rected propaganda
against
the
strong alike.
The mortality rate hogs, but then he does not have
Act. This naturally brought dis¬
of small businesses would prob¬ to
feed the hogs so much corn.
ably increase.
Enterprises that This means he has more corn to respect for the law. The failure
essential

lack

"know-how"

will

Others will fail be¬
of too much credit—more

sell to the government.

The ques¬

always fail.

tion then arises: what is the gov¬

cause

of people

to abide by law is due

ernment

have the capacity to
handle. In addition, there would
than

be

they

failures among
presently sound businesses

unnecessary

those

which

would

be

undermined

by

subsidized and unprincipled com¬

petition built on sand.

'

to go

If

Let

because

if

bandied

antee

me

the

conclude by saying that

government

procedure

is

credit-guar¬
so extended

its

disposes of some of the corn enforcement.
in this fashion then what hap¬
"One of the net results of the
pens? The old price ratio of pork
strike is to leave the coal indus¬
to feed is well known by every
try with excess capacity. It may
farmer.

machinery for providing equity
capital for meritorious small busi¬
nesses.
But that certainly is not
a
general field for commercial

Government Guarantee

re¬

are

If it

prices

for

in this instance to the lack of

going to do with the
spect for law by those who
corn? Is it going to sell it back
to the farmer for animal feed? charged constitutionally with

There may very well be a need
for a new system or for better

a related aspect
business: small

do

while.

the

manner

payment.

continuously camouflaged.

of

banks.

well

good.
I would

risk

of

measure

appearing self- Review. The
annointed, let me say that if you farmers
are
hear any banker state that he does
themselves
Henry H. Heimann
not make small business loans for now
quite con¬
fear of examiner criticism, you cerned about this problem as most
can
be pretty sure that you are of them do not want the kind of
listening to one who is misin¬ help which in the end will hurt
formed, weak, or
incompetent, them and bring about a chaotic
He may have been misinformed state in their normal
markets, he
by subordinates who have been says in outlining this condition in
criticized by examiners for un¬ our national economy/
sound practices.
But if not, he is
"Many people find, it difficult to
either too weak to say "No" to a understand the present farm pro¬
borrower without throwing
the gram in our own country as they
onus on the examiners, or he
is can see neither the end nor the
the

At

it

worse,

disposed unfavorably toward small Credit Men
to look to for payment,
Oh, the
business loans. We do insist, how¬
says
in the
bank may have the moral but and if it does it will be the banks ever, that they be set up soundly
current issue
rather than the sellers that suf¬
legally unenforceable obligation of
and supervised intelligently, just
of his Month¬
j.-.:
the dealer, and it may have in¬ fer.
...V.v/-' as in the case of consumer loans.
ly Business
Past Practice
sisted on a "dealer's

of

adopt

we

It does not change

anything except the

Na¬

tional

assume

Brannan Plan.

"The purchase of feed at token

be

that here

possible

on

three-

thing and days-a-week work in coal produc¬
this
is
increase
the
supply of tion will be all that the country
hogs. When the hog supply in¬
can absorb. Many mines, however,
can

creases

only do

then

one

the government

lias

in and buy the surplus pork.
the
government - distributes

these

products to the so-called
under-privileged then some of
these groups, who at least occa¬

cannot

economically operate

three-day
and

week

natural

and for all

gas

time,

basis.

have
so

far

on a

Fuel

oil

definitely
as

is fore¬

sionally
buy
meat
at
regular seeable, taken over much of the
prices, will be practically out of market for coal."

Volume

171

Continued

Number 4898

from

COMMERCIAL

THE

corporation

4

page

no

investments

rather

than

part

as

a

corporation's bonds will be part

of its funded debt except for

bonds

Miscellaneous
'

Several

be

may

the

/other

Assets

types

of

due

rent

liability.

together under
"miscellaneous as¬

separate classifications

the

sheet.

Such

on

the bal¬

miscellaneous

income

for

assets, intangible assets, and

one

Deferred

include all

assets

penditures

the

benefits

of

ex¬

which

specific

few

a

of operations,

subsequent

of

labelled

senting the depreciation and wear
and

tear

We

the

on

it might be shown on the
liability side.
In either case, as

sheet,
you

set

for it

same

whether

ference

net result

the

see,

can

be the

makes

no

show

we

an

as¬

side

copyrights,

trade

marks, franchise rights and good¬
will.
As you can see, it would be
difficult to assign a specific value
of

are

reserve

a

of

the liability side of
In this case such a
is described as a valua¬
on

reserve

tion

We

reserve.

an

also have

may

of reserves. We might
reserve
which

other types

have

liability

a

have been established to pro¬
for taking care of a specific

may

vide

For example, assuming

liability.
that
a

show

ledger.

nature—although they
may be extremely valuable. Con¬
servative accounting practice will
frequently suggest that because
of their intangible nature a nom¬
inal figure of $1 be assigned to

intangible

knew that we would need

we

machine during the coming

new

might set up a reserve to
provide for this expected expendi¬
ture.
We might also have a sur¬
them, which, for example, is what
General Electric does despite the plus
reserve
which is not de¬
tremendous value

obvious

of the

intangible

company's

assets.
company assigns a large
value to these items it is impor¬
tant to determine that this is not

Where

a

simply

"padding" of assets. Fi¬

a

nally, special funds consist of cash
securities that have been segre¬

or

gated to meet

specific purpose.

a

year, we

for any specific purpose
but simply to act as a buffer in
signed

j

allocation of income so that to

the extent that there are reserves

distribution to the stockhold¬

ers.

that

funds
an

bonds

many

stocks

such

and

and

fund

a

pre¬

sinking

require

available

there will be less income

Thus, for example, if a cor¬

last year but possibly

year

now

the liabilities

to

balance sheet we find

the

for

creditors' claims that will mature

months

from

the

date

provision for liquida¬
Current lia¬

special

tion has been made.

will

bilities

notes

and

ration

to

include the

payable by the corpo¬
It also includes

others.

liabilities,

accrued

accounts

financial

is other
which the

that

obligations

corporation has already contracted
but which
will not actually be
paid until sometime later. For ex¬

ample, if a corporation's net in¬
come
during the year were $1,000,000 at the close of the year it
would
owe
Uncle
Sam
some

$400,000 in taxes but these would
not be payable until the following

its
balance
sheet,
therefore, it would set up an ac¬
On

year.

count for Federal income

current

taxes, a

liability to the amount of

$400,000.
Funded
The

next

item

Debt

generally found:

the liabilities is the Fund¬
Debt, which is the corpora¬

the

if its expecta¬
business were

year,

poorer

realized it might then draw upon
the

reserve

already established to

provide it a

better earnings pic¬

ture.

of the balance sheet and for which
no

and

year

dividends it might pay

Next

out.

tions/of

comparable classification of the
types of liabilities. First,
we will usually find Current Lia¬
bilities which include all those

current

amount of

various

12

:

V-s

••..

/,

.

Bookkeeping Transaction
As

this

if

were

confusing

not

enough we must now introduce a
further complication into the pic¬

tion's

long-term

debt.

For

ex¬

corporation had out¬
standing an issue of $5,000,000 of
first mortgage 6% bonds due in
ample, if

a

1960, this amount would be shown
this
section of the balance

in

sheet.

Generally speaking, all of




stop us

Stock

Capital

a

and

principal category on
the liability side is Capital Stock
and

Surplus.
the

resent

Together these

net

of

worth

setting aside

the $200,000 for future replenish¬
ment of our fixed assets we would
then

be

setting

up

fund which

a

previously mentioned as

a

special fund.

tant

distinction

because

does

that

not
a

to

an

the

the existence

of

impor¬

in

a

its

corporation

In

value stock and it reduces the par
value to $5, it will create a capita]

surplus

of

tion may

$500,000.

stockholders.

own

and

owns

We

assets

than

book

value.

not

that

mean

plus

in

the

surplus

liabilities to

and

is
as¬

others than

stockholders.

Although it may be
confusing that the net worth of a
corporation is shown
bility

side,

this

net

the

on

lia¬

is

worth

in

fact what the stockholders collec¬

tively

own or, put another way,
what the corporation owes to the

stockholders.
The

'

'O

u

capital stock account
the

resents

issued

stock

is

and

that

rep¬

has

outstanding

at either par or

if

'

been

shown

stated value. Thus,

corporation has issued 400,000
shares of $5 par value stock the
capital stock account will i total
$2,000,000. However, if only 300,000 shares are outstanding its cap¬
a

ital

account will

stock

$1,500,000.

total only

'

V

Surplus

7.'..'/

Surplus is the excess of aggre¬

As

bring the balance

If, for example,
our assets were $1,000,000, our lia¬
bilities to others $500,000 and we
had

100,000 shares of capital stock

with

a

of

per

$2

value or stated value
share (or a total capital

par

stock account of

$200,000) surplus,

and

balance

the

we

sheet

would

be

It would be pleasant

could leave it go at that, but,

is

common

earned

of

use

for

sur¬

any

the

the

have

surplus but
earnings or avail¬

no

funds

which

from

dividends.

to

pay

surplus can, of course, be minus
in which case they are

figures

referred

deficit
a

Just

<

as

account

worth of the corporation, if there

is

deficit this would be subtract¬

a

ed from the

arrive

to

capital stock account

at

worth.

net

For

ex¬

assuming a corporation
shares of $5 par value
and
a
capital deficit of

ample,

with 100,900

stock

management has retained and
and

cumulated

which

from

ac¬

divi¬

dends may

be paid to stockholders.
in liquidation, partial or

Even

if

there

are

avail¬

monies

able, the existence of earned sur¬
plus does not mean that the man¬

will

agement

As

dends.

elect

we

saw

to

divi¬

pay

in the

second

Capital surplus, the second prin¬

cipal type

sources

is

surplus

other

than

For example, if a

sells

poration
stock

of surplus,

from

for

$20

its
a

$5

share

par

cor¬

value

(and

you

the net worth would
then be $500,000 less $200,000, or
$200,000,

follows

fixed

assets

of $657,242.72

for

reserves

(7) Trade

although
then

are

tive

marks

and

patents

valuable

the

conserva¬

shown

at

accounting

of

practice

and

surrender

small

a

identified

item

otherwise

not

totalling

180.69.

paid expenses consisting of ex¬
penditures on
tools and
other
equipment
and
for
insurance
against which charges will be
made in future periods as they
used up.

(10) Total

assets

1

Turning now to the right hand
we find the liabilities, and

page

the

first

liabilities

current

of $2,193,224.72, and ac¬
liabilities, that is other obli¬

amounts
crued

gations of the company currently
but which will be paid out

owed

in

Total current, lia¬

the future.

bilities amount to $4,896,986.16.
The
debt

has no funded
figures shown

company

there

so

are no

It does show

funded debt.

for

purchases its stock for
above the par or stated value, or
from a reappraisal of assets be¬

which the company will

low their book value.

the company

laneous

this

to

We have here the

balance

consolidated
Oct.

31,

of

1949

sheet

of

as

Emerson

the

Radio & Phonograph Corporation
and

convenient
amine

balance

because

sheet

it

is

is

to

a

ex¬

relatively

On the left hand side of

simple.
the

This

subsidiaries.

its

find the assets and
the first group of assets listed are
the current assets, consisting of:
page

(3) Accounts and notes receiv¬
(less a reserve for doubtful
accounts
of
$81,436.93)
$3,321,able

will

You

854.06.

recall

other

and
been

reserves

placed on

instead

that

we

that this

might

have

the liability side

of treated

as

a

deduction

from an asset.

as

the one hand, and fin¬
ished goods on the other and to¬
taling $3,585,984.
This inventory
breakdown is usually made since
process on

have a more
ready market than work in proc¬
ess and the overall figure would
not

products

describe

the

inventory

posi¬

accurately as the slightly
more
detailed presentation. Total
current assets amounted to $14,tion

as

538,603.49.

(5) The balance sheet next lists
accounts
and

stock purchased by them from the

This

is

an

unusual

transaction and will not generally
be found

of the

count

in balance sheets.

reasons

still

owes some serv¬

it has

Capital stock of Emerson con¬

800,000 shares outstand¬
par value so that as we
might expect the capital stock ac¬
count totals $4,000,000.
Surplus
is
shown
separately as capital
sists

of

ing of $5

consisting

surplus

One

for stating this ac¬

separately from accounts re¬

capital

of

stock acquisitions, donations, etc.,
to

the amount of $456,247.50;

earned

is !the

that

surplus,

and
re¬

tained earnings of the company,

of

$5,578,127.31.
that

notice

will

You

total

the

liabilities, including capital stock
and

amount to

surplus,

$15,012,-

000.53, which is the same as the
figure shown for total assets. The^
book value of each share of Emer¬

stock would be determined by

son

dividing the total capital stock
and surplus of $10,034,374.81 by
the number of shares outstanding,
a book value or equity
$12.50 per share.
The
lack of relationship between par

800,000, for
of

about

or

stated

for

have

we

as

value and
security is

seen

value

book

share,

a

Par,

in this case.

well illustrated

value

book

value,

value

market

is $5 per

$12.50

per

share, but the market currently
appraises the stock at some $27
share.
subject for
In

a

However, this is the
later lecture.

case, balance
accompanied by a
series of notes.
These are an in¬

almost

sheets will

every

be

tegral part of the financial state¬
ment

should

and

looked

simply

written

in

not

because

print.

fine

be

over¬

they

are

For

ex¬

ample in this Emerson report, we
find

note telling us that a

a

dividend of 10%
the

years

which

stock

given during

was

amount

was

charged against earned surplus.
*

*

week

we

receivable from officers

employees of the company for

company.

continue

product for which

or

per

(4) Inventories, broken down
to raw materials and work in

finished

has received but for

provide some service or prod¬
words,

we

discussed the possibility

fees

uct in the future. In other

actual

some

which in
which

and
of

already been paid.

Balance Sheet

turn to

in our
included as miscel¬

liabilities
consists

the company

ice

now

.

case

a

of
general

income

deferred

for

where

us

con¬

sisting of accounts payable to the

which

it

to

amount

$15,012,000.53.

we

Let

$30,-

some

discussion

balance sheets.

$1.

value of
life insurance policies are shown
(8) Cash

$80,639.53

a

a

undoubtedly

than it has made. A
capital deficit may occur where
a
corporation sells its stock for
less than the par or stated value,
money

Analysis of

and

for

figure of $262,245.73.

curs
more

(less

depreciation

amortization of $393,996.99)
net

liability

An earned deficit oc¬
where a corporation has lost

value is

purely arbitrary figure

(6) Then

$300,000.

will recall that the par and stated
a

not be due within

may

future.

near

shown at cost

earned

as

added to the capital
represents the net

surplus

stock

to

capital deficit.

or

unfortunately, surplus is a com¬ t
(1) Cash on band and in the
item and for a proper banks, $5,980,705.58.
understanding of the balance we
(2) U. S. Gov't Securities at
must have this item well defined.
cost,
$1,650,059.54 (although in
parentheses we are told that these
;;
Definition of Surplus
government
securities
have
a
First, we must distinguish be¬ market value of $1,651,485. With
tween two principal types of sur¬ both securities and inventories it
plus because their meaning for is common practice to list them at
investment analysis is so different. either cost or market whichever
Earned surplus, the first of these, is
lower.)
earnings which the

the

are

t,

plicated

consists of the

accounts

Both earned surplus and capital

usually

should be familiar. Also, these

(9) The last item on the asset
divi-: side is deferred charges and pre¬

be paid out of capi¬
A company might

large capital

a

a

transaction with which stockhold¬
ers

stock¬

matter of fact,

a

surplus.

have

gate value of assets over the stated
value of liabilities, reserves, and
capital stock. In other words, it
the lever to

there

available

able

and

Like

31

ceivable is to draw attention to

than

less

for

value, by retiring its debt at
less than book value or by reap¬
praisal of its assets at a higher

still

stock

sur¬

book

can

capital

corpora¬

also create capital

purchasing

perhaps see a bit more
clearly why assets and liabilities
must always be equal for a sol¬
vent corporation since the value

therefore

of

A

plus by purchasing its own stock
bqlow the par or stated value, by

word

to anyone other than

owes

quite possible) it
capital surplus of
share sold.
Simi¬

larly if a corporation has out¬
standing 100,000 shares of $10 par

tal

the

what it

earnings.

monetary sense.

every

what

reserves

example above, assuming our

a

dens may not

arising

by and of itself assure

is

poration—the difference between

investor

corporation actually has the

reserves

our

This is

$15 for

holder.

the asset side of lecture the payment of dividends
the balance sheet, either as a cur¬ is purely a prerogative for the
rent asset, as an investment, or as management.
have

this
create

cor¬

would appear on

we

would

rep¬

the

complete, this is the only source
and no funds or other monies may
from
which
dividends
may
be
actually be involved. Thus, when
paid. Like our friend, the reserve,
we
reduced our equipment from
however, the existence of earned
$1,000,000 to $800,000 by setting up
surplus does not mean that there
a
reserve of $200,000 we did not
are
actually funds available—in
necessarily set aside any money. this case from which to
pay divi¬
We simply reduced our income by
dends. The management may have
this amount and had this much
previously used such earnings for
less available from which to pay
expansion or some other purpose.
dividends. If we actually followed
the sound practice of

that

so

(1539)

surplus, capital surplus is a book¬
keeping transaction and it does

Surplus

The next

a
reserve
is
Except
bookkeeping transaction

Establishing

ture.

simply

among
ed

a

if

a

within

a corporation's securi¬
premium and need not
here.

at

"balanced."

serve

Liabilities

Turning

problems related to the

expected poorer earnings this year
it

example of a special fund.

side of the

part arise out of somewhat

might set up the surplus re¬
described above and that
would in effect reduce its income

would be

the

profit¬ by definition, would total $300,000

poration had a particularly
able

for

and

sheet into balance.

Reserves, as we have said, are

an

our

ferred

classifications

of the

any

issuance of

ties

is

Significance of Reserve

for

ties

and emergencies.

years

poor

You will

recall, for example, from
discussion of types of securi¬

appropriately fall into

always the difference between

or

and

liabilities which do not

are

sets

set

$800,000

any,

shown.

dif¬

$1,000,000 less depreciation
of $200,000 for a net asset figure
of

item

will

of

the

which

that

of the balance

side

assets

$200,000

items

time

that

at

the

postage stamps,
Intangible assets usually in¬

these

net figure for them.

a

instead of showing this deduction

etc.

to

in order

those assets

on

mentioned

include stationery,

patents,

repre¬

might

Other deferred assets

clude

amount

an

a

its

from

insur¬

prepaid

as

that

ago

whether we keep
figure of $1,000,000 on the as¬

deferred asset—in this

a

assets

a

carefully. We

deduct

liabilities, if

next

The

stop here

moments

to arrive at

will be charged as
periods.
For example, assuming a corpo¬
ration at the beginning of
1949
had paid a premium covering a
3-year fire insurance policy, at
the end of the year there would
still be two years' coverage.
If
the
corporation
had
original¬
ly paid $600 for the policy, at
the end of the year it would show
case

purposes.

best

corporation will
fixed

as

had

we

entirely obtained in the
period in which they are made
but which, in the regular course

not

These

of reserves is a difficult

and

saw

represent

corporation's

a

moment to review it

cial funds.

expenses

of

the

be

technical

Reserves

allocation

concept

spe¬

Miscellaneous
will

other

Any Reserves will generally be

assets, generally include deferred

ance.

a cur¬

-

next.

had

year

net income it would still have

most

listed

$400

12

Reserves

sets" although in practice any or
all of these
may
be shown as

are

next

the

months, which then become
assets

those

grouped

heading

ance

during

during the

CHRONICLE

charged $200,000 to depreciation.
Well, we shall return to this rather
confusing section of the balance
sheet again.

Understanding the Balance Sheet
of current assets.

FINANCIAL

&

Next
second
lenz

guest

of

authority

Bullock,

mutual

us.

our

noted

funds, who

will review the subject
funds for

have

John Da-

lecturer,

Calvin
on

*

shall

of mutual

32

COMMERCIAL

THE

(1540)

lic

Gieatei Jobless Benefits
six million more workers and,
to raise amount and duration of benefits.
Such changes would
have amounted to $850 million rise last year. Mr. Truman de¬
clares while this would mean greater payroll taxes, it would
President asks Congress to cover

necessarily entail

not

an

first

expansion

major

called

Truman

the

of

for

a

present

unemployment compensation pro¬

special message sent to

gram in a

the

Presi¬

the

dent's

pro¬

posals was
introduced in
the

House

by

Represen¬
tative
W.

lost

through

purchasing

power

unemployment

deficiency

Feaeral-State

in

the
of
that

system

unemployment

insurance

it

large

excludes

The

covered.

is

numbers of

was

National Minimum

Coverage should be extended to

John

McCor-

mack of Mas-

sach usetts

Democratic

established

by

states.

The

which

law

benefits

adequate

will

in

all

standards

proposed
these: Benefits for single per¬

normal

are

should

approximate 50% of
earnings, up to a maxi¬

of

mum

least

at

$30 a week.
allowances should be

Additional

for

granted

individuals

with

with the number of depend¬

ents,
of

to

up

lower,
three

an

more

These

of

70%

whichever is
individual
with

$42,

or

for
or

maximum

a

wages,

the

in

If

dependents.

standards

they

had

not

are

been

in

—

must have

we
■/ .■>;

a

strong and stead¬

ily improving system
ployment insurance.
Under

of

Federal-State

our

unem¬

unem-

pjtoyment insurance system, bene¬
fits

paid, in accordance with

are

state laws, to workers who, while
able and seeking to work, are

unemployed through
their

■

i-

paid

t *;

ft*

vs

These

own.

from

fault

no

of

benefits

are

the

proceeds of state
payroll taxes which are deposited
in

accounts—one for each

reserve

state—in the Unemployment Trust
Fund in the United States Treas¬
ury,

is

not

because

Payments

Set

Record

In the past 12 years,
unemploy¬
insurance has proved its

ment

worth, not only
workers

also

as

and
a

to the

families, but
of maintaining

power

entire

unemployed

their

means

purchasing

invaluable

an

as

of support to

source

of great value
In

1949,
example, $1,700,000,COO in
benefits were paid to more than
economy.

for

7,000,000
amount

individuals,
for

any

year

tory of the system.
significant factor in
serious

year's

dislocations

period

of

the

largest
the his¬
This was a

in

preventing

during

economic

last
read¬

justment.

are

fewer

jobs.
Employment has remained
at high levels, along with indus¬
trial

production,

comes

and

health of
'

consumer

in¬

other indicators of the

our

economy.

people look¬
In recent years, up
persons have

are more

ing for work.
to
1,000,000

more

come

into the labor market each

year,

looking for work, than have

left the labor market.

Part of the

new

group
entering the labor
market this year will be the larg¬

number

in

our

young

of

college

history

—

graduates
500,000

some

including

with the

Thus,

not

productivity has in¬

but

creased.

the number of

kept

force

pace.

has

in¬

jobs
This empha¬

sizes the importance of
our

economy
so
that
be created to use

expanding
new
jobs

wasted.
It also emphasizes the
imoortance of making better pro¬
vision for those who are tempo¬
rarily out of work.

many

made

as

well

as

strengths

existing system.
While
improvements have been

in

the

state

laws

since the

program began, the system is far
from adequate today.
Workers Not Covered
•

Over 15,000,000 workers—about

one-third

of

all

employees—are




the Territorial Legis¬

at least 26 weeks

workers who

long.

in

a

out of work that

are

Experience

which
tion

have

in

increased

benefits

of

of

for

amounts

and

duration

unemployment benefits,

in

order to correct the second major

deficiency

in the present unem¬
ployment insurance system — the

inadequacy of benefits.
At present, while the
law

includes

a

Federal

number of stand¬

energies

that

are

skills and

now

being

With these maximum
age
as

The Congress now is well along
toward
ieT»»+ion

completing action
i««r*rfivp

tbp

on

leg-

old-a^e

and survivors' insurance and
pub¬

aver¬

weekly benefits for the nation
whole

a

just

were

over

$20 in

1949.
The

create
mean

jobs
are

ical

variations
serious

among

inequities.

states

They

that workers who lose their

in

identical

treated

cause

very

circumstances

differently be¬

of the accident of

location.

businessmen in
a

Six Million Wider Coverage

levels,

greater

loss

unemployment

They
some

in

geograph¬

decreased.

markets

when

than

do

those in other states.

Furthermore,

while

It

is

estimated

that,

proposal, the number of

benefits in

only half
The

their

exhausted

large

as

combined

it

was.

of

effect

recommendations

my

extended

for

higher benefits and
longer duration would have re¬

coverage,

the increases in wage levels.
this
all

basis,
benefits

combined

for

all

On

cost

of

under

states

these

proposals would have been
about
1.2%
of
taxable payrolls
in

1948

pared
basis

and

2.5%

with
of

in

actual

1949—com¬

costs

(on

the

the

present $3,000 wave
limit) of 0.9% of taxable payrolls

in

1948 and

2.2%

in

most

states

the

rate

to

pay no
states have

of

tax

in

but

employers have had
whatever.
Some

tax

had

to

increase rates

last year

in all but

a

few

or

tax

will

propose

achieve

improvement in the
unemployment insurance system,
benefiting both workers and busi-,
nessmen,

at

costs.

is

As

very
reasonable
the case at present

with respect to coverage, the Fed¬
eral

law

states

should

from

not

if

the

prevent

exceeding

standards

mum

do

mini¬

the

they

wish

to

so.

Would

Cover Interstate

Workers

Third, I recommend that ade¬
quate methods should be required'
to

provide

who

benefits
from

move

for

workers

State

one

to

an¬

other.

Clearly,
ployed in

worker who

a

is

different

two

em¬

States

during a year is as entitled to
unemployment insurance benefits
when

of

out

work

who is employed in
States

as

worker

a

only

The

one.

have

generally recognized
have attempted volun¬

this, and
tarily to work out methods for
paying benefits in such interstate
cases.
They have, however, been
only partially successful.
Inter¬
state workers

much

generally must wait

longer

to

receive

benefits

than intrastate workers.

the benefits of

more,

state

workers

they

had
'

state.

Further¬

worked

inter¬

many

lower

are

in

than

only

if

one

■

.

is

It

difficult problem

a

to de¬

velop adequate methods for

pay¬

ing benefits promptly and equi¬
tably to interstate workers in our
Federal-State

in the

is

unemployment

national

interest

mobility

the

courage

in¬

Nevertheless,

system.

surance

to

of

it

en¬

labor,

since that is indispensable to eco¬

nomic

expansion in a free society
ours.
Consequently, I be¬

like

lieve

that

required
as

are

and

States

the

be

such methods
to provide fair

necessary

terstate

should

adopt

to

protection

adequate

in-'

for

workers.

Plans to Bar Fraud

Fourth, I recommend that both
Federal

State laws

and

fraud

revised

and

improved.

weakness in

a

concern¬

disqualifications

and

be

was

the orig¬

inal Federal legislation that it did
not

clearly require the

deal

fraud.

of

going
in

States to

adequately with the question^
Some

States—without

uneconomical

to

inspection

and

preventing
lent

claims.
the

so

methods

for'

detecting -fraudu-;

or

I

believe,

Federal

clarified

extremes

policing—have'

effective

instituted

law

however,
should

that all States

required to have adequate

be

can

be

means

for

dealing with those few indi¬
viduals
who
attempt to obtain
benefits
through misrepresenta¬
tion.

•

During the last few

years

some

States have considerably enlarged
the number of reasons for dis¬

qualifying workers who seek un¬
employment
benefits and
have
increased the severity of penal¬
ties for
disqualification.
These
excessive

disqualifications
have
prevent persons who
genuinely out of work through

operated to
are
no

fault of their

own

from receiv¬

ing benefits.
These over-severe
disqualification provisions, which
penalize the innocent along with
the guilty, should be corrected.
Fifth, I recommend, at this time,
improvements in the financ¬
arrangements for

ment

has been extremely low in recent
years—many

addi¬

2.7%

substantial

ing
In

the

the

two

1949.

Tax Rates Still Low-

somewhat

that the situa¬

the

rates

meeting
within

costs

that

1949 would have been

as

not

wouiu

tax

rate.

It

who

the states
generally have increased benefits
recent years, so

trouble

tional

should

under my

states suffer

occurs

increase

they still have excess reserves.
Most, if not all, states would find
no

dura¬

that

of

rate

to
all the increased
costs, since

cover

ing

workers

that

mean

to

while

the

is

states

many

have

states

the

duration does not rise
very much, because most workers
Benefits Inadequate
find a new job before using up
Second, I recommend the estab¬ benefits, the number who use uo
their benefits entirely is markedly
lishment of nation-wide minimum
levels

posals

to all

year

average

number of workers.

labor

our

creased,
has

same

our

weaknesses
the

ceptance by

In

experience
with
unem¬
ployment insurance has revealed
in

Moreover, the
Federal unemployment insurance
legislation should be extended to
Puerto Rico, subject to
its ac¬

about
ards which the states are required
addition, of
sulted in about $850,000,000 more
to
meet,
it does not establish
course, a large number of high
in benefits—and in consumer de¬
levels
for
benefit
school graduates will also be look¬ minimum
mand—in 1949.
The cost of these
amounts or duration.
Maximum
ing for jobs.
improvements would be moderate.
weekly benefits in the various
Furthermore, as new plants and
At the same time that weekly
equipment have been added and states now range from $15 to $27 benefits
are
raised
the
upper
for single persons;
benefits are
supplies of raw materials have
limit to the amount of wages
become more ample, businessmen somewhat larger for persons with
taxed should be raised from $3,000
have been able to produce more dependents in the 11 states pro¬
to $4,800 per worker, in line with
viding
dependents'
allowances.
persons,

250,000 veterans.

will

Our

cluded at present.

lature.

Additions to Labor Force
But there

est

1949

there

the

de¬

pendents.
The proportion of pre¬
vious
earnings
replaced
would
vary

below

Consequently, I believe that the

high.
effect, the
House.
national average weekly benefits
The text of
years, I have recommended that
in 1949 would have been just over
are waiting for the Federal Gov¬
President Truman
the system be improved, to extend
the
Presi¬
But
this
would
be
a
ernment to act and have provi¬ $24.
protection to many workers not sions in
dent's mes¬
their laws which would substantial improvement in an in¬
now covered; to provide, in every
sage to the Congress follows:
come level
which, at best, is in¬
cover these
employees automati¬
state, benefits for 26 weeks,
To the Congress of the United
cally when the coverage of the tended to provide only for sub¬
ranging /up to $30 a week for Federal Act is extended.
States:
Furthermore,
No sistence expenses.
persons,, with
additional reason exists for
One of the great advances in single
discriminating uniform standards would reduce
benefits for dependents; and to
economic legislation made during
longer in the Federal law against present inequities in benefit
increase the financial stability of
levels among
the Nineteen-Forties was to estab¬
such workers.
different states.
the system.
• ::./;. ■ /■. /;■-. ,;vv.:
lish the Federal-State system of
Coverage should also be ex¬ Some variation in benefit amounts
Action on these proposals has
employment security.
tended
to
Federal
Government would and should remain, reflect¬
This sys¬
become more urgent as unemploy¬
tem has two parts—first, a nation¬
civilian employees.
Although the ing the differences in wage levels
ment has increased somewhat, in
wide employment service to help
Federal
Government
took
the and costs of living in different
workers find jobs and employers spite of the continuing high levels leadership in establishing a sys¬ parts of the country.
of business activity.
While un¬ tem of
At present, the maximum dura¬
find job-seekers; and, second, a
unemployment insurance
nation-wide system of unemploy¬ employment dropped over 500,000 for workers in private industry, tion of benefits varies among the
between February and March, on
ment insurance to help tide work¬
Like
it has not assumed the same obli¬ states from 12 to 26 weeks.
the average nearly 4,500,000 per¬
ers
over
periods + of unemploy¬
gation toward its own employees. the variation in size of benefits,
sons were looking for work
during Yet the rate at which Federal this is inequitable, and in many
ment.
the first three months of this year,
states simply represents a lag in
Finding a job is of more imporworkers—especially manual
as
compared to 3,000,000 in the
ance
to an unemployed worker,
workers
what
was
considered
are
separated
from reaching
same months of 1949, and nearly
of course, than receiving unem¬
from the beginning to be a de¬
their jobs
is .approximately
as
Furthermore,
ployment insurance benefits. 2,500,000 in 1948.
high as in private industry. Fed¬ sirable standard, but which was
the length of time it takes people
eral workers should no longer be originally
Consequently, great emphasis has
set
low
because
of
to find jobs is becoming longer.
With this
always been placed on strengthen¬
denied the protection of unem¬ actuarial uncertainties.
One million people—about one out
wide range, the average duration
ing and improving the employ¬
ployment insurance.
of every four unemployed—have
ment service.
I also propose extensions of cov¬ of benefits in 1949 was less than
been out of work for 15 weeks or
13 weeks.
We cannot, however, completely
Because of the short
erage
to about 500,000
persons
more.
A year ago, only 420,000
eliminate unemployment even in
who are employed on a commis¬ duration of benefits, nearly 2,000,were without jobs that
long and, sion
times of high employment, there
000
workers
exhausted their
basis,
and
about
200,000
in 1948, only 330,000.
wiR be turnover of jobs and
rights to benefits before finding
workers
in
occupations
of
an
This gradual growth in unem¬
jmimerous shifts and changes in
industrial nature connected with another job.
ployment over the last two years
Benefits should be available for
job opportunities.
Consequently,
agriculture, all of whom are ex¬
leader

well

standards I

sons

only

average

still

are

2.7% contemplated when h.e sys¬
tem was started.
Under my pro¬

Asked

For these reasons, I believe that
nation-wide minimums should be

assure

workers.

employees of small firms—those
employing one to seven workers.
about $20 Workers in firms employing fewer
—not enough to preserve a mini¬
than eight workers were origi¬
mum
standard of living.
Nearly
nally left out of the Federal law
2,000,000 workers used up their because of
expected administra¬
benefits entirely — showing that
tive difficulties.
In fact, however,
benefits were not available for a
such employees have been satis¬
long enough period.
While the
factorily covered for years under
unemployment reserve funds of the Federal
old-age and survivors'
the states have so far proved to
insurance system, and 17 states
be adequate, a few states may
have already extended their un¬
soon face financial difficulties be¬
employment compensation systems
cause
of
local concentration
of
to cover them, without encounter¬
unemployment.
ing any serious -administrative
On several occasions in recent
difficulties.
Many other states

out

carry

insurance.

one-fifth of the

now

benefits

A bill

April 6.

by unemployment
In
1940, only about

protected

tne

replaced by unemployment insur¬
ance
benefits.
In
1949, weekly

Congress

to

not

not

major

present
President

Thursday, April 13, 1950

programs.

programs,

workers

increase in tax rates in all States.

CHRONICLE

Like tion is not nearly so bad as in
unemploy¬ the case of old-age and survivors'
ment insurance system needs to be benefits,
in most states the in¬
improved in the light of expe¬ creases in benefits have lagged
rience.
Accordingly,
I
recom- considerably
behind increases in
ment that the Congress tbrn its wages and costs of living.
Thus,
attention as soon as possible to unemployment benefits today re¬
place a smaller proportion of a
strengthening our Federal-State
unemployment insurance system. worker's regular wages than was
First, I recommend that cover¬ the case when the system was
age be extended to about 6,000,000 started.
assistance

those

Recommended by Tinman

FINANCIAL

&

this

cases,

unemploy¬

insurance.

Since the
gram,

a

beginning of the pro¬
small part of the unem¬

ployment tax has been collected
by the Federal Government and
included

year,

enues.

taxes

the

in

general Federal rev¬

The administrative costs of

program—both

Federal

and

Volume

Number 4898

171

State—have been paid out of gen¬
eral Federal revenues, and have
been

large as the Fed¬
eral unemployment tax collections.
never

I propose

THE

Continued

from

COMMERCIAL

V

5

page

&

FINANCIAL

The

,

that the Federal unem¬

Federal

count in the

Fund

The State of Trade and

separate

price increase of last December

unemployment ac¬
Unemployment Trust

(which

includes

now

Indicating the industry's increased

the

reserve
accounts
of benefits). This
would be used exclusively

reinsurance grants,

of

cost

and

program,

is

to be

States

demonstrated
that
the cost of unemployment
insurance varies widely among the
has

is

in
certain industries, which are be¬
yond the control of the individual
of

incidence

-

•

while able to fi¬
adequate system of un¬

States,

few

an

nance

$5.79

7.1%

FOOD

PRICE

INDEX

DROPS

SHARPLY

IN

figure to $5.74, from
The current index represents the lowest

week previous.

a

level since Jan.

3, 1950, when it stood at $5.73. It compares with
$5.78 recorded a this time a year ago, or a decrease of 0.7%.

\
,

1

WHOLESALE COMMODITY PRICE INDEX ATTAINS NEW
HIGH LEVEL FOR YEAR
.

Commodity

executives

believe, "The Iron Age" declares, that re¬
ported net earnings of the companies are overstated, and do not
reflect a true picture.
They are carrying on a running battle with
the Treasury Department over allowance for
depreciation. They
say it reflects cost of replacement, not original cost as the law is
now interpreted.
They are hopeful of winning the battle, but pros¬

trends

mixed

were

last

with

week

the

daily

wholesale

commodity price index, compiled by Dun & Brad- '
street, Inc., holding in a narrow range. The April 4 figure at
251.49 represents a new high for the
year and compares with

-

250.47

week

a

previous, and

responding date of last

with

year.

255.89

recorded

the

on

cor-

•

>

*

Leading grain markets displayed a steady to firm undertone
during the past week.
Trading in grain futures on the Chicago

*

Board of Trade broadened

-

i

soybeans.

considerably, particularly in wheat and

\
enough to support the extraordinary rate of steel production 1
/
Increasing concern over possible drought and insect dam-,
now witnessing.
'•'•v-V-i
: *}' 'T1-" age in Winter wheat areas of the Southwest was
the dominat¬
They point out that some of the steel now being made is going
ing influence in that grain.
/
into depleted inventories.
And when these inventories are built '
New crop deliveries of wheat sold at new
highs for the season.
up to desired levels there will be a drop in demand—even
if
Cash wheat, however, was inclined to
drag at times due to slow
industrial activity remains at current levels.
' 1
milling and export demand. Corn and oats were firm along with
This week, the magazine notes, there are still no
signs of a
V, wheat and limited offerings of both
grains were easily absorbed.
slowing of demand. Cancellations are almost unknown, except for
Buying, of hard wheat bakers' flours continued on a handsome in long range line pipe orders.
Some orders for pipe to be
to-mouth basis.
Trading in family flours was somewhat better
delivered as far ahead as 1952 have been cancelled and placed with
.but activity in the export market remained at a low ebb. Cocoa
new units which have recently been
brought into production. Line
demand was fairly brisk with prices
edging slightly higher.
pipe making capacity is still filled practically through 1951.
: <
Volume of trading in lard expanded sharply last week. After
Past reluctance to make third quarter conversion commit¬
touching new seasonal highs early in the period, lard prices
ments is melting fast. Conversion seems definitely with us in the
developed an easier trend due to failure of the government to
third quarter, probably in sizable volume. This forecasts
'

not
we

It has become evident that

State.
a

unemployment

only

rose

Central States reported

while the

week,

A drop of almost 1% last week in the Dun & Bradstreet wholefood price index brought the April 4

sale

pects for Congressional action this year are gloomy at the moment.
This week steel sales executives told "The Iron
Age" the level
of business is good—much better than they
thought it was going
to be a few months ago.
But even this high level of business is

mainly
due to differences in each State's
economic 1 structure and
in
the
This

States.

different

32.4% increase in earnings over 1947.

a

Steel

-

Experience

dividends

common

the

LATEST WEEK

Surplus accounts of the
26 companies were up an average of
13.1%, while invested capital
rose 7.0%, and working
capital 8.3%.
Invested capital per ton of
ingot capacity was up 4.9%.

ficulties.
To Brace Up Poorer

when

1948

to

for

Pacific and South
Although a decrease occurred
level, failures remained above
in three regions, the Middle Atlantic, Pacific, and New

WHOLESALE

a

contrast

failures

was

Steel shipments declined about 11%.

financial dif¬

severe

in

despite

the

available to States who encounter

temporarily

last year

that stockholders

awareness

Middle Atlantic and East North

in

33

England States.

good return on their investment if more equity
capital is to be attracted to the business, common dividends de¬
clared were up 10.3% in the face of the decline in
earnings. This

State

security

receive

must

to pay the cost of State and Fed¬
eral administration of the employ¬
ment

scarcely felt. Net income
1948, an increase of 7.5%.

(1541)

Atlantic States reported a decline.
in total casualties from the 1949

Industry

was

7.2% of sales for 1949, 6.7% for

for the payment
account

rise

a

as

ployment tax be paid into a spe¬

cial

CHRONICLE

-

'

are

,

•

•

,

employment insurance in normal

periods, may not be able to main¬
tain the solvency of their unem¬

in

funds

ployment

period

a

under

unemployment

severe

of
the

present financial provisions pro¬
vided in the Federal legislation.
So that these States will not be
to increase

forced

their tax rates

during periods of declin¬

unduly

ing employment and payrolls, the
legislation should be amended to
provide assistance to such States
through reinsurance grants when
their funds approach exhaustion.
This will be a major step toward

Federal-State
system of unemployment insur¬
ance,
since it will, without de¬
tracting from the independence of
strengthening

.

4

a

healthy

gain

some

of

the

high volume of consumer pur¬

chasing power
it

Thus

so necessary

entire

the

of

welfare

is

program

is to put to

sound, productive use
technical knowl¬

increasing

our

edge and our growing labor force.
To this end, we need imaginative

enterprising

and

investment—in

plant capacity, in new equipment,
in
basic
resource
development.
To
this end, we need vigorous
competition and a growing num¬
ber of new
businesses.
To this
wage-price-profit deci¬
sions, and mature labor-manage¬
To this end, we
expanding world econ¬

ment

relations.

need

an

omy, with a
international

productive flow of
trade and invest¬

and public policies
directed to these pur¬

Both private

be

poses, end
a
series of
gress
ent

I

I have recommended
measures

to the Con¬

for Federal action. My pres¬
proposal to strengthen our

of these measures.
am

during

Congress on un¬

employment
insurance
because
State legislation must follow the
Federal

amendments.

Action

by

this year would clear
the way for State action in 1951,
when practically all of the State
Legislatures will be meeting in
regular session.
But the primary reason for Con¬
the Congress

gressional action is the real need
The
unemployment insurance system

of those who are unemployed.

a

act

scheduled

rate

the

week

was

of

lower

Institute

March

14,

1949,

operations

the

this

announced

when

the

at

were

of

to

i

tried

assisting

and

them.

proven

means

of

That system ur¬

gently needs strengthening.
I
therefore request
favorable

a

steady

to firmer

without either price

years

March 31.

on

week

a

trend

but

ago

the first

in

supports

or

price

"

Increased supplies of lambs left the market 75 cents to
$1.50

hundredweight lower for the week. Steers sold
lower with receipts about the same as a week
ago.
Cotton markets developed a steadier undertone
with closing prices up
slightly from a week ago.
factors included reports of possible
heavy

that

together

year

rise

1,864,300 tons
ingots and castings for the entire industry compared
tons one week ago. A month ago the rate was

of

13

with

bright..

'

decrease

a

points in

somewhat

: were

1.845,300

the

slower

in

acreage

insect

and

an

mid-March

moderately
last

damage this
unexpected
Export sales

parity price.
prospects for the season

but

week

Supporting

continued

.

RETAIL TRADE STIMULATED BY LATE BUYING
COMPARES
FAVORABLY
WITH
COMPARABLE
WEEK
IN
1949—

in 1940, highest prewar year, at 1,281,210 tons.

WHOLESALE TRADE POINTS UPWARD IN WEEK
ELECTRIC OUTPUT LOWER DUE TO
The

Last-minute Easter shopping in the
period ended on Wednes¬

of electrical energy distributed
by the electric
industry for the week ended April 8, was esti¬
5,897,831,000 kwh., 'according to the Edison Electric

amount

light and
mated

SEASONAL FACTORS

day of last week accompanied
Dollar

power

at

Institute.

level

volume

in

for

Inc., in its latest

V

this year than in

14,105,000 kwh. lower than the figure reported for the
previous week, 537,870,000 kwh., or 10.0%, above the total output
for the week ended April 9, 1949, and 864,952,000 kwh. in excess
of the output reported for the
corresponding period two years ago.
was

CARLOADINGS

SHOW MILD

GAIN

IN

LATEST

This

was

an

increase

of

3,120

cars,

0.4%

0.7%

week's

below

represented

the corresponding

a

week

decrease

in

1949

of

but

5,270

above

an

59,722 cars, or 9%, above the comparable period in
loadings were reduced by labor troubles.
AUTO

OUTPUT REFLECTS MILD

cars,

The

There

of

APRIL

and

Ward's
be

predicted that 615,200

produced in the United

monthly

new

record.

"Ward's" allowed

for

In

passenger

Coast

the resumption

cars

total

a

and

with

of

like

1949

April

industrial

of Chrysler production
-

132,240 units produced in the

SLIGHT

failures

similar

week

increased

to

203

in

last

year

but

were

over

twice

as

numerous

from

1,

1939 week.

a

the

an

like

in

the
on

some

wholesale lines, combined!

week.

a

advance

week

of

1950, sales reflected
year ago,

but for the

compared with the

country-wide basis,

as

taken from.

of 1% (revised figure) was regis1949.

no

For

the

four

weeks

ended

change from the corresponding

year

to date show

drop of 3%.

a

like

week

of

7%

1949.

According to the Federal Reserve Board's index, department

in

store

a moderate decline from 1949 prevailed in all indus¬
try and trade groups except construction which had over three

dations at this session of Congress.

times

sales

in New

York

City for the weekly period to April I,

1950, fell 4% from the like period last
of

However,

last year.

South

ment store sales in New York the
past week declined about

week

Construction accounted for the week's increase in failures.

as

types of

the'

as

Failures remained well below the prewar

casualties

many

Handicapped by unfavorable weather conditions, depart¬

the

level, falling 31% short of the total of 295 in the corresponding

many

slightly

preceding week

period

RISE

consecutive week; they compared with 230 in

1948 when 79 occurred.

as

volume

tered

week ended April 6 from 198 in the preceding week, Dun &
Bradstreet, Inc., reveal. Casualties continued below the 1949 level

for the second

for

+1 to—3.

April

and

demand

the Federal Reserve Board's index for the week ended April 1,
1950, showed no change from the like period of last year.
In

production,

week.

Commercial

in

+3 to —1; Southwest 0 to +4; and Pacific

Department store sales

the

BUSINESS FAILURES CONTINUE

rise

general reordering for immediate delivery, helped to raise

dollar

,

trucks

by April 17.
The week's total compares with

Lent.

of

Ordering for late Summer in

,

the

end

England and Northwest +2 to —2; East and

0 to —4; Midwest

States this month, to set a

estimating

the

noticeable

percentages:

made up of 108,734

was

of
a

PREDICTED

24,767 trucks built in the United States and
4,532 cars and 1,567 trucks built in Canada.
cars

buying of food increased slightly the past week

Total retail dollar volume for the
period ended on Wednesday
of last week was estimated to be from
2% above to 2% below the
level of a year ago.
Regional estimates varied from the levels
of a year ago by these

According to "Ward's Automotive Reports" for the past week,
motor vehicle production in the United States and Canada
dropped
slightly to an estimated 139,600 units compared with the previous
week's total of 139,821 (revised) units.
The total output for the current week

was

house-furnishings during the week.

1948, when

CONTRACTION IN LATEST

WEEK—RECORD OUTPUT FOR

retail

anticipation

or

increase

1949, states Dun & Bradstreet,
of trade.
Easter was a week earlier

1949.

In women's wear, interest in
many dress and suit lines was
slight; millinery and toppers were noticeably popular, while among
accessories handbags were frequently requested. There was
little
perceptible change in the quantity of men's suits sold.
in

total

summary

buying.
with the

consumer

practically steady

holding slightly under the level for the similar 1949 week.

preceding week.
The

was

in

The seasonal impetus to the demand for
apparel last week
a moderate increase in volume with dollar sales

WEEK

or

moderate rise in

a

nation

brought about

Loadings of revenue freight for the week ended April 1, 1950,
totaled 720,353 cars, according to the Association of American
Railroads.

the

the comparable week

;

It

consideration of these recommen¬




developed

nine

lower than

were

a

89.8% and production amounted to 1,711,800 tons; a year ago
it stood at 99.2% and 1,828,800 tons, and for the average week

'

in

ceilings.

••v,

industry's

102%

market

market

This week's operating rate is equivalent to
of steel

hog support program, which expired

Closing hog quotations

of

and

the

on

/

capacity.

would

particularly urging action

at this session of

is

very

Age"

that

V capacity

unemployment insurance system is
one

Steel

Iron

New

ment.

must

and

"The

.

output this week represents the
greatest production since the record output of 1,880,400 tons

end, we need a stable agriculture,
sensible

point,

the

The

in

to support growth
and expansion in the economy.
Our essential economic problem
our

Iron

that

'

,

economy.

element

strong

a

to the

American

to

up
■

the operating rate of steel companies having
93%
steel-making capacity for the entire industry will be
97.8% of capacity for the week beginning April 10, 1950. This
is an advance of one point from last week's rate of 96.8%.
of

insurance

the

least
•

The
week

advantages of pooled reserves.
A
strengthened unemployment

system not only will
furnish
more
adequate
aid
to
those : who
become unemployed,
but also will do more to maintain

market—at

concludes.

our

action,

State

•

w2%

a

1949.
was

decline of 4%

was

year.

In the preceding

also registered from the similar week

For the four weeks

ended

April 1, 1950,

a

reported from the like week of last year.

to date volume

decreased by 5%.

decrease of

For the
«

year

Continued

COMMERCIAL

THE

(1542)

34

That

room.

means

greater flex¬

ibility

in contrast to the rigidity

which

The Business Outlook and

existed

of

Security Markets

in

The immediate outlook for

is good.
"Immediate" is a
hedge word, so that I can interpret
ness

ever, in any event,
business
during

How-

I want.

it later on any way

the outlook for
the
next
six

months is assured to be good.

principal reasons for that

statement

these:

are

high level, and in all probability
constructed
in
1950 will
be larger than in
a

the number of homes

Naturally, building activity

1949.

creates

demand

a

for

mate-

raw

activity

Building

labor.

The
strong, and

six months certainly is good.

for

demand

apparently
money or

is

cars

the people have the
the credit to buy their

cars.

11

"

of unemployment.
We
witnessed it very clearly last year
in some of the soft-goods industries, notably the textile industry,
where there was a decline in
prices and a sharp decline in
profits, and an increase in unemployment.
r V
\

nishings is, in its broadest term,
very strong.
Home building and
the demand for home furnishings

hand in hand.

Add

that

to

*

that the

fact

the

deficit of the

government is large,
probability during the

that in all

present fiscal year the deficit of
the government will exceed $5M>
billion. The deficit financing not

adds to the purchasing
power of the
country, but particularly, if the bonds are sold to
the commercial banks, rlso creates
merely

inflationary psychology.

an

have

to

are

we

^"dean^bond^in^lnera/Tnd
in °°ni?sl" ®e,ner®'tax

tax-exempt securities.
So

porations in 1950 will be lower
than in 1949, and 1949 was lower
than 1948. .Capital expenditures
by corporations have a far greater
impact on business activity and
employment than consumer expenditures.
/
The careful security analyst, or
the man working with securities,
will not overlook the highly abnormal international political situation
which can exercise
any

Ask

As far

the

as

in the dark. We know that
money market is influenced
by three forces:
grope

add to this the fact that

in the hands of the people

is

be

added

that

should the farm-support policy be

continued,
farmer

is

the

bound to

Not

of

income

A11

Is

remain

(1)

very

large—estimated at over $200 bil¬
lion—if you
add the fact that
wages are high, that real income
is high, that the standard of liv¬
ing of most people is constantly
increasing, you get a number of
very powerful forces which indicate good business.
should

the
high,

"What

The

supply

and

demand,

(2) The policies of the Reserve
authorities.

(3) The policies of the Treasury.
high-grade se-

The demand for

curities is very strong. The supply
is particularly large as regards
tax-exempt securities. The policy
of the Reserve authorities is quite

clear. They follow the policy laid
V1?6
having more

fow.n,'as[

^tes

long-term

m a

Briefly,

policy is

the

this:

in

^ets, ^°. hring about a minor in¬

into

our

economy.

can

In

the

first

we must realize that farm
income is being maintained by the

place,

How long
what the ultimate

this can
outcome

government.
last,
will

be, nobody can tell.
overlook

we

can

deficits
business, to

the

Neither

fact

that

periods of
good
say the least,
do not augur well for the future.
budgetary

in

Moreover, we know that our
has become more rigid.
It is more brittle than ever before,
a fact which,
I believe, security
analysts ought to consider more
carefully than has been
done
economy

What

of
or

I

,

.

ipean is this, that costs

production have become
less

money

fixed

wages

and
is

a

to

mediumsecurities,

prices of commodities, a

developed

bound

to

happen

after World War II."

They did not take into account
the changed
conditions that
existed.
They did not take into
all

1946 and

tween

sult

great difference

the

account

1920, and the re¬

the highest level of busi¬

was

peacetime,

in

activity

ness

be¬

the

true?

Is that

%

this

anyone in
foretell what

is there

Now,

who

room

can

the

actions and reactions of the multi¬
tude of

If there is

people will be?

such

one

in the

man

room,

atrist.

a

or

psychi¬

[

:

What does it

then

He ought
psychol¬

here.

or not,
sufficient,

predict the market, because you
cannot predict the psychology of
the individual, and in the market,
and particularly the equity mar¬
ket, psychology plays a more im¬

this

will

cause

a

don't know.

we

It

spread,
that one trust company alone has
$200 million for that purpose, and
as

has

rumors

$150

million, and
million, as I have
heard during the last week or so,
to give an indication that here is
another has $75

a

new

of

source

demand

for

equities.
Whether this will take

place or
not, we don't know. Again, it is
one thing to
advise, and it is an
entirely different thing to take
the responsibility and to face the
possibility of a recession soon.
*
/
(6) You know that business ac¬
tivity is at a high level. What
will happen later on in the year,
nobody can tell.
It will depend
upon capital expenditures.
It will
depend upon private construction.
It will depend upon whether or
not the automobile companies will
out with

come

a

low-priced

new

If this should develop, then

car.

You cannot

prove?

Immediately talk

that

it will

another

is

1920,

.

huge demand for equities on the
part of trust companies. Whether

ity, accompanied by sharp decline
in prices of equities. They said to
themselves, "What happened after
May,

the market.

on

companies to invest in equi¬

ties up to 35%.

is

of 1% or 1%%?" If that
should take place—whether it will to be associated with
take place or not, I don't know— ogist or psychoanalyst
coupon

trust

sharper decline in business activ¬

he doesn't belong

relationship between the govern-

headed

ment market and all other highgrade bonds, including tax-exempt
securities.

in

The Equity Market

And now

we come

you
am

n

f

here merely expecting

me to tell
what the market will do. I
afraid that in this respect I

will

have

to

disappoint

you.

I

don't know, and that is the honest
truth.

crease

short-term

in

minor increase in
Since

tainty, in

the

iy4.

the
not

a

long-term rates.

not

one

may

same

that

may
cer¬

distant future,

rate

By the

expect

may

and

fair degree of

certificate

the
to

a

rates

is good,

business

expect with

go

up

token, one
return on
to '62-'72—

the

long-term—2V2S

eligible for purchase by combanks, may go, let us say,

mercial
in

more

decline

in

out of the ques-

On the contrary, the cost
production, as far as labor is
concerned, is constantly increasing,
tion.

of

round figures, to yield 2.40.
Basically, the money-rate policy

has not undergone a change. The
for a tightening of money

reason

there

that

know

we

are

still

a

old cars which
have to be replaced.
It will de¬
pend upon the international po¬
number of

large

the market will do, or may do, I
do know the forces that operate
in

the

market.

The

forces

that

operate in the equity market are
primarily (1) psychological, and
(2) economic.
You

notice

that I

put the

psy¬

forces first, and the
economic forces second, and I did
that for the simple reason that, in

chological

the

equity market, what is, is not
what
actually is, but what the
people believe to be, and I will

If somebody had gone by the
economic

forces

alone,

all




great as

as

one

as

bearish

hand,

as can

Favorable Economic

then,

the

I

be.

Forces

following

the

favorable forces

the

are
operating in

equity market:

a

direct

bearing

on

the possibility
rates, and there-

or

to lower money

fore

influence, if not business
activity directly, at least business
sentiment.

policy of the Re-

authorities

is,

therefore,

(2) The return on equities com¬

becoming
equity-minded because of the high
more

people

are

return.

equity market and therefore en¬
able a number of individuals of
small means to enter the market
indirectly.

(4) There is the opinion that a
portion of pension

to the middle of 1948 would have

will

go

into

equities.

who Whether this will take place or
the eco- not you don't know and I don't
nomic forces could have said to know. Talk is one thing; action is
It is easy to ad¬
himself: "There is a tremendous another thing.
pent-up demand for all commod- vise; it is difficult to take the
ities in the United States. We are responsibility.
You are familiar with the old
in the midst of the strongest sellers' market that we ever had be- prayer of the colored preacher. He
Tore." There was a great pent-up went down on his knees and he
supply of money in the hands of prayed: "Use me, Lord; use me,
the people. The standard of living Lord—preferably in an advisory
of the people was higher than ever capacity!"
It is so easy to advise.
It is
before. People had money. They
wrong.

There

a

man

on

eager

to

spend

it.

Under

these circumstances, therefore, the

easy

of

a

and

to advise the administrator
pension fund to buy equities
to obtain a safe return of 5%.

It is

sition

of

entirely different propo¬
to take the responsibility

an

investing

pension

funds

in

bound to be equities. But, be that as it may,
good, and if profits of corporations there is a great deal of talk that
are good, then the equity market pension funds will go into equi¬
ties, and since psychology plays
ought to be higher."
of corporations

are

very

are

pow¬

increase, they will not be will¬

ing
to
take
reductions when
profits of corporations are going
down.

(4) Profits of a large number
corporations in the first quar¬
the

of

ter

they were

are

year

a year ago.

lower than
The cost of

business is increasing and becom¬

ing more rigid.
If you

take all these factors into
you will
say to your¬

account,
selves:

there

of

large number of un¬

a

are

favorable
we

there are a large
favorable factors, and

"Now,

above

but

factors,

all,

don't know what the psychol¬

of the people will be."

ogy

Ground

Middle

The

these

Under

circumstances,

I

believe it is not wise to come out

considerable

been

The unions

(3)

erful, and whenever they see a
corporation or an industry doing
well, they make their demands,
and as a general rule, obtain them.
But while they are willing to take

number

(3) Open-end investment trusts
are growing very fast.
They make
an
appeal to many individuals
who
hitherto
were
not in the

funds

lays stress primarily

(2) There are many maladjust¬
structure.

of

pared with the return on bonds is
high, and because of this,
quietly, slowly, there is a shift
from bonds into equities.
More

large-

ments in the wage

the psychology

very

and

brittle economy can lead to

scale unemployment.

an

(1) A fear of inflation and the
to hedge against inflation.
That I mention first because it has
desire

his

man looking at a market exclusively from the economic point
of view would have said: "Business is bound to be good. Profits

ties the ability

serve

was

forecasts of the market from 1946

were

present

On the

up a

Now,

while I do not know what

is, if the increase in business
activity should later on decline,

now

The

decline

a

service which was as
bullish as can be, and this after¬
noon I picked up another service
picked

to the equity

™ao£et' afnd+l am q"!te sure that
?enJience Ca+

for

'30s.

the

which

it will give the Reserve authori-

hitherto.
w,

happen

1920 there was a sharp

that after

stock market went down.

question:

-

be¬

highest profits in history and the

Periods of good business, as we
are en3°ying at the present time, prove my point, m a mmu e.

all the weaknesses that have crept

we

will

this

tax-exempt

But

to somewhat tighten money mar-

that

of

people

The people remember

lieve to be.

break in

the

what

rather

but

equity market,
actually is,

the

In

is, is not what

of the investors.

overlook

or

supply

the

medium-term corporate securities^
if next month the Treasury offers
7- to-9-year securities with a

which is basic.

Well

Now, that does not mean that
everything is well with the United
States,

as

yourself

term,

The Money Market

unbal¬

an

an

the total volume of liquid savings

this

long

Policy Regarding Tax-Exempts

our

To

securities

exemot

Why?

effect

an

(5) The New York State Legis¬
lature
passed a law permitting

1920

Memories of

time in many months keen corn¬
litical situation abroad, which will
petition, and the effect on the
determine the expenditures of the
market can readily be foreseen or portant role than economics.
Federal Government.
We leave the field of psychol¬
foretold. Hence, I believe, those
But the fact of the matter is,
of you gentlemen who operate in ogy, which is a terra incognita to business activity
right now is
me,
which means an unknown
a tax-exempt market or those who
high, and will remain high for
land.
That is in Latin.
operate in medium-term corporate
several months, and
that again
We come to the field of eco¬
securities should pay careful atplays an important role.
tention to the policy of the Treas- nomics, and we see a number of
Adverse Factors
ury: (a) as regards money which conflicting forces, and because of
the Treasury will borrow in a these conflicting forces you have
As against that, you have these
not too distant future, and (b) as all kinds of views of the market. factors:
Last night I was
reading an
regards the refunding policies of
(1)1 have already mentioned to
the Treasury, which will be par¬ article in "Barron's" of the early you that the economy is very brit¬
ticularly important in September, part of March, in which one man tle. Our economy is not any more
There is, in my opinion, a direct makes a prediction that wevare as flexible as it was. before. A

y

To this should be added the fact
that, at least for the moment—it
may be changed later on—it looks
as if capital expenditures by cor-

,

the equity market.
If you

to have

better than I do.

what

such an important
role in the
market, the mere talk is sufficient

will increase. Tax-exempt securities will encounter for the first

money market is
indefinite
period of time, it is inflationary. concerned, the proposition is much
<imnipr
TTpro wp rin nnt
tr»
Naturally, this has an effect on simpler. Here we do not have to

for

budget

the

to

You know it far

become more brittle and that a
brittle economy can become an

people are realiz- moment, without any advance noing that the budget is operating tide, a strong psychological effect
on
a deficit
in a period of good on the movement of prices
of
business activity, and ask them¬ equities.
So much for business.
selves the question, "When will
the budget have been balanced?"
anced

gov-

immediately the supply of methe future, has also to consider dium-term securities eligible for
the fact that the economy has purchase
by commercial banks

A number of

If

happened

unstable economy.

;

el The demand for home fur-

go

not

medium-term government obligations was very limited, the banks
however, that demand for a given were more or less forced to seek
product goes down, what hap- an outlet for part of their funds
pens?
First, prices go
down, in tax-exempt securities with a
Profits go down. Profits can go maturity of, let us say, from 10
down only to a certain point, to 12 years.
In that category,
Since the cost of production can- therefore, the demand for these
not be materially reduced, it leads securities on the part of the banks
to the closing of the factory and was very strong.

goods
and
will be
propped up in addition by the
Hence, even though the immelarge volume of public works.
diate outlook for business is good,
(2) The outlook for the auto- the careful security analyst who
mobile industry during the next endeavors to project himself into
manufactured

rial,

is

Treasury

impact of this development. Once,

will be at increase

(1) Building activity

of the

strong, we don't feel the full

very

busi-

for

demand

the

Business Outlook Good

The

So long as
commodities is

What does it mean?

reached again.

policy

importance,
merely to those interested in

supported

previous postwar peak reached fixed because they are
November,
1948,
may
be b.y the government.

the

what

equity market?

about June

to

considerable

of

Too, prices of farm products are

190; and in May

between 185 and

up

Thursday, April 13, 1950

1949.

The

The

Yet

to obtain more elbow

briefly this:

from first page

CHRONICLE

FINANCIAL

&

headed for another

and say we are

great bull market, and it certainly
is not wise to come out and say
that
I

headed for

are

we

a

collapse.

of

adoption

the

that

believe

a

ground is much more ad¬

middle

visable.
be

To

than

comes

I

the

By "selectivity"
selecting merely

mean

chips.

blue
It

that.

is

more
be¬

selectivity

before

important.
not

do

perhaps

specific,

ever

Anybody can do
interesting to

rather

me

in looking over

of

investment

the portfolios
and other

trusts

institutional investors who.

large

buy equities, that all have prac¬

tically the same securities.

"selectivity"

By
Now

curity

time

the

is

analyst

ask himself the

thpir

the

rvrirps

mean this:
good se¬

a

to sit down and
question: "Which

have

industries

through

I

for

already

readjustment,
nlreadv

reflect,

gone

and
it?**

Volume

Number

171

4898

THE

COMMERCIAL

They

must
consider
what
lies
Question:
Dr. Nadler,*. do you
of these given industries, feel that the government's: policy
bearing in mind the higher stand¬ in trying to
restrict^ put %. lithe
ard of living and the larger sav¬ pressure
here
oj#-government
ings in the hands of people, and bond prices—do yfcti feel that a

ahead

the

lot

policy of the government.

Second, bear in mind the

of

effect

ques¬

tion that profits of today may not
be the profits of tomorrow, and

.4vill

carry-over

the

on

have

any

high-grade boilcl market de¬
cline enough to effect in any way
therefore an analysis of the break¬ the equity market?
ing point today, while it is not a
Dr.
Nadler:
The
question is
fixed

point, becomes
than

tant

And

ever.

after

you

Questioner;

You

rates

and

sum

up,
a

then, business ac¬
high level, the out¬

fect

thereafter is not
...

What

it.

outdo

year

ability the
will

clear.

not

The

better

they

itself,

and,

important,

more

the

policy of the Treasury.
■ by
which the Treasury
raises new money or refunds the

tant

much

said.

the equity market is

as

on

in

dollar

few who can find out what
psychology of the people will

let

be, you have discovered the stone
of wisdom.
You can discard all
other theories.

slowly. There

the

unfavor¬

and

favorable

both

' "

omy.

Chairman

*

Thank

Doctor.
like to mention at this

I would

that this

be pub¬
"Chronicle"
of

talk will

the

in

April 13.
I

Nadler, that

Dr.

know,

has

audience

lot

a

Where are
•V'V

for you.

men?
,

'

our

questions
they, gentle¬
of

Dr.
the

thing

buy

stocks at high

"

V

To

do

to

as

the

volume

same

business

of

amount

member I took a

holds

in

because

store

Wall

gives

very

little for the past. It gives every¬
thing for the future.
Should you
find that the earnings of the stocks
that

are

deflated

pricewise

will

well, and you have your
reasons
for it, then, obviously,
those are the stocks to buy.
....

hold

-

up

On the other

hand, if you should

outlook for the
stocks that are selling high today
—what we call high—that their
find

that

the




re¬

going to do?"

Questioner:
5

Yes, sir.

be

Secondly,

-

a

great

today is about two or three times
as

high.

That

rrie&ns

those

that

companies will bejp a position to
earn more than they did before.
'

The

fact

that

a

dollar

and

averages

see.

top is fdrmed, there
people who would not
working; they would be mak¬
a

.

Bank

Stocks

■

,

Question:

has

de¬

opinion

,

Dr.
on

Nadler:

Dr.

I

Nadler, what is
bank stocks?
believe you. .can

bank stocks as carefully?
as
you
want to, more carefully
than any other security, because, r
in the case of bank stocks, the

analyze

earnings of the bank can be de¬

,,by] the management.
has to, be taken into
You
can't- say
that about dny
account in earnings and in the
other industry.
'
outlook for profits—and therefore
Why? The business is good and
any going back to what happened
termined

preciated

prior to 1946, when-the decline in
the purchasing powef of the dol¬
lar set in, is not of as great im¬
••

■

the

volume

of

increases.

loans

Right!

And the bank has its earn-;

ings.

If

means

with

a

business

the

is

bad,

government

that

operates

deficit, the supply of gov-'
securities is larger and

ernment

the bank is in a position to

its income from securities.

obtain

an

or

three

down

immaterial—as

possible,

humanly

I

far

can

as

see,

And I go you a

step further, and say there isn't a
single man or woman in this room

enough to
bond.

ernment

to

the

your

question!

see

a

3%

That

gov¬

answers

[Applause]

,

observation which

There

the SEC will allow.

many

your

is

points
is

points

two

up

seems

to be very general among

are

a

lot

of cities and towns

in this

country outside of New York, Chicago and Los Angeles where
there are security dealers who would like to do some advertising

com¬

many

—

whether the government bonds go

that newspaper advertisements are so hidebound
by SEC rules and other unknown impediments, that any serious
effort along these lines cannot be directed toward a specific target.
For instance, many dealers shy away from going into print and
selling hard. They are afraid to do so. They don't know what they
can say and still not run afoul of criticism from the bureaucrats.
They haven't got the funds to hire expert lawyers to tell them what

ing money on the .market and
spending their time in Florida. It
is not so easy!
[Applause].

profits ought to be larger, assum¬
ing everything else remains the
same.
,"V.V /

course

securities dealers,

forecasting the,Security mar-

whether

Dr. Nadler: Tl^jat means that the

within

rates,

of

all

asked

recent advertising

,

unemployed—a million
half larger than a year ago.

Dow-Jones

a

There is

Let was as easy as to watch the

are

another 18 portance as many people think it
then they to be. ■
v*
are a good buy too.
The trick is
Does that answer the question?
to
find out what earnings will
Questioner: Thank you.
do in the future. That is the trick.
earnings are good for
months or two years,

I

auto¬

my

Fortunately, that went down in/
March. Should, however, the total
number of employed not increase,,

pressed in terms of dollars would
larger.
Is that true?

Money

fluctuations

easiest

the

been

kindly turned over to me, the
campaign which has been under way
for about six months in a city of about eighty thousand population.
The circulation of the paper used is approximately fifty thousand.
The surprising thing about this advertising is that the expense
involved was so small compared with the actual profits received,
that it completely belies the accepted premise concerning such
advertising, which is, that immediate profits cannot be expected
from most advertisements; but it is the long range result that
proves its value.
After the first month the sales of securities to
new customers alone paid the bill, and now the repeat business and
sales to old accounts, is providing a profit far in excess of the costs
involved.
•
.•
/;•'.>
results of

number of

If

four

By JOHN DUTTON

it

And

be

one's ability, to panies have machinery and equip¬
what the future ment which they bought prior to
for the earnings, 1946,- and the- replacement value
Street

trip in

is the stock market

"**

on

or

One of the smaller dealers has

mobile,, .and no matter where I
came
to buy gas, the first ques¬
tion the man asked me was, "What

ex¬

the

young

particularly

three

That is

of

nice

is

willing to
think of the fu¬

next

have

I

afternoon.

Y;-.It

Nadler:

Dr.

question

Railroads.
No.

to

years

be

years?

will remain low.

Nationalization

/,,,

Nadler:

you

the

over

some

you

Securities Salesman's Corner

up,vall the slack," they said.

a

Nadler:

talk about it,

people were really interested

and

ture

as

He didn't say

in the market at that time.

is, to the best of

prognosticate

Dr.

of

it did 10 years ago, the

predict what

the nationalization of the

Questioner:

you

.

what is more important

me,

actual

;

'*

*

Dr.

what?

for

rate

Would

come.

the
President
of
Westinghouse stated yesterday?

we

business

The question,

interest

ur.

more.'

take

our

as

railroads,

equities.

were

if I
understand it correctly, is this:
Is it desirable to buy stocks which
have already been deflated priceWise, and the earnings are good,
or to buy stocks where the earn¬
ings are still good and the prices
are high?
It is a very good ques¬
tion..

{Laughter]

wdrd

The

the equity market?*"

place,

you

Do you think there is
chance of this nationalization,

such

important

and rather rapidly, in April and
Why?
In the first
in May, I-think the security ana¬
know that because the
lyst will begin to pull.jn his horns
dollar buys so much less than it
in spite of all the new factors en¬
did 10 years ago, if a company
tering into the market,. ; •«
:

of

earnings have
still been good, where earnings are
still very high?
• : > ~
Nadler:

Specifically,

a wellwhich had been

the ^decline in the
purchasing power of the dollar is
bound to have an effect On prices

the last three years

Dr.

analyst

Obviously,

prices, or the stocks which are
depressed marketwise, where, for

<

an

know what happened.
"Look* at
the
huge investment
trusts that have been formed to

depreciated

earnings, under

have

oldf'man, and I remember

an

Well,

that there was

company

reported

ence

Question:

to

a

chasing power of the dollar influ¬

I would like to ask
Nadler whether it would be

*

an

can

feel blue.

you

Nadler, I recall
in the '30s, very correctly,
predicted a continuing low

that

a

Question:
any

when

Question:

of management.

say,

can."

have

extent does the decline in the pur¬

Questions and Answers

.

earnings?

say

work for a

versation

down. If the
promotion
of

that

me

happened! You never
can tell
when yOU deal with the
thought.
stock market, where, to a very
;
Dr. Nadler: Let us look at it large extent,:, you- deal with in¬
from
a
broader Wangle, because,
tangibles, with -human psychology,
after all, the broader angle is al¬
and who can predict what human
ways
more
important than the
psychology is.
specific angle.
;
:
Moreover,
even
in
business,
If I understand your question
everything is not so hunky-dory.
correctly, sir, it is this: To what We saw lash
February the total

"

F. Novak:

N.

very

am

to comment

the

to

ask

really represented any increase of
earning power at all? That is my

;V
*

*

'■

give

I

tells

ably ' remember
him.
It
was
around June; 1929.
•
I said, "Dr. Friday, what do you
make of thejmarket?"
He said, "TEhjo.y it while you

own

result.

of what you

anybody

day .I was traveling with the late
Dr.
Friday7" Some of you prob¬

present conditions, of $3 a share

operating in the econ¬

able forces

question.

The index
down below 161.

welL1929. We were all in
midst';of a
new
deal.
It
couldn't happen. I remember one

am

like to

was

the

earning, before this inflationary
period, at the rate of perhaps $2
a share.
Would you consider that

will do well. If you have not,

then feel your way

I woffld
a

favor

on

us

known

Go by it, and

our

you

lished

I

in my

out

Would you- epre
the
effect
tnat

the

time

it

reason

1949

in

go

pursues

loans, then it hedges
change in interest rates.
If interest rates go up, the man¬
agement will make more money;

very

that question

witteho

Question:

very

you,

tried

the Doctor

should

*

am

[Laughter and applause.]

concerned, if you are one of the

are

general

as

year,

far

As

The

answer

investments,

grade bonds.
,

going to

is that I

they are called later
will have an impor¬
bearing on prices of all high-

in the

Nadler:

Dr.
not

method

securities,

the

tection than the rest of the group?

by
The

other hand, if
private company
and you belong to a strong union,
you can ask for higher wages.
If
they don't give it to you, you

business

against

had.

ever

bearing on the equity market, and
if anybody-3tells me that there are
new forces in the market, well, I

down you

the Reserve
is unfolding

the policy
of
authorities, which

than

business

depression

we

years

recession

if

which

a

are

and if the market goes
might have better pro¬

average,

mediate future will be influenced

by

situated

on

feel

you

where, if the market goes up,
would do better than the

run;

•

that

no

prices will then

went

"Yes, sir!" I have indi¬
cated ,to you a number of uncer¬
tainties
which
are
vital,
and

just

pick out indi¬

to comment

care

labor

and

the

On

ernment.

you

therefore, I believe, bank shares
are
easier to analyze than any¬
thing else.
The only
difficult
everything,^ today is fine, that problem is
management, and past
there isn't a- cloud in the sky as
big as the palm of your hand, I performance tells you.the story

didn't go

You may

you

industries

doesn't

certainly doesn't want it, because
you can't strike against the gov¬

rates go up, and the bond

money

is this:

nothing to brag about.

of

trends

would

few

number
of
banks can be bought at substan¬
tially below their book value. ■
Thirdly, I believe that the stock
large

a

nationalization?

wants

Management

Second,

1947 and 1948 were the

the

Even

answer

average

1946, and

peace

And

of good

year

a

market in the im¬

money

best

little ef¬

industry.

in

down

stocks, but in those studies

as

of them sound.
*

the

The

Dow-Jones

occurred.

Nadler, I know
student of economics

willing to

market.

*

Dr. Nadlei1:

1928

vidual

In part, good business is
supported
by
measures
by the government, not all

taken

be

Who

you

The

Dr.

and

that will be nationalized."

and

think the Dow-Jones of a well-managed bank offers the
is a good barometer? To¬ hedge
against
an
increase
of
day we don't see any clouds that money rates,
and in other re¬
might
come
along.
Don't you gards this is what I mean: Where strike, and ultimately you get it.
think that is a point which has to an institution has a large volume
Management doesn't want it; labor
be taken
into, consideration se¬ of bonds, > high-grade bonds, 'it doesn't
want
it;
government
can be adversely affected only if
riously?
f ■'
doesn't want it.
It is nice con¬

the equity m&rket.

business

prob¬

saying, "This will be nationalized,

sec¬

average

rates were

money

deep
also studied

a

you

business,

being

Don't

maturity

onds, or whether it is based on a
solid
analysis of the monetary

<

.

barometer of economic conditions.

so,

1950, as a whole,

year

down

go

as

follows

What is clear is that in all

on

•

one

June,

when you feel very blue, and you
have
to
let off some steam by

bank

hours, six minutes, and four

us,

15th of March or the 15th of

whether the in¬
prides itself that
distribution is three

upon

35

,

2.40 has very

or

put this over

try, the stock market, which is the

in

think

different in

was

Question:

tainly is good, and there is nothing
can

2.35

or

look for the next six months cer¬

that

It

1929, when

its

(1543)

depends

dividual

style

barometer, which is, in this
country, as in every other coun¬

role -in- the equity

no

It

I want

In my-opinion, management has

f

Is that the

don't

I

.■

CHRONICLE

a

effect

any

all,

put the problems before
only- want, to ask him

question, J

high. Whether the return on longterm government securities is 2.30

Summary
♦To

play

market.

favor them, as I demonstrated by
the experience of 1947 and 1948.

tivity is at

have

of

and'I

because, for the time being, money

of little value if the psy¬
of the people does not

chology

arid

Yes.

Nadler:

Dr.

remember that all economic anal¬
yses are

will

equity market.
question?

First

with which he has

long-term govern¬

the

on

alibi in
must

an

decline

moderate

some

bonds

ment

have done it
you
are
capable
for

the

prices of

make this anal¬

wrong.

are

whether

,

you

of doing, prepare
case

•

,

you

ysis, and after
as
carefully as

impor¬

more

,

.Question!

to thank Drv Nadler for the

equity^market? Will

the

FINANCIAL

&

in their local paper.
be up to next. Just

They don't know what the SEC is going to
recently some lawyer of the Commission re¬
leased another viewpoint regarding the advertising of mutual
funds. I understand that lately the NASD has also been interesting
itself in what and why and how ads should be written by retail
dealers.
It is

' "

■"\!'

'■

"

.

:

'

disgrace that after almost 18 years the Securities and
Exchange Commission has left the securities business in complete
bewilderment concerning limitations which supposedly surround
the advertisements it places before the public.
If there is a pro¬
gram—if there is a set of understandable rules—if there are deal¬
ers who know just how far they can go in an ad—and how much
they are circumscribed by nebulous interpretations that constantly
keep dribbling out of the Commission—I don't know of them.
But let us get back to this dealer who is finding new accounts
through his advertising and who is making it pay. He has done it
in the same way that people in other lines of business make a suc¬
cess out of their advertising. He has used repetition.
Every day in
the week including Sundays he inserts the same ad. He used the
same

a

type, same layout, same stock.

inches double column.

He selects

a

The ad is small, about two
medium priced stock.

It is a

dividend payer and a company well known
the highlights and invites further inquiries.

in his territory. He hits
The leads are then fol¬
lowed by salesmen. Day after day the same ad appears. People
begin to believe the stock attractive the longer the ad appears in
the paper. Those who don't buy at first, later on do so. They don't
know it, but the ad has been silently selling them. When a situa¬
tion gets stale after about two or three months it is changed—but
the style of type and the size of the ad remain the same. Repeti-'
tion—that is the secret of
I
But I

am

sure

also

that the

success

here.

SEC could

find

no

fault with these ads.

that my good friend doesn't know this.

He is
just taking a chance that they would pass muster—they are hon¬
estly and carefully written and that is the best he can do. I asked
him why he didn't check them with the Commission.
"Good
heavens no," he replied. "First of all, the less I see of them the
better, and secondly they would be weeks telling me what I could
or couldn't do, and probably they would mess it up so that I would
just be throwing my money away on the ad after they got through
am

with it."

sure

36

(1544)

COMMERCIAL

THE

&

three countries alone

Continued from first page

CHRONICLE

rarely

Thursday, April 13, 1950

lution to this problem may be in

What happens is

occurs.

T

that the

flow

thrpugh

As

FINANCIAL

of

goods and funds ordinarily

legislation. - In the meantime, era-;'
ployers should be cautious in ac¬
ceding to union demands for plans

'

passes

countries in such a way that what each
country needs from the other is obtained, and all is

We See It

many

well if at the end

which

of the world is achieved.

The
The

basic

Basic

discussion

is
.

*

found in what must be termed the "managed econ-

©my" approach. Implicit in virtually everything that
is being said is the notion that somehow the channels

.

of trade and the flow of goods and services

:

:

try to country must be directed by
five agency.

I

J

some

from

coun-

sort of collec-

If in their infinite wisdom—and if they

are to be; successful in such gigantic
wisdom must be infinite—the powers that

,
*

;

.

tasks

....

,

.

their

verse

must

effective.

pull the strings that such

so

a

strange ideas about the role of investment in the
balancing of such accounts. And so Point IV is trotted
out.
But if investment is to be investment and not charity,
then further complications are introduced.
It would be

lie

*

being said rests directly

or

this

situation quite beyond our control, the effect of which is
to limit the application of well-tested and well-proved basic
doctrines

governing such matters

these. The (existence
periphery, constituting
a
very large portion of the globe, harboring an extraordi¬
narily large portion of the peoples of the world, producing
a substantial
part of the goods of the world, and all oper¬
ating under close control and central direction, obviously
precludes world-wide application of the principle of even
relatively free trade. It would be futile to advocate even
as

of the Soviet Union and its satellite

the freedom of international trade
that

on

a

international economic

relations

But

even

*

when all such aspects

even

as

an

"v

ultimate

,; ;

:

of the situation

convinced that if

<

!

j
i

-

I

a

'

t

'

occasionally pay lip
they call "triangular trade," but what
not to realize is that the trade of the world

?

they

?

is normally not "triangular" at all, but
many-sided.

I, That

appear

is

to

say,

that the balancing of




accounts among

the

His theory is that

tax laws.

Few

extend

most

con¬

know,

of

as
long
limited to

time.

is

but

one

five

as

one

duration. The

provision

un¬

negotiated for

periods

for
are

in

years

As you

are

relatively short

sion

ance

depends

between
-v

goods and
creating simple balance
between two countries, but is that of so
directing the flow
of goods and services—and, let it not be
forgotten the flow
of investment funds and the
earnings from past invest¬
ments are
also
involved—among a large number of
countries in such a way that a
general balance is achieved.
The President and the others

tax

a

its income for

or

pen¬

of

the

terms of that contract. Its continu¬

are so

service to what

The
Rev¬

proposition.

two

or even two
groups of
reciprocal in their production and in
their needs that the direct flow of
goods and services
i>etween them may be counted
upon to balance out year
after year and still leave the economies of both countries
or both groups of countries at maximum
efficiency or even
near it.
In brief, the problem of the master minds who

I

4

on

to

were

10 years.
Internal

asserting

now

shot"

years;

truism that very rarely, if ever,

undertake to control the international flow of
services is virtually never that of

is

of

union contracts

liave there existed two countries

countries which

employees

program rather than a

der

The difficulties which any control agency must en¬
directing the international flow of goods may be
It is

The

ing the union negotiated plan

counter in

-easily indicated.

provide annuities for its regular
employees. It did not plan to make
any
further payments into the

ceivable that the rule may prove
to be a serious obstacle to qualify¬

An Impossible BalanceV
>

in

trust fund

a

to

"permanence" doctrine, it is

are financial and
currency manipulation, bad in itself, but often effected for the express

}

000,000 into

$1,1941

put

company

In view of this extension of the

on the movement of goods on trumped
grounds of public health, and all the rest.
Also

purpose of controlling the movement of goods across
boundaries.
; V^
'..V,

highly

"one

much

restrictions

•

other than the

The

long-range

to be included

j

case

situa¬

a

the trust is not exempt since the
law
contemplates a permanent

evidence, including, of course, tariff rates and tariff
procedures, but also many other things such as quotas,
on

where

the year 1944.

government which have of late years been so much in

|

em¬

compensated employees were in¬

against the fund

larger element of free¬
dom cannot be injected into this situation, then it is all
but hopeless.
There are not only elements of direct
control as such, but all those other interferences of
a

tion

extended to

was

volved.

enue

of such goods and in the management of the economies
bring them into being, is essential. Indeed, we
are

this rule

Commissioner

which

!

after the

favored

draw benefits after

taken into full account, it is still true that a very
much larger degree of freedom in the international
flow of goods and services, as well as in the production

]

soon

ployees had been provided.

fund.

■

are

.

highly paid employees, and

In the Lincoln Electric Co.

during most of the latter part of the nine¬
teenth century and the earlier years of the twentieth. The
aggressiveness of this immense bloc of the Kremlin, and
the definite possibility that we may be required to defend
ourselves against the political aggression of it, renders it
difficult at some points to suggest complete laissez faire
in

against the employer adopting a
plan, fully funding the pensions

union

on

the

the negotiations

parties

when

the

1

;

,

dis~-

a

a

(§29.23(p)-l, Regs..

'
Taft-Hartley
that

)

(

Act

also re¬
contributions for

the

benefits and

for other-

social insurance benefits be segre¬

the right to change
Moreover, whether
terminate the plan and to dis¬ union negotiated plan

then abandoning it
pensions for such

,

:or

or

thereof."

retirement

may reserve

for the

f

:

111.)

5

gated;

other

No

the

not

or

and that the funds desig¬
pensions not be used for

nated for
any

i

purpose.

problem

that

is

in.

encountered

with certain of thenegotiated plans—like theAmalagamated Clothing Workers,,

is actually
it, if the terminated at the end of the con¬
plan is abandoned within a few tract period, the fact that it is
years after its inception, this will adopted in the first instance for a
be evidence that the plan from limited term violates the concept
the beginning was not a bona fide of "permanence" required by the
The Bureau
program for the exclusive benefit Bureau's regulations.
of
employees.
(§29.165-1,
Regs. has been vitally concerned with
this problem.
Thus far, it has not
111.)
That
requirement
was
adopted
primarily
to
guard come up with an answer.

world-wide basis

existed

goal under current conditions.

.

respect

union

continue contributions to

elements in

are

plan

indirectly
or

pri¬
and;

purposes

unemployment
sickness, acci¬
dent, hospitalization, medical ex->
pense,
recreational,
welfare, or
similar benefit plan, or a combina¬

In Pension Plans

it.

We well understand that there

wage,

quires

Impediments to Free Trade

^

page

designed

which is primarily

.

benefit

Tax Problems Involved

er

upon

from

be

plan—

a

.

missal

change is

Of course, this

most of what is

•

The

the surface of what is

on

ply to

5■■;*.

tion

Continued

implication does not always
said; it probably is not
always fully realized or understood by those who give
voice to the notions recently expressed, but all or

<

*

plan

for pension

to

state that the statute does not ap-,

well if the President and the others refrained from usurp¬

ing the functions of Mother Nature.

;

provide a combination of'
benefits unrelated to that purpose.;
In. that respect,
the regulations

very

;/v

the

not

have

■

J
..

that

marily

..

Then the President and his advisers appear to

be conclude
that more of this class of goods should flow from coun¬
try A to country B or that less buying by country C in
country D is desirable, then the managers of the uni¬

-

.

,

,

unsound,

an

(3). Welfare Plans: To qualify a
pension plan it is also necessary

Obviously, such an involved
pattern as this is too much for any one brain to direct
successfully.
Only nature itself is equal to such a
task.
;
..
*

Weakness

of all official

weakness

require

may

actuarial method of funding.

balance of each with the remainder

a

the

International Ladies Garment.

Workers

and

Brotherhood

the

of

International.,

Electrical

Work¬

They maintain separate and
distinct funds for providing the-

ers.

retirement

vide

social

insur¬

In

fact, the
themselves specifically

tracts

Actuarially
Sound
Plans:
Another requirement for a quali¬
fied pension plan is that the plan
(2)

the

and

benefits.

ance

for

con¬
pro¬

the

percentage of gross;
payroll which shall be contributed
each

to

fund.
However, in spite
provisions of the Taft-Hart¬
actuarially 'sound
ley Act and the Treasury's regula¬
basis. The regulations state:
tions, there is a drive by some
"A
plan designed to provide unions to obtain a "single pack¬
benefits for employees
or
their age" type of plan in which various
beneficiaries to be paid upon re¬ welfare and insurance benefits, as
tirement or over a period of years well as strict retirement
benefits,
after retirement will, for the pur¬ are included.
poses of section
165(a), be con¬
I understand that recently the
sidered a pension plan if under
American Federation of Musicians
the plan either the benefits pay¬
has received an opinion from the
able to the employee or the re¬
Attorney General of the United
quired contributions by the em¬
States, permitting it to avoid safe¬
ployer can be determined actu¬
ly the separate trust requirements
arially." (§29.165-l(a), Regs. 111.) of
the
Taft-Hartley
Act.
The
"/Many union negotiated plans United Mine Workers is another
will fail to meet this requirement. case in
point.
The union agree¬
Some union negotiated plans re¬ ment itself
provides that, "The ..»
quire that the employer contribute trustees shall designate a portion
be

must

tained

to

established

on

pension

a

amount

main¬

and

of the

an

fund

either

employee,
percentage of a payroll,
per

a

flat

a

or

flat

a

or

cer¬

.

.

of

.

the

herein pro¬
actuarial
a separate fund
administered by the said
payments

vided, based upon
computations, as

proper

tain amount per ton, or a specified

to

amount per

trustees herein described and to be

unit of production, etc.

If these amounts
to provide

used

are

such benefits

be

merely used for providing pensions
could

nuities

purchased with them, no diffi¬
culty will be encountered under

United

as

be

the tax law since the plan could
qualify as a "money purchase" ar¬
rangement. But most of the plans
provide for pensions in a fixed

for

members

or an¬

the

of

Mine Workers of America

their

or

the

families

or

dependents

and such other persons as may

properly included
thereunder."

as

This

be

beneficiaries
undoubt¬

was

edly inserted to satisfy the re¬
regardless of the ade¬ quirements of the Taft-Hartley
of the employer's contri¬ Act.
But in actual practice, I am

amount,
quacy

butions

provide

that

amount

of

/

pension.

advised,
funds

such

no

was

made,

segregation
has any

nor

of
ac¬

For instance, the plan might re¬ tion been taken to compel such
quire the employer to contribute segregation.
r

a

_

,

contract

comes

for

up

re¬

newal.

20c

30c

or

a

ton to

a

pension fund

Regardless of whether the

pro¬

and
of the Taft-Hartley Act
might guarantee
the
em¬ visions
Accordingly, there is the dis¬ ployees $100 a month pension at can be
circumvented, it is clear
tinct possibility that at the end of
age
65.
It is self-evident that that such a single

package plan
requirements of
Treasury Department's regula¬
crease in direct
wages or in other one hand and the specifed bene¬ tions in this
respect.
Tax wise, it
immediate benefits rather than in fits on the other.
means the
According to
employer will lose his
a deferred pension
plan.
An ex¬ the Bureau's present attitude on deduction for amounts contributed
the

contract term the

decide

it

ample

prefers

of ' this

in the

to

union

have

occurred

an

may

in¬

recently

of the New York City
Omnibus Plan.
This was adopted
as a

case

result of

made in

arbitration award

July of 1947.

continued
union

an

in

1948

It

was

because

there

longer wanted the Plan.

no

necessary

correlation
on

the

the subject, the plan would not
qualify as an actuarially sound
plan within the meaning of the
above-quoted regulations.

dis¬
the

is

between these contributions

will

violate

to

such

a

a

difficult

problem

in view

fund.

vember, 1949,

a

As

late

as

No¬

spokesman for the

coal operators stated that he knew

of

no

coal operator who had been

Again, the Bureau is confronted permitted
with

the

the

tribution

a

deduction for his

to

the

United

con¬

Mine

Fund.
The
regulations.
It is, of Workers - Welfare
anxious not to place any Bureau of Internal Revenue has
obstacle in the way of qualifying confirmed, informally, that state¬
pensions will vary in inverse ratio a union negotiated plan. Neverthe¬ ment. : The failure of the Fund to
to the size of the Social
Security less, it finds itself in the awkward qualify in this respect may, thereno

It must also

the

union's

benefits.

be recognized that
for company

of

its

own

course,

desire

One

union

has position of having adopted a re¬ for£, subject the coal operators to
Security quirement at least eight years ago a tax of approximately $42,000,000
in
benefits are raised to about $130 designed to weed out
addition
to
the
tremendous
unsound
per month, the U. A. W. would pension plans
adopted perhaps for sums they have already contrib¬
give up its pension demands. Cer¬ a limited group during the war uted to the Fund itself.
v
tainly, if Social Security is in¬ years. Now that rule stands in the
(4) Plan Mast Be Limited to
stated

that

if

the

leader

Social

,

creased

,

what the unions con¬ way of its
approving plans hav¬ Employees: Still another require¬
adequate level, it is quite ing a much broader application in ment for qualifying a
plan is that
possible they will demand wage coverage.
Unless the Bureau re¬ it must be for the exclusive bene¬
sider

to

an

increases in lieu of

a

continuation

of the pension benefits.

verses

itself

on

this

relatively fit of the employees of that par¬
ticular employer. In other words,

well-established rule, the only so¬

•

Volume -171

Number 4898

THE- COMMERCIAL

employer cannot provide bene- hardly seem possible that a union
for
persons
who
are • not,
negotiated plan could result in
strictly speaking, his employees— discrimination in favor of highly
e.g., lor the employees of a sub¬ compensated employees.
Yet it
sidiary company or of an unre¬ may. •"
v '
^
- r
(•'
lated company, or for
people who
For * purposes 1 of
determining
are
on
a
retainer or consulting
discrimination either as to' cov¬
an

The failure to

CHRONICLE

quirements of
the

close

that

section

ficiaries
are

(1545)

the

under

regarded

pension plan earning over $3,000 per annum.
by the But it frowned on any additional

covered

as

plan, then the amount contributed limitations which might further
making each year, based on that year's cut down that coverage. :
v V
retirants, will generally be less
Recently one of the large steel
ordinary and neces-c than 5% of the payroll of all the companies was confronted with

taxpayer

from

.

the claim for the deduction under

§23(a) as an
sary business

erage

or

plan to employees does not result classified
merely in the loss of a tax deduc¬ excess of
tion for the contributions made on
behalf of those who are not em¬

ployees.

Rather, it may result in
disqualifying the entire plan and
losing the deduction for contribu¬
tions made

who

on

behalf of

those

even

clearly employees.

are

.

At first

blush, this requirement,
hardly seem to have any
possible application to the union
negotiated plan. Yet it has. There
would

has

been

a

growing tendency to
plans on an industry¬

negotiate

wide,

or

geographical,

a

rather than

on

ployer basis.
is

obvious.

preserve

benefits
union

The

so

long

he

or

unions

as

he is

—

for

to

active

of
em¬

employers during

of his period of active

service.

plan! could

that

basis

(§23(p) (1) (A) (ii),
Effect on Non-Union Plans
provide IRC); or
There is a side reaction to the
benefits on the first $3,000 of earn¬
(3) The employer may deduct
union negotiated pension plan that
ings without resulting in discrim¬ annually the pension cost attribu¬
might be explored profitably at
ination against the employees ex¬ table to that year's service
(i.e., this
point.
Suppose an employer
cluded.
Yet it is hardly conceiv¬ the so-called future service bene¬
is considering the adoption of a
able
the union
would
agree
to fit) plus one-tenth of the total
plan which covers non-union as
excluding such earnings for pur¬ cost for years of service prior to
well as union employees.
That
poses
of
the
union
negotiated the inception of the plan (i.e., the
plan may not in the future prove
plan.
Even if it did, there is still so-called
past
service
benefit)
satisfactory to the union negoti¬
the possibility that
plan
lim¬

pension

one

Under the Bureau's rule,

such

this

want

an

for

annum.

em¬

regardless

works

many

the course

reason

employee's

member

whether

ployer

The

an

basis,

individual

an

-j:';!;;'.

a

not

a
so
(§23(p)(1)(A)(iii), IRC).
ators who prefer to have a sepa¬
,The Bureau has supplemented
might
be
discriminatory
rate deal applicable to their par¬
the employees excluded the detailed provisions of §23(p)
wide basis are those of the Amal¬ against
ticular members.
Moreover, the
from
the plan.
It is true that with a very comprenensive Bul¬
gamated
Clothing
Workers
of
employer will, under the Inland
America (CIO), the International unions for such highly compen¬ letin
designed
to
indicate
the Steel
case, be required to nego¬
Ladies Garment Workers Union sated employees are not too com¬ "trend of official opinion on the
tiate with the union on the adop¬
mon.
However, where they exist, administration of the provisions"
(AFL), the International Brother¬
tion of the plan or on any at¬
hood
of
Electrical
(See Foreword to
Workers
of they do provide a rather serious of that section.
tempted modification of it. Fur¬
problem in qualifying a plan re¬ the Bulletin, dated June 1, 1945,
America
(^jFL), and the United
thermore, such a plan may be ad¬
Mine Workers of America.
I un¬ sulting from union negotiations on by the Commissioner of Internal
versely
affected
by
the
with¬
behalf of those employees.
The Revenue.)
derstand
the
so-called
Toledo
drawal of the union employees at
Plan is one negotiated on a geo¬ Bureau is not quite as limited in
Even though the alternate pro¬
some
subsequent stage, or their
making exceptions to this rule as visions of
graphical basis.
§23(p)
would
seem demand for a substantial
change
it is in some of the other require¬ to
indicate there was a certain in it
In
those
applicable to them.
This is
cases,
the employer ments. While the statute itself
amount of flexibility available to
makes his contributions to a com¬
true not only with respect to the
does contain the non-discrimina¬ the
employer in funding pension union employees but also to those
mon fund.
They are then used to tion
rule, most of the precise de¬ benefits, it is anomalous that none classes of
pay benefits not only to his own
employees who may be
lineations of that rule have been of
them
quite fits the pattern unionized in the future. The em¬
employees but to employees of
imposed by Bureau regulations taken by the recent trend in union
other employers in the industry or
ployer may thus hesitate to adopt
and rulings which were prepared
negotiated plans. The funding pro¬ a plan covering union or potential
in
the
particular
geographical under
entirely different economic visions in negotiated plans vary, of union members

Notable examples of retirement
plans negotiated on an industry¬

ited

,

'

area.

....

Thus

circumstances.

The

law

far, the Bureau has been

seem to be
sufficiently flexible in
application of this regard to permit the Bureau
the rule that the plan must be for to
change its fundamental con¬
the exclusive benefit of the em¬
cept of discrimination so as to
ployer's own employees.
Now it qualify union negiotiated plans of

rather

strict

in

confronted

with

the

union

de¬

is

into

trust each

year

will

a

which

the

fund

an

benefits

for

those employees who retire in that

year.
(The
Bethlehem
Plan
is
$
*
*
typical of this method.)
Or the
foregoing discussion indi¬ employer can fund the pensions
industry-wide or geographical cates some
pitfalls in qualifying for those employees who will re¬
basis.
The Bureau is inclined to
a union negotiated plan.; The seri¬
tire in a given year over the next
"soft pedal" this requirement in
ousness
of the situation
will be five
years.
(See
the Jones
&
some of the cases that have come
appreciated
if
the
tax
conse¬ Laughlin and the Republic Steel
before it thus far.
Whether it can
quences of failing to so qualify the Plans.)
:
continue to do so is questionable
The
Bureau's
Bulletin
states
plan are noted: (1) The employer
in view of the fact that the re¬
that—
may lose his deduction with retro¬
quirement
is
not
one
imposed active
effect
if
the
"Where no costs are determined
employees'
merely by regulation or ruling,
rights
are
forfeitable;
(2)
the with respect to an employee until
but is in the statute itself and has
employees may be regarded as his retirement (or until benefits
v.-,

The

■

been in the statute for many years

taxable

on

the amounts previously

prior to the amendments contributed to
the plan
if their
by the Revenue Act of 1942.
rights are non-forfeitable; and (3)
If
the
trend
for
industry-wide the fund itself
may be taxed on
union
plans continues,
it may,
any income earned by it while it
therefore, become necessary for was not
exempt. Any of these re¬
the Bureau to request appropriate
sults would be highly unsatisfac¬
remedial legislation in order not
tory taxwise.
Accordingly, both
to affect its long-standing appli¬
the employer and the employee
cation
of
the
present statutory have a stake in
attempting to have
provisions in that regard. ^
this problem resolved satisfactor¬
(5) Discrimination in Covsjsl
e ily with the revenue authorities.
Benefits:

One

of

c

-V

in

1942—and the one which

emphasized most in the
administration of the

pensi©q*pian
provisions—is that the plan .jufct

:

Even
come

if the

the

plan

obstacles

behalf

are

first

should

over¬

noted

above

and qualify as exempt under §165
as tc
of the Code, the employer can get
benefits in favor
ly compensated employeesfj^rne a deduction only for amounts con¬
tributed within the statutory lim¬
statutory provisions are qurj£J
In other
tailed in this respect; and seVffal its set forth in the Code.
tests are set forth to guide^the words, the employer will have a

,

;

be : argued, therefore,
that where the full reserve is paid
It

in

could

retirement

at

(as

the

under

Bethlehem

type of funding), such
supplemen¬
tary or past service costs and that,
therefore, the deduction must be
limited to 10% of the amount actu¬
amount represents

an

sive, taxwise, for the employer—
especially in the early years—since
deduction

the

would

be

allowed

attitude

on

this

very

important

aspect of the law;
The Bureau's effort along these
lines was to make sure not only
that

did not discriminate
highly compensated
employees and against the lower
a

plan

in favor of the

the

even

deduction

on

indefinite¬

would

tend

to

out because in the tenth and

subsequent
would

be

the

years

getting,

as

a

employer
deduction,

the

deduction

deduction

will

be

by other provisions of

law.

preceding years.
It is also arguable that under
such a method of funding the de¬

Prior

to
the Revenue
Act of ductibility of the contributions is
1942, deductions to pension plans governed by the first provision
were
allowable
either
under noted above—namely, that based
§23(p), which was specifically ap¬ on 5% of the compensation of the
plicable to pension trusts, or under employees covered by the plan.
§23(a), which was general in scope (§23(p) (1) (A) (i),
IRC.)
The
and related to ordinary and neces¬ question
in that connection is:
sary business expenses. Since the "Who are the employees covered

paid employees who were actually
covered by the plan, but also that Revenue Act of
1942, however,
the plan did not discriminate as contributions to a funded pension
between
the employees covered plan are deductible, if at all, only
and those not covered.
It would under §23(p) of the Code (which




ly,

carried

for his the sum of one-tenth of the con¬
contributions, but the amount and tributions made in each of the ten

of that

requirements of
§165(a)(3)(B) of the Code.
The possibility
of adopting a
plan, similarly limited in coverage,

should be kept in mind by em¬
ployers who have a large number
of actual and potential union em¬
ployees.
It offers a method by
which

plan

can

would

not

a

which

be

set up

be

by the plan?"—so as to determine
the compensation on which the 5%
is

to

be

based.

If

all

the

em¬

ployees who are prospective bene¬

now

toprogressive
union raids in the future.
And, by
excluding
actual
and
potential
union employees in the first in¬
stance, it avoids the problem of
bargaining with the union on a
plan before the union has raised
constant

attrition

the issue

on

its

subject

by

own

behalf.

V

/

•

.

Conclusion

t

The foregoing

discussion is not
designed to paint a hopeless pic¬
ture of the tax situation confront¬

ing

the

employer in connection
negotiated
pension
is designed to present
certain of the practical obstacles
arising under the
tax laws as
now
construed
by the Bureau.
With all fairness to the Bureau, it

with

union

plans.

It

should
is

be

with

a

fine

the

that

stated

approaching

these

sense

of

Bureau

problems

cooperation.

arises:

a nonpartisian commission to make
completely impartial" study of the whole prob¬
lem of Federal spending has been recently suggested
by Senator Robert A. Taft.

"a

The commission, he said,

should

of

consist

leading citizens, who
would be named by the President
and Congress "to report on the
long-range spending programs of
the Federal Government with ref¬

%

vX'

■

''

^

''
.

'

erence

to their relative

which

controlled

crimination

The Senator Is Right!

and also

timing

non-dis-

Formation of

Par. 61.)

for only a part of his contribution.

a

classifi¬

a

the

meet

payable),

If the plan is

right to take

that such

..

erage or

(§165(a) (3) (B); §165(a)
(4); §165(a) (5), IRC.) The regu¬
lations are even more precise and
many rulings have been promul¬
gated "spelling out" the Bureau's

held
would

,

not discriminate either

Bureau.

cation

of employees union, he may find he has con¬
satisfy the Bureau's tributed to a plan which cannot
rule as to non-discriminatory cov¬ qualify and, therefore, he has lost
erage
(§165(a)(3)(B), IRC) and his right to a deduction. On the
at the same time exclude those other hand, if he attempts to qual¬
classes of employees which now ify his plan first so as to be cer¬
of the deductibility of his
are, or in the future may be, sub¬ tain
ject to collective bargaining? Un¬ contribution, he may not be able
til
to conclude his negotiations with
recently,
no
such
solution
seemed
r
possible under the the union.
As the union pressure mounts;
Bureau's interpretation of the ap¬
plicable revenue provisions.
It it is. not at all inconceivable that
took the position that a plan could the Bureau may be required to
qualify if it related only to sal¬ relax many of its carefully * built
aried employees or, in some in¬ up restrictions relating to pension
-v
■;
stances, only to salaried employees plans.

supplementary [i.e., past service]
costs."
(See Part III, Subpart G,

,:-.v ally contributed in a given year.
This would be extremely expen¬

Deduction Aspects

Bureau

this stage.

question then

all the costs determined represent

made

and

his

on

even

requirements of the statu

would limit the plan to salaried
employees of the company earning
over $3,000 per annum, other than
those employees who are repre¬
sented by a collective bargaining
arrangement, and other than those
who are entitled by law, contract
or
custom
to
compensation for
overtime services. In a ruling is¬
sued
in
February,
1950,
the

amount which would

this character.

mand for

an exception to the rule
where plans are negotiated on an

The

the problem described above. It
proposed a classification * which

popular at the present time con¬ possible for an
sists of having the employer pay some classification

its

-

is

But one method which

course.

,

It appreciates» the dilemma con¬
Is it fronting
the
employer:
If
he
employer to find agrees to
the
demands
of the

at

would

37

fore¬

expense. /
active
and
retired
employees.
The provisions of §23(p) are, of However, if the Bureau construes
benefits, the Bureau has
employees earning in course,
extremely
complicated. this provision narrowly and re¬
$3,000 a year as highly For purposes of this discussion, it gards only the actually retired em¬
compensated
employees.
Some is sufficient to point out three ployees as covered by the plan,
unions are composed of specialists main limitations:
then the 5% rule will be of little
and craftsmen who would be re¬
(1) The employer may deduct help in granting the employer a
garded as highly compensated un¬ an amount not in excess of 5% of full deduction for his annual con¬
der
the foregoing test.
For in¬ the compensation of the employees tributions.
The Bureau has not, at this date,
stance, motion picture projection¬ covered by the plan (§23(p) (1)
ists and certain of the other crafts (A)(i), IRC); or
resolved this issue.
Until it does,
in
the
movie
(2) If benefits are funded by the employer is confronted with a
industry are ex¬
tremely well paid.
Their unions spreading the pension cost over a serious
problem
in considering
are
pressing for industry-wide or particular employee's remaining how far he can go in acceding to
company sponsored plans.
A plan period of active service, the em¬ the union's wishes as to methods
limited to those union employees ployer may deduct the amount re¬ of funding the union negotiated
might cover only employees whose quired to fund annually the cost plan.
IV
compensation exceeds $3,000 per for all the employees computed on

limit the

so

FINANCIAL

has been expanded considerably).
And the failure to meet the re¬

fits

basis;.

&

a

on

t-y

importance,

economy

can

y.'/' &

J

.'#•

of

such

a

7

.3

il,

■2'&&&'■

function

.

stand

and still exist."

"The

/T';
-

the burden of taxation

free

'

.V'S'A

%

com¬

I have suggested," the

mission,

as

Senator

"

V

f.

3
i

added, "is much broader

ymv*-

.

Ww
°Sr

J?-

Robert A. Taft

than the Hoover Commission. Sub¬

stantial

savings can be made if
the Hoover Report is accepted, but that report after
all deals only with the reorganization rather than
with changes in policy, and the matter so far sub¬
mitted by the President, except in the case of the
armed forces, hardly promises any financial sav¬
ing."
The Senator is right.
Much
reorganization is essential.
And the

sooner

we

come

to

costly current blunders will be.

more

our

than mere

senses

the less

38

THE

(1546)

Continued

jrom

COMMERCIAL

tary

7

page

the Treasury consented to a grad¬
ual rise in the rates paid on its

Mean¬

while, however, the maintenance
of

fixed

a

level

short-term

of

rates forced the system

the market

which

to absorb
were offered

securities

whatever
in

other

not

in

the

sys¬

tem was

determining the amount

Federal

of

made available.

action

credit

Reserve

This obstacle

the

by

be

to

to

System

Reserve

"traditional" lines was, I
believe,
largely responsible for
the increased emphasis on changes
in member bank reserve require¬
along

ments as

policy,

much heated
strong feelings

which

and

debate

instrument of credit

an

over

so

such

developed.
Treasury Cooperation
the

On

credit

other

where

hand,

credit

give

to

of the

Treasury in bringing some

that prevailed at
by this time be

doubts

Any

time should

resolved

as

a

result of the various

statements of Federal

ficials

Reserve of¬

in

reply to the question¬
naires of the Douglas Subcommit¬
tee of the Joint Committee

the

policies of the

on

the

economists, businessmen, and oth¬
ers, it would be an exaggeration
to say

that it had gained anything
approaching
unanimous
accept¬
ance.
For
example, the Presi¬
dent's Council of Economic Advis¬

in

ers,

statement

a

Committee

on

the

the Joint

to

Economic

Re¬

port concerning the report of the

Report, and in testi¬ Douglas subcommittee, came to
before that subcommittee, the conclusions that "low interest
and also by the actual operations rates are
always desirable"; that
of the Reserve System since the
even
in inflationary periods the
middle of last year.
The essential Council "would not abandon the
point with respect to Federal Re¬ advantages of cheap money and
serve policy was made clearly in
use
central
bank
operations to
a few sentences by Mr. Sproul in
cause an anti-inflationary increase
his testimony when he said:
in
interest rates."
The
Council
cannot

be

purposeful

a

Reserve

Federal

the

bear

the

on

reserve

monetary policy unless the Fed¬
eral Reserve System
is able to

for short-term holding—and per¬
restraint, "neutral¬ haps a trading profit as well —
ity," and ease,
and that
such must assume the risks of such a
v
changes of policy must be re¬ policy.

of

programs

.

Continued

jrom page 2

rise

In

in

The

retain

"would

cheap

the

to

of

advantages

and

money

measures

adopt

other

curb the inflationary

s e v e r

Flexibility Endorsed

small

rates,

Senator Douglas' subcommittee,
after completing its extensive in¬

interest rates generally.

quiries, reached conclusions in its

of

The effects

reflected in

were

the

greater caution displayed by the
banks in making mortgage loans
and

term

loans

in

more

cautious attitude of in¬

a

vestors

to

business,

and

generally

toward invest¬
corporate and "munici¬
pal" securities and mortgages.

ments

in

1949

Policy

Reversal

policy in the spring of 1949, which
involved

relaxation of restraints

a

on

the

an

easing of money market

availability of credit and

ditions,

not

was

related

to

con¬

debt

management

problems or, more
specifically, to the financing of
the prospective budget deficit, as
was

suggested by some

tators

at

the

time.

commen¬

It

of

related to the business

course,

was,

re¬

cession

during

months

of

confirmed

the

the

first seven
This was

year.

by the public statement

replies

instances

which

port

in

general

strongly

en¬

the

System

prices

of

policy

economic

flexible

adusted

to

conditions.

times

is

mone¬

changing

essential

an

acteristic

of

that

promote

char¬

policy

monetary

a

ous,

banks and other investors had

become unaccustomed to the fluc¬

tuations in

prices of Government

bility rather than instability." It

and

high-grade

went

response

will

on

to

economic

sta¬

suggest that "the ad¬

vantages of avoiding inflation
so

great and

t

r

a

much

dom

to
of

restrict

can

this
the

restrictive

a

policy

y

Federal

credit

and

rates for general
poses

the

the

should

cost

charges

even

to

in

be

if
a

service

the Federal debt and

on

Old

to

raise, interest

prove

changing

to

there

the

place

was some

proper

confusion

interpretations

as

to

that statement, especially
with respect to the sections
stating
that it would be the policy of the
on

committee

direct
purchases,
sales, and exchanges of Govern¬
ment

to

securities

Reserve

the

by

Federal

Banks with primary re¬

gard to the general business and
credit situation, and that the pol¬

icy of maintaining

orderly

ditions in the Government

ity market would

be

The question at issue

continued.

was




con¬

secur¬

whether

greater

inconvenience

bonds, in
economic

conditions, that were regarded
quite normal in earlier periods.

free¬

stabilization pur¬

increase

to

but

paying big dividends. In 1946
the per share earnings were $3.04,
and the cash dividend paid was
in

$.80;

earnings

the

1947

vs.

It appears
come

that
in

their

people be¬
unhappy when they see the

appreciation
counts

melting

away

to-the

bond
as

ac¬

bond

prices turn down, and do not give
adequate consideration to what
substantial
premiums
mean
in
terms of the yields they are able
to get on new investments. As we
a

purposes."

letter from

one

of our member banks
concerning
relationships between this general subject, it seems to
monetary policy and debt man¬ us that banks and other investing
agement policy, the subcommittee institutions can safely regard fluc¬
took the position that both should tuations of a
couple of points (or
be "guided primarily
by consider¬ even more) in prices of long-term
ations relating to their effects on bonds without
concern, provided
employment, production, purchas¬ the distribution of securities in
ing power, and price levels
," their portfolios is appropriate to
As for the

.,

.

and

recommended that Congress
adopt a joint resolution giving
"general instructions to the Fed¬

eral Reserve and the

garding

Treasury re¬
the objectives of mone¬

the character of their business. It
is

a

comfortable feeling to have a

nice margin of market value over

cost,

but

means

such

that

a

new

margin usually
investments

can

to

enterprise—making

and

the

senses

her.

any

were

broadest

products

capitalization
changes) $.889; in 1948 the earn¬
ings were $3.55, and the dividend

large

mass

is

This

basis

for

more

and

lowest available price.

for

allowing

$.972.

was

that

estimates

1949

In

will

earnings
may

seem

have

approxi¬

be

mately $4, and the dividend
$1. This

This

are

(a)

mind

in

the

that

of every
received by him,

Federal

and

State

a

company

for two

is

It

the

dered

to

seems

to

me

reasons:

in

engaged

public

a

in which

way

is

proval

bound

to

service^

it is

ren¬

the

meet

ap¬

its

of

customers,
with
resulting assurance of substantial

stock¬

dividend dollar
must pay out to

holder,

the

(b) The nature of that
and

Bearing

average

the

of the people at

service of substantial proportions.

but it
is, in fact, an extremely sound
policy, in the light of the special
exist.

to

*

niggardly dividend policy,

circumstances that

available

clear prospect of continued

a

growth

was

to some like a

progress and

continued growth.

authorities 25c
COL. WILLIAM FREIDAY

Partner, J. Robinson-Duff

Co.

&

Members N. Y. Stock Exchange

(Selected Issues)
If

wishes

one

selection

might

of

to

called

be

confine

security

a

irrespective
market
price

but

to

his

what

"investment"

stocks

of

present

providing
diversi-,

wide

fication

and

predicated on
a

constant

earning power
dividend

and

the

record,

does

seeker

to

have

not

look

further

than

four

common

listed

stocks

the

on

New

° r\
Exchange
v

declared; thus, the overall return
is more than satisfactory.-

o

which

stock dividend of 10% has been

Co1' William Freiday

have

a o

n

holders

their

to

dividends

paid

year

every

share¬
before

since

the company has
itself by its boot
straps," but this has been done in

Civil War times.

constructive and forward
looking manner/ Instead of ex¬

estimation) are: (1) the

In

a

been

a

sense,

"lifting

collector

tax

would

large proportion, the

garner

.

,

The

capitalization

-•

is extremely

simple—long-term debt $3,500,000,
common

stock 525,582

shares ($10

of

record

looking management policies

achieved.
of

At

the

the

in

apparent

are

a

time

results

when

the

grocery

a year ago, this
has been running con¬
ahead
of
last
year's

compared to

company

sistently
totals.

a

Manufacturing Co. which
years of dividends to its

Singer
has

86

Now the seeker for

The effects of constructive, for¬
ward

sales

(3) the Fire Association
Philadelphia with a dividend
of 91 years; and (4) the

93 years;
.

credit.

par).

ume,

dividend payments for

made

has

Co. which

Manufacturing

Scovill

a

has
put the cash to most constructive
company

uses.

(in my

Pepperell

Manufacturing Co. which has paid
dividends for 97 years; (2)
the

pending the "seed corn," of which
the

diversification,

Providing wide

these four "world beaters"

very

chains are
showing small losses in sales vol¬

many

unerringly

available

best

better

bulk

New Bondholdings

she

values
the

$3.05, and the dividend was (after

as

so

Reserve

should be restored

significant

mone-

contribute
that

end

are

other

Treasury in its sale of securities
for new financing and refunding
said in reply to

ever,

Government

The

a

How¬

to sup¬

bonds at par or higher.

mittee issued

June 28.

was

Any such
idea, of course, reflects a complete
report misunderstanding of the functions
of the subcommittee, among other and responsibilities of the Reserve
It probably had its ori¬
things, stated that "timely flexi¬ System.
bility toward easy credit at some gin in the fact that during the
times
and
credit
restriction
at war, and for several years previ¬

tary

a

of the Federal Open Market Com¬
on

impres¬

the

their view, one of the
most important—perhaps the most
important—function of the Fed¬

report to Congress early this year
dorsed the idea of

gave

commercial

sion that, in

eral Reserve

other

The reversal of Federal Reserve

al

banks'

;

though it was, caused widespread
uncertainty as to the prospective
course

...

Security I Like Best

of

,

addition, the gradual

short-term

,

/

:

pursue

/

credit.

can¬

fluctua¬

some

concerned, but the investor who
attempts to get a long-term rate

Sys¬

That goes much farther
alternating programs of forces."
to 60c at present tax rates, we find
position of the banks, through the restraint, 'neutrality,' and ease, in in the direction of a bias toward that he
really can retain only be¬
a
use of surplus Treasury revenues
roughly contracyclical pattern. low interest rates than can fairly tween 40c and
75c, depending
(which fortunately were available Such programs must, as they ac¬ be attributed to the Treasury. As
upon his tax bracket. On the other
at that time) for the redemption complish an increase or contrac¬ I mentioned earlier, the Treasury
hand, the evidence is overwhelm¬
of maturing securities held by the tion in the volume of credit and did go along with the Reserve
ing that the company has been
banks, and especially by the Fed¬ a tightening or loosening in the System (after some delay, it is
putting these retained earnings to
eral Reserve Banks.
In this way, availability of credit, affect inter¬ true) on a policy of gradually ris¬
most constructive uses.
the Reserve Banks were able to est
rates, not only for private ing short-term rates in 1947-48,
The growth in sales volume is
absorb substantial amounts of re¬ credit, but for Gorvernment se¬ and in recent months has adjusted
serve funds through security
the terms of its refunding issues eloquent testimony on this point.
re¬ curities."
In 1945 sales were $55 million; in
conditions
market
demptions.
In addition, the sys¬
resulting
Translated into action, this in¬ to
$83 million; in 1947, $99
tem sold short-term Government terpretation of Federal Reserve from changes in the supply-de¬ 1946,
securities whenever market con¬ policy has been demonstrated dur¬ mand situation in the money mar¬ million; in 1948, $116 million; in
1949 just a trifle over $135 mil¬
ket and the system's gradual with¬
ditions permitted and, together, ing the past
year, not only in the
the redemptions and sales went a steps taken to ease the
drawal from its easy money pol¬ lion. The payment of large divi¬
availability
dends would have meant a cur¬
long way toward offsetting the of credit
during the brief business icy of the middle of last year.
tailment of the sound expansion
additions to bank reserves result¬
Another
and
more
recession, but also in the steps
surprising
program, in which the company
ing from the gold inflow and taken
subsequently
to
move source of sentiment favoring sta¬
has
other factors, including the sys¬ toward a
engaged, or embracing the
position of "neutrality," ble low rates on Government se¬
alternative
of
new
tem's purchases of Treasury bonds. as business
financing,
than
recovery
proceeded. curities rather
fluctuating
which
in
many
instances,
is
Thus, although the scope of ac¬ An answer to the question of interest rates (expressed in the
cumbersome
and
costly.
The
tion open to the system was lim¬ whether
the
Reserve
System form of favoring the maintenance
stockholder has not gone* com¬
ited, it was sufficient to enable would sell Treasury bonds in ap¬ of stable bond prices) has been
the system to keep member, bank propriate circumstances has been some
of the
commercial banks. pletely unrewarded, however. In
in addition
to
the
cash
reserve positions under recurrent
given by the Federal Open Mar¬ This attitude was reflected in re¬ 1949,
dividend, there was declared a
pressure and thus to exert some ket Committee in the form of ac¬ plies to one of the questionnaires
stock dividend of 5%, and in 1950
restraint
on
the
of the Douglas subcommittee. In
availability of tion during recent months.

to

pressure

avoid

is able to pursue alternating

tem

While there has been wide sup¬

mony

"There

the

accept

we

unless

port for this point of view among

Economic

is

due, the
system did have full cooperation

in general shall
in the duly constituted authorities
of the Federal Reserve System,

of

as

that

interest rates, we

whether Federal Reserve."

and

conditions.

unable to take the initi¬

ative in

cost of
be vested

and

credit

Treasury securities, as
purchases, would be made
maintaining
orderly market

were

buyers

consequently

available;

sales

well

rates

availability,

periods of consistent with

in

in

not expect to

other bonds. The long-term holder
of long-term bonds need not be

If

express¬

imply that a firmer money pol¬ and that Treasury actions relative
icy would be adopted in appro¬ to money, credit, and transactions
priate circumstances, as well as an in the Federal debt shall be made
money policy
business recession,

flected

only at less advantageous

tions in prices of Government and

policies" and

to

easy

be made

yields.

proposition

those

supply,

these statements were to be taken

for

those

at

debt-management poli¬

and

Thursday, April 13, 1950

~

ing it to be the will of Congress stated by Mr. Sproul, to which I
"that
the
primary
power
and referred earlier, that there cannot
responsibility for regulating the be a purposeful monetary policy

Misconceptions Aboni Reserve
System's Management
borrowing.

CHRONICLE

cies and the division of authority
over

short-term

FINANCIAL

&

The last report showed

its

runing 14.7% ahead of
ago.
No other grocery

were

year

marketable

with

earning power need
not stop here for there are four
comparable
"world beaters" in
stocks

dividend annuals which
the

on

York

(1)

listed

are

"Big Board."
These New
Exchange stocks are:

Stock

Pennsylvania

the

which has paid dividends

RR.
Co.
uninter¬

ruptedly since 1848 or 101 years;
(2) the Washington Gas Light Co.
1852 or 97 years;
(3) the
Gas
&
Electric
Co.

since

chain has been able to show such

Cincinnati

results.

since

This

;

ability to lead the industry

in sales growth is not accidental.
It is due to vision and hard work.
The best part of it, from my point
of

view, is the fact that the

ice

rendered

permanence,

has

an

serv¬

element

grounded

on

of

the

the

1853

96

or

years;

Continental

since 1854
In

Counter

dividend

or

Over-the-

class, there is one

enjoys the

which

pany

record

continuous

Co.

95 years.

or

unlisted

the

of

136

com¬

enviable
years

payments < and

simple truth that the customer is

concern

being exceedingly well served. A

for Banking

net

(4)

and

Insurance

of

that

delphia.

profit

margin

quently tells its

of

own

1V%%

elo¬

"one"
best

complicated

five

of

Pennslyvania

Co.

and Trusts of Phila¬

like

I

involved,

the

The

story. The

housewife may not understand the

statistics

is

is

these

investment
a

security

selection

nine

of say

incomparable

Volume

171

Number 4898

THE

.

dividend payers yielding safety of

stantial

principal,

COM3VIERCIAL

tremendously
pacity.

and

income,

'

marketability

diversification.

earnings orf its present
larger
plant ca¬

Gas
J. W. JACKSON

Investment

Research

selection

security

of

as

holds
of

and
11

a

r

in

1951

by

is

over

de¬

will be increased

those

ultimate

The

of

1949

J.

W.

consider

stock

natural

for

effect

coupled

gas

the

maturity
character

tne

inherent in this

basis

consideration to the convertibility
On this basis, the bonds

should be worth about

selling

are

around

stock.

mon

tne

high

as

with

objectives, it

our

in

70

1946.

erations.

op¬

What industry can rea¬

sonably

be

expected

to

description
lumbia

is

a

permit

of

but

ing

di¬

rectly and an additional 800,000
supplied through the sale of
gas at wholesale to other distrib¬

.ex¬

stock¬

confidently expect to
reap
benefits of sound manage¬
ment in the future through divi¬
dend income and long-term price
appreciation — as
they
rightly

Over 1

served

Present

program.

holders may

,

are

forward-looking

its

out

pansion

holding "entity which

customers

conclusion,

demonstrated its ability in carry¬

Co¬

population of 7 million.

should!

utilities. Natural gas rev¬
enues comprise 92.5%
of income,
and sales are admirably diversi¬
fied as to type of customer.
For
example, residential and commer¬
cial sales

run

around 53% of

total,

industrial around 23% and whole¬
sale
21%.
This diversification,
with the emphasis on stable resi¬

OETJEN

HENRY

Partner, McGinnis & Co., N. Y. C.

(Southern Pacific Co. Convertible
Debenture 3s of 1960)
I

that

believe

tunity exists in the

oppor¬

Southern

new

debenture

convertible

Pacific

of

1960.

offered

holders

further

million

increase

Henry

the

into

$100

stock.

terms,
what
has
been
accom¬
plished? Briefly, the system's en¬
larged capacity has enabled it to

York

markets.

fuel

is

Demand

low-cost

and

enormous

ing.

Now the

system

lift

restrictions

and

demand,

thereby

conven¬

and

grow¬

is able to

satisfy

realizing




for

the

sub¬

of

its

com¬

the

of

able

and

65.3%

1940,

be¬

compared

increase of 21.2% for the

an

rest

This favor¬

country.
has

trend

continued

at

an

accelerated rate from 1940 to 1950.
The

territory shows a good bal¬
between agricultural and in¬

ance

dustrial

The

areas.

of

continuing in¬
the
territory

well for the future.

augurs

Many

industries

new

have; been estab¬
and
further
expansion,
especially in the steel, chemical,

lished,

and other basic

industries,

expected in the

near

can

be

future.

The road's property is in excel¬

lent

physical condition, in fact the

best in its history.

ade,

for

spent

In the last dec¬

$103 million have been

over

the

physical
road, such
installation
of

improve¬
heavier

ment of the

rails,
sidings,

for

The

lines

the

each

10

offer,

shares

subscription offer

present
are

Stock

of

The

abandoned.

organization

has

streamlined to achieve
economies.

been

maximum

A cost reduction pro¬

of the first order has been

gram

carried

lny the

out.

last

decade

about $264 million were spent for
new

equipment and improvements
existing equipment. Well over
20,000 freight cars, 200 passenger

of

cars,
tives

and

over

were

been

result

from

Further
from

ordered

million.

at

a

cost

of

Savings
lower

will also
fuel
prices.

economies

will

result

yard

of
ex¬

selling at

time

listed

on

Exchange

The personnel and management
of the road

the

new

the New

and

are

They

Southern

are

stock at
per

amounted

million

Finals of

to

the

Pacific's financial po¬

sition
is
strong.
The
working
capital at the end of 1949 amounted
to more than $85 million to which
capital and other reserve funds of

in part in

convertible
a

share.

into

common

conversion price of $55

The number of shares

from
1939

more

to

less

than

than

$716

$463

million

in

million in

1949, excluding equipment obliga¬

of

Inter-City

Bankers Basketball
The

bankers

between

games

final

and

second

inter-city

the

of

basketball

National

City

Bank of New York and First Na¬
tional

Bank

played

of

Friday

first o'clock

in

Chicago will be
evening at 8

the

Columbia

Uni¬

versity gymnasium, 116th Street
and Broadway.
The first game,

28 in Chicago, resulted
victory for the Windy City
return of more normal
weather, cagers, 41-31.
N a t i o n a 1 City,
the road was able to show a net fourth
year undefeated champs of
income of
$321,000 in January the Bankers Athletic League, and
1950, which compared very fav¬ First National, holders of the Chi¬

exceptional nature.

an

With

the

on

March

in

a

orably with

a deficit of $1,727,000 cago American Institute of Bank¬
January 1940. Earnings for the ing crown, are renewing an
1950 should be in excess of inter-city series that had its
origin
$10 per common share.
25 years ago.

in

year

The

fact

able

was

that

that

to

bonds for

Southern

resort to

new

Pacific

convertible

City
Bank
Club,
employees'
organization of National City, has

financing indicated invited its members
improvement guests on Friday night.

to

its

be

considerable

a

The Chi¬
general, and cago team will arrive today and
Southern Pacific's credit in par¬
will be quartered at the New York
ticular, has1 taken place during Athletic Club.
Its captain, Ear)
in railroad

the

last

due

to

credit

in

few

years.
It was only Abraham, received the Lou BotP
strong earnings posi¬ dreau "most valuable player"

the

tion of the road that such

an

dertaking Was ventured. The
cess

of the

for

itself.

in

Although

com¬

industries, as for
public utilities, no

in

convertible

bond

award

for

6 foot 8

inches, center,

issues

in

game.

Zeravich,

was a mem¬

-

the

Trad Tv. Stock Sold

industry have been avail¬
have

Jim

Illinois
AAU
champions.
Matty
Begovich will referee the coming

able to the public since 1937. Since

railroads

1950.

ber of the American Gears,

convertible State

other

instance
railroad

un¬

suc¬

bond issue speaks

new

bond issues have been rather

shown

sharper
Tellier
&
Co.
announce
that
price movements than public util¬ their
offering of 600,000 shares of
ities, the conversion feature is common stock of Trad Television
much

attractive

more

road

security

than

utility security.

in

in

For

lent call
of

.one

which

on

rail¬

a

cents

share

has

and

per

the

excel¬

an

the future earnings of
best railroads,
the fastest

region, and who. at the

35

oversubscribed

investor books closed.

an

America's
covers

at

Corp.
public been

a

who would like to have

L. C. Crawford With

growing

same

Stern, Frank & Meyer

time,

(Special to The Financial Chronicle)

is also interested in

safety of prin¬
cipal, no better opportunity has •'•I: LOS
ANGELES,
CALI F.—
existed for a long time.
Loyal C. Crawford has become as¬
sociated
with
Stern,
Frank
&
members

Eighth

West

325

Meyer,

Atlantic Coast Line

the

of

Street,
and

York

New

Angeles Stock Exchanges. Mr.
Crawford was formerly with Bo-

Los

Makes
Atlantic

Exchange Offer
Coast Line

RR.

Co.

is

offering to holders of its $50,724,000 non-callable first consolidated

gardus, Frost & Banning and in
the
past was with Cavanaugh,
Morgan & Co.

mortgage 4%

bonds due July 1,
1952, the right to exchange these
bonds
for
an
equal
principal
amount of new general mortgage,
series A

bonds, due March 1, 1980,
bearing interest at the rate of
4%% to Sept. 1, 1952, and at 4%

thereafter

to

maturity. The offer

announced

was

on

April

10

With State Inv. Co.
(Special to The Financial Chronicle)

Joins F. L. Putnam

on May
terminated

10, 1950 and
at any time
thereafter by the board of Direc¬
tors.
Acceptance of the offer is
voluntary, and bondholders who
do

be

not

will

accept

retain

'(Special

have

indicated

their

Haworth
F.

There

of the

the

Interstate

new

by

the

about

are

25,000 Unlisted Securities
in which there appears

active trading
makes

What

of the issu¬

Use

Commerce

ture

Stanley
&
Co.
has
employed to organize and
manage
the solicitation of ex¬
changes on behalf of the com¬
pany.
Compensation
equal
to
$2.50 per $1,000 bonds exchanged
will be paid by the company to

you

think

your

remembered?

in The Commercial
Chronicle to fea¬

Financial

&

Com¬

space

to be an

market.

pet issues will be

series A bonds by

mission.

the

securities

your

firm

specializes in.

Morgan

been

77

3,000 Listed Securities

stockholders, who meet April 18,
to authorization

Inc.,

Co.,

&

B.

the staff of

inten¬

change but the consumption of the

ance

joined

their

plan is dependent upon the vol¬
untary exchange of a larger pro¬
portion of the bonds and upon
the offer being declared operative
by the directors on or before

mortgage

has

Putnam

L.

Chronicle)

MASS. —Lloyd

Franklin Street,

tion of accepting the offer of ex¬

general

to The Financial

BOSTON,

present rights.
A number of in¬
stitutional holders of the bonds of
1952

•;

by

business

may

"

In¬

Bank of Commerce

vestment Co.,

Bidg.

The State

with

is

McGorrill

The offer of exchange will re¬
main open at least until the close
of

^

PORTLAND, MAINE—John M.

C. McD. Davis, President.

and

excellent.

serv¬

exchanges

bonds of 1952.

of

ly responsible for the somewhat
poorer showing last year, were of

new

will be re¬
1952, or any
thereafter, through operation about $17 million must be added.
of the sinking fund.
The bonds The road's debt4ias been reduced
deemable

104.

economy moves.

date

be

reduction

quarter of 1949, which were main¬

numerous

straigthening

were

$17%

March 31, 1950.

on

debentures

will

$11

net

as

of
lines,
yard im¬
same time,
580 miles of unprofitable branch

have

Under

The

improvements, elimi¬
stockholders nation of steam servicing facili¬
have the right ties,
instalment
of
more
me¬
Oetjen
to subscribe chanical equipment, streamlining June 1, 1950.
The offer is also
of office procedures,
and other subject to authorization of the
principal amount of de¬

bentures

At

clean,

to the

entures,
April 1,

1960.

physical

ient

with

1920

increased

economical units. The break-even

this

pired

new

area

•

due

Translating from financial terms

this

area

tween

convertible

to

tap

this

deb

system's capacity to deliver. Now,
however, the major part of the ex¬
pansion
is virtually completed.
$168

service

stock, point has been considerably low¬
A
$37,727,600 ered in the last few years.
principal further cost reduction program is
amount of 3% under way. Thirty-six new diesels

million has been expended on ex¬

of

Pacific's

400 diesel locomo¬
bought.
This
new
equipment made it possible to im¬
prove service and to
retire un¬

mon

pansion of facilities. It is antici¬
pated that this year about $27 mil¬
lion of new money will be raised

i

has

1949.

over

39

time, annual interest

same

charges were reduced from about
$31 million in 1939 to $20 million

mon

Southern

shares of

j

question—What is the

.

to

If

70, the

130.

outstanding
3,7 7 2,7 6 3

long-term outlook for the system
earnings-wise? To answer this, let
us look back a few years to
1946
when the management's construc¬
tion program was put into high
gear.
Since January, 1946, $168

order

3s

The

company

and commercial sales, in¬
stability of earnings lead¬
ing to continuity of dividend in¬
come, one of the
objectives we

in

in¬

unusual

an

speculative

and

vestment

dicates

Now the

60,

grades,
provements, etc. At the

dential

have in mind,

to

rose

bonds would be worth

elimination

are

uting

stock

common

dustrialization

management in
which
the
stockholders
place
their confidence is of primary im¬
port in evaluating any security.
Columbia's alert management has

Middle Eastern communities with
million

liberal dividend will

more

a

In

supplies, through its subsidiary
companies, natural gas to 1,214
a

ten-

of

the stockholders.

brief

system.

the

a

com¬
a

of the convertible bonds,

rise

the

result in

is

eventually forthcoming as soon
as the
system's conservative pol¬
icy permits.
In the meantime,
ploughed-back profits strengthen
the equity position and work for

stock fills the bill.

will

Space

good.

five-point rise of tile
stock would

mon

the

for

very

assured, A return of

be

earnings and dividends?
In
opinion, Columbia Gas System

common

is

5%%

that

ture
my

outlook

Pacific

is the fastest growing territory in
the United States. The population

provided — thus
satisfying
our
requirement
of
generous income. It is my opinion

good "buy"

a

Each

surprise, especially,

a

future

seems

over

value and in relation to fu¬

to

as

'

as

the

60 or 70

to

bull market Would

the bonds would be worth 110.
the common stock rose to

$0.75

provide

continuity
of
income?
Which
promises greater relative safety of
capital?
The general answer to
these questions is, I believe, the
public utilities field. Among vari¬
ous types of utilities, which indi¬
cates the most dynamic
growth
possibilities?
I think the answer
is natural gas.
Finally, at today's
market levels, what security meets
our requirements and may never¬
theless be considered

A rise

in the present

high

as

age, therefore, the current rate of

first

was

select the field of

stock, selling at
time around 54, sold

extent. This, coupled with unusu¬
ally mild weather, acted to hold
earnings down on a per share basis.
With anticipated broader cover¬

picking the individual

and security to conform

necessary to

time

This

62 in 1948, and

as

if

Prior to

They

The

present

point

marked

95.

present

premium of 9
points gives the holder a 10-year
call on tne Southern Pacific com¬

cilities had not yet begun to con¬
a

the

at

104.

tribute

to

to

feature.

Southern

earnings

seems

yield to maturity
for this security, giving no

earnings of $0.84
per
share to be the low point
earnings-wise.
In 1949 new fa¬
to

issue

3.60%

will show

1949

bond

new

a

not come

is

have

will

early

as

dividend

issue

tne

of

approaches this ideal and is defi¬

,

banks and brokers for their
ices
in arranging

Pacific

bination

since

company

exceed

date and the unsecured

situation, and I believe the future

of securities.

not

At the

in

stock of the Columbia Gas System

nitely deserving of a prominent
position in the portfolio of not
only
the
average
investor
but
also the more sophisticated buyer

been

maturity date among 35.8% of 1939 fixed charges.
bonds, except
Assuming a 20%
dilution of
equipment obligations. The next the common
stock, the $5 dividend
maturity will be the Southern now
being paid would have been
Pacific
first
mortgage
2%s
of earned in ali
years except 1940.
1961. They are selling at the pres¬
The earnings outlook for 1950 is
ent time around 96, with a yield
very good.
The extremely poor
to maturity of 2.67%.
The com¬ weather conditions
Southern

nual

common

would

bond

new

system's enlarged ca¬
pacity
to
deliver
is
obvious.
Wider coverage for the $0.75 an¬

Jackson

the

combined

earnings of the tremendous de¬

with

diffi¬
I

40%

mand

attain

fact,

promi¬

A

year.

through the coverage of additional
markets.
Truly a growth situa¬
tion—meeting another of our ob¬
jectives!

the¬

cult -to

ory

in

this

liveries in

the

have

tions. This net reduction of $253
million amounts to about 35.4% of
the originally outstanding debt.

in

The

of

supplied

on

ideal

the

justify

ibutes.

While

Hagers-

nent source estimates that gas

desirable

which

for

common

be

familiar

issued

that purpose. Thus,
maximum
dilution
of
the

of the additional areas Which will

growth

11

markets,

C.,

D.

now

town, Baltimore, Roanoke, AllenBethlehem are only a few

pects—

a

Washington,

built.

are

town,

and

pros

en¬

day is

been

for New York

and

-

,

premise

sound

have

deliveries

available
*

,

continuity

i p a 1

lines

Increased

of
income,
safety of princ

been

To supply new markets,

pipe

new

know,

we

have

cubic feet per

billion

possible.

naturally

be

will not exceed

(1547)

the earliest

loads

peak

of 2

a

average
&

reserved

to

CHRONICLE

20%.

history.

larged to the point that delivery

first demands the establishment of
investment objectives.
For the

investor,
the
ideal security,

shares

meet

(The Columbia Gas System, Inc.)

Fundamentally,

ex¬

stock

common

Underground and
above-ground storage facilities to

tem's

Edward A. Purcell & Co.,
New York City

"best-liked"

been

have

reserves

FINANCIAL

upon conversion
7 04,552

panded to a total of 8.27 trillion
cubic feet—the highest in the sys¬

Dept.,

of

&

THE

COMMERCIAL AND

FINANCIAL
25

Park

CHRONICLE

Place, New York

7

40

(1548)

THE

COMMERCIAL

Continued from page 11

licly known
Atlantic.

1*

■

fl

■

ffllllf
"•111
to be

m

f UUl
A11T

*

—

m

For

seen.

■

i

t AVAlfftl

A

doubt that
will
fight.

Until

the

discovered

State

Point

De-

Four,

this movement of private Ameri-

Am?r?Jin

American

Unwanted

Containment

of

Policy
con-

tainment, predicated on the doubtful physical principle that a
all

be kept water-tight if
holes on
one
side
are

can

the

plugged, has induced earnest secthoughts.
The Soviet erup-

de-

The

is the

fascist,

notion

that

trade,

can
-

eluded from

the

left-wing

ex-

of na-

the insistence of

on

in this

groups

elsewhere

and

been

company

who

country

have

never

been able to forgive the Spanish
dictator for having ejected the
communists.

He

the first to

correlation

and

between

surrender

to

com-

American

bil-

Even the shipment of mili-

and Italy which have had all the
marks of organized insurrection,
It is extremely doubtful that the
countries of Western Europe have
the

capacity to commit themselves
Kremlin

in any struggle with the
—or

substantial scale in the hope that

✓American billions

may

sate for atrocious

compenin policy

errors

and for the lack of armored divi-

sions and air power to which General Eisenhower has just called

attention.
brother

Point Four is

a

blood

of

UNRRA, the Bretton
Woods institution, the loan to
Britain, and ECA. An added element

of

illegitimacy arises from
the imputation of parenthood to
Earl

Browder.

How

be

effective

as

We

can

barrier

a

to

Point

is

soft-boiled

living than in any other community cf comparable size in the
United

States.

Communism

and

are much more likely to
be problems in psycnotogy than in

treason

the inclination.

Norway and

a

study of the fellow-traveller. He

presents the following description
of the economic status of a hundred leading fellow-travellers:

"To

lers,

identify the fellow-travel-

study

a

been

has

made

members of organizations that

of
are

is

chain

Here

is

AmerirflVhnfinn/h^

Tt

nv

rnari

(2) The

in the socialist countries of West-

Europe.

ern

recall

lenrHna

willing and able to commit them-

billions

lug of

measurable

anv

an

harden-

anti-communist attitude

,*
The

question may be reStated in the form of a direction.
'afame, in the order of their alignment, the countries which, in the
of

event

can

In
the

be counted

the

war,

side.

our

-direction

following this
of alignment

must not be based

gratitude

or

rather

on

on

order

on

the

to

affection for

U.

the fear that

S, but
they will

become the first and the most

cer-

On

the

basis

of

this

only realistic test-our
opponent of the

the event of

war

test

weights

cer-

Kremlin

will be Tito.

in

His

assured

belligerency on our side
will obviously have nothing to do
"with ECA aid

or

prospective bene-

ikt under Point Four.
The

second

schedule
"will

of

probably

be

with

the

on

"liberation"

Turkey.

The

States"

is

as

little

,

progress of these people, both as

is

ways °f

Logically, if the expenditure of
billions

made

was

for

reliable prospective

allies

should

be the most conspicuous
ficiaries of our aid.
The

bene-

reveals that these

ailies

record

with

one

possible
exception
have
been
treated like unwanted stepchildren.
»•„.

,

:

..

Billions and Belligerence

opposition to Stalin's legions than
The

third

area

.

of

validity, then those

any

which

have

re-

in Western

ian
,t

in

terms

of




,

that

vou

pothesis

is
nor

it is

tainly
of

neither

our

good

t0 do for industry what the Amer.
ican

JT

resources

in

Kremlin-

and

dofne

consumer

for

thp

,tnnrevenf

a

the

mephpniQmnfnn^nfrpa
rpcZHirm tn r^NrnPr
from

forHm*

which

Daiance

euhctitntfnn

rnii ntll

j. 1

t

haianm

y

hnthnn^

j

intPr^

tn

nrp

nrnnnc~Q

.

Tt

nriee

thnsp

12Lh"
Tf

arp

farmer

nf

for

American

.

p ^dustry is producing more

mouse^raPs ^an,

.e./Amencan

market can absorb at the pffered
prlce „tbe solution lies not in
"loans J° foreign buyers, who
cannot afford to buy them otherwlse' but m cost reduction to expand the purchase of mousetraps
or
the conversion of surplus

manufacturing facilities to other
Pr°ducts.
Point Four is a special form of
f°reign aid.
It is designed to
prolong the period during which
American dollars may be used to
Promote the foreign policy of this
country. The results of ; other
forms of aid have been so unconvincing that Congress is reluctant
to extend them. It is in particu-

the

doubtful

most

a

taxoaver

aireadv

use

oped areas.

states-

good economics. Cer-

limited

the

proposal

a

lar revolt against the ECA. Point
Four was not conceived to aid
surplus American capital to find
Profitable investment abroad. It
was not conceived to take advantage of attractive investment opportumties
in
underdeveloped
areas.
There was no demand for
such aid either from American
capital or from the underdevel-

"investment" of added billions in
underdeveloped areas to secure
vague, remote benefits resting on
an
unproven and untenable
hymanship

balance

S?

Orthodox

'

Formula

Foreign

for

tween

been

of

countries

treated

most

stalwart

our

billion*

in

stands

list.

Zscow

merely

be

from

an

incurable tendency to
output.

excess

month

Committee

of
to

a

ov-

State

Department

to

intervene

outlet for The formula has been tested and

an

The attempt
Congressional

substitute

a

billion

the last century and
half. Provide such capital with
the right of entry and exit.
Sup-

proven over
a

ply a currency which is stable and
honest. Levy reasonable taxes on

management to

h^np

By leaving them

their

miseiy

makes

An

at

the

important

a

and

Washfngton

is

phase of rivalry between

used

which

as

these

a

fteld

two

of

giants

measure

strength'

-

a conviction—probably

diJ?^°"ty

~,that any

without

already

be^11
g d and
resort to wa^Britain^a*
can

made

a

bilateral

trade

with the Kremlin,

full terms; of which

the

are not pub-

better,

loans

arises

the

rest

clothing and shelter, and
the

hope

of

communist

you

kill

conver-

A fully belly and Marxist
no more mix in the

same vessel than oil and water.
This theory has never been subinductive

test.

There is much evidence to

sug-

to

fair

a

gest that it is completely fallacious.
n

.

,

Psychol°8y
If this theory
should

be

-

.

Communism

'

were correct there
discoverable an ap-

from

tion of this country from a net
exporting to a net importing nation.
For example, it may^ be
necessary for this country, with
an excess

of exports of $11.3 bil-

lion in 1947, eventually to countenance

an

excess

cover payment for

of

imports

to

financing past
The vast

of material circumstances. Give loans by this country.
exposed f° fbe spurious re- cyiange would reflect

jected

There.is

of

tence. Remove the fear of nation-

use

the best

corn-

materials, labor,

raw

niques, to turn out the best prod-

ology which will hold out to them
promise, however false, of means
toward a better life."
I?ere is a Pervasive fallacy
which has distorted the thinking
<£ ^ai?y S1?cefe liberals, namely,
that discontent and susceptibility
to radical doctrine are the result

theology can
in

financing

Af-

non-discriminatory basis

ford protection against local vio-

production and distribution tech-

England sion.
batUe

continued

a

the

hp

^ninsula6 Thprp11agreement
'

Department

comS

a

for

alization or competition with the
sovereign. Give the foreign owner of capital the same right of
management as is accorded to
domestic
capital.
Permit
that

aspirations,

and faithful allies.

Russia

positive

State

to

of

tbem fe,I1il® g™uPd, for any jde~ s^ous difficulties of the transi-

munism, implicit in our various
foreign aid programs, possesses

w^rotobfv shoS°heHe,0 relnlnJ their
-^anywhere else.

is

infamous

the

products

ab-

can

volume

trade account. This is

unable to fulfill their reasonable of the world through gifts and, bination of

If the theory of making friends
and influencing enemies of com-

as

assured

of

they

This

1

the purpose of promoting effective opposition to Stalin: our most

wpiaht

Turkey in the form of

eign

economy

sufficient

a

to themselves.

American

Sm^rnotThrow Lt
tW° WOrId !x>wers- that
Sound
they do in England ^aTd^hould noTni?

in

sorb

potatoes and peanuts and
mutually beneficial commerce, prunes for an equivalent amount
and the development of interna- of cash in the ECA program was
Uonal understanding and good a legislative attempt to apply this
wlt!L/ ' '
theory. Professor Seymour E.
They aspire toward a higher Harris of Harvard stated this mostandard of living and better tive for foreign aid in a recent
healtb and physical well-being- address before the Academy of
Under present circumstances their Political Science:
poverty is not merely a handicap
^Perhaps the strongest case for

the

a

because

li^e» tbe. fxPansion of in

lcftwjng element thp tPn«inn
in the Labor ^aare °meals "^a"1 day1 S adeauate
Partv holds that
squaie meais
a day,
adequate

s'.

embraced

mit the American taxpayer to the

its

advance of human freedom,
growth of democratic

secure

temnt*Sfltn^fifHa^inn°th^«Sh

Italy,
and
the
U.
American aid here has been on

true

cer-

avowed

any

they

Marx

of

was

undernourished.

destrov

last

the

England

France,

that

narticularlv

because such progress will further

im-

head

com-

faith
were

the

a com-

factions

munist propaganda. Turkish

it

ft be said of

can

communists

humanitarian end in itself and erproduce, must find

Turks have been very effective in

tempts at infiltration, the subversion of native officials, and com-

the American

as

says:®

our leaders a

communism

liberally should be

country

Soviet

the undeni-

N0r

"misery"

any

C°'d ^

in statecraft. He long ago

i??1P!ed> what some of

the

most

from

tainly not the misery of poverty,

In the voluminous pro-Point
Four propaganda a theory closely
related to support of American
foreign policy emerges. Describing the inhabitants of underdeveloped areas, for whose osten-

more

form of artificially induced
foreign purchases until such time

On the other side of the world Department
'
An Outlet for Surpluses
Investment
com"The United States and other
There is a third explanation of
~ H the
sovereigns of retarded
munism Chiang Kai-shek, has free nations of the world have a "foreign aid forever." This is that ereas
wjsh to attract American
been abandoned by our heavy- common concern for the material the American economy, suffering capital rt is not: necwai y lor the

tain victims of Soviet "liberation."

tain

the
are

Misery and Ideology

possible.

first

suffering

in

UNRRA' the loan t0 B,itain> and
ECA.

our only tested ally against

promise

Counting Our Allies

were

likefly to be successful as the giving hjm three square meals a
Bretton Woods adventure, day does not stand up To com_

are the polnts of certain resist"
ance to communist aggression,

of Turkey and

the United

of

.

still have not grasped, that

the beneficiaries9

among

Six

'
were

defense

links

0f the

elsewhere.

a?

m^Sy °t£o°been oT^sid?

lawyers

fellows

kind words by our American aid.
With its mixture eleven recently tried
in
Judge
State Department for Swizerland of
politics, banking, and charity, Medina's court
None
of
them
nor any suggestion that she
parPoint Four aid, dedicated to the i00ked underfed The naive theorv
ticipate in the handouts going promotion of "the foreign policy

hnnnfi-

selves against the communists? Is
it possible to impute to American

eight

millionaires"

any

antUmmmunist

thn

weakest

democratic

of

no

or

able kin of all previous forms of

recently Yugoslavia, none has
beea *avored by the generous ateiarie* anH
in their rpliahilitv
tention of the State Department,
o^oertH-P 1p7 the2 fS In no case is the assurance of re"
J2ennfirtWith thVRu^aiK
sistance or belligerence, on our
:^Two questions should be raised,
OT measured by °ur
the

nf

little

If these

(3) Point Four is

We cannot offhand

Hit the excePtion

hp

in

had

democracy without any of the de- precisely those countries which
generative stigmati which have have been the most conspicuous
developed like malignant tumors beneficiaries of American aid.

probably in the order named. With

thf oviLnrTm,^

nn«tnrpc

have

Kremlin

real

a

subsidy for American goods "in

a

the

voted

American aid.

Switzerland.

in effect the foregoing proposes

ain to place

only other country which
can
be counted on beyond any
reasonable doubt to fight the Reds

communism?

a^ sni^/ir hiiifd

Denmark

Another Subsidy

liberals

higher in this center of lavish

men

The

Yugoslavia, Turkey,
Spain,
be certain that Browder
Portugal and Switzerland—these

can

-nvtreri

Four

was

demonstrate the only method for
handling certain types of treason

the ultimate reduction of
exports
be $2 bilb'on more

would have to

munity. Yet it is probable that the
percentage of communists, fellow-

tlC.,.PaC5 baSt bee? 1
S'g'ial for
Pr?Itessor S'd"ey Hoo,k
outbreaks of violence m B ranee of New York University has made

Stepchildren

Spain has

tions largely

sion.

poverty

tarvellers and

tary equipment under the Allan-

Unwanted stepchildren

Actually

,

given

we

proximate

Thursday, April 13, 1950

with Great Brit- clearly communist fronts,
many of
Czechoslovakia on the them actually labelled subversive
turn in Asia demonstrates that the
Security Council. Sweden persists by the Department of Justice. For
contents of the bucket can flow which has so far proven effective,
in meticulously "correct" conduct purposes of identification
anyone
through the holes on the other He defeated and destroyed the and has refused to
participate with who was a member of at least
side to which the policy of con- communist-led
Spanish Republi- her neighbors in any arrange- twenty such fronts was considered
tainment did not apply.
can Army.
Nor did he make room ments for mutual defense.
All a fellow-traveller. It was discovThe opening statement in the in his
foreign service for veterans these countries get American aid. ered that of the leading hundred
preamble of the Kee Bill, i.e., "To of this army who had formerly
A realistic survey of the situa- fellow-travellers twenty-four
promote the foreign policy of the obeyed
the
commands
of
the tion in the spring of 1950 shows:
were
college professors
twentyUnited States," indicates clearly Kremlin.
Divided loyalty has not
(1) The countries which are one writers and editors'nine aca determination
by our govern- been among the idiosyncracies most likely to prove our reliable
tors and producers eight clergyment to continue foreign aid on a tolerated
by the Caudillo.
allies in
any
conflict with the
ond

-

or

An Illusion

Salazar

survival

How much aid have
Spain ar'd PortugaI?

government.

theory of communist

bucket

Their

this

on successful resistance and lions are erecting bulwarks
they can have no illusions of com- against communism and winning
promise, appeasement or deals.
friends for us is largely an iiiu-

^

The

and

this side of the
sure,

previous^ era de- pends

teriorated.

voiii»>A
Failure

Franco

CHRONICLE

in which collectivist munism.
Hollywood, California, than in the absence of continued
whetner socialist or is a flamboyantly wealthy com- foreign aid or (and) loans."

way
economies,
communist

I ATA If AY
1 Uiv Vvl

FINANCIAL

on
be

To

only

m

aj

Aid

VlUil|il "All

during these years

the premises on which capital had
moved in the

partment

&

the

effects

.

at th

-

lowGst rost

\

-

*

Where these principles
plied today,

they

as

are

are apin Can-

a<jaj Venezuela and South Africa,
American caoital wm

move

these

not

free-

e
"
ly and willingly in response to
economic opportunity. Where
principles

are

recog-

not only °f trope's attempts to nized, as is the case in Mexico
^
•

a

balance counts but also those of and Great Britain, American capithe rest °f the world• The brunt tal is reluctant to enterThere is no magic by which

of the adjustment would have to

be borne by the manufacturers living standards in other areas
who account for 5200 biIlion can
lifted- Such hi«her stan^
worth of goods- and the amount
involved
be 6% o£ salesv B-v
e°ntinuing the ERP on a reduced
level for the years 1952 to 1936
311(1 PreParing a large loan program,, this country might stretch
out the transition from the five
required to 20 to

50

years

now

years;

but, with the longer period,

dards are the result of hard work,

Patience, and a careful utilization
of resources, both human and naturaL Above aB. such progress, if
the sovereign sincerely wishes it,
can

be attained only in

an

atmo-

sphere of freedom and the right of
the

industrious

to

win— jand

tain—the rewards of

success.

re-

Volume

171

Number 4898

Continued from

The

first

THE

COMMERCIAL

Would
would

Meaning oi Government

tion against all government inter¬

against

ference, one has let in the thin
end of the wedge and there is no

It is

the

of
an

stopping its spread.

for

free

a

free economv

a

makes it

merely

were

life

nowadays employed in

the service of government
"planning" could not be enforced if the

of

powers

government

to

carrying

general rules.

„

most of

economic

were

out

xe-

fixed

Where the aim of

also deserves emphasis that government policy is that other
exceptions from the equality beshould be produced than
fore
the
law
is the
only 'true fhose which .would be produced
meaning of privilege.
So long as
a free economy
or that the
government action is guided and things
produced should go to
restricted by abstract rules which People
other than " those who
apply equally to all people
it would buy them on a free marbe
oi ket it is evidently necessary that
privilege.
But if with regard to the government should discrimm-

if in factthose who -advo-

seem as

cate

It

economv

of

opposing tooseacts^)f^wernmerd woufd

no'nsle to^eak'

(1549)

decide who is to get what.

ipso

facto

tion'

Planum^

" It

cfse

only weaken the

govern-

Exceptions from Equality

But

indiscriminate opposition

can

CHRONICLE

"Planning

fairly obvious that
are

stricted

to all government action; or even
the annearance of such a
rigid

attitude

of

arbitrariness

Piiria.il
curtail

controls

which

ment action.

way

FINANCIAL

these rules the state should be no
less subject than the
individual,

page

Interference

such

&

involve

Most

forms

They

discrimina-

of

Quotas or
subsidies would become equally
difficult; it is true, they would
not become impossible.
It would

could be changed monthly would
in

fact

be

almost as powerful a
control as'. direct conIt would be, if alterations
could be determined by an administrative authority witn dismeans

of

trols.

still be possible, by proclaiming cretionary
general

a

quota,

rule,

to fix a global
the amount of a

of

say

commodity to be produced

im-

or

ported, and then to sell these
quotas by auction to highest bid-

der.

Or to offer the

much less

the legislature. Legislatures
might
kind still erect a great many obstacles

same

tivity.

modify As I said before, I believe
that t h e s e things are almost
always undesirable. But they not
the

give

government

-

It
can
be
if its alteration de-

powers.
so

pends on legislative action.
The
main safeguard here,
therefore, is
to prevent delegation of
power by

of. subsidyproduce a certain com- to the
to anybody who is
willing to

only

41

less

growth of human producBut

the

wisdom

of

our

governors

would have much less
chance to thwart the wishes of
the

consumers and to prevent

industry

from taking that direction which
^eir wishes indicate;
; \

to them per;
They-also
interfere-less, in
^a
If, beyond this, it were, possible
approving
those one person government acts on ate between different people:rltvetyreal sense, with t;he private-t0
persuade legislatures that the
benefit
which
them.
This, of principles which it is not willing will have to show somepeople to
^
;
course
-is not the case
are laying down
But in to apply to others, even if it does ho things; which others are pre-, And what is even more important, n°rm,s
should be intended not
only for
position it is
so to protect weakness or to com-1 vented
from: ? doing, or compel; they differ only m degree from the day> but for
long periods, that
a- clear--Principle *be-s stated
by'! pensate for fnisfortune,
this is s°me people to -do things which some nther.kind of action, such as the criterion for
them to'apply,Which we can distinguish between undoubtedly the gr ant i n g: of* nthers need not do. { Sudh dis-^
^xa. ^i?' -whibh; any ?government when deciding whether a bill
the objectionable kind of govern- privilege.* The vonly
objectionable kind ofjovern ^
meaning crimination can evidently not be; ihust .take. I can thereforeseeno ought to
go onthe statute book,
^ ^tacbe •[ to
laid down in the form of ihose general principle on
which^ley!was whether m the light
general general/ rules
Which are; alone 'can he objected to xrt toto. f in so
r
present knowledge it ought
"incfixr
'
i
Thpv
must far as they are
concerned, every accepted as a

which

harmful

are

sonally- while

,

suchl'

eSntialthS'

.

.

.

_

olpSi

permanent rule

obiection in principle'

;w^i?Swies

,

w.«vii

*
Meaning of Arbitrariness
this world. But this **
"'V: Similarly,'the only meaning of circumstances of the moment and?,strong
gre^mptiop against most probably already too much. r to
.,Vts there such a principle which arbitrariness is action which :is
that reason must be left to the
k^d undertaken m hope for. We ought to be' well.
would enable "us to distinguish not in conformity with a general executive
authorities.
These
content if we could succeed in1
between government m e a s u r e s
rule which applies equally to all. agencies must be given power to Bid they cannot be, as far
os^I erecting that wall against the.
which are a limine objectionable Whether any action is arbitrary or do- what at a given moment is can see, objected to simply,on the
further .encroachment of
-

- ' - *

.

and others which will

examined

action

ment

"ut

individual

tvoe of govern-

a

which

ruled

be

can

drcurrSances

all

in

have to be

their

for

merits-between

and

another tvne which mav be foolish

th«Tparticular

orwise in
Vmt

ttthirh

ic

instance,

siihiert

net

the

to

objection of principle which

rame

applies
fr

:-y- •;.

al? interference \

to

in this specific sense.

t

we;

S®
he exam-r should probably have achieved asusuallywill have to
be;jnedonits merit. I-shall later much as0ne could ever hope to:
^ made in the light of the particular try to show that there is Still a achieve in
,.

4iS*tothat

"government

to

ference" proper?
I believe there is

;

inter-

.

one

imim-

very

not

be decided only

can

if there

exists a recognized rule
should guide such action.

overall

which

^cessa^
suit
but

Wher-

me

given

„***

authority is given discre- most appropriate to achieve that
tion, its action within the limits result must be left to their decof this discretion is necessarily S1<^-.

ever any

.

arbitrary, and
be

never

cial

in particular

can

controlled by
olled

revision.

A

any judiludicourt, by apply—*

,

,.

W11CI C

tl 1C

^>-1 \J vv vxi

v/a

,

.

,.

cpnep
it mav
sense li may

he
De.

•

Laws

Between

itvn

.
-

in
is

rln«.plv

with
Willi

connected
connected

closely

another distinction which used to
be

of

tradition

the

to

sacred

which
tends to oe forgotten: L11C distinctenas to be luiguutrn. the UJOVUiv
tion between government by law
and government by men. I believe
that if we once again succeeded to
Western

Liberalism,

but

*

wnat

CcUI

UtJ

UCCiucu

British

recent

one

and

x,

vy

In

.

instance,

the

Town and Country Planning Act
equal1947, Parliament has gone so

PtheCTaw prevent"

■

wider.

strict applica-

a

,

an
4~i

excessive bx^». vxx vxx c— .
growth of governmental

an

w

so

-

•

-

.

.

„

..

,

,

,

.

court

once

and for all.

+Vip

people

phes, nothing should be regarded
justifying them.

as

a

,

,

^

mr

BOSTON, MASS.-Byam Whitney has" become associated with
proctor, Cook & Co., 35 Congress
street, members of the New York
and

Boston Stock

Whitney,

^

....

Not All

5
(Special to The Financial
Chronicle)

At least

in a peace-time economy, and perhaps apart from temporary local
crises due to natural catastro-

..

Matter of Degree

Exchanges. Mr.

member of the Boston

a

Exchange,

formerly proprierigidly thp nrinnmle tor of Byam Whitney & Co.
the principle tor of
;v'v
.

.

-

.

-

was

-

.

nrrt

To enforce

imV

Byam Whitney With

...

rmmster.al order on
w^ch one o of equality before the law would
the ^rnost^far—reaching tools ol thus eliminate a large
most far-reaching
group of
"government interference" would control, the so-called
government
activities
as
abso¬
become impossible if the principle ment charges," are to be levied.
lutely
inadmissible
in
normal
-P.,!!.. ixIViororl +r>?
T hplipvP
were fully adhered to?
I believe
times.
Much would be gained it
Not Accidental
so large a part that I should like
it were generally realized that it
AH this is not an accident.
to propose that we should regard
is not all a matter of
degree, but
nf

It would at least
pre-

from sliding by

wnfhii?*h* ceptible steps into a condition
of an argument wMch ""body wants, but which
oi
argumenx
many Well-mtentioned

tioned, controls which necessarily
involve discrimination between
persons should ^be ruled out of

far — even to as
provide that the
■
'General
nrincinles" be fixed by
be fixed
"general principles

—

powers? How many of those acts
which are loosely described
which are
as

.-nfv.i'nrtQmonf

TO

But these limits become

constantly wider

tion of the principle of the
before
lty
oeiore
ine
iaw
y
pievem

and Men
t+
It

'

,

Preventing Excessive Interference
How far would

Distinction

guided.

,
,

,

.

the force
me iorce
v— —

— *— -»/->-

t

ing a rule may decide whether an
authoritv
I
think direct
authority has acted within the the discretionary powers of the not legitimate.
has
authorities
are
concontrols of the kind I have menlimits of ns discretion or not. But executive
nmus ui its uiaciciiun wx xiv,,,.
-

—xt

injustice of all laws.
This is the old principle of equal¬
ity before the law.
-

represent.

^ly .mportanl, not to

government control of economic more certainly than when it is daily help to create.
dailv helD^rc^Patp"
life has proceeded very far, that often used in cases where it is

if the decision of the authority ftantly extended.
At first the
has been within the limits fixed legislature usually tries to keep
—anH
hv
mistrative
—
*
,
*
urgently needs to be revived and by the law.
the law, an administrative yiese powers within limits by
an
administrative tnese
cannot" be
impugned
laying down general principles by
to be made again the fundamental decision
arhitrarv
in
the
tnie which
their exercise is to be
touchstone by which we judge the however
or

.s

e'^U^rewhefe the Mowtolf sZys
everywhere where the growth oi siroys
CVC1 iY W1JL1 C

old distinction, but one which

justice

It

.

portant distinction of the kind, a

very

all circumstances undesirable.

-

-

Eqnitabfe Securities
Adds

Douglas Bartow

Equitable

Pniialitv

Securities

Corp.,

*

tion of''government interference." it must direct particular people ro incompatible with-a free
society, naa
ueeon.e
a5SUcialea
w«n
u,v
Whether particular government do what it wants done.
Direct But we must also face the fact company's sales
department
He
actions which can be carried out control however means discnm- that there is another
region where was formerly with Central Rein a free economy thinks objec- by laying down a general rule ination.
If the government is not we have no such absoiute criteria public Co
31
iionable.
We would slill be far applying- to
all people and all allowed to discriminate, it cannot ^nd where the
rules

in

announced

advance

we

sreat deal of
those activities which the believer
would

a

positively defining the kind

from
of

eliminate

action

JDUl
But

VVC
we

which

should
oxiwixxvx

desirable,

was

have erected
im

v

one

v.

.

-

..

.

times are desirable or not seems to exercise direct controls.
a matter of expediency.; But
that government measures which

me
:

1—

hpfween

It

dSn iS

can

at

most create conditions which will
make it attractive to some people
hv

their

own
choice to do what
safeguard against that involve
discrimination
^
encroachment
which different people, the application the government wants done
I do
almost
inevitable ' if
it
ine w
the of
different rules to different not want to say that these indirect
xvx>~^

important
piecemeal
seems

opposition against all government
is abandoned and

action

no

other

should

be

»

t
TrflTri

out

ruled

o

Air-on*

prntrnAnd

thev

themsefve's a^

'

with'inaiestic mnarUaHtvW

pro

*

under

haystacks

benches,"
which

has

'the

or

constant

since

been

fundamental

able

maxim of

park

ridicule

poured
"

"

this

on

and

on

••

indispens¬

free society had

a

powers.

which

growth

^owtb
fivw vai

vv/

Yet
.

this
low

majestic
wHir>Vi

.

there

can

be

,x

it

is

precisely

impartiality of the

onnlipc thp

law, which applies the>

nrin—
same pnn
camp

o" SSS
va

c,v,

allow

To

,

everything

expedient

seems

a

for

tat

nol management,
LnawmpDt
ness

-

o ce to bus

manawrnpnt.

the

.

.

Practlce adner-

.

—

.

—

same.' °r at least to a
..rill
Xlleft

'

sociated with William Leib &
Russ Building, members of
San
Francisco Stock

Mr.

nA "L^iilu;t:ilclV? -J1JC u"Cu"

f-

PYPrHqpH

f

The Results of

desirable end is

Let

us

-

Equality

The

ciples.
„,u:~u

which

m,,ct

must

spective

.

submission
Ho

be

of
Ot

.

.

to

rules

woujd

irreirre-

Cf
Gf

of whether in

harmful or,

circumstances of different people,

condition

for

not,
the

government

nh«orvPd
observed

the par-

ticular instance their infringement
ticular instance.tneir anirmgemenx
is

stock department,

is

the mam

possibility

of

fn

But

fact

lhey^ould if 'course

dQ sQ Qnlya!.f^
th
in

advance

for

were
t

laj

dQwn

long periods

and

sociated with King Merritt & Co
Russ Building. He
with C. L. Vertin

controls
cuinxixia

Z
needs

of

particular people.
which legislation, xv.
rcgipiunuH, fortunately, is a
wnxv-xx

a

free society.

And to

was formerty
Co.v
Co. and

partner in Herman,
& Co. of Salinas.

.was
was

Hampton

But
cum-

be

With Waddell & Reed

precluded if the powers bersome
process.
At - least,- a
were
limited to great
many
many; of
the
influences
t
(Special to ito.financial CHHoma*) &
enforcing general rules aoplying which theoretically could be exerenforcing
BEVERLY HILLS, CALIF.—
«Aji——x
u
equally to all people. All forms cised by indirect controls could Henry W. Barbour has been
of
licenses,- permits, allocations become effective only if it were
added "to the staff of Waddell &
and
prjce-f'xing would become possible to alter the terms of these
r,'
a
t
ooaq
wi ut
n
i
impossible since all these methods controls at (short intervals.
A Heed, inc., oy4d wusnire Bomegovernment

,

"

*

*

'

'

*-

x.—

...

only barrier order in




was

the

Exchange.
formerly with

genera,

;;

briefly survey the kind

_

.

,

ciples irrespective of the different

whlch constitutes the

Taylor

Co.,

cxjax^e U1 lxxe uaxij

a

dispense with all moral prin-

,

that

.

•

x

^efnit
indefnite

to

law.

..

.

achievement of

doubt

SAN FRANCISCO, C A LI F.—
Philip B. Taylor has become as¬

"Juies. Tariffs and taxes
^c^ion^s'^aken^ntirelv^ut^f g'°bal quotas'sold by auction, and Herman With King Merritt
strYct the power of government the hands of business WHh in°hf s"bsi'^ C0U^
£«"T&oawpLf™merely chafes the" cond™'^ j.0:appiy equaiiv to all people ^ules FRANCISCO, CALIFm^ht^ormally'seem SAN Herman has become asHf ^
purposes, we merely changes the conditions or

OlUUlty
lief in the possibility ui. w11j imof any ****

little

(Special to The Financial
Chronicle)

ment action, tne immediate

done much to undermine the be¬

partial

William Leib Adds

about

Advance
TA

inter-

"nro-

hibits rich and poor alike to Sleep

can we sav

Rules Must Be Specified in

mat- they are less pernicious than the

me a
T4

But this wil1 often also be true of able to adJust itself to the altered
gressivps." I believe it was Ana- Prohibiting lying or even of mur- conditions created by the governtolej France who invented the dey ,
willing to rewarded

What

them?

are desirable.
In most
instances quite the contrary. But

of which might be only beneficial, depends on private business being

^

0f degree

objectionable at all controls

are
and

altogether, appears to

principle put in its place.

.-ropv

people,
times

wbat is admissible and what is not
must be in some meaSure a matter

imply that the government has to tariff

or a

tax

or a

subsidy which vard.

42

In

that.

name

Whyte

others I've
*

Says—
By WALTER WHYTE=

The swift up

and down so
characteristic of
present day markets was in

frequently

of

most

makes

for

confusion

in

last week.

confusion

and

makes

turn

for

the

convictions about

set

market one way or another.
Despite the sharp drops of last
week and the equally rapid
recovery, I don't think we are
as close to a collapse as gen¬
erally feared. I still believe
the familiar averages will go
up to about 211 to 215 before
any
real break will come.

The two com¬ This doesn't mean that the
bined make for hypoed fears 211-215
range will be an auto¬
among traders and investors matic stop. There are no such
so that
everything good is ex¬ things in the market.
*
5*
*
aggerated and everything bad
is intensified.
*

industry

8

You still have
*

*

Cooper-Bes¬

and Mead.

The former

semer

At this

give you some notion of their
The Securities Act of 1933,
Securities Exchange Act of
1934, the Public Utility Holding
Company Act of 1935, Chapter X

tal

ball, and if I did I probably

wouldn't know how to

Hold it

just a minute!
just found something!
it's not

It's

exactly
like

more

fact

it.

use

fish bowl.

coincide

with

those

of the
Chronicle. They are presented as
those of the author only.]

I

...

Well,
crystal ball.

a

a

time

is the Securities

Act of 1933.

Its

dual purposes are to make avail?
able
reliable
and
adequate in¬

formation about newly distributed
securities and to prevent fraud in

occupied by some
tropical fish; fascinating
things that eat like gluttons

Tellier & Co.

that

announce

than 200,000 shares of com¬
stock
of
Eastern
Harness

more
mon

Racing Club, Inc., have been sub¬
scribed and paid for, making ef¬
ion. You know, it's occurred
fective
the
public
offering of
to me that a fish bowl (occu¬
and stare out in baleful fash¬

terns which

all

into

lines.

can

kinds

The

The
not

of

fascinating
be

can

ap¬

plied to the stock market with
only minor changes.

Fort

*

*

,

.

•••

Harness

all the

For

example, if the major¬
the fish scoot down
when someone gives the bowl
a smart
rap, the market's go¬
market's

they
well,

go

If they

due

for

the
If

go up

rise?

a

Raceway Corp.,

which occupies
Steuben

benville,

ing down.

and

the

.

Ohio,

under

at

and

proposes

beggars

stock to pay

of

ness

off existing indebted¬

Fort

Steuben

far

I

so

haven't

been

able

to

make any connection with the
market.

But I'm

working

the

on

CHICAGO, ILL.

Pacific Coast

ments

minister

tive

before they become effec¬

and

This

on

statute

ties

business from offices

West

Sixty-ninth Street.

William
and

Members

Exchange

New York Curb Exchange
(Associate)
San Francisco Stock Exchange

Chicago $oard of Trade
OOrtlandt 7-4150

■..

623

Officers

Sheppley,

Presi¬

Geneva

New York 5, N. Y.
Teletype NY 1-928

Private Wires to Principal Offices
Sub Francisco—Santa Barbara

Caroline E.




than

information

directly

to

Duncan,

Secretary.

trolling about $12 billion of assets
through the reorganization ma¬
chinery.
U

,..

The

Subject to prior sale

ft

50

Act

Of parallel interest is our func¬
under the Investment Com¬

of

prospectuses

by

pur¬

Act of 1940.

While this law

does not penetrate as
deeply into
the financial operations of invest¬

sion

ment

of

the

for

ment,

prospectus

it

is

require¬
of the key¬

one

stones of the Act and poses some
of the most basic legislative
prob¬
lems which the Commission faces
The 1934 Act

the

of

Exchange Act of
natural extension

Securities

Act.

The Con¬

recognized that it was im¬
portant to provide current, relia¬

gress

information

about

being traded

on

well

require

to

as

about

issues.

new

securities

exchanges

our

as

The

information

1934

Act

about

and

as

the

morals

pro¬

manage¬

investor's funds than

himself.

can

can

As

a

matter

of

it follows that the invest¬

ment company stands in a
special

fiduciary
have

relation

to

those

who

committed; to its hands the

ojjheir

Unfortunately

investments.

investment
companies did not live up to this
many

re¬

by
study of the
investment compafny field.
The

of

insider trad¬

ing in the issuer's securities.

ment of

a

Investment Company Act
grew jut, of that study.

body in

addition it deters abuse Of inside
information by members of man¬

the

our

Federal law

minimum

em¬

some

standards

of

which

investment

are

statutes.

are

visions.

covered

In

by their

contrast,

which could transform the nature
of the company overnight with¬

pro¬

the

Com¬
out security-holders' consent; dis¬
given the duty
of fairly intimate regulation of crimination in favor of insiders;
the financial practices and opera¬ ruthless switching of investors in
mission

tions

has

of

been

public

utility

and

holding

out

each

company systems and to a lesser
extent of investment companies.

of

temptation

was

as

gullible

a

ever

present

to

buyers were ready to pay fantas¬
prices created purely by ma¬
nipulation. The usefulness of the
and

activity

as

of

measures

indices of economic

as

destroyed. The crash

was

inevitable.

was

The main staple of this
illusory
banquet of prosperity was ignor¬
Even

ance.

the

dealers

had

no

opportunity to defend themselves
against pressure to take new is¬
sues by resort to current
reliable
information.
The customers were

utterly
cut

helpless.

from

that tie

its

With

tie to

market

a

reality

is information,

(and
and

pure

simple) and without the informa¬
tion they needed they were
easy'
victims of the current hysteria.

Disclosure is
I

hope I
has a big

a

have

small word; but

indicated

that

it

Now, how do
the disclosure requirements of the
purpose.

time

(Let me caution you at this point
to bear in mind that the Commis¬
sion

at^extensive loads (or

does

of

not

tion

filing

statement

The

Holding Co. Act

Act of

1935

holding

affects

company

all

mere

central

made by the Commission.

The Public Utility Holding Com¬
pany

obvious

study

The
itself

the

Investment
was

operation

systems

Company

forked out in full

with

-

the

A.ct
co¬

investment

250.00

July

j

While

both

thd Holding Com¬
Investment Company

pany
and
depression following 1929. Utility Acts
are, in a broad sense, prod¬
holding company systems were ucts of the
depression, they were
the subject of one of the most ex¬
based
on
the
special problems
haustive studies ever made of a
presented by special segments of
single industry. In that study the 4he
corporate.,community.
How¬

3

625.00

3
17

300.00

10

350.00

bare

3

362.50

of these empires:

would

not

the

Trade

sordid

Commission
stories

laid

ever,

it

wa3 HheSpurpose of the

of

many information requirements of both
control, by small the Securities Act of 1933 and the
cliques, of vast and unrelated Securities Exehatige Act of 1934
to correct evils; growing out of
operating
properties
acquired

with other people's money; com¬

plex financial monstrosities created
in

order

to

increase

general customs in securities dis¬
tribution an<f%ading. These were

not isolated customs but applied
speculative to the financing.of £ll segments of.

the

registra¬

the

infor¬
But it

to
Congress that
filing of information

meet

the

needs

demonstrated

were
was

of

makes

publicly available.

recognized

in

that

which

1929.

dealers

It
and

customers must be provided with

the facts
be in

a

directly if they are to
position to make their in¬

vestment

decisions

The Securities Act
to

provide

prospectus

for

this

intelligently.
was

intended

through

requirements

of

the
Sec¬

tion 5.

The Lost Objective of the

Prospectus

•

Federal

re¬

registration

Central

was

the

registration

statement.)

practices

in

that

flect the merits of the
security in
any way, nor does it guarantee
the accuracy of the

mation

disclosed

the merits

pass on

securities,

with the Commission does not

initial charges)—were some of the

26

Broadway, New York 4, TeL BO 9-8470

long

as

maintain those prices by
manipu¬
lation of the market. Uninformed

different companies—

387.50

ft

issuer

public could be induced to take
the issue at high prices.
Having
unloaded at inflated
prices the

and

20

Brokers

the

should apply to Jhe management Securities Act work?
Section 5 of
large stockholders
by providing for civil suits to re¬ and operation of investment com¬ the Securities Act requires that a
capture profits made by such per¬ panies and to correct the abuses registration statement be effective
disclosed in the^ study.
sons in short-term
Abuse of before the securities are offered.
trading.
agement

June
June
July
July
June
June

Inc

se¬

caring less about the business of

1940

The aim of that statute is to

In

of

curities, often knowing little and

value

he

dealers

issues

new

securities markets

that it
investment

better

587.50

Calls

and

for

investment company
at¬
tracts public capital by represent¬

June 10

price change

>

per-;

story,

tic

•

The

Congress to make

manipulation of securities prices,
and extends the disclosure
prin¬
ciple to the proxy procedure and
management

philosophy

fiduciary standard and, as a
sult, the SEC was directed

listed

securities, prohibits fraud and the

to

;'f.

Act.

pany

management

information

requires the filing of initial and
current

similar

a

that underlying, the Holding Com¬

vide

The Securities
a

somewhat

on

scrambled

ing, essentially,

today.

1934 contains

companies, it is based

paper structures was one of the
marked features of the crash and

or

Dealers Assn.,

Company

212.50

THOMAS, HAAB & BOTTS
Members Put

Investment

June 19
June 16

325.00

are

the

Scrambling for New Issues
Underwriters

/,

May 25 $525.00
137.50

you

with

the collapse.

we

that
•

of

many

familiar

con¬

have been built up in cen¬ company industry; and it had the
tralizing control of electric and distinction of being passed in both
gas utility properties.
The dra¬ Houses of Congress without a dis¬
matic collapse in values of these senting vote.

Per 100 Shares Plus Tax

..

companies

chasers of recently registered se¬
I will return to a discus¬

curities.

E.

SPECIAL CALL OFFERINGS
Douglas Air... @ 78
U. S. Smelting @ 36%
Intl. Harvester @ 26%
Skeliy Oil
@ 114
Phillips Petr... @ 64M
Elec. Auto Lite @ 44%
Zenith Radio.. @ 65%
Shell Oil.
@ 38%
Kennecott Cop. @> 50%
General Motors @ 80
Deere & Co... @ 44%

these., requirements,

processed

pany

major

Monterey—Oakland——Sacramento
Fresno—Santa Rosa

further

goes

have

tion

and

on

Schwabacher & Co,

*£4 Wall Street

at

Vice-President;

.

Stock

S.

Treasurer;

Sheppley,

•

Pacific Coast Exchanges

sold.

are

merely requiring the central fil¬
ing of information.
It aims at

curities

Transconti¬

been formed to
engage in a securi¬

Securities

York

—

and

sonally

the building of these em¬
are any guarantee of
permanent'
pires—to bring about simple and economic stability. ;< But if we
integrated system patterns and, look back at the facts it becomes
or
inadequate registration state¬
ments these powers are seldom whenever
necessary,
to abolish clear that the practices which our
used.
Instead, the Commission holding company systems. We are present statutory information re¬
places great reliance on careful particularly prpud of the fact that quirements are designed to cor-examination of registration state¬ since we began actively to ad¬ rect had a good deal to do with

company control
for
essentially "dis¬
business
advantage by brokers,
They do not
penetrate into the financial opera¬ security dealers and bankers; rad¬
tions of the companies whose se¬ ical changes in investment policy

nental Securities Corporation has

idle

first, regulation of

>

»

These laws

(Special to Tire Financial Chronicle)

dent

Neto

raceway

improvement

Transcontinental Sees.

are

Orders Executed

Raceway

economic:

our

ated in

closure"

I

Trouble is that

feed them.

use

I've

up.

go

to

the proceeds from the sale of the

.

.

lease.

a

night harness racing meets

the track

round and round
<
Corp., to purchase
how simple the and to finance an
is? I wonder I program.

little

Steu-

Eastern Harness Racing Club con¬
ducts

discovered how to make

even

operates the

Raceway in

you see
whole thing

didn't think of it before.

Club

•

ity, of

main features:

of

organization.
Pools of
capital dried up, the machines lay

spotted in the Holding Com¬
pany Act.
The statute has two

sion has the power to apply sanc¬
tions in cases of materially false

ble

Racing

the
par¬

financial
operations from there on.
transactions generally. the normal
of system companies and second,
Economists are still searching!
exempted, securities can¬
a directive
to the Commission to for the key to
not be publicly offered until they
understanding of;
undo, through fgir and equitable business cycles, and I don't pre-;
are effectively registered with the
reorganizations, ^the tangles cre¬ tend that our securities laws alonef
Commission.
While the Commis¬

a

had

outstanding stock of

Steuben

Fort

unless

shares

200,000

by April 10.

Eastern
owns

effective

of

been sold

■

f*

was made on Feb.
proviso that it would

become

minimum

be translated

effect

offering

15 with the

to

the

social

securities

1,000,000 shares at $1 per share.

pied—naturally) can be more
rewarding than a plain ordi¬
nary crystal ball.
One can
watch the fish weaving pat¬

the subject I

premises

very
and

been

receipt

it's

Securities Act

ice companies.,
Point by point, these evils have

the investor by providing for the

Offering Effective

In

all

Unless

bringing

Eastern Harness Stk.

in

order

investment; utility operating somewhat broader background.
financial policies dominated
Few of you are likely to re¬
by holding companies thirsty for member the crash of 1929. From
the earnings they could
siphon a human point of view the sui.
of the amended Bankruptcy Act out of the
operating" properties; cides, the despair, the utter col->
of 1938, the Trust Indenture Act huge profits,., arising from trans¬
lapse of values were real.
Whenof 1939, the Investment Company fers of assets to controlled com¬ it
became clear that we were in a i
and Investment Advisers Act of panies at inflated prices bearing
steep incline to depression rather 1940.
no relation
toydnderlying values; than in a temporary crisis fromuseless services performed by af¬ which we
The 1933 Act
would rebound
quickly, ;
The first statute in this roster filiates at hugejirofits to the serv¬ we found ourselves
doubting the:

before the securities

crys¬

In

and

both of

a

trading

out

the

informal and volun¬
tary methods of correcting them

I don't have

to

ticularly wish to discuss this eve¬
ning, we must therefore lay a

values and to assure control with¬

scope:

point I should drag has a stop at 24, with a profit
out a crystal ball and then
taking level at 27 or better.
cpme up with some ponderous The latter's stop remains at
forecasts that would immedi¬ 16, with
profit taking sug¬
ately place me in a position gested at I8V2 or better.
vrhere I would be regarded
[The views expressed in this
with awe.
Unfortunately for article do not necessarily at any
us

and

securities.

of

the effectiveness of
prospectus
requirements of

Informing the Investor

seen.

uncertainty.

V "

page

appraise

*

Seriously, however, I have
no

It

from

will

Walter

Thursday, April 13, 1950

types

yet to find a
for it) isn't any different
*

evidence

CHRONICLE

(I've

from many

Markets

FINANCIAL

&

Continued

event this new

any

method

Tomorrow's

=

COMMERCIAL

THE

(1550)

However,

through an unfortu¬
language the main

nate choice of

objective
been

ble

of

the, prospectus

has

lost, and it has been possi¬
avoid the clear Congres¬

to

sional

intent

that the

full

infor¬

mation outlined in the statute be
the basis for the sale of new is¬
sues.

This results from two fac-

Volume

Number 4898

171

tors:

first,

law

between

ig,

the

distinction in the
talking and writ-

second,

and

the

provision

of

that prospectuses may¬
under certain
cir¬

tbe statute

withheld

be

cumstances

until

the

securities

delivered pursuant to sale.

are

The Securities Act is
that

substantially

written

or

deemed

a

it

ies

the

statute

the

of

violates

use

Other

and

contents

written

the

material

be used only if it accompan¬
follows

or

adopted to

alleged

prospectus

a

forming with the Act.

con¬

These pro¬

overcome

difficulties.

developed

tne

Opposition

ironwthose

wno

buyer should get

every

and

system

of

who. would

prospectus

a

adopt

on

re-

k

stake
too

is

features <>*~the Act. Our
tne disclosure

m

principle

great

uniformed

tor

leave

it

to

customer

of oral

session

a

to

to

the

decide, at-

salesmanship,

who

the

prescribed

full

tbat

he

does

ask

for

in

at

securities

him the full story in advance. You
will note however that the statute
to

not

require the

accompany

broadcast,

from

written

as
or

offering.
Those who
that
permission
be

proposed

for

granted

precede oral

or

distinguished

prospectus

discussion

oral

of

forthcoming
securities
offerings
argued that it would be unrealis¬
tic

it

make

to

unlawful

to

talk

lull

prospectuses

in-

to

the

ine

aisiriouiion

Seen'
Nor

rln
do

agreelwiih

T
I

ixrifh

aorno

tho
the

that
irt?on °hat investors?
investors

tention

read

prospectuses

oresent
pxesent

svstem
sysiem

delivered

s^Ie

the

that

tn

is

thp

is
is
of

course

tnlen

a

not

therefore

dfwelnn

our

nrosnectus
prospectus

had

hnhit

to

investor

the

nf

the

sellina

a

ave^raep

The

not

the

*

in

investor

averaae

document
has not

it

will

Under

the
we

late

so

con-

chance

cpif.nrn-

tection bv advance reading of the

pertinent

information

tails. No reasonable person would

that

length

object

of many prospectuses has deterred

to

a

provision

permitting

guards.

average

safe¬

them

oned

reasonable
an

Today most securities transactions

the

It

and

is

true

complexity

investor

from

using

But it does not follow that

nrosnprtn<r shnnlrl

It

shouid

does

have

hp

follow

continue

(which

conducted

are

the

the

lee-way
has
unreasonable loophole.

But without those

guards
become

that

we

efforts

our

had

ahand-

generally

the

sees

either

psychologically

fi¬

or

nancially committed to the sale.

us

number 1 in any program of im¬
proving this law is to eliminate
this

dilemma.

It

is for

this

rea¬

that I consider it worthwhile

son

to spend a few minutes on a prob¬
lem that has become a Commis¬

sion

classic—the

tion 5 of the Securities Act.
to

It has always seemed to me
a

logical

to

to amend the

answer

law

to
provide for delivery of
prospectuses to the buyer in ad¬

of

vance

committing him to

the

sale. Other
to

proposals, such as that
permit securities to be offered

before

effectiveness of the regis¬

tration

mind

statement,
be

cannot

to

my

considered

separately
project. And the
major project is, to my way of
thinking, of more importance than
other proposals which have cre¬

from this major

facts

but

which

believe that these pains would be
unless managements really

taken

believed that their efforts resulted
in

Commission itself.

detailed

set the facts out itt'a way designed
to invite reading.
It is hard to

by

subject of serious differences of
opinion not only within the fi¬
nancial community but within the

likely to

great efforUand expense in

contain

How

improve the Act has been the

be

the prospectus are

preparation and mailing of annual
reports
to
stockholders
which

Sec¬

revision of

is

con-

and

our

at this moment making

a

special study of this problem. As
our experience grows we discover
new

in

areas

make

which

condensa-

individual

prospectuses

pore useful and readable.
i

wish

fact
the

that
dim

to

I

make

do

view

point of the

a

not

participate in

that

some

^ke of tJl.e inteIligence

people

or

age

aver-

investor. Those who have had

working experience with

our com-

that

inquiries

great

a

can

tell

you

investors

time

I

dispute.

recommended,

At

one

together

aIertj and that they want and

can

USe

„
How"

"-T

?ver'1 re.c°gni2e that the average
m^eS4ur+ ^
^jtraine«d analyst
and that it would be fatuous to
L would be fatuous to
base
scheme of regulation
3 sche™e °£u r,egljlatl0n on
1
a?®umPtl0n that he Is any
J"?.™ than 3 man of ordinary mtelh«encek

a

on

Because of that fact I believe
tbat we sb°uld continue our ef*orts to simP^fy an<^ streamline

actual

reading
stockholders;

the

of

reports

to

get

the

important

job

tuses

The

livery

to

make

documents

sion

spectuses

on

a

case-by-case basis

them

the

useful

sell-

tendency, lias

nor

Continued
LsOnunuea

But

in

patient




and

requiring condensation and
giving immunity. Others felt
that this provision would project

decline

the Commission into the undesirable

role

of

prospectus

Still others felt that it

due burden

drafting,

was an un-

a drop in tax receipts of
something like 16 or 18 billions of

dollars.

Even

In this situation

plans are being
increase in
public expenditures for education,
for

pressed

great

a

material

still

I

case

left

don't

of

out

want

to

prospectuses,

appraise

these

criticisms; there are many arguon both sides.
But I am
willing, on the basis of our ex-

perience

to

forego

and

to

continue

and

this

proposal
present

our

get voluntary coopera-

tion in improving prospectuses.
It has been

my

feeling

out the controversies

mCnt
ment

the
the

0f
of

Act,

surance,

tives

etc.

Granted the objec-

be

good, the question
remains, can the economy
the accumulating load?
If
not, the continuance of fiscal uncertainty and instability will surely, if perhaps slowly, undermine
may

carry

the system of private enterprise
by killing the incentives to take

the

risks essential to

expanding

dynamic,

a

economy

through-

ameSd- Impossibility of Over-All Control

over

that

disputes

about mechanics and principles,

as

Close
ment

observation

of

^civauuu

govern-

vu.

guvwu-

over a long period of years
^

^

diverse as they may have appeared on their face, are really
peared on their
are
rooted in doubts about the ef-

has convinced me of the impracticability oi developing a coherent,
of
nnncicionf
nnmnrDVianorva
consistent,
comprehensive
pro-

ficacy of the prospectus. The arguments about the practical difficulties of making advance delivery
(which were never impressive to
me in themselves) lose a consid-

gram

nm

of control over economic
life.
The difficulties pertain, on
the one hand, to the inherent nature of democratic government
and

processes,

and

on

the

other

protecting investors is to strike

a

body.

responsibility — between
major divisions of govern-

the

ment and state and local governments. Fourth, government eco"omic policies inevitably reflect

the power and influence of the

,

special interest groups that
strive perpetually for government
favor or protection,
A program

Measures Needed to

resulting

FaVAC(s11

Forestall
111vdlfftll

from

purchasing

power

the

among

common

creasing

realization

of

these

of

depends, of course, upon
capacity to place in the hands '
the

masses

ever-increasing
amounts of
real
buying power
This requires, of course, an intensification of' technological progress,
for
increasing
man-hour
output constitutes the only foun-

constant

expansion

of

scientific

research and

Thus

scientists,

inventors,

en-

one

policies

-.*>

objective — that of inthe
capacity:, of
the

"■,

Pe°Ple to satisfy their wants.

possi-

bilities
our

■.

T.

the

blocs

ternally

I/vUiVwdlUll
Depression
,,

masses.

The

H0HYACC1 ATI

21

a
€1

*

*

/

a unified lawSecond, there is

many

Sheers, business managers, and

o^defailed^act^on^he

a

for social security, for health in-

on

by

case

:

T<u°ir°^dr ^ drceS4 °Peai^Vauire-

hand, and complete flexibility in

moderate

so

that of the current year
has served to create a substantial
deficit,
as

the Commission to
responsibility
for dispensing legal immunity for
take

from
X
jrom map 6
page

its staff insists

gence can understand.

f'

;

of

into

thus

and to give immunity from ^gal blow at the foundation of the Seaction based on required omis- curities Act.

of conformance in the

proposal of advance de¬
of prospectuses has been ments

criticized.

involve

the Commissl°n power to order advance. To diminish the role of making
deletion and condensation in pro- the prospectus in the scheme for divided

engineering experibeen to make of the prospectus
mentation; (2) an ever-broadena
means
of avoiding sellers' liaing mechanization of every type
bility by cramming it with every Gf economic
activity* (3) the rapid
conceivable
representation
that
replacement of obsolete plant and
some court might deem material.
equipment; (4) the further imThat tendency I am glad to say provement of internal
organizais on the way
outn, We have got- tion and management policies;
ten prospectuses fn recent months and
(5) the co-operation of labor,
that have been moclels of brevity
and clarity — that have so well
Influences of Progress
told their story that they could
The achievement of economic
be regarded as prime pieces of
progress everywhere has been deselling literature. There is no rea- pendent upon the combined inson
why this tre_nd should not fluence of: (1) natural and human
continue.
Neither 'the Commisresources;
(2) scientific discov-

done.
-

might abuse this procedure
over-long prospectuses
to prod the Commission

filing

by

Xlsio" which. would have giv,en documents worth delivering in ment itself is not

However,
in Nation for higher standards of
many cases, istead of taking simliving.
Maximum
increase
in
ilar pains in preparing prospecproductivity necessitates* (1) a
ing

•

erable amount of their force in to the highly complex and baffling
ProsPectuses- Recently it was pro- the face of prospectuses that are character of the control problem*
P°sed to write into the law a pro- clear, informative, and useful First, the United States Govern-

—

help

trants

in order

are

many

on a ritual
eries
and
inventions; (3) engipreparation neering applications; (4) business
with members of the staff, that of
prospectuses.:
Within
the organization and management; (5)
prospectuses be delivered before framework of adequate disclosure the economic system; and (6) the
sale, or—in the alternative—if the a good deal of flexibility is possi- governmental system.
Scientific
seller
wished
to
withhold
the ble to cut out unnecessary detail, discoveries would not yield pracWith some skill and imagination tical results if we did not have
prospectus> until delivery of the
securities (as is usually done to¬ the lawyers' prescription of ma- invention; patented technological
day) that the buyer have a short terial information can be organ- devices would be impotent withperiod within which he could, ized and presented in the pros- olIt engineering applications to
after getting the prospectus, re¬ pectus in such a way as to make productive processes^ engineering
it a piece of selling literature of can function in a
scind the transaction
that is,
private enterelect not to go through with it. real interest rather than an ex- prise system only in conjunction
This election to rescind (or "the culpatory document.
There are with a business organization able
many cases in which a building to
out clause" as it has been called)
appraise the commercial feasiwas
widely misunderstood and by building description of the is- bility of new developments; incriticized; it generated more ran¬ suer's plant may be unnecessary, dividual business
enterprise in
Even such technical
matters as turn will be thwarted if the ecocor than it vras worth.
Thus, since
of
preferred
stock n0mic system is defective; and fiit is only incidental to what I descriptions
and the terms of the offering can
regard as our major purpose, ad¬
nany the functioning of the ecobe reduced, without sacrifice of nomic
vance delivery of simple and use¬
system is dependent upon
ful prospectuses, I would be will¬ materiality, to simple statements ^e character and the administrathat
people of ordinary intelliof the governmental system,
ing to forego it if doing so will

ated considerable

.This met with considerable tax system even a 20% decline in
Some felt that regis- production for a full year would

diges- ments

tive capacity for facts of the

The very corporate executives
who argue that investors will not
go to

It has been obvious to
many of
at the Commission that
project

flexibility
forward;

Over-Cramming 4he Prospectus

read

Improvement of Section 5

going

between,

43

controversy.

economic

pros¬

pectus for the first time after he
is

and

in

forms toward sim-

sions.

(1551)

considerable

by word of mouth,
including the interstate use of the success in the recent past) to get
telephone so that the legal re¬ those responsible for the prepara¬
quirement to use prospectuses as tion of prospectuses—(the issuers'
a
underwriters'
lawyers pre¬
primary
offering
vehicle
is and
avoided.
As a result, the
cus¬ dominantly) to simplify them.
tomer

usual, the best for-

our

stantly

investors'

favor- of: buyers who
will take their securities signt unin

about pending issues when friends
met on the golf course or at cock¬

oral discussion under proper safe¬

and

1 \^€an issue oi plaint files and have dealt with efforts to
kyfPaSSeCF
oi

nwho

mation.

does

not—need

infor¬

Clearly the statute aims
giving the investor a shield
against selling pressure by giving

the

on

merits

lies somewhere

plicity

to

loimation; or to subject investors

contain

of

its

i

car~mai

security

must

approach

has

As

CHRONICLE

?ht*
e ^eerJ opposed to Hon, deletion, simplification help
that abandonment of one of tne

visions add up to the requirement
that the first written offer of a

complement

mula

?'estioned th.eja.asic princi- staff is

a

to

Each

Revision of

be

FINANCIAL

case-by-case

a

other.

could

prospectus, and

governing
prospectuses its

fra-

dangers.

has

unless

underwriting

&

ternity we have shown how fairly
simple
adjustments
in
practice

worded

so

the

COMMERCIAL

with representa-

sessions

ol

prospectus

conforms

may

tives

radio broadcast form is

rules

statute.

arduous

offering in pie that

any

THE

-

consistent,
are

of

pressures

cannot

in-

be

since

formulated

such

and

ex-

ecuted by political maxim that it
is sometimes necessary to accept

promote unsound policies be-

or

of the exigencies

cause

the

of

situation,

Maiura,

Natural Sciences

A factor of major importance
has been the ability of the socalled natural sciences, especially
chemistry and physics, to unlock
the secrets of nature and create in
effect vast new productive resources.
These developments, together with the growth of large-

scale business organizations, opcrating under a private enterprise
system, which provided incentives
and furnished the driving power
f°r expansion, made possible the
great century which lies behind
usThey overcame the limitations of nature and engulfed the
law of diminishing returns with a
law
increasing returns. They
transformed the expected static society into a highly dynamic one,
providing goods and services for
the satisfaction of human wants

rovernment»« Rnle

ine government s Koie
That the government has a role
of great importance to play in
helping to preserve and foster
competition
is • unquestionable,
This has been our basic national
policy for more than 60 years,
The question at issue pertains to
the place at which the line is
drawn. In recent years the tendency has gone far beyond that of
establishing rules of the game and
punishing violations of law and
proscribed abuse of power,
The purpose is not only to prevent

and

practices

punish
monopolistic
but to curb "incipient

tendencies"

which

in

ment of government
tors

might

the judgadministra-

eventually

jnt0 restraints of trade.

contended that the

mere

develop
It is

even

power

to

iri ever-increasing abundance.
control the price of a product is
This
increasing
productivity illegal even though such power is
must be accompanied by a con- not exercised.
The
size of an
stantly broadening distribution of enterprise, it is contended, should

national purchasing power
subject to government control
through the medium of an ever- irrespective of the policies purimproving ratio of prices to SUed and the results accomplished,
wages. Unless the buying power
Time
does
not
here
permit
the masses, whose wants ere^itatinn
nf
ate markets, is progressively ex- elaboration or citation of ca
.
,

business

panding
will

have

to

be

management
management.
with a

content

virtually static situation. There is
scant future in trying to sell more

.

I can nnlv state mv view that govmy
T ran only
eovernment

regulation of trade and

industry shouid stop short of the
J

.

goods to the shrinking rich and usurpation of managena
uncmiddle classes; and net foreign tions and be confined to the
outlets will shrink as export sub- checking of collusive efforts to
sidies decline and imports in- eliminate competition
Any atcrease.

government

tempt on the part ot g

Financial Stability
Another condition essential for
continued

economic

expansion

is

the maintenance of general finan-

cial

There have been
only two years since
1930
in
which the Treasury has had a surplus of revenues over expendi-

officials to prevent one company
from
others

stability.

tures.

Only

in

the

super-boom

growing at the expense of
is
nf

J.

a

negation of the very
A

rnmnPtition

.p

'

nolicy
„

anxT

which places in the hands ot g vernment the power to limit size,
to curb "incipient

tendencies,"

or

professional students of economics

years 1947 and 1948 have we fully
carried the load. Because of the

to check the evolution of industry
can only result in seriously re-

and

highly sensitive character of

tarding economic progress.

government co-operate

in

a

our

'<

t;

44

T?

The following

Indications of Current

latest week

week

Business Activity
Week

Equivalent to—
Steel

(net

1,864,300

that date,

in

or,

INSTITUTE:
Crude oil and condensate output — daily average

I

Latest

Previous

Ago

I

Month

Month

ua

89.8

1,845,200

AMERICAN GAS ASSOCIATION

2

of

Crude

——

stills

to

runs

sales

dally

—

4,843,100

4,909,250

5.469,000

5,316,000

5,209,000

Api'!{

18,432,000

17,839,000

17.707.000.

2,301,000

2,338,000

2,184,000.

1,959,000

6,501,000

6,870.000

7,048,000

(bbls.)—
—
April
8toeks at refineries, at bulk terminals, in transit and in pipe lines-

7,922.000

8,171.000

8,140,000

of

6,658,000

8,351,000

oil,

Residual

oil

fuel

Finished

—

(bbls.)

(bbls.) at

gasoline

at—

at

134,208,000

135,406,000

135,586,000

gasoline

Benzol

ENGINEERING

—

of

42-gal-A
167,674,000

170,465,000

152,590,000

155,754,000

15,063,000

14,681,000

„>—

(bbls.)———
(bbls.)

output

output

130,070,000
167,072.000
12,937.000

.

7'

11.000

21,000

30,000

15,041,000

14,131,000

imports (bbls.)—,————
Indicaied consumption—domestic and export

10,959,000

10.642,000

5.355.000

204.397,000

•215,453,000

196.751,000

10,662,000

*19,305,000

tf2,305,000

1

12,425,000

12.950,000

15,466,000

17,915,000

1

38,532,000

*40,086.000

51,670,000

48,556,900

Refined

1

41,041,000

42,546.000

46.036,000

58,120,000

§720,353

5717,233
♦5672,695

§574,395
§518,611

.

725,623

imports

products

i—-—

5670,25b'

581.137

stocks

(bbls.)

TRUCKING

AMERICAN
Month

CONSTRUCTION

•

(bbls.)—4———

output

oil

Number

ENGINEERING

125,230

(bbls.

(bbls.)

CIVIL

231,728

118,725

15,102,000

Crude

Aj rll
April

freight loaded (number of cars)Revenue freight received from connections (number of cars)

Revenue
'

3,160,406

123,769

-

(bbls.)

127,769,000

April

—

oil

RAILROADS:

AMERICAN

OF

3,517.414

230,897

——

crude

Decrease—all

ASSOCIATION

4,325,231
3,975,609

228,769

_

— _—,

J;

,

.

production

each)

-Domestic

April

—

—.—

domestic

Ions

April

—

(bbls.)

oil

fuel

1

April

—■

oil, and distillate fuel oil (bbls.) at—

Residual

4,084,481
3.731,943

therms)—-

INSTITUTE—Month

January:, '.'

Total

-

Natural

output

unfinished

and

Kerosene

Gas,

.

—

output

PETROLEUM

AMERICAN

17,635,000

.-April
April

Gas,

<M

therms)

(M

sales

gas

sales

5,129,800

April

(bbls.).

average

4,872,950

55,470,000

————-—"£pr~

output

Kerosene

-

i————

<M therms

gas

(bbls. of 42

(bbls.)
—-———
(bbls.)_—
and distillate fuel oil output (bbls.)-:—

Gasoline

Ago /

For Month

—

therms)

Natural gas
Mixed

———

—

Year

February:

Total ®as

1 323 800

1,711,800

PETROLEUM

gallons each)

of that date:

are as

Year

Manufactured

AMERICAN

of quotations,

cases

either for the

are

Ago

96.8

April 16

tons)-.

production and otber figures for the

cover

Month

*

castings

and

ingots

97.8

on

Thursday, April 13, 1950

Dates shown in first column

month available.

month ended

Week

April 16

capacity)—

operations (percent of

Indicated steel

■■

INSTITUTE:

STEEL

AND

statistical tabulations

or

Previous

Latest
■

IRON

AMERICAN

or

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(1552)

NEWS- J

of

Volume of

ASSOCIATION—

February:
motor carriers

of

—

318 %

318

reporting——

:

.

318

3,147,597

2,712,104

G9.639

78.121

85,589

84,257

71,017

59,776

67,419

23,204

55,533

(tons)——

*3,247,372

77,946

freight transported

45,131

79,722

RECORD:
Total

construction

•

and

municipal-

6304,439,000

$253,901,000

$210,567,000

$178,242,000

C

216,615,000

155,521,000

122,135.000

89,664,000

April

6

87,824,000

103,380.000

88,432,000

83,578,000

April

o

—

21,993,000

71,419,000

65,831,000

6

—

-

—;

6

April
i

—

Federal

April

——

—

construction

State

:

-i!

construction——————

S.

U.

Private
Public

-

76,547.000
11,885,000

16,601.000

zinc

(U.

S.

BUREAU

MINES):

OF

of 2,000 lbs.)

Bituminous coal and lignite (tons)
Pennsylvania anthracite (tons)—
Beehive coke (tons)-

r

April

1

11,910,000

*12,510.000

3,075,000

1

1,031,000

*1,138,000

662,000

*93,600

2,800

114,200

end

STORE

TEM— 1935-39

INDEX—FEDERAL

SALES

1

83,600

COAL OUTPUT

AVERAGE=100—————

(in

output

301

April

kwn.)—

OOo

(COMMERCIAL

STREET

period

(tons)——-

*279

301

244

Beehive

coke

April

5.897.831

3

5,911,936

52,435,000

11,803,000

*33,762,000

4,894.000

*2.581,000

2,373,000

—s—

265,100

*26,400

444,000

DEPT.

—

RUNNING

—

Lint—Consumed

"y

tons)——

(net tons)

(net

tons)

LINTERS

AND

MERGE

,

5,359,961

8.936,586

(.net

^

,

ignite

anthracite

OF

COM-

BALES:

month

In consuming

FAILURES

(tons)-

of

'

and

coal

INSTITUTE:

ELECTRIC

Electric

end

(BUREAU OF MINES)—Month

Pennsylvania

COTTON

EDISON

period

at

lbs.)^-———

March:

of

SYS¬

RESERVE

of

orders

Bituminous
DEPARTMENT

(tons

—

960,000

April

—

grades

9,933,000

April

all

output,

(tons oi 2,000

at

Unfilled

—

INC.—Month

INSTITUTE,

smelter

Shipments
Stocks

GOAL OUTPUT

ZINC

March:

of

Slab

71,977.000

31,561,600

AMERICAN

of

INDUSTRIAL)

—

INC.

1,825,791

1,749,946

1,616,394

9,228,737

9,974,867

7,563,540

DUN

BRAD-

A

April

203

6

221

193

127,662

132,013

119,003

of Feb. 25

342,881

290,276

65,453

69,249

373,095
85,021*

public

storage

Linters—Consumed

230

In

month

25-

February

of

establishments

consuming

of Feb.

as

Feb.

of

as

as

In

Finished

steel

(per

Pig

(per

gross

iron

640,179

25

i'—-

In

-

IRON AGE COMPOSITE

734,186

739,438

February———

public storage as of Feb. 25
Cotton spindles active as of Feb. 25-——

AND

establishments

PRICES:

lb.)

—April

4

f 3.837c

3.837c

3.837c

4

$46.33

$48.33

$46.38

$46.74

April

4

$23.83

"$28.42

$27.42

$26.17

—

Scrap steel (per gross ton)

—.

.

20,217,000

20,417,000

3.732c

April

—

ton)

20,756,000

'

)■

EMPLOYMENT
OF

AND

PAYROLLS—U.

SERIES—Month

LABOR—REVISED

'

\

DEPT.

S.

of

Januaiy:
All

METAL

PRICES

(E.

M.

&

J.

QUOTATIONS):

Durable

Electrolytic copper—
Domestic refinery at
Export refinery at—
Straits
Lead

Zinc

tin

(New

(New

Lead

(St.

Louis)

U.

S.

18.200c

22.950c

18.425c

13.425c

23.425c

76.000c

74.500c

DAILY

10.500c

12.000c

16.000c

10.300c

10.300c

11.800c

15.800c

10.500c

10.250c

9.750c

13,997,000

♦14,033,000

14.732,000

7,354,000

*7,300,000

8

6,643,000

*6,733,00"!

6,738,000

18.200c

2il78c

18.420c

23.42bc

10.963c

12.000c

18.907c

Lords

10.763c

11.800c

13.715c

73.098c

73.250c

71.500c

15.000c

.April 11

102.33

103.01

103.27

.April 11

Estimated

116.41

116.22

116.41

121.25

121.25

121.46

119.82

119 82

120.02

115.82

115.82

115.82

119.00

METAL

112.19

April 11

109.0-5

103.88

108.70

111.81

111.62

111.62

.April 11

117 20

117.40

117.40

113.89

-Apiil 11

120.22

120.22

120.22

Electrolytic

103.16

117.40

U.

S.

BOND

YIELD

Government

DAILY

Silver

AVERAGES:

Bonds

Baa

April U

Public

Group

Utilities

2.23

2.26

2.38

2.83

2.84

2.83

3.00

Silver,

2.59

2.59

2.58

2.70

2.66

2.65

2.79

2.86

2.36

2.86

3.05

3.22

3.23

3.24

3.46

Zinc
Tin

3.07

3.03

3.08

3.27

Apiil 11

2.79

2.78

2.78

2.96

April 11

2.64

2.64

2.64

London

(pence

pound)—East

NATIONAL
Orders

INDEX--—————

PAPERBOARD

received

2.78

York,
(per

99%

GnfiLea orders

(tons)

—

April 11

-

—___;

at—

DRUG

AVERAGE=IOO

-

—

LOT
\

DEALERS

PRICE

SPECIALISTS

INDEX

of orders

$87,296
41.730c

24.602c

27.318c

360.2

357.6

25.102c

27.818c

39.000c

Nominal

Nominal

Nominal

(per

Antimony

(per

354.7

356.3

223,429

186,128

249.542

178,967

210.097

195,468

149,918

ICadmium

pound)—
(per pound)—-——

Apiil

1

92

95

88

75

§Cadmium

(per

-April

1

371,805

355,062

371,003

271,986

tCadmium

OF

'

Customers'

short

sales

Customers'

other

sales---;

Number

of

shares—Customers'
short

Customers'

other

Dollar

I

sales

Other

sales

Round-lot

PRICES

—Mar. 25
—Mar. 25

NEW

35,140

31,310

996,888

<

.

870.826

171

40.000c

IN GREAT BRITAIN-

OF

23,819

17,577
472,042

Total

5,464

7.200

Total

655,071

464,842

Mar. 25

$36,845,440

$32,497,863

$23,227,829

$16,070,418

Mar. 25

342.150

Mar. 25

—

U.

S.

DEPT.

OF

;

262,550

204,980

262,550

204,980

AMERICAN

than farm and

products——
products

•Revised figure.

•

275.030

267.600

206.280

226.970

RRS.)




£5,430,000
'

;

;

7-

•

15,174,000

13,751,000

9,593,000

9,)34,000

20,267,000

22,206,000
-''

70%

-

73%

—

Month

(ASSOC.
Feb.:

of

$584,927,686

$657,044,390

$675,771,407

501,117,846

————

546,665.008

567,794.600

/

85.67

83.20

55,118,342

64,111,602

64.289,723

15,236,248

32,757,854

30.934,276

—9.000,00C

11,500,000

6,000,000

-•'

income

income before charges

railway ooerating

RYS.

Net

after

charges

INCOME

(est.)——

ITEMS OF U. S.

*■

CLASS I

43.02

-

Commission)-—

(Interstate Commerce

December:

of

oberating

railway

Other

income

Total

152.0

152.1

152.0

157.6

158.5

158.0

April

'

—

income

foods

"

■

available

Income after fixed

164.1

Other

*

168.0

167.3

193.8

199.2

201.8

205.1

155.7

155.9

156.0

164.4

-—April

213.9

214.5

164.0

:

$69,309,849

fixed

3,818,574

5,919,013

123,632,516

93,518,357
57,743,306
3,318,190
54,425,116

93,785,315

charges.'
-

deductions

;

—

-———

s

■

,

149.8

Federal

142.5

Dividend

April

145.6

145.6

145.4

135.8

136.1

136.8

130.3

130.5

130.1
169.3

173.3

193.2

197.6

115.9

116.9

———April

169.6

169.6

April

193.0

192.9

April

117.3

*116.6

,

.

'.

/

j

34,683,574

(way & structures & equip.)—
Amortization of defense projects—;—;—

—April

Depreciation

income

taxes.

■

stock

common

On

preferred stock___J_^__l_.
of income to fixed charges

Ratio

.1,465,519
12,592,286

•

35,130.793
.1,367,669

59,760,134
14,317,750
45,442,384

32,848,872
.1,158,622

-

30,383,515

33,390,366

appropriations:

On

133.1

■

-

-

88,524,917
6,069,468
82,455,449

——

-

225.9

%

215.8.

99,704,328

6,744,296

'

.

35.212,889

97,336,931

income-——~

—

charges

Net income

$64,491,439

21,754,801

—-

—

——

for

$75,582,130

61,066,963

130,376,812

income—
-

-

172.6

_——April

I—IIII

Income

158.0

([Includes 499,000 barrels of foreien crude
runs.
tThe weighted finished steel composite was revised lor the
The weights used are based on the
average product shipments for the 7
years 1937 to 1940 inclusive end
1§46 tO 1948 Inclusive.
gReflects effect of five-day week
effecthe Sept. 1, 1949.
**Correctedx
-

1941 to date.

—

67%

ROADS

I

revenues

Net

132,350

April

materials

allied

—:

Taxes

132,850

342,150

—April

products
metal

\

9,775,000

,

<bbls.I

.4:—'—
CLASS

—

operating

SELECTED

———April

~ ~

.

materials

£10,995.000

.* ,j;'

*

23,562,000

(bbls.)

month)

of

Operating ratio—per cent————

LABOR—

__

lighting

'"

13,070,000

—-

—_—

mills

end

operating expenses———————

Month
Mar. 25

:

commodities other

f

„

."1_

~~

-

£9,690,000

OF MINES)—'

—Mar. 25

—

Meats

W*n

(at

EARNINGS

660,535
"•>

-April

and

RR.

*

864,149

-J;--:

Chemicals

20.500c

40 000c

17,748

985,958

^

and

141

Mar. 25

___

Metals

23,960

181

6.677

sales

SERIES

20.500c

Miscellaneous deductions from

...

Building

Stocks

(bbls.)

from

Shipment

•

Grains

and

31,491

294

10,932

Livestock

Fuel

35,434

,7.'.;

—__Mar. 25

products

Textile

Production

563^95

$21,337,880

;

•

Foods

All

20,370

650,791

___■

All commodities
Farm

21,774

.

$26,303,809

_t_____—

1926=100:

20.500c

(BUREAU

Net

purchases by dealers—

WHOLESALE

28,413
830,869
$35,514,604

._

——

17.000

pound).——'——

BANK, LTD.—Month of February

Capacity used

i

Number of shares——:

,

30,362
921.896

$39,296,060

dealers—

Number of shares—Total

-•'/* Short

(per

Month of February:

——

Round-lot sales by

ingot

'

'

value

Not avail.

17.000

.

-Mar. 25

sales

sales

$2.10000

$1,800

'

Mar. 25

total

sales—,

$2.15000

$1,800

40.000c

MIDLAND

Mai. 25

.

Customers'

$2.05000

«"• 17.000

*

Mar. 25

Odd-lot purchases by dealers (customers' sales)—
Number of orders—Customers' total sales—-J,

$2.15000

$2.00000

>

——Mar. 25
„

■

$2.07500

—'

ingot

♦•Nickel

-r "

:

——

134.1

$75,111

$2.00000

(per pound)::—

,—

plus,

PORTLAND CEMENT

-

value

121.8

33.500c

$66,000

%

$2.07500

pound)

99%

NEW CAPITAL ISSUES

ODD-

THE
N. Y. STOCK
COMMISSION: *
V

f.

Number of shares

Dollar

*121.6

$66,000
$2.00000

—li——

(per

Magnesium,
121.2

7

—

Cobalt. 97%

ON

EXCHANGE

-

$35,000

pound), bulk. Laredo..
—
pound), in cases, Laredo.—

Antimony

-1926-86

Odd-lot sales by dealers (customers' purchases)—
Number

102.000c

30.598c

203.668

April

AND

>':

$71,000

1

—-

EXCHANGE—SECURITIES

■

103.000c

73.352c

$35,000

M. J.)

<E. <fc

1

.

—

STOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT

.

74.352c

$35,000

74.694c

-•
;

27.882c

pound),

.April

_

——.

—-

REPORTER

17.056c

$71,000

(per

Aluminum,

OIL, PAINT AND

43.500

$4.02750

9.750c

75.094c

(§1)__

rain.

U. S. price)
(per flask of 76 pounds)—

-April

x_»

———

Percentage of activity———

64.000

$2.79756

9.940c

Louis...—

ounce

Quicksilver

ASSOCIATION:

(tons )___

Production (tons)

63.957

$2.79750

>__

St;

(per pound)—
York
Straits

New

Gold

%

18.425c

ounce)

per

(Check

Exchange

(per

([Antimony
COMMODITY

18.200c

—'

Antimony (per pound), Chinese Spot—----Platinum, refined (per ounce)—
1—

Industrials Group

MOODY'S

-

refinery

New
'

April 11
Group

domestic

St.

Sterling

2.66

April 11

,

Railroad

2.29

Ap:il 11

—

March:

and

April 11
April 11

corporate

044,000

QUOTATIONS)—

J.

Electrolytic export reiinery
Lead (per pound)—
Common, New York 3—------------u--

April 11

Average

M.

for Month cf
pound)—

(per

Common,
MOODY'S

'

_

(E. &

PRICES

Average
Copper

104.83

.April 11

Industrials Group

>4—

goods

/Nondurable goods

117.20

.April 11

Group

in manufac¬

manufacfj-.ing

113.12

.April 11

Group

of employees

number

turing industries—

101.62

-Ap'il 11
.

Utilities

148.9

345.9

"

,

manufacturing

Durable

;

Aaa

Public

*140.4

*330.1

All

All

corporate

Railroad

139.9

329.7

Payroll indexes—

AVERAGES:"

Bonds

Aa

*5,545,000

Sterling Exchange—
Silver, New York (per ounce)—

103.000c

10.500c

.April

—

75.375c

.April

*

at—

PRICES

*5,957,000

5,453,000

,„i— ,l,

Employment indexes—
All manufacturing

Vv-•• VvV

BOND

6,007.000

goods

„

.April

at

Government

Average

18.200c

18.425c

.Aprii

;

„

:

;/%'

18.200c

_Ap.il
at—

at—

(East. St. Louis)

MOODY'S

.April

*11,502.000

11,460,000

workers)—

(production

goods

Nondurable

York)

York)

manufacturing

•Revised

figure.

18,236,152

-

tBased

on

_

_

36,223,051

9,019,743

-

;

5,245,742

3.52

2.61

"

28,854,228
-

10,256,958
2.76
t

the producers' quotation.

tBased on the average of
TBased on platers' quotations.
([Domestic, five

the producers' and platers' quotations.
tons or more but less than carload lot packed in

Colburne, N. S.. U. S. duty included.

cases,

§?Tin contained,

f.o.b. New York.

••F.O.B. Port

ttlncrease—all stocks (bbls.).

Continued

The

THE

-Number 4898

Volume 171

from

4 fC

page

'

and

?;

/

;

COMMERCIAL

—A Political Grab foi Control!
in wartime the CIO

all

lobbying for
when

ment

already

some such

it

was

arrange¬

too

State for reasons now

thoroughly propagandized

would find it easy to step in and
take

How destroyed or

how
through
the
industry to 4% and purse, because if the rules of the
individual
annual
incomes
to game were to be changed to suit
$25,000. The proposal of the ma¬ the majority, no investor outside
jority that schedules of intended the psychopathic ward at Belleprice increases be filed with a vue would ever put a dollar of
government agency is strangely new savings into heavy industry.
silent with respect to price de¬ By way of contrast, we feel the
creases.
Is it a case of "heads I minority views are realistic, fac¬
win, tails you lose?"
But such tual and temperate. They appar¬
price procedures fit easily into ently come from men who know
proposed to Presi¬

dent Roosevelt to limit return

on

over.

enfeebled?

Well,

investment in

the

types

of

industrial

strait-

jackets contemplated by the
Spence Bill (H.R. 2756) or S. 281
somewhat

ironically

Economic Expansion
Real
We

the

to

reference

status

is

cover

up

ceilings
first
the

Price

Purpose:

incline

the

to

price

device

toward

control

We

instance.

Control

makes

of

wheels

the

free

enterprise turn and wish to pre¬
serve and nurture this system.
It is to be hoped

that the vital
highlighted by these hear¬
ings will be clarified and simpli¬
fied so as to be comprehensible

isue

to the average

lay voter unskilled

public utility

a

move

a

the

opinion that

semantic

a

or

called

Act of 1949.

what

don't

to

price
in the

believe

majority had in mind the idea

of

compensating shareholders for
relinquishing their right to a rel¬
atively high return in good years
by
granting
them
full
utility

Continued

from

page

CHRONICLE

of

There

6

for

if

the

stockholders

the

and

management were to write all the
rules.

Return

in

steel

the

on

the

investment

industry has charac¬

earnings of 6%

isted

or

more

Individual

only 7 of the past 20
years.
Cognizance of this fact,
known to all intelligent investors
in and analysts of the steel in¬
dustry, is an important reason
why the quotations for many of
the

leading

companies

far

are

lower than the book values based

original cost and even farther
below estimated present net sound
on

depreciated values.

^

Stockholder

(5)

conspicuous

groups

were

their silence.

by

They did not register an appear¬
at the hearings nor did they

ance

attempt

their

make

to

%

views

known

through any of the cus¬
tomary
channels.
The
United
of

Steelworkers

America* CIO,
much in evidence
through their director of research,

however,
Otis

were

Brubaker,

and

the

United
through
Donald Montgomery, their Wash¬
ington representative. If present
trends continue, historians of the

Automobile

future

.Workers

will

that

record

vestors in American

the

industry

in¬
con¬

tributed importantly to their own

eventual liquidation-by their inr
difference, lethargy and lack of
organization. We are reminded of
marble

a

the

plaque in the lobby of

Crillon

Hotel

in

Paris

upon

which is inscribed the famous let¬
of Henry IV to one of his
captains, written in 1589 after a
great battle:
Where were you,
brave Crillon, we fought at Argives and you were not there."

ter

(6)

The

strict

division

of

the

majority and minority along party
lines transforms the hearings into
a

political event of the first

nitude.

We
seven

''A A
don't

know

mag¬

S'

whether

the

Democrats, who comprised

the

majority, or the six Repub¬
licans, who were in the minority,
will utilize the wealth of material
which

the

hearings

brought forth

as

a

and

reports

source

or

a

basis of political potential. Speak¬

ing personally, we feel that the
majority views constitute a blue¬

print for the virtual destruction
or

at

U. S.

best

the

enfeeblement

of

heavy industry to a degree




it

Now,

is

quite natural

~

was

chronic

a

tendency

7:\7

that

when you have trade unions, or¬

'

V'

ular

that

form

V

•

%■:

'

'•

I

.'*>
t

-V

for

them.

That

minds

a

search

is

enactment

that

case

a

A*-

for means of

powerful

urge to
a general import duty of 10%
ad
removing all
valorem, and then giving the gov¬
misery that is caused
ernment the right to impose addi¬
by unemployment, and one of the

Obstructing

the

very

human

devices

that

duties

tional

very

quickly

comes

made and

and very quickly achieves sup¬
port in such circumstances, is the

if

case

application

were

stated.

:

:

up,

done and is

intensive, there de¬ most, two continuous strip steel
velops, even among the business rolling mills in Great Britain.
men a certain liking for the easy,
Well, now, clearly, when there
controlled life, a certain love of can
only be, for tecunical reasons,
the

chains

limit

ex¬

in

rule and is uniform
plant to another.
J j

one

took, in the Import Duties Act of
1932, has been a most powerful
of
temporary
overcapitalization. instrument in
removing competi¬
And when the temporary lasts as
tion from British industry, because
long as 20 years it creates in men's
the Act took the form of imposing

of

Britain's

so

that

their

at

the

merely

time

and

also

difficulties, not
extent, in

same

World War II there was

a

further

complicating factor, and that was
that it
duct

of

so

happened that the con¬

the

war

led

to

an

enor¬

mous

extension of the capacity of

some

of the British

exporting in¬

dustries, particularly the steel in¬
dustry, and also to the capture by
other producers of the
others of the British

markets of
exporting

in particular the cot¬
ton-textile industry, so that when
we
emerged from World War I
industries,

with very substantial proportions
of over-capacity in several of our
most

important industries that, as
I say, has been avoided in World
War II, for a variety of reasons
that it would be interesting to ex¬
not

which

but

pound

permit.

my

two producers of a given article,
clearly there is not a competitive

and prof¬ situation and there

an easy

On top of those
to

same

the

movements

teristically been low, the Federal guarantee them
Trade Commission having found itable life.
that

trade union

from

supply of all things to exceed

demand

cyclical character of the steel in¬

even

45

ganizations of labor putting them¬
selves into
a
position of;, such
all' industry and V not
tor which in Great Britain to a
merely a
strength in the labor market, it is
schedule of prices for steel prod¬ much greater extent than in this
quite natural that there should be
ucts but the whole price system, country,
namely,
a
general a similar
growth of organization
which is the crucial organizing tendency towards overcapitaliza¬
on the
employers' side, and in the
and regulating mechanism of free tion, and it is overcapitalization
past generation in England we
either temporary or permanent,
enterpise.
•
have had a very great deal. There
which is far and away the biggest
has been an enormous growth of"
Guilty Before Trial
enemy of competitive countries.
trade associations,
of employers
v.;
And as for the hearings, well,
Now, my three reasons that I associations, which came into ex¬
they comprised a sort of demon¬ have given you—so far as one can • istence no doubt
originally for the
stration trial in which the writers
humanly foresee—are not likely to purpose of bargaining but have
of the majority report constituted be
operative in the United States. remained in existence to move on
themselves prosecutors, judge and But now I come to
two, and very and try and find some way in
jury. We have seen all too many pertinent ones that conceivably
which the rigid costs to which col¬
trials of this type in various parts
may.
The first of these is the lective bargaining leads can be
of the world recently, trials in effect on the trade
cycle.
matched by equally stable selling'
which the verdict is known in
It so happened that Great Brit¬ prices.
advance and in which a principal
ain suffered from depression and
The Tariff Factor
objective is to propagandize the
unemployment throughout, sub¬
Now, I have got two more on
particular views of the party in stantially, the whole of the
period
power.
Of course, the ultimate between the two world wars. The ray list, and here I come for the
first time to a specific act of gov¬
victims abroad were people, while
depression was not as deep, and
ernmental policy.
in Washington there were only the
That was the
unemployment was not as
decision that was taken when in
stockholders involved. Or by any severe
as
you
suffered in this
1932 Great Britain decided, after
chance,
are
stockholders
also
country in the early 30's neverthe¬
people?
less, those were years in Britain nearly a century, to reverse its
policy of free trade, and to enact a
of depression and unemployment.
protective tariff. And the partic¬

status involving a fair and rea¬
sonable return in poor years. The

dustry being what it is, this would
be quite an ambitious undertaking

(1553)

untutored

jumbo

where the

FINANCIAL

•
in the
mumbo- two curves reinforcing each other,
accounting ■ and
the the productivity going ytp and the
terminology
of
industrial
eco¬ number of heads going up also.
"
nomics.
This issue is, as we have
Overcapitalization ;.
stated, not merely that of steel
prices.
It involves the future of
There also you can see Is a fac¬

?

VMahoney Steel Repot

presumably the government. Back

&

time

does

*

Well, the second reason for the
change in the attitude towards
competition is, I think, to be found

can

not be

a

competitive market. Clearly, also,
before anyone or any two pro¬
ducers are willing to invest the
very large sums of money neces¬
sary to produce such equipment,
they need to have some assurance
that somebody else is not going to
put down a third or a fourth, and
in those situations, I think, you
can very readily see, various de¬
vices which, however good their
intentions, have the effect of lim¬
iting
competition
naturally
or
otherwise.

general

idea

that

Nearing Population

Peak

not

one

only very much smaller than
economy, it is also
that is neaping the peak of

its

population.

the American

the

referred

to

fertility

of the

within

the last

Doctor Moulton
quite astonishing

American people
ten years (laugh¬

ter from audience)

which has

fixed

an

market,

up¬

can

be

equitably

shared out among the producers.

and

quick yielding to temptation,
briefly, and in some spirit
of criticism, remind you of the
great support that was forthcom¬
ing ,in this country for exactly
similar ideas, written into law in

let

me

the form of the National Industrial

tion

every industry that
after any form of pro¬
to form itself inta

tariff

tective

association for the purpose of

making

an

application and stating

20

lent

they

did so

ideas preva¬
governmental circles at

in

I am speaking of
depressions of 1932

that time—and

both

the

of

very strongly in
organization as a condi¬
tion for protection. 7^',>VX 7:'-\!

1933—were

and

favor of

sometimes used the
"efficiency," but it is quite
clear from the word that "effi¬
I think they

word

Recovery Act of 1933.
For

immedi¬

course,

the case, and when
Lest you should be tempted to
think that is an unusually soft they found that the

the ideas of the
prevailed in Eng¬ ciency" was being used as a syn¬
land, and that accounts for quite onym for "organization." For ex¬
a
large part of the "slump-mind- ample, the steel industry, which
years

Blue Eagle have

supports the
opposition to

pres¬
com¬

was

of the leading cases, wa#

one

disposed to form itself into a tol¬

erably tight cartel as a condition
being given protection against
imports.
,•
other one which perhaps comes
The
deliberate
policy of the
even nearer at home to you in the
British Government of those days,
United States, which I do not need
so
far
from
being inspired by
to go back to 1933 to find my ex¬
Sherman Act and anti-trustisra,
ample for, and that is the effect
was quite openly and deliberately
of labor unions.
contrary and that had and still ha»
Effect of Labor Unions
v a most powerful influence. \
petition.

Number

Five

on

my

list is

of

an¬

Now,
in
England,
the labor
experts and have vmade it unions, the trade unions, as we
call them, had reached the posi¬
the relative size of the two possible once again to believe that
economies.
The British national the population and therefore, fun¬ tion of being substantially in con¬
product, gross national product, in damentally, the productive power trol of the labor market. As long
the roundest of round figures, and of this country can look forward as 30 years ago!
We have had a
converting at the present rate of to a period of expansion which if whole generation of experience of
exchange, is about $35 billions, it is not quite indefinite will cer¬ a strong trade union, a strong
labor movement, and the effect,
whereas the American is $250 bil¬ tainly last for a long lime yet.
beyond any question, has been to
lions or more, and that is a ratio
Now, in Britain, that is not so.
strengthen
the
anti-competitive
of, shall we say, one to seven.
set all the forecasts of the

led

hankered

edriess" which

Thirdly, this British economy is

is ately

of

that,

wasteful and hurtful, and that the
amount of market, the apparently

ent attitude of

Britain

competition

Well

popula¬

Socialism
•

:

-

'

■

■■■

lr'.v:•>.

'

-

in

<

There

was

some

increase

in

the

forces.

iSA*':

"r."

^

seventh and last—and
no doubt you would have thought
that I should have put it firstsis socialism.
Well, I would say
that socialism, in the sense of a
specific doctrine, a specific set of
beliefs as to how government, how
Now,

my

industry, should be run, has

had

a
very
small influence, a 'Very
small influence in this growth of

,

v.\.^/'".'7'
Moreover, I will. remark in birth rate in the war years, and
anti-competitive opinions in Eng¬
The basic doctrine of the trade
passing that
in spite of that the estimates of, the population V
land..;,;,: '
,;7 v\777- " 1
union movement is the doctrine of
enormous ratio of one to seven, I
experts have been, to some : ex¬
And
without
discussing, that
That is
think it is still true that the Brit¬ tent, falsified, but to nothing like the standard pay-wage.
to say, a worker in a given trade particular subject at any lengthy
ish national income is still
the the same extent as in this country,
I will give you just two reasons*,
shall have the same rate of pay as
second largest in the world. With and the position is still as it was
which are all but conclusive for
the man who is working alongside
other countries you would find 10 years ago, that we have just
•
of him or, indeed, who is working believing that is so: X
the ratio even greater than one to about reached the peak of our
First of all, that it wasn't until.
in the plant across the street.
seven.
population.
,-v/ ;,) V;...:
../"■.*:
1945 that a socialist government
That doctrine, which I am not
The Undersized Market
o It has just pushed over the figwas growing in power and there¬
standing here this morning to fore
urge of 50 millions, and that is
anything that is done delib¬
Now, that means that the mar¬
where it will go. Now, clearly, that criticize, which I am merely men¬ erately as part of socialist doctrine
ket that is available is in many
means
that the expansion of the tioning as one of the most impor¬ must be confined to those last few
industries becoming too small to
tant factors in the situation, that
economy from here on out is lim¬
years, y/.v ;7/''J,'V 7
7
provide a really competitive con¬
ited to the increase that will prove doctrine, unquestionably tends to
Secondly—my second reason, isf
dition in a number of the indus¬
to be possible in productivity, per make costs rigid. That is the more that
you will find that the dis¬
tries that requite very heavy cap¬
head of the population. Indeed, to¬ so when the power of labor unions like of
competition is just a»
italization.
I am always in great
wards the end of the 20th Cen¬ extends beyond the rate of wages
strong—indeed, I sometimes thinks
danger of error whenever I put tury, you may find that produc¬ and begins to cover the field of
stronger—among the businessmen
even
one
foot over the line of tivity, the rise of productivity per labor and productive practices in
and
the
industrialists,
among
general. When, for example, the
British
management,
among
technicalities, but I have been told head is beginning to be offset by a
number of men who are necessary
people who would sue me for
and believe it to be true that, for fall of the number of heads that
to operate a given machine is not
libel if I said or implied they
example, it is impossible to con¬ can be produced, whereas in this within the power of the employer
Continued on page 46
template having more than, at the country you are going to have the to decide, but is laid down by
•

46, (1554)

THE

Continued

from

COMMERCIAL

tition" is

45

page

in

Security
Obstructing Competition and Economic Progress

which I sometimes find people in
this country jumping, that it must
be the insidious disease of social¬
ist
this
in

has

that

doctrine
reaction

produced

that

is

it

>

far

so

can

from

best

be

truth

the

regarded

as

the opposite of the truth.
It is misleading. It will obscure
being

analysis

your

of

conditions

in

England, if you open your minds
to

that

to the

doctrine.
truth to

is far

It

assume

nearer

Psychological

that these

phenomenal changes that

psychological approach, very think, he is less favorably im¬
of the. rest follows.
Now, pressed by the phenomenon of in¬
I would
like to leave with you dividual
insecurity that goes w;th
the thought that the British ap¬ it. Now, that is no doubt a
shock¬
proach to these matters may not ing thought to you, and I would
be wholly wrong/ Those of
you merely
just mention in passing
much

that

not

be

forgotten,

in

casting

up

Now

the balance sheet.

I have

been

describing are due to the
impact upon the
British
com¬
munity of external circumstances,

that,

no

has

psy-

peoD0le1Cwho°caSnntradeT1itrto

climate

Effects Bad

or

to

the

Progress

insecurity, such as the suicide rate,
the incidence of mental instabil¬

of personal

higher in this country than it is
the United Kingdom.
Here, I
am
in my
capacity as reporter,

in

and

not as commentator.
I think
the Englishman would
say, "Give
us
a
little bit more

competition

and

ret

past

12

months

Competition

has been at the rate of 51/2% per
annum,

a

figure

confess

I

distrust

large

so

it,

but

that

if

I

the

Competition

being—briefly
thing.

try was
provide

Scorned

is regarded

expressed—a

as

bad

job

for

for, he would say, "to
decently remunerative
as many
people as posa

sible."

/

indwilual

by

competitive economy, and

•
Aelus Wing Co., Inc.
April 10 (letter of notification) 300,000 shares of capital
stock, of which 150,000 will be offered publicly, 148,599
shares will be held in reserve to pay for work done
by
employees who desire part of their compensation to
be paid in common stock, and
1,401 shares to cover

Halsey, Stuart & Co. Inc.; Union Securities Corp.; Salo¬
mon Bros. &
Hutzler; First Boston Corp.; Harriman Rip¬
ley & Co., Inc. Proceeds — To redeem $15,162,300 out¬
standing 4%% cumulative preferred stock at $110 a
share, to pay $10,300,000 of 2% serial bank loan notes and

stock

in

Price—At

men.

construct

housing

505 Perry Street,

All

($1 per
units, boats,

share).

par

Proceeds—To

aircraft, etc.

Office—

American Casualty Co.,

Chicago, III.

Kern, President

of company, will

sell the stock. Proceeds
For stated
capital and paid-in surplus to carry on business.
State¬
—

ment effective March 24.

American

$1).

Cladmetals

Co.
(5/10-15)
480,000 shares of common stock (par
Price—$1.50 per share. Underwriter—Graham &
31

filed

Co,,- Pittsburgh

and New York.
Proceeds—To install
additional facilities and for
working capital. Expected
between May 10 and 15.
American Gas & Electric Co.
March 31 filed $27,000,000 of serial
between

1952

determined

by

and

1965

(5/1)

notes, due serially
Underwriter—To be
bidding. Probable bidders:

inclusive.

competitive

balance, if

any,

added to treasury funds.

Expected

May.

American Investment Co. of Illinois
March 27 filed 31,892 shares of common stock
(par $1) to
be

offered

$15

Trenton, N. J.

Feb. 27 filed 1,000,000 shares of common stock
(par $1).
Price—$2 per share. Underwriter—M. A.

March

the

share. Proceeds—For general corporate purposes.
American Phenolic Corp.,

•

to

employees.

Underwriter—None.

Price—

per

Cicero, III.
April 3 (letter of notification) 12,000 shares of common
stock (par $1) to be offered at market
price (of between
$7 and $8 per share) for account of Arthur J. Schmidt,
Chicago, President. No underwriter. Office—1830 S. 54th
Street, Cicero, 111.
'i-'v
•
Ampal-American Palestine Trading Corp.
April 10 filed $3,000,000 of 10-year 3% sinking fund de¬

bentures.

Underwriter
Israel Securities Corp., New
Proceeds—To increase working capital to be used
for enterprises in Israel.
Business—Developing the eco¬
—

York.

nomic resources of Israel.

able

your

no

&

$14 per share by
Underwriter—F. Eberstadt

Co., Inc., New York.

Armstrong Rubber Co., West Haven, Conn.

March 8 (letter of
notification) 1,000 shares of 4%%
cumulative convertible preferred stock
and 3,000 shares
of class A no par value common
stock, to be sold at $40
and $14 per share,

respectively, by Frederick Machlin,

Executive Vice-President of the
company.
—F. Eberstadt &

Underwriter

Co., Inc., New York City.

Associated Natural Gas
Co., Tulsa, Okla.;
March 14 (letter of
notification) 2,500 shares of common
stock at $100 per share.
No underwriter.
Proceeds to
build a natural gas transmission
line.
Office—105 N.

Boulder, Tulsa, Okla.
New York

Boston

Philadelphia

Pittsburgh

San Francisco

Chicago

Cleveland

Beverly Gas & Electric Co.
Dec.
to

Private Wires




to

all

offices

20

filed

be offered

33,000 shares of capital stock (par $25)
to stockholders at the rate of
1% shares

for each two shares

writer.

now held, at
$30 per share. No under¬
The proceeds will be used to
pay off $575,000 of

It

can

that

is

a

your

Good

good

luck

develop¬

I

hope to see
hope that they will be
the magic prescrip¬

find

that

ful

produces

such

wonder¬

material

prosperity in this
they have found
prescription, and when we

country.
the

When

have made up the bottle of medi¬
cine in
England, I don't think that
we
shall ever want to drink the

lot.

Two With Waddell, Reed
(Special

to

KANSAS
W.

&

The

Financial Chronicle)

CITY,

Bartsch and

are

now

MO.—Gerald

Rufus F.

associated

Roberts

with

Waddell

Reed, Inc., 1012 Baltimore Ave¬

nue.:"

•>/.; '■///,//

%

With White & Co.
(Special to The Financial Chronicle)

ST.

LOUIS,

MO.—Clarence

V.

Norfolk is with White & Co., Mis¬

then I sissippi Valley Trust Bldg.

•

INDICATES

;

ADDITIONS

SINCE PREVIOUS ISSUE

notes

held

by

the

New

England

Electric

bank loans.

System

and

Bluegrass Life Insurance Co., Louisville, Ky.
(letter of notification) 100,000 shares of com¬

March 10
mon

stock at $2.50 per share.

No underwriter.

for minimum operation
capital.
lor Bldg., Louisville, Ky.

Canadian

Admiral

Corp.,

March

30

filed

28,458 shares

Proceeds

Office—Marion E. Tay¬

Ltd.,

Malton,

Canada

Ont.,

of

$1 par value common
stock to be offered to shareholders at the
rate of onehalf share for each share held.
Underwriter—None. Price
—$5 per share. Proceeds—To purchase plant
site, erect
and equip plant, and for
working capital. Business—
Manufacture

and

and electric home

distribution

of

radios,

television

sets

appliances.

Canam Mining Corp.,
Ltd., Vancouver, B. C.
Aug. 29 filed 1,000,000 shares of no par value common
stock.

Price—800,000 shares to be offered publicly at
share; the remainder are registered as "bonus
Underwriter—Reported negotiating with new

80 cents per

shares."

underwriter.

Proceeds—To

Capper Publications,
A

par value common stock to be sold at
James A. Walsh, President.

to

tion

Statement effective Dec. 9.

Armstrong Rubber Co., West Haven, Conn./
March 10 (letter of
notification) 1,200 shares of class

we

exhuberant,

your

extended.

Englishman coming to
this country, he is first of all impressed by the enormous material
that is produced

as

ment and one which I

Securities Now in Registration

previously subscribed for at $1 per share.
Offer¬
ing*—The 150,000 shares will be offered
through sales¬

of

them!

an

wealth

If you accept that difference in

Indeed, the word "compe¬

To

much

as

security."

bouyant productivity.
to

,

head in the

progress, but

sending
of explorers over here to
try and find out what is the sec¬

th2/we

per

keep,

our

more

teams

you

fhprifImula,

.

us

of

progress and

su°pogrt program

little bit

a

let

notice more and more
British
industries
are

But
when
all
- ^JUjup. gs
your ambition a parthat
has
been myself, T do not think
I
widespread be¬ said, I still think it remains true
Jicular balance, a particular forlief in socialist principles in Eng¬
of
that the long-term effects of this hfJtn
oL, mixture between these
history of the last generation to
land is to be regarded more as an
ejemen^ 0f progress and security.
shift-over in opinion from compe¬ find the explanation.
We have
affect of the general political and
w^Tn Englaiid set up a different
tition to non-competition are, on
through
a
most_ insecure mature*. a "different balance.
economic
circumstances
of
the the
I
material plane at least, going time, in
England, in the last 30
„4hink there^are many of us there
country than as their cause.
to be bad.
They explain much of years, and by Perfectly natural,
^ow who ^hink
I have left myself very little the material
have got
sluggishness that can processes there is bred
n
balance "wrong, that we have
time to describe the results of this be observed in British industry individual mind a
passion
se~rfpor much security and too little
change in opinion, and I want, today.
They explain the halting curity.
2.progress, that we have neglected
very briefly, though, merely
to technical progress of many in¬
Sometime ago, on one of my
pUr materiaf;~productivity to such
say this, that though they have dustries.
visits to this country, I remember jfn
extent that we are now
been bad, though one can make
finding
Well, finally, can one look seeing a magazine published in
ourselves firdifficulties, in diffiquite a long list of the deleterious forward, in
England, to any this country that was devoted to cutties
effects
of
this
both*abroad, typified by
non-competitive change
back
towards
the
old industrial problems
and
which, the persistent dollar
state of affairs in particular point
gap, and difideas?
Not, I think, without a under its title, ran the battlehead, ficulties
also at home,
of the rate of economic progress,
change in public opinion, and the the sicgan, sumeihing of this sort:
^at is to
in producing
you would find great difficulty essential
point that I want to put Dedicated to all who believe in
*e^
h f
indeed in proving that they have before
material income to
you this morning is that making better goods at lower cost.
been disastrous.
of
British public opinion is hostile to
And suddenly it occurred to me
security that is placed upon it.
For example, the rate of pro¬ the idea of competition.
And that —but nobody in my own
country B^t j do not think that we
should
duction, of output in the United is true on both sides of the fence, would
say that was the purpose
ever
wish to adopt
exactly the
Kingdom is today not only higher among capital as well as in labor, of
industry.
s^tne formula of combination bethan it has ever been, but, in¬ in the Conservative Party as well
If you stopped the man in the tween
progress and security that
as in the Labor
Party.
street and asked him what indus- you would.
deed, the increase in productivity
and that the very

you

considerably

I

^curjty now, m this country,

But

insecurity, I think

will find that the incidence of all
those
is
quite

of

Security

vs.

clash .between

the

fol
fhli J™
that you

diet

Sv' f

take any of the phe¬
indicate individual

that

ity, the alcoholism, the incidence
of divorce, any of the other
signs

Origins

doubt,

if you

nomena

...

against, competition

England.
This

ever allowed out
England
without

label

Thursday, April 13, 1950

true

conclusion to

easy

CHRONICLE

Now, why should this be so? who know my paper know that I
figure is anything like that Because unless this general pop¬ spend most of my time pointing
order of magnitude, that is a rate ular approach is changed, I can out defects of the British system,
of technical progress far higher not hold out any prospect to you and out of earshot of my English
than was achieved, on the aver¬ of a change in the state of British listener^, I would like to suggest
to you, to this American
audience,
age, in the competitive 19th Cen¬ industry, and again I would im¬
that this different approach
press upon you that this attitude,
may
tury.
not be, wholly wrong.
no doubt so
<
strange to your minds,
Also, this non-competitive state
is not just due to foolishness, or to
My old friend, Professor Allan
of affairs has been combined with
blindness, or to.addiction to Fisher, who spoke to you yester¬
quite enormous social advantages
wrong
doctrine.
It arises from day, and whom 1 am delighted to
in
Great Britain. There is cer¬
circumstances.
It arises, in par¬ see here this morning, once wrote
tainly very much less wealth,
ticular, from the passion that the a book, a most inpressive and im¬
either corporate or individual, in
British people have acquired in portant book called "The
Clashing
England, than there is in the
the last generation for individual of
Progress and Security" and
United States, but I
sometimes
security.
that, I think, is a description of
think as I go about that there is
the whole of the 20th
Century.
less poverty, too. That also should
The

socialists in any meaning of
the word whatever—I think that
were

an

in

FINANCIAL

such as "cut-throat,"
"wasteful,"
"damaging,"
"hurt¬
ful," or the like, being tied around
its neck (laughter from audience).

Britain's Overemphasis of Individual

it is rather

hardly

public

some

&

develop mineral

resources.

Indefinite.

Inc.

March 20 filed $2,000,000 of series 6
five-year first mort¬
gage 4% bonds and $2,000,000 of series 7
10-year first

mortgage 5% bonds.

Price—At par, in denominations of

Volume

Number 4898

171

THE

COMMERCIAL

CHRONICLE

FINANCIAL

&

$100, $500 and $1,000.

Underwriter—None. Proceeds—
redeem outstanding bonds and improve facilities.
Office—Eighth and Jackson Streets, Topeka, Kan.

share

To
'

Central
March

■

28

of

April 13, 1950

retire

non-voting common stock (par
Underwriter—None. Proceeds—To

par.

indebtedness and

for

operations.
Camp Bowie Blvd., Fort Worth, Tex.
Central Vermont Public Service

Office

v;

.

Noon

(EST)

Great Plains

Corp., Rutland,

March 30 filed $2,000,000 of series F first
mortgage
bonds, due 1980, and 8,000 shares of $100 par value pre¬
ferred stock.
Underwriter—To be determined by com-

_

bank

•

Notes & Stock

_

April 17, 1950
—-

Light Co.——
'

South Carolina Electric & Gas Co.

loans.

April 19, 1950

Crops, Inc., Morrill, Neb.
(letter of notification) 170,000 shares of comstock (par $1). Price—$1.50 per share. Underwriter

Public

—Robert

D.

Bowers

build oil seed

(The)

Co., Denver,
processing plant.

Colo.

Service Electric

White

(S. S.) Dental Mfg. Co

Granville

Chicago Fair, Chicago, III.

March 24 filed $1,000,000 of subordinated debentures, due
Underwriter—None.
Price—At par.
Proceeds—

;

Glatfelter

St. Louis

•class A

stock (par $1). Underwriter—Sills, FairHarris, Inc. Price—$5 per share. Proceeds—For
working capital and to reduce bank loans.
•

Engineering

California

■

Corp.,

■!

•

Cordillera

>

1,

-Preferred

from

nick and Kidder, Peabody & Co., both

Notes

American Gas & Electric Co.——-

'

James Richardson & Sons, Winnipeg, Canada. Price—To
be filed by amendments. These securities are to be offer¬

_-Common

$1,000 of notes (with a detachable warrant
capital stock) and 50 shares of capital
Business—Develop¬
ing oil and natural gas resources in Alberta, Saskatche¬
wan and possibly British Columbia.
Expected today.

ed in units of

May 10, 1950
American

for 50 shares of

Co

Cladmetals

stock.

May 22, 1950

\

.-.f

-Preferred

—

California Electric Power Co.

March

5%

:year

shares

debentures

of

common

debentures

and

—

-

Common

-

of 5-to-12

and 24,950
in units of $100 of

(par 10c.)

shares

of

stock.

June 7,

Underwriter—To

1950
——Bonds

California Electric Power Co..

be

supplied by amendment. Price—$101 per unit. Pro¬
pay
off current debts and for expansion.
Office—110 East 42nd Street, New York, N. Y.

ceeds—To

Dairy Dream Farms, Inc.
April 5 (letter of notification)

inal

5,139.6

shares

of

(par 100), to be offered under plan of recapi¬
common stockholders pro rata at par.
Pro¬
ceeds to pay current debts and for working capital.
Delaware Power & Light Co.
8
filed 232,520
shares of common

March

stock

(par
April 5,
1950, at the rate of one share for each six held, and then
to be offered employees with a maximum purchase of
150 shares per employee.
Rights will expire April 24.
Underwriter
(For
unsubscribed
shares)
W.
C.
Langley & Co. and Union Securities Corp. (jointly).
Price—$21 per share.
Proceeds—To finance construc¬
offered to

stockholders

of

record

—

tion

for

the company

and two subsidiaries.

Dome

Exploration
(Western)
Toronto, Canada .'r'

..

Ltd.,

$10,000,000 of notes, due 1960, with Interest
first year, 2% in the second year, and
3% thereafter, and 249,993 shares of capital stock (par
$1). To be sold to 17 subscribers (including certain part¬
ners of Carl M.
Loeb, Rhoades & Co., State Street Invest¬
ment Corp. and State Street Research &
Management
1%

Co.)

in

the

Underwriter—None.

Business—To develop
Western Canada.
<•

Proceeds—For general funds.

;

Dorchester
ferred

Fabrics,

Inc.,

Sponsor—

stock.i-

Price—At

par

Proceeds.

To

Summerville, S.
1,000 shares of

($100

Corp.,

per

share).

Under¬

expand plant facilities.

El

Natural

Paso

March

filed

27

Bangor,

Gas

common

derwriter—Shearson, Hammill & Co., Los Angeles, Calif.

to

an

Indianapolis.

Proceeds—For working
(Julius)

Glatfelter
31

filed

(P.

(4/20)

Co.

H.)

20,000 shares of 4V2%

ferred stock (par

Inc.

shares

of

class

A

10-cent

par

Underwriters—Kuhn, Loeb & Co.




—

Helio Aircraft Corp.,
March 22 (letter of

(par $20) and 9,000 shares of common stock (par $1)
sold in units of one preferred share and one
common share for $25 per unit.
No underwriter.
Pro¬
ceeds
to
build
a
four-engine
helioplane prototype.
Office—Boston Metropolitan Airport, Norwood, Mass.
Home

pre¬

$50) and 70,000 shares of common stock

SINCE

mo

PRINTING CO.; Inc.
'

80 SOUTH ST., NEW
'

YORK 7, N. Y.
/

f4

Price—At

Underwriter—None.
Pro¬
Office—119 N. 5th Street,

par.

working capital.
Grand Junction, Colo.
Idaho

Power Co.

(5/1)

April 3 filed 20,000 shares of 4% preferred stock. Under¬
writer
Wegener & Daly Corp., Boise. Price—At par
($100 per share). Proceeds—To expand production, trans¬
mission and distribution facilities. Expected to be issued
—

after May 1,

or

1950.

,

•"

«•,

'//fy s

'''V /y '/'

,,,

''

,

,

/

%

J

7

filed

$10,000,000 first mortgage bonds due
300,000 shares of cumulative preferred stock
(par $50). Underwriters—Merrill Lynch, Pierce, Fenner
& Beane for preferred not needed to exchange out¬
standing 200,000 shares of 4.70% preferred stock (on a
share-for-share
basis
plus
cash,
about April 5
to
April 19). Bonds awarded April 12 to a group headed by
White, Weld & Co. and Merrill Lynch, Pierce, Fenner &
Beane on its bid of 100.18 for 23/4S.
Price—For preferred
$51

'-fir

Co., Grand Junction,

(letter of notification) $100,000 of 4% deben¬

notes.

March

'my

Investment

ceeds—For

1980

/'

&

Illinois Power Co.

SERVICE

'/

Loan

Colorado

on

f

Norwood, Mass.
notification) 9,000 shares of preferred

be

CONFIDENTIAL

KUADIUI

Mo.

George K. Baum & Co.., and Prescott-WrightCity. Proceeds—For additional working capital and to reduce short-term loans.

ture

cumulative

standing 5% cumulative first preferred stock (par $100)
in exchange for their holdings, at the rate of one new
share of preferred and 3% shares of common for each

(4/20)

Inc., Kansas City,

Snider Co., Kansas

(par $10) to be offered to holders of 20,000 shares of out¬

I

250,000

writers

Redpath, Washington.

Drewrys Ltd., U. S. A., Inc., South Bend, Ind.
March 1 (letter of notification) 9,000 shares of common
stock to be sold at the market price by Alfred
Epstein.
No underwriter.
/

stock.

Harzfeld's,

30 (letter of notification) 2,980 shares of prior
preferred stock. Price—At par ($100 per share). Under¬

ington, D. C., at the market price of between $19% and
$16% per share. Underwriter—Auchincloss, Parker &

March

Instrument Co.,

(letter of

stock

capital.

& Co., Inc.

(letter of notification) 5,000 shares of common
be sold by Mrs. Dee M. Schmid, Wash¬

poned.

filed

•

to

Garfinkel

Underwriter—R. C. O'Ddnnell & Co.,
Office—1408 Elwood Ave.
Temporarily post¬

31

13

March

r

Equitable Securities Co., Indianapolis, Ind.
(letter of notification) $100,000 of 5% sinking
fund debentures.
Underwriter—City Securities Corp.,

for $12 per share.

common

Street, New York City.

unspecified number of common shares held

Feb. 24

Drewrys Ltd., U. S. A., Inc., South Bend, Ind.
20 (letter of notification) 8,015 shares of common
stock (par $1) to be sold by Carleton S. Smith,
President,

March

March

April 13; rights will expire April 24.
Underwriter—
White, Weld & Co., New York.
Price—To be supplied
by amendment, along with dividend rate.
Proceeds—
To pay for construction of new San Juan pipe line.
Expected in April.

2

(par $1)

Chicago, III.
notification) 2,000 shares of com¬
mon stock (par $1).
Price—$20 per share. Underwriter
—Paul H. Davis & Co. of Chicago.
r

65,000 shares of convertible second pre¬

stock, series of 1950, no par value, to be offered
common
stockholders at the rate of one preferred

Feb.

value

80 Wall

ferred

share for

class A

Hammond

(par $1) to be sold at the market price of about
$3.75 per share by Woodrow G. Krieger, President. Un¬

Du Mont Laboratories,

stock,

cumulative participating

Co., El Paso, Tex.

stock

(Allen B.)

and 18,000 shares of 5%
preferred stock (par $4). Price
—Preferred at par and class A at $1.50 per sharei Under¬
writer—Jackson & Co., Boston, on a "best efforts" basis.
Proceeds—For
development of model, etc.
Office—

Me.
April 3 (letter of notification) 2,500 shares of common
stock (par $10) to be offered at the market price (about
$14,625 each) by the Central National Corp., New York
City. No underwriter.

C.
pre¬

buy additional machinery

Douglas Oil Co. of California
Feb. 3 (letter of notification) 15,000 shares of

Detroit.

current obligations, and to provide

Co. of America, Inc.
(letter of notification) 150,000 shares of com¬

March 20

(letter of notification)

writer—None.
and

Eastern

stock (par 50c) to

filed $5,000,000 of quarterly investment series

April 3

pay

Gyrodyne
March 3
mon

•

Feb.

:

■

for the purchase of trusteed industry shares.
Income Estates of America, Inc., New York.

/

by amendment. Proceeds—For additional facilities
corporate purposes. Expected about April 20.

and

oil and natural gas properties in

/The) Dominion Plan, N. Y. City

April 11

filed

on

Jan. 30 filed
at

Van

com¬

stock

now

facilities, to

Price—To be

Alstyne Noel Corp., New York.

and

talization to

$13.50)

Co., Jacksonville,

working capital.

••

mon

Transportation

May 27 filed 620,000 shares of class A participating ($1
par,) stock and 270,000 shares (25c par) common stock.
Offering—135,000 shares of common will be offered for
subscription by holders on the basis of one-for-two at
25 cents per share. Underwriters—Names by amendment
and may include Blair, Rollins & Co., Inc.; John J. Ber¬
gen & Co. and A. M. Kidder & Co. on a "best efforts
basis.". Price—Par for common $5 for class A. Proceeds
—To complete an ocean ferry, to finance dock and term¬

(face value $100 each)

stock

ten

$249,500

Atlantic

Florida

May 23, 1950

Dairy Dream Farms, Inc.
29 (letter of notification)

•

Proceeds—For general funds.

Gulf
Iowa Public Service Co..-

—

' V.

of New York, and

Preferred

Idaho Power Co

Corp.,

"

22

1%

date, and 500,000 shares of $1 par value capital stock
(Canadian currency). Underwriters—Dominick & Domi-

1950

29

Seattle 1, Wash.

Development Co. of Canada, Ltd.,
(Alta.) and Montreal, Can. (4/13)
filed $10,000,000 of notes due 1965, bearing
to 4% interest between 1952 and retirement

Calgary

April 25, 1950

May

Seattle, Wash.
(letter of notification) 50,000 shares of nonassessable common stock at 50 cents per share. No underwriter.
Proceeds to develop and operate Ling mining
properties in Colorado.
Office
902 Seaboard Bldg..

■>

16

filed 100,000 shares of common non-assessable
(par 50c). Price—35c per share. Underwriter—
Proceeds—To buy mining machinery and for
working capital. 7
•

s:

V

April 3 (letter of notification) 50 shares of common stock
.(par $1) to be sold at $5 per share to Francis L. Vore,
Monrovia, Calif. No underwriter. Proceeds for working
capital.
v ?
>
'.March

British Columbia,

stock

March
"

Pasadena,

•

Ltd.,

Equip. Trust Ctfs.

Rochester Gas & Electric Corp

common

Consolidated

Corp.,

None.

Ry,J—

V

&

-man

Feb.

Preferred & Com.

Co..

Mines

Great Plains

Colonial Acceptance Corp., Chicago, III.
March 27 filed 164,560 shares of first series convertible

t

(Allen B.) Laboratories,
(P. H.)

common

(par 5 cents).

Canada

Inc.— _-Common

Nashville, Chattanooga &

alterations and general administrative
an exposition in Chicago.

Business—To hold

expenses.

-

April 20, 1950

-1960.

-For construction,

-Bonds

& Gas Co.„—

stock

Grant (W. T.) Co., New York City
April 3 filed 118,935 shares of common stock (par $5).
No underwriter. These shares will be sold to employees
from time to time under terms of an Employees Stock
Purchase Plan to be voted on April 18. Proceeds—To be
added to general funds for corporate purposes. Price—•
Not less than $22 a share.

Proceeds—To
Du Mont

ore.

Mining & Milling Co.
Consolidated, Inc., Spokane, Wash.

Price—10 cents per
share.
Underwriter—None.
Proceeds—For development
and operation of mine properties.
Office—1103 Paulsen
Bldg., Spokane 8, Wash.

April 18, 1950
Pacific Power &

March 20

;mon

made

Golden Anchor

non-assessable

.Preferred

Chemical
;

to be

April 3 (letter of notification) 938,730 shares of

Norwich Pharmacal Co

Halsey, Stuart & Co. Inc.; Coffin & Burr, Inc.; Kidder,
Pea body & Co. Traditional underwriter for stock, Coffin
& Burr, Inc.
Proceeds—For construction and payment
of

expected

—

—To drill for commercial

Development Co. of

-petitive bidding for the bonds; to be filed by amendment
'for the preferred stock.
Probable bidders for bonds:
?

Equip. Trust Ctfs.

_

_

Canada, Ltd.

Vermont

'

is

•
Gold Shore Mines, Ltd., Winnipeg, Canada
April 10 filed 500,000 shares of common stock (par $1).
Underwriter
None. Price—$1.50 per share. Proceeds

Delaware, Lackawanna & Western RR.

6109

—

offer

April 20 and to expire May 1. UnderwritersSecurities Corp., New York, and Stroud & Co.,
Inc., Philadelphia. Price—$50 and $15 per share respec¬
tively.
Proceeds—To redeem the 5% preferred not
surrendered in the exchange.

NEW ISSUE CALENDAR

Inc.
notification) 1,500 shares of 5%
non-convertible preferred stock (par $100)

Price—At

The

about

and 3,000 shares of class B

*$1).

surrendered.

47

Union

Airlines,

(letter

cumulative

(1555)

21

and

per

share and dividends.

at 100.61.

Reoffering of bonds planned
loans made

Proceeds—To pay short-term bank

,

Afct&olk}/ y.-London Associate
The LBAGW/B PRESS, ltd.

for construction.

Continued

VmcCORMICK and HENDERSON, Inc.

^

r * **

"V-v-r\ '**■

** •dl

'***"

on

page

48

w

48

THE

(1556)

Continued

from

for

47

page

of

com¬

(par $1) to be offered at $4 per snare; and
12,500 shares to be issued to William Innes in exchange
for 600 shares of common capital stock (no par) of Innes,
stock

Inc.

No

and

for

Los

indebtedness
Office—436 W. 7th
Street,

Proceeds

underwriter.

to

pay

Angeles, Calif.

•

capital.

working

Petroleum

Intercoast

York

New

Corp.,

,

April 5 (letter of notification) 3u,000 shares of common
stock (par 10(f) for account of Oils & Industries, Inc.
Withdrawn

April 11.

on

Inter-Mountain

/

stock to

March 20 filed 95,000 shares of $10 par common
be offered to holders of record March 31

share

one

for each

held

shares

two

in the ratio of

share;

$10 per

at

rights to expire April 26 (42.776 shares to be acquired
by Southern Bell Telephone & Telegraph Co. and Chesa¬

peake & Potomac Telephone Co.). Underwriters—Group
Proceeds—To be used to
reduce short-term bank borrowings outstanding.
State¬

of six headed by Courts & Co.
ment effective

April 6.

Public

Iowa

Service

Co.

(5/22)

preferred stock
(par $100). Underwriter—To be determined by competi¬
tive bidding.
Probable bidders: A. C. Allyn & Co.;
Karriman Ripley & Co. and Merrill Lynch, Pierce, Fenaer & Beane (jointly); Kidder, Peabody & Co. and Blyth
& Co.
(jointly); Equitable Securities Corp.; Lehman
Brothers; White, Weld & Co.
Proceeds—For payment
bank

loans

for

and

Kansas City

construction.

Expected

May 22.

per

by United Light & Rys. Co., Chicago, at
share to United Light stockholders of record
basis

the

on

of

three

shares

of

Kansas

City
/stock for each five shares of United stock held.
Rights
are to expire April 19.
Underwriters—None. If unsub¬
scribed stock exceeds 1% of the total, United Light may
consider

competitive

bids

on

this

balance.

Statement

Kern Mutual

Telephone Co., Taft, Calif.
March 31 (letter of notification) 15,000 shares of com¬
stock offered pro rata to stockholders of recoid
about April 10 at $10 per share; unsubscribed shares
to be publicly offered at $10.50 per share.
Underwriter
—Bailey & Davidson, San Francisco Calif.
Proceeds—
To retire $33,000 of outstanding debentures and pay
,

for construction.

•;/.//

•

;,::///7

y-H-;-

/

•

Keyes Fibre Co., Waterville, Me.
April 7 filed 100,000 shares of 5.6% series first preferred
stock (par $25). Underwriter—Coffin & Burr, Inc. (The
company is offering five shares of the new preferred,
plus an unspecified cash payment, in exchange for each
of the 13,293 outstanding shares of preferred, of which
Coffin & Burr owns 9,459 shares.
However, Coffin &
Burr won't enter the

exchange offer.)

exchange, which means only 19,170
preferred are needed to affect the
Price—To be supplied by amendment.

Proceeds

cash

of

the

new

For

adjustments under the exchange
offer, to redeem preferred shares not surrendered, and
for working capital.
—

•
Lloyd International Oil Corp., Tulsa, Okla.
April 3 (letter of notification) 100.000 shares of common
Stock (par $1) to be sold by William L. Mann, Arcadia,
Calif., President. No underwriter. Office—215 Calumet
Bldg., Tulsa, Okla.

Lowell Electric Light Corp., Lowell, Mass.
Dec. 30 filed 55,819 shares of capital stock (par $25)
Offering—To be offered at $35 per share to common
v,t

Sugar Mfg. Co.,

April

per

Denver, Colo.

•

New

York

State

Electric &

Gas Corp.

be offered to common stockholders of record

the

of

rate

share

new

one

for

each

seven

April 27 at
held; rights

will

expire May 15. Underwriters—First Boston Corp.;
Lehman Brothers; Wertheim & Co.; and Merrill Lynch,
Pierce, Fenner & Beane; all of New York. Price—To be
filed by amendment. Proceeds—For construction.
Norlina Oil

Development Co., Washington, D. C.

March 28 filed 600 shares of capital stock (no par.) To
offer only sufficient shares to raise $1,000,000 at $5,000

share.

No underwriter.

Proceeds to be used to ex¬

plore and develop oil and mineral leases.
•

North

Western

Coal

&

Oil

Ltd., Calgary,

Ala.,

Canada

Co., New York City. Price—$123.75 (U. S. funds)
$250 unit. Proceeds—For equipment, working capital

per

and current liabilities.

Northwest
March

Cities

Gas

Co., Walla Walla, Wash.

15

(letter of notification) 21,370 shares of con¬
vertible preferred stock (par $5), 10,685 shares being
offered to common stockholders of record April 3 on
a

to

surplus account.

•
Peninsular Telephone Co., Tampa, Fla.
April 12 (letter of notification) 50,938 shares of common
stock (no par) to be offered to stockholders at rate of

May

The

1.

remaining

shares

10,685

also

are

to

sold

be

at

not

less

than

$10

share, less a commission not exceeding 50 cents
share.
Underwriter—None. Proceeds—To convert
plant in Eugene, Ore., to propane gas and to improve
facilities,

Norwich

well

as

(N. Y.)

as

for working capital.

Pharmacal

(4/17)

Co.

Pennsylvania & Southern Gas Co.
March

the

rate

of

preferred share for each 16
common
shares held about April 17, rights to expire
about May 3.
Underwriter—Hornblower & Weeks, New
York.

one

Price—To be filed by amendment.

build

Proceeds—To

$500,000 chemical plan and warehouse facilities

a

north of Norwich, N. Y., and to expand business.

Oklahoma
March 6 filed

Gas

offered

97,900 shares

stockholders of

common

record

shares, plans to subscribe to the 55,004 shares to which
it

is

entitled.

Underwriter—No

underwriter, but any
stockholder with a subscription
will be paid 25 cents per share.
Price—$41 per share.

NASD member

helping

a

Proceeds—For construction.

Orchards
March 16

Pennsylvania &
March

Telephone Co., Orchards, Wash.

(letter of notification)

Price—At

None.

Proceeds—To modernize

par

($100

500 shares of common

share).

per

Underwriter—

plant.

sion)

1980.

Southern

Gas

(letter of notification)

at

filed

Light Co. (4/18)
$9,000,000 of first mortgage bonds due

Underwriters—To

determined

be

com¬

Price

Co.

15,761 shares

of

com¬

(including 9,500 shares under offer of recis-

the

market

account of R. Gould

(estimated

at

$4

share) for
Underwriter

per

Morehead, Treasurer.

Bioren & Co., Philadelphia.

No general public offering

planned.
•

Pepsi-Cola Co.

April

(letter of

4

/

notification)

shares of capital

4,500

stock

(par 33%^), to be offered on the New York Stock
Exchange through Delafield & Delafield at the market
(about $10.87V2 per share), for account of Walter S.
'

Phillips Petroleum Co., Bartiesville, Okla.
March 31 filed $75,637,900 of debentures, due 1975, con¬
vertible into common stock until May 1, 1960, to be of¬
fered to> stockholders April 18 at the rate of $100 of de¬
bentures tor each eight shares held.
Rights are expected
to expire, on May 2.
Underwriter—The First Boston
Corp., New York.
Price—To be filed by amendment,
along with interest rate.
Proceeds—To pay off indebt¬
edness

incurred

wholly

for expansion of the company and
subsidiary, Phillips Chemical Co. ;

owned

Pioneer
March

Telephone Co., Waconia, Minn.
(letter of notification) 1,000 shares of 5%
preferred stock, series B. Price—At par

30

cumulative

($100 per share). Underwriter—H. M. Bishop &
Minneapolis, Minn. Proceeds—To expand service.
•

a

Co.,

Portal

Drilling Corp., Tucson, Ariz.
(letter of notification) 117,000 shares of $1

April 3
($1

share).

per

No underwriter.

leases and development work.

Tucson, Ariz.
•

(The)

par

non-assessable stock to be offered at par

common

//

Proceeds for

drilling,

Office—1448 N. 1st Ave.,

v.

Potomac Plan, Washington, D. C.

April 11 filed $3,600,000 of securities.
Sponsor—Capital
Corp., Washington. An investment fund for the

Reserve

systematic accumulation of the

stock of Potomac

common

Power Petroleum Ltd., Toronto Canada
April 25, 1949, filed 1,150,000 shares ($1 par) common
of which 1,000,000 on behalf of company and 150.000 by
New York Co., Ltd.
Price—50 cents per share.
Under¬
writers—S. G. Cranwell & Co., New York.
Proceeds—

For

administration

and

expenses

drilling.

Statement

effective June 27, 1949.
Preferred

Fire

Underwriters,

Inc., Seattle,

/Washington
March

15

(letter of notification) 1,500 shares of partici¬
preferred stock and 10,500 shares of common

pating

stock, at $100 and $1
writer.

Proceeds to

per share respectively. No under¬
organize the Preferred Fire Asso¬

ciation./ Office—1020 Virginia St., Seattle 1, Wash.

Pacific Power &
17

17

stock

mon

Statement effective April 4.

stock.

March

(letter of notification) 8,500 shares of

Electric Power Co.

Electric Co.

&

stock (par $20) to
April 5, 1950, at the
rate of one for each 10 now held.
Rights will expire
April 25.
Standard Gas & Electric Co., owner of 550,041
be

28

stock for account of Mark Anton, President.
—$4 per share.
Underwriter—Bioren & Co.

value

March 24 filed 50,000 shares of series A convertible pre¬
ferred stock (par $30) to be offered to common stock¬

holders at

Underwriters—Mor¬

Proceeds—For general corporate purposes, including ex¬
pansion of facilities.

rights to expire
shares and any unsub¬

per

mains and

share for each five held.

new

Stanley & Co.; Coggeshall & Hicks; and G. H. Walker
& Co., New York.
Price—To be filed by amendment.

gan

share-for-share basis at $10 per share,

scribed

balance

Underwriter—None.

Mack, Jr., Chairman of the board.:

April 6 filed 2,200 basic units of $250 face amount each
of production trust certificates, or an aggregate principal
amount of $550,000, Canadian funds. Underwriter—Israel
and

Proceeds—$10 per share to capital account and

mon

stock (no par) to

common

Thursday, April 13. 1950

one

Christensen, Inc., and Boettcher & Co., both of Denver.
Proceeds—To retire balance of an outstanding note and
outstanding second mortgage income bonds.
I

mon

shares

($100

par

per

elective March 22.

.

expire

to

are

(letter of notification) $300,000 of first mort¬
gage serial bonds, series of 1950.
Price—At $1,000 prin¬
cipal amount each.
Underwriter—Peters,
Writer &

(no par)

to be offered

$12

National

rights

Price—At

March 23

Power & Light Co.

March 3 filed 1,904,003 shares of common stock

March 22

shares;

CHRONICLE

28.
share).
Proceeds—To pay indebtedness to its parent, American
Telephone & Telegraph Co., and for corporate purposes,
including construction. Statement effective March 27.

per

Feb. 21 filed 50,000 shares of cumulative

of

five

FINANCIAL

&

April 6 filed 272,380 shares of

Co.

Telephone

each

Underwriter—None.

Innes Shoe Co., Los Angeles, Calif.
March 31 (letter of notification) 12,500 shares
mon

COMMERCIAL

by

competitive

•

(The)

April

Prudential Fund of Boston, Inc.

filed

11

shares

91,752

of capital

stock

(par

$1).

Underwriter—Standish Ayer and McKay, Inc., Boston.

one

new

Underwriter—None.

bank loans, for construction

and

share for each three

Proceeds—To repay
to make further im¬

provements.

Lytton

(Henry C.) & Co., Chicago, III.
March 1 (letter of notification) 7,000 shares of common
stock
(par $1).; Price—$8 per share.
Underwriter—
Straus & Blosser, Chicago, 111. Proceeds—To two
selling
stockholders.

March 31 (letter of notification) 1,142 rights to subscribe
to additional common stock at $1 per right and 283 shares

ler

stockholders at the rate of
iihares held.

bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Kidder, Peabody & Co.; W. C. Langley & Co. and The
First Boston Corp. (jointly); Union Securities Corp.,
Equitable Securities Corp. and Salomon Bros. & Hutz-

of this stock at

(jointly); Blyth & Co., Inc., White, Weld & Co. and
Harris, Hall & Co. (Inc.)
(jointly); Carl M. Loeb,
Rhoades & Co.; Lehman Brothers. Proceeds—To be used
to pay off 2%% promissory notes held by Mellon Na¬
tional Bank & Trust Co. and payable May 1, 1950.
Statement effective April 7.

•

Public

holders
share

Service

for each

holder

of

shares.

of

$100 each.

record

of

Co.

12

99.81%

March
held.

Edison Co.,

as

bought most- of the
held by 148 public stock¬
offered to give these stockhold¬

Only 2,254 shares

holders.

(The company offered stock¬
the right to buy one new

28

Commonwealth

the

of

Illinois

Northern

The rights are

common,
are

chance to round out their holdings to 12 rights since
fractional shares will be sold.) No underwriter. Pro¬

ers a

McDonnell Aircraft Corp., St. Louis, Mo.
March 23 (letter of notification) an undetermined
amount
of common stock (par $1) and warrants to
purchase this
stock at $10 per share to be sold at the market
price of
about $25 per share by J. S.
McDonnell, President of the
company. Underwriters—Merrill Lynch, Pierce,
& Beane; Smith, Moore & Co.; G. H. Walker &

Fenner
Co., St.

Macco Corp.,

Paramount, Calif.

March 28

(letter of notification) 1,000 shares of com¬
(par $1) to, be sold at between $8 and $9.50
per share (market price) by Edward A. Pellegrin, Vicemon

stock

President

of

company.

S. Paramount Blvd.,

No

underwriter.

Office—14409

Paramount, Calif.

Middlesex Water Co., Newark, N. J.
(letter of notification) 5,200 shares of

Feb. 9

stock offered to
afc

$50 per share

common

on a

common

stockholders of record March 17

one-for-five basis.

Underwriter-

Clark, Dodge & Co. Proceeds—To pay notes and for
additional working capital.
Expected this month.
Miller

(Walter R.)

Refiners,

of debentures and two shares of

unit to

common

rate of

one

Inc.

derwriter—George D. B. Bonbright & Co., Binghamton,
Proceeds—To assist in acquisition of 1216 shares
of company's common stock.
N. Y.

stockholders of record

stock at $5 per

April 14 at the

Unsubscribed securities

be retained

by the company and subject to future
issuance as may be subsequently determined.
No under¬
writer.
Proceeds for construction expenditures.
Com¬
pany refines and markets crude oil.
Pacific

ord March 21, 1950 at the rate of one share for each six
shares held; rights expire April 21.
Underwriter—None.
Price—At par.
Proceeds—For Construction and to re¬
pay bank loans made for construction purposes.
Ameri¬
can Telephone & Telegraph Co.,
parent, owns 3,732,493
shares, or 91.75% of the 4,068,165 common shares out¬

shares

of

March

or

78.17%

of the

820,000

14.

6%

preferred

stock.

Statement

no

ceeds

effective

for

are

Public

working capital. /

Service

Electric

.

,

&

'/>■'
Gas

Co.

(4/19)

March 29 filed $26,000,000 first and refunding mortgage
bonds to be dated May 1, 1950, and to mature May 1,
1980.

Underwriters—Names to be determined

by com¬

petitive

bidding. Probable bidders:
Halsey, Stuart &
Co. Inc.; Morgan Stanley & Co. and Drexel &
Co.
(jointly); Kuhn, Loeb & Co. and Lehman Brothers
(jointly); First Boston Corp.; Union Securities Corp.
and White, Weld & Co. (jointly). Proceeds—To redeem
a

Telephone & Telegraph Co.

Feb. 23 filed 814,694 shares of common stock (par $100)
to be offered common and preferred stockholders of rec¬

like

3%%

amount of first and refunding mortgage bonds,
series, due 1966, at 103%. Bids—Expected to be
on or about April 19.

received

Rand

March
mon

McNally & Co., Chicago

14

stock

—None.

(letter of notification) 20,000 shares of com¬
(par $10). Price—$15 per share. Underwriter

Proceeds—To be added to

working capital.

Of¬

fice—536 So. Clark Street, Chicago, 111.
•
Reid Brothers, Ltd., San Francisco, Calif.
April 3 (letter of notification) 10,000 shares of preferred
stock. Price
At par ($10 per share.)
Underwriter—
—

Denault &

•

Paramount Fire Insurance Co.
(N. Y.)
April 5 (letter of notification) 50,000 shares of common
stock
(par $10). Price—$28 per share.
Offering—To
stockholders

Mountain States Telephone &
Telegraph Co.
March 10 filed 183,918 shares of capital stock offered
to stockholders of record March 27 at the rate of one

common

unit for each share.

standing, and 640,957 shares,
Co.,

March 6
(letter of notification) 1,000 shares of 6%
cumulative preferred stock at par ($100
per share). Un¬




Ltd.,

Honolulu, Hawaii
15-year sinking fund de¬
bentures, due 1965 and 500,000 shares of common stock
(par $1) to be offered in units of $3 principal amount

will

Louis; and Smith, Barney & Co., New York.
'

Pacific

March 29 filed $750,000 of 6%

on

May

america

8,

of

record

1950,

Corp.

on

April
a

15,

1950.

share-for-share

44,870%

rights
basis.

.

Rochester

expiring
Trans-

of the outstanding shares.
Any unsubscribed shares will be taken by Transamerica.
owns

Co., San Francisco. -Proceeds—To restore de¬
pleted stocks, buy new items and for additional working
capital.
/
April
ferred

5

(N. Y.)

filed

stock,

80,000

series

Gas & Electric Corp. (4/25)
of 4% cumulative pre¬

shares
H

(par

$109), of which
50,000
unspecified amount

shares will be offered, along with an

of

cash,

in

exchange

for

outstanding 4%%

preferred

THE

Number 4898

171

Volume

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1557)

49

v

stock, series

Rochester

and

Sudore Gold Mines Ltd., Toronto, Canada
7 filed 375,000 shares of common stock. Price—$1

on a share for share basis. Underwriter
Boston Corp. and eight other New York

G,

First

—The

firms.

changed. 4%%

Proceeds—To

preferred

redeem

reimburse

stock,

unex¬

the

Hale Bros. Stores, Inc. stock under a plan of consolida¬

share (U. S. funds). Underwriter

15.

June
per

com¬

road

construction.

Teco, Inc., Chicago
Nov. 21 filed 100,000 shares

for construction expenditures and for additional
Expected April 25, the exchange offer to
expire May 4.
Beverages, Inc.

Offering—These shares

(N. J.)

Feb. 17 (letter of notification) $100,000 10-year 5% con¬
vertible income debentures, at par, in New Jersey only.
No underwriter.

par.

1949, at rate of

working capi¬

22 filed

and

warrants

50,000 shares of capital stock

(par $10)

enabling stockholders to purchase

these

•

shares at $30 per share on the basis of one share for each
five

held

stock.

f

Angolas, Calif,
65,000 shares of

.

;

•

v

common

Price—Par

($1 each).
Underwriter—Dempsey
Tegeler & Co., Los Angeles.
Proceeds—For working
capital.- Office—607 S: Hill Street, Los Angeles.1
:
■

-

;

Sha wmut

•

Association, Boston, Mass.
Feb. 27 (letter of. notification) 700 shares of common
stock (no par) to be sold at $16 per share by the National
-

Shawmut Bank of Boston.
Jackson &

Underwriter—Paine, Webber,

Oil

Corp.

subsidiaries

shares

either

are

a

stock

in

held

the

purchase

plan.
These
treasury or will be re¬

acquired. The maximum number of shares which

can

be

sold under this plan in a five-year period is 598,700, or

5%

of

funds,

the outstanding
.'aL.V

a

,

shares.
: 7 •

Proceeds—For

general

•

Slick
Feb.

Airways, Inc., San Antonio, Texas
(letter of notification) $194,000 of 4% convert¬

10

ible income debentures, due 1957 (non-interest bearing
until March 1, 1952), and 19,400 shares of common stock

(par $10), into which the debentures will be convertible.

Underwriter—Fridley & Hess, Houston.

Proceeds—For

general corporate purposes.*
Carolina

South

..-y

Electric

&

Gas,Co. (4/18)
Nov. 22 filed $22,200,000 first and refunding mortgage
bonds, due 1979.; Underwriter—Names by amendment.
"(Prospective bidders include: Halsey, Stuart & Co. Inc.;
Kuhn, Loeb & CoY and Glore, Forgan & Co. (jointly);

Kidder, Peabody & Co.; The First Boston Corp.; Union
:

Securities Corp.).' Proceeds—To redeem a like amount
of outstanding first mortgage 3%% and 3%% bonds.

Expected about April 18.
Southeastern RR.

Co., Inc., Statesboro, Ga.
(letter of notification) subscriptions to 6,000
shares of common stock at $50 per share, the subscrip¬
tions to be exchanged for shares after company begins
to function! as a corporation. No underwriter.
Proceeds
March 29

to build

railroad from Monticello to

a

Southern

New England

Atlanta, Ga. 1

7

Telephone Co.

offered

stockholders

common

of

record

March

28,1950, at the rate of one new share for each seven held.
Rights will expire April 21, 1950.
Underwriter—None.
Price — At par.
Proceeds — To repay advances from
American Telephone & Telegraph Co. and for further
construction.
Associated

Telephone Co.

(4/26)
March 30 filed 16,500 shares of $5.50 cumulative preferred
stock (no par). Underwriters—Rauscher, Pierce & Co.,

Inc., Dallas; Paine, Webber, Jackson & Curtis and Stone
&

Webster

Securities

Corp.,

New York.

Price—To

be

filed by amendment. Proceeds—To pay indebtedness and
finance purchase of Two States Telephone Co.
•

Co.

Co., Kansas City, Mo.
April 10 filed 250,000 shares of $6 par value common
stock (par $6) to be sold for account of J. H. Whitney &
Co., The Pittsburg and Midway Coal Mining Co. and
Kenneth A. Spencer. Underwriters—Glore, Forgan & Co,
and Kidder, Peabody & Co. Price—To be filed by amend¬
•>

Sta-Kieen

Bakery, Inc., Lynchburg, Va.
March 20 (letter of notification) 3,375 shares of

common

stock to be sold at $11 per share by five persons.

preferred stock which will have

on

share-for-

a

Kidder,

—

•
Texas Power & Light Co.
April 6 filed 203,786 shares of preferred stock (no par)
of which 133,786 will be offered to holders of outstand¬
ing 7% and $6 preferred stocks in exchange for their
shabes on a share-for-share basis, plus a dividend adjust¬
ment on all exchanges and a $5 per share share
payment
on all 7% shares exchanged. The
remaining 70,000 shares
will be sold to the public. Underwriter—To be
supplied
by amendment, along with price and dividend rate. Pro¬

ceeds—To pay off loans from Texas Utilities
-for construction.
'Y
■
.a •;
:•
Turner

a.7

.,

-

Co., parent,

Airlines, Inc., Indianapolis, Ind.
notification) 60,000 shares of

March 10 (letter of

^

~

common

stock (no par). Price—$4 per share. Underwriteiv-None.
Proceeds—To buy planes, pay overhaul and for working

capital and general corporate purposes. Office — Weir
Cook Municipal Airport, Indianapolis, Ind.
.j'
United

Mines

of

Honduras,

Inc.,

Wilmington,

stock

mon

stockholders

written

writer—Willis E. Burnside & Co., Inc., New York City.
Proceeds—To
rate

indebtedness and for general corpo¬
Office—North American Building, Wil¬
Y
:

pay

purposes.

mington, Del.
U.

Expected in April.

S. Oil & Development

Corp., Denver, Colo.
notification) 160,000 shares of 6%
preferred stock (par 10 cents). Price—25 cents per share.
Underwriter—R. L. Hughes & Co., Denver. Proceeds—To
March

drill

10

and

(letter of

rehabilitate wells.

Office—429

C.

A.

Johnson

Bldg., Denver, Colo.

Videograph Corp., N. Y. City
(letter of notification) 300,000 shares of common
stock (par 10c).
Price—$1 per share. Underwriter—
George J. Martin Co., New York.
Proceeds—For addi¬
tional
working capital.
Business—Assembles a coin
operated combination television and phonograph. Office
—701—7th Avenue, New York, N. Y.
'•■■■ ..«*■ a
Feb. 2

Weisfield's, Inc., Seattle, Wash.
^
;
7
/
14 (letter of notification) 6,000 shares of capital
stock at $47.50 per share. No underwriters.- Proceeds to
be used in setting up additional branch stores in Wash¬
ington and Oregon to sell retail jewelry. Office—Ranke
Building, Seattle, Wash.
:
Y ;
;/„•
-r.' Y'
March

Western

Uranium Cobalt Mines, Ltd.,
Vancouver, B. C., Canada

Feb.

filed

28

shares

800,000

of

common

capital

stock

(par $1). Price—35 cents per share. Underwriter—None.
Proceeds—Exploration and development work.
\
Western Wood Sugar & Chemical

Co.
shares of preferred
stock (par $50) and 22,220 shares of common stock (no
par) to be offered in units of one share of preferred and
four

of

common

Proceeds

plant.

to

stock for

build

and

$50

operate

a

a

unit.

No underwriter.

wood

sugar

molasses

Office—409 Atlas Bldg., Salt Lake City, Utah.

White

(S. S.)

Dental Mfg. Co. (4/19)
shares of capital stock (par $20).
Underwriter—Drexel & Co., Philadelphia. (Of the total
shares, 29,891 will be offered to stockholders at the rate
of one new share for each 10 held and employees of the
company and its subsidiaries will be given the right to
buy the additional 20,000 shares plus any remaining from
the stockholders' offering.) Price—To be filed by amend¬
ment.
Proceeds—For additional working capital.
Ex¬
pected April 19.
*
3 filed

49,891

Under¬

writer—Scott, Horner &. Mason, Inc., Lynchburg.

American

•

Line

RR.

$1,000,000 of series 1207-A accumulative savings
certificates, and $10,000,000 of Series 1217-A accumula¬
tive savings certificates.

ably to

Mortgage Co., New Ulm, Minn.

$500,000 of series 1305 investment certifi¬

cates;

company.
•

-

Structolite

No underwriter. An investment

Corp.,

bonds due June

•

•

Richmond,

25 shares at $1,000 per
Proceeds to buy crude material
processing machinery to make Perlite." Office
—627 Portola Ave., Richmond, Calif.
April 3

share.

(letter of notification)

Calif.

No underwriter.

and build




costs.

Probable

Incorporated.

1, 1964, and the balance for construction
bidders

include

Halsey,
'
'•

Stuart

4

to

natural

approving

on

gas.

financing

Inc.

bonds, prob¬

amount of $1,250,000.

an

•
California Electric Power Co.
(5/23)
(6/7)
April 12 company filed with California P. U. Commis¬
sion tentative financing plans calling for the sale of 180,-

000 additional shares of common stock and
a

$2,000,000 of
The stock is ex¬
negotiated basis with the offering

series of first mortgage bonds.

new

pected to be sold

tentatively

set

on a

for

May

23

(traditional

underwriters:

Shields & Co. and Walston, Hoffman &

bonds

to

are

June ' 7

Goodwin);' The
be sold through competitive bidding about

(probable bidders:

Halsey,

Stuart

&

Co.

Inc.;

Shields & Co.; Kidder, Peabody & Co.). Invitations for
bids on the bonds are expected to be published on
May
31.

Proceeds—To finance in part property expenditures

for 1950 and 1951.

v.x

Y/7;.;7v/YY,-*/ /

7;/.mx Y:\v;/:■'

>

• '• Celanese

Corp. of America 7r
April 12 the stockholders voted to authorize the creation
of 1,000,000 shares of a new preferred stock (par $100),
505,000
Plans

*

of which can be issued at any time.
being formulated for the issuance this year,

shares

are

conditions

market

are

initial series of this

considered

satisfactory,

of

preferred stock which may
Net proceeds would
be used in part for expansion of the business, including

an

be convertible into

additional

new

common

stock.

production facilities." Probable underwriters:

Dillon, Read & Co. Inc.; Morgan Stanley & Co.
•
Central Hudson Gas & Electric Corp.:
April 6 company announced plans to sell this year be¬
tween $7,000,000 and $10,000,000 first mortgage bonds,
$3,500,000 preferred stock next year and between $6,000,000 and $9,000,000 of additional bonds in either 1951 or
1952.
The proceeds will be for construction.

Central

Illinois Light Co.

March 10 Commonwealth & Southern

it

will

sell from time

to

Corp. notified SEC
time, during a three months?

period commencing March 20 on or off the New York
Stock Exchange, its holdings of 7,314 shares of Central
Illinois stock.-

1

; /

\

;

.

.

Central

States Electric Corp.
March 1 it was announced that under

an

;

.

7
amended

V ;
plan

of

reorganization St is proposed to issue to holders of all
classes of 6% preferred stock for each old share the right
to buy a unit consisting of eight shares of new common
stock and $14 principal amount of new 4Y2% income de¬
bentures for a package price of $18. The common stock;
except for approximately 4,600,000 shares held by Harri¬
son Williams and associates, would be offered the right
to buy a unit of one new common share and $1.75 of new
income debentures for a package price of $2.25 for each
five

common

shares held.. The

issue of

stock and

new

debentures would be underwritten by

Darien Corp. and
a
banking group headed by Hemphill Noyes, Graham,
Parsons & Co., Shields & Co., Blair, Rollins & Co., Drexel.
& Co. and Sterling Grace Co.
.
,

•

t

Chicago,

Rock Island &

,

Pacific RR.

April 11 company applied to the ICC for authority to
issue $3,630,000 of equipment trust certificates. Probable
bidders: Halsey, Stuart & Co. Inc.; Harriman Ripley &
Co., Inc. and Lehman Brothers (jointly); Lee Higginson
Corp.; Salomon Bros. & Hutzler; Harris, Hall & Co.
(Inc.).
,
;
..

Cleveland

Electric

Illuminating Co.
April 25 stockholders will vote on increasing authorized
preferred stock from 500,000 shares to 750,000 shares to
provide company with an adequate number of unissued
shares and to enable it to sell or exchange such shares,
if

desirable, under future market conditions.

Probable

underwriter: Dillon, Read & Co. Inc.
Commercial
30

Credit

stockholders

Co.

approved

creation

of

500,000
which
of under¬

&

Co.
'

.

A group

Consolidated Edison Co. of New
Jan.

York, Inc.

13 company officials estimated at $96,000,000 new

1953.
Indications
$12,000,000,- plus
treasury funds, will be sufficient to carry construction
program through until next fall before permanent financ¬
ing will be necessary. Refunding of $5 preferred stock
financing

that

(1,915,319

required

short-term

shares

bank

through
loans

outstanding)

is

of

also

reported

under study.

to
'

be
~

Dayton Power & Light Co.
April 13 stockholders will vote on increasing the author¬
ized common stock from 2,000,000 to 4,000,000 shares and
on

•
Broadway Department Store, Inc.
April 11 stockholders approved offer of 1 % shares of
company's common stock in exchange for each share of

plans to sell 250,000 shares.

writers, headed by Kidder, Peabody & Co. and The First
Boston Corp., are expected to offer the stock.

1, 1952, to refund $33,325,000 of general unified mortgage

filed

27

manufactured

May

March 20 reported company plans to issue

were

stockholders will vote April 18 on

creating a new mortgage to be dated March 1, 1950,
providing for a maximum of $200,000,000 bonded indebt¬
edness'. The net proceeds would be used to refund $50,724,000 first consolidated mortgage 4% bonds due July

Bond &

State
Feb.

from
vote

,

money

Atlantic Coast

will

include:

Budget Finance Plan,

company

Can

announced

March 28 announced

conversion

of

bonds

shares of cumulative preferred stock (par $100) of

Co., New York, N. Y.
company is considering a program
of long-term financing for working capital.
Probable
underwriters:
Morgan Stanley & Co.; Clark, Dodge &
Co.; F. S. Moseley & Co.
3

one-for-four basis and may be under¬

bidders for

Stockholders

•

March

a

and F. S. Moseley & Co.
Blyth & Co., Inc.
and F. S. Moseley & Co. (jointly); Merrill
Lynch, Pierce,
Fenner & Beane; Lehman Brothers; Kuhn, Loeb & Co.
and Lazard Freres & Co.
(jointly); Harriman, Ripley
& Co., Inc. and First Boston Corp. (jointly). Proceeds—
To retire bank loans of $14,625,000, and to pay part of

March

Prospective Offerings

on

by Blyth & Co., Inc.

Probable

if

(letter of notification) 150,000 shares of com¬
(par 50 cents). Price—$2 per share. Under¬

a par value of $40 per
subscription to common

Latter will be offered for

snare.

plans.

outstanding $6 preferred shares

Spencer Chemical

ment.

Brooklyn Union Gas Co.
March 8 company announced it plans to issue
$8,000,000
first mtge. bonds and sell 186,341 shares of convertible

cost

of

April

Southwestern

Service

March 27 (letter of notification) 5,555

March 9 filed 400,000 shares of common capital stock (par

$25)

Electric

March 16

under

July 15,

Price—At

Delaware

Jan. 27 filed 598,700 shares of common stock (no par) to
be offered to officers and employees of the company
and

Texas

Curtis, Boston.

Sinclair

of

Peabody & Co. and Merrill
Lynch, Pierce, Fenner & Beane, New York. Price—To be
filed by amendment. Proceeds—For construction.

.

Service Finance Co., Los

share for each five held.

one

stock

holders

Underwriter—None.

Underwriters

Sentinel Radio

Dec. 19 (letter of notification)

to

share basis and the remainder will be sold to the
public.

Segal Lock & Hardware Co., Inc.
April 5 (letter of notification) 2,500 shares of common
stock (par $1), to be offered at market (approximately
$1.75 per share) through Delafield & Delafield, New
York, for the account of a selling stockholder.

;

common

Expected exchange offer will be made about May
Blyth & Co., Inc.

Traditional underwriter:

ber

•

v.

tion.

April 6 filed 175,000 shares of preferred stock (no par) of
which 65,000 will be offered in exchange for a like num¬

Rights will expire May 2.
Under¬
writers—Chas. W. Scranton & Co. and Day, Stoddard &
Williams, Inc.
Proceeds—To increase company's capital
and surplus.
April 12.

Corp., Evanston, III.
\
Feb.. 15 (letter of notification) 40,000 shares of common
stock (par $1).; Price—$6.50 per share. Underwriters—
Sulzbacher,, Granger & Co., New York. Proceeds—For
working capital.|:x,*.;'»•
••
i.'Y' V.

par)

offered

whereby television users could pay a special fee for
costly television programs by calling the telephone com¬
pany and asking to be plugged in.

Security Insurance Co. of New Haven
March

be

Proceeds—For working capi¬
tal and the promotion of Zenith's "Phonevision"
device,

Office—45 Downing Street, Newark, N. J.

tal.

($10

to

are

stock in Zenith Radio Corp. of record

common

Proceeds for additional

None. Proceeds

of equipment,
construction, exploration and development.

pany

Rotella

—

—Funds will be applied to the purchase

releasing from preemptive rights 50,000 shares of such
to be sold to officers and employees.
It is also

stock

,

Continued

on

page

50

IJ

*+ n,

.

i
50

THE

(1558)

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 13, 1950

n
!

,•

Continued

i, i
6

i

**
r,
'

I

bank loans in full by

49

to

Delaware, Lackawanna & Western RR. (4/13)
will be received on or before noon (EST) on

;f

April 13 at the office of J. G. Enderlin, Treasurer, Room
2008, 140 Cedar Street, New York 6, N. Y., for the pur¬
chase from it of $1,995,000 equipment trust certificates,

i' '

series J, to be dated April 1, 1950 and to
annual instalments of $133,000 each from

„

*' •;

mature in 15

f

April

1,

1965,

inclusive.

•

*

Delaware, Lackawanna & Western RR.
April 3 company applied to ICC for authority to issue

r

£

,

$11,613,600 of new
Pennsylvania Division refunding
and collateral trust bonds due 1985 and for

mortgage

exemption from competitive bidding. The bonds are to
be offered in exchange for Morris & Essex consolidated

■

mortgage bonds, 5s series A, and 4^s series B, due 1955
on basis of $400 in
cash and $600 in new bonds (with
interest at same rate as old bonds). The lien of the new
bonds will be subject only to a new first mortgage under
which a maximum of $12,000,000 may be issued. Of this
amount, Metropolitan Life Insurance Co. will purchase

<
/

<

to $7,750,000, the amount necessary
& Essex bonds assent to the exchange.
up

should all Morris
Georgeson & Co.

will aid in soliciting exchanges. The First National Bank
of New York is exchange agent.

Green Mountain Power Corp.
March 7 amended plan of reorganization filed with SEC

provides

'

¥
«*.—

for

sale

of

approximately- 100,000

shares of

stock for cash to the public through under¬

new common

•

Hamilton Watch Co.

April 11 stockholders authorized the directors to incur up
to

$3,500,000 of indebtedness on a long-term basis, so as
the company in a position to do such financing

to place

when deemed necessary.
•
Holiday Brands, Inc., Boston, Mass.
April 10 it was announced company plans to offer 400,000
shares of class A common stock. Price — $3 per share.
Underwriter—Clayton Securities Corp., Boston. Expected
early next month,•

Montana-Dakota

•

Montaup Electric

in the

construction

20

Indiana

&

Michigan Electric Co.
Feb. 27 company was reported to be contemplating the
issuance and sale of $20,000,000 first mortgage bonds in
June or July, the proceeds to finance construction pro¬
gram. Probable bidders: Halsey, Stuart & Co. Inc.; First
Boston Corp.; Union Securities Corp.; Harriman Ripley
& Co., Inc. Possible refunding of privately held $22,500,000 3^% first mortgage bonds is also said to be under

reported

1951, estimated

at $12,-

sell in

may

1950

and

1951

Muntz

(T. V.), Inc.
March 31 it was said that early registration with the SEC
is

expected of about 400,000 shares of common stock.
Underwriter—Kebbon, McCormick & Co.
Price—Ex¬
pected at $5 per share.
•
Nashville, Chattanooga & St. Louis Ry.' (4/20)
April 10 reported planning to issue $4,800,000 of equip-,
ment trust certificates to mature serially in one-to-fifteen
years.
Probable bidders: Halsey, Stuarti'& Co. Inc.;/
Equitable Securities Corp. and Harris, Hall & Co. (Inc.)
(jointly); Kidder,; Peabody & Co.; Salomon Bros. &
Hutzler; Harriman Ripley & Co., Inc. and Lehman Bro¬
thers (jointly). Expected about April 20.

Natural

Gas

common

stock to

common

stockholders

of record May 3, 1950, on the basis of one new share for
each eight shares held; rights to expire May 22.
Un¬
subscribed shares will be offered to company employees.

Co., Inc.

:■,/•;

Northern

funds,

will

be

Gas

Oklahoma
March

it

28

Co.

used

finance

to

the

company's

Probable

bidders:

Merrill

•

Stuart

April 10

applied to SEC for authority to issue
and sell at competitive bidding $3,000,000 of first mort¬
gage bonds, series due 1980; and to sell at public or pri¬
vate sale
through a negotiated underwriting 100,000
shares of $50 par preferred stock (the latter being subject
to stockholder authorization on May 2); and to issue and
sell at competitive bidding not exceeding 275,000 shares
of common stock (par $3.50). Probable bidders: Merrill
Lynch, Pierce, Fenner & Beane and Kidder, Peabody &
Co. (jointly); Halsey, Stuart & Co, Inc.; Smith, Barney
& Co.; The First Boston Corp. Proceeds to pay $2,400,000
of 3% notes and $5,000,000 of first mortgage 4%% bonds,
due 1978, and for new construction.
r

I;

company

Iowa Electric Co.,

March

10

reported that early registration with SEC Is
expected of an offering of about $18,000,000 preferred
and

stocks through a negotiated deal. Probable
underwriters: First Boston Corp. and G. H. Walker & Co.
•

common

Kansas City Power & Light Co.

March 31

reported planning sale of $12,000,000 to $15,000,000 of first mortgage bonds this year in addition to
the sale of additional equity securities.
Probable bid¬
ders for bonds: Halsey, Stuart & Co. Inc.; Glore, Forgan
?

8c Co. and W. C.

Langley & Co. (jointly); White, Weld
Co., Shields & Co. and Central Republic Co. (jointly);
Lehman Brothers and Bear, Stearns & Co. (jointly); The
First Boston Corp.; Equitable Securities Corp.; Smith,
Barney & Co.; Kuhn, Loeb & Co., Salomon Bros. &
Hutzler and Union Securities Corp.
(jointly); Harriman
Ripley & Co.

■

C
r'
&.*

&

-

h}
a/

Knott

Hotels

fering of 100,000 shares of new unissued $5 par common
stock (in addition to 30 000 shares by
selling stock¬
holders). Proceeds will be used to reimburse treasury
for capital expenditures already made and to increase
working capital. Expected this month.
Lone Star Gas Co.
March 23 announced that the company plans long-term
borrowings in order to retire two short-term bank notes

amounting to $5,000,000 and other loans which were the
result of new construction expenditures during
1949; viz;
$47,500,000 in instalment notes (including $2,500,000 cur¬
rent maturities) outstanding at the close of last year.
Lorillard

(P.)

Co.

'W*

*

April 4, Herbert A. Kent, President, said: "It may be
necessary to do some financing" before Aug. 1, 1951 to
redeem

$6,195,400 of 5% bonds due on that date and
for additional working capital to meet expanded sales
He added that company plans to pay off its

volume.




'

are

expected to be issued about

April 11 it

was

groups

$30,000,000

Public

Southern California
March 30 company

of

for/exemption from competitive bidding on
1,000,000 shares of cumulative preferred stock. Probable

underwriters:

First Boston Corp. and Harris, Hall , &
(Inc.)/ Proceeds to be used for construction costs.
Expected early in May. •••'
'r.
Co.

Sunray Oil Corp.]
31 reported the registration statement may be
filed this month involving about $80,000,000 financing
in connection with proposed merger of Sunray with
Barnsdall Oil Co., which is still in formative stages.

Bosworth, Sullivan & Co. (jointly);

(Inc.).

000,000

/;
17

Electric & Gas Co.

stockholders

will

bonds for the

vote

on

are

bankers for

Sunray.

7/:

&

locomotives

Pomeroy, Inc.
;

■_

(jointly); Bankers Trust Co.,
; *; 7

28

Power &

G.

Light Co.

M.

bidders for bonds:

&

.("•>'•/:/

:

Ltd.
Eastman, Dillon & Co. and the First
Corp. were ready to underwrite the financing
of the 1,400 mile pipe line proposed by the West Coast
Transmission Corp., along with Nesbitt, Thomson & Co.,
Ltd., of Montreal, Canada, and Wood, Gundy & Co. of
Toronto, Canada. The financing would be divided 75%
to bonds and the remainder to preferred and common
stock.
A large amount of the bonds are
expected to
be taken by life insurance companies. Arrangements will
be made to place in Canada part of the securities. It is
expected an American corporation will be formed to
construct and operate the American end of the line in
Washington, Oregon and California. The completed line,
it was announced, will cost about $175,000,000.

Barney & Co.
(jointly); First Boston Corp.; Kidder, Peabody & Co.;
(3) for both issues: Lehman Brothers; Harris, Hall & Co.

April

Co.

&

Boston

Lehman Brothers; (2) for debentures:
Halsey, Stuart &
Co. Inc.; Blyth & Co., Inc., and Smith,

Service

Dillon

Feb. 10 reported that

000 debentures are expected to be sold about
mid-year.
Probable bidders: (1) for preferred: Glore, Forgan & Co.
and W. C. Langley & Co. (jointly); First Boston
Corp.,

Public

applied to the California P. U. Com/

mission

West Coast Transmission Co.,

Colorado

May 22 stockholders will vote on increasing authorized
preferred stock (par $100) from 300,000 shares to 375,000
shares; the additional 75,000 shares, in addition to $7,500,-

Boettcher & Co. and

,•*

Edison Co.

^

Co.

bonds, the proceeds to be used to refund
$20,000,000 in outstanding 3%s, due 1966,
Co.

Proceeds would be used to refund $30,r

Shields & Co.

000,000 3Vi% bonds and for construction costs.

Virginia Electric & Power Co.
r
March 27 it was reported that company may issue next
fall $20,000,000 of "new money bonds." Probable bidders:
Halsey, Stuart & Co. Inc.; Union Securities Corp.; Kuhn,
Loeb & Co.; White, Weld & Co.; Stone & Webster Se-:
curities Corp.; Salomon Bros. & Hutzler. V :

reported investment banking firms have
to
bid for a
probable > offering of

Service

Co.

Boston Corp. and Harris, Hall & Co.
(Inc.)
(jointly); Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;

and to provide construction funds.
•

summer

Rhoades & Co.

new

at lower cost

Edison

reported that company expects to issue
$55,000,000 of bonds.
Probable bidders:

Halsey, Stuart & Co. Inc.j
Co.; Harriman Ripley & Co., Inc. and Union
Securities
Corp. (jointly); Kidder, Peabody & Co.;
White, Weld & Co.; Lehman Brothers; Carl M. Loeb,

which might be in the form of additional common
Traditional underwriter: Lehman Brothers.
Power

California

was

First

Drexel

stock.

.

this
The

Probable

March 20 directors authorized officers to develop plans
for public financing of $25,000,000 to $30,000,000, part

Electric

Co.

Gadsby, President, reports company
plans late this year to sell $10,000,000 of bonds, plus an
additional like amount in-1951, together with 150,000
additional common shares in the latter year and 165,000
shares in 1952, the proceeds to meet construction costs.

.

formed

Southern
March 3 it

Utah

Philip Morris & Co. Ltd., Inc.

Corp., New York, N. Y.

March 2 the directors authorized discussion with
Hayden,
Stone & Co. as principal underwriters of a proposed of¬

•

Oswego Falls Corp.

Potomac

Union
&

provided satisfactory terms could be
Probable bidders include Halsey, Stuart &
Co. Inc.; Kuhn, Loeb & Co.; Lehman Brothers; First
Boston. Corp. and
Harriman Ripley & Co. (jointly):;
Union Securities Corp.
Expected late this month,
,r'

March

March 20 stockholders approved $500,000 additional first

•

(Inc.),

sell
$32,000,000 additional first mortgage pipe line bonds
(which may be placed privately) and will borrow, $10,V.
000,000 from banks.
Proceeds will be used to expand
operations./
7 •.j,
■:y.r"

Inc.; Lehman Brothers and Blyth & Co.,
Inc.
(jointly); Equitable Securities Corp.; Harriman
Ripley & Co.
' ':;y

of

Co.

Thalmann

arranged.

Co.

mortgage bonds, which
May 15.
•

&

Transcontinental Gas Pipe Line Corp.
it was announced that the company will

Pierce, Fenner & Beane; The First Boston Corp.; Halsey,
&

Becker

Ladenburg,

March 27

Lynch,

consideration.
Interstate Power Co.

G.

bonds,

mortgage

New York.

$7,500,000 of 3*4% bonds and the balance for
costs.

and

Feb. 7 directors appointed a committee to proceed with
the refunding of the $31,534,500 outstanding 4% first

Hutton

was

construction

A.

Corp.

(jointly); Merrill Lynch, Pierce, Fenner & Beane; Kid¬
der, Peabody & Co.; F. Eberstadt & Co.; Allen & Co.

Electric Co.

Gas &

bidders:

Securities

Offering expected in June.

reported company may issue in May
$17,500,000 in new bonds. The proceeds would be used
to retire

Probable

at

purchase of 13 additional
(to cost approximately $3,-r
500,000), to be financed largely by equipment trust
certificates (expected to total around $2,400,000). Prob¬
able bidders: Halsey, Stuart & Co. Inc.; Lee Higginson
Corp.; Kidder, Peabody & Co.; Salomon Bros. & Hutzler;
Harriman Ripley & Co., Inc.; Harris, Hall & Co. (Inc.);
Blair & Co., Inc., L. F. Rothschild & Co. and Schoellkopf,

construction program.
Probable bidders: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc; The First Boston
Corp.;

Kidder, Peabody & Co.

Pierce,

stock

Diesel-electric

'

Natural

offer

to

common

Texas & Pacific Ry.
,
March 21 directors approved

Jan. 20 announced that the company proposes to issue
and sell at competitive bidding $40,000,000 of 2%%
20-year debentures.
The net proceeds, together with
other

of

Eastman

Price—To be supplied b,y amendment. Proceeds—To be
used for construction. Underwriters—May include Blyth
&

Lynch,

March

Co.

April 4 requested SEC approval to issue 304,500 addi¬
tional shares of

Merrill

,

Seaboard Air Line RR.

company

approximately $22,000,000 in new securities, which may
include bonds and debentures and possibly some addi¬
tional common stock. Financing of $10,000,000 or more
in bonds may be undertaken in May.
The proceeds are
to be used for expansion and extension of its gas and
electric lines. Probable bidders for bonds: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc.; Union Securities Corp.;
Merrill Lynch, Pierce, Fenner & Beane; Smith, Barney
& Co.; First Boston Corp.; Lehman Brothers.

Northern

.

Property Custodian Is pre¬
competitive bidding 440,000 shares
(total issue outstanding) early in
Registration with the SEC expected shortly.

paring

Power Co.

Montana

underwriter:
.

Jan. 26 announced the Alien

April.

plans

329,400.
Dec.

Fenner & Beane.

Schering Corp.

Co., Fall River, Mass.

through

program

Traditional

rate.
•

Co.

future to refinance bank loans and to finance

near

,,

1

Utilities

March 30 announced company expects to formulate

writers, subject to prior subscription rights by present

preferred stockholders.
Exemption from competitive
bidding has been requested. Proceeds—To retire 4y4%
notes and for working capital.

July, 1950. These loans now amount
Traditional underwriter: Lehman Bros.

$12,000,000.

May 1 bondholders will vote on increasing the aggregate
principal amount of bonds which may at any one time be
outstanding to $40,000,000 from $20,000,000.

April 1, 1951

Probable bidders: Halsey,
Stuart & Co. Inc.; Salomon Bros. & Hutzler; Kidder, Peabody & Co.; Harris, Hall & Co. (Inc.).

to

r1
.

page

Bids

«'

i

from

planned to offer between 200,000 and 250,000 shares of
common stock (first to stockholders) and $7,500,000 pre¬
ferred stock, probably in May. Probable bidders: Mor¬
gan Stanley & Co.; W. E. Hutton & Co.; Lehman Brothers.

ti!

>

issuance

of

$90,Wisconsin

of refunding $50,000,000 3y8% bonds due 1965; $10,000,000 3Y4% bonds due
1968; $15,000,000 3% bonds due 1970 and $15,000,000
bonds due 1972. Probable bidders: Halsey, Stuart & Co.

of bonds.

Inc.; Morgan, Stanley & Co. and Drexel & Co. (jointly);
Kuhn, Loeb & Co. and Lehman Brothers (jointly); First
Boston Corp.
•

Electric

Power Co.

ler

man

new

Rochester

April 4 it

purpose

March

Glore,

stock

(par $10).

Traditional

First Boston Corp.
•

March

31

management

additional

reported

\

common

stock-

holders, the proceeds to be used to redeem outstanding
long-term debt or for working capital. It is also pro¬
posed to replace the outstanding 5% preferred stock with
another series of preferred stock with a lower dividend

&

.

Wisconsin Power & Light Co.
March 24 reported company plans to raise about
$16,000,000 in new money to finance construction
costs, etc. This
may include $10,000,000
of bonds.
Probable bidders:

considering possibility

common stock to

Forgan

bidders: Halsey, Stuart & Co. Inc.;
Co. and Equitable Securities Corp.

O

Safeway Stores, Inc.

of offering

plans to issue $25,000,000

Probable

■

underwriter:
-

company

Ripley & Co., Inc.
Proceeds—About one-half for
refunding and remainder for new construction. Expected
early in June.
: '
/- •

Telephone Corp.

was

common

reported

(jointly); Lehman Brothers and Salomon Bros. & Hutz¬
(jointly); Merrill Lynch, Pierce, Fenner & Beane;
First Boston Corp.; Union Securities Corp. and Harri¬

announced that the stockholders on April
19 will vote on the issuance of 300,000 additional shares

of

23

<
s

v
,

Halsey, Stuart & Co. Inc.First Boston Corp^; Salomon
Bros. & Hutzler; Equitable Securities
Corp.; Lehman
Brothers; Glore, Forgan & Co.; Harriman Ripley & Co.
and Harris, Hall & Co. (Inc.)
(jointly); White,. Weld &
Co, and Kidder, Peabody & Co.
•*
:

Volume

171

Continued

Number 4898

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

tailed—I refer particularly to fin¬

page

must

ished manufactures and

from

peace

goods—the effect

Contribution o! Imports to Business

will

likely

to
and

be

in

semi-manufac-

finished

But Tftich

labor.

places

is

in

man's

that another factory replaces the

Your

old

exports

to

Belgium

from $535 million in

million

in

1949.

fell

1947 to $307

Multiplied

by

shrinking exports to other coun¬
tries, as the Marshall Plan runs
its course, this is not an

expanding

outlook for you.
On the other
the

United
from

rose

States

from

our

a

the

at

from

Belgium

$59 million in

95 million in
rowed

hand, imports into
1947

1949..This has

1, to

3 to 1 ratio—
of the flow of

expense

of

.

however,

can—and

Our

-

Million

trade ; deficit

with

,

The

you,

make

machinery and textiles, and

the

ters.

One

any

is

the

it

the total vol-

war,

'tis.-'
,

imported

an

Mission,

foe

tioned—employment
other

5

headed

pijjd-

tod

i\?0nJ^erCe

by Mr. Wayne
who is with us

chatfield Taylor,

by two facthe

in

dis-

the' more

that

is

_

,

pointed out that had the

reiationship between in¬
already mapports and the gross national prod-

have

we

by

.

C

%
i

,

caused

T

been maintained,
tries alone, in 1948,
uct

a

sold

to

two

you

ECA
could

billion

coun¬

have

dollars

markets of your manufacturers of

stand rightly the thesis of Amer-

comparable products, and the degree to which they may effect em-

Meanwhile
Public

ployment in

new

..This

to

in

our

pro-

industries.

our

serves

distortion

well. As

as

home

illustrate

.

world

trade

the

espe¬

cially in the emphasis which is
placed on the importance of competing and completing goods.
According
to
the
economist,
Robert

L.

Gulick, in representa¬
before the war, strictly

tive years

consumer goods, other than food¬
stuffs, comprised around 6% of
total imports. In 1948, all imported
finished goods going into your

industrial and

Including

consumer

foods,

one-third

of

markets,

less

were

total

your

than

imports.

These represent merchandise with
a

high

content

of

the

other countries. In

labor

of

thirds of your exports represented

high content of

a

cessities of today.

w.*.

But,abroad

your labor.
Imports of raw materials and
semi-manufactures contribute" to

you,

undersell

so-called
protected
industries?
How do their wages compare?
comparable '
How do wage rates and productivity
represented
in
imported

the

American product.

Unfortunately,
the j spfttiigkt
on
imports produced by
excessively cheap labor tars all
imports with the same brush. The
postwar problem of the majority
of foreign exporters to the United
States is how- to get their prices
sufficiently low to compete ;in

employment

sustained means

thus

market.

It is also

V

^

true that other coun-

tries with lower wage scales erect
tariff and other trade barriers to

nrnriiTntc

nthpr
otnei

low American wage cost

per unit!

to the people of Mississippi: "We

! buy your raw cotton for
you, in

or automobiles, and

power

nf

automobiles

our

duiomuunes.

want to

buy

pur

turn,, buy
wfe do not

But

is nrovideH

oower

canned
^

things t00' and

goods for industrial and

consumer

through the

channels

use,

move

of trade, they create
employment
in the distributive trades.-

They

increase

demands

cprvipp*

for

fv,pV

r:

The

J? £

goods of
*+m

tney

still

similar

a

*

nave

u

to

be

li?1*iwin *ranslk Therefore, m
fi?^caSftn /nnie
uey can"
1

displace^labor.

When these

of

goods add to exist-

—it

in

mcrease

<•

-

Alwavs
a ways

are

occur-

ring at all times m a world where

certain

is

but

conditions, outmode or replace
those long established. A
factory
to

machine

a

is

new

location,

invented

which




or

a

dis-

2%s,
have

quickly.

in-

What other dislocation factors
are

element in the

an

particular

competition from substitute ma¬
tenals or new products,
H°w does the competition of

an/integrated

^

market,

it, S market
people, the same

locality

or

camp-

arpa

(

*'nlshed merchandise

for part of the

consumer income

with the portion of consnmer lnc0me created by imports?
colppare
Such

continuing

i-

*

coordinated

continuing,

indllstrV

"Wall

Street

cooramaiea

bv

industry

could

the

increasing
of the imporin

understanding
of imports to a
domestic
--a,
economy, and the true function of
both imports and exports.
In closing, I should like to quote
a few remarksmade by Dr. Amos
E... Taylor, who is also with us
today. As you know, he was for
many

director of

years

Economic

be the

cently reported

that

share of all goods entering
country

by

ship

and

Union.

In

a

only

does

a

raw

finished

materials

products

American

and

semi-

essential

to

industry,

but certain
the other imported commodities are in
of

competition

order tG avoid the mistakes of the

duet to

ports>

but

a

increasing demand when the level
national

maj°r past,

the

interruption in the
full flow of trade, when
ships had
to sail only partially
loaded, or
with empty bottoms.
One out of
wag

we

ditional

income

rises.

...

In

f^ars reiative

to

.

are

sharply

cur-

April
of

29,

record

on

1950,
April

to

6,

the books of the

Ottumwa, liwa. George A. Morrell, Vice Pres. & Treat.

month

a

THE COLUMBIA

and

ago,

GAS SYSTEM, INC.

since approved for issuance by the
Public Utilities Commissioner of

Oregon,

the

this

The Board of Directors has declared this

financing
FPC earlier

proposed

authorized

was

by

the

following quarterly dividend:

The Commission

the

con¬

No. 62,

receives and

it

interest

ord

183,4tf

rate,

as

price

the

April 20, 1950.
Dale Parker

April 6, 1950

the

to

share

per

May 15, 1950, to holders of rec

on

close of business

at

obtain

of such things

approval

payable

requires that

submit to it data

company

bids

on

day

'

Common Stock

week, subject to certain

ditions.

Secretary

be

received from bankers and the
initial reoffering price.

The bonds

The

being floated to
put the company in funds to
liquidate an outstanding promis¬
sory note for the same amount,
held by a Pittsburgh bank, and
dated Sept. 30, 1949.
Some 10 banking groups have
are

been formed to

bid for the

Board

has

declared

twelve

and since the necessary
of hibernation has been,
completed the company could call
for bids at any time.

this

situation

gives

evi¬

of

But

changing

with

the

dividend

a

and

record

one-half

the

at

May

ness

2,

of

cents

close

Of

busi¬

1950.

Checks will be mailed.
JOHN

dence

of

(12i/2c) per share on the out¬
standing common stock of the
Company, payable on May
22, 1950, to stockholders of

company

corporate paper.

Directors

Manufacturing
Company

issue

and trust funds that have supplied
the major outlets for high-grade

of

Wentworth

when it is put up for sale by the

E.

McDERMOTT,
Secretary.

'

DIVIDEND NOTICES

DEBENTURE: The regular quarterly
dividend of $2.00 per share on the De¬
benture Stock will be paid May 1, 1950,
to stockholders of record April
24, 1950.

ap¬

"A" COMMON and VOTING

likely that the aforemen¬

COMMON: A quarterly dividend of

trend

the

of

pears

times

it

and

tioned institutions

of competition from

way

in

comer

the

labor's

a new¬

25 cents per

and

share

on

May 15, 1950, to stockholders of record

April 24,1950.

field.

funds,
under

demand

growing
prod
of

now

the

for

such

protec¬

the "A" Common

Voting Common Stocks will be paid

A.B.

Pension

;

Newhall, Treasurer

Framingham, Mass.

tion, promise to shape up in an
increasingly substantial way as
time goes on. Fact of the matter
is

that one of the large pension
funds, the name has not yet been
revealed, stepped in to take up
$2,000,000 of the Boston Edison
issue, or about 11% of the total.

Bits and Pieces
While
has

the

been

powers

investment

displaying
absorption

of

market

improved
in

recent

weeks there have been few deals

that could be

actually termed

as

"out-the-window" operations.
Rather while the bulk of

PRODUCER

the

OF

investor

have

the

required

ing". This

was

a

general

run

.

and economic cooperation,
The modern interdependent world

HIGHLY

PURIFIED

bit of "work¬

true in the

of the Wheeling

WOOD

case

CELLULOSE

& Lake Erie's

recent offering.
It

also

goes

for

Metropolitan

The

has
MEETING

a
world of full employment,
specialized production, and a high

.

RflYomeR

new

issues has been moving out to

In

trade

destined

are

to encounter considerable in the

NORFOLK

AND

NOTICE

WESTERN

RAILWAY

COMPANY

setandard of living, imports should

employed in the be viewed as benefits, not dangers
metropolitan area is in to the economy.
Employment
some way dependent on
port ac- is not solely a national problem,
tivity and foreign 4fade. Where is It is an international problem,, the
the purchasing flower of
these solution of which can be found
people who may be thrown out of only in an expansion of world
exports

almost

sion

imports.

York

If your

on

Placed in registration with the

need to remove the tra-

every ten persons

employment?

paid

1950, as shown
Company.
'

Securities and Exchange Commis¬

substantial

20%, comPari; of this

was

share

i-nvi..

pared to 33% in 1041.

was

be

stockholders

with

connection

per

the capital stock of
John Morrell & Co.
will

the $9,000,000 offering of first
mortgage, 30-year bonds, pro¬
jected by the Pacific Power &
Light Co. of Oregon.

Domestic

now director of
Social Affairs for

rir

"Not

"sistiof

New. York's

in

case

dividend of Twelve
One-Half Cents

(80.125)

Bu-

your

and

Pan-American

nr

re-

CO.

and

under its jurisdiction.
At any rate that appeared to

have

pur- part of United States imports con-

Journal"

A

determined, this week,
to tighten its grip on financing by
public utility companies coming

jnausiry py inaustry, couia nave vigorously

elsewhere. By the same token, un-

employment decreases that
chasins power.
"■

&

.

increases, the the

arp

MORRELL

The Federal Power Commission

A Helping Hand
ports, to what extent does dislocaOver the years it has been such
tion in one segment of the industry compare to the entire industry, time-established institutions as in¬
surance companies, savings banks
or the economy as a whole?

.

materials,
or
new
products growing out of changed

new

recently,

just

appeared

ex-

Purchasing power for necessities brochure prepared for the Comand luxuries ?Uke> whether they mittee on International Economic
nrnHnppH in thp
DnltAtr
areproduced in the same-area or Policy, Dr. Taylor says:

change. New

Substitute

moves

'

obvious/ no."

Full employment in a given/p-

cauge

Certain imports may cause some
dislocations in the manufacturing

nothing

an

is

million

with other

OrrnrrineOccurring

fields. But dislocations

result of
decreased

or

slump

total labor employed

distribution.

Dislocations
jjisiocaiions

-

Because you have here in

160

The

1P¥psHJ>p^yare are non competitive
or
they
completing items—
they

the

as

creased imports

tance

Mr. Hoffman calls

dustry

thny
iSo? AmprWi

claimed

is

unemployment

kind of market that he is advo- reau of Foreign
I I cating for Eur°Pe*■Commerce, and is

1 ?u

no+nrn

answer

Why?

.A

Integrated Market

America
as

-

nature,

An

insurance

qjj

tTlf

lDg American

wage scale, is

our

higher than yours."

port industries

Co.'s

stock.

Indiana

DIVIDEND NO. 83

period

where

cases

corn-

industry

rates,

g,°.ods' xbecause, we Process those far-reaching effect

■}( Moreover,as
raw
materials,
commodities, semi and finished

out

JOHN

dui we uu not studies, country by country, and

your paper or

—

that ourchasine

In

-v

with

compare

parable domestic
by industry?

protect their workers against-the^ondition of an industry—such as

nr

created

purchasing

/nLc+in
products of
domestic
manufacture
in
the same way
for
for

merchandise

turned

manufacturing processes of.
Now, I want to ask you a quesindustry. They thereby provide tion:
employment in many industries.
Do the people of Michigan say

^,ch,otherwi?e, cc"?ld not exist
not exist

How does the total number of

v.;

lower than
Imports not only
compete for the consumer dollar,
States.

tte

at their present levels.
EmDlovment
thus
created

engaged
hi/export and import industries?

scales 'Workers engaged in export indusin
the tries compare with those in the

wage

say,

are

United

your

of

DIVIDEND NOTICES

How many people are

of yesterday have become. the ^-

contrast, two-

those

Northern

been cleaned up

expand those already undertaken

Thus the luxuries

customers.

but

out

with

Service

brought

ican selling—the whole base of the for exports. These studies should
market is broadened to""take in seek to answer such questions as:

for

brought

bonds

along

hela Power Co.'s preferred

increased

ductivity increases, we too have
to consider the competition in our

consumption

goods

Co.'s

Georgia Power Co., and Mononga-

pos¬

product — whether
domeSt-ie-pr m0re than they did.
foreign—is promoted, the wider its
I should like to propose that
sale. This sale is not entirely at
joint studies be instigated by your
the expense of customers of com- government and
min~e, and by the
petitive products, but—if I under- governments of other countries to

canned

process

Edison

recently,

It

tional income and production.

tribution and service traded/
The

more

if

be

of population

areas

f0u0wing the

most

we

..

dislocation

uct tends to be offset

however, is still $200 million.
Our export also represents the
product of our labor. However, we

large

There£ore

must—arrive,vat

equable solution.

an

volume sale of

$200

over

utmost concern in

sci0ljsness,
m,

Deficit

is

trades.

country as well as in yours. ume
your exports today is not
a tlme 0 Srowlng social con- abnormally high in relation to na-

surely

goods from your country to mine.
Trade

invention

new

itself

51

an

*lc Pr°W^

nar-

a

or a

distributive

import3 o£ the
duct of labor
entirely new industry of other
countrTes, or the deor group of industries.
creased exports of the product of
I am not minimizing the dis- domestic
labor which constitutes
tressing effects of these disloca- the real threat to full' employtions.
They are very real to the ment?
people and industries involved.
In
i£e of the unprecedented
How to cope with, these situations
demand for materials and prodJ? they arise constitutes a domes- uc£s o£ United States manufacture

to

trade balance with you

9 to

one

start

with

prosperity are to
than an empty hope."

because such imports are diffused

resourcefulness and inventiveness

dan labor.

business

and

sible dislocation caused by an in¬
crease in
imports—particularly so,

in

—

all

do

key industries, in
at ports of entry,

localities,

and

employment

will be far greater than

effect, in the product of Ameri-

goods

in

key

Activity and Full Employment
turers

be felt

on

consumer

(1559)

•

*

Roanoke, Virginia, April 4, 1950.
NOTICE OP ANNUAL

MEETING

OF STOCKHOLDERS
Meeting of Stockholders of Nor¬
Railway Company will be
held, pursuant to the By-laws, at the principal
office of the Company In Roanoke,
Virginia, on
Thursday, May 11, 1950, at 10 o'clock A. M.
The

folk

Annual

and

Western

to elect four Directors for a term of three years.
Stockholders of record at the close of business

April 21, 1950, will be entitled to vote at such
meeting.
By order of the Board of Directors,
L. W. COX, Secretary.

Board

declared

of Directors

regular

a

quarterly dividend of fifty
cents (50<?) per share on the
Common Stock, payable
May 15, 1950, to stock¬
holders

of

record

close of business

at

the

April 28,

1950.
+

EDWARD BARTSCH

President

April 4,1950

51

COMMERCIAL

THE

(1560)

FINANCIAL

&

CHRONICLE

Thursday, April 13, 1950
states

which

are

in

being? drawn; out

BUSINESS BUZZ

on

'Of%
A-wig

Va,|

pro¬

chance of

getting enacted this year. There
ever,

possibility for

a

President

insure"

state

eral money.

WASHINGTON, D. C. — H o w Secretaries, future Presidents of
tricky a job it is to keep a check the U. S., and future Congresses
<m the prodigal ways of a spend¬ would go along.

wanted

funds

action.
to

with

Congress, if

^re¬
Fed¬

unem¬

.

thrift government, was

illustrated

ployment

bank

Chief

.

object

however,

a

of

the

message,

to be abie to say,
be any appreciable

was

should there

; Neither of these involves a di¬
rect appropriation for an expendi¬ ably not toe great for the private
ture. Both are in the way of a party who allegedly undertakes to
liberal boost of guarantees which launch them. Nevertheless, there

hardship this fail among Die job-.
less, that he' had asked" for help
but Congress didn't act.

potential, risk of sonje is so little commercial interest in
the guarantees would not building houses at remote mili¬
tary installations that Title VIII
be necessary.
has proved to be a great disap¬
The first was in relation
to
military, housing. For d e c a d e s; pointment to the Defense Departs
ment.
Only about a dozen loans
upon decades the Armed Services
for around $20 million have gone
have been getting what direct ap¬
,
propriations they could out of through in nearly a year.
involve

up a

before July,
"loan fund" for

broke state Jobless funds.

riskwhich, makes

00% guarantee, the
element of risk in practice is prob¬

kind,

worsens

might set

Of course these loans are

rather sharply by a couple of the less to the
most recent actions of Congress.
them. With

a

(This column is intended to re¬
flect the "behind the scene*' interpretation from tite nation's Capital

:

or

and may or may

.

*€&■

a

Is among these proposals, how¬

A UW

The

.

do in

Most of the President's

/illU

kmIbt Nation'. Capital

of

9

posals do not have

BehinJ-the-Sctne Interprrtafiw

danger

unemploy¬

ment compensation
money,
fact run out of money.

not coincide with

the "Chronicle?**own views.)

i

Geo. O'Connor With

What is new in this situation,
Congress to provide housing for
military
personnel
at military however, is a "technical amende
ment" which the House passed a
tanips and installations.
few days ago and which will prob¬
f.,. Last year the Defense Depart¬
ably get by the Senate as well,
ment thought up a new gim¬
unless the economy Senators are a
mick. It was to, shift to FHA
little more alert than their House
(and hence to; the, Treasury as <
counterparts. .
•
;
ue ultimate guarantor);the bur¬
That "technical amendment?
den of financing construction of

E. F. Hutton & Co.
;

..

(Special to Ths Financial Chronicle)

t SAN
FRANCISCO, CALIF.—
George R. O'Connor has become

associated

with

E- F.

Hutton

*

&

,

.

housing at out-of-the-way mili-

t

installations, to take care;
«of_ both civilian and .military i
personnel, other than, of course,;
troops in barracks.
tary

In fact puts the Defense Depart¬
ment

I; What happened is that Congress

Under this FHA under¬

for FHA.

writes any bank or insurance com¬

loan to construct housing at
military installations at out-ofthe-way places, removed, that is,
from
metropolitan areas that
might reasonably offer private

pany

rental facilities for the families of

militaiy and civilian personnel at

the

in

and

cab

Sheldon J. Nankin has also been
added

get the plans drawn

in

up

wrap

(Special'to

FHA approval.

Then-,; when It is "
there remains only

all fixed up,
the

problem

getting

of

the

being paid to listen to Horace T. Porterfiefd
—NOT Guy. Lombardo!"

going

*

on.

#

<5CtS.

,<

The other loose guarantee proj¬
the

was

in

occurred

connection

V There

with 608 (Sec. 608 of Title VI of

a

condition precedent to the mak¬

ing of the application for insur¬
these projects, that it was
Intended to keep as a permanent

ance on

pot

no

matter how important

the President of the
United States, ean make a bind¬
ing promise of that character. A
even

future

President

or

a

future

Defense

Secretary or a future
Congress could, with Impunity,
any time close up that base, put
It out. of existence, and leave
the rental housing project at the
defense

Installation

and valueless.
a

promise

of

would even be binding upon the
particular Secretary of Defense
who made it.

Hence this promise that in effect
there would be for the life of the
loan

on a

Tile VIII project, a con¬

tinuing heed for it, is in the nature
ofa

prayer:

that future Defense




deal

great

a

in

Administra¬

the

plan

is closely

analogous
1, to submerge the
independence of the Comptroller
of the Currency to the Secretary
of the Treasury, a plan which now
stands a good chance of being
Plan

to

beaten
came

because

aroused

the

the danger.

.

.

bankers

much

so

-

be¬

sooner

to

receipt of
financing.

au¬

ditional
able

to

sustain
than

even

$500

member,

intends

to

wipe out the

independent
tegrity

Coplay Cement Mfg.
Giant Portland Cement

years

LERNER & CO.

last

the

Investment Securities

the attack has

10 Post Office

abated. Hence the plan to give

Budget
wipe

Bureau)

out

the

Square, Beaton ), Mass.

Telephone BUfcfcutt 2-139#

Teletype BS 19

authority to
Patent
surprise. When

separate

came as a

Wallace

merce;

Secretaryship,

about

a

dozen

left

the

Com¬

Walt

left

he

reason

Disney Productions

"The Cinderella Stock of

of his key men

Analysis

around, whom Sawyer for some

as

identity

long

as

semi-

on

1950"

*

Request

has not fired.
♦

and

In¬

they remain

was

go

into

ef-

&

Congress renewing
recommendations

organization

plans

*

President Truman's message to

tion

some

of

'

■

...

•

of unemployment

inspiration for both

came

General 4a 1975

significant only

making

Convertible 5%s 1949
Common A and Pfdw—When Issued

insurance

as

a

contribution by the

.

Missouri Pacific

his

liberaliza¬

for

-

The

Oregon Portland Cement

the Commerce Department (and

in the Cabinet, even if the Re¬

feet.

Riverside Cement

Spokane Portland Cement

to do harm to the respec¬

million, FHA

President to

Democratic election

insurance in

BATKIN & CO.
30 Broad Street, New York
Tel. WH 3-3388

case

unemployment

sharply this fall and

does
some

4

Tele. NY 1-1965

rise

of the

was

clear enough projects to
level of activity greater

HAnover 2-0050

the

during
in building.

Teletype—NY 1-971

Congress

1949,

has

Firm Trading Markets

a

guar¬

FOREIGN SECURITIES

anteed another year of inflation

multiple rent projects,

Aerovox Corporation

ly in building, and In effect has
postponed for another

year

Hytron Radio 6- Electron.
Strom berg

r-AM. mabks & no. INC.
FOREIGN SECURITIES

the

ill, Thompson & Co., Inc.

SPECIALISTS

Trading Department

decision whether to bring hous¬

ing finance down to earth.
it

Carlson

Preferred

All Issues

has

underwritten the boom general¬

money

become

a

boom year

in

Younger has

with; Walston, Hoffman

without this ad¬

occurred

So

for

Henry

thority to underwrite applications from
the
Budget
Bureau,
an
pending at the March 1 deadline
agency which was given by Presi¬
for "ending" this 608 business.
Actually,

couple of

tive agencies. Likewise neither

Both committees and both Houses

insurance

Nevertheless,

Office,

i

Both are alike In that neither

Cabinet

constantly of "abuses
system."

of the patent

No.

move

of

J.

rooted in the American tradition,

but talked

This

and

additional

Tf» Financial Chronicle)

Cement Stocks:

were

of

conservative Title II opera¬

ending the
applications, for 608

'

the

to whether either

as

tion,

stranded

character

radicals

tion

more

It Is doubted that

Diat

Roosevelt

dent

the

*

Secretary
Sawyer of Commerce nor Sny¬
der of Treasury, was behind the

went along.
Installation, the military base on
The joker, however, was this:
which the rental housing was be¬
Whilst "ending" the receipt of
ing erected.
applications for new 608 projects,
One fundamental principle of
the housing bill added $500 mil¬
government, however, is that no
lion

official

going

tration.

*

as

financing

*

is

nervousness

the war-time and postwar eras.
To protect the "sound character"
of these loans the Secretary of
Housing and Home Finance
Defense was ordered to go through
wrote amendments substituting a,

certifying

William

sniping at the patent
system. They called it "monopo¬
listic," which, of course, it avowed¬
FHA) loans. It had been well House or Senate action can come
ly was. The attack was seldom
advertised that the Congress was in time to forestall
Reorganization
going to kill off 608 this year, Plan No. 5, whose effect is t© frontal, but usually oblique. Offi¬
the last vestige of
the liberal submerge the Patent Office to the cials did not attack the patent
wartime easy
financing. Under political control of the Adminis¬ system openly, which is too deeply
which

This correspondentattended
608 FHA insures 90% of the re¬
hearings on this
placement cost (but not higher
proposition last year. Not once,
costs at the end of 1947) of mul¬
however, was it explained simply to Congress that this device : tiple rent projects.
was
simply one which would
Theoretically, everybody was
take a large load of military
for a return to more sane ap¬
housing off /this year's taxpayer ' praisals and guarantees than
and put. it on a future one—
608, whose purpose was ob¬
Unless all of the projects pay out
viously to make financing easy
uweetly.
so as to get the houses built in

the solemn farce of

608

*

several of the

•*<
<*2?

keep

action

paradoxical

San '
'

&
Goodwin,
265' Montgomery
Street, members of the New York
policy coor¬ and San
Francisco Stock
Ex¬
until well into 1951.
dinating function of the White
changes. In the past he was with
House
on
many
matters,
and Schwabacher &
At the same time the new Title
Co. /
which
has
been
expanding in
II rental financing was made so
power since and reaching for even
much lower on valuation, by com¬
greater powers.
parison, as to be virtually a dead
For years under the New Deal,
letter.

t

ect

affiliated

will

debate

outside the Banking Committee
was

SAN

some

that
when
the
House passed this
by unanimous consent nobody
from

in

-V

•

FRANCISCO, CALIF.—>

"If you don't mind a suggestion, Miss Perkins, you are

private party to sign the papers
and take over. It was very ap- ;
parent

■,

With Walston, Hoffman

pink ribbon for

a

to the firm's staff

Francisco;'

get the project already to

*

Furthermore, Congress adopted
the highest inflation ratio of the
war era, 90% of replacement cost,
and the, loans run for from 32 to
40 years. Finally, the novelty was
adopted of permitting the Armed
Services to lease government land
for the sites for these rental proj-

the

of

developer of military
housing for insurance
under
Title VIII. The Defense Departs

knew what

these installations.

position

initial

ment

passed a law creating a new Title
VHI, called "military housing,''

Co., 160 Montgomery Street,
Mr*
O'Connor was formerly a partner
in Leib, O'Connor & Co.

The

50 Broad Street

New York 4, N. Y.

120

Tel. REctor 2-2020

has

made

available

'

BROADWAY, N. Y. 5