Full text of Commercial and Financial Chronicle : April 14, 1949, Vol. 169, No. 4794

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

BUS. ADM.

'Apr

j 5

LIBRARY

1949

ESTABLISHED 1S39
.

J. h''

JL v

Reg. U. S. Pat. Office

Volume

Number 4794

169

New

Trends in

Less Spending, Threat to
Lamont University

President, United States Trust

consumer

Company of New York

from

risks

creased

able economic

couraged

capital,

venture

Expresses doubt
stand

can

I

am

the

sure

subject

"Trends

in

economy

January, 1949, personal incomes after taxes

annual rate of

my

opinion,

January,

is little
than

in

to

al

such

the conditions
of

health

Prof. S. H. Slichter

or

sickness that
Benjamin Strong
;

may

prevail in

our

economic

Finance, then, has two functions
—as an
a

Economic
of

means

machinery and

diagnosis. Let

moment consider the

(Continued

on

the American
Life

a

page

39)

Strong be¬
Chapter of

Society of Chartered

Underwriters

York

as

for

us

latter func-

*An address by Mr.
fore the New York

taxes

were

still

Forum.

New

than in

in

with

$9.7 bil¬

lion

a

These

,

'

A

copy

will be

on

K

•

*'

;

.

ago.

In

Feb-

r u a r

y,

1949,

incomes

after

were

no

business

about

and

Incomes

:

and

the United Nations. No such

organization could possibly
successfully so long as "great power disagree-;'
ment outside" it, "and completely independent of" it,
can
and do develop as.has been the case during the
past two or three years. Such a course of events evi¬
dently reduces it to a sort of debating society.
It is
doubtful, to say the least, whether the debates and the
pageants staged at the sessions of the United Nations
since the end of active hostilities have had any such
function

worthy

because this is the first
(Continued on page 35)
°
-

j

i

•

Exchange

on page

Government

sowing
between

on page

33)

Slate and

THE NATIONAL CITY BANK

UTILITIES FUND

INCOME (BALANCED) FUND
on

'

HART SMITH & CO.
15 BROAD

OF NEW YORK

request

DISTRIBUTORS, Inc.

Dept. Teletype: NY 1-708

New York

PACIFIC

Paid-Up

£2,000,000

Trusteeships and Executorships
also undertaken




1-395

NATIONAL BANK

Wires Connect
Montreal

OF

Toronto

THE

CITY OF

NEW YORK

Central Maine

CANADIAN

Power Co.

bonds & stocks

common

SECURITIES

Distributors of Municipal

Prospectus available

upon

request

and

Corporate Securities

OTIS & CO.
Established

£2,500,000

description
banking and exchange business
every

,

THE CHASE

HAnover 2-0980

Teletype NY

Private

Bond

DeakWitter
Members New

£4,000,000

STREET

Bell

COAST

Zanzibar

Subscribed Capital

Bond Department

f

Underwriters and

26, Bishopsgate,
London, E. C.
v.

Fund

discord

BOND FUND

in

Office:

conducts

cooping

Bonds

64 Wall Street, New York 5

Branches in India, Burma, Ceylon, Kenya
Colony, Kericho, Kenya, and Aden

Bank

of

(Continued

34)

PREFERRED STOCK FUND

FRANKLIN

Kenya Colony and Uganda

Reserve

seeds

is

and

Municipal

of INDIA, LIMITED

The

the

Socialism

separately

up

inc.

NATIONAL BANK

Capital

them

^

(Continued

.

New York 5, N. Y.

and

tions" but

.A Mutual Fund

Prospectus

40 Wall Street

Head

but Socialism brings us
want,
and
new
and
greater injustice. We all loathe
monopoly of every kind, but So¬
cialism means a super-monopoly
from which there is no escape. We
all wish a real community of na¬
system,

disorder,

Dr.

incomes

situation.

,

COMMON STOCK FUND
*•'

•

the

the

of the

We must say in all candor that it appears to us that
Evatt, unwittingly we assume, has in the very prem¬
ises exposed the weakness, not to say the impotence, of

greater

epitomize the present

Funds,
Vv".;.

supplied

Members New York Stock

to

law

to

Assembly in the course of a defense of the troubled away from us,,
step by step.
organization which was to encourage, develop We all strive
and give expression to the concept of "One World" which
for
a
pros- J
Wilhelm Ropke
swept most of this planet at the end of an unprecedented perous, order¬
conflict which had cost humanity immeasurably.
ly, efficient, and just economic

purchasing power are at new post¬
war highs, but willingness to spend
is dropping.
The drop in retail
sales
in
January,
1949,
below
January, 1948 is especially note¬

White,Weld&Co.

Bankers

the

and

Franklin Custodian

request

■

der

of the

life

Electric and Gas Utility Account¬
ants, Detroit, Mich., April 11,1949.

study of

..

the

highest value
to liberty un-«

How Many Worlds?

j"The fact is that nearly all the difficulties of the United

substantially above

1949

facts

Gold Shares;

V

r

Nations have been caused

year

*An address by Dr. Slichter be¬
the National Conference of

South African

:

'I'.'^

in

fore
a

attribute

February, 1948.

retail sales

City, April 7, 1949.

We have recently completed

tarian. We all.

February, 1948, but retail sales in
February,

life.

far

they • are
n-totali-,

.

* it

i

n o

So¬

as.

—

reflects

s o

than

the

by one factor: great power dis¬ civic
January, 1948
rights,:
$9.5 billion agreement outside the United Nations and completely inde¬ butf Socialism
as
compared pendent of the United Nations." So commented the President is taking them

function.

>

in¬

money

less

ma-

life

ing

cialists
as

January, 1949
was
slightly

our

and

——<f agree, includ¬

:

EDITORIAL

rise

the

retail sales

that

business
As

over

comes, the to¬
tal volume of

a

chine

1949^

1948. De¬

spite

piece of mech^-

economic

GENEVA, SWITZERLAND—The proper way to look at Socialism
is to regard it as one of the most paradoxical movements of all times*
Even if inspired by noble motives, it not only fails to reach its goals
but threatens the very principles of a Good Society on which we all
:

than in Janu¬
ary,

fi¬

nance
more

permits

running at

$12 billion above January, 1948—an increase of

own

s m

were

The index of the prices of consumer goods was up only 1.2%.
Consequently, incomes after taxes had 4% more purchasing power in

broad and rather indefinable one.

i

"moderate" Socialism is road to super-monopoly, economic
paralysis,'super-nationalism, and international discord.

even

:

5%.

will agree that
assigned
to
me,
Finance," is a very

a n

ing

The Paradoxes of Socialism
In
an

you

In

as

pro- >/

and

regulating.

more

Compares difference between "democratic" and "totali¬

society.

tarian" Socialism to that between murder and manslaughter—an
immaterial one to the victim. Cites European experience as show¬

outstripping productivity.

wages

(Geneva)

Socialism is paradoxical in having

noble motives counterbalanced by its inevitable threats to the good

Holds

by improved marketing and pricing. Lists

duction; (2) higher taxes; and (3)

have dis¬

measures

Political economist maintains

billion annually to keep employment steady,

long-term trends: (1) rise in government spending faster than

;;

unpredict¬

high taxes endanger business sol¬
vency.

be done

can

government

and from

regulation

and this

Professor, Graduate Institute of International Studies

is at postwar high,

power

Copy

By DR. WILHELM ROPKE

spending is sagging, causing unemployment rise.

sales must increase $10

Prominent banker asserts in¬

purchasing

a

Socialism in Europe Today

Stability

Professor, Harvard University

Dr. Slichter contends, though

STRONG*

BENJAMIN

Price 30 Cents

By SUMNER H. SLICHTER*

Finance
By

York, N. Y., Thursday, April 14, 1949

1899

New York
Cincinnati

^

Chicago

Columbus

Stock

Stock

Denver

Dominion Securities

'

"

Seattle

BA 7-4300

Members New York Stock Exchange
and other Principal Exchange*

Los Angeles

Wires

111

Broadway, N. Y. 6

WOrth 4-6000

40

Exchange Place, New York 5, N. Y.

-

Bell

System Teletype NY 1-702-3

Teletype NY 1-2708

Boston Telephone: Enterprise 1820
Private

Honolulu

Direct

IRA HAUPT & CO.

Grporatioti

Exchange

Angeles Stock Exchange

San Francisco '

Toledo Buffalo

Co.,

Exchange

14 WALL ST., NEW YORK

CLEVELAND

&

York. Stock Exchange

Francisco

Honolulu
Los

(Incorporated)

of

San

Wire te:

Hendricks A Eastwood, Inc.,

Phila.

COMMERCIAL

THE

(1614)

2

J

By ARNOLD BERNHARD*

Utility 5V2I52*
*

1948

available.

report

habitual divergence betwein value and short-term market price. Maintains key
stock lies in projecting, from past record, its likely capitalization of ex¬
pected earnings and dividends.: On this basis belie res present market is undervalued, and that many

Market analyst stresses

BOUGHT

—

SOLD

—

market's pricing

to

Waltham Watch 5/75

of

stocks will rise.
The

1

Bought—Sold—Quoted

discussion is—Are Stocks Undervalued? I say that they are, and I
say so because I have in my mind a^concept of value which is not at this moment the
equivalent of prices. Some may agree that stocks are undervalued but it is obvious that

Corporation
York 5

-120 Broadway, New

Louisiana Securities

common

QUOTED

New York Hanseatic

'

topic of

my

most investors

"

*'

'

Steiner,Rouse&Co.

3>-

*

.

Teletype NY 1-583

BArclay 7-5660

do

stocks

under¬

are

General Public Utilities Corp.

would

force

prices

ftfcpONNELL&fO.
Members

York Stock Exchange

New

York

YORK

NEW

5

That

'

HADING MARKETS IN SEES

OIL STOCKS

Low Priced Industrials

,

INACTIVE STOCKS

Removed from the
New York Exchanges

STEIN & COMPANY
Members Nst'l Ass'n of Securities Dealers, I nc,
27

William St., N. Y.

C. 5, N. Y.

cannot

undervalued

overvalued

or

value

of

in

TeL DIfby

whether he defines that

—

,

Common
*"

'

'

-

•'

.

''

Black Star Coal Corp.
Common

i

Kentucky Stone Co. '

•>,

Preferred

5%

™I BANKERS BOND E;
Incorporated

Floor, Kentucky Home Life Bldg.

KENTUCKY

2,

Bell Tele. T,8 1««

Long Distance 238-9

prices.

stock

sell

.He,

or

Wellman

it.

QUOTED

standard

WM. J. MERICKA & CO.
Incorporated

New York

I Member Cleveland Stock Exchange
Union Commerce

Building

CLEVELAND

f

is

It

unusable

be¬

what

the

knows

nobody
of

the

all

future

from

life

whatever

the
have,

expectancy

is determined

to

is¬

would not be

stocks

common

to succeed

of being
partnership

sued..

Capital,- instead

asked

to

assume

a

a

standard

of

stocks.

common

The

in

"buy

to

was

stocks is that no¬

common

is

body

knows

or

know

what

the

expected

To define the

total in the future.

Those

are

relative terms

they must be related to some
a

standard.

of

stock therefore as the

down
a

a

this:

to

common

isfactory

is

.

to

define

been

a

history there has

definition

economic value that has
versal

itself.

life

as

acceptance.

of

pure

won

uni¬

All the great

economists have attempted to de¬
fine

value

Aristotle,

—

Adam

Ricardo,
Bohm-Bawerk,
Jevons, Clark, Pareto—but there

Smith,
no

definition

of

value

in

the

that

"'Transcript of address

by Mr.
Bernhard before N. Y. Society of

1856

Security Analysts, April 8,

Direct

1949.

branch

our

offices

in this fact: that people—the very

people—do not put the same
on a stock at all times. If
General Mo¬

same

American La France

price tag
the

Bausch and Lomb

market price of

tors is 30 in March of 1938 and 30

Dayton Malleable Iron
J.*.v Haskelite Manufacturing

Hydraulic Press Manufacturing

Stromberg-Carlson Co.

its,

that

the

of

what value is.

we

H. M.

price?

because

defined,

verdict

the

that

value

market

That does not

verdict
of the market at every moment.
Obviously, the market changes its

T
\

What

reject

value of

it

causes

to

do

that the

theory

the

stock is the total of the

a

will

it

dividends

its

during

pay

life, not because this is theoreti¬
cally incorrect, but because it is

impracticable.
tells

sense

us

way or

in

dividends

that

other have

as

reinvested

a

Profits

dividends.

same

often

in

are

paid

function of profits,

the

what

price of

will

market

have

also

know

think

stock should

a

Assets
We

some

able to de¬

rendered

have

a

are

proceedings

to. various

I We have

be

defined.

Value

seem

to

be

is

some¬

the mind of
the common
is expressed
moment, we

forced

back

to

the

the

thing, since they are
both the expression of value as it
exists in the minds of the buyers
same

read

=

"Securities

Sales- E

E man's Corner," a

regular S

E

feature in every

Thurs- E

E

day's

E

"Chronicle."

E the

the S

of

issue

=

7T111II11N1111111MIH11II1111111111111111111 kT

LAMB0RN & CO., Inc.
99

STREET

WALL

NEW YORK 5, N.

Y.

sugar
Raw—Refined—Liquid

Exports—Imports—Futures

claimants.

reason

to

DIgby 4-2727

believe also

that habit of mind has something
to

with

do

price/determination.

If U. S. Steel sells for $100 a

during

share

that figure will in¬
thinking of buyers and

a year,

fluence the

ing year, even though other fac¬
tors significantly related to value
may have changed.

thing that exists in
people.
But since
conception of value
in price at a given

mm

E for selling securities

available for apportion¬

sellers of U. S. Steel in the follow¬

can¬

'mm

.

mm

in

Up to this point we have rea¬
soned that value is something dif¬

price and that it

helpful hints 5

f

court tests
given weight

service.

ferent from

on

5 For clever,

wm

be.
weight.

ment

we are

Selling |

| Pointers

from many

that book values

of equity

£IIIIIIIIIIIIIIIIIIII1III1IIIIIIIIIIIIIIIIIIII«£

the

mystery.

the search,

PH 73

in

out

While dividends may be
a

Teletype

business

the

dividends.
said to be
they are not
the equivalent. Therefore, we may
assume that profits in their own
right may have some bearing on
not

and

Phila. 2

r

However, common

bearing
on the price at which a stock will
sell and, therefore, on its value.
We know; too, that dividends
can only be paid from profits and
that profits are not
always the
some

~

RIttenhouse 6-3717

so?

of Dividends

Importance

We

Telephone

mean

have to accept the

we

niind.

Stock Exchange Bldg.,

to

as

Byllesby & Company

v PHILADELPHIA OFFICE

;

must accept

a

if no perfectly sat¬
definition of value has

shall

we

cannot be

determine

through-value,

admit

reorganization

even

If

and

us

effort to determine the amount

is

stock

Let

which

factors

those

to

value

an

termine value within certain lim¬

not

wires to

That break lies

standard of value.

the

premise that price and value are

Established

Mobile, Ala.

an

us

in

We need hot give up

however,

something that exists
the mind.
It is, therefore, as

difficult

offers

opportunity to evolve a practical

dis¬
boils
value of

its future dividends,

of

sum

to

will

dividends

counted to the interest rate,

Value

is

for the exist¬

reason

very

of

ence

something dear unless
know what cheap is and what
or

never

•

unusable.

value

In all economic

*'

theory

been found.
in

:

of all the
in the fu¬

though he did not define
You cannot buy
something

kind of

Engineering Co.

Broadway

one

company

Value Definition Difficult

150

pay

could take exception to
of value.
The only
can find with it is that it

any

or

they are cheap and
they are dear."

implied

too,

and

—

it will

dends will be over a 20-year span,

value,

dear is.

SOLD

that

dividends
will be.
If we could determine
in advance what the sum of divi¬

when

them

you

—

be equal to the sum

sum

Rothschild,

Baron

market

when

stocks

'cheap

BOUGHT

one

,

said that the way

LOUISVILLE

stock is the

a common

insisted on the investment over a period
student of the market of time and the date when the
should "first of all know value." capital would be returned out of
depreciation
reserves. •
We
That was his expression, "first of the
should then have bond capital, or
all, know value."
oossibly income bonds, but not
Another famous authority on

the

•1st

the

that every

stock

:

accepted
value

of

of risk, would be granted a contract,
enormous specifying the return to be paid

had

has

the

in Wall Street,

influence

'

.

'

;

trends

that

definition

theory

whose

Dow,

price

Air Filter Co.

American
,

price.

livings

our

which

circle

NY 1-135 >

New Orleans, La. - Birmingham, Ala.

price and

think

this

is

mind,

different

often

is

Value
c

.

we

perfectly
There is a break

•

.

cause

not.

or

T

we

that

fault I

he implies that he has a

terms,

standard

N. J.
Tele.: NY 1-1055

all

But since

ture, discounted to the prevailing
interest rate.
I do hot see how

unim¬

be

I, Montgomery 8t., Jersey City 2,

4-2190

to

When an analyst
adviser
speaks
in such

an

for,

dividends

fully valued/'
or

is

holds the value of a common Stock

portant. More and more we hear
the expression, "this or that stock
is

!

of

remarks, you will gather that this
is going to be a rather abstract
discussion of the theory of stock
it

..

I

securities, to determine objec¬

But

or

classical

the purchase and sale

on

values.

Stocks

'

/

tively, and in conflict with pre¬
vailing opinion, how different the
price of a stock ought to be from
what it is.
From these opening

STOCKS

MINING

of

Arnold Bernhard

is

me or any

advising

that

the

St., New YoH« 4, N. Y.

HAnovor 2-0700

reasoning is not

circular, though.
in

Members New York: Stock Exchange

25 Broad

market.

is its value, in the opinion of all
obviously cannot the
buyers and sellers who partici¬
value are
pate in a free market, and if the
the same thing.
price of General Motors is 50 in
October of 1938, can we not find
Common Stock Value a Mystery
in this variation in price the clue
"
'/.
'
*

other analyst
in the practical task of

and

be

that * stocks are
less than they are

people

believe

for

engaged
r

should

we

making

more

selling

raises
it

so,

and

all

are

telling

be

possible

were

value

worth

question

you

2-7815

REctor

we

where

whether

Exchange

Curb

price

would

longer

that

should need to know.

undervalued.

the

New

Tel.

If

wasting our time discussing value
at all.
Value would be price and

the

to

no

BROADWAY,

they

stocks

point
stocks

Bought—Sold—Quoted

120

if

cause

up

Stock

Common

valued, be¬

id,
their
buying
of

New York State
Electric & Gas Corp.

f

that-, a stock's
value is the equivalent of its price.
say

.

sellers who participate in a

The

cannot

We

d

Rights

;

economic sense that has been ac-, and
free
corded universal acceptance.

think

not

that

j

Alabama &

Y

Editor, Value Line Investment Service, Inc.

Analysis and Comment

on

•„

Thursday, April 14, 1949

Are-Stocks Undervalued?

i:

Central Public

CHRONICLE

FINANCIAL

&

Now

let

me

state

where

we

at this
point. We say that value and price
are not necessarily the same thing.
Yet the only determinant of value,
which is something that cannot be
defined, is price. We find a break
in the circle of reasoning in the
stand

in

fact that

Stix & Co.
•

/ INVESTMENT SECURITIES

this ' argument

SOS OLIVE
..

•.

-

'.

.-•!

STREET
V;

i

'

•

*

..

St. Louis IMo.
\

v

'

'

Members St. Louis

'•

*

,

Stock Exchange

prices are not the same

(Continued

on page

38)

;

H. Hentz & Co.
We Maintain

Members

|
»

f

New
New

York
York

Curb

Cotton

York

New

Stock Exchange

CANADIAN

Exchange

American

Markets For:

/

INDUSTRIALS

CANADIAN MINING

Exchange

'

Commodity
Chicago
;

of

CANADIAN

Inc.

Exchange,

Board

Specialists In

N. Q. B.

FOREIGN

OVER-THE-COUNTER

SECURITIES

OILS

Trade

New Orleans Cotton Exchange

BRITISH

And other Exchanges

SECURITIES
.

INDUSTRIAL STOCK INDEX
10-Year Performance of

Externals —Internals

35 Industrial Stocks
BOOKLET

N. Y. Cotton Exchange
j

NEW

CHICAGO

j

YORK 4, N, Y.
DETROIT

PITTSBURGH

GENEVA, SWITZERLAND




ON

REQUEST

Goodbody & Co.

Bldg.

Members N. Y. Stock Exchange and Other Principal Exchanges
115

BROADWAY

Telephone BArclay 7-0100

NEW YORK 6, N. Y.
Teletype NY 1-672

zippin & company
208

South La

Salle

Tele. RAndoIph 6-4696

National Quotation Bureau

St., Chicago 4
Tel. CG 451

Incorporated
46 Front Street

j

New York 4, N. Y.

Volume

169

Number 4794

THE

COMMERCIAL

I NDEX
V-

Articles and News-

,

Socialism

Less

Are

in

Page

Undervalued?—Arnold

4

4

All Fronts!—Hon. John IV. Snyder

Impact of Military Preparedness

on

Our Economy—Edwin G. Noiirse

Let Congress Encourage Producers— Roger

W. Babson

Placing Corporate Earnings Under Individual -Income Tax
Affects Risk Capital—H. P. B. Jenkins

»

.

Spiral May Resume—Lawrence Cluyton...

The Outlook for Interest
A

-

Probable—W. Walter Williams

nor

% The Automotive Outlook—L. E. Briggs.
The Case for Unemployment Compensation Benefits

■_

—Bernard

Pitfalls of

E.

.:;

,

Teets

Unemployment Insurance—Earl O. Shreve
if

First Results of Poll

Dealers' Comments

Conservative

New

if

if

Street

England Fund Management Lauded by

22

kers and those
letter

1948 About

Equal

Contributions

as

21

New York

-

23

47

by Col. Herbert G. King

•....'

Bookshelf

Dealer-Broker—Investment Recommendations

11

Washington Ahead of the News—Carlisle Bergeron

25

News About Banks and Bankers

Our

Reporter

on

(2)

No

(4)

(5)

Securities Salesman's Corner

25

Registration
Industry

opinion

No

(6)

—

I

FINANCIAL

and

Gardens,

Edwards

c/o

S.

25

Park 'Place,

'

REctor

-

Patent Office

ary

New York 8, N. Y.

2-9570 to

WILLIAM

DANA

WILLIAM D.

25,

York,

1942,
Y.,

President

RIGGS, Business Manager

Hi.

135

8.

(Telephone:

La

Salle

State




B.

the post office at New
under the Act of March

in

Countries, $42.00

St.,
0613);

per

Monthly
$25.00^ per
Note—On
the rate

made

Charges Are Pending
|—
—177 or 19.9%;
:____——-089 or 77.3%
25 or 2.8%

49

Burlington Gardens, W. 1
64 New Bond

per

year:
per

£155,175,898

1 _786 or
'—:— 27 or

86.2%

Associated Banks:

3.0%

Glyn Mills & Co.
Williams

opinion

Record—Monthly,
year.
(Foreign'postage extm.t
Earnings Record — Monthly,
year:
(Foreign postage extra.)

York

fluctuations In

funds.

Deacon's

Bank, Ltd.

or 26.2%)
or 70.5%

______234
___628
:—______— 2^

3.3%

or

Securities of

'

-577

or

64.8%

1—•.—242
72

or

27.2%;

or

8.0%)

—

_—

i

on

page

8)

&

Common

Stocks,.

*

.

offerings of

C

"

•

v

INDUSTRIAL & UTILITIES COMPANIES

v

LAND SETTLEMENT & HOUSING

;

Members New York Viirb Exchange

York Stock. Exchange

HAnover

/

%

Albany

'

2-4300

*

Teletype—NY 1-5
-

Chicago

-

Glens Falls

-

Hubbard 2-8209

' 1 f"

'

Schenectady -

Exck'g

"
*

S. CURRENCY

INQUIRIES INVITED
Brokers Protected

AMERICAN PALESTINE

50 Congress Street, Boston 8

Broad Street, New York 4

25

Tel Aviv Stock

IN U.

Spencer Trask & Co.

Meinbers New

on

Dividends and Interest in N. Y.

PREFERRED STOCKS

•

Listed

year.

Quotation

New

Street, W. 1

COMPANIES

per year.

account of the

Smithfield, E. C. 1

Charing Cross, S. W. 1

96 or 10.8%

High Grade Public Utility and Industrial

Publications

of exchange,
in

Bishopsgate, E. C. 2

Bonds of

S.

remittances for for¬
eign-subscriptions-and advertisements must
be

3

8 West

Rates

$35.00

OFFICE—-Edinburgh

Branches throughout Scotland

LONDON OFFICES:

-

of

$25.00

2.5%)

___—

We Are interested in

.

Union

and

75.2%

Dana

Canada, * $38.00

Other

or

,

BANKS & CREDIT INSTITUTIONS

Pan-American
of

or 22.3%

at

Other

Every Thursday (general news and ad¬
Issue) and every Monday (com¬
plete statistical issue-— market quotation
records, corporation news, bank clearings,
•tate and. city news, etc.).
Offices:

<

Incorporated by Royal Charter 1727

Eng-

Dominion

vertising

3,

.

Royal Bank of Scotland
HEAD

—

seeohd-class matter Febru¬

Subscription

Bank

vOther

C.,

2.9%

Smithy

Subscriptions in United States, U.
Possessions^ Territories and Members

Thursday, April 14, 1949

Chicago

as

N.

r

9576

SEIBERT,

E.

75.8%

Preferred

8, r879. :

HERBERT D. SEIBERT, Editor & Publisher
.

London,

Company

WILLIAM B. DANA COMPANY, Publishers

.*

&

1949 by William

Copyright

CHRONICLE
Reentered

Reg. U.

,

TOTAL ASSETS

Opposed
No opinion

13

Drapers'

or

or

System

(Continued
Twice Weekly

COMMERCIAL

■

New York 5

Telephone WHitehall 4-2250)

.

_1_ 1670s

Moloney Act Be Repealed?
Favoring

48

and,

The

.1

•

.

Should

5

;.

Says)

Whyte

nor

Favoring
Opposed

44

1 Washington and You
Published

./

•

40 Exchange Place,

Forbidding Discount to Non-Members

Rule

24
26

Complaints

NASD Trial

46

(Walter

■/

^—-——7— 22 or

Favoring
Opposed
No opinion

27

Utility Securities

The State of Trade and

—

Favoring
Opposed

5

Governments.

Tomorrow's Markets

5V2S

Bought—Sold-—Quoted

or 21.3%

199

_____

opinion

Neither

47

-.

Railroad Securities

Securities Now in

CEN. PUB. UTIL.

Examination of Books and Records-Where:

12

Prospective Security Offerings
Public

MYERS, Rights

KENTUCKY UTILITIES

.891

_____

i-~~—

;

14

Wilfred May

Reporter's Report

opinion

No

16
'

Observations—/L

LIGGETT &

;

____J.___'____190
_1_675
26

(Favoring
Opposed

,

15

Our

X

Young & Gersten

POLL]

Questionnaire for Reports on Spreads

Business

Mutual Fund

NSTA Notes

-

(2)

43

;

—Charles F. Eaton, Jr

*

in

-

•'

•

1

6

Indications of Business Activity

,

'

.

RESULTS OF NASD

No

18

10

in

!•

Favoring
Opposed -^

18
....'.

Prominent Personalities

'

•-

5 % "Yardstick"
^

14

...

Einzig—"Question of Currency Devaluation".

~

;

Total ballots returned

(1)

Coming Events in the Investment Field

Funds

fMM

Cover

Canadian Securities

Mutual

•'

-

(RETURNS FROM NASD MEMBERS)

47;

(Editorial)

Bank and Insurance Stocks

-

'"

Others will appear

(April 13) of the opinions expressed' by both members and
non-members of the NASD on the series of questions set
forth on the face of the ballot. We defer making anyr edi¬
torial comment in the matter until a.later date, in light of
the fact that other ballots, owing to the time element, are

47

Regular Features

From

Teletype NY1-1942

and, further below, appear

thp composite results up to press time

'

DIgby 4-4370

Y. 6

■

9%, Reports F. W. Dodge Corporation

Industry Booming in New State of Israel..

/

38 Broadway, If..

Many hundreds of firms made

•

first

ca.

the market for securities of the smaller

in this week's issue.

probably in transit.

,••.47-.

(retail, etc-.) and to express

of these expressions (whether pro or con) as can be

We show

-

Individual Savings in

Step to Peace, Says President Truman

on

subsequent issues.

20

20

Construction Contracts Decline

i.

many

Hold Amiual Meeting

to

42

Business Man's

Southern Production

effect, if any, the NASD's "5% mark¬

this latter query

on

accommodated

Lower Margins to Aid Stock Market, Says William Witherspoon

It

to what

as

corporations of the country.

19

Los Angeles Stock Exchange Reports Gain in Trading...

See

recipient wyj requested to indicate

18

1947, Reports SEC

Reasons for Bull Market Summarized

I

Petroleum Hb & Pr.

questions, pertaining to the

side the

reverse

comments

German Manufacturers Exhibit Products in

series of

procedure followed by the NASD.

up" philosophy has

18

20

to

a

:'rules" and methods of

comments

%

(Boxed)

North Atlantic Pad Is

We

Paget Sound Pr. & Lb

municipal' bond business. The

a

for the.reason that they are not

the nature of the firm's business

8

Analyzed-

.rMore Savings Going Into Non-Governments;

As

doing. strictly

non-member ACTIVE MARKETS;

stock:exchange floor bro¬

exception.

not. included

were

the ballot contained

14

Journal" Seeking

We Shall See!

.

of. the NASD, with the

'

Investment Dealers Association of Canada
June 21-24 at Minaki Lodge

-

13

on

Housing Authority Bond Study Issued by C. J. Devine & Co

.

forwar.ded to. every firm, whether member or

On the

Mark-Up" Spread

by Charles F. Eaton, Jr

,

.

•.

••

Corporations

Mutual Funds' Role in Investment Business

"Bawl

Telephone: WHitehall 4-6551

.

William A. Parker

.

;

. ■*. *

STREET, NEW YORK

99 WALL

plete cross-^section .of. opinion i on the subject, a ballot was

3,8

Effect of. "5%

on

•

NASD

on

Securities of Smaller

J.

policies and methods of operation. In order to obtain a com¬

23
'•

i

.

>■

8

cash before your very eyes at

subject to the jurisdiction of the NASD.: The first page of
■

;

by the CHRONICLE for the purpose of ascertain¬

Stupendous! Colossal! Magnificent!
See Obsolete Securities turn into

22

■

-

Comes to Wall St.

7

,

'V >v'-.,--'-

v

ON EARTH

effect of "5%"' philoso¬
securities of smaller corporations.
on

ing the views of the securities industry with respect to. the;
National Association of Securities Dealers, per se, also its

TP:

......

on

THE GREATEST SHOW

publish today the initial results of the poll being

conducted

9

Rates—Raymond Rodger$

Depression—Neither Inevitable

We

" :

Tl^e Challenge to Democratic Capitalism—Marriner S. Eccles
The Inflation

phy

7

-

How

indicates^ Widespread dissatisfac¬

Many dealers comment

6

•

NASD

on

throughout industry with organization itself.
Regulations governing "spreads" and prohibition
against discounts to non-members heaviljr opposed.

2

Moving Ahead

$

(1615)

tion

.Cover

...

Bernhard.

Advertising in Securities Merchandising—John T. McKenzie
on

Initial tabulation

Cover

......Cover

Strong..

CHRONICLE

First Resnhs of Pell

•>

V

.

.

Stability—Sumner H. Slighter

to

Finance—Benjamin

Stocks

.

Europe Today— Wilhehtv Ropke

Spending, Threat

Trends
'/

in

/%>

-

FINANCIAL

&

SECURITIES CO.
(Member NatL Assn of Securities Dealers,

(

Worcester

40

Inc.)

Exchange PL, N. Y. 5, N. Y,
WHitehall 4-5654

4

COMMERCIAL

THE

(1616)

CHRONICLE

FINANCIAL

&

Moving Ahead

Advertising! in Securities Merchandising

Secretary of the Treasury

Poor's Corporation

Executive Department, Standard &

Editor, "Advertising in Action"

Mr. McKenzie points out procedures

and

Asserting

of its effective use. Gives exam¬
and analyzing cost studies.

Discusses direct mail advertising and cites cases

ples of window displays in selling securities and urges watching results
Lists "a few nudges from experts."
I have been asked to talk

ing".

.

starting off at this time from position of unex¬
ampled financial and economic strength, Secretary Snyder looks for
continued prosperity. Says return to normal buyers' markets can

in merchandising securities through advertising and

processes

«>

Treasury bond stabilization
Contends present readjustments are helpful and healthy,
but warns against undue credit expansion and speculation.

In peacetime as well as in war, the United States must act to keep

t i

s

i

n

g

cam¬

void

propriation.

can

of

single

a

applied to some advertising. It
exactly the right mean¬
ing.
REST IN PEACE—speak in
a
hushed
voice—here lies the
sacred dead.
But good advertis*as

there

money,

call

"tombstone"

word

that

like

I

without

For

we

salesmanship—devoid

of

leadership—devoid
of
glow of human warmth.

ap¬

an

but

conveys

be no pro¬

motion.
Each time I

speak of an
appropriation

Don't let anyone

ing is fighting!

they

sales

do

get

over

potent

a

in small space.

message

Mailing Pieces and

Dignified tombstones—ads de¬

it.

start

with

advertising

"Tombstone"

adver-

paigns

loaded

graveyard.
It's just
advertising.

ing

thought.
All

by far is the advertis¬

with dead

serious

lor

defenses strong.

We must be strong on all fronts. We must have
behind us to maintain and strengthen our confidence in the
future, in the security of our jobs, and in,the soundness of our coun¬
try's whole *>
<
our

the largest

will
give you food
tonight

period of business development. Stresses financial

program.

attention of your
lieve this talk

are

soundness of government and praises

because I have projected some ideas from time to time which have attracted the
Committee. Most of my time is spent in writing and planning, but I be-

.

we

usher in greatest

,

"Modern Merchandising of Securities Through Advertis

on

Letters

the power

economic

and

structure.

hardly remind

makes them pay?
Robert
Collier,

that

believe

I

considered

by

are

we

direct-mail and mail-order
copywriters to be the "daddy" of

moving ahead

all engaged in

fronts.

many

all of these

on

the profession, has
makes let¬

And

this to say about what

believe

ters and

will

mailing pieces pay:
perfect dic¬
finished
style;
it
may

"A letter may have

tion—a

t

^

bristle

with, attention-getters and

I

we

continue

o

progress,

step

by

if

continue

we

step,

.

have done a

Only 35 said: "We have some¬

Do You Want Articles

partners or offi¬ thing that will benefit you. Let's
cers—you've been able to wangle get together." The other 635 were
an
appropriation out of them. the loveliest collection of dignified
You're ready to start advertising. "tombstone" cards to be found
You'll spend part of your money
On this page we give an
anywhere in America.
Take a
on
newspaper - advertising—part look at just a few of them
(as additional lecture in the se¬
on
direct mail lead
building- shown in Chart No.. 2).
ries on Investment Salesman¬

sales job on your

Under One Cover?

mail

coordinated

order—a

paign.

cam¬

'..-j.

...

.

••

•:

We've deleted the names only.

ship, sponsored by the Boston

advertising is dig¬ Investment Club and Boston
(1) Start with a schedule—and
I'll
pass
over
this phase very nity, cultured in timidity—a wist¬ University,
transcripts ! of
ful compensation for loss of the
quickly.
This is the type of
which are
schedule form
Poor's

&

at Standard

we use

Corporation.

Chart No. 1.)
Each
black

dot

(See

represents

a

mail release, each

mailing piece is
given a job number.
All typog¬
raphy, printing, paper, envelope,
plate, postage, collating, inserting
and bundling charges are segre¬
gated by job.
similar

A
out

schedule

our

on

is

worked

advertis¬

newspaper

ing.
(2)

Set

control
money

up

system—so
you'll have
left for tail-end newspaper

insertions

or

work

control

•basis

appropriation

an

our

as

releases.

mail

on

We

monthly

a

illustrated at the bottom

J of Chart No. 1.
*

(3)
space,

Decide

on

media,

size

of

type of mailing pieces, copy

appeal, mailing lists to
important elements in

use.

any

Very
cam¬

paign.
Security / advertising is
highly selective. You must know
where you're going right from the
start.

V

You have

in Boston.

some

But,

•

being published in
that
the investment business is sacred the CHRONICLE.
(The pre¬
and that a firm's address is Mount vious
lectures
appeared on
Olympus.

in other cities,

It

touch.

assumes

What

*A

lecture
a

by

series

Mr.
in

a

McKenzie,
course

on

receptionist,

sored

Salesmanship, spon¬
by Boston University and

ton, Mass., March 29, 1949.

his
through the

sending

expecting

and

bring the order

to

quiries

indicate

that

the

out to

dustry are interested in ob¬
taining all of the lectures un¬
one

The

cover.

Club

is

bad as the anxious to determine the max¬
called at imum
potential interest in
our
house.
when he
such a brochure and, accordbrought his basket to the door, my
wife asked: "What have you nice :ngly, requests that inquiries
They're

almost
salesman

as

who
One day

bakery salesman in that regard be sent to Dr.
"Oh, nothing much."
Douglas H. Bellemore, Chair¬

The

today?"
answered:

Now, let's take a look at some
Ads that do pack sales punch.
I

have

one

here,

full-page

a

that brought *3,000
I don't show this for size,

newspaper Ad,
but to

just

Department, Boston Univers¬
ity, Boston, Massachusetts.—

convincingly
f

few

good examples

are

of

not

typography

or

the

bacon
home with it.' Why?
up

is
ex¬

layout,

walks

and

getting the results you
accomplish with a letter

no

more

a

thumb than is
a

rod

and

matter

of

landing

hook.

rule

of

fish with

a

You

Holding Corp.?

$219,784,271 in 1948. Will this steady growth continue? Our Research Department has
prepared a detailed study of Amerex available to dealers and investors upon request.

know how

seen

ragged

a

Members N. Y. Stock Exchange and Other
Principal Exchanges




105 West Adams St., Chicago

|

t

of

lines,

when

a

'sportsman' nearby, though armed
with every piscatorial lure known
to man,

"It's
The

fish
it

to

Goodbody & Co.
Telephone BArclay 7-0100

crudest

a

couldn't

raise

a

bite.

matter of bait, that's all.

what the
on, and he gave
The 'sportsman' of¬

youngster
would bite

to

even

them.

knew

fered them what he had been led

Trading Dept.

Teletype NY 1-672

energy,
our

pur¬

We have moved cautiously
each problem.
But we
an
unswerving
confidence in our ability as Amer¬
pose.

solve

to

maintained

have

citizens

ican

cial

so¬

health.

confidence

in

important asset. But it
be taken for granted. We

must not allow

our

coming of

age

nation to bring with it a tired

a

refusal

to

the

meet

challenge of

growth and progress.

our

believe

and

they

noses

fish

ought

turned

up

to

have—

their

fishy

at it.

"Hundreds
written

of books have

about

the

art

of

been

fishing,

but the whole idea is contained in

(Continued

on page

30)

prise flourishes best in
tive environment.

at

evidence

of

reappraisal
If

on

in

we

new

our

are

period

domestic

are

we

portunity to build the foundations
of. our
prosperity stronger and
deeper than has ever been pos¬
sible

before.

We have

had, up to now, little
appraisal. Our produc¬
tive machinery was converted, al¬
most over night, to meet the vast
requirements of war. Almost as
time

for

ing the

had

back-logged dur¬

war.

the

urgent

replacement

demand has slackened. The
ble

for

things is

business

has

new

the

scram¬

American

over.

invested

billion
in
equipment since
$75

more

than

plant
end

and
of the

to maintain and expand pro¬
duction of goods—an annual rate

investment

of

twice

the

approximately
of any former

peak

are starting off
position of finan¬
strength unex¬
history. Liquid as¬

ampled in

our

individuals

of

sets

the

at

are

highest figure on record, totaling
over
$200 billion.
Net working
capital of corporations has been
steadily increasing since 1939, and
stands

now

about

at

record

a

level

of

billion.
Employment
incomes,
and
corporation
profits are, likewise, at or arouhd
record
levels.
Our position has
$65

and '

not

been

undermined,

it

as

been at various times in the

has
past,

by speculative operations in real
estate

stock

the

on

or

and

com¬

modity exchanges.
Above
ness

all; the financial sound¬

of the United States Govern¬

ment—which is today the fulcrum
world
stability
and
world
peace—is beyond question, k The
Treasury's major objective has

of

been

that

maintain

to

soundness

through fiscal policies and debtmanagement operations designed
promote confidence in the gov¬

ernment's
nancial

credit

stability

in

and

of

the

the

fi¬

country.
taken

And I believe that the steps
toward

confi¬

that

maintaining
have

dence

to

the

present

un¬

contributed

maintenance

of

our

paralleled economic position,

worthy of
our traditions—so splendidly por¬
trayed in the history of your own
city—we will look on this period
as
one
of unprecedented oppor¬
tunity. We will find in it an op¬
economy.

have to work

we

selling.

t

Objectives of Fiscal Policy
A

that
a

competi¬

a

We know how

cial and economic

Economy
is

tra¬

our

Moreover, we
this time from a

Reappraisal of Our Domestic

There

that

you

type of American enter¬

to achieve when

to

future

the

most

a

cannot

as

country

our

ever-increasing

material

and

This
is

lead

to

with

forward

ditional

has

one

our

war

have

you

the

Company increased from $76,529,767 in 1939 to

115 Froa/*w* v, New York

challenge to

a

determination and to

Now,

"Because
set out to

outstanding

(Owns 99.13% of Total Number of Shares of American Express Co.)

Address

strains.

new

been
our

we turned to peace, and
to the need of satisfaction of the

urchin pull in fish after fish with

Total assets of American Express

and

problems

new
Each

many

ucts which

picks

often

What Is the Future of Amerex

them

pent-up demand for civilian prod¬

of

given in Chart 3.

are

They
amples

more

happenings have brought

quickly,

Editor.

as a

to sell.

this

Economics and Finance

man,

bring out the fact that you

do have to "sell" in copy

A

with

many

ciations in the investment in¬

der

him.

bakery

These

firms, individuals and Asso¬ entering, today,

salesman

a

buyer

60-cent

good

dollars.

card in to the buyer,

Investment

the Boston Investment Club, Bos¬

issues of March

our

on

of

waste

a

American
Like

spits

salesman has to talk

ninth of

4, in

page

his hands
3, 10, 24 and 31, and April 7.)
every time a partner talks "Cam¬
The Boston Investment Club
paign of dignified cards to keep
our name before the public."
advises that preliminary in¬
devil

The

replies.

•

nice graveyards

as

This type of

common

buyers' markets and
conditions.
I need

competitive

.

you

normal

financial

tell you

assume

to

Now,
let's consider
effective
mailing pieces and letters.
What

anything different. There
to
be
John T. McKenzie
guided
I think of an
interest-arojusers; it may follow
is no peace, calm, stillness and
-by
American
every known rule; yet when it
old friend of
quiet in selling. It's an encounter reaches the Hall of Judgment
tradition
and
mine—an advertising man.
When not
necessarily rough and tumble, where the reader sits and decides
John W. Snyder
b y
American
he
goes
after
his
advertising
but, nevertheless, vital, dynamic. its
experience,
fate, it may find itself cast
money, he tells the story about
has
seen
vast
Our
Recently, I thumbed through into the hell of waste basketdom,
country
the rooster that went out for a
670 advertisements ads of brokers while
some
screed
changes
in
the
past
50 years. We
lacking any
walk one morning, stumbled over
and
dealers.
That
represents pretense of polish or the finer have passed from a predominantly
an
ostrich egg
.
.
called the
But how arts of correspondence, blandly rural and small-town economy to
hens together and said, "Now, I'm quite an expenditure.
a
highly complex urban and in¬
not complaining, but this is just a many of those 670 do you guess
dustrial
civilization.
We
have
were "tombstone" cards?
sample of what our competitors
lived through two great wars.
are doing!"
Only 35 carried a sales message.
Let's

All Fronts!

on

By HON. JOHN W. SNYDER*

By JOHN T. McKENZIE*

:

gives illustrations.

Thursday, April 14, 1949

fiscal

sound

be based

course,

tem

that

will

policy must, of

on a revenue sys¬

the

meet

cost

of

prescribed government functions
provide for reducing the gov¬
ernment debt. Since Feb. 28, 1946,
and

when

Federal

the

debt

reached

the peak of
been

in

$280 billion, there has
decline of over $28 billion

a

the

outstanding obligations of

the Federal

More¬

Government.

there has been an even
greater decline — $32 billion — in
holdings of Federal securities by
the banking system.
This reduc¬
over,

tion

in

the

bank-held

been one of the

management
brought about, in

been

has

debt

objectives of post¬

debt

war

and has
part, by

vigorous promotion of sales of
savings bonds and other secur¬
ities
to
individuals
during the
postwar period. I believe that we
can all take pride in the fact that
holdings of savings bonds by in¬
dividuals are actually at a higher
level today

than they were at the
when it was pre¬
they would be widely
redeemed as soon as goods in short
supply were once more available.
end of the war,

dicted that

You

will

that

individuals

be

interested
now

to

know

hold

over

year.

$47 % billion of savings bonds, al¬
most $5 billion more
than they

have

held at the end of December 1945.

Since V-J Day, Americans
bought 12 million new cars
trucks, 28 million new refrig¬
erators,
vacuum
cleaners,
and
washing machines, and something
and

like

50

million

television

sets.

and

other

are

more

economy
1

radios
that

accumulated

and

these

demands

nearly satisfied, our
is becoming readjusted

*An address by

der
of

new

Now

before

the

Secretary Sny¬

Executives'

Club

Chicago, Chicago, 111., April 8,

1949.

A

second

major

objective

Treasury fiscal policy

of financial confidence has

terest

been

in

the maintenance of stability

the

With

of

in the in¬

a

government bond market.
national debt today of $252

billion, the maintenance of stable
conditions in the market for gov¬
ernmental

obligations is essential.

The Treasury
program,

bond stabilization
carried out during the

(Continued

on page

24)

Volume 169

Number 4794

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(F

(1617). ,5
ity," while

'

Steel Production

v..;. The

Electric Output

some Interior Depart¬
officials maintain we are
sliding into a sizable recession in

ment

I

r-

.»

-

both prices ana voiumes. Further
adding to the coniusion, the ECA's

Carloadings
Retail

Staie of Trade

Trade

Commodity Price Index
Food Price

and

Industry

Total

>

industrial

production

moderately last week and
•■'V".

year ago.

was

\

for

the

nation

as

a

whole

slipped

lower than the comparable period
^'../'Ssv-.
■'
■■

a

abortive

was noted in continued claims for
unemploy¬
insurance with initial claims falling almost one
percent in the
week ended March 26. However, the total of all claims in the week

into

which

must

the
For the

week ended

April 7, civil engineering construction in¬
$178,242,000. The 1949 cumulative total sur¬
passed that of the comparable period last year by 24%.
'

creased

about

35%

to

extent

the

Reserve

au¬

departed from
ly-stated

pre¬

rogatives

i

supply

no

longer is

a

problem to most

consumers.

000

for expansion

that this

was

peaks last

and

plant improvement, Mr. Tower said, adding
major factor in the establishment of new peacetime

a

1933-34

sary

by

want the

most

the

in

of

in

1948,

American

according

Railroads

on

to an announcement of
Tuesday of last week.

the

Association

to

$5,000,000
For the

•

rentals, for the month amounted
against $19,000,000 in the same month of 1948.

as

first two

months of

1949, net operating income, before
interest and rentals, totaled $62,998,694
compared with $81,071,749
in the like period of 1948, while
net, after interest and rentals, for
the same period was estimated at
$17,000,000 compared with $37,-000,000 in the first two mo.qths of 1948.
In

the

12

months ended Feb. 28,
1949, the rate of return on
property investment averaged 4.30%, compared with 3.32 % for the
like period of 1948.

to
of
to

of

operating revenues in the first two months of 1949 amounted
$1,406,435,652 and compared with $1,466,625,429 in the same period
1948, or a decrease of 4.1%, while operating expenses amounted
$1,184,046,785 as against $1,202 211,199 in the corresponding period
1948, or a decrease of 1.5%.

The

Spurred by favorable weather and by the nearness of Easter,
shoppers purchased a noticeably larger volume than in the
preceding
week.
Total retail dollar volume was
slightly above that of the
similar week last year. Promotions of
spring merchandise were gen¬
erally well received..
\
;
.*
«

,

,

As many buyers placed re-orders for seasonal
goods, total whole¬
dollar volume rose
moderately in the week and was slightly
above that of the comparable week in
1948. There was a slight im¬
provement in deliveries as compared with this time last
year, though
/collections were less -prompt than in the
corresponding week a

change

■:

'■■./.'■>£:/>}/

ers', market and

steel

will be attached to the

no

doubt that the steel

people

are

concerned

industry is in

that

buy¬
significance

undue

process. The ingot rate is pointed
prices will be tested before the
year is out. Steel users are getting rid of inventories that
loom large
in comparison with their sales and steel
firms will soon be taking
all the orders that are offered
to
them, states "The Iron Age,"
national metalworking
weekly in its current summary of the steel

trade.

base

steel

*

so-called

quota

system

in

steel,

says

the

of

its

nation's

the

magazine,

has

almost vanished and that only plates and
pipe are scheduled on the
basis of strict customer quotas.
All other items are being booked
pretty much as orders are received. But there is so much difference
between conditions this week and six months
ago, observe "The Iron

deflation

purposes

provisions

lows

in

tailed

the

excessive

chase

from

of

margin-reduction, in spite of

in

the

deal

with

even

to

control the

area

of

stock

in

but also

fears,

major

following its
of Regulation

relaxation

W's control

over

consumer

credit

transgression enadding stock market
as

still another in¬

strument

for

broad

planning,

the

Board's

an

man

Stock

was

Ex¬

formerly

for

many

years.

;

,

to

The

Financial

Chronicle)

/TOLEDO, OHIO—Parker Camp¬

Mr.

become

associated

with

&

Co., Inc., of New York.
Campbell was formerly with

the Toledo office of Otis & Co. and

in ; the

past

Cleveland

First

represented

Corporation in Toledo.

>:

j

Nat. M. Goodhue
(Special

to

The

Financial

highly significant in highlighting

narrow

prices.

'
Chronicle)

In

with

the past he
Tucker, An¬

thony & Co.

Arrowsmith with

Hornblower
(Special

leads.
have

The

to

Financial

H.

Arrowsmith

blower

Chronicle)

MAINE—William
is

with

Horn-

Si

Weeks, 83 Exchange
Street. In the past Mr. Arrowsmith
his

in

own

investment

Montclair, N. J. v.'-'

The Reserve Board experts
been

flation

(Mr.

worrying about de¬
Eccles stating that

for

several

months").

On

the

other

hand, top Presidential Eco¬
nomic Advisers Keyserling
and
Clark have persisted in seeking
new

controls to fight the "contin¬

uing"

threats

their

chairman

of

situation

of in-flation,

with

Chair¬

explanation at the

our

zation"

and

as one

of "stabili¬

"continuing

prosper-

BEST RESULTS

for investment houses

'

order

much

so

extra

business

duce
steel

in

that

the

has

decreased

few steel firms

a

over

second

and

with

above

quarter.

items except plate

prewar years,

sales

volume

some

It

There

the

past few

weeks.

So

In

happy that they started to take
they thought they would pro¬

are

Time Inc.

what

is

now

exact reverse

of its

use

Kingan & Co.
Continental Airlines

several

authority adds.

McGraw (F.

in the industry who privately think the pattern
now shaping up looks like 1937-38.
Then the steel rate dropped off
sharply in the second half of 1937 and continued downward until
well into
go

are

many

1938.

considerably

If the present trend turns out that
way

below 75%
on how low

which

to

be

•

(Continued




on

page

42)

H.) & Co.

Bought—SoldJ—Quoted

FREDERIC H. HATCH & CO., IHC.
Established
MEMBERS N.
63

1888

Y. SECURITY DEALERS ASSOCIATION

Wall Street, New York 5, N. Y.

'

Bell Teletype NY 1-897

11,000

the

communities all

U. S.,

investors

—

banking executives, corporation
officials, professional and institu¬
tional

security buyers, and the in¬

dividual

investor—rely

New York Times for
accurate

the rate will

the

midpoint of
recent guesses
the rate will go this year, this trade
magazine declares. But there are other ways that steel consumers
are
getting their steel cheaper than the full railroad rate. Barge
shipments are increasing. More and more steel is going out by truck.
appears

over

over

the

general practice on all
and pipe to enter business the same as in
steel firms using the old quota setup as a

bogey for district offices—the

months ago, this trade

in

.

Opens

"the recession has been under way

virtual "cash mar¬
frankly tied its action

Said then

business.

associated

was

business

Age," that it is hard to believe.
-Steel

;;

Campbell with Blair

conducted

is

the confusion to which such gov¬
ernmental
direction
inevitably

coun¬

in January, 1946 at
imposition of 100%

antidote.

Parker

economic

in¬

as an

'

Eccles in

Cleveland

action

power

predicting "dis¬
to the country's inflationary status inflation." Again the Secretary of
of the time, albeit not embracing the Treasury bases whatever plan¬
full confidence in its effectiveness ning he must do on interpretation
as

Cincinnati

PORTLAND,

the

in

credit control

or a

For it

associated

with the Federal Reserve Bank of

7

the time of its

margins,

and

changes. Mr. Lazar

Adds to Planners' Confusion

or

The Board's overstepping of the
law's original intent was decisive¬

revealed

become

Mr. Eccles' and the Board's defla¬
tion

the

;

ly

York

curities

only was the margin action
against the background oi

.

Philosophy

\

•_

has

Goodhue has opened off ces at 84
State Street to engage in the se¬

taken

leading

the

more

market

1946
'

Lazar

with Westheimer & Co., 326 Wal¬
nut Street, members of the New

hovering
thoroughly deflated around their

Besides
.

expressed

discussion

margin regulation
to

.

Chronicle)

BOSTON, MASS.—Nathaniel M.

balances

preventing the

was

Financial

cus¬

credit

all-time low.

fol¬

as

thereto, of giving the Board

t'i; *"

purpose

questioned in the light of
long-standing inac¬
around the present price

tomers'

margin

stated

either- formally

implied*

use

market

The

CINCINNATI, OHIO—Benedict
J.

Blair

of credit for the pur¬

intention

or

-

market's

tailed

law

intra

to

must be

Not

Federal Reserve Board shall.
No

Westheimer Co. Adds
(Special

re¬

carrying of securities, the

or

materials, with

changes in the last decade, and
today ranks as the third greatest
trading nation in the world. Copies

(Special

of

as well as by the previouslyexisting
paucity of
speculative
credit outstanding. It must be re¬
membered
that the Bpard
had
persistently for months and years
turned a deaf ear
to pleas for

preamble to the de¬

use

professions

level

specifications in Section 7:

"For the purpose of

raw

.

.

purposes

further

of

source

the

tivity

of fair and honest markets
the

a

bell has

in such transactions

are

such

stricted

ing system and Federal Reserve
System, and to insure the main¬

And

stock market."

But

en¬

credit,
and make
effective the national hank¬

tenance

"particularly

as

Margins Tied to Economic Aims

is "to protect...
.

intended

was

safeguarding of

the national

this

at

Another Board spokesman
explained similarly that the action

speculative excesses.
As stated in
the Act's opening section, one of its

primary

imminent

more

time.

Ex¬

credit system

Canada's great industrial growth
during the war; long thought of as

months," and that the low¬

dicated that the Board considered

newly-founded Securities
Exchange Commission, it ex¬
ceptionally vested in the Federal

Reserve Board the

filled with facts about the new
Canada. Illustrated with over 100

issued Mr.

was

ering of margin requirements in¬

delegated

other

has just
100-page booklet en¬
louay," wnich is

a

"Canada

intra-market

an

several

the

to

ket."

The

1934

a

leveling off

slowly downward and

of

to

anti-deflationary with respect to

Securities

titled

little in the way of heavy
industry,
Canada has undergone tremendous

the

try's general inflationary forces, or

OF RATED CAPACITY

This week there is

all

Bank of Montreal

published

explained that the coun¬
try "has been in a recession for

and

to

SCHEDULED THIS WEEK TO RISE
0.4%

al¬

in

Canada Today'
The

setting

When the order

Mandate

the

Act

strument

STEEL OPERATIONS

and

amount

enough
within

their prescribed limits?

Eccles

the

of administration and

forcement

sale

year ago.

FRB's

Whereas

control
;

laws.

involved

loans

that

operating

policy rather than simply of the booklet may be had for the
fiscal step is
asking from the Superintendent of
indicated by surrounding events the Business
Development Depart¬
as well as by explanations offered
ment of
the Bank of Montreal,
by Board officials.
Place d'Armes, Montreal.

securities).

on

more

Total

brokers'

double

powers

Net income, after interest and

become

chastened

keep

photographs, the booklet describes

step of
lowering the

current

neces¬

following

planners in any. field

a fortnight
margin re¬
quirement from 75% (where it
had been) to 50% was taken in a

as

se¬

Exchange holocaust
(to the tune of $6%

1920s

billion

operating income of class I railroads in February,
$29,754,215 compared with $39,425,295 for the same

had

Stock

of the

loans

month

deemed

Congress

machinery

Net railway

totaled

securities

was

latest

taken as part of the Board's
general economic philosophy and

sensational disclosures of the way
nation's banking and credit

Upon the completion of all plans so far authorized or announced,
to 100,000,000 tons of steel ingots can be
produced annually,
and, at the close of 1950 that figure may be reached if consumers

1949,

further

as-inflationary

was

curity specu¬
pillar of our

a

Federal

control

in

tonnage, Mr. Tower stated.

made

was

Such

the

close

to

A. Wilfred May

in total production, employment' and payrolls of the
nation's manufacturing industries.
-V-V'--','
year

n

field.

of credit used

lation

Record-breaking steel production in the postwar period was
largely made possible by steel companies' expenditures of $2,000,000,-

to

even

as

passed."

are

in

road

Curtailmen t

In an address on Monday of this week before the Economic Club
Detroit, Walter S. Tower, President of the American Iron and Steel
Institute, declared that the so-called "steel shortage" has disappeared
of

desirable

much further down the
general economic man¬
agement. That the margin action

their original¬

this

and steel

The

ago

have

time

such

dangers

to

which

thorities

-Lumber production increased 6% in the week ended March
26,
being about 8% less than the corresponding 1948 output. Shipments
of lumber, on the other hand, were 3% above
production and new
orders fractionally above production.
;

until

note

us

action is

preventive step at this time of
strong inflationary pressures and

run.

Let

rise of about 79% above the like week of 1948.

"The

a

it

odds

depression

a

.ft

time:

con-

tradic t ions

A fractional decline

a

the

become

ever

lights, the^

j

ment

reflected

Will

Although the recent lowering of margin requirements apparently
has proved a dud marketwise, its political implications are broad and
significant. It clearly shows how government management gets to
stepping outside the bounds of its prescribed functions, and high:

the

says

against

this year.

Margin Regulation and Economic Planning

Business Failures

Director

25-to-l

are

Auto Production

is:

Deputy

By A. WILFRED MAY

Index

$jjje

financial

upon

The

complete,

news.

ftork SimtjJ

"All the News That's Fit to Print"

*

C

(1618)

THE

:

COMMERCIAL

Impact of Military Preparedness
'

Onr Economy

on

Thursday, April 14; 1949

CHRONICLE

FINANCIAL

&

From

By EDWIN G. NOURSE*

on

Chairman, Council of Economic Advisers, Executive Office of the President

President's top economic

adviser, pointing to drain

Ahead

by military ouiiays, pleads for inter-

on resources

meshing of military machine and industrial forces. Stresses economic efficiency as war potential, and
warns of inflation and disruption of civilian economy by heavy military costs.
States reasons for limit¬

By CARLISLE BARGERGN

building up and strengthening economic and
military expenditures may lead to budget deficits or additional taxes, but

ing military appropriations to $15 billion, and calls for
Warns heavier

social forces.

contends North Atlantic Pact does not require

For the past several weeks I have been

ads

paper

that

heavier defense costs.

or

Russia has to labor much longer to get a loaf of
pair of shoes than he does in this country.
I hate to see
good money, talent and well-meaningness thrown

a

I addressed an orientation conference similar to this on the subject
Implications of Military Preparedness." I began by drawing a contrast between!
purely military point of view and the purely economic point of view, and said that
"

there
be

<£-

should

reconcile¬
of these

ment

views

rather

of

needs

military

carrying

on

prepared¬
possibilities of
business as usual and

the

at

which

the

against

ness

rate

can

we

make

purely economic terms, I
the

gravate the scarcities of strategic?

than conflict

social and cultural progress.

materials

between them.

since war has now
become "total," it involves a very

so

large ideological element. Both
during the time of actual conflict
and
in
the days
of peace that

inflationi

*

Moreover,

Members
of the

military
profession are

*

technicians in

r

precede it, workers and farmers,
citizens as a whole, must find the

the science of
defense. Since

; the

economy

and the social

the

litical

of

ducted

that

our

economy

so

con¬

convinced
institutions provide them
they

are

with the sort of life that is worth
Edwin

po¬

G.

Nourse

The
wel¬

living and worth defending.

advances the
fare of its citizens lays a founda¬
tion of preparedness that the gar¬
that

country

state,

lost if the system of

are

the

affairs

that

■structure,
hardly less
than

,

military
security should fail, the plan the
.military offers must be one that rison state never can.
provides every technically avail¬
On V-J Day, the people of the
able safeguard against any and all United
States
looked
forward
foreseeable threats. > In a word,
confidently to rapid and extensive
they think of the total resources disarmament and we all rather

.

iof

the

country

available

as
potentially
implementing the

for

security effort.
The

thinking

is

definitely cast in a different mold.
.His basic purpose is to provide
ume

with the greatest

of goods and services.

unit

of

manpower

withdrawn
cost

for

without

cept

in

military

result

vol¬

Every

material

or

is

use

product

a

(ex¬

the

demonstrated during the
soon bring .us a new
Golden Age of peacetime pros¬
perity and enjoyment.
Then on
March 17 of last year, President
would

war

Truman

required

nology,

ament.

in

roads

and

other

civilian

serve

uses).
work

Ideally
would

well

as

the

be

that

works

military

as

economist's

directed

toward

getting the most efficient admin¬
istration

of

economic

resources,

the

us

in

bad

news

developments

some

measure

to

postpone this prospect and divert
a

incidental improvement

brought

international

that

collateral sense of
pageantry, contributions to tech¬
or

highs of in¬
agricultural produc¬

and

tivity

economist's

consumers

assumed that the new

dustrial

substantially larger amount of
annual product to
rearm¬
The military chiefs fol¬
lowed Mr. Truman a day or two
later, spelling out this need in
terms of $3
billion annually of
added budget load.
The economic
our

results

almost immediate. A

were

of

process

market

adjustment
lower price
gave
way
to a

1

men

and nat¬

resources.

on

Common Ground

There

can

is,

and

mon

of

however,

must

a

common

meet.

This

com¬

ground is likewise the field

decision

on

which

the

Presi¬

dent,
the
Congress,
and
the
thoughtful citizen must take their
stand during the next few months
sand

burst

new

the ensuing years.
The
problem in whose solution
'both points of view and both
typos
of professional competence are re¬
quired is that of the needed bal¬
over

of

inflation

Fall, " carried

early
sale

and

new

postwar peaks.

The

•ground on which the military man
and the businessman or economist

consumer

reasons

that, by
both whole¬
prices up to

for this

impact of

the preparedness program on the
economy

are

quite

evident.

had had two years and

a

We

half of

vigorous
postwar
reconversion.
During this period we were still
feeling the tremendous economic
,

momentum

of the

war

influence,

with its creation of superabundant

monetary purchasing
its accumulation of
satisfied

wants,

power

enormous

and

public

with efficient weapons."
means

In pro¬

of modern

war

the whole structure of economic
society
times
the

is

involved.

either of

economist

man

are

command

war

and

Henceor

the

in

un¬

pri-

vate—from

integral

parts, of the
organization
no
less

than the general and the admiral.
And in times like the
present,
tense

but

still

short

of

strongly inflationary current, in¬
adequately
stemmed
either
by
government policies or by private

triotism
dered

vidual.

war,

have to weigh with utmost

\

we

nicety

*An address by Dr. bourse be¬
the
National Military Establishment, Joint Civilian Orien¬
tation
Conference,
Washington,
fore

vD. C., April 5, 1949.




making

was

under way, and there were
strong
indications that the zeal of the

military

or the Congress, the apprehensiveness of the citizenry,

and local pressures for the
expan¬
sion of military works might com¬

bine to produce a substantial

largement
tures.

the indi¬

efficacy
problematical.
I sug¬
gested that the return to controls
continuance

their

and

for

free

en¬

of
military expendi¬
Analyzing this possibility

the

under

our

among

Bargeron

•V-v'- •"/

the

among

the

unrest

and

in

Communists

is in

the

have

been

planting the

exorbitant

beeri,

'•''$*»

effective

of

seeds

socialistic

and

both the employer and the gov¬
They have been tremendously effec-'
rapid strides towards the socialized

upon

the

"welfare"

or

as

Their inroads have
the intellectuals.
/

workers
of

Insofar

government.

state

that

have

we

in

taken

recent

•

not been effective in these activities as
Communists, simply
accomplished agitators. And what is more important they alone
would
have
accomplished.. nothing, would accomplish nothing in
the future, were it not for the vast army of "100%'Americans" who
have gone whole hog for the socialistic concept, for national patern¬

some,

If that dan-;

bargaining.

off-in

better
off

as

present
a
twopronged danger. As a free people,
we
are
always fearful that eco¬
nomic controls may prove habitforming and develop a spirit of
acceptance of authority over larg-i
er
and
larger areas of life and
weaken the reliance of the people
on

be

7

in this

thousand

better

or

V

have

would

years

a

been
-

_

years, the momentum of which has become so ir¬
resistible that eventually we seem almost surely to wind up with some¬
thing on the order of the British government. But the Communists

be

alism

for

or

statism, whatever

you want to call it.;
Americans" vwere
formerly
known

.

These

"100%

as
fellow
Throughout most of the New Deal
they and the Commies were inseparable.' They looked upon the
Commies as sources of inspiring and worthy ideas.
Their attitude
was that they didn't care if the Commies were Commies as
"long as

travelers.'

we

are

They

both

are

"Liberals."

pursuing

the

goal."

same

This

■expressed attitude.'v.

Mrs.

was

Roosevelt's

"!'

''"'i
ger is avoided, there is the op-j
'V', But the Commies in those days were not openly acting as agents
posite danger that in avoiding it,! of
Russia, they were not openly acting as salesmen of the Stalin
we develop evasion or defiance of.
dictatorship. They were selling the "dignity of the working man,-'
constituted authority, black' mar¬
"the right to bargain collectively with their employer,"; socialized
kets, and a lowering of the moral
medicine, subsidized housing, and the like, a bountiful living for all
fiber of our people.
In any event,: and without
having to work for it either.
'/-Xby giving legal sanction to cer->
j 1; Our labor leaders, perfectly good Americans, welcomed the Com¬
tain structures, .procedures, and
mies' support in the organization of the mass industries; they wel¬
property rights for a period of comed
the alien technique Jof the sit-down strike which the Com¬
'

;

controls build

years,

less

greater or

up

interests

vested

the

on

munists contributed, and they should, if they do
thirst for power which the Commies gave them.

part

beneficiaries of these arrange¬

of

ments

have them

to

build

and

perpetuated

claims

vested

up

;

of

,

to

seek

it complicates the re¬
operation of the

economy.

Soon after that first Orientation

Conference,

important

two

figure of $14.5 billion
Military Establish¬
ment and $500 million for stockpil¬
ing. An additional $800 million was
proposed for universal training.
Secretary Forrestal, in supporting
that budget, pointed out that un¬
due
enlargement
of
military
spending would weaken the na¬
tional economy — "precisely the
a

of

some

contemporaries

our

The 81st Con¬

would like to see."

them.

But

so-called

the

would

we

would

we

this

is

become

maintain

our

only in personal association.

"humanitarianism"

;

Commies.

Under the "Liberals"

vassals of Moscow.

own

the

of

Big, all powerful

autonomy, our own

.V".

government.

President's budget was presented,
and it set

shun

shun

munists

de¬

for the National

to

-They
They
have adopted all the ideas as to our domestic happiness which origi¬
nated in Eastern Europe. Their slogan, is that the way to head off the
Commies is to adopt these ideas of the Communists. There is ad¬
mittedly a fine difference between the two groups.. Under the Com¬

smooth

to

.

however, that the Commies are known as primarily agents
Russia, most of the labor leaders and the "Liberals" generally

don't

offsetting benefit.

some

secure

not, appreciate the

Now

of

those who have been hurt by them

is along these lines, it seems to me, that messages to American
should be directed.
They don't want* any part of Stalin.
they cant understand that the domestic program on which they
are being sold will inevitably make of them mere subjects of an allpowerful State; that it has already gone far to make them simple
statistics instead of human dignities.
workers
But

the comraderie between

I think, perhaps, it is unfortunate that

;

;

the '.'Liberals" and the Commies had to be brokn up.

Because we are

venting all our spleen and a good part of our national energy
towards "stopping Stalin"-or preventing him from coming over here
after us.
The "Liberals" are right in there pitching with the rest,
now

so

their "patriotism" is not open to

question.

1

j

^Manifestly, too, this exercise of ours is doing our national-sub¬
has to weigh every defense
authorization against the' Presi-' stance no good, and generally speaking it seems to be the excitement
of a'people gone completely insane.
Parenthetically, when by way
dent's call for substantial tax in¬
of heading off Stalin, we prepare to send arms to the Commie ridden
creases even on the basis of the
country of France, one wonders how far national insanity can go.
present budget.
f V
v , «•
-

gress

c

Inflationary
A

November

the progres¬

of

inflationary

It is still too soon to
this easing will

much further as to produce
"recession"

real

(Continued

on page

considering the
expenditures upon the
into

effects

pay

is

be

we

must
di¬

as

such

pos¬

the
President's
pointed out that« the
structure for the military

adjusted.

exercised

structure

differences

balance

in

in

and

in

the
due

Unless
revision

and

it

great skill
of this pay

allowances

retirement

that

as

they

and those in Russia.

are

being made-to

„

Joseph Sattler Joins

Join Shields Staff

impact,

not

inasmuch

they are getting something for nothing, you can readily see
that any effort at education among them should be towards the
destruction of the myth, not the relative advantages of workers here
think

it

Message

services

is advanced Americanism^and

27)

well

as

one

This, however, is the preoccupation of our "thinkers," not our
What the workers are swallowing is not anything they asso-'
or Communism at all.
It is something they are told

ciate with Stalin

of defense

economy,

indirect

illustrate

To

indirect

present

is

account

effects.

whether

or

1 In

should

since

whether

sure

go so
a

.

.

workers.

has been

pressures.

be

development

abatement

sive

Abated?

Pressures

second

Budget

When I addressed the Orienta¬
tion Conference in November, the

budget

Carlisle
-'

distasteful-1
on

of

have

could

purpose.

would

here

workers.

tive

their real

Hence

would

sible

The Inflation Angle

of

the

remove

is

among

ernment.

fear would be engen.-':

or

to

worker in

one

form

demands

nominally

a

of such controls

ness

rect

process

consider-j

"cold war," I doubted!
that enough warmth of either pa-i

take

self-restraint.

of peace,
business¬

of

he

it

better

a

who thinks he
than

Where

scope.

would1 still

we

only in

result

and

highways, dams, gen¬
erating plants, factory equipment,
and
operating
inventories
to
ance between the military strik¬
houses, passenger cars, electric
ing force and the civilian reser¬
toasters,
and bed linen.
What we
voir of men, morale, and machin¬
were
witnessing in the market
ery upon which the actual fight¬
was an
inability of end products
ing force must depend in this day
to satisfy simultaneous demands
of industrialized war.
of the market for capital goods,
The old adage that "an
army current consumption
goods, and
travels on its belly" has now to be
exports on the level that un¬
enlarged to the form 'travels on precedented
savings, high current
the economic machine that main¬
earnings,
and
foreign
demand
tains the physical well-being cff made
possible.
Hence we were
the soldier and keeps him
supplied being swept along in the grip of a

viding the

necessityi

much

Communist

instead,

velopments took place. First, the

common

i

Since
be

measures

variety and

Either way,

Must Meet

;

able

turn

ural

,

for control

a

when

manner

so

the
Communist philosophy is concerned the Soviet
propagandists have gotten exactlynowhere

ag-4

so

labor, and

create

and

levels

minor allocation of

Russia

to fan the flames of;

power as

then underway toward

ly

»

ing

with

promply

came

augment the flow of purchas-j

with security assumed or, at
least,

military insecurity adequate¬
guarded against by a
very

skilled

and

to

There isn't

substantial!

increase of this sort would

this

directed

country

in
to

conclusion that

in

away

.

—

tne

blending

a

or

reading full page news¬
outstanding manufacturer to the effect

an

worker in

a

bread

Last November,

the

by

sponsored

"Economic
"

of the News

made

for

provisions

be¬

(Special

i!

LOS

jorie

C.

to

The

Childress

with

are

with

formerly
Company.

510

Co.,

*

the

West

'

Street.

with

;

•

Chronicle)

CAL.

—

Joseph

117

Mr.

East

Sattler

Gross,

Rogers

was

&

of

Co.

Colorado
formerly
Co.

and

Pledger & Co.

military and civilian employees of
the Government, we might upset the en¬
tire
structure
of
Government
pay;-;.-If
tween

military pay levels were so raised that
they were out of line with Federal civilian
pay, this would almost certainly force a
substantial general upward adjustment of
the whole Federal payroll.
And a eeneral
rise in Federal pay could quite easily dis¬
turb the wage structure of industry.

Financial

Investment

Standard

California,

California

First

The

Sattler has become associated with

associated

Miss Childress w^s

Sixth Street.

to

PASADENA,

Robert S.

and

now

Shields, &=

(Special

CAL.—Mar-

ANGELES,v

Honeyman

Standard Investment Go.

Chronicle)

Financial

Francis L. Coe Opens
(Special

j

-

to

The

Chronicle)

Financial

Paine, Webber Adds
•

(Special

LOS

WORCESTER, MASS.—Francis
is engaging in a securities
•

•

The

staff of- Paine,

business from offices -at 340 Maine
Street.

to

Financial

Chronicle)

ANGELES, CALIF.—Wal¬

ter S. Wesp has been added to

L. Coe

;

the

Webber; Jackson &

Curtis, 626 South Spring Street.

"

Volume

Let

169

Number

4794

THE

COMMERCIAL

Individual Income Tax Affects Risk
Associate Professor of Economics, University of Arkansas

extinguish it, Congress should change policy and legislate
to all corporations and individuals engaged in useful

benefits

production. Otherwise, he

"we all

says,

bust."

go

'

Professor Jenkins considers

•

ate

:

[

^

Cleveland, Mr.; E. J. Kulas, calls my attention to the
following, written by Thomas Jefferson, the founder of the Demo¬
cratic party, about 150 years ago! Read it carefully—then cut it out
and send it to your Congressman. It should be printed on the fly-leaf
-

of

•

-

ever

school

the

first

most

tant

depression,

a

rule

old

and

virtues

Should

the

as

dangers.

To

preserve

our

price
be

load

If

can

we

from

be

our

be

and

Our

Congress

and

is just as true today

son

hang

and

and

the

was

primary

Can

few

the

cause

cart

should be special

corporations

to

all

started

dangerous

a

it

be

can

must burn itself

ture

tell.

can

prairie

fire;

controlled

or

out, only the fu¬
.

Otherwise,

we

the

the White House,

to

tremendous

the

which

rally, he

amount

mail

of

President gets.

are

realize
Natu¬

read only one letter

can

out of every

thousand; but ajl are
read by someone and tabulated as
to

whether they condemn oY

about

do

tion

in

that

no

definite

the

as

fraction
be

can

maximum

>

which. is

burden

with

economic

of

the

designated'

tax

compatible

maintenance

of

the

Therefore, for purposes of
this paper, it will be assumed that
we actually need and can provide

'"" '

.',v

(Special

" *

to

Coast i

on

LOS
R.

and

The

J

Chronicle)

Financial

has

was

taxation
the

of

for¬

a

for the White

distribution

the

Corporation.*
?.'?

in-

to

The

Chronicle)

Financial

ANGELES,

West Seventh

■*>,-'

J

•

•'

.

makes

address

an

benefits,
even

more

for

more

*•'*>

'

*•

*

>

-K.

Ay

>

*

the

"*-

•-

1

-•

''

s

.

of

taxation

the

on

the

and

earnings

or

1952, the Democrats will

thrown

such

a

out.

is

It

true

the

past.
time?
In

usually worked in
But, will it work next
the

past, the

Administration

had:

existing

no

among

the dif¬
changed

the

way

unemployed

are,

•;

the

take

form

of

an

-

■

••

1

on

risk

.

supply

-

fJUeri Hrw

lacking

•

.

•

; v

r

'

The

even

in

present
an

Adminis¬

election dur¬




'•

•

-

.

>2

•

K.

.4

• .<■

f" v

.

f:

:. CHICAGO

some

light

can

this question by

upon

(Continued

means

on page

investors

FINANCING OPERATIONS

valuable

STATES GOVERNMENT

supplement to earlier editions. Not

Reserve

Bank

erence.

a

tables of outstanding

Market

permanent ref-

Tax features, maturities

and optional dates etc.
•f

are

completely covered.
;..
r.

•

...

•'

.«

\

-

_

*

**

■

*

*

Banks and other institutional investors

us

•

invited to write for

*

copies.

C. J. DEVINE & CO.
INC.

Omaha 2, Neb.

48 Wall

Telephone DEarborn 2-0500
Chicago

•

Boston

•

Street, New York 5, N. Y.

Philadelphia

Cincinnati

☆-

k

Specialists in United States Government Securities

'

•

•

:

1

be thrown

* 7'■ '

V

4, ILL.

*•*•'

ownership of corporate

operations. The price and yield

bread and the farmers threatened

changed.

the distribu-

iries and records of Treasury and

"

by foreclosures. ."Now, this has all
tration,

a

risk

corporate earnings. Never¬

theless,

individ¬

IJorL■ Flloctt C.xcLan(j* anj Ollir PrincipalHxckanytS

Lincoln fi/Neb. ;:

of

on

j:

United States Government Secur-

CflUTTflDin 8 CD.

i

of

of total

corporate

are

:

i

capital likely to be pro-f

'*'•'

;

:•

classes

1948 but includes complete

exami¬

pleased^o ^announce that

....

...

edition

i.

•

'•

Banks and other institutional investors will find this

•,;j v. •

■

t

only does it review the period from V-J Day through

nation of the effects of the

of

stock, dividend receipts and sharbs

taxes

OF THE UNITED

de¬

tax¬

tion among the different income-

1946-1949 REVIEW
OF

reduce its
of risk capi¬

sources

has become associated ivilh

.

helping

the

weight of

that'

rule has

the

under

the

country was prosperous; but that
when
unemployment
comes
in
1950

of

complete data

of
<r!

•'

Fori,nstitutiona!

:

■

be

taxation

sources

☆-

DOMINIC C. CRONIN

l^The Republicans think that Mr.
because

income

the

rev¬

c.y

farm supports, and
taxes, which must

elected

corporate

affects

complete

corporate

the

.

A'.. '/**

'

No

how

would

that

way

%z \ .Mw'

-.

_

We

-a

of

capital is possible in the absence

Congress is the repeal of the

Federal

records afford
'

-

supply of risk capital in

economy.

ation

re¬

sup¬

Individual Income Taxation

appealing

with; these increased govern¬
ment benefits, 90% of these mil¬
lions of letters approve.-,
V;
was

.'

"

Federal

go

Truman

*'■

«

the

scription

One of the alternatives open to

T

security, more sick
unemployment in-

more

surance,

'

of the important influences

one

our

ply of risk capital in the economy.
*

taxation

on

to

the
important
capital, the present
of those profits

of risk

double

without any loss in revenue
to the Federal Treasury?
That is

will

was

formerly with King Merritt & Co;

House.; The simple

for more social

investments, would
potential

of

one

sources

is

corpo¬

those less likely

duce the actual and

question to be investigated in
this paper.
And this investigation

-

Street; He

to

make such

tal,

CALIF. - —
Walter
Gierlich
has. joined the
staff • of Dempsey-Tegeler & Co.!,
210

a

drain

Dempsey-Tegeler Co.

(Special

stock

rate

Classes?

Since the corporate profits con¬

stitute

personal

in

Different In¬

the

Among

re¬

which

or

invest

to

Could

load:

tax

Federal

LOS

capital,
disposable

the distribution

concerns

Federal

ferent income-classes be

With

which

risk

likely

more

truth is that when President Tru¬
man

Therefore,,
change

any

structure

income from those income classes

major question raised
over corporate

merly Los Angeles representative
>

ed

come

by existing

produced

for the Parker
.

of

sources

proposed Federal taxes.

Another

Lord, Abbett & Co., 210 West

Seventh Street. Mr. Jones

be

Federal

of

Corporate Earnings Distribut¬

by the controversy

associated

become

amount

to

enue

~

•

ANGELES, CALIF.—Bert

Jones

with

total

the

How Is the Burden of Taxes on

1.

pros¬

■

Bert R. Jones with

tax

transferred

relating, not only to eco¬

this

the

questions and

answers.

duced the aggregrate of these two

it?

perity.

Lord Abbett

in

consid¬

involves

be shown by a few

given here are the retained earn¬
ings of corporations and dispos¬

the President's policy. They
kind of daily "Gallup Poll"

prove
are

ap¬

the

this paper,
the sources of risk
capital to which attention will be

negative—what

we

problem

national income

Is Truman Wholly to Rlame?

Very few, except those who

the

paper, and they are
hereby dismissed with the remark

and

" -v.'

bust."

...,

close

corpo¬

over

military defense. These problems
to complicated fdr examina¬

that

whether

involved

are

useful
all "go

In

engaged

in

should

and

erations

stop.

benefits

nroduction.

•

they can pay increased taxes.
Unfortunately, the: New Dealers

main¬
prosperity, j

nomic prosperity, but also to much
more
vital
problems, including

econ¬

oryit. will

is

which this conclusion is based can

necessarily be affected
alternative examined in

taxation, one is the doublequestion of whether eco-„ it is here assumed that

This

Only

and

,

Deal legislation

individuals

honest

help manufacturers

so

re¬

able personal incomes.

can

Some must pull the cart.- My ap-

legislation to encourage producers
They can work for legislation
which will

(1)

(2)

provision for the recovery or
of invested * capital

by

controversy

answer

neal is that accompanying all New

Congress¬
men accomplish much now?
Yes,
without
opposing
further
New
Deal
measures,
they can force
f

work

hard

ernment's

for the fall of the Grecian. Roman,
Teutonic and other Republics.
,

our

parents may
to enough money to keep
us

omy,
on
their "part, will save
them.
All cannot ride in the gov¬

people what, in their ignorance,
they wanted. This same thing has
happened at various times in his¬
tory

the

prosperity could be main¬
tained under a still higher total
tax
load,
or
even
under
the
present total tax load; and—if the

today

teach these to

Some of

-

character,

the

gave

on

apply

this will be very different.

didates and their fellow travelers
truth

are

would not

B. Jenkins

H. P.

nomic

going through our few remain¬
years,
whatever happens tb
the country.
With our children

it, yet President Truman
won his election
by preaching the
very
opposite and Governor
Dewey did not have the courage
to defy Mr. Truman.
Both can¬
the

ilar

Of the major questions
rate

conclusion is that the rais¬
ing of any given amount of rev¬
enue
by the employment of any
of those schemes would be likely
to cause a
greater reduction in
the supply of risk capital than is
caused by the operation of the
present system of taxing corpo¬
rate earnings. The reasoning upon

a

economy

allowances,

income tax.

the individual

under

But my

replacement

minimum necessary for the

ing

he made

ignored

taxes

tenance of economic

us

when

as

in

reduce

this

bring shares of corporate profits

tained corporate earnings, and (3)
disposable personal incomes. Since
depreciation- allowances and sim¬

in-

supply of
i sk
capital

in

account

of risk capital in

sources

enterprise

depreciation

the

which

truths

preached

should

we

children.

The above statement by Jeffer¬

basic

same

Jefferson

Blame?

to

capital,
asserting

alone,
i.e., to
shareholders like

aspects of

no

other

It is here assumed that the prin¬

on

free

every

of

tax

corporate

partners in the business.
Various
schemes have
been devised for

And

revenue.

taxation, such as, for example,
equity and impartiality.

risk

below

taken

treat

total

same

income

ual

alternative

the

raising the

examination,

be

ciple

r

of

one

barreled

The

sition of public money."
Is

will

se¬

any

by

this

in

the sources of

would

to have funds to tax.

for
unexplained
forbids it in the dispo¬

money

projects,

a

those

possible way b-y
Congress, by Labor Unions, and
especially by our Schools in orddr

prudence which in pri¬
vate life would forbid our paying

being

crease

encour¬

should "be

cor¬

that

simple.

justification, then production
in

are

our

present

and

by the fortunate
which is the basis of

economy

aged

same

our

only

supported

some

people under the pretense of car¬
ing for them, they will be happy.
The

is very

groups

amount of Federal

rious drain

thing
cab

these funds

Soon there will
profits to tax.
What then?

answer

methods of

of

the New Deal philosophy and has

the

of

The second

is that

producers,

prevent the government

labors

must

readers

the

ail

business and
industrial

accusing

profits. On the other side, spokesmen

on corporate

duced

porate taxes

If the
unfortunate non-producers are tc

debt. We must

the

I

pensions

or

from

corporate earnings is the object of vigorous controversy from two
side, spokesmen'for certain labor and political groups are urging

Congress to levy still higher taxes

j;

,

one

certain

few years.

a

no

The

profusion and servitude.

wasting

realize

for

with

choice between economy and lib¬
or

Do?

_k.

be taken away from the rich

perpetual
make

supports

collected

to

rulers

us

•

-

•

On the

for

thing to realize is that

of this column.

not

must

Federal taxation of

the

the money whicn is giveh away in

independence,
our

Readers

•

The first

greatest of

erty,

promise

might not apply again.

What

public

debt

Roger W. Babson

could

much more help than' thd Re¬
publicans would promise that the

■.

let

4

impor¬

and

we

'

so

among

availability of risk capital will be greatly diminished. Says stockholders in high income brackets
would be adversely affected by elimination t>f dividend taxation.

directions.
ing

"I place econ¬

omy

the

y^

book:

proposal of repealing Federal corporate income taxes and applying corporShows effect of proposal on taxes paid by
brackets and concludes, because higher bracket incomes will be hit hardest by change,

earnings taxation to shareholders under current rates.

different income

A friend in

<

Capital

By H. P. B. JENKINS

in order to

,t

(1619) ' 7

''

By ROGER W. BABSON

Babson, quoting advice of Thomas Jefferson, warns against
government wasting labors of people under pretense of caring for
them. Says New Dealers have started a dangerous
prairie fire, and

,

CHRONICLE

Congress Encourage Producers How Placing Corporate Earnings Under

Mr.

•

FINANCIAL

&

Washington

St. Louis

•

•

Pittsburgh

San Francisco

•

Cleveland

28)

of

8

THE

(1620)

The Challenge to

COMMERCIAL

First Results of Poll

Democratic Capitalism

Former

Chairman

onerous

now

Board of Governors, Federal Reserve System

ference

economic stability.

maintain

to

democratic

our

credit into economy to sustain produc¬
and consumer goods, and defends government interSays long-term outlook is clouded by Soviet policy and sees

5% "Yardstick"

(1)

Opposed
No opinion

current

Wm

or our

/

several

months

been

our

has

in,a
of

de¬

flationary re¬
adjustment. In

nearly all im¬
portant
in

i

#

m

areas,

both

and

✓

soft

hard

lines, the sup¬
ply of goods

Marriner S. Eccles

a

very

italism.

This

for

disparity in price rises was sure
to bring with it serious disloca¬

economy

m

than

little

problems.

;tis?

Wages also increased from

Ion g-ria nge

pnase

to

more

150%.

tions that made for future trouble.

Meanwhile, we have refilled the
pipelines, taken the edge off of
most urgent backlog demands of
individuals and businesses, sup¬
plied their current demands, and
provided ; to foreigners
a
very
.arge net export of goods financed
by existing gold and dollar bal¬
ances arid
government loans and
grants. In addition, we have main¬
tained huge military and veteran
aid programs.

;;,7; 'v,%7.

has overtaken

Readjustments Needed

demand
at
prevailing,, prices.
Many prices have weakened and

production
Huge crops

has

been cut back.
down the prices
of practically all agricultural com¬
modities, and this is reflected in
press

lower prices of foods. New private

construction, particularly in hous¬
ing, has declined. In many parts
of the country a large number of
new

houses built last year remain

unsold

and

in

down

been

price.

at

an

on

bankers,

evidences

jyhen^some early

tft^turrfent

of

of

tionary movement

defla¬

beginning

were

to

appear, I expressed the -hope
that needed readjustments would
be permitted to occur. It is impor¬

dissipate bur basic ele¬
ments of strength and our cushions
against the current recession in
not to

tant

attempt to shore up the econ¬
omy
at present " inflated levels,

record

and

the other hand, is de¬

increasing

are

declining. Our

are

thus

locations

irift

of

able

at

tries

further

and

they

as

months

has

been

but beneficial to

some,

It

others.

onerous

increased

recent

painful to

export surplus has been contract¬
ing as production in'other coun¬
has

meeting

a

perpetuating economic dis¬
that developed in the
inflation p'rbdhssPTfte defIatldhary

Savings

and bank loans

at

time

all

to reduce inventories in
lines is very great. Sales

volume,
clining.

October

an

pressure

most

Last
Iowa

'marked
Inventories have

being

are

certainly unavoid¬
stage and is" less

was

some

than it would

now

be

delayed

by using
after another.

if

one

have used up their gold and dollar

mostly

resources.

One danger is that we will not
face up to the necessity for ade¬

Some readjustment is not
only
inevitable but desirable after such
a
prolonged period of inflation.
For nearly a decade the
economy
has been running under forced

draft.

During

the war the tre¬
increase in output that

mendous

achieved went largely into the
wastes of war.
Much of the in¬
we

come, generated, by
the*>4ncrease
in output, however, went to swell
*he cash balances and liquid asset

prop

quate readjustments.

It

is

cally difficult to resist the
ous

minority

Each

inflation for
the

others

farmer

the

groups.

benefits

of

himself, but he wants

to

pay

wants

,

numer¬

pressure

wants

one

politi¬

for them. The

floor

a

under

his

prices at present high levels, but
he

wants

lower

labor

and

living

costs. Labor has fought for lower

prices,

but

S*0ldings of individuals

resists • lower
wage
costs. Business wants competitive

nesses

free

and busi¬
because of shortages in the
sppply of goods. .:.

to

fWith the end of the

was

war

there

competitive

ductions.

*"

,

Needed

huge backlog demand for

a

enterprise, but does not want

make

£

5

price

.re¬

f

-

;

current demand that would have
existed, had there been no war.

ing • and

The

large current income, by
liquid

more easy

Longer-Range

But the

as¬

sets in the form of
currency, bank
deposits and government securi¬

of

ties, widely distributed, as well as
by easy credit. Excess demand in¬
evitably spilled over into price in¬

just -been

flation

as

the harness of
controls,

including
were

taxes,

prematurely abandoned

private

as

profits

excess

credit

and

expansion

pumped new -money freely into
the
already
swollen
spending
stream.

As

a

result

have

we

substantial

very

had

inflation.

*'

a

The

awerage of consumer prices at the

P&k

75% higher than in
H®9, and 35% higher than at the

end

was

of

1945.- Prices

credit into the

purchases of
goods at inflated prices.

supported by
of

not

che

the

Problem

problem

one

which

discussing.
longer-range question

mind

by

f•

::

the

is
I

It

not

have

is

the

called

astonishing

to

tremendous

production

'de¬

mands

placed on it in the war and
postwar period. Our remarkable
achievements here, however, pose

:orecefully an old but a unsol ved
oroblem, given conditions of peace
in

the

How

world.

can

we

That

keep

problem' is:
our

economy

producing on a sustained basis at
the high levels of which our man¬
and

power

productive

facilities

are
capable? *- How can we pro¬
housing,"
must foods,e and many other con¬ vide a steady distribution of the

of

as

*An

address

by

300 to 400%.

Mr.

Eccles at
luncheon of the Commonwealth
Club of CW—San Francisco,

CM., April 8,1949.




—

in

the

economic

or so

ago,

:7

of

Russia

had met to discuss the

severity of

timing and
collapse.
j

our next

However

small

our

in

success

maintaining' stability,; capitalism
has succeeded. )inl developing;- an
unrivaled technology of produc¬
tion. For a long time, except in
war or general inflation, our ca¬
pacity to produce has constantly
exceeded our use of that capacity.
The

Let

what

levels

back

into

directly or indirectly
expenditure stream, de¬

the

No

racies have

solving it.
current

capitalism.
not

On

Democ¬

yet succeeded ir
the

contrary,

re

depression has been i i
chronic tendency of Western
cap¬

—

Favoring-

:

Opposed
No opinion

v

or

91.5%
4.5%

or

3.4%

or

92.6%
4.0%

or
,

j

/

>

.

——138

or

78.0%

21
18

or

12.0%'
10.0%:

.

—

——

Dealers' Comments

or

Effect of

on

mand becomes insufficient to take

off

the market what it produced.

As

a

result, production, income,
employment fall off and de¬

and

"!|%Muk-Up"SpreadonSeciirities
I

flation inevitably sets in.
Whose

responsibility is it when

this happens? The answer is that
it is nobody's individual responsi¬

'

previously noted, the reverse side of the ballot in¬
cluded the following question:

bility, but everybody's collective

responsibility.

There

are

people

of

businesses in our country

and

"(4) What effect, if any, do you think the NASD's
'5% Mark-Up' philosophy has on the market

millions

of

Of Smaller Corporations

As

tens of thousands

who

receive income and decide hoW to
use

it.

There is

no

assurance

that

these many income recipients will
a sufficient amount of total

make

expenditures to disburse the en¬
tire income.
If they do not then
trouble begins to develop.
This characteristic
pattern of
instability has increasingly re¬
quired collective action through
government

to
supplement" the
spending stream in order to pro¬
vide

sufficient amount of total

a

expenditures.

Government inter¬
only answer we
have yet devised and it is likely
to be the only answer to the prob¬
lem of depression when it arises,
vention

is

the

because government alone is in a

act

on

a*

do, but it

unavoidable if

to

to

in the

vive

midst

will not

indicate the

in view of the fact that time does not

source

our

the stocks

^

dealers to avoid

are

as

handling such, if possible, even though
worthwhile as those on Big Board.* MONTGOMERY, ALA.

I i' '[ j

'

DENVER, COLO.
V

Makes such securities hard

sell.*

to

'

«

.

;

SMALL GEORGIA TOWN
.

Makes

a

slow market, thus making sale of equity shares for new

difficult.*

money: very

ATLANTA, GA.

Very bad.
ATLANTA, GA.
-Destructive.

rr* •

-

v

CHICAGO, ILL.

;

It reduces the interest of security dealers in such issues and con¬

sequently makes it harder to market new issues and makes the mar¬
ket thinner or non-existent oh outstanding issues.*
v; •
•

Our

problem of maintaining
economic stability and providing
personal and family security is
immensely more , complex today
than it

War.

was

Since

;

It makes the

that

of which

CHICAGO, ILL.

\

%

;

.

marketing =of these securities much

more

difficult.

CHICAGO, ILL.
Bad.*

•-

j

%

CHICAGO, ILL.

'•/
;
■
,
The smaller corporations of the country who have securities out¬

'7';"%

*

standing will eventually have to go into banks for their money as
long as the 5% mark-up rule persists, because the smaller corpora¬
do not have very) many shares outstanding require con¬
siderably more work by the (security dealer to secure and place the

*

'

Commented anonymously.
■

-

;

(Continued

on page

40)

is

temporarily or
ndefinitely postponable. The Fed-

iral Government

(Continued

7

CHICAGO, ILL.

time, we have
become
immeasurably., more in¬
dustrialized, urbanized, and in¬
terdependent. Geographical fron-&

chase

;;

Detrimental, if any.*

before the first-World

tiers have largely disappeared. We
have seen the rise of huge busi¬

as

well

on page

as

29)

State
.

•

,

Very harmful.*

:

Complexity of the Problem Today

i

ALABAMA TOWN

SMALL
Causes

of

insecurity.

on

obtaining individual sanction to publish-it.
Where the'comment'was made anonymously, this is indi¬
cated by the symbol appearing at the end of each comment.
permit of

there is reasonable freedom from
want and

corporations of

be accommodated in this issue

sur¬

widespread
unemployment
and
destitution.
These freedoms only thrive when

smaller

the

the question and as many of them
are reprinted herewith.
A humber of replies included the firm's name, but the
majority elected to reply anonymously in accordance with
the-option contained in the ballot. In cases where the firm
name
appeared, we consider it a matter of fairness not to
as can

maintain,

freedoms, the
high living standards for our peo¬
ple which we have the capacity to
produce. The experience of his¬
tory plainly shows that political

of

of dealers took advantage of the opportunity

express their views

be

our

other freedoms

country?"

sufficient

seems

we are

without loss of

securities

the

:iHundreds
to

T do not like this any more
you

for

securities.*

we

opinion

Should Maloney Act Be Repealed?

(6)

increasingly rigid., A great deal
more of our expenditures are for
goods of a durable type,-the pur¬

that

4.0%

or

-.—164
7

Opposed

-

Sustainable economic stability is
the foremost long-run
problem of

services

■%
or

•

I

When total income at high
of employment does not

mean.

flow

explain

me

r-'t:
-———----—7
—162
J——
8

(5)/ Rule Forbidding Discount to Non-Members
v;- v Favoring
__!
6

has been to main¬
aggregate demand for total

tain

:

opinion

Favoring ——
Opposed
No opinion

7v7V

problem

output.

No

10 or 5.6%
155 or 87.6%
12 or 6.8%

:

(4) V NASD Trial System

that

newspapers

Wizards

:

making .and centralized power.
Our prices and costs have become

and

democratic
«

opinion

Favoring
Opposed

are

goods

able to turn out?

went up as much

more

tions who

creased much

capital goods in¬
Some prices
increased very little while others

tendency

a

become

ness, labor
and farm ) organiza¬
tions with concentrated decision¬

sumer as well as

more.

is

to

ease

with which-our
economy has met
the

the

and

important aspect

more

economic

transitory

consumer

!

there

Only a; month

read

we

than

economy. In my opinion too much
credit has already
gone into hous¬

huge accumulations

No

drift away from-democratic
cap¬

a

italism.,

be

filling empty
hwentory pipelines and meeting

A -very

19 or 10.7 %
144 or 81.4%
14 or 7.9%

Examination of Books and Records Where
Neither Complaints nor Charges Are Pending

(3)

haps not surprising that in other
parts of the world there has been

scale.

readjustments
postponed by

was also ine need of

were

.

Favoring
Opposed

From the record it is per¬

severe.

price

should

pumping

And

depressions

position, to

all kinds of goods in this
country
and throughout the world. There

These demands

—

our$>

economic

ror

—:

Questionnaire for Report on Spreads

(2)

Today I should like to discuss three subjects because they are closely related: First,
the current economic situation; second, the long-range problem of economic stability; and
third, the need for establishing peace in the world before we can successfully deal with
either

22 or 12.4%
or 76.3%
20 or 11.3%

;

Favoring

capitalism being stimulated by fortuitous developments and temporary stop-gaps. Holds
overshadowing problem is attainment of peace.

•

—177

Total ballots returned

if it occurred later, opposes pumping more easy

tnan

NASD)

(RETURNS FROM NON-MEMBERS OF

Board, asserting present deflationary drift is unavoidable and is less

Holds too much credit has gone into housing

tion.
-

of Reserve

NASD

on

(Continued from page 3)

By MARRINER S. ECCLES*
Member of the

1949

Thursday, April 14,

CHRONICLE

FINANCIAL

&

See page
r

11 for "Dealer-Broker Investment Recom-

mendations and Literature" column.

Volume

169

Number 4794

THE" COMMERCIAL

&

FINANCIAL

CHRONICLE
would

The Inflation

Spiral May Resume

Member, Board of Governors, Federal Reserve System

Governor reviews recent economic slowdowns, and gives reasons for relaxing instal¬
ment credit restrictions and margin requirements. Warns there is no likelihood
government's fiscal

I

begin by giving you a few definitions of terms that you sometimes run into in the
governmental world. Most of these categories that I shall mention are far
from me; that is, I do not claim to be any one of the kind of people that I am going to
economic and

portant, of the responsibilities of

much stock in the effect upon the

the

business

might

the

are

in¬
time

run

Federal

System.

Reserve

As you all know, I

in Washington,

D.C.

We do really

is

regulate, in large ex¬
tent, the banking: system of the
country, not the investment bank¬
ing system but the commercial
banking system, because the mem¬

a

who
organ¬
chads

ized

func¬
field.

am

A "coordi¬
nator"

and

Board

sure, our predominant
tions are in the banking

any

brings

ber banks of the Federal Reserve

regi¬

System, while only about half of

mented confu¬

the total number of banks in the

uf

out

A "confer¬

ence"

is

a

Lawrence

Clayton

include

do

country,

sion.

banks

the

world

all

that

government's fiscal
policy will be deflationary in this
year of 1949. I would say the odds
favor
the
budget / being
infla¬
tionary. That is to say, the govern¬
ment will pay out to the Amer¬
ican public more than it takes
back from them. So that there
should be most likely an infla¬

tionary effect

posits of the banking system.

habits

men

"statistician"

A

draws

is

an

who

man

a

mathematically

a

line from

precise

unwarranted assump¬

tion to

a foregone conclusion.
"professor" is a man whose
job it is to tell students how to

A

solve

the

problem of life, which

he himself has tried to avoid by

becoming

a professor.
"efficiency expert" is

An

a man

who knows less about your busi¬

than

and gets paid
more for telling you how to run
it than you could possibly make
ness

do

you

out of it even if you ran

it fight

instead pf the way he told you to.
A "Consultant" is an ordinary
who

man

'home.

is

long

a

without

any

Phi Beta

is

Kappa key

financier

a

who has

money,

the

Not

one

on

of. his watch chain and
on

from

way

v

"economist"

An

a

end

watch

no

other.

having prepared

anything
today, I won't resort
In fact, I have no
great predilection for statistics as
in particular

statistics.

to

did

the young Harvard

who

sent

was

camp—we'll

that

of

the spending
American people

upon

graduate

into a lumber
in northern Mich¬

up

say

predominantly

the

the

activities of the commercial banks

government has any intention of

of the

country, we can, in a meas¬
ure, affect the expansion or con¬
traction of general business.
Over the past several years we

a

hope ,you won't feel, be¬
action

with

reference

that

this

and

that

unusual

an

was

it

had

women

50

men

camp,

living..

to

But, apart from those segments
these selective controls, that we of the economy, there are a whole
differ fundamentally with the po¬ lot of other segments of the econ¬
sition of the Council of Economic omy that have not
kept pace with
Advisers, for Instance, or anyone the general rise. And the people
else in official Government posi¬ represented in those
groups are
tion, with reference to the poten¬ the onesv who are being priced
tialities in the situation in 1949.

of the market.
And that, I
think, explains more than anytiling else the slump that has been

out

Inflation Spiral May Resume

It is still entirely possible, that experienced by the members of
might get such an upturn in tins Federation throughout. the

we

the year, par¬ country—a slump which has gone
ticularly if Congress should em¬ beyond the usual seasonal down¬
bark on a deficit financing pro¬ turn.
gram, which would turn the spiral
I think it is the unbalance more
again upward.
That is still pos¬ than anything else and not the
sible.
We think the odds have general level of
purchasing power
been shifting in the other direc¬ that is
responsible for the slow-*
the latter part of

tion, and whereas 60
it looked like

ago

a

90 days down that nearly every segment
toss-up, in of business is experiencing at this

or

betting

language, the odds have time.
moving in the other direc¬
As I said earlier, I don't myself
tion.
yv
1
•'
have any fears of any severe de¬
But the potentialities are still
pression, and I think what we are
there. We are still at a very, very going
through is healthy and that
high price
structure
compared there are forces which will keep
to the past, and a very, very high it from
going very far.
•
leyel of total activity in this coun¬
try. In fact, there is good reason
to
assume,
on
sober reflection, R. C.
Williams, Jr.,
that we could not veiy well hope
With Marache, Sims & Go.
to
freeze the inordinately high
(Special to The Financial Chronicle)
level of spending which was re¬
flected in the final figures for 1948.
LOS ANGELES, CALIF.—R. C.
We all know that we have been Williams, Jr. has become connect¬
been

.

.

(

rather than discourage the expan¬

we

sion of bank credit and

manent the level of the economy

on

we

at worst be balanced, and at best,
borrowing from the standpoint of retail trade,
the part of businesses and in¬
may well result in some consider¬
dividuals
for
various types
of able deficit.
y
j
spending.
■

should endeavor to make per¬
had in

1948

as

Jarecld With Paul

against going

(Special

to

Financial

The

Flynn

Chronicle)

through

some

.

.

ures

that

we

headed for

are

a

ment credit
that

there

real

change,

in

the

is certainly evidence
been a change, a

level

of

Edgerton, Wykoff

(Special to- The Financial Chronicle)
could not
LOS
keep the economy, on its way up
ANGELES,
CALIF.
—
from reconversion, from getting Anton Gaspich has been added to

into
and

an

period,

we

unbalanced situation.

By

the staff of

Edgerton, Wykoff &

large, you have the farm com¬ Company, 618 South Spring Street,

munity of the country getting from
200 to 250% more in total income

than

before

the

war.

You

business in the aggregate

securities for sale or as a solicitation

than seasonal,

more

the postwar

have

enjoying

members of the Los

Angeles Stock
Exchange. Mr. Gaspich was pre¬
viously with Turner-Poindexter &
Co.

This advertisement is not, and is under no circumstances to be construed as, an offer of these

has

current

With

that with release of all controls in

se¬

countries who have joined
the
depression.
Atlantic Pact.
Certainly if that
Mr. Ney said I might comment
briefly on the business situation happens, there will be an imme¬
as I see it.
As I say, there is an diate stimulus to all kinds of busi¬
adjustment on at the present time. ness in this
country, but particu¬
vere

So, at the end of the first month,

business

,

■

,

of

an

offer to buy

any

of such securities.

The offering is made only by the Prospectus.

^

■

his

report to the personnel divi¬ and in the prospective rate of bus¬
sion recited, after he had learned iness. And while it may well be

■

^...'■

NEW ISSUE

few days before that one that we may see for a month or
of the loggers had married one of more, and perhaps several months,
only

the

a

decline

I'Two

absolute

I

per cent of the men have
married 50 per cent of the women."

year

in

but

as

preceding, month by month,
is any reason

to feel that 1949 is

going to have

very

any

a

.

minutes, and there won't be
many after that, to tell you

little

bit about the general na¬

of the

interests of the

eral Reserve

Board.

I

am

Fed¬

afraid

of the

1940.

I

close to
•

earmarks

think

it

will

many

of

the

people

in

Federation may feel that the Re¬
serve Board exists solely to make
and

,

,

.

.

/

its

for

and I

be

1939

brokers

—-

sure

except
kindly toward

feeling for

some

us

time

past that we exist solely to make
life miserable for the stock ex¬

changes and the brokers.
But those two functions

lation

of

instalment

stock margins)

portant,

Telephone Company of Pennsylvania

or

Twenty-Five Year 3% Debentures

pretty

pure

"guess-

as

Dated

Due

April 15, 1949

April 15, 1974

don't

members, substantial decline such as would
that the stock¬ turn all your black figures into
this morning red figures.

when they feel
—have been

The Bell

individual

quite

am

I

'&■>

1947.

That, of course, is

the ment"

of

they sometimes say, but
believe, in view of the
other important
factors in the
life miserable for the Federation situation, that we are in for a

too

.i,,;.. ,'i,

against the

I don't think there

think I might use about five

$25,000,000

-

business, not in the

sense

of my

ture

v ;.

a

cooks:

are

although

(regu¬

credit

and

the least im¬

they are

im¬




OFFERING

PRICE

101.77%

AND ACCRUED INTEREST

I do think we are

definitely in a
more competitive
situation, where
selling has got to be the watch¬
word instead of just procuring,
and where sales organization will
have to be keyed up to the high¬
est state of efficiency if the organ¬
ization in question is to succeed.
Government's Fiscal Situation

There are other factors that I
*Stenographic report of an ad¬
Clayton before wish to allude to: First of all, the
the American. Retail Federation, government's fiscal situation.
Washington, IX C., March 29, 1949. While some of'you may not take
dress by Governor

.

healthy readjust¬
.LOS
ANGLES, CALIF; -Rayment to bring back a buyer's mar¬
That would almost certainly be
mond B. J a reck i has become affili¬
ket and a competitive situation
true
if
ated with Paul R. Flynn Co., 411
Congress should now de¬
Recent Economic Changes
with respect to production and
West Seventh Street. Mr. Jarecki
cide, as a corollary of the Atlantic
I say "if," because certainly up
selling.
was formerly with
Reagan & Co.
Pact, to authorize a billion or a
to this moment, while we have
The unbalances result chiefly, of and its
predecessor firm for many
had clearly more than a seasonal billion and a half, or two billion,
course,
from the fact that we years.
adjustment downward, there is no or whatever the figure may turn had accumulated such enormous
justifiable implication in the fig¬ out to be, for the rearming of the spending power during wartime

loggers

cooks.

little ahead of it with reference

to the cost of

some

adding to the inflationary forces,
the government, you under¬
stand, is not just the Administra¬
tion.
The
government includes
have endeavored to restrain the
Congress. And it seems very like¬
too rapid expansion of bank cred¬
ly to. me that Congress will at
ed with Marache, Sims &
Co., 458
it, and if we should now be enter¬ least equal, if not exceed, the through a very inflationary pe¬
South Spring Street, members of
ing a period of deflation that might budget estimates prepared by the riod, and we have arrived at a
the Los Angeles Stock Exchange.
go considerably more than it has Bureau of the Budget, and that very
high price structure, and
any evidence of going at the mo¬ it will not, on the other hand, pro¬ with a great deal of unbalance in Mjr. Williams was formerly with
ment, we would expect to reverse vide any additional taxes. So the the situation. And we probably Bartling, Corbrey & Co., and Edgerton Wykoff & Co.;
those policies and to encourage chances are that the
budget will would not be nearly as well off if
but

igan—and having become addicted The fact that the Reserve Board
to the use of statistics and having has been willing,
after quite a larly, of course, heavier industry.
But the additional payrolls and
been placed in charge of this lum¬ long period of unwillingness, to
ber camp, made a vpry unusual reduce the margins on trading on
purchasing power created thereby
report after the first month of the stock exchanges and also with¬
in the last month has relaxed to
operation.
I should say by way of preface some extent the terms on instal¬

and two

the Board has taken

govern¬

the

which have about 85% of the de¬
So

the

of

ment's, budget, we at the Board
think it has a very profound ef¬
fect We don't see any chance at

through the operation of the gov¬
fiscal
banks of the country are members ernment's
policy in the
who
individ¬
ually can do nothing but as a of the Federal Reserve System. year 1949.
And
by exercising a certain de¬
I don't want to be misunder¬
group can meet and decide that
gree of control upon the lending stood.
I am not saying that the
nothing can be done.
of

group

I

cause

But

types-that you

man

ture.

modest

policy this year will be deflationary, and says final budget for coming year may be unbalanced. Holds
inflationary spiral may return and certain consumer groups, will be pticed out of market.

to^ at

1'

You have organized labor
I
think
I. have talked
long war.
enough to "give you just a general keeping up with the procession
indication of what I see in the pic¬ and, in some cases, even moving

Federal Reserve

these

9

somewhere
near
300%
greater
profits after taxes than before the

certainly reflect themselves

in the retail trade,

By LAWRENCE CLAYTON*

describe.

(1621)

Copies of the Prospectus

may

undersigned and, others as

Kuhn, Loeb & Co.
April 13,1949.

be obtained in any State only from such of the

may

lawfully offer these securities in such State.

Lazard Freres & Co.

-

(1622)

10

FINANCIAL

&

COMMERCIAL

THE

000 Minnesota Power &

Illinois Brevities
New

Pennsylvania

$137,206,016, or $5.80 per com*nrion share, compared with $4.56
per share for the fiscal year ended
Jan. 31, 1948.

RR.

trust certificates, series W,
prices to yield 1.2% to 1.70%,
according to maturity.
ment

if-

f

An

underwriters

of

groups

publicly of¬
7
at
$11.25
per share by
an underwriting
syndicate which includes, among
others, Straus & Blosser; Day¬
ton & Gernon; Ames, Emerich
&
Co.; Link, Gorman & Co.,

who

Ypublicly offered the following
utility securities: On March 24,

$35,000,000 New England Tele¬
phone & Telegraph Co. 25-year

3% debentures due March 15,
1974 at 100.75% and interest; on
March 24, $12,000,000 Eastern
*

•

'

:

Associates

Fuel

and

Gas

,

mortgage

collateral

and

on

$10,

was

April

and

Sills,

Fairman

Harris,

&

Inc., all of Chicago.

first

*i

r,

trust

if-

Marshall Field &
for

in

offerings

these

the

sales in

In the West Penn Power fi¬

calendar

^

-

who

aforementioned bankers

Of $28,276,024.
,

,

if-

it

if-

Halsey, Stuart & Co. Inc.,
sole

'

>

Y

Blosser will also participate

in

public offering of

131,841 shares of 6% cumulative
class

B

preference

stock (par $2) of Trenton Chem,

ical Co., Detroit. The funds

are

to be used to pay for expansion,

,$21.87per
proceeds

it

' ■*'

.

Daniel W. Creedon, President of

Libby, McNeil & Libby, Chicago,
food canners,
in the company's

and interest.
if-

if-

addition,

V

Halsey,

'

-

Stuart

&

Co. Inc. headed five Other groups
of underwriters who offered the

following equipment trust issues:
On March 9, $2,550,000 MissouriKansas-Texas RR. 2V2 %
equip¬
ment trust certificates; second se¬
ries 1949, at prices to yield 1.40%
to 2.875%, according to maturity;
on
March 11, $3,165,000 Wabash
RR. 214% equipment trust certifi¬

cates, series. B, at prices to yield
(1.40% to 2.65%, according to ma-

■

annual report for the year ended
Feb. 26, 1949, reported sales of

$153 574,246
as
compared
with
$145,370,616 for the preceding fis¬
cal year.
Cases sold were the
highest in its history.
Earnings,
after income taxes, were $3,809,933, or $1.05 per share, compared
to $5,366,394, or $1.48 for the pre¬
vious year.

•

■

it

A

group

April 5 publicly offered $10,000,000 4% debentures due 1964
of General Telephone Corp., in¬

Public Utility

the following Illinois
bankers: Central Republic Co.

Kebbon, McCormick &
Co., Blair & Co. and Carter H.
Harrison & Co.

Corp.

it

sales

for

1948

against $810,506 for
the previous year. Current assets
amounted to $409,481 and current
liabilities to $283,859 as at Dec.
31, 1948.
it

it

if-

shares

Co.

of

share)

Service

Co.

ice Co.

■

Blair

&

Co.,

also

on

March 9 participated in the pub¬
lic offering of an issue of

fi¬

of Cities Serv¬

J

it

it

'Y :
Y Y

v'•

it

208 S. La Salle Street

CHICAGO 4

on

*

Co.,

privately

Members of Chicago Stock Exchange

Tel. DEarborn 2-5600

Tele. CG 146-7




Service

an

nounced

on

Y^-U'Y'YY'"1'

March 10.

*-Y'

■

/ vYY.Y:v-

Chicago, for the four weeks ended
March 26, 1949 amounted to $21,279,654, as compared with $20,813,149 for the preceding four
weeks period and $220,892,169 for
the same period in 1948.
Jewel

Tea

Co.,

Barring-

Inc.,

the

four weeks

ended

March

weeks'

period and

$11,324,610

in

1948.

Investment
14th

Annual

May 5,1949 (St. Louis, Mo.)
St. Louis

Municipal Dealers
party. Y'

an¬

St. Louis

Municipal Dealers an¬
outing
at : Norwood
Hills
Country Club.
(Virginia Beach,

7-8, 1949

Va.)
Southeastern

Group of Invest¬
Spring
Meeting at the Cavalier Hotel.
Bankers Association

May 14-15

(San Francisco, Calif.)

Francisco Security Traders

San

Association Annual Outing at Mt.
Diablo Country Club.

May 16-17, 1949 (Hot Springs,
Ark.)
,

Spring meeting of NASD Board
Advisory Coun¬

of Governors and

cil at The Homestead.

(Pittsburgh, Pa.)

May 17, 1949

Pittsburgh

Hills

Country Club.

Y

May 18-21, 1949 (White Sulphur

'

notes and to finance exten¬
and improvements of the
utility company's facilities.

-

Yif

sions

*

*

*

.

March

on

it

Illinois

earnings
the

The Illinois Co. also
10 was included in

Other

per

latest

fiscal

reported
share for

follows:
Felt Co., $7.87

year
&

Springs, W. Va.)

■

common

American Hair

(against

if-

firms

as

in

investment bankers who public¬

the preceding
year); Bell & Gossett Co., Morton

ly offered 50,000 shares of West

Grove, $3.34

Penn Power Co.

series

stock,

$104.50
'

...

„

1

if-

group of

16

4.10% preferred

C

*
'

.

$100)

(par

share.

per

'

a

at

' $

Y'

.

Walter

E. Heller & Co., Chi¬
placed privately a 3 Vz %
promissory note due Feb. 1, 1964
through Harris, Hall & Co. (Inc.)

cago,

it

was

announced

on

March 8. The

current
it

i):

sj:

\

Herman Nelson Corp., Moline,

manufacturers

of

industrial

heating equipment and ventila¬

tors,

placed

Reynolds

414%

privately

&

Co.,

a

sinking

fund
March 1, 1950-61.
it

it

through
$660,000

note

due

,

;•

■,

1948 of the Standard Gas & Elec¬

tric Co. and-its
,

owned

Springfield,

$1.75

(against

$1.68);
Cory
Corp.,
50cents
(against $1.91); Feltman & Curme
Shoe Stores Co., 38 cents (against
45

cents); Gardner-Denver Co.,
Quincy,
$2.86
(against
$2.88);

General
average

Box

Co., 57 Vz cents on
number of shares out¬

Outdoor

eral

Inc.,

$4.07

Advertising

(against

Co.,

$3.72);

presently major¬
subsidiaries,
except

City, $6.82, disregarding preferred
dividend
arrearages
(against
$5.26); Harrison Wholesale Co.,
$3.08 (against $2.24); Independent

(against

Jefferson
Electric
Co.,
Bellwood, 90 cents (against $4.20);
Lincoln
Printing
Co.,
$2.72

(against $5.21); Lindsay Light &
Chemical Co., West Chicago, $7.49
(against $6.52);
Link-Belt Co.,
$14.37
(against $8.68); National
City Lines, Inc., $1.97 (against
$1.57); National Cylinder Gas Co.,
$1.94
(against
$1.50);
Signode
Steel Strapping Co., $2.91

$2.18)

y

Stone

(against

Container

Corp.,

$1.62 (against $2.91); Union Tank
Car

Co., $3.77

fore

adjustments, and $4.23 after

(against $3.14 be¬

Industrial

Toppers Annual Outing at Rock
Springs
Country
Club,
West

3, 1949 (New York City)
Club

Bond

of

low

Club,

N.

Country

June

6-7, 1949 (Cincinnati, Ohio)

Municipal Bond Dealers Group
Spring Party.
Cocktail

Annual

party for out of town guests June
6th; outing June 7 at the Kenwood
Country Club.
June 10,1949 (Los Angeles, Calif.)

Bond Club of Los
June 10-12, 1949

A.C.ALLYN«® COMPANY
Incorporated

Minn.)
Twin City Security Traders As¬
sociation Summer Party at Gull
Lake.

(New York City)

June 10, 1949

Municipal

Bond

York Field Day at

Club of New
Sleepy Hollow

Country Club.

i949 (Boston, Mass.)
Municipal Bond Club of Boston
Annual Outing at the Concord
Country Club, Concord, Mass.
June 17,

,

June 17,1949 (New Jersey)
Bond
nual

Club of New Jersey An¬

Field

Day at Rock
Club, West Orange, N. J.

June 21-24,

WATERLOO

Whiting is opening

—

1949 (Canada)

Investment

Dealers

Chronicle)

offices at 30

Association

of Canada 33rd annual

Club

meeting at
Ontario.

(Toledo, Ohio)
of

nual outing at

Richard A.

Spring

Toledo

Oct. 5-9,

....

1949

15th

an¬

Inverness Country
..

v*y \ •

(Colorado Springs,

Colo.)
National
sociation

Security

Annual

Traders

As¬

Convention

The Broadmoor Hotel,

,

at

*

Federal Street to engage in the se¬

CHICAGO
MILWAUKEE

Financial

Angeles field

(Minneapolis,

Club.

The

Scarborough,

Y.

Bond

Open Own Offices
to

25th.

Day at Sleepy Hol¬

Minaki Lodge,

Whiting

BOSTON, MASS.

York

New

Annual Field

June 24, 1949

Riehanl A.
To

PHILADELPHIA

May 27, 1949 (New York City)

Gen¬

eral Steel Castings Corp., Granite

Pneumatic Tool Co., $2.69

of

Board

Governors at the Greenbrier.

Orange, N. J.

Service

$3.78);
,'i

Meeting of the

June

Public

standing (against 89 cents); Gen¬

borrowings.

Spring

Central

Illinois

Association

Investment Bankers

(against $3.29); B/G
Foods, Inc. $1.98 (against $1.70);

Co.,

,

$6.66

Co., $1.80 (against 85 cents).

KANSAS CITY

of

Securities; Traders
$12,330,335 in the preceding four Association annual outing at South

sory

Municipal

OMAHA

Group

Association

Meeting at Shamrock Hotel.

26, 1949, were $12,577,274, against

adjustments); and Wells-Gardner

BOSTON

Texas

Bankers

ton, reported that its retail sales

Public Utility

II

Astoria.

April 28-29, 1949 (Houston, Tex.)

1 The sales of National Tea Co.,

Ra ilroad

NEW YORK

Security Traders Association of
New York dinner at the Waldorf-

-due

(Special

209 S. La Salle Street • Chicago 4

Commission dinner.

April 22, 1949 (New York City)

May 6, 1949

Public

Fort Worth

the corresponding period of

request.)

WiIliamA.FulIer&Co.

*

Community

Y

nine institutions. The net proceeds
are to be used to refund promis,-

SECURITIES

Common Stock

(Analysis

,

National Security Traders Asso¬
Securities
&
Exchange

nual cocktail

Y

for

INVESTMENT

of Indiana

stock.

mon

Community Public Service Co.,
Fort Worth, Tex., placed privately, through Central Republic Co.
(Inc.), Chicago, an issue of $3,000,000 of its first mortjgage 3 14,%
bonds, series B, due 1974, with

$4,000,- ity

Public Service Co.

Roof,

April 20, 1949 (Washington, D. C.)

ment

are

Starlight

the

at

ciation

with nine institutions, it was an¬

Common Stock'

Brailsford & Co.

requirements on the latter
stock, the balance was equivalent
to 22 cents per share on the com¬

Sim¬

new

Field

Waldorf-Astoria.

Republic

represented

'

meeting

May

nancing, and 638,160 shares

Investment

April 20, 1949 (New York City)
Bond Club of New York dinner

per

$16

The consolidated net income for

William

annual

(par

Wells & Co. Of this total, 361,-

for the account

equiva¬

was

standing shares of $4 cumulative
preferred stock. After deducting

Y

Ohio

Blunt Ellis &

shares

equivalent to
the outstand¬

stocks the remainder

Chapman & Co.; and Mullaney,
840

was

lent to $4.63 per share on the out¬

the Illinois Co.; Farwell,

mons;

In

mortgage-bonds, series B, 3U%,
1974» through Central Re¬
public Co. (Inc.) of Chicago,

at

Central

were:

(Inc.);

EVENTS

Texas, placed
issue of its first

the

of

COMING

nual

stock

-common

per

1948

lative, and after deducting annual
requirements on such

-

Chicago
investment
houses
participating in the public of¬
fering on- April 6 of 1,000,000

Co:

dividend

totaled

$1,041,790,

and

per share on
ing shares of prior preference
stock, $7 cumulative and $6 cumu¬

'•

-

(Del.)
Electric

both

for

come

ray

compared to $83,166 for the year

Income 5 Vi—1952

Milwaukee Railway

ex¬

Federal income taxes, of $163,590,
Net

&

$14.28

if-

it

Chicago, North Shore &

net

to

Co.

Gas

of which companies
majority-owned sub¬
sidiaries in 1948, amounted to $5,951,022.
The consolidated net in¬

Dolese & Shepard Co., Chicago,

on

cluding

(Ky.),

for the calendar year 1948 report¬
ed a net profit, after charges and

underwriters

(Inc.),

Central

The
used

Bankruptcy

ceased to be

tubes.
it

.;

reduce

33

be

proceeds of the loan were used to

*

of

at

share.
to

are

("picture")

;Y">:

,

Inc.,

pand production of cathode

underwriter, on March 24

3% series due 1979, at 100.56%

Products,

.....

it

the

Electric

Louisville

stock (no par value) of Slyvania

Electric

&

Gas

fered 250,000 shares of common

etc.

as

publicly offered $2,500,000 Gulf
Power Co, first mortgage bonds,

In

,

&

convertible

'
,

it

that Straus

the proposed

Bacon, Whipple & Co., Julien Col¬
lins & Co., Martin, Burns & Cor-

'

©

if

It is expected

and

bett, Inc., Patterson, Cbpeland &
Kendall, Inc. and F. SS Yantis &
Co., Inc.

'

a

on

share

at

among

of 35 investment bankers
March 22 publicly of¬

group

Co., Chicago,
1948 re¬

assets

included

were

cago,

Public

Current

of

railway subsidiaries of
Philadelphia Co. amounted to $6,688,790. For 1947 the consolidated
net income, restated for compara¬
tive purposes by exclusion of the
operating results of
Louisville

1

Y ^

Hickey & Co., Inc., and Blunt
Ellis & Simmons, both of Chi¬

it

year

77B

street

*

it

$7.50

31, 1948 amounted to $65,168,744. against current liabilities

nancing Mullaney, Wells & Co.; in
William
Blair & Co., the Illinois Co., and
Mullaney, Wells & Co.; and in the
New England Telephone offering
the

1947.

Section

interest.

Dec.

the Eastern Gas financing

'

par

fered

ported a net income, after income
taxes, of $11,234,077, or $5.45 per
common stock, from net sales of
bonds, series N, due March 1,
1979, at 101.10% and interest. Y-Y $224,547,479, compared with a net
nf $10,556,783, or $5.10 per com¬
Other Illinois banking houses
mon share, from $211,402,847 net

'were:

*

stock,

.

bonds, 3%% series due 1974, at
102.459% and interest; and on
March 10, $10,000,000 West Penn
Power Co. first mortgage 2%%

participating

'

25,000 shares of

of

B/G Foods, Inc. elass A common

Chicago, headed three different

,

issue

Pittsburgh Rys. Co. (debtor under

Act) and its subsidiaries and other

1947.

Halsey, Stuart & Co. Inc., of

.

it

if

if

equip¬

at

if-

*

2 Vz %

#

Thursday, April 14, 1949

mortgage bonds, 3% series
due 1979, at 102.46% and accrued

♦

was

Light Co

first

high records in both sales and earnings were set by Mont¬
gomery Ward & Co. and Sears, Roebuck & Co., according to their
annual reports covering the year ended Jan. 31, 1949, which were
recently issued. Montgomery Ward reported net sales of $1,211,955,909
and net earnings of $68,232,076, or^
$10.28 per common share, after turity; on March 15, $4,500,000
charges and income taxes, against Spokane Portland & Seattle Ry.
sales of $1,158,674,514, and a net of 2% equipment trust certificates,
$59,050,066, or $8.86 per common 1949 series, at prices to yield
share, for the preceding fiscal 1.35% to 2.55%, according to ma¬
year.
Sears, Roebuck's net sales turity; on March 17, $3,780,000
for the 12 months ended Jan. 31, Delaware, Lackawanna & Western
,1949 were $2,295,991,180, exceed¬ RR. 2Vz% equipment trust certifi¬
ing the volume in the preceding cates, series H, at prices to yield
1.40% to 2.80%, according to ma¬
year by $314,455,431, while net in¬
turity; and on April 7, $9,990,000
come after provision for all taxes
<

CHRONICLE

curities business. Mr. Whiting was
MINNEAPOLIS
FLINT

formerly vice-president of
&

Goodwin, Inc.

Bond

Dec. 4-9, 1949 (Hollywood, Fla.)
Investment Bankers Association

Annual Convention at the Holly¬
wood Beach Hotel.

Volume

169

Number 4794

'

COMMERCIAL

-THE

&

/

'

Recommendations
It is understood that the
-

-oh

Canada—Booklet
ment

the

of

firms mentioned wilt be* pleased
following; literature?.,
-

T

develop¬

-

Place

d'Armes,

Canada.

T

-

'

\

Cotton—Memorandum — Orvis

*

American Equitable Assurance
Co.—Analygis—Blair & Co., Inc.,1
44 Wall Street; New York 5, NvYj

Bros. & Co., 14 Wall-Street, New
York 5, N. Y.
v .
/

i

■

,

„

f

Economic

Recovery

of

.Also available are. * leaflets ori
Merchants and Manufacturers In-'

Europe

and the ultimate effect upon gov¬
ernment bonds of Great Britain,

tabulation of indf-:
cated first quarter Bank Earnings,
and data on Aetna. Fire Insurance
Co.,

surance

Belgium,
Sweden, : Netherlands;
Norway and
Denmark -— New
study—Zippin & Co., 208 South La
Salle Street; Chicago 4, 111.

*

CP. and

a

.

/

Anheuser-Busch,

2, Mo.

sissippi Valley Trust Building; St.
*Louis i, Mo.'

—

Memo-'

*

initiated and, sometimes, fostered by it

are

V

from economic

.

js>—■——

developments;.
there~ are

but
f

u

1,

,

With these principles in«

rate

mind,

what will be the "natural"

pres¬

ernment

'

Notes—Analysis of Federally-

subsidized low rent

housing pro¬
gramme. J. Devine & Go*, Inc.,
48 .Walt Street, New York 5, N. Y.
Also available is the 194-9 edi¬

from

sures -

and

terest

rates-

the ' economy

during

on in¬
the.: coming

months? ?:

-

Fernandina Port Authority 4 %
toll
road
revenue
bonds—Cir¬

Financing Opera¬

tions.

cular—Allen

&
Co.,
30
Street, New York 4, N. Y.

Broad

reinvested

:

equally

,

deliberately

Interest Rates :<'r.

most) foasie

economy

interest rate

factors in

de¬

termination with the inaugura¬
tion of public debt management
in World War II.

-

.

different,, but

elements* of

m our economy.

today

*

ment

expansion since 1941 will
place substantial sums at the dis¬
posal of management in 1949. The
almost

;

universal

•sinking* funtj

inclusion

.

of

amortization pro¬
debt arrange¬
ments^ has a double effect: (IX It
decreases the demand for capital
ous depression, that the following
observations are made:
(Paren¬ by reducing the total of debt; and
thetically, may I remind those ;'(2) it increases the supply by
who
think we
face something placing funds in the handy of
'more serious than a readjustment lenders for reinvestment. While
in the economy, that business men net corporate earnings after- taxes
.—and - bankers—were
blue > in this year will not be as high ay
or

visions in modern

with modern,
and invest¬
Co., 120 Broadway, New York 5,
ment banking facilities, such as
Getchell Mine, Inc.—AnalysisN. Y.—In the issue are brief data
Eastman, DillOn & COi, 15 Broad- ours, a> change in savings does not January, February, and March )ir 1948, cash dividends paid out
on Sears, Roebuck & Co.; Amer¬
They were also blue in probably will not decline ver^? v* necessarily, or even directly lead 1947.!
ican Machine & Foundry, Maine Street, New York 5, N. Y. :
to a change in the supply of credit
"January, February and March, much. An idea of the importance
Public Service, Lehigh Valley
and capital.
Under such condi¬ ,194«8.'
Repetition of this gloomy of this source can be secured from
Gillette
Safety Razor—Memo¬
Railroad, American Power &
tions, the capacity to save—or business psychology in 1949? al¬ the Department of Commerce rer
Light, Sperry Corp. and Grey¬ randum—A. G. Becker & Co., 120
willingness; Jo forego consump¬ most looks: as if it had become a port that in 1946 publicly ait*
South La Salle Street, Chicago 3,
hound Corp. ■
nounced dividends of American
tion—has buti a very indirect con¬ regular
pattern, doesn't it? )
nection with 'the rate of interest.
The supply of capital from all Corporations reached $6,074,200;*
New York City Bank
Also available is a memoran¬ This
flocks—
being ^ the case; the mone¬ sources will be
MO; which was. a 14% increase
very great in 1949».
Comparison and analysis as? of, dum on Visking Corp.; 1' CVv :
While per¬
tary authorities can, within wide Because of changes in methods of •over the 1947 total.
March 31 of 19 bank stocks—Cir¬
sonal income taxes will take a
limits, determine the rate of in¬
the
great
increase
in
financing,
cular—Laird, Bissell & Meeds, 120
Harshaw
Chemical
Co.— Mc¬ terest because they can control
Very heavy toll of this total, there
capital formation in recent years
Broadway, New York 5, N. Y.
will still be a most substantial
Donald
Co., Union Commerce the supply of credit and they can is not full realized
by many. The
amount left for investment
exercise great influence on the
Building; Cleveland 14, Ohio.
post-war practice of using rein¬
Over-the-Counter
Industrial
Insurance" companies,
demand for credit.
;
savings
vested earnings- and bank borStock Index—Booklet recording
Hazeltine
Corp. — Analysis —
This does not mean that the r o wing,
especially reinvested banks, and other large institution¬
al investors will have enormous
10-year performance of 35 indus¬ Bacon, Stevenson & Co., 39 Broad¬
"managers" of our money and our •earnings, on a greatly increased
trial stocky—National Quotation
sums for investment during 1940.
way, New York 6, N. Y.
scale tends to hide the enormous
debt
can
disregard
underlying
Bureau, Inc., 46 Front Street, New
The total of life
insurance
in
economic forces with impunity. growth of the capital supply. In force and the volume of new in¬
York 4, N. Y.
:
Laclede Gas Light. Co.—Special
fact, there are some who feel that
On the contrary, the basic idea of
surance
written will remain at
needed' expansion of industry has
memorandum—Newhard, Cook &
Preliminary New York Bank Co., Fourth and Olive, St. Louis; such "management"
Pension plans
is a con¬ been prevented by shortage of in¬ very high levels.
will continue td expand and the
Earnings — Indicated
for
first
2, mo. ;
scious effort to adjust money and vestment capital. Yet the records
provision
for
each
participant
will
quarter — New
York
Hanseatic
shows
that
American
industry
continue
to
rise.
The
savings
Corp., 120 Broadway, New York 5,
!:5Address by Dr. Rodgers before added nearly $19* billion of new
Laclede Gas Light Co.—Memo¬
banks are again very active in
N. Y,
V,.'w/r Vthe 55th Annual Convention, Flo¬ plant
and
equipment in
1948
randum—Edward D. Jones & Co
seeking deposits and many of
300
North
FourthStreet,
St. rida Bankers Association, Miama, alone!
Public Utility Shares—Analysis Louis
Those who criticize the pattern
(Continued on page 34)
Fla., April 12, 1949.
2, Mo.
■'VAV >V'''
Market

Survey

Abraham

—

&

economy

any

.

commercial

banking

«

•

,

,

,

,

—Joseph Faroll & Co., 29 Broad¬
way,

New York 6, N. Y.

Railroads

Lehman

Memorandum

—

Smith, Barney & Co., 14
Street, New York 5, N. Y.

Corp.

—

Analysis

of

changes in portfolio—Ira Haupt
& Co., Ill Broadway, New York
6, N. Y.

—

Wall

Thisannouncement is not an
New Issue

•

ojjer o} securitiesjor sale or a solicitation oj an ojjer to buy securities.

V

•-

t.

v-

..

April 13, 1949

"9

Merck

Reinsurance—Brochure—Geyer
&

studies

are

Reinsurance

General

Fire

Also

Hampshire

Na¬

Co.,

New

Insurance

Fire

2015

Operating

Insurance

Broadway,

115

$50,000,000

N. Y.

available

Co.

C. I. T. Financial

American

on

Brooklyn

Hercules

Co.,

are

leaflets

and

Republics,

and, in the current issue of "Bank
&
Insurance
Stock
Digest,"
a
tabulation of 1948- Fire and Cas¬
ualty

& Co.,

analyses of
Chicago Corp*, Dixie Cup, LilyTulip and Erie Income 414s of

of

Corp.,

Insurance

Co.—Detailed study—

New York 6,

American Alliance Insurance Co.,
tional

&

Goodbody

Co., Inc., 67 Wall Street, New

York 5, N. Y.
Also
available

Union

Gas

i.y

Johns-

Powder,

tional

Re¬

Steel, Ohio Oil,

Corporation

.•

;

^

.

V

Manville, Monsanio Chemical,
National
Bank of Detroit, Na¬

2%% Debentures, due April 1,1959

•
/

'

.;:.v

.

-'T

.

Ruberoid,

Union Carbide and Victor Chem¬

sults.

ical Works*.

*

**-

c

■

*'

j;

African

South

Gold

Shares—

40

•

Noranda

study—White, Weld & Co
Wall Street, New York 5, N. Y.

New

,

Securities

Oil

—

Circular—Aetna

111

Corp;,

New York 6, N.

Broadway,;

yr

'a"

v

Pifice 99^S%<

^

;

plus accrued interest from April 1, 1849

/.'v

Y.
b'f -v.
'

*

»
-

Thirty
Should

Stocks Whose Earnings

Increase

in

1949—In

Polaroid

Memorandum
—Troster, C'urrie & Summers, 74.
Trinity Place, New York 6,. N. Y.,

the

current issue of "Fortnightly

Mar¬
ket and Business Survey"—E. F.
Hutton & Co., 61 Broadway, New
York 6, N. Y.
*•

*>

Amerex Holding

sis—New

York

Y.

ihe possibilities for Central Public
Utility 5Yzs of 1952,




Chicago 4, 111.

Corp.,

Alsa available is an analysis of

—

'

t
t

'
.

'

^

\^CopieS of the prospectus may,

^

'<■

"

l-

1

obtainedJram cither of the undersigned (who

are among
only, by persons to whom such underwriter
may Regally 'offer, these securities' under applicable securities laws.

the

underwriters nflmeiL in (lie prospectus)

'

:

Public Service Co. of Indiana—

Corp.—Analy¬

Hanseatic

Corp.

Analysis—William A. Fuller &
Co., 209 South La Salle Street,

•

12D Broadway, New York 5, N.
!

;

specifically, financial

pro¬
vision for depreciation on the bil¬
lions and billions oi plant equip-

Present Readjustments and

The

dangerous,

,

•

;

Too heavy reliance on
earnings or- on debt

creation introduces

weakness

*

created by

In

only 6%.

More

of these forces

nant

tion of the firm's review of U. S.

flowing

,

the

on

pressures

——

both. rMoney
and
credit J0% of the gross business investf
management which, does not- give merit' in 1929 was secured? by the
full' weight to} basic economic issuance of new equity (stock), se¬
forces is bound forfait .'.
curities, the recent level has. been

forces press-

ihg

—r——:——:

-rror

nonetheless
p ow,e r

—

credit to the needs, oi the-economy rof present-day investment are opt
or to the needs, of the government Tttuch
firmer ' ground." Whereas

ar¬

tificial,

In addition to .the natural

factor in the
is. the. spreading
Raymond Rodger*
business readjustment.
It is on
Also available are brief data on g o v e-r nment
the .assumption,, yes, the convic¬
American Power. & Light, Consol¬ policy was greatly increased with;
tion, that this is a business read¬
idated Vultee, American Gas & the advent of managed money in
justment, centered, on realign-;
1933; and they became the domi¬ ment of prices, rather than a seri¬
Electric, and Warner Bros.;
>

t.,
\j •• ;• r - x ;•
-Local Housing Authority Bonds

,

Inc.

Central Arizona Light & Power
Co.—Analysis—Ira Haupt & Co.,
Ill Broadway, New York. 6, N. Y.

-

Government

,

Co.l from, the cen¬
Fourth Street, St. Louis
tral banking
:Vv""" > system. The
i m p o r tance

306 North

possible benefits by lower com¬
modity prices—White & Co., Mis¬

.

The interest rate is the very heart, of competitive capitalism. Paradoxically it is both
cause and1 effect.
It is the result- of basic
Natural forces in the- economy, many of which
|

rand'um—Edward D* Jones &

Insurance Companies—Study, of

and

t

•

from the. gov¬

•,?'•*■!

v

stiffen, commercial rates will remain firm, iand rates on corporate issues ofV'. \
? " different grades will: widen;
'V.

Manufacturers Trust Col interest

,

(

cludes mortgage^ rates will

-

-

Yo$k diversity

from reinvested profits and. debt creation, and warns of lack of
equity investment. Looks for-smaller
capital demand and lists as influencing interest rates: (1) government agricultural, support policy.;,
broadening of sqcial security (£) increased public housing;, and (4) debt management policy. €on-

Corporation-

Amerex. Holding

Detailed study available tch deal4
Development ers and investors ' on requestof Montreal, Trading Department, Goodhody &
Montreal, Que., Co., 115 Broadway, New York 61
/ •
;« N. "Y.
V r *v

Business
Department, • Bank

By RAYMOND^ RODGERS*

nofe necessawly afFeet supply bf cretHt and capita}, Dr. Rodgerscontends
monetary authorities alone, cau and do finally determine interest rates. Foresees ample capital, chiefly

country—Superin-

tendent,

.

11

Hbldiiig private saving does

^

;
\

(1623)

Professor of Banking, New

.

send interested parties the

to

.

CHRONICLE

The Outlook for Interest Rates

Decder-B roker Investment

.

FINANCIAL

t

St.
way

,

Louis-San

Co.

—

Francisco

Rail¬

Analysis —Vilas

(Continued

on page

13)

'••

&'

'$ 5>v-

Dillon, Read & Co*. Inc.

Lehman Brothers

♦

News About Banks

dent.

1860

the Bankers Trust Co., New York

REVISED

1949."
He
growth to
policy of aggres¬

the

bank's

which

The

-•*

,.•>

*

*

Trust

County

Company,

given

White Plains, N. Y., was

The Irving

the

and

Austin

A,

James

of

"The firm

as

that

;

„

on

certificate to Brown Bros. Har-

a

publication of our mono¬
graphs will help to bring home to
American businessmen
and
manufacturers the fact that Italy,

York, N. Y., to continue business

private bankers with $2,000,000 capital.
The new authoriza¬
tion was issued to the company by
reason of admission of Robert A.
Lovett as a general partner.
General partners were listed as
Thatcher M. Brown, Moreau Delane Brown,
Prescott S. Bush,
Louis Curtis, E. Roland Harriman,
Stephen Y. Hord, Frederick H.
Kingsbury, Jr., Robert A. Lovett,
Thomas
McCance,
Ray Morris,
Harold D. Pennington and Knight
Woolley, and as limited partner,
as

W.

Averill

*

*

*

:

Thomas

Dewey

E.

Comptroller Frank C.
guests at a luncheon

State

Moore

were

last Friday at the Bank

of Man¬

40 Wall Street, this city,

hattan,

direc¬

attended by the officers and

this

of

The

Governor

Comptroller

and

bank's

original
charter bearing the signature of
Gov. John Jay, dating back to April
2, 1799.
Mr. J. Stewart - Baker,
Chairman of the Board, presented
Gov. Dewey with a section of the
wooden water pipe which was laid
by the Manhattan Co. in 1800 in
old New,York City.
The bank's
shown

were

the

historical

exhibit

floor

commemorative

was

main

the

on

its

of

150th anniversary and week long

celebration.
*

*

*

*

,

,

Benjamin Strong, President an¬
on April 8 that the Board

nounced

of Trustees of United States Trust
Co. of New York have

appointed

Alfred A. Fraser, III and Henry
G. Hopper, Assistant Secretaries
of the company.
*

An

exhibition

ported
the

*

from
of

of

Italy,

American

merce

*

V

,

products im¬
sponsored

Chamber

Trade

of Colonial

Trust

Americas

by

Com¬

of

with

Italy, Inc.,
display in the

has been placed on
windows of the principal
the

offices

Co., Avenue of

and

Forty-eighth
Street, New York City.
At the

same

time, the banking

institution has published

a

series

of

monographs, "World Recovery
Through Imports — Trade with
Italy," designed to encourage in¬
creased imports from Italy. These
are being mailed to more than 350
banks in the port cities of the
United

list

of

States

and

importers

to

and

selected

a

others

terested in international

trade.

The trade exhibition and

ographs

are

results

the

of

in¬
,<.

mon¬

visits

to

Italy last year by Arthur S. KleePresident of Colonial Trust

man,

Company, and Mario Diez, Vice-

to come, will be

years

market

tremendous

for

our

would sell to Italy, we
from

ex¬

Joshua B. Powers,

B.

"

:

A

""

:

'

'

#

if

Broderick, President, will be on
display this week, at the "1949
Personnel
Workshop,"
of
the

bank

its

Tor

own

a new position, according to
special dispatch to the New York
"Times" from Peekskill, N. Y., on

a

April 4.
The

the

28, it

devices.

Altogether,

its

insurance

Powell




after

Trust Co.,

long illness,

a

associated

been

with

affiliated

*

in

formed

was

with

Worcester

held his present

had

position for nine

and had been a bank direc¬

years

tor

He

1930.

1944./

since

$50,000.
the

of

bank

Dr.

are:

delphia National Bank. Mr. Hardt
who retired

Raymond S. Ellis.

1

as

Hardt

retired

on

Chairman and Execu¬
of the

Phila¬

under the bank's

re¬

if

tirement system will continue as
a
director.
Mr. Hardt joined the
Franklin

which

National

was

Bank

in

1908

-if

-

Tioga
Co.'s

if

if

National

Bank

stockholders

Trust

&

have

>-'*•. V,."

if

111., on April 6 issued a certificate
authorizing the Highland Park
Building Loan and Savings Asso¬
ciation, 21 North Sheridan Road,

delphia National Bank in 1928.
;

if

'

Benjamin G. Cooper, Auditor of
Public Accounts, at Springfield,

absorbed by the Phila¬

approved
Second

Highland Park, to change its name
Savings and

the proposal under which

to the Highland Park

National

Loan Association. Walter E. Meier-

of

Bank

Philadelphia

will

hoff is

the

tion.

buy the assets and assume
deposit liabilities of Tioga Na¬
tional, according to the Philadel¬
phia "Evening Bulletin" of March
30, which also said:
>;

National

will

National

posits of $25,000,000 and total
of

sources

The

National

Yardley

capital

Bank,

increased

has

Pa.,

stock,

March 30, from $50,000 to

*

in New Mexico in addition to his

Oklahoma

and

territory..

•

it

*

Official opening of The Bank of

*

7

At this
time the public was welcomed for
an
inspection of the new bank
building
and
installations
just
completed at this location.
The
office opened for business at reg¬
ular banking hours on Tuesday,
April 12, offering complete bank¬
ing services at this second Bank
of Virginia office in Norfolk. ;
Tazewell F. Thompson, Assist¬
ant Vice-President, is in charge of
the bank's operations at 21st and
Granby. The Main Street office
10

to

p.m.

its

to

city,

that

serve

with

the

ViceA

Zehmer,

H.

L.

of

area

President in charge since 1944.

Virginia office

now

i-

-jf

increased

capital stock, effec¬
March 28, from $120,000 to

common

tive

$180,000 by sale of new stock, ac¬
cording to the April 4 Bulletin
of the Office of the Comptroller

p.m.

of the Currency.
*

As

of

First National Bank

the

its
common
capital stock, effective
March 28, from $50,000 to $75,000,
Bulletin

of

the

from

learned

is

it

has increased

Texas,

Strawn,

j

*

*

of the sale of new

result

a

stock

Office

the

April 4
of
the

Comptroller of the Currency.
'

"

■

•

of the bank continues in full oper¬
ation

(f

of Greenville, Miss., has

Granby Streets, Norfolk, was held
on April
11 with an open house
from

"

The Commercial National Bank

office at 21st and

new

Panhandle

Texas

1

.

Virginia's

Kansas—to

northern

ming. Emory F. James, Jr., who
formerly had this territory, has
resigned his position
with the
bank.
James
R.
Gayler, VicePresident, will represent the bank

its

effective
$100,000
by sale of new stock, according
to the April 4 bulletin of the Of¬
fice of the Comptroller
of the
Currency.
'%{■>/ v'V^ ^
common

in

succeed Guy

M. Hadsell, Assistant
Cashier, whose new territory will
:..'i be Nebraska, Colorado and Wyo¬

■:

Yardley,

last

bank's

-

Division

re¬

$27,000,000.

'

the

of

Co.

the

for

a

City

The

Trust

&

Mo.,

.■.

.

been

after May 1 will represent
Correspondent Bank

year,

have. de¬

Bank

City,

■

...

has

staff of

of the

Kansas

^

who

Evans,

member

business

*

*

....

Ray

-

consolidated
of

Secretary of the Associa¬

'

<■.;

The business of both banks will
be

close

third Bank of

\

.

of

-

if

if

sjs

.

Schmitz

Dietrich

President,

that

President

of

announced

as

L. Locke,
Fisher
Flouring
John

Mills, was elected to the board of
Washington Mutual Savings

the

■

New

York. Organized in

1859 by
of leading citizens of the
old Village of Flushing, the bank
originally was set up to provide

a

group

residents of Flushing and

neigh¬
boring communities with a local
savings institution.
'
the

At

end

operations,
total

the

first

the

of

bank

year's

boasted

a

of 267

depositors, with sav¬
ings aggregating $7,898.
Today,

the institution's books show

a

to-

total of

-

...

Branch
new

banking was given a
wrinkle on April 12 when the
Trust

Stamford

Co.,

of

the

present

park

at

vard.

It

was

open

for only three

week, from five to eight
Thursday evenings, and the

on

a

bank's

funds

safe

Clement and Bloodgood's

of

were

kept

in

the

General

Store, then at the corner
Broadway and Prince Street.

The bank

now

has four offices

of

which, the Kew

Offices,

was

Gardens

opened for busi¬

and

executives

of

dig¬
the

joined with Harold
the bank's President,
celebrate the formal opening
Railroad

Rider,
the

small

red-brick

E.
to
of

branch bank

pace

with the

who

The commuters and local towns¬

people crowded in and around the
Stamford Station waiting room to
witness the formal inauguration
of the new branch which was at¬

April 6

as

Wil¬

of

Bank

took

Va.,

W.

on

over

President of the firm,

succeeds

R.

E.

Ward, whose resignation as Pres¬
ident and a member of the board
was

accepted

April 1.

••

Mr. Ward
board

April 5, effective

on

-

by

Hefner.

replaced

was

on

Vice-President
•

H.

the

V.

•

'

%

Treasurer of the
New York, New Haven and Hart¬
ford Railroad Co., and Mr. S. A.
R.

Benjamin,

Boyer, Assistant Vice-President of
New York, New

Haven and Hart¬

ford Railroad Co.

board

The

of

-

*

*

directors of The

'«

.

gill

5

an

elected

Company

Richard

an

.

*

its

capital

common

from

stock

$75,000 to $175,000, effective Mar.
30.

the increase re¬
stock dividend and

of

$25,000

sulted from

a

$75,000 from the sale of new stock,
according to the April 4 Bulletin
the

Office

of the

Comptroller

of the Currency.
if

G. Mac-

announcement

Caleb S. Green, Presi¬

Australia

■

Issuance of

the

First

I-ake. 111.,

6

a

State
was

&

99-year charter to
Bank

of

announced

Round

on

Aoril

by Benjamin O. Cooper, Auditor

*

;

;

,

•*'

*

Bank

China,

38

of India,

Bishops-

gate. London, in its statement of
condition as of Dec. 31, 1948, re¬
ports the

highest total

history of the

the

totaled

Resources

£138,421,141,

resources

96-vear-old
on

that date

an

increase

£12.132.342, over the figure of
£ 126,288,799 reported at the close

of

of the

previous

on

year.

reserves

Deposits in¬

for contingencies

Dec. 31,

190

last, totaled £120,411,compared with £110,158.808

(adjusted) for Dec. 31, 1947. Net
profits
for
1948
amounted
to
£467,111 after providing for tax¬
ation and contingency accounts.
earnings

Net

for

1947

were

The report states that
a
final dividend of 6%, less in¬
come
tax, will be paid in April
out of the 1948 balances, making
£448,058.

the

annual

same

as

distribution

in 1947.

tains branches in
*

on

Assistant Vice-President,

according

•

Ohio, has increased

New Carlisle,

it

Banking

Trenton

*.

.

The New Carlisle National Bank,

of

if

if

if

/

.

*

Chartered

The

cluding

:

'

a

institution.

Williamson

meeting of
it
the
Seattle

of March 30.

in

Mr.

a

from

learned

'

April 6, which added:

•

the Honorable Richard
Rapport, Bank Commissioner of
the State of Connecticut, Mr. W.

'.

according to Associated Press ad¬
vices from Williamson, W. Va., on

tended by

issued by

kept

residents

National

First

liamson,

at

the trustees held on March 29,

"Times"

Ben

set up to accom¬

Stamford

modate

growth

"has

I8

the

nitaries

Aoril

on

-f

Seattle

of

Bank

was

.

V:

Haven Railroad Station. State

Jan. 8, 1949.
'
'
Joseph Upton, President of the
bank, says that the institution's
ness

in the fall.

opened

Williamson, Jr., of Ashland,
Ky., grandson of the founder of

work in New York and elsewhere.

site

Charlotte

Conn., opened its first Commuters
Branch in the
westbound New

000,000.

original bank was estab¬
lished in the old Village Hall, a
small frame building situated on

at

and Boush Streets will be

Stamford,

which has been

The

construction

under

*

*

*

104,670 depositors and to¬
tal resources of more than $90,-

Hills

&

Bank

County Trust Co. 15 years before

April 14th, marks the ninetieth
anniversary of the founding of

est

NEW YORK

had

been

located in Flushing, Corona, Little
Neck and Kew Gardens, the new¬

Kenney

V

Anderson, 52, Execu¬

home

He

the Queens County Savings Bank,

of

STOCKS

A.

Worcester banks 32 years, having

it

hours

and

Re¬

according to the Boston "Herald"
of April 4 which went on to say:

Main Street and Northern Boule¬

bank

Federal

the

i joining the Guaranty bank when

ence..
*

his

at

Confer¬

Chicago

of

Worcester, Mass., died on April 3

by the American Management As¬
at

Field, Chico-

announced by the Board

of the Guaranty

first shown

until

*

of

reserve

a

for operating expenses,
a total capital
structure

$10,000
making

Officers

*

re¬

In addition, it has a sur¬

plus of $15,000 and

Co.,
in

Co.,

tive Vice-President and Treasurer

companies and 300 labor
have
contributed-18,000
pieces of rank-and-file employee
and
supervisory
literature
in
eighteen different classifications.

sociation

Trust

;

1,200

was

Falls

System.

Oscar

some

Office

Avenue

*

Hardley

was

serve

unions

All this material

*

*

Governors

of

bank systems and record manage¬
ment

*

Falls, Mass., effective March

pee

of

suppliers

manufacturing

1

branch at Westover

application of visible records for
assembling personnel facts will
be made available later through

served

in¬

Cooper

Auditor

$25,000,

time.

William

J.

Holyoke, Mass., has established a

The

use.

of direc¬

board

of the

tors,

University. This is the first time
that the public has been given an
opportunity to view the co-ordi¬
nated system of personnel records
which were recently completed by
the

Bank

President for ten years. George

Chairman

School of Commerce at New York

Trust

and

succeed the late Dr. Stanton Cur¬

National

Peekskill

the

Bishop, former Assistant Cash¬
ier, was promoted to be Cashier.
James
Dempsey, -attorney
and
former Assistant District Attorney
of Westchester County, was elected

ings Bank of this city, Joseph A.

Bankers

City,

Second

President

V.

unique exhibit of the person¬

the

po¬

Divi¬

and Trust Co., Peekskill, N. Y., to

ry,

nel records of The East River Sav¬

Metropolitan

formally at the
April 30, 194.9.
Upon completion of the purchase;

of

*

-

who has been

has been elected

dent,

by Arthur S. Kleeman,

of

a

the

Gaspar F. Goshgarian, President;
Claus F. Junge, Vice-President;
and Willard J. Murphy, Cashier.
Directors, in addition to the three
officers, include Roy C. Davis and

Cashier and Executive Vice-Presi¬

President.
.

*

David M. Barry,

''

/

*

.

Colonial Trust Company, it is an¬
nounced

'

;

"■

"

Inc., which company represents
publishers of many of the world's

the

tive Vice-President

of capital stock from $235,-

of $25 each.

Powers,

great newspapers, has been elected
to
the
Directors
of
Board, of

in

offered

was

serve

bank has capital stock

new

ported.

In 1944 he

April

April 1 to certificate of in¬

value of $2& each, 900 shares
of preferred, stock B of the par
value of $50 each and 8,600 shares
of common stock of the par value

founder and

Joshua

of

of

The

Maryland in Upper Marlborough,

Rye Trust Co., Rye, N. Y.,

given approval by the New
York State Banking Department
was

Southern

of

Md.

if

par

if

if

it

the

inactive

The

Bank

of

Fifth

each, to $272,500, consisting of 500
shares of preferred stock A of the

will continue through the first two
weeks in May.
i"'.1/.,

years.

National

their

$50 each, and 2,900 shares of com¬
mon stock of the par value of $50

must buy

banking facilities for the past

ten

sion

consisting of 1,800 shares of
preferred stock A of the par value
of $25 each, 900 shares of pre¬
ferred stock B of the par value of

a

out

Assistant Cashier of the

as

*

*

Avenue, Round Lake, Lake

1, 1940 to November 1944 he

the present

♦

de¬

Jan.

sition

000,

exhibition

trade

Italian

its

all

of Cedar Lake Road and Rail¬

which

April 5, 1949.

as

Italy."

The

of

Station

from

in

served

ner

road

has been with¬

York

crease

ports, provided that Italy can pay
for them through exports of her
own
to the United States. If we

institution.

historic

tors

in

President

Harriman.

Governor

and

said, "and it is our belief
it so, we must do

keep

office

career
Bank of

new

stitution will

New

and

Wall Street, New

riman & Co., 59

to

location

the

change

and

Plaza, Hartsdale, New York to 232
East Hartsdale Avenue, Hartsdale,
New York, effective on or after

everything we can to encourage
further imports of Italian goods.
It is our hope that this exhibition

Banking,Department
April 1 the issuing of

The State

announced

*

*

.

of April 4 by the New
State Banking Department

business

National

The

partments there during the period
July 1, 1932 to Dec. 31, 1939. From

First

as

branch

spots in the
picture,"
Mr.

economic

world

Kleeman
*

of Italy on

progress

of the brightest

one

President.

to

to economic recovery is

the path

to
election
a
Vice-

Vice-President

Assistant

Vice-President

York

International Division.

April 1 announced the promotion
of Arthur G. Boardman, Jr. from
an

proval

of the bank's

President in charge

Trust Company on

First

111.

County, 111. ,
The community

served

ap¬

his

began
the

Baltimore

principle and

in

*

.»

CAPITALIZATIONS

He

Public

Accounts, Springfield,
bank, which expects
to be ready for business about
May 1, is to be located at the Con¬

on

City.
with

consist¬

been

has

of

Macgill. will take up his
April 11. He comes from

duties

in

1,529,000

ently followed,
practice."
„•

Bankers

and

HEW OFFICERS, ETC.

f

to

well-defined

"a

siveness

NEW BRANCHES

Thursday, April 14, 1949

ponulation increase of
Queens,
which has climbed from 32,903 in
attributed

CONSOLIDATIONS

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(1624)

12

12%, the

The bank main¬
New York,

In¬

Burma,
Ceylon,
Indonesia, IndoChina, the Philippines, China and
Japan, as well as in Great Britain
dia,
Pakistan,
Malaya,
Siam,

and Germany.

••

Volume 169

Number 4794

THE

and call it 28).

COMMERCIAL

Stock is

Markets

Dresser

recommended

was

(1625)

13

cur¬

A

rently selling about 31. Sug¬
gest you hold it but keep your
stop at 27. Old stop was 26.

Tomorrow's

CHRONICLE

FINANCIAL

&

Depression—Neithei Inevitable Nor Probable

;;
If#.

By W. WALTER WILLIAMS*
•'

•

-

-

Chairman, Committee for Economic Development

,

:

Continental, Inc., Seattle, Wash.

President,

r

^

||

"

V

1

."

*

Walter

between 2(B£..and 2114r An
in last week's column

Whyte

.

error

made 'the price read .27 H28Y2, the stop, of 2\Vi, was
equally incorrect. If you refer
.

By WALTER WHYTEi

with strong and ta column of March 31 you
continues to dom¬ will see the correct price. In
inate market. Expect more of any event stock became avail¬
Dullness

•

J

able at

for rest of month.

same

Last week the tape started
to move a little
though it

21*4 and stop is 18.

Dresser is

•

p

•

continued prosperity: (1) appre¬
;has capacity to maintain stability; (2) clarified understanding be-: <
tween ^government and business; (3) recognition by business.and labor that continuous increase of j;
^consumers' income can come about only by more productivity; (4) recognition of buyers' market and *
^return to normal pricing and marketing; (5) wise use of Federal budget to-stabilize economy; andA;
economic system

our

.

*

i ;

'

^

?.4'Vvi.

-

It takes

•

.

(6) monetary and debt policy for preventing depression.
rash

1

to speakon the .subject designated, which is :i#The Genera! Busi¬
Prophecy is always dangerous, particularly so when prophecy may
adoption of wrong policies: For fhat reason this discussion will beat a hasty

a

man

Outlook for 1949."

ness

about 22 V2 r ~" result in the

now

1

#

^

Mr. Williams reviews recent trends and lays down as conditions for

ciation that

weak spots
the

.,s

.

.

Bristol

Myers

,

into the

came

list at 31 and went up to 33.
never
generated sufficient ex¬
It's now about 32.
Stop re¬
citement to attract any vol¬
mains at 29. .
/
• r
-i
ume either
way.
That, how¬

wasn't

ever,

fact

surprising.

the- maintenance

of

in price quotations
is enough for the time being.
Two weeks ago I anticipated
that the month of April would
dull

a

Nothing has

one.

happened since to make
change my opinion.
*

*

; With the
the

news

ings

me

—Walter
[The

do

not

coincide

with

Dealer-Broker Invest.

coming of spring

and

t h

able

operations.
In
other
declines are expected.

cases,

Recommendations
and Literature

1 y

But it's all kind of mixed up
and judging from the tape ac¬

tion,

no one
•

really

*

Simpson's,

Limited

Analysis
Sons, 367
Street, Winnipeg, Man., and
80
King Street, West, Toronto,
Ont., Canada.
\
Richardson

—

&

facts

at

and

wher

The question of taxes has

Stillman,
Maynard
&
Co.,
Broadway, New York 6, N. Y.

will

be

done about

don't think
in

the

so.

red

We

There

and

deeply

with

most in

countries, the chances

are

hike in taxes is almost

Co., Chrys¬
Building, New York, N. Y.
*

In

the

Boeing

certainty.
.

weeks.

(1) What

It is

Zonolite

added

to

Co.

—

data

on

Memorandum—

Dominic Gronin With

Cronin

the

became

market

is

;< now

Cruttenden

Dominic C.

associated -with

&

connection

with

Cruttenden

previously reported in

was

the Financial Chronicle of March
3ist. /•

list

whenever

As

■

stands

now

you

Willard Penry Joins

perity?
It

(Special

The

to

Financial

Chronicle)

W.

with Wesley Hall & Co., First Na¬

the median

of

Securities

Penry has become associated
Mr. Penry

previously with the Pacific
Company of California and for
many years with Hope & Co.

Pacific Coast Exchanges

to

The

Financial

has

Zehm

with

Clair

S.

become

Hall

Building.

&

Mr.

Make

New York Stock

Exchange

Exchange (Associate)
San Francisco Stock Exchange
Chicago Board of Trade

14

Wall Street

COrtlandt *7-4150
Private Wires to

San

New York 5, N. Y.

Teletype NY 1-928

Principal Offices

Francisco—Santa

Barbara

Monterey—Oakland—Sacramento
Fresno—Santa

Rosa




to

The

Richard

Co., Union
Zehm was

Financial

Chronicle)

FLA. —Fred

This

gives

and

businessmen,

as

us,

Wight

was

Building.

previously

Thomson & McKinnon.

Jtem.

Industry after industry had

free

enterprise

sys*

enlarged capacity,, improved prof

continued

on page

as an

an

.,'./•

36)

offering, of these Debentures for sale,

offer to buy,

any

of such Debentures.

The offer is made only,bp means of the prospectus.

: •

ISSUE

.

.

3%

-

,

■

;

.

.

or as aft

.

/'.

'•*

.

■

•

...

.

.

>■

■

April 13. 1949

■

/■ ;. ;/://

Company

Sinking Fund Debentures

Dated April 1,1949

/..V

v,

.

,.

/

1' ; >;/

Due April 1,1999

'/•/

•

.

determine

to

an

whether

our

Copies of the Prospectus may be obtainedfrom

ticks

or

Price 101.30% and accrued interest

:

<

only in States in which such underwriters
in securities

no

mistake,
if

we

we

Mr.

with

any

are

of the sewer al underwriters

qua.ifi.ed to act

and in which such Prospectus may

as

dealers

4

egally be dislrioutcd.

cre¬

can

only stupid

are

most of

And

The First Boston

mis¬

our

Drexel&Co.
Merrill

L. R.

Boulware, Vice-President
Electric,
recently
speech in which he showed
faith in our capacity to act

General
a

Lynch, Pierce, Fenner & Beane
,

.

*

Corporation
Lehman Brothers s-

Eastman, Dillon & Co.

•

■

Coffin & Burr

•

Dick & Merle-Smith

Incorporated

,

Equitable Securities Corporation

Tucker, Anthony & Co.
Hirsch & Co.

ignoramuses.

Hornblower & Weens

Paine, Webber, Jackson & Curtis

American Securities Corporation

Stroud & Company

Bacon, Whipple & Co.

Weeden & Co.

McLeod, Young, Weir, Inc.

Incorporated

Mr. Boulware asked the rhetor¬
ical

"How are we act¬

question:

ing?"
His
had

answer

been

"Just like

was:

studying

be

to

we

half¬

wits."'-1 '
we

at

go

we

into

can

hard

the

cause

some

of the

commit, let
facts

and

us

Auchincloss, Parker & Redpath

First of

Field, Richards & Co.

Been

as

given

in

a

to

to

visit

opera

did

not

He told his daughter

let him know what was going
address

by

Mr.

Williams

before the Eastern Regional Clinic
of the Mortgage Bankers Associa¬
tion of America, New

April 4, 1949.

Starkweather & Co.

York City,
.

Stein Bros. &

Baker, Watts & Co.

Corporation

E. F. Hutton & Co.

Piper, Jaffray & Hop wood

4,

u*

Boyce

Fahey, Clark & Co.,.
Kalman &

Company, IncJ;

Prescott, Hawley, Shepard & Co., Inc. I
Chas. W. Scranton & CoJ

Robinson-Humphrey Company

De Haven &

Townsend, Crouter & Bodine

J. J. B. Hilliard & Son

_

„

Minsch, Monell & Co.

Bosworth, Sullivan & Co.

Mackall & Coe

Elkins, Morris & Co.

T. H. Jones & Company

i

Butcher & Sherrerd

Wurts, Dulles & Co.

Cohu & Co.

Scott, Horner & Mason, Inc.

Townsend, Dabney & Tyson

Boettcher and Company
|

Hallowed, Sulzberger & Co.* '■>

Metropolitan St. Louis Company

Yarnali & Co.

Goodbody & Co:

Kirkpatrick-Pettis Company

W. H. Newbold's Son & Co.

Johnson, Lane, Space and Co., Inc.
Stix & Co.

*An

i

Johnston, Lemon & Co.

f'

an

language he

Ira Haupt & Co.

Whiting, Weeks & Stubbs

Granbery, Marache & Co.

Laurence M. Marks & Co.

The

Rufus Choate felt when

about

Company

Happening Since

period like this it is easy

was

Francis I. du Pont & Co.

Green, EUis & Anderson

McDonald &

Hayden, Miller & Co.

Henry Herrman & Co.

the Fall of 1948?
a

'

Michigan Corporation

Merrill, Turben & Co.

In

Julien Collins & Company

see

at the moment.
What Has

Blunt Ellis & Simmons

Robert W. Baird & Co.
Incorporated

E. W. Clark & Co.

there is for real alarm

understand.1

C.

Leedy, Wheeler & Alleman, Inc.,
Bank

the

Commonwealth Edison

as

Wight has become connected with

Florida

outstanding achieve¬

an

of

$50,000,000

ac¬

associated

Leedy, Wheeler Staff

(Special

'

solicitation of

at

takes will come, if we make them,
out of our fears and our stupidity.

to feel

ORLANDO,

/

or as a

.

of

ticks "/ well

ate trouble

what

—

circumstances to be construed

econ¬

in

degree

enough.

he

New York Curb

no

Swiss American

years.

Joins

/:
NEW

poorly. '

formerly with Otis & Co. for many

Members

mind
an

Chronicle)

CINCINNATI, OHIO
E.

in

have

we

will

economy

look

Clair S. Hall & Co.

Trust

Schwabacher & Co.

choice

stupidities

Richard Zehm Now with

on

pros¬

surplus

or

Before

(Special

Orders Executed

maintain

standard

a

important

was

Pacific Coast

confusion and

is

war

ment

in the last six

offer to buy,

right inseparably linked with
our precious freedom to spend or
to
refrain
from
spending. / We
citizens by exercising that right

CAL. —Willard

Building.

ing and guessing

depres¬

a

our
bank
counts and in other property.

like

tional Bank

the

to

contradiction of economic report¬

mistakes

into

be .borne

pockets,

our

some

2&V2

(we'll take

Out of the great

living
which permits the right of choice.
We have a margin or surplus in
and

:

long of the following:
Cooper Bessemer at 27 V2 to

DIEGO,

emotions

production of goods has been
increasingly
veiy
rapidly.
The
speed with which American busi¬
ness
has increased output since

:

•

the outset that

made

are

SAN

the

since

the

are

can we

should

of

~

Wesley Hall Co. Staff

what

In part this reflects the fact that
our

_;.A.-V-.

(4) How

J

available.

decide

to

on supply in large
disappeared.

has

now?

are we

-

sion?

consumers

Co., 209 South La
Salle Street, members of the New
York
and
Chicago
Stock -Ex¬
changes, it is announced. Mr. Cronin's

cult

of demand

sure

measure

the

Crutfenden & Co.
—

happening

been
States

which could get us

Grumman

Seligman, Lubetkin & Co., 41
Broad Street, New York 4, N. Y.

CHICAGO, ILL.

econ¬

on

Fall of 1948?

omy

& Co.

A few weeks ago I recom¬
mended a few stocks, having

has

United

the

margin

during such pe¬
riods, however, that buying
can be
calmly undertaken.

the

are

Co.,

Aircraft and Radio Corporation of
America.

■•I

market, •■meanwhile,
having
indicated
higher
prices, has done little. It will,
I believe, continue to do just
that, for at least another two

these

issue

same

Airplane

Another

this figure
speech, asked if the economy
were not actually in for a series
of
protracted
hiccups. Perhaps
you see what I mean then when
I say that our present situation is
so obscure that it is pretty diffi¬

This is under

and Views"—Bache &

a
a

our

four questions fore¬
minds today:

(2) Where

U. S. Plywood—Data—In "News
ler

series of burps.

of

61

being spent for foreign

money

new

more

are

(3) What

I

them.

are

of

case

manufactured goods).
During the
last few months the excess prgS-

dilate with.

been

relegated to the mutter¬
ing stage and some people
seem
to think that nothing

today are permitting

us

those goods
prices rose more slowly
(such as steel, automobiles,/re*
frigerators
and
other
durable

baby that drank its
now emitting

omist, commenting

the

and acute shortages of

milk too fast and is
a

since

whose

adjustments and recessions
and one even likened the existing
a

Ever

consumers,

foods and other farm products)

as

present situation as disinfla¬
Other
economists
talk

situation to

redueed.

businesses and the
government have been trying to
buy more goods than were pro¬
duced.
This great pressure on
demand gave us rapid increases
in the prices of many goods (such

war

about

e

ters.

in

Tiffany & Co.—Memorandum—

*

the

tion.

hand

jitters. When you
look at the overall picture, there
is no reasonable justification for
the jitters we find in some quar¬

Main

cares.

*

economists

Some

Another economist has referred to

zing the

ranted

erably

an-

mean

ourselves to indulge in an unwar¬

Hickey, 49 Wall Street, New York
5, N. Y.

(1) The great pressure of de¬
on supply has been consid¬

mand

language that nobody

a

say we are

there

retreat in
a

cur¬

being

any

at

be

need

is

drama

following basic Tacts
clearly:
••'•ii''-

emerge

about to experience a
resumption of inflation once sea¬
sonal farm employment gets un¬
der way and once the full impact
of government spending is felt.

clear

that

that the

seems

understands.

this time. That

A lot of

(Continued from page 11)

—James

staged in

emotions.

wrong

economic

rent

whic h

doesn't

the

Sometimes it

j

>"

emphasis
upon
tho s e

mouths the

did not want to

said he

with

dilate

e

-

He

on.

r-

takes to place

is

being awaited with
mingled emotions. Here
and there estimated earnings
show a continuance of
profit¬

de

un

-

theypoint.
Above all, it
W. Walter Williams
doesn't imply
*
any pussyfooting about the way
many of us are behaving.

*

of first quarter earn¬

prophetic

are

Whyte

expressed in this
necessarily at any
those, of the
Chronicle. They are presented as
those of the author only.]

time

the

facts

views

article

some

r

Thursday.

a

status quo

be

More next

In

.

<e>-

retreat from

Scott & Stringfeilow I

C. C. Codings and Company, Inc.

Strader, Taylor & Co., Inc.

Harold E. Wood & Company

"

14

COMMERCIAL

THE

(1626)

FINANCIAL

&

CHRONICLE

Thursday, April 14, 1949
ternational situation and for other

Conservative New England Fund

Bank and Insurance Stocks

Management

H. E. JOHNSON

By

As Reported

This Week—Bank Stocks
banks

various

The

City

York

New

variations in individual cases, the

there

were

were

in line with expectations.

Indicated earnings on

Although

-

■'

,

; *

some cases

first quarter

of 1949

as

The

principles

mentioned,

as

■■

...

•

Deposits

of Finance.

Mar. 31,
1948 V

•

*

1948

1949

1948

1949

Dec. 31,

.

Manhattan

of

Central

Hanover
<—-

Corn

Exchange

First

National

°-63

—

:

1,326,728

0.86

165,922

1.24

<1.21

750,858

17.00

20.52

5.41
0.29

4.88

2,309,540

0.30

1,037,114

1.16

*1.19

2,111,608

0.75

4,534,193
566,423

1.09

1.14

484,018

10.15

8.96

127,620

0.69

Public

National

U.

Trusts

.

^Adjusted

for

tlncludes

indicated

,

1.55

Trust_^_____

.:

-

.

corpo

515,991'

sion

Treasury

was an

deposits for the quarter was generally down. The
important factor and tax collections-increased gov¬

ernment balances with the Federal Reserve.

The
at

the

trend

loans

of

of the

end

quarter were, with a few

at the end of 1948.

exceptions, lower than

///>■;::

.

These various amounts
Loans

,

shown in the following table.

and

Discounts.:

Mar. 31,

V

1949

1948

U.

Mar. 31,
1948

Dec. 31,

1948

1949

1948

r

Government Securities

S.

Mar. 31,

Mar. 31,

Dec. 31,

;-.i

-(000's Omitted)-

Bank

Manhattan-

of

Bankers

Trust__

Central

Hanover

Chase

National

Chemical

—

—

&

Bank

*■

Tr.

$309,622

$344,796

$342,789

563,849

571,153

576,407

485,731.

441.902

449,775

477,387

425,538

418,156

491,795

590,525

643,386

1,524,426

1,482.834

1,405.957

1,334,139

1,482,078

1,725,309

540,438

560,799

432,571

386,884

415.567

415,757

-46,034

48,039

52,644

95,602

96,526

103,036

,70,140

80,285

73,765

462,675

461,605

486,341

104,344

110,333

77,143

317,343

325,693

373;005

1,012.290

1,158,058

$408,647

$455,974

'

Commercial
Corn

Natl,
Exchange

First

National

1-~-,
'J
—

1,034,441

810,900

920,758

959,611

429,049

308,798

370,705

395,088

572,764

605,912

496,440

939,831

970.586

1,080,514

—

1,397,011

1,423,085

1,276,311

1,657,371

1,737,912

1,949,523

Trust— *—

263,255

256,427

152,972

.140,307

Public

National

U.

Trust—

S.

For

___

City

York

New

-

419,701

Manufacturers
National

$434,482

Trust-

Guaranty Trust
Irving Trust—!

the

—

38,703.

quarter

the

248,900
135,597

V

37,944

trend -of

217,193

-263,466

213,330

248,764

268,883

76,614

81,759

69,895

174,310
•

25,600

•

declined

loans

in

sympathy

with

Five of the banks listed, Central Hanover,, Chase National,
New 'York Trust, Public National and U. S. Trust, were able to show
a slight gain for the last quarter.
year ago.

U.

S.

Government securities

banks,

Treasury operations

also

showed

were

a

declining trend for

dominating factor in this

a

connection.

Cinn.

New

Mr. Wil¬

carefully

t itutional

hospitals,
pen-,

Mutual.
been

public's

the

other

William H. Shroder and John H.
have

William
the

firm

March 31,1949
on

Request

'

Laird, Bissell & Meeds]
Members
York Stock

Telephone:

SAN

,

■Exchange

120 BROADWAY, NEW YORK 5, N. Y.

Bell

BArclay 7-3500

Teletype—NY 1-1248-49

(L. A. Gibbs, Manager Trading Dept.)




vice-

Street,

New

York

City,

announces.

Hardy with Colvin Co.
(Special

New

elected

presidents of Burr & Co., Inc., 57

Bank Stocks

Circular

been

to

The

Financial

FRANCISCO,

Chronicle)

had

been

pretty

fof >, and
generation, to

care

from

.-as

a

In

In

definite observable trend!

retail

distribution

Parkers urged

cussions of

stock

of Funds,

against
market

dis¬

-

action

recommended

also ihat

should

discussions.r of

avoid

dividual. items in

.in¬

folio

result of
.

a

company's portfolio. A

fund; is not ;an ITEM, it's a way
of. investing, a PROGRAM de->
signed for future performance; in¬
cluding the preservation of
chasing "power.
' ,

for

a

long time

v

Mr.

Mutual Trust and the present day
Mutual

Investment

Fund

in

this

country.
Mr.

Parker

traced

the

lack

of

CAL.

viously with Da vies

was

& Mejia.

to

pur¬

have

select

stocks

their ability,
highly favored
the unpopular

proved
the

both

well

as

hold- 5

lists of individual4
other
words, . the

as,

undervalued

stocks

combination

of

that

the

types

has

and

these

performed outstandingly over- the

long-term.
The

be

-

;

large

point

of

-

could, also

investor

stand¬

from rthe

appealed' to

convenience;/ im

ear¬

marking portions of an estate for,
specific
beneficiaries.
This ? re¬
duces the cost of estate adminis¬
tration

and

might

com¬

assure

for a » long
these bene¬

petent management
period of years for
ficiaries/'/

i

:

/

,

Appeal to the Big Investor:

per¬

formed the services of the British

funds

salesmen

Fund's Port¬

a

have been better'long-term

investors.

the sound work of Boston trustees;

Parkerfeels

that

Richard <1. Wallace

many

investors are not purchas¬
investments at present
because they do not like the mar¬
ket, the business outlook, the in-

large
ing

any

rsneofol -to

'

Chronicle)

Thje. Financial

CHICAGO,
Wallace
has

ILL. — Richard J.
become
associated

NSTA Notes

PITTSBURGH

The

third annual
The

SECURITIES TRADERS ASSOCIATION

Pittsburgh

Securities

Traders

Association

will

hold

their

outing at the South Hills Country Club on May 17.

Association

also

the;following 1949 committees:
Bodell, Young & Co.. Inc.
Membership: Richard W. Everson, Reed, Lear & Co., Chairman;
Frank Tiernan, Jr., Preston, Watt .& Schoyer, co-Chairman; Paul A
Day, Glover, & MacGregor; Charles Kalbach, Reed, Lear & Co.; and
Snowden Richards, Jr., Kay, Richards & Co.
Special Committee: Harry J. Steele, Fauset, Steele & Co., Chair¬
announces

General Program Chairman: G. C.

George E. Lestrange, Arthurs, Lestrange & Klima, James Lear,

Powell & Co.; Frank L. Satler,
C.

.

Richard

-•

with

Wallace

J.

Dempsey-Tegeler & Co., 209

South La Salle Street. Mr. Wallace
was

chell
years

with Remer, Mit¬
Reitzcl, Inc. for many
specializing in bank and in¬

formerly
&

C

stocks.

surance

;

v

—

pre¬

Paul R. Warwick, Jr.,
Go. Formed in Dallas h
DALLAS, TEX.—Paul R. War¬
wick, Jr. is forming Paul R. War¬
wick, Jr. & Co. with offices in the
Life

Southwestern
conduct
was

securities

a

Building

to

business.

He

Hotel Reservations: F. M.

Ponicall, Jr., Singer, Deane & Scribner,
Chairman; Wm. J. Ackerman, Reed, Lear & Co.
Speakers: Franklin Maroney, Blair & Co., Inc., Chairman; Owen
Kraft, BIyth & Co., Inc.; Wm. J. Ackerman, Reed, Lear & Co.; Stanley
Dodworth, Buckley Bros. .
Special Event: John R. Klima, Arthurs, Lestrange & Klima,
Chairman; Kenneth W. Moir, Chaplin & Co.; Thomas R. Davis, A. E.
Fidelity Trust Co., Chairman; Norman Ward.
Norman Ward & Co.; Laird M. Arthur, Arthur & Guy, Inc.
LaBoccie: Steve W. Steinecke, S. K. Cunningham & Co., Chair¬
man; John Ballard, Hemphill, Noyes & Co.
Insurance-Annuity—Charles N. Fisher, Singer, Deane & Scribner.
Chairman; William Vorsanger, Blair F. Claybaugh & Co ; Walter H.
Babbitt, W. H. Babbitt & Co.; James H. Scott, James H. Scott & Co.

wholesale

Dallas

formerly

Distributors

for

representative

Group of New York..

..:,

,

Hugh J. Devlin to Open
Own Firm in New York

Jr., Moore, Leonard & Lynch;'Edward V Hugh J. Devlin will

Kost, A. E. Masten & Co.

Golf: Paul F. Eves,

affiliated with Colvin & Co., Russ
Mr." Hardy

with

demonstration

sales-

has

in Tecent

Masten & Co.

Thomas F. Hardy, Jr., has become

Building.

in a
Mr..
Parker as the prospect. This stim-)
ulating exchange
of - objections
and answers brought to the fore
many prospect reactions.
/ \
engaged

Investors,

porated

son,

Burr Names Two V.-Ps.
Knuth

;

-

Funds

upward

r,

City

large portion of j
providing £

against the large in-j
vestor's own judgement.
*
t j
Mr. J. Denny May, of Incor-'

hedge

a<

the

.

19 New York

a

his total fund—thereby

ings then

Reed, Lear & Co.; Anthony E. Tomasic, Thomas & Co.; Wilbur John¬

With Gb'dden, Morris

Comparison & Analysis

be made

can

,

for.

Johnson & Johnson, co-Chairman; A. Lowrie Applegate, Geo.
Applegate & Co.; J. Ray Baldridge, Moore, Leonard & Lynch; Duane
B.
Barbour, Merrill Lynch, Pierce, Fenner & Beane; John L. Fitz¬
CINCINNATI, OHIO—The Mun¬
Following the dissolution of-Didicipal Bond Dealers Group of Cin¬ richsen & Co., announcement is gerald, Jr., Singer, Deane & Scribner; Albert R. Carter, Preston,
Watts
& Schoyer; George A. Depp, Chaplin and Co.; Robert Doyle,
cinnati has set June 6 and 7 as the made that F. v. z; Didrichsen and
days for their annual spring party. Charles J, Mullally have become C. F. Childs & Co.; John L. Emery, H. M. Byllesby & Co.; Wm. R.
A cocktail party will be held June associated with
Glidden, Morris & Foley, Reed, Lear & Co.; Sterling E. W. Graham, Graham & Co.;
6 for out of town guests and the
Co., 72 Wall Street,. New York Arthur R. Hei'ren; Harold K. Keir, Hemphill, Noyes & Co.; Cyril
Kenwood Country Club will be
Knock, Reynolds & Co.; Paul V. Lane, S. K. Cunningham & Co.;
City,
the scene of the activities on June
Guy W. Lewis, Peoples First National Bank & Trust Co.; Horace E.
X Besides the usual dinner, there
Now Coffin, Betz & Co.1 Matters, Moore, Leonard & Lynch; Albert J. Metzmaier, Jr., Mellon
will be golf, baseball and tennis.
National Bank & Trust Co.; Charles G. Peeler, Jr., Blair & Co., Inc.;
PHILADELPHIA, PA.—Neil J. Charles V. Shanahan, Singer, Deane & Scribner; Sydney Stolack,
Sullivan has retired as a partner
Blair F. Claybaugh & Co.; Raymond M. Taylor; Samuel H. Teresi,
With Boardman Freeman of
Coffin, Betz & Sullivan and the
Thompson & Taylor Co.; S. J. Titus, R. C. Schmertz & Co.; Austin
(Special to The Financial Chronicle)
firm name has been changed to
Umstead, A. E. Masten & Co.; John W. Wolf, Kay, Richards & Co.;
BOSTON, MASS. — Julian K.
Coffin, Betz & Co. Offices will be and
Roger J. Zingerman,,Merrill Lynch, Pierce, Fenner & Beane. f ,
Croxford and Melvin S. MacDonmaintained in the Fidelity-Phila¬
ald are now with Boardman &
Publicity Committee: E. E. Sweitzer, E. E. Sweitzer & Co., Chair¬
delphia
Trust
Building,
Phila¬
man; Fred L. Stout, Stout & Co.
"
Freeman, Inc., 75 Federal Street.
delphia.
Entertainment: Louis W. Voight, Hemphill, Noyes & Co., Chair¬
man; George W. Sheridan, McKelvey & Co.; Elmer E. Powell, E. E.

To

appeal

investor to liquidate
some of his holdings and go more
heavily into unproductive cash, ■*
or
the„ alternative of employing
"detached"
competent
full-time >
big

appetite

Investment

steadily

issues in

-\vy

taken

down

the

hand,

just as insurance salesmen
approximate [avoid discussing the
merits of

-

generation, partly

stocks..•* On

common
,

stating that Funds should not be
purchased for market actions He

n s

fund

England

man;

Didrichsen, Mullaily

Municipal Men
Hold Outing

INVEST¬

i

404,946

general business conditions.
Seasonal factors were also a considera¬
tion,
In most cases, however, the totals outstanding were above a

most

of. this

They have

are

was

Mr.

Mr. Parker stated that money in,

handed

down and totals

investments was also

and

Trustees"

holders, ^in¬
cluding
1,432

trust companies and
companies. The total

$61,000,000.
*

The trend of

funds,

assets

stock dividend paid in January, 1949.
earnings of City Bank Farmers Trust Company.

"Boston

years; a

churches,

insurance

111,511

133,239

*

old

Investors, has
32,121
stock¬

as

•<■

512,591

.

rated

investors, such
Parker

William

< 622,700

'642,399

/;

In-

company,

$1,033,285

1,325,455
1,417,743
4,295,185
1,435,190
1,168,936
183,678
188,093
' 772,123
:
750,631
523,324
519,734
.2,330,237
2,332,836
1,113,182
995,260;
2,223,383
2,085,683 *
4,731,275,
4,616,665

•

511,379

r,

.1.56

tNational City

S.

4,067,177

0.73
;

i

Trust

Manufacturers

York

1,325,645

0.75
—

'Guaranty Trust
Irving Trust

New

V 1.50
V 0.45

1,325.472
1,400,785
-4,237,000

0.81

Trust

National

Commercial

$1,180,773

1,360.714

,

1.50

Z

Bank &

Chemical

,$1,080,920

0.87

0.63

National

Chase

$0.53

$0.58

Bankers Trust

•

Mr. Parker's

(000's Omitted !
Bank

the

In answer to the question "Why
past
and knowledge of the American public
present lin "ownership" securities prior to buy a lot of things in a portfolio
■of
deve lopments ; the- twenties', the'brokeniaith due
a
fund
in order
to get the:
in this field to the '29. collapse;-and the shat¬ stocks you want?" Mr. May stated
at the New tering of faith in '37, Interest has
that- -the
record
proves
stock ■■
York Institute .continued steadily-downward in
selection
by fund managements

"

Mar. 31,

conservative

liam A. Parker, the chief executive officer of Incorporated Investors,
discussed
the/*
—

Dec. 31, 1948.
Per Share

today's

the foundation of the three early MUTUAL
in Boston back in the middle '20s.

pared with those for the same period of 1948 are presented below.
Also shown are the deposits at the end of the periods and as of

First Quarter

Incorporated Investors likens

MENT FUNDS founded

comparative purposes the indicated earnings per share of the
various New York City banks for the first quarter of 1949 com¬

Indicated Earns.—

to

management for

of

the

of

For

'■

*

successful "Boston Trustees" and to British trust practice. Advises
salesmen to stress overall program in lieu of portfolio items.

overall basis were little changed from

reported on a quarterly basis slight gains were
the case of National City which reported $0.77

officer

-

careful mutual fund management to traditional conservative and

results in most instances

where net operating earnings are
shown. Such was
per share for the
against $0.74 a share a year earlier.

In

the previous year.

an

Chief executive

issued their

last week

ended March 31.

period

the

for

statements

quarterly

in

by Parker

by DOUGLAS K. PORTEOUS

An

reasons.

offices

open

0t 40 Wall Street to engage in the
securities business. Mr. Devlin was

with

formerly
Inc.

/

*

With

Fitzgerald
>■

*.

&

•

Co.,
-

•

Shaw, Hooker & Co.;

(Special

SAN

rain

:

•

B.

Shaw,
gomery

to

The

Chcunicle)

Financuil

FRANCISCO, CAL.—Lor-

is

Mackey

Hooker

Street.

&

now

Co.,

Mr.

1

with
Mont¬

Mackey

the past was with Brush,

in

Slocumb

& Co. and E. H. Rollins & Sons.

(1627)

15

BW MMM1848— Discovery

of Gold in California! The ringing

"Gold"—heard around the world

chants, industrialists, farmers and
and

the

use

natural

vast

the Gold Rush

resources

men

of science

its predecessor companies have worked side by side with

cry—

brought miners,

mer-

commerce,

develop

to

of the State. Almost since

days, Pacific Gas and Electric Company

agriculture and industry to provide dependable

public utility service

vital to the growth and development

so

of the State. The Company looks forward to
opportunities for service to the public in the

or

even greater

ahead.

years

•-2-1849

Highlights of the

Annual Report...i948
43rd

Miners' ditches and flumes

lay

foundation for P.G.& E.'s hydro¬
electric system of later years.

REVENUES
Gross

operating

million

dollar

CONSTRUCTION
Substantial progress

passed the two hundred
1948, reaching a total of

revenues

mark

in

Sales of gas produced revenues of

$117,000,000

increase of $19,922,000,

an

10.8%, over the preceding year. Other income, V
largely from interest and dividends, amounted -to -

from *'electric

Revenues

totaled

service

$136,276,000 and accounted for 66.7% of gross oper-

ating

revenues.

$1,404,000,

qr

or

water

and

|

steam

.7% of the gross.

of

electricity reached

a

year

was

This

gain

was

ment

of sales

winter

cubic

V'

the previ¬
or

6.7%.

10.2%,

or

over

1948

i

OWNERSHIP

was

First electric power plant for San
Francisco—first central

and the

remaining 60,129

of the Union and in

were

located in

k".

y

map

every state

,'///,

1%

foreign countries. The aver¬
age holding is only 93 shares, with a par value of $2325.

the previous year's record

station

established in the United States,

of record. Of these, 94,130 were California residents

territory. Sales of gas also
peak, increasing 15,091,000,000

total of 163,082,000,000 cubic

to a

over

our

new

Francisco Gas Company

Pacific Gas and Electric Co.

particularly gratifying in that it
afforded us an opportunity to welcome 12,966 new
stockholders into the Company's family of owners.
This
brings to 154,259 the number of stockholders

achieved despite the temporary curtail¬
occasioned by the unprecedented mid¬

a

feet,

gain

564,000,000 kilowatt-hours,

drought in

established

San

formed—earliest predecessor of

obtained from securities sold during

STOCK
The year

high record of

new

9,037,000,000 kilowatt-hours. The
ous

1852*

V9

the year.

SALES
Sales

was

<7

the Company's

on

32.6%, and sales of

was

or

$66,562,000,

made

long-range construction program started in 1945, im¬
mediately after the release of wartime controls. This
is not
only the largest power building program in
America today but will involve in the next two or
three years one of the major natural gas
pipe line
projects in the country. More than $158,000,000 was
spent on construction work in 1948, of which about

$204,242,000. This

$390,000.

was

PROGRAM

some

'

feet.

PERSONNEL

CUSTOMERS
At the close of the
year

service

to a

of. 128,086
customers

and

water

years,

3d

the Company

was

total of 2,145,560 customers, the net

surpassing

even

gain
the 1947 record. Electric 5

totaled 1;208,579, gas customers 919,623,
and steam customers 17,358. In the
past ten

the Company has extended service

660,000

supplying

tq more

than

striking evidence of the
extraordinary growth in population which has oc¬
curred in our field of operations/
;;
i
v /
new

customers,

a

.

.

At the

year-end there were 16,797
employed by the Company, 1062

men

more

and

women

than

at

the

end of the

preceding year. The additional employees
were
required by the expanding volume of business
and increased construction
activity. Wages and salaries
paid all employees totaled $62,297,000 in 1948,
$4,882,000

total, $36,972,000

.

Folsom

Powerhouse

operation

—

placed in

first hydro-electric

plant of P. G. & E. system.

was

,

High voltage electric

power

transmitted 142 miles from Col¬

*2

gate Powerhouse to Oakland. '*

EARNINGS

Earnings for the common stock were $2.51 per share upon an average of 7,372,582 shares outstanding
during the year. This compares with $2.57 per share upon an average of 6,565,358 shares outstanding
during 1947. Total common shares in the hands of the public at the end of 1948 were 7,540,296, com¬
pared "with 6,869,441 at the close of 1947. On these year-end totals, earnings were $2.46 for 1948 and

\y- —m

4905 -2C
I ^

$2.45 for 1947.

For the past quarter

has

rates

\s~l~

t"

than in the previous year.

Of the
charged against income as
operating expense and $25,325,000 was charged
against construction jobs.
:
more

VA
.1

of a century the trend of our
consistently downward. Practically

been

alone among

On its

vast
postwar development program the Com¬
has already spent in excess of $300,000,000.
Expenditures during the next three years probably

pany

all the goods and services included in
the average household budget, our charges for both
electricity and gas are substantially below prewar

will be

levels.

the

Now, however, the cumulative effect of higher costs
has

made

it

apply to the California
Commission for authority to increase

necessary

Public Utilities

to

even
larger. To enable us to obtain this addi¬
capital most economically, it is essential that
rates
charged for our services continue to produce

PacificGasand Electric Company,

consolidating earlier systems,'

incorporated October 10, 1905.
/■fe—.

!

r'*'&t

tional

sufficient

fair

revenue to cover

return

on

the money

operating costs and yield a
invested in the business.

1914
P.G.& E.

successfully inaugurates

customer-ownership financing

This was the first application of its kind in
twenty-eight years;
; •' :
O •••.■

gas rates.

plan, first in America.

'■'

• <

PRESIDENT

PACIFIC GAS; AND ELECTRIC COMPANY
'

'

J copy

of

our 4948

SAN

FRANCISCO, CALIF.

Annual Report to Stockholders will be suppled upon recjuest to £. ]. Beckett, Treasurer
Natural gas

introduced into ter» ]

ritory served by P.G.& E. by pipe
line from Kettleman Hills.

r




16

THE

(1628)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, April 14, 1949

Prominent Personalities

Mutual Funds

(Fourteenth of

By HENRY HUNT

=

-

President, Eaton

Market Review
When

Trotpecfus
your

upon

NATIONAL
RESEARCH
120

request from

investment dealer,

or

from

SECURITIES

"As in

'

cut like

;

1948, the March market came in like a lamb and

lion.

a

&

While there

prices

commodity

further declines in business

were

during

and. employment

the

month,

went

activity,

investors

pleased that the adjustments to a normal peacetime
orderly than they were in the early 1920's. They
were at least willing to buy well situated stocks that give good yields
since the.y felt that some seasonal upturn in business is suggested by
the report of the National Association of Purchasing Agents that
production generally is being maintained and in some cases is im-"
basis

BROADWAY, NEW YORK 5. N. Y.

were

proving.

see

he

being.
offsetting some of the unfavorable trends in business is
feeling that President Truman's honeymoon is over, that Con¬
gress is taking a realistic arid independent view of the situation, that
the North Atlantic Defense Pact has improved the position of the free
enterprise nations, and that inflation is considered a 'dead duck'
even
in Washington where instalment restrictions were eased and
security margins reduced.
Encouraging was the example set- in
Canada where personal income taxes are to be reduced and where

Nation-Wide Securities Co.

10%
the

income of individuals

of the dividend
total

income

drawing
recent

more

tax

While

due.

money

from

is to

months, that trend is expected

' % /.

in the

reply

CALVIN BULLOCK

Index

our

of

the purchaser of stocks

long-term

six, months profit

His

near

12

out

Eaton

of

since.
have

no

phenomenon but it is

new

a

i IH [ T

NEW

YORK

5

N

.•

-

-

a

"The acid test

"To

to whether

as

or

produce

any

are

no

that

Charlie

business

the

He believes that

management.

a

stake

Eaton

of

finds

investment

in providing new

in the

economic

welfare

procedures, developed. He further believes that
necessary nor desirable to oversell the invest¬
company idea." It has already proved its worth, and

in between for work

evident with the passage of time.
pretty busy program, he finds time

more
a

on

committees in the investment

coun¬

sel, investment company, and investment banking fields. He
a
Director of a leading Boston bank -and a Director or

is

Trustee of other financial institutions and
izations.

:7

y

'.J I

s

charitable organ¬

•.

told Charlie once" about the Indian, living on
reservation, who was offered a job in NewiYork
with bright prospects of success after hard work. The Indian
Someone

his

tribal

asked "What for?" and

was

told "So you ran make a lot of

and retire and go fishing."

The Indian's reply was
fishing now." Charlie got a laugh out of the story,
as he always does, but was not impressed by the philosophy
expressed.
You will never convince him that hard work
is not good for everyone. Then you can enjoy your fishing.
money

"I

They

can

go

worth-while results,

a

retail investment, trust

some

BONDS

Don't Be
"One

of

the

"The Death of

PREFERRED STOCKS

a

hits

of

asleep

a

the

Salesman."

"Willy Loman"

season

It

Broadway is

on

js the story of

Wiliy

a

play called

Loman—

a

CUSTOMER,

..

"He meant

(Series S1-S2-S3-S4)

to

his light,

He
Prospectus from

became

y

seemed able

never

side-tracked

with

For years he battled with his

to

false

own

.

'click'

as

he

had

wanted

to.

goals

and sales will-o-wisps.
conscience until finally, at 63, he

realized his life had become a
failure, simply because he had over¬
certain fundamentals—and his failure had ruined
the lives
of his faithful wife, and two sons'; -Beset
by

looked

Keystone Company

worry

of Boston

and distraught by

disillusionment, his spirit broken and his health ruined, Willy took
what seemed to him to be the
only way out^ ending a life which had
become unbearable, - all because he had failed to
understand the

*

meaning and importance of

Boston 9, Massachusetts
! *

..

"There

smartness.

was

a

time

Today it is

in the old days were
once-over

men.

waiting for

them with

shot

guns.

and

can

progress to

Secondary Uptrend Indicated?
wholehearted signal that the secondary trend of

the market
given by both the Dow-Jones industrial and railroad
averages when they passed previous highs last week. At the week's
highs the industrials had advanced over seven points, from the
Feb. 25 low of 171.10, while the rails at their high were more than
ihree points above the Feb. 24 low of 46.34.
upward

is

#

was

"According to precedent, secondary movements last from three

weeks to three months and
the last

retrace

from one-third

leg of the primary movement. '■

to

two-thirds of
*

V j '

..

"

well, cherished certain ideals, worked hard according

yet

blind,

and

"A

run-

-

were

sified Services, Inc.

salesman, who could not or would not see the wisdom of
building his business future on a foundation of SERVICE TO THE

COMMON STOCKS

victims

hardly expect to enjoy the measure of
which he aspires, no matter what he sells."
—An excerpt from "The Broadcaster," published by Investors Diver¬
or

success

of-mill

(Ssrie, K1-K2)

many

were

of their savings in certain kinds of Funds.

"And finally, if you really want to shoot for a BIG volume
lay your plans to sell a lot of people a lot of times—not a lot of
shares to a few people—once."—Putnam Fund Distributors, Inc.

(Series B1-B2-B3-B4)

too

disciples of 'Caveat Emptor.' But those days are gone
forever.- Today, if anyone must beware, it is the salesman. He who
has not learned the value and importance of SERVICE, is either

in the Mutual

sales gadgets—no trick selling ideas—which elim¬

why they should put

investing their capital




in

country

While Charlie has

because

not you truly are

inate the time and work it takes to
explain to customers face-to-face

INVESTMENT FUNDS

Congress Street

coincidence

mere

sound

ment

Such opportunities, of
taken advantage of fairly

program must be planned with care and conviction.

"There

50

a

wholeheartedly

that fact will become

of business

Fund business for keeps is your willingness to sell
your most cher¬
ished customers—before you start
working on 'the prospect list.' J

Certificates of Participation in

Xke

not
so

—From "Keynotes" published by The Keystone
Company of Boston.

Funds

or

his

in

it is neither

do not exist for long, and they are
quickly when publicly recognized. The spotlighting of these unusual
factors by a magazine with the editorial
standing of 'Life' may well
prove to be the factor which crystallized public opinion in this case."

Custodian

local inrostnumt dealer

is

the

and

once

Four Time-Tested Rules

your

occupied

new

the investments company provides a real
bulwark for our capitalistic system of free enterprise.
He
believes
in
the competitive
system even for investment
companies and that it is in the ordinary "give and take" of
honest differences of opinion that right principles are evolved

few.

course,

.

was

,.

"Unfortunately, there will be only

K, :ystone

has

a

company

an opportunity to
buy 'dollars at a discount.' A few investors
going to have the opportunity to buy securities at outstandingly
'generous income rates and with every confidence that their capital
.

of investment counsel

shareholder-investors with
of

are

will grow.,

It

since.;;

1924, and
pioneering spirit. Charlie has been a pioneer ever
years, investment habits in this country
changed greatly. Investment management as a special¬

It

to have

Y

ever

Fund, which it manages, and for which it also acts as under¬
',-v:V
7 7v-; <••<7'

bargain counter but the returns on investment were out¬
standingly generous. A relatively few investors laid the foundations
for fortunes by recognizing value and
acting on their judgment.
"Today, although there has not been the sharp decline in price
that the 1932 panic created, there has been a tremendous rise in the
underlying assets of. business. As a result, a few investors are going

HUGH W. LONG & CO.
WAll

At that time, not only was the ownership

established.

was

writer.

are

Perhaps

Howard

Eaton & Howard Balanced Fund and Eaton & Howard Stock

the

on

16

1932.

Eaton, Jr.

investment company as a public institution.
Here
again Eaton & Howard ventured into the new field. It or¬
ganized two mutual investment funds which bear its name,

twice in the average person's lifetime does a combination of cir¬
cumstances create such an opportunity.
Such, for example, was the
in

Charles F.

with the First National

mutual

the

or

case

still

Over the 25

himself

one.

rare

came

he

ized service has come of age, and its growth has been ac¬
companied and augmented by another important develop¬
ment—the inception
and growth in this country of the

.

"This is

was

field

required

selling at less
;han the value of their cash on hand.- In other words, a share of
jtock can be purchased at a price which discounts the actual dol'prs in the comnany's treasury and
completely ignores the value
of the plant equipment, good
will, patents and processes and man¬
agerial skilL
'
/
-.V'„ ; :
-

&

The

"The March 21 issue of 'Life' points out that the stocks of many

companies

that

schooling included Exeter and
after which his first venture

thoughts and energies

ll
for
iB
$5
01A
$
well-known and established American

is

ton

Gingold pointed out that
in

15

of

Corporation of Boston, predecessor of the present First Bos¬
Corporation. Shortly thereafter, in 1924, the firm of

:v:\

last 16
years.
Some o^the services that were so correct in their predictions
;hat the market would decline in November after the election, re¬
gardless of which party won, are now predicting an equally sharp
advance."—Written by'Ralph Rotnem of Harris, Upham.
"
Sept

on

inference

into business

March 15 would have been able to take a

on

"Because that is where I

The

Harvard,

Speculative Confidence rise in each of the last

column in the 'Wall Street Journal,' Oliver

one

thinks well of what he learned at home
in Princeton, Maine. '

five weeks. It has been eight months since we have had two con¬
secutive months of rally in the market. Only in two .years out of the
last 30 (1931 and 1920) has the market failed to rally for at least
two months after a decline lasting as long as this one has." In his

Established 1894

When

sons

was

from."

encouraging of all has been the action of the market
itself in holding above the February lows and in showing greater
volume on advancing than on declining days.
During March there
was
a
willingness to take a greater risk in the market which has
made

forgotten it, and that is why you
on a trip to the
woods, where
really relax, on the few occasions

asked him "Why do you
always talk about Princeton, Maine?," his

"Most

or

Inc.

him off
can

spent his early days there.

deducted from

be reversed

to

Howard,

the lungs, once experienced, can
forgotten.
ChaYlie Eaton has

his young

government has been with¬
economy than it has put back in

our

&
"

when the demands of business permit.
Born
in
Princeton, Maine, Cnarlie

our

future.
Investment
idlers

be

from

comes

be

never

This indicates that the decline in industrial activity which

"Also

Fund, Lm
Dividend Shares, Inc.

in

gen

never

the

Bullock

man

.

more

evident at the end of 1948 has lost momentum for the time

was

a

'Way Down East" in Maine,
not far from the border of Canada, ne is not likely to forget
the fresh air, the sun, the wind, the
lakes, the white water
of the rivers
and
the
good hunting and fishing, of his
youth.
That feeling of physical well*
being which comes from plenty of oxy¬

rather

seemed

CORPORATION

Series)

a

CHARLES F. EATON, JR.

a

one

when

simple little word

selling

was

demonstration of

Willy Lomans.
They never visited

They
a

...

considered

SERVICE!

display of
SERVICE.. Many salesmen
a

were 'hit and run' boys—
given territory a second time

"But before readers attempt to measure the possible extent of the
current (or possibly recent) secondary
uptrend, let them consider
this

record

of

futility of the

stock market,

which shows the price

of the Dow-Jones industrial average at the close of various
quarters
in recent years:
*
;
v

.

;

Date

Dec.

31, 1946

March
June

Price

_l.il——^177.29

31, 1947___

30,

1947__i__

Date.

March 31,

7

—177.20 Dec. 31, 1948.—
177.30

Sept. 30, 1947____________;._177.49

March
-

-

-

31,

Price

1948.-._________177.20
177.30

1949______1____177.10
7

•

-

,"Within the period covered in the above list there have been
bull and bear market signals, but the almost
stationary average
suggests that there was little advantage to be gamed from following
them."—"The Dow Analyst."

Volume 169

i

Number 4794

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1629)

A-

can

cash

life of the people as well

the people themselves.

expanded activity.

as

Dictators—Mussolini, Hitler, Stalin,
tute their edicts for economic law.

state" must do that

American

however great, is not enough. There must be the

The
worldwhether
today rulers
is at gripsplan
overthetheeconomic
age-old
question

same

pattern since

years

ago.

First,

and

more

revolt, expressing itself in
markets, the last

resort of

spect for natural

compulsion with

people who have

just

popular

demonstrated

a

way

principle that

such

on

workings of

a

free

a

a

economy,

economy
never

there

of oil and gasoline.
sthe United States
to meet
out this

to

1948

fear of

was even

a

miracle, it

wide-spread suffering.
What happened?

the

end

of

result,

gas

liquids

a

year,

i

you,

the public,

were

buy—more Cities Service

total of $593,000,000 worth.

'f '

-

in

year,
:

..

.

itr

'

■

its production of crude oil by 10%.

V

.

It refined 72,000,000
over

barrels,

1947 of 10%.

an

increase

,

It furnished customers 372

billion cubic

feet of natural gas, an increase of 17%.

ration and fix

Its sales of electric energy were

-

"

just short

of 3 billion kilowatt hours, an increase of \
gas.

In fact,

12%.

;

.

100,000,000 barrels of
to the stock

piles of the

of crude oil and natural

increased by two billion barrels,

were

and natural gas

reserves

a

In order to do this Cities Service increased

shortage

said, could prevent
>

petroleum had been added
nation, and proved

was

of spirit I

its part in this ti'ansition from

agitation in Congress

power to

Plenty of oil and

the

men

scarcity to plenty. As

15 per cent short of crude oil

was

can't"putsch" oil around—nor

Cities Service played

needs, and sato little hope of wiping

give the Executive the

by

acute

an

Government agencies estimated

deficit. There

prices. Only

-done in

was

toward

been done

products and services than in the previous

of getting things done.

ago,

always striving. It has

able to buy—and you did

incident falling naturally into the old American

year

i

which it is

fact,
'

pro¬

production swings the price

excess

night to bring back the balanced

You

large scale and in such

a

today

so

by Executive Order.

nation had the opportunity to see

short period of time the
—an

of scarcity in

plenty today in 1949. Furthermore,

Economic law, unhampered, thus works
day and

more re¬

discovered—not made.

are

Seldom has

of

pendulum downward,

man-made law.

•economic laws

one

impossible for the

convert an economy

rising prices automatically stimulated

as

duction

market-place than in

In America, we have
gone on the

industry to

1948 to

acceptance of black

an

law in the

oil

fixed prices 4000

more

profit incentive and the profits of

earlier years it would have been

Every effort has followed the

greater and greater penalties. Then follows

credit to furnish the wages and tools for the

Without the

et al.—substi¬

Every "omnipotent

Hammurabi

or

In

spite of these increased

its

activities, Cities Service

program

of development and

expansion, investing $112,000,000 in 1948. Stimu¬
lated

by 8 trillion cubic feet!

forward

carried

by the free air of American endeavor, unham¬

pered" by totalitarian^plaiming", it is'getting Teady

It

was not a miracle.

natural

American

consumption

by

way

the

On the contrary,

it

was

the

of guiding production and

free operation

of the

price

in'order to
This

mechanism.

The anticipated

shortage caused competition to

going

to do its

concern,

A

more

detailed

account

of the "American Incident" is liven in the

enterprise system is still

a

and proposes by precept and example

part in

keeping it

so.

® Service
W. ALTON JONES, President

Company's Annual Report to stockholders, a copy ol which will
be sent upon request. Address, 70 Pine Street, New York S, N. Y.

resources

«.

Company believes that the United States of

centive to discover and produce crude, but incentive,

Cities

It-also added to its financial

meet those demands.

America under the free

bid up prices of crude oil. This created
greater in¬

yr'»




for further demands'of the* public for oil;
gas, and
electric power.

17

Thursday, April 14, 1949

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(1630)

.18

would

Mutual Funds' Role in Investment Business

for

be

equally poor judgment
to underestimate the
of, competent investment

anyone

value

President of Eaton & Howard, Inc., tells
York Investment Association proper use of investment trust
F. Eaton, Jr.,

Charles

Canadian Securities

New

shares

McKAY

By WILLIAM J.
Political

outweigh economic logic in

considerations continue to

official circles. With the prospect of a
June
election in
Canada the Liberal administration's principal
objective appears to be the winning of electoral approval; the effect
on the economy of successive con-<fc
cessions is apparently of minor found economics with politics by
importance.
Official statements the pursuit of the policy of nationcontinue to place emphasis on the alization of industry and finance
undoubtedly praiseworthy results on a still broader scale,
The sooner therefore that the
achieved in the past period of the
sellers' market. Without the polit¬ problem is considered from- a
ical necessity to create a favorable purely economic as distinct from
a
political angle, the closer will
impression, the Dominion govern¬
both

ment

Canadian and British

paying serious be the approach to a satisfactory
economic pitfalls solution. On the other hand if

would now be

the

to

heed

It should

be borne in

in

mind that

is

present gratifying $1 billion
total of exchange
reserves was
bolstered during 1948 by many
non-recurrent items. The past year
moreover marked the definite end
of the seller's market.
Thus the
the

period ahead will

immediate

fraught with exceptional
ties for countries which

continued

will eventually dictate

influences
events.

of

There is now evidence

elsewhere
rigid exchange controls and
recognition

increasing
that

in

unrealistic currency levels are

compatible with ability to compete
for
export outlets in a buyers'
market.
Consequently economic

be

difficul¬

ment

recently before the New York Invest¬

Inc., investment managers, discussed the role of open-end investment
banking and brokerage business.

trust shares in the investment

"Mutual in-

stances

vestment
c o m

whether

Eaton

Mr.

tition with the

regular

use

func¬

not

of

invest¬

ment

funds

use

Charles F. Eaton, Jr.

by bankers and brokers can sup

plement

world

competition in dwindling
markets. The situation in

cluded in

the soft-currency cate¬

nevertheless

gory,

conse¬

a

as

see

evidence of it every

pointed out
companies were
forming common trust funds in
recognition of the necessity foi
handling
their
small
accounts
more
efficiently and effectively
He explained how, in recent years,
several
groups of religious
anc.
Eaton, in his talk,

how

fol¬

Proper

I

those

complement

and

functions."

is being
to relatively unprofitable

trust

large

charitable organizations also have

commingling the investments
of their various affiliated institu¬

been

tions

nothing

"are

said,

Eaton
or less

Mr.

more

than

recognition of the inherent ad¬
vantages of sound and construc¬

a

investing. The sooner
comprehend the significance
this trend and the sound prin¬

tive group

devoted

of

and lumber in¬ quence of its. relationship with the segments of your business. Effi¬ ciples on which it is based, the
dustry is already causing growing pound it would also be sympathet¬ cient and effective use of one's better
you will be able to solve
concern; in the event of a deval¬
ically affected.
time
and
energy — continuously some of your own personal prob¬
uation of the Swedish kronor the
During the week both the ex¬ applied—is vitally important tc lems as an investment man and at
forestry industry's export problem ternal and internal sections of the the
proper
functioning of any the same time render a broader
will become even more serious. market were steady but inactive.
business.
This business is no ex¬ service to your clientele.
In the case of another staple Cana¬ The corporate-arbitrage rate was
ception.
To insure our own eco¬
"I have talked to you thus far
dian export item—base metals— firm at 11 %% and free funds re¬
nomic
survival
and
to
render about
your
small accounts, for
falling prices, and increasing pro¬ mained almost stationary around better and more profitable service
this is the particular area in which
duction elsewhere, are * likely to 6V2%. It is somewhat remarkable
to the investing public we must
there exists such an urgent need
pare still further the Dominion's that the recent wave of currency
seek every possible means of im¬
the

pulp,

paper,

vulnerable exchange reserves.
Meanwhile the

rumors

exerfs a! vital in¬
the Canadian economy

has

so

far created no ef¬

.whatsoever

fect

Brjjiph situating

which inevitably

here for Canadian

fluence on

ities.

the ^market
internal secur¬

in

The stock markets were

dull

irregular and recorded more
losses than gains. There was how¬
ever
considerable activity in Win¬
Labor government to paint a rosy
economic
picture it is likewise nipeg Electric on reports of a $45
gives cause for even more serious
concern.
Despite the efforts of the

and

only possible to do so by pointing
to the achievements of the past.
Even the highly creditable first

purchase price, so far unconfirmed
by
the
Manitoba
Government
Golds held most of their recent

improvement in your opera¬
tions.
Let me say now that there
are a number of your larger ac¬
counts which will use investment

provement on
proceeded

resume

of

the

growth

of

the

$e

score."

*to give

briei

a
background

anc

investment com¬
in recent years.,

business

pany

this

stating that:
(1)

It is

sound method of in¬

a

vesting as proven by its growing
acceptance and use in. this coun¬

V-"!

try.

advisedly so.
Such
funds present a logical method ot
acquiring not only a group of
and

funds,

and

cation

disproportionate
time and effort

up a

Hill Brothers.

MUNICIPAL

George Atwood Joins
Staff of Cohu Corp.
George D. Atwood, former part¬
of Reinhart & Bennett, mem¬

ner

bers

CANADIAN STOCKS

of

the New York

Stock Ex¬

of

which

your

could

be

more

advanta¬

geously devoted to your larger,
more
profitable accounts and to
continuous search for

the

CORPORATION

new

"You

cannot

—

diversification

nobody

and

is

can—

supervision

make them

profitable business
without
introducing more effi¬
cient
and
effective
procedures.

now

Cohu

■;hat caused

vestment Funds.

A. E. AMES & CO.

&

INCORPORATED

Carlisle-Jacquelin Co.
Carlisle & Jacquelin, 120

TWO WALL STREET

way,

NEW YORK 5, N. Y.

the

will
WORTH 4-2400

'

NY




1-1045

1

Broad¬

New York City, members of
New York Stock Exchange,
admit

James

M.

Brown,. Jr.,

Howard

into this

us

to create the Eaton

Funds

which

got

an

honest difference of

certain

con

should

be

whether

or

not the use of mutual funds tends
to

"freeze"

the

money

involved.

and

can

selling effort and expense on your
part."

"Bawl Street Journal"

Seeking Contributions

in

most

in¬

hardy
perennial,
"The
Journal," is getting

That

Street

Bawl

ready to make its annual appear¬
The

ance.

date

this

will be

year

June 3; the occasion, the 25th an¬
nual Field Day of the Bond Club
of New York.
invitation

An

Street

Wall

to

contribute articles
or advertisements lampooning men
and events of the year in finance,
business and politics has been is¬
sued by David B. McElroy, Chair¬

jokesmiths

to

of the "Bawl Street Journal"

man

Straley,

Committee, and John A.

Contributors whose

editor.

is accepted

rial

mate¬

will receive free

copies of the paper,, a publication
which invariably becomes a col¬
lectors' item.

■■

;

.

■,

May 1 is the deadline for con¬
tributions which should be sent to
Mr.

McElroy

Co.

or

Mr.

J.

at

P. Morgan

Straley

at

Hugh

Long & Co.

&
W.

„

V

Burnside Director
Mortimer B. Burnside has been

elected
States

director

a

Air

United

of

Conditioning Corpora¬

tion.

Austria: Crossroads of Europe—
Ernest

L.

Bogart—Citizens

ference

on

International Economic

procedures

are

Delivered
ture

Chamber

the

of

Commerce

of

Fu¬

the

Institute—

Washington 6. D. C.
—paper—$1.50.
United States,

Epic of American Industry, The
Blaine Walker—Harper

—James
&

Street,

33rd

49 East

Brothers,

New York

16, N. Y.—cloth-r-$5.
Welfare

Expanding

•,

ican

Enterprise
41st

East

in

Free

a

Lonigan—Amer¬

Economy—Edna

Street,

Association,
4
New York; 17,

N. Y.—paper 50£.

of

Manual
Loans

;

:

■:

;,

tional

Relating

Banks—American

New

I
urge
you
to be
discriminating in voicing1 your
feelings on such matters.

Laws

by

Investments

and

a

12

East

4

to
Na¬

Bankers

36th

Street,

York, N. Y.—paper—$1.

.

r

and

spect

only hope

that in the few

allotted

to

me

I

may

thinking and
imagination in re¬

have stimulated your
aroused

your

gard to this

whole growing field

open-end investment trusts. Let

me,

and

Business—Sec¬

Economic

1948

Association,

of

Pricing

American

of

ond

deemed

customers. You have
responsibility in this re¬

grave

Con¬

Union, 80 Lexington Avenue, New
York 16, N. Y.—paper.

half of your

in

None

'freezing'

repeat

and

minimum of extra

a

meth¬

and . 'proper' because you
demand them for and on be¬

fallible.

such

in the invest¬

'right'

that

some

increasing

an

additional

business with

a

for
the 'business.
stated, "in the last

ods

cases," he declared, "but I believe

individual floor

are

will help govern what

been active

an

and

ness

"Undoubtedly that is true in

as

opinion on

banking and brokerage busi¬

Exchange Member, to partner¬
ship on May 1.
Mr. Brown has
broker.

welcomed

analysis, you men

"I

occasionally he is asked by

you
of

troversial matters

thing

ment

business."

bankers

in any

as

competition and

growing industry,

moments

hat

here,

us

Mr. Eaton then went on to state

investment

out

"After all," he

give these small accounts adequate
nor

thrashed

be

good

business.

associated with My own firm recognized this years
In fact, it was precisely the
Corporation, 1 Wall ago.
Street, New York City, in the Re¬ necessity for the better adminisration of our smaller accounts
tail
Distribution of
Mutual In¬
change,

The

amount

the broad diversifi¬
constant supervision

BONDS

PROVINCIAL

bringing

management.

investment

tinuous

Re-elects Officers

amount

satisfied, and what
they will be

important,

most

In addition to

St. Louis Stock Exch.

ophel, Reinholdt & Gardner; Bert
H.
Horning, Stifel, Nicolaus &
Co., and Spencer H. Robinson,

business,

increase your

individual securities, but also con¬

(2) It operates under sound provided by mutual funds, the ad¬
and
base-metals led by
quarter's export figures undoubt¬ gains,
laws, i.e., the Investment Com¬ vantages of simplicity and free¬
edly still reflect contracts placed Consolidated Smelters which
from
detail
have
strong
Act of 1940, and certain dom
while the sellers' market still ex¬ touched a recent new low, finally pany
appeal to busy men and women
some
improvement State Regulations.
isted.
It will be remarkable in¬ registered
substantial
means.
Mutual
(3) Its record is an open book; of
deed if the level of the 1948 ex¬ Western Oils likewise showed a
anyone
can
easily secure perti¬ funds are enabling these people
port target can be maintained—to tendency to recover following an
nent and complete information on to achieve peace of mind through
;
attain the boosted 1949 target re¬ earlier decline.
any phase of its operation.
professional management at lowcently announced by the President
Perhaps you would be in¬
of the Board of Trade will consti¬
(4) The majority of trusts are cost.
tute a miracle. The realization of
doing a good job, judged by any terested to know that in the case
of
Eaton
&
Howard Balanced
this British economic aim appears
criterion one cares to apply.
Fund 25% of the Fund is owned
all the more unlikely in view of
Continuing, Mr. Eaton stated:
by shareholders having an invest¬
ST.
the avowed intention of the Labor
"How can mutual' funds, there¬
LOUIS, MO.—Officers of
ment of $25,090 or more.
I point
the St, Louis Stock Exchange have fore, help you in this search for
government to continue to conthis out only to emphasize the fact
been
re-elected for the coming increased efficiency and economy
that the small account is by no
year. They are John A. Isaacs, Jr., in your business and at the same
means the
only logical place for
Semple, Jacobs & Co., President; time tap new markets?
First of mutual funds."
Edward D. Jones, Edward D. Jones
all, let us consider the small ac
In concluding his remarks Mr.
& Co., Vice-President; and John count.
For obvious reasons this
CANADIAN
H. Crago, Smith,
Moore & Co., phase of your operations is par¬ Eaton said that investment com¬
panies are growing up, and al¬
Secretary and Treasurer. Elected ticularly inefficient.
These ac¬
Directors were: Arthur A. Chris- counts take
though there are still problems to
GOVERNMENT

is

for

then

markets,

be better

will

"These

of their own.

developments,"

you

offer you a sound method to
new

efficiency,
and,
therefore,
the
profitability of your business, par¬
ticularly
with respect to your
smaller accounts.
Your customers

forming mutual invest¬

by

ment funds

amount of time and effort

and will con¬
At the same time,

so.

supplement your regular
tap

of

job

good

a

?.

and

-

Mr.

sell¬

are

ures

That

day."

proced¬

lowed.

in the most effi¬

business

I know.

and

brokerage—

ing

surely

they

cient and satisfactory way.

vestment

banking

where
must

But when you do

properly

them

beget

in-

Funds

suitable.

.hey

not be oversold.

are

upon

not the Funds are sold

or

not in compe¬

of

benefit of

depends

It

properly and in situations

declared, "are

tions

to the

accrues

concerned.

all

anies,"

p

are de¬
Mr. Eaton contends that certain
necessity might compel a country
large degree on the such as Sweden to resort to uni¬ phases of the investment business
availability of export markets.
lateral devaluation in which event are still relatively inefficient anc
In the case of Canada the situa¬ a chain reaction would be set up uneconomical.
"I have particulai
tion will be further aggravated as that would bring intolerable pres¬ reference to the use of the time
a result of the promising condition
sure to bear on sterling and other
and energy of your salesmen anc
of the world's grain crops which overvalued
currencies. Although registered
representatives," the
threatens to produce intense fu¬ the
Canadian dollar is not in¬ speaker said.
"A disproportionate
ture

of Eaton & Howard, they

Association, Charles F. Eaton, Jr., President

to

pendent

large, are doing
managing money
tinue to do

'

*

"I believe mutual funds, by

industry.

supplement regular functions of securities

can

informal talk given

an

procrastination
facing the economic facts, there certainly
if sound
every likelihood that external

there is

ahead.

In

management.

not

warn you again
over-sell
management.

closing,

to

of

us,

of

On

the

course,

are

other hand,

Study of the Port of New York

Authority—Municipal Service Di¬
vision, Dun & Bradstreet, Inc., 290
Broadway, New York 7, N. Y.—
board covers—$5.
Toward
—Booklet

of

the

School

Mutual

Understanding

covering the functions

school—New
of

Industrial

in¬ Relations, Cornell
it Ithaca, N. Y.—paper.

York
and

State
Labor

University,

Volume 169* Number 4794

Housing Authority 1
Bond Study Issued

I THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1631)

19

j

i

Govt. Finance Review Also
Released by C. J. Devine j

r

...f

"Local

•

Housing Authority Bonds
and
Notes," an analysis of the
present Federally-subsidized low
rent
housing program and pror
posed

amendments

this

to

MINNESOTA

prot

TER

CtNTENN

has been prepared by C. J.

gram,

Devine & Co., Inc., 48 Wall Street,
New York City, and is now avail¬
able
in

for

distribution.

Specialists

government and municipal

se¬

MODERN

L

curities,

the

investment

banking
closely followed housing
financing at the Federal, state and

MACHINERY

firm has

local
was

levels.

ment

and

The

current

booklet

written to give banks, invest

dealers, insurance companies

other investors

book"

low

on

"basic

a

data

rent

housing on
may be super-imposed any
subsequent amendatory changes, i
which

.Divided into two sections, the

x

study reviews first the

organizat
obligations of the Public
Housing Administration and local
housing authorities throughout the
tion

and

The second section is de-

country.
voted

.

to an analysis of bill 1070
ready for deliberation in the

now

United States Senate which would

the United

amend

States Housing

Act of 1937 and authorize

$7,000,000,000
bonds

of

caliber.*

tured

.

c*..,

and fanning milk manufac¬

at Molina Plow Work* located!**

btacktmith thap

a

Moline, Illinois.

„

Describing

\

the

grade

•*&

Hay rake*

..

,

(

*»

possibly

financing with
substantially improved
new

distinctly

as

bonds which

high

would

be

■J issued under the Act of 1937 with
amendments

proposed by Senate
1070, the brochure points out

bill
that

such

securities

should

have

broad market acceptance at prices
related to tax exempt money mar¬
ket conditions.

(

'The

1949

Devine &

edition

of

the

C.

J;

Co., Inc. review of U. S.

Government

financing

operations

also just issued discloses that com-*
mercial bank
able

creased

lion

holdings of market¬

successful

fiftl

grain drill, the Matin*-Manilpr, originated
straddle

raw

First Successful

cultivator introduced.

S. Treasury securities de¬

U.

approximately
Jan. 31,

MINNESOTA

bil¬
and

$17.6

between

1945,

sources

Nov.. 30,

1948. In its analysis of
changes in ownership of Treasury
securities, the review also shows

Plow Works in
Molinp, Illinois, begins innnul'aclure ot'
hay rakes and fanning mills
Moline
plows,! breakers and cultivators added
tirist. successful si raddle rbw culti¬
vator ;
The Monitor, first, successful
grain drill.
Famous "Flying Dutch¬
man" three wheel plow . . . first suc¬

during the same period other
^categories of investors increased
their holdings of Treasury issues,
this being especially true of Fed¬

cessful

eral Reserve banks and private in¬

vestors.

Influenced

by

check-

combined

wire-driven

and drill planter
threshers and engines

Minneapolis

.

.

^

...

>*

jk*

(*> u

T"^v,

lA

,

i

l4W

*

• •

.

first commercially successful cylinder
corn shellcr
Twin City tractors
.
.

,

.

.

.

the lour year period.
The -review,

in book¬

prepared

Moline produce s the funtous "flying
Dutchman'1 three wheel plow, a design
that h®««W« dandard for the industry.

The Xhatnpion' Corn Woofer, ftnt »uc<e**ful wire driven checkrow 0fld drill
p la nter developed. Loter model *
planted five

let form, includes a graph of mar¬
ket prices of representative U. S.

/Government

last

10

issues

and

years

market

*

a

Universal all-purpose tractor
complete line of tractor-attached
machines— I lib very first general pur¬
pose tractor
.
.
.

1923-29 —-First
thresher

.

.

new

.

Twin City all-steel

model beet, puller I.

low built ."easy loading

Moline spreader
Minneapolis 16 and 10 fool combines
MM tractor gang plow and Wheat¬
land Disc plow
The Uni-Tiller-all..

influenced

.

prices during this period.

Other sections of the review

Moline

with

.

,

covering the
discussion of

which

occurrences

successive world thom-

pion yield*'

.

.

.

.

in-one farm machine

ure

chest of natural

resources

to work without

...

con¬

chronology

a

1930-35 —'-Original MM Quick-On

important

of

—Quiek-Off tractor tools
Universal
tractors with complete tractor tool line
pneumatic tires for MM tractors
new MM Hammermill..
lightweight,
big capacity Marvestor combine
high compression head for MM trac¬
.

financial

and

economic

events

.

V-J

from

Day through

de¬

1948;

tails of public offerings of market¬
able

of

S.

U.

June,

1945

Treasury

issues from

thorugh 1948; records
and

marketable

for

security.

issues

1948

and

.

>»**■«

/

y/

tors

Minneapolis Tbmhmrt ond Engine* fcref built- Minneapolis Threshing outfit
;
'
premium at Colombian l*pg*ifion in Chicago, t«93.

wan

huskor
.

direct and

.

.

.

Modern

dates.

f

The

first Z Visionlined Tractor

MM Jli-KIearanee plows

disc harrows

!p|LV; >*

««fr.-v
'

,

''

'

—

'

<

X-fjrtt commercially successful
& cylinder tprn thaller offeredto

'

statistics

ownership

on

marketable U. S. Government

,

of

.

farm trade,

Twftt Cfty engine*

moke their first appearance.

of

,Nov. 30,

ceipts

years,

ing

expenditures

are

recorded

with actual records

1941-1948

and

fiscal
cover¬

budget

esti¬

mates for 1949-1950.

As

view

in

previous

contains

graphs

showing yields
marketable
-

and

U.

years,

on
S.

descriptive

the

and

v

1942-49 -r-New
and15

foot

tables

Treasury issues
of

U.

S.

Treasury and Agency obligations. J




streamlined 12, 9,

Harvesters

.

.

.

..

Self-Pro-

.

.

,

The

.

The Uhi-Tiller

row corn

...

.

buskersUni-

Visionlined Tractors.,. A complete line

ment of

agriculture!

Ask for
Twin C7fyf/pctor*,lbe power lead¬
ers of their, day, enter fhefnrm
Scpne. Th«*e giant Machine* were
forerunner* of ipadern^M Procter

free-

cooper¬

individually

.

.

.

.

.

MM'S

a

.

,

GROWTH

HAS

AGRICULTURE

saluting the 100

years

HELPED

DEVELOP

of

progress

in Min¬

nesota, Minneapolis-Moline recalls its own 84

of steady growth. From humble begin¬
nings in a blacksmith shop and two machine
shops, MM has become famous throughout
the world for its Modern Machines, Visionlined Tractors and Power Units to help the
farmer get greater yields, conserve the soil
and reduce his labor and drudgery. MM's
growth in the manufacture of mechanized
tools for the farmer is closely linked with the
progress of Minnesota and other great farm
areas
to maintain this progress with, more
and even better Modern Machines, Visionlined
years

...

Tractors and Power Units is MM's constant
aim!

FREE COPY of MM's combination Yearbook and Calendar

depicting the complete line

of Modern MM Machines and Tractors.

model*.,

Minneapolis-Moline

re¬

all classes of

tables

The Comfoktractor

.

of Modern Machines, Visionlined Trac¬
tors and Power Units for the
develop¬

of

the

of

by

MM

.

.

Matic!Power for MM's R»Z, U and G

Tabulations of re¬

1948.

and

Treasury

as

,

first modern tractor with built-jn-

One and two

bonds, notes and certifi¬

investor classes

.

.

pelled i Powerflow Harvest or

se¬

curities show distribution of each
issue

.

cab.

Bale-O-Matic

cates among

picker-

corn

.

debt,

government

a

high calibre
sturdy, hard-working citizens and the
development of modern machines and mod¬
ern methods for the building of a firm and
stable agricultural economy. Without mech¬
anized farm tools and greatly increased
knowledge, the first crude fields in the forest,
and on the prairies would have remained
small and unproductive
the slow hand
methods of working the soil, seeding and har¬
vesting would have persisted
the state's
modern farms could not have helped to feed
a hungry world.

In
—

R Tractor with comfort cab
The
Harvest or '69'
new line of t ractor

guaranteed, at various

trees

Minnesota is fortunate in the

.

...

1936-41

.

total

.

first

Dec. .31,

a

to

.

,

non-market¬

outstanding

.

.

of its

.

.

able

.

.

restrictions, to

.

tain

.

system of enterprise that permitted her citi¬
ate with each other and to strive

1902-18- Twin City epghvs
"T^V»

abundant nature which furnished

>,

zens

..

.

an

lakes, streams, forests, fertile soil and

.

row

in¬

this

to

.

.

.

rich, fertile

a

This great state is indebted to the first

sturdy hands of pioneers who braved danger,
and hardship to build the first settlements,

...

.

rough frontier territory to

state.

.

that

crease
the
total
of
outstanding
.marketable government securities
was reduced only $5.7 billion over

a

/865-93 —Moline

has benefited from many
in achieving 100 years of growth from

MINNEAPOLIS

1,

MINNESOTA

20,

(1632)

COMMERCIAL & FINANCIAL

.THE

RETURN

Investment Dealers Association of Canada

City

Leave

Minaki

Thursday, April 14, 1949
Via

Day and Date

Time

Junje 25th

7:08 AM

:

.

CHRONICLE

Annual

Arrive

Meeting, June 21-24, at Minaki Lodge

*

The program

tee

1:00 p.m.

Arrive

Winnipeg
Winnipeg
Calgary

Leave

Minaki

Arrive

Edmonton

Arrive

Executive Commit¬

Members

mittee

Wednesday, June 22:
10:00

i

,

Association

office

10:00

June 26th

9:05

June 25th

7:08 AM

June 26th

8:15

il

was

CP #8

not

all

are

AM

and pension reserves increased in
1948 by about $6.9 billion as com¬

CN #1

AM

pared with

arrange

$

billion the
The rate of accu¬
mulation of time and saving de¬
posits continued to slow down so
that, in 1948, only $900 million was
saved in this form compared with
$2.2 billion the previous year.
to

#

nings will be left free for recreation with the exception of meetings

Committees (con¬
sisting of eight Executive Officers of the Association) which will be

held in the afternoon,

It has been decided to hold no annual dinner
this year.
Guest speakers will address the members at luncheons.
There will therefore be no necessity for formal dinner clothes. Ar¬

and Minaki

Lodge to have the Ladies Lounge set aside for the use
members, which will open at certain hours for the serving of
liquid refreshments, without charge to the members, similar to the
arrangement at Manoir Richelieu last year. The registration fee for
each member, which will be charged to his account at the Lodge,
will be $25.
v

in consumer debt

billion

vious year.
,

shall have to

we

and the Browns

see

whether the Murrays

their,

$85.75

56.60

47.20

7.10

5.95

Calgary
)
Edmonton i

Winnipeg
Toronto

67.50

Ottawa

70.00

/•

own.

58.35

,' Montreal

76.95

64.15

104.90

89.05

,'V 111.55

96.15

J
'

Saint John
f Halifax
;

*;

<?

'f

..;:

Sees More

*■

reporting volume and composition of individual saving in 1948,
SEC finds though individuals' holdings of securities were about
same as in
1947, a larger portion was in securities other than U. S.
Government

,

/

ROOM

Compt.

Lower

Bedroom

for 1

for 2

$15.95

$31.90

$40.00

$45.00

$48.00

$56.00

8.10

16.20

20.50

23.00

25.00

29.00

14.40

.18.00

20.50

22.00

26.00

-Seat rate is 750—
24.50
27.50

30.00

34.00

30.00

35.00

7.20

Toronto to Minaki
Ottawa to Minaki
Montreal to Minaki

9.70

19.40

10.00

20.00

Saint John, to Minaki
Halifax to Minaki

.

25.00

D. Room

28.00

D. Room

for 1

for 2

11.25

22.50

28.50

31.50

34.00

40.00

15.60

31.20

39.50

44.00

48.00

56.00

17.20

34.40

43.50

48.50

52.00

61.00

dition

WESTBOUND City

Via

June

18th

8:00 AM

Arrive

Montreal

June

19th

7:20 AM

U

Saint John

June

18th

8:00 PM

CP #39

Montreal
Montreal

June

19th

11:35 AM

Leave

June 19th

Leave

8;20 PM

Ottawa

\ June 19 th

10:55 PM

Arrive

Minaki

June 21st

Leave

Toronto

June

Minaki

June 21st

8:00 AM

Day and Date

Time

Via

CN #4

Arrive

19th

CN #3

u

CN *1
it

8:00 AM

11:00 PM

••

CN #1'

CN #3
a

City

Leave

Minaki

June 24th

10:34 PM

Arrive

Toronto

June 26th

7:00 AM

Leave

Minaki

«

If 2

June 24th

9:30 PM

Arrive

Ottawa

June 26th

6:10 AM

Arrive

Montreal

June 26th

9:00 AM

Leave

CN #2

Montreal

June 26th

8:00 PM

Arrive

CN #4

Halifax

June 27th

7:50 PM

CN

«(

«

Leave

Montreal

June 26th

3:15 PM

Arrive

CP #40

Saint John

June 27th

6:40 AM

«

Day and Date

Time

Via

June 18th

7:15 PM

CN #2

June 20th

9:30 PM
8:00 PM

EASTBOUND
Leave

'

City

Vancouver

,

Arrive

Minaki

Leave

Calgary

June 19th

Arrive
Leave

Winnipeg
Winnipeg

June 20th

6:00 PM

June 20th

7:40 PM

Arrive

Minaki

June 20th

Leave

Edmonton
Minaki

June

Arrive

•

.




19th

June 20th

10:34 PM
9:45 PM

10:34 PM

«

CP #8
«

CN #4
U

XN-*4

in

aoproximated the 1940 level.
form,<£

liquid

phys¬
ical investment and expansion of
inventories by farmers and unin¬
new

corporated
business.
Including
these non-liquid forms of saving,
individuals

added

more

to

their

total assets in 1948 than in 1947.

In ad¬

the

of

held

end

$900 million. The $700 million in¬
crease in security investments was
accounted for by net purchases, rif
$300 million of state and..local
government bonds, and $400 mil¬
lion of corporate and other securi¬

ties, counteracted in part by a de¬
cline of $300 million in U. S. Gov¬
ernment securities other than sav¬

insurance, and $1.1 billion to their
equity in savings and loan asso¬
ings bonds.
ciations. During the same period

*

individuals increased their mort¬

indebtedness by $3.7 billion

gage
and

other

consumer

indebtedness

Curb

by $2.3 billion, and reduced thefr
holdings of cash and bank depos¬
its by $1.4 billion.

While the increase in individ¬
1948 individ¬
$130 billion in uals' holdings of securities during
1948
was
about the same as in
cash and bank deposits and about
$70 billion of U. S. Government 1947, a larger proportion was in
As

of

about

At

Really Associates

the

York

annual meeting of New

Exchange Realty As¬

Curb

sociates, Inc., Charles M. Finn of
Adriance
Werle

&

Finn, and Edward C.
& Wood, were

of Johnson

securities. Of the total of cash and

the form of securities other than

deposits,

Government.
Holdings of
term. James R. Dyer of Dates &
savings bonds increased by
about $2.1 billion with Series A-E Dyer, and David U. Page, were
named inspectors of election/for
bonds accounting for $700 million,

$24

billion

was

in

the

form of currency, $56 billion was
in time and savings deposits, and

$50

billion

counts.

was in checking ac¬
U. S. Government securi¬

U.

U.

elected Directors for a three-year

S.

S.

more

than

twice

the

amount

for

1947. There was a decline in indi¬
by
individuals
were
mainly U. S. savings bonds, $34 viduals' equity in U. S. Govern¬
ment
securities other than savings
billion of Series A-E bonds and

ties

$14

RETURN

*

Time

Halifax

Arrive

-

Day and Date

Leave
-Leave

1

SCHED ULE

saving

considerable amount of

uals

RAILWAY

to

individuals purchased $7.7 billion
of new homes and there was also a

goods increased

$1.1 billion in the quarter,
while mortgage debt rose by about
by

Finds individuals' holdings of cash and
deposits lower.

$3.4 billion less than in 1947 and

RATES

Compt

Calgary to Winnipeg
Winnipeg to Minaki

obligations.

During this last quarter, in¬
added $800 million to
their holdings of cash and bank
deposits,
$1.9
billion
to their
equity in insurance and pepsion
reserves, $700 million to their [in¬
vestment in securities, and $400
million to their equity in savings
and loan associations. Individuals'
chase of consumer

During the year 1948 individuals saved $4.9 billion in liquid form,
according to estimates of saving by individuals in the United States
made public by the Securities and
Exchange Commission. This was

Single
■■

.Vancouver to Minaki
Edmonton to Minaki

AND

a

indebtedness arising from the pur¬

bank

■

BERTH

Savings Going Into Non-Governments

In

56.25

.

billion,

dividuals

(See letter

$102 ."85

to about $1.8

ter.

this country, or whether

run

FARES

5)

fourth quarter of
liquid saving

individuals'

amounted

duly
elected representatives ;of the people have minds of

-t*fy

para.

During, the

lower rate than in the third quar¬

attending at a later date. This
reduced rate for the going trip is only good between June 18 and
June 23 and for the
return trip is good up to 30 days.

'Vancouver

,

1948

.

Now

rate will be forwarded to members

April 4,

imppsed
in
The increase
amounted to $2.3

compared with an in¬
$3.1 billion in the pre¬

as

of

crease

Congress during its first three months—
they must demand immediate and positive ac¬
tion.
—Philip Murray, President of the CIO.
.

in

September of 1948.

and

Train schedules are as follows: The Association has applied for
the reduced rate to the Canadian Passenger Association under the
"Identification Certificate Plan" and the forms to obtain the reduced

in 1947.

debt increased

restrictions

credit

the 81st

day, single ($18.00 double), which includes meals.

billion

$3.8

consumer

1948, but at a smaller rate than
in
1947,
largely reflecting the

impressed with the fact that labor and the people
in this country are dissatisfied with the record of

Rates at the Lodge will depend on the accommodation allotted.
These rates vary from $6.00 per day, single ($11.00 double) to $11.00

Identification

with

pared

"During this period it is imperative that every
possible step be taken to secure meetings between
representatives of the CIO organizations and the
various Congressmen and Senators. They must be

1948 showed

debt in

increase of $3.7 billion as Com¬

Other

of

year.

Mortgage
an

ternational Association of Machinists.

Liquor Commission

Certificate Plan

increase of $1.1

an

preceding

has failed to dis-'
cipline the handful of Southern Democrats, led by
Senator Harry F. Byrd, Democrat, of
Virginia, who
have deserted their party leaders, their
party prin¬
ciples and their party promises again, again and
again."—Harvey W. Brown, President of the In¬

of the outgoing and incoming Dominion Executive

Regular

an

1947.

Individuals' checking accounts de¬
clined by $1.8 billion in contrast

"So far, the Democratic party

'•

To Minaki From

in

One of the more significant de¬
velopments in the composition of
saving in 1948 was the decline in
individuals', holdings of cash and
bank deposits.
This decline re¬
flects to some extent the expan¬
sion of farm arid other inventories.

"The Republican leaders seem to think the
plain
people in this country are plain stupid. In my ex¬
perience the average citizen in the United States
is bright enough to tell his enemies from his friends.
*

RAIL

increase of $7.1 bil¬
Individuals' saving
in private life insurance, one of
lion

an

We Shall See!

Meeting of Members to Review IDAC Problems

rangements have been made with the Ontario

<

equity in insurance

Trans-Canada

reservations at

Meeting; President's Address, Reports from
Districts, Committees, Election of Officers
Luncheon—Special Speaker
Retiring President's Cocktail Party

a.m.

absorbed by individuals.

Individuals'

the more stable forms of savings,
trains, it is particularly necessary to
amounted to $3.5 billion, main¬
early date.
Sleeping cars from Montreal
and Toronto (leaving the night of June 19) will be combined at taining the rate of increase shown
since 1945. Equity in government
Capreol and operated from that point either as a section or special,
insurance reserves increased $3.4
so that arrival at Minaki will be at 8:00
a.m., June 21. All times
billion, almost half in social se¬
given in the schedule are Standard Time.
curity funds.
make

The program is being arranged so that the business sessions for
the members will be held in the mornings.
The afternoons and eve¬

per

11:10 AM

will

Friday, June 24:
v

June 25th

CN #1

*

Thursday, June 23:
;
10:00 a.m.
Special Forum; Discussion of Problems of Members
11:15 a.m.
Conference With Newspapermen
1:00 p.m.
Luncheon—Special Speaker
5:30 p.m.
New President's Cocktail Party

.

10:10 AM

Annual

a.m.

1:00 p.m.
5:30 p.m.

*

Leave

Minaki

.

Luncheon—Special Speaker
Meeting of the Outgoing Dominion Executive Com¬

3:00 p.m.

7:08 AM

June 25th

most all the net .increase in
corpo¬
rate stock of $1.2 billion, however,

return railroad reser¬
vations unless specifically requested to do so. As the trains from

for the meeting is as follows:
.

9:20 AM

June 25th

by individuals while $4.6 billion
bought by institutions. Al¬

'it

'

The

■Tuesday, June 21:
•
■
10:30 a.m.
Meeting of the Outgoing District

June 27th

Minaki

Leave

TORONTO, ONT., CANADA—The 33rd annual meeting of the
Investment Dealers Association of Canada will be held at Minaki
Lodge, Ontario, starting Tuesday morning, June 21, and finishing
Friday afternoon, June 24. Reservation should be made with J. A.
Kingsmill, 11 Jordan Street, Toronto.

Vancouver

-

was

CN #1
V...

1950.

held

billion

of

Series

F

and

G

bonds, with other U. S. Govern¬
ment securities amounting to $21
billion.

In

addition,

individuals
had an equity of about $54 billion
in private
insurance and about
$36 billion in government insur¬
ance and pension reserves. Equity
in savings and loan associations
amounted to about $11 billion at
the end of 1948.

bonds

reflecting

Armed

Forces

of

During the organization meeting
the corporation Mr. Page was

elected President for the* ensuing

William B. Steinhardt was

redemptions

of

year.

Bonds

of

elected Vice-President and Chris¬

Leave

$300 million and an increase in topher Hengeveld, Jr., Secretarysecurity loans by banks of about Treasurer. Frederick J. Roth was
appointed Assistant Treasurer for
$400 million.
•
;■ ' V':. ;:v During 1948 saving in the form the year.
.

of securities other than U. S. Gov¬
ernment amounted

to $2.8

billion

compared with $1.4 billion in 1947.
and
local governments reached a rec¬

New securities issued by state

New York Stock

Exchange

Weekly Firm Changes

Neil J. Sullivan retired from
ord level, largely because of flo¬
During 1948 individuals' hold¬
tations to pay veterans' bonuses,
partnership in Coffin, Betz & Sul¬
ings of U. S. Government securi¬
and
individuals'
holdings
in¬ livan March 31.
ties increased by about $1.4 billion
r
creased by $1.2 billion. This may
while their

holdings of securities

other than

U. S. Government in¬

creased by $2.8 billion. Individuals
also

added

about $3.5 billion

to

their equity in government insur¬
ance

-and

pension - -reserves,

be compared with a $400 million
increase in the preceding year. In
1948

there

billion

was

a

increase in

record

the

of

net

$5.0

issues

$3.4 of corporate and other bonds.

Of

of the

Interest

Conning

to

their equity in private

this total, $400 million was

taken

William S.

Ballard ceased March 26. <
Interest
Richard

in

of
C.

the

late

Oscar

B. Richard &

a

billion

late

in Conning & Co. and

ceased March 31.

n;

L.
Co.

Volume

169

Number 4794

THE

COMMERCIAL

Atlantic Pact Is
President; in

to Senate, submitting text of treaty, hails it

message

expression of U. S. for

a«

be

to

Says signatories

peace.

deprived of freedom by

President Harry S. Truman, on<$April 12, submitted to the Senate of
lor

ratifica¬

tion
oi

the

the

A 11

t i

n

Treaty

maintain

.

to

c-

Principal

electric

under construction

now

150,000

of

and

action

if

The

the',

and

they

as

the

may

is

peace

people of the North Atlan¬

previous week

tic

by twelve

agreements,
designed
to assure
peace and the rights of small na¬
tions, broken one by one and the
people of those nations deprived

tions

naan^

as

instrument

of

collective

individ¬

and

community have

of freedom

ual defense

sion.

against ag¬
gression.

their

The

message

President

ac-

Truman

suffer the

not; "

common

companying the text of the treaty

the

members

To the Senate of the United States:

community stem directly from the
European members in tradition

the

con¬

copy

together with

on

a

and

This treaty
desire

is

of

an

Events

taught

this

of

each

vj

of

Atlantic

We have

security

member

in the

of all.

achieve

of

community
security and
of

None

economic

us

alone

prosperity
None of us

freedom.

the

world..

For

in blood and conflict—that if

clear evidence that differences in

we

must

we

litical
the

This knowledge has made us de¬

termined to do everything we can
to
insure
that
peace
is main¬
tained.

this

We

have

arrived

not

in

the

world.

has demonstrated the
overwhelming will of our people
that the strength- and 'influence
of the United States shall be used

of peace,

cause

freedom.
•

'

;

wholeheartedly

accepted

the

Charter of the United Nations in
Since then, we have worked
unceasingly to reach international
agreement
through the
United

1945.

Nations

and

Nations

a

to

the

United

effective

instru¬

make

more

mination
world.

action

work

to

It

.

in

is
the

of

on

the

realities

we

face

today and framed within

v

terms

with

'♦

United

Nations

the

Constitution

of

Treaty

is

great

a

fulfillment

toward
United

States

to

of

ad¬

the

achieve

An

underwriting group headed
the First Boston Corp. offer

Commonwealth

$50,000,000

Edison

Co.

1, 1949. The debentures are priced
at

101.30

and

accrued

interest

to

armed attack,

Article

the

or

individual

Charier,

51

of

United

Nations

such
measures as the Security Council
may
take to maintain and restore

subject

international

eurity.
the

and

The

peace

treaty

determination

to

and se-

makes

of

the




clear

people

Though "the New York Central gained substan¬
tially over 1947 in total revenues and net income,
there

on

I

disquieting factors which also must be
realistic appraisal of the year's results:

are

noted in any

1—Unit
financial

volume

showing

2—Heavy

down.

was

was

Thus

the

improved

due largely to increases in

increases

continued

.

in

basic
any

wage,

man¬

agement's control.

3—Large

sums

of money have been and still are

needed to continue

our post-war plant and equip¬
modernization, which is vital to the longrange interests of the Central, its owners and em¬
ployes, and the public.
J

ment

4—Our profit was

inadequate, in relation botlj to

gross revenues and to our invested

Revenues

capital.

Up, but Volume Down

Tuesday on its bid of 100.53.

Proceeds from the sale will be
added

to working capital for the

ultimate

financing

of

company's

subsid¬
;

the

ended

year

Dec.

31,

1,

ating

of

revenues

$238,112,280

Giving effect to this financing,

the/,

has

company

outstanding

$388;0QQ,090 of funded debt; and
13,732,000- shares -of- capital stock

$25

par

value.

'

1

*.

new

1948

—

Our

improved

largely from our
freight traffic. Totaling $561,361,243, freight reve¬
nues improved 13 per cent from the
previous high,
of 1947, though unit volume as measured by rev¬
enue ton-miles fell 4 per cent below
1947, and 24
revenues

While travel

—up

2.2

record
cent

volume continued

passenger revenues

below

its post-war de¬
increased to $136,168,197

cent from 1947, but 25 per cent below

per

1944.

Revenue

1947, with

than Pullman traffic.

passenger-miles fell 9 per
coach traffic falling more

.

,

expenses

rose

10 per

.

,

As

a

result

our

profit, though substantially im¬
was disappointing for a year

proved from 1947, still
in which

of

total traffic volume was greater than
peacetime year except 1947. The rate
on
our
depreciated railroad property

our

return

investment

was

\

,

only 2.1

per

cent.

Net Income Improves

Net income totaled $14,727,096, equal to $2.28 a
share, compared with $2,306,082 or 36 cents a share
in 1947. Except for the "profitless prosperity" pe¬
of

1946-47,

From

in

this

relatively small profit, the Central's
a 50 cents a share dividend, the

three

15, 1949, to
22, 1948. The
necessity of financing the major improvement pro¬
gram which still is under way precluded the con¬
sideration of any larger payment.

con-

struction, estimated to cost approximately $340,000,000 during
the four-year period 1949-1952.

years,

of

payable January

record

December

Modernization Continues
Our

improvement program has required us to draw
heavily on cash reserves accumulated in the war
years, as

well

as

current earnings. It is expensive—

especially in these
Yet

years

of high prices.

cannot stand still.

Continuing moderniza¬
principal hope for reducing the ratio
operating costs to revenue and thus of improving
our earning power and the value of Central stock.
Continuing modernization likewise is the only way
we

grade crossing eliminations decreased by $502,227;
Meanwhile $15,790,280 of older debt, including that
of lessor

companies,

purchase.
As

was

-

retired, at maturity

or

by

<

result, while total debt held by the: public
increased $22,907,493, or 2.68 per cent, interest re¬
quirements, on an annual basis, increased by a
relatively moderate $600,592, or only 1.84 per cent.
;

a

As against this

increase, leased line rentals

pay¬
reduced $110,301 on an an¬

able to others will be

nual basis by means of

1948 expenditures totaling
$1,828,059 for the acquisition of lessor companies'
stock guaranteed by the Central.
"'y\
The Rate and Cost Picture

i

'

f

Freight rate increases authorized by the Interstate
Commerce

Commission

various dates

were

made

effective

during 1948, and there also

were

on

in¬

in passenger fares and express rates. Even
the situation confronting the eastern railroads,
compared with 1939, is as follows:

creases

so,
as

Passenger fare levels have increased

an

average

of 24 per cent, and
56 per cent, while

freight rate levels an average of
the wage rates we must meet
have gone up about 82 per cent and the prices we
must pay for-materials have increased an average
of about 121 per cent.

the- increase

Thus

-

in

and
has far outdistanced

average

wage

rates

the increase in the prices we are.permitted to charge
fdr our service. From: these* and other figures it is^

to $667,343,966, up.
cent from the previous year. This was despite
the lower tralfic volume of 1948, and was due to
climbing wage rates and larger unit costs of mate¬
rials and supplies.
■ ;
!
operating

Moderate

Amounts due New York State in connection with

materials prices we. must pay

'

Expenses at All-Time High
Total

Increase

carrying forward the improvement program, the
Central issued last year $39,200,000 oi new equip¬
ment trust certificates bearing low interest rates
and maturing serially in one to ten years. As is well
known, these represent short term obligations to
temporarily finance in part the acquisition of new
locomotives, freight cars and other equipment.

came

cent below the record of wartime 1943.

cline,

Interest

Debt
In

,

Due to the freight rate and passenger fare increases
during 1948, total operating revenues increased to
$779,860,755, ut>* 10.9 per cent from 1947.

3%

sinking fund debentures due April

treaty undertake to
right of collective

their

the

1948 the company reported oper¬

1949

public, utility

a

eral than for the railroads.

stockholders

yield
approximately
2.95%
to
self-defense against maturity.
The issue was awarded
in accordance with to the group at competitive sale

exercise

1948 produced

much higher degree of
prosperity lor the nation and for business in gen¬

first

13,

of

For

estimated popula¬

an

directors declared

Edison Debentures

safeguard

and

Offers Commonwealth

April

*

iaries.

of approximately 213" square,

First Boston Group

by

three

business in Chicago which has, an

generating

when rate increases lagged far
behind soaring costs, this was our lowest net in¬
come since 1940. It represented a profit of only 1.8
cents of every dollar we received both from rail¬
road operations and in other income.

publicly,

northern part of Illinois through

The Year in Review
The year

riod

TRUMAN.

of

itself in

1,

3,600,000.
-Electricity is< supplied to the
neighboring metropolitan area and
the surrounding
territory in the

does substantially

electric

the

the

the Senate to its ratification.

HARRY S.

tion: of
^approximately

;

/*;y with net income of $24,219,363.

in any other

just and enduring peace, I re¬
quest the advice and consent of

of the United Nations

this

the

a

The twelve nations which have

signed

the

of

with countries outside
the .Western Hemisphere in col¬
lective arrangements, within the
Charter,
designed to
peace and security.

situation

the

April

and .after. April

EXCERPTS FROM ANNUAL REPORT

unconquerable will of the people

peacetime

framework

of

based

In the conviction that the North

vance

last-June

its approval

6ur country's associating

of

and

Atlantic

peaceful

a

Senate

it signified

when

for

Atlan¬

step,

a

deter¬

our

accord

na¬

Treaty

is such

redeemable

.

.

of

miles

per

Charter

terprise with the free nations of
Europe to restore the vitality of
the European economy—so impor¬
tant to the prosperity and peace
of our country and the world.
The North Atlantic Treaty
is
of

of

''///■/

-

evidence

real bar to

the United States.

for its

further

no

tic

the

mighty task. '
/
In the last year we have em¬
barked on a great cooperative en¬
ment

are

association

I believe that the North

this determination, our peo¬

In

ple

justice and

on

The company
all

unit

area

po¬

treaty is only one step—
although a long one—on the road
to
peace.
No single action, no
matter
how
significant,
will
achieve
peace.
We
must
con¬
tinue to work patiently and care¬
fully, advancing with practical,
realistic steps in the light of cir¬
cumstances and: events
as
they
occur,
building the!;structure of
peace soundly and solidly.

years

in the

treaty is

This

Every action of this nation in re¬
cent

systems

effective

tice.

great responsibility that goes with

stature

this

devoted to the great prin¬
ciples of human freedom and jus¬

lightly, or without
recognition of the effort it en¬
tails.
But we cannot escape the
great

part

every

tions

at

decision

our

in

language and in economic and

work for peace.
.v"

steam-

kw.

Company's Waukegan Station.

our

men

peace

110,000

.

our

of free

achieve

related

joint strength is
tremendous significance to the

of

at f* 1998.

Company's Joliet

a

beginning

100%

steam equipment at Public Service

continuance

the

future

to

with

and

to

related

equipment

,

months

$60,000,000'..

over

unit; and

Service

Station;

this

the

assure

can

Together,
of

:

generating

Public

the

tality and aggression,
i We have also learned—learned
are

steam

kw.

pres¬

from

welfare

military security.

of

to cost

107,000

material and fuel costs—factors beyond

and

of

welfare

alone

in

electric

rates and. fares.

war.

upon

or

that we cannot achieve
peace independently.
The world
has grown too small.
The oceans
to our east and west no longer
protect us from the reach of bru¬
us

moral

our

rebuilding

depend
can

have

century

task

The

tunity to live and work in free¬
:

American

North

shared

devastation of

the

dom.

have

we

ent

expression of
people of the
United States for peace and se¬
curity, for the continuing oppor¬
/

the

The

the

and material strength

of State.

retary

law.

of

joined together in the progressive
development of free institutions,

Treaty signed
April 4, 1949,
report of the Sec¬

Washington

of

and in love of freedom.

of

Atlantic

North

at

a

rule

are

21

by

follows:

I transmit herewith for the

generating

Station

steam

fate.

same

The debentures

through
the *■ operation
of
the
sinking' fund at prices ranging
from ,101.30%
during the four
months' period beginning Dec. 1,

related

that

one

heritage of de¬
individual liberty and

a

mocracy,

sideration of the Senate

and

/

are

nations signing this treaty

share

,.

shall

generating

(1633)

oppress

resoived

are

nations

The

the President's

by terror and

They

one,

of

text

solemn

seen

unit

CHRONICLE

*■ •juipment
at
C.dcago* - new
generating s+riion 1949 to 100% on and after April
(Ridgeland Station) west of the
1,
1998.
The
debentures
are
city limits to contain«two gen¬ otherwise callable at
prices rang¬
erating units, each cf 150,000 kw. ing from 104.30%
during the 12

Fisk

our

with justice

peace

such

necessary
broken.

been

si g n e d

take

kw.

jcapacity,

States

deem

which

had

aggressor.

United

neighbors in the North Atlantic
community to do their utmost to.

text

North'

a

the

resolved not

are

FINANCIAL

units

steam

Truman

:

&

tion offers the

apparent: that, the.* railroads as. a whole have not
participated' appreciably in the general prosperity.
Problems in. the. East

This is

,

particularly true

on the Central and other
large eastern railroads. There are several contribut¬

ing factors, including our large volume of passen¬
ger train service, carried at a substantial annual
loss; higher freight terminal costs and heavier
property taxes in the densely populated territory
we serve; a relatively shorter
average revenue haul
than on many railroads in other areas; and further
acceleration

of industrial
development in other
sections, reducing somewhat the eastern carriers'
share of total railroad transportation.
•

Under

Faith in the Future

present-day conditions

what is ahead of

such forecasts

any

comment as to

is largely conjectural. However,
are available indicate that freight

us

as

traffic volume will be somewhat below the level of

1948, and that

a

further decline, in passenger traffic

volume is indicated.
Whatever

the

future,

transportation is
tion's

-

economy,

know

we

railroad

that

major factor affecting the na¬
and
indispensable to national

a

defense. For this and other

important reasons, the
major improvement program inaugurated in 1945 is
imperative and must be carried forward.'
To realize fully the benefits of this program, we
will continue to need and appreciate the same close

cooperation from our employes that they demon¬
strated again during 1948.
We face the future with faith that, in the national
interest, enlightened public policy eventually will
accord the railroad industry the equitable treat¬
ment essential to the preservation of its financial

integrity and its standards of service.

of

we can

are

maintain our service at the standards which

vital in this period of intense competition.

G. Metzman
March 10, 1949
•>

For

Comparative

Statistical

Issue

of

President
Income
Chronicle

Account,
dated

Balance

April

18,

Sheet,
1949.

etc.,

See

•

Thursday, April 14, 1949

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(1634)

22

'

'

i.

,
■

"

opinion

L

busi¬

no

unlimely moves by government in way of increased
taxes or deficit financing could be harmful to buying public.
Stresses adverse effect of alarming con¬
sumers, and predicts, in absence of stringent fiscal and credit policies, downward trend of prices, pro¬
duction and employment in 1949 will be moderate.
Sees no basis fori wage increases in auto industry.
;

In

choosing

which influenced our conclusions.

indus¬

motive

try, but I have
been
doing

in

gen¬

tomob i 1

field

in

e

par¬

ticular.

'

It is not my

intention to do
c r y

any

st a 1

L.

ball

gazing for
you,but rather
to report on some of

E.

Briggs

findings.
All of you, I feel sure, are famil¬
iar with the arguments pro and
relative

con

nomic

able

national

the

to

situation

my

and

have

eco¬

avail¬

abundant

reports pertaining
inflationary and deflation¬
ary picture as regards prices^ em¬
ployment levels and general busi¬
to

the

ness

is currently
point of the

'

•

-v

,

in

In looking

commodities

Therefore, I will not burden
you with a repetition of these gen¬

because

received

and

demanded

'

labor
higher

to offset the rise in the cost
living.
Prices of these com¬

wages
of

en¬

as«yef declined
proportionately, with farm and
interpret these trends in the light
food prices
:
v.; A.";',
of their effect on our own busi¬
Speaking generally, it is the
ness and that of the industry in¬
feeling
of
automotive
executives
sofar as 1949 is concerned.
modities have not

at Ford

.

•

of prices,

that the downward trend

a

it, there

no rea¬

are

apparent which would cause

sons

depression

or

major business

re¬

statistics,
do not

we

The

cession.

interpret

them,

as

forecast

one.

I refer to concrete facts and

•

which

fig¬

subject to analysis,
time we try to
keep a close watch on the psycho¬
logical factors which are hard to
ures

but

are

the

at

same

define but which
nite influence

can

exert

a

defi¬

business trends.

on

untimely

or

moves on

in

government
creased

could

of

way

in¬

deficit financing
harmful in their effect

taxes

be

the

on

the

the part of

or

buying public.

Such

moves

could also tend to contract expan¬
sion programs of industry gen¬

erally.
will

The test of these

come

The
one

the

in

factors

later in the year.

human

factor

is

economic

major
for

a

picture

production and sales, and is
degree incalculable. If the
public gets alarmed
and tightens- up on spending
to
any considerable degree, the ef¬
fects will be felt immediately.
Incidentally, I have just re¬
car

in

some

consuming,

turned

Florida

from

where

I

ob-

.served that although business was
off a little from the 1948 season,
any normal
still very good.

by

held

by

standards it was
This opinion was
all of the bankers with

whom I talked during my visit.
Of
cars

course,

we

don't

feel

that

represent a luxury such as a

Florida

might be consid¬
ered, but the public generally do
regard car prices as too high. This
is so, even though the automobile
-still represents the best value for
the money of any heavy goods.
season

Economic

Facts

not

and

1949

The

in

of a

nature

the

need

goods is

durable

for

still great while buying power re¬
mains high if only it will be put
to work.

In the absence of strin¬

.

gent government fiscal and credit
policies, it can be expected that
and consumer spending

business

decline

not

will

enough

to

con¬

sharp downward turn

tribute to

a

this year.

"

It is up to

business management

to maintain confidence

going further into the
picture, let me review
briefly some economic facts

and avoid

any curtailment of planned capital
expansion programs.
•/- ■'
.

Situation

too

early

prevailing did not warrant an in¬
crease
and would, in all likeli¬
hood, result in unemployment.
The entire Ford contract is open

for

negotiations this spring while
Chrysler's is open a little later on
economic matters only. The Gen¬
eral
Motors'
contract, which is
the cost of

tied to

living -und has

just brought about a decrease in
wages, is not open for discussion
until

1950.

The industry's material costs are

will be of great importance.
Increased costs can no longer be

year

on

to the consumer without

the

profit position of the industry
limits -absorbing any
y

Automotive

Credit

Conference
Bankers

of

Briggs be¬

taken

Instalment

all

the

Amer¬

Association,

Louis, Mo., March 31, 1949.




St.

should

be changed

other.

this'*—_''11-■—1

place, in

taken

Has

wnicn

unemployment compen¬
sation, in some form, 'is here to
stay.
To many this development
will be looked upon as a real step
forward
in the
progress of
our

country,

the

To

civilization.

of

rest

What

the

Probably,

most

building

toward

step

has already

have

me.

Have?

We

Do

seems

to me

decide

upon

,

that before we

are to
have, we
Ought to give what we have at
least a once-over-lightly. We have
important as our most priceless national
upon what heritage, the opportunity system
been taken —many times erroneously referred

in this field.

progress

It

,

return, at least

us

minutes, to the subject

assigned to

can

build

by those who are responsible~lor

to

the

as

how we

what

upon

intelligent

make

to

few

a

matter

you

necessary

we

permission, let
lor

■.. try——1———

therefore, with your

them;

upon

you,

accept the fact with
serenity. For all of us—may we
have
the courage and
wisdom

may

.

we

enterprise system?

free

this

arranging

in

con¬

of

ment,

nothing alarm¬

see

"I

convinced that the auto¬

am

mobile

lion

about

10%

be¬

six mil¬

trucks this year,

than

more

if

That's

produced.

be

could

sell

half and

and

and

cars

they

could

industry
five

were

pro¬

industry in
1948. Let me point out that I said
sell 10% more—and I stress this
word SELL because, in my opin¬

duced

entire

the

by

i

j

is

tation

truck

and

car

transpor¬

enough to absorb
production in the his¬
the industry, provided
can rekindle the 'desire'
large

the largest

of

tory

scaffold had been erected for

new

just as they were
with the business
of' the day, a big fellow on
a
horse rode up and said to the
about

'

for

actual

and

genuine * demand

is

of

your

home town

office boy

an

his way to become

on

his company;

president
mechanic will

a

continue to prosper until he owns
automobile

an

clerk

will

agency;

start

grocery

a

chain

a

of

super

markets and succeed; a soda
fountain ; boy
will own a drug

food

store;

farm

a

hand

will

become

people to have them wealthy growing wheat, another
listen to our poor words.
This raising cattle. You can't name a
compunction
on
my
part was line of endeavor within which
greatly increased recently while some American boy with nothing
on
a
trip to Texas. In this little more to start with than a price¬
Texas town they were about to less
heritage, brains and the will
hang a Negro.
I inquired why to do, will succeed in this land of
they were hanging him, but no opportunity.
A government and
one seemed
to have any reason an economic system
permitting
for it.
In any event, the party this is worth
keeping and, as we
proceeded on out to where a nice have demonstrated, worth fight¬

the purpose and

ion, at least 50%"of these vehicles
would have to be sold.
I believe
need

at

express

time of busy

earlier

York

New

this month had this to say:

the

makes

management has
viewpoint that almost

of

cars

will

enter

buyers' market before the
over.
a

the

year

is

In fact, at the present time,

good

many

buy."

to

proceed

who-

man

apparently

charge:

"Wait

John,

want

I

I

to make a speech.
run for Sheriff, as

about to

am

in
there,

was

minute

a

-rl:.<)

ing for.

1 It

is the system that affords the'

opportunity
most

the

for

humble

exalted

most

nation

great

the

to

or

fame

rise to

to

position

develop
and

the

of

son

workman

of

our

idea into

an

fortune.

It

was

Napoleon who said "Ability is o£;
little
account
without
opportu¬

high-priced

makes

you

know, and this is

for

me

.

have

We

tried

to

keep

our

or¬

of

the

make

to

a

op¬

Not

since

portunity,

con¬

inception of un¬
employment compensation have its

centrates all operations pertaining

architects submitted for your con¬

these

manufacturing and sales of
Ford cars and trucks into one in¬

sideration

tegrated group. The company is
now
organized into six operating

the

tion
Ford

Division

Ford

the

of

which

Motor Company

to the

divisions, each

a

profit

and

and

itself

unto

business

loss

having

so

various

many

and

plans—some of them

sundry

by

the

plans of

well-grounded

men

of their knowledge and

reason

in

experience
for

drawn

are

-

field

this

the

sole

—

plans
of

purpose

the advantage

of functional super¬ strengthening that which we have.
vision from the staff Vice-Presi¬ Strangely enough, however, from
of the

dents

The

».

closely tied in with labor costs and
the
results
of negotiations this

very

ican

production

car

We

Club

tive

to

to do

that the economic conditions

was

increases.

fore

changed; give us courage to change the things that
and give us wisdom to distinguish one from the
Most of us will agree that with the intensified industrialization
be

cannot

a good time
nity.".
.
speech." The
Any planning for building that
man in charge objected somewhat,
any predicting, on the labor situ¬ ganization and our thinking flex¬
is to long endure must find its
but finally said. "Well, this isn't
ation, but the trend of labor nego¬ ible enough to deal promptly with
proper
place in this system. It
my party—this is Mose's party—
tiations in the textile industry a the changing market conditions.
must be a proper part of it. Cer¬
just a minute and I will find out
short time ago is interesting.
Only last month we completed
tainly the sound planning and
Mose, do you care if
You may recall that the matter a decentralization move that had from Mose.
this
fellow
makes
a
speech?" building of unemployment com¬
of a wage increase was submitted been two
years in the making and
pensation in this country is no
Mose
replied, "No, suh, I don't
to arbitration by an impartial um¬ which was
planned to strengthen
exception. If we,, in our anxiety,
care—but for hev'uns sake, hang
pire whose findings definitely op¬ assembly and marketing opera¬
to provide more security, do so in
posed an increase.
His position tions. This move was the forma¬ me first!"
a manner that takes from our

Labor

certainly

is

It

definitely

address by Mr.
the
National

God, give us the strength to accept with serenity the things

Dear

that

this time my
appreciation for this opportunity
ing in the higher priced models to discuss with you the matter of
going into a buyers' market and building upon what we have—
in fact have anticipated it. Let me
strengthening, if you please, the
cite you an instance.
security of our nation.
Mr. J. R. Davis, our Vice-Presi¬
I suppose that all of us have
dent
of
sales
and
advertising,
some
temerity about taking the
speaking before the Sales Execu¬

salesmen

automobile

*An

Lincoln

back

siderably.

the

/

seriously reducing the market, and

Before

an

Institute.
Your It is the system under which we
presence here today is the most have in the past and continue now,1
tangible evidence possible of the to prosper and achieve as do no
At Ford we are increasing our
recognition- of a need for a build¬ other men.
over-all production by approxi¬
ing program and may I, as a cit¬
Consider the fact that right now
mately 200,000 units but we cut izen interested•• in good govern¬

tween

sudden recession.

and

serious

passed
Some

i

a

up the slack.
As a consequence,
sales are experiencing a decided

ofj moderate

be

There is little doubt that unwise

;

and employment will
proportions in

production

Recession

No
see

we

Advocates

ra'ing system that will be incentive for employers to
stabilize employment, and upholds Federal-State partnership in
administering unemployment compensation.
experience

...

backward, high farm
prices brought about increases in
,•

other

deavor to tell you how we

unemployed worker in obtaining necessities of life.

buyers' market
and
management is making the
discovery
that,
despite all the
preparation and planning, sales
forces are not yet geared to take
in

already

are

be large enough to be an attractive
small as to fail to assist materially

never

subst.tute for wages, nor so

many

and summer.

from which to draw your own

As

however, holds it should

instances have drop in volume as bu^er selectiv¬
declined to the level prevailing at ity is encountered.
In the light of my earlier pre¬
the beginning of 1947, particularly
diction
this may sound
a
little
farm products and'food which are
gloomy but there is a paradoxical
especially sensitive to supply and
situation here.
|:y
y
demand conditions. Heavy foreign
and
domestic needs kept
these
Higher Production Schedules
prices well above the general level
The top executives in the auto¬
after inflating them much faster
mobile
business
have
sincerely
than most other commodity prices.
expressed their belief in a good
However, prices in this area could
business year. To back that up the
still decline and leave the farmer
industry is stepping up production
with a comfortable pripfit margin.
schedules and talking of a five and
This price decline has
brought
a
half to six million car year.
about a slight decrease in the cost
There is good reason to
believe
of living index and it is reason¬
such production is not an unreal¬
able to expect that a further re¬
istic hope.
duction will occur in the spring

conclusions.

eral statistics but instead will

has oc¬

fall

last

of
,

Prices

eral and in the
a u

crucial

levels

peak

economic
realm

economy

curred.

the

in

most

boom.
Some easing of
ousiness activity and prices from

observa¬

some

total

its

postwar

and making

tions

The
at

research

some

Asserting unemployment compensation is here to stay, Mr. Teets,

,

thought you might be interested in our ap¬
and what the outlook is for Ford and the indus¬
I am neither qualified nor authorized to speak

auto-

the

Denver, Colo.
I

subject for this talk today I

a

praisal of the automotive situation for 1949
try in general. Let me say at this time that
for

By BERNARD E. TEETS*
of Employment Security,

Director, Department

Executive

offing, but holds unwise or

recession is in

ness

.

Unemployment
Compensation Benefits

v

-

basis of recent research and study, expresses

on

^

^

Treasurer, Ford Motor Company

official,

Ford Motor Co.

Prominent

By L. E. BRIGGS*

.

•

The Case for

Outlook

The Automotive

'

question

of

prices

car

is

another subject under close obser¬
vation

and

constant review.

One

top automotive executive just the
other day said, "Certainly there is
nothing

about

sacred

automobile

prices. We will reflect the changes
in
commodity prices and labor
costs

just like

such

other manufac¬
case,
it will
longer to apply
to
the
finished

of admittedly
well-qualified
individuals,
has
come the Advisory Council's p^n,

changes

our

>

could

tors

could

have

horrible
I

brought forth such a

monstrosity.

appreciate,

was

asked not to

before

but

us

"An address
are

some

subject

to

possibly

(Continued

economic

change

affect

car

on page

fac¬

which
prices

32)

and

•

labor
reminded

capital

of

government,

I

and

am

of the words of Stuart Chase who

said:
"I

.

.

have

looked

Capitalism until I
mented, and

ping

it

from

am

at

word

this

all but de¬

am

in favor of drop¬

the

language.
So¬
cialism, its historic antagonist, is
almost

battered.

as

As

a

matter of

however, that I
judge the issues

rather

to

comment

another

National

by Mr. Teets at the

Institute

ment'Compensation.
Commerce
D.

of

U.

Unemploy¬

of

S.,

Chamber of
Washington,

C., March 31, 1949.

a

piece of

paper

covering

the factory. The crux of the mat¬
ter is—who receives the factory
income.
it is
the

product."
There

pens

combined.

Speaking

proving beyond doubt that "too fact, ownership of this and of that
many cooks spoil the soup."
If began to lose its importance with
left to their singular devices. I the rise of the inventor class when
am
certain that-no one of them one person had the factory and

any

but, in
probably take

turer,

collective

the

company.

injure not labor, or
capital, or government, but all of
we

the

a

As the

case

now

stands,

six-cornered fight between

landlord
land

on

demanding rent for
which

the

factory

stands, the bondholder demanding
dividends, the worker
wages,

demanding

the management demand-

continued

on page

26)

Volume 169

COMMERCIAL

THE

Number 4794

By EARL O. SHREVE*

of

use

adverse effects in reducing

eludes

;

unemployment benefits and their
Con- 7

mobility and flexibility of labor.

of social insurance which

any system

productive

encourages

^

Unemployment is
valued

most

works

man

truly

a

.People

not, he has certain overhead costs of operation, just as

or

has

as

It hurts people, and people constitute
have budgets to meet. Whether a

evil.

an

assets.

is

than
and in¬

more

Minority

rule.

An

The

under

which

will

ideas

or

ideal
no

on

is the

Western
cludes

society is one
imposes, his

spirit in which

we

They

from

are

establishing or
publicizing Chamber policies.
They are exploratory. They are
designed to help build a free and

1

h

a

e

s,"

u

o

bulks

which

large in all

so

personal

our

budgets—all
these

costs

go

whetner

on

is work¬

man

ing

a

not.

or

friendliness

mutual

and

aid,
like
Earl 0. Shreve

do not

we

to

a

see

i ghbor in

n e

want.

is

He

and

going to get help when he
his family are in need.
He

may

it through friends and neigh¬

get

or

concerned

are

only with the last
method
unemploy¬

mentioned

—

insurance,

ment

have

phrase which I

a

liked

never

because

we

don't really want to

insure unem¬
ployment. We would rather in¬
sure
against it, and I hope we
will get some fresh ideas today
on
this phase—insurance against
unemployment.
I:
businessman's

The

is

business

production. Social security bene¬
fits, however, "are payments for
which society receives no current
The unemployed man is

product.
a

consumer,

but not

a

producer.

constitute

net

a

addition

to

purchasing power. Rather, it rep¬
purchasing
power
pre¬
viously withheld through a pay¬

resents

roll

tax

which
hits.

with

hazard

when

released

than

better

employer, and

the

upon

is

Work

good

wages

are

with

unemployment

sons

phases of

some

This

insurance.

out of the ever-present pos

grows

sibility that
that

it

some

reduces

individuals will
of the law,
mobility and

beings like to be active:

there is something which we label

job.

find

to

if

or

than frank,

less

if

we

did not

that

drafting

law,

can

that

both

the

ORLEANS,

Sides

We

all

these

two

—in

some

Nature

Human

know

meeting

rectors

Wheeler

of

elected:

were

Wheeler,

President;

folk, Jr.,

and

Presidents;

&

J.

M.

G.

C.

people

When real need

exists, adequate
benefits should be provided ior a
reasonable duration.

But any sys¬

Products

B.

"Economist"

famed

article entitled,

pub¬

world-

a

"The Car-

activities,
and our
for higher real

universal pressure
for

income

everybody,
the

overlook

never

places

which

system

we

must

fact that any

ated by
ter R.

Rives III.

remarks

premium

a

payments for not working, no

on

by what means, works in

matter
tne

direction

of living.
we

must

of

lower

stauuaras

In all of these programs

the

place

Chamber

of

to

prices
have

to con¬
living lor

are

we

better

be found
other part of the world.

than

people,

in any

if

can

of




Walter R. Howell.

A

NATURAL
GAS

U.

Exchange,

May 1.

Report to
12,000

COMPANY

another

was

Stockholders

Social

New

Security

review

this

of

balance is another reason
this meeting today.

Recently

Under

.ems.

for

our

and

Company. Sales of

gas to

distributors

(including sales to subsidiary
ies) and

consumers

compan¬

amounted to

ap¬

proximately 94 billion cubic feet—an
increase

year.

of

19%

the previous

over

Consolidated operating
to

$26,760,285,

$4,700,000

oyer

the

revenues

a

gain of

high

previous

mark established in 1947.

own

Federal-state sysproposals the

of

experience

the

company,

today.

Many

of

company was

in¬

by 126 million cubic feet (43

percent),

the

increase

greatest

capacity made in

since

any year

struction of the system.

do not reflect to

year

extent

in

con¬

Sales for the

the

enlarged

any

substantial

facilities

com¬

pleted in December. Demands for

gas

by both retail distributors and indus¬
trial

Daily deliv¬

THE

these

incentives

The

capacity of the

ery

creased

consumers

continued

to

be

high.

CHRISTOPHER T. CIIENERY, Chairman

proposals have
altering i,:-.ther

some

made

basically

of progress

Proposals

problem

proper

for

year

expansion for Southern Natural Gas

amounted

potential

This,

then,

„

these

.

sug¬

YEAR

IN

BRIEF
(CONSOLIDATED)

(COMPANY ONLY)
1948

Gross Revenues

Taxes

......

$14,867,298
2,500,930

4,489,839

3,967,888

3,226,157

4,436,836

3,755,163

.

$19.93

$18.84

$21.51

$20.11

....

$ 2.84

$

2.29

$ 3.15

$ 2.66

Book Value per

Share.

Net income per

Share

.

•

■*

Dividends

Paid per

1947

$22,340,439

2,831,794

.

Cash Dividends Paid

$26,953,217

4,002,599

(including Income Taxes)'

Net Income

$18,474,747

1948

1947

.

,

.

Share

.

.

.

.

$2,466,028

$

1.75

'

7 $2,113,722
$

1.50

Current annual dividend rate: $2.C0

Copies of the full Annual Report are available on request.

v

questions

are

complicated and some are contro¬
versial.

We

have

allowed

ade¬

time for discussion among

yj-y v"v.y

S§sS?S::':¥:''

in

Compensation,* competition in the goods market,

Commerce

York City, members

„«

of the New York Stock

Mr.; the speakers and from the floor.

of

Washington, D. C., March 31,

Street, N.

the recent deaths of Wal¬

ford & Co., and

to

emphasis on

goods, of better quality, and

more

Shreve at the National Institute of; The Chamber believes not only

Unemployment

Weekes, Jr., will be
Dartnership in H. N.
Whitney, Gosdby & Co., 49 V/all
admitted

cre¬

Brailsford, President Brails-

SOUTHERN

1948

S., ] but also in the opinion market. We
1949.1 want frank discussion from all

a

Whitney to Admit

and other resources to

manpower

quate

:;:Opening

H. N.

ments, the increased diversion of

here

London

-

of our foreign commit¬

pressure

unemployment..

The

Executive Vice
President,
newly-created position.

ing benefits, who may erroneous¬

gests another reason why we are

lished what has become

Laughlin, Inc.

formerly
ViceAthey, was named

of

ly believe that,they are getting
something for nothing. With the

the individual may

side.

&

including those draw¬

everybody

stronger than the other, or again

shift from side

President

annual

the

at

Corp.

employees to remain off the job,
when work is available, will hurt

gate seasonal and other short-run

side

-one

Bliss

Kubik,

Athe>

meeting, to fill the vacancies

W. Wool-

Secretary-Treasurer.

which encourages productive

tem

is

are

of

L.

Arthur D.

be at¬

human nature

there

Athey Prods.

directors

elected

were

A. J. Maier, Vice-

and

balance so
may

payroll tax savings from steady
jobs has been a powerful stimu¬
lant to General Electric to miti¬

that

sides to

German

unem¬

we

to

President

CHICAGO, ILL.—Roy Iverson,
Vice-President, Brailsford & Co.,
Chicago, and Paul R. Doelz, Pres ¬
ident Kalman & Co., Minneapolis,

the

LA.—At

legislation

strike that
objectives
7

tained.

my

Two

to

NEW

annual

administration of that

sound

and

of

insurance

ployment

times

at

jobs, that

of

and

we
tire of rating to encourage management
like to fish and policies for steadier jobs would be
This I
rest, that we sometimes find very abolished or jeopardized.
ingenious ways of "playing sick," would personally view as a mis¬
take—I can assure you that in
or refusing a job.

admit

our

reestablishment

loses his

he

responsibility of the states would
is the employer's responsibility to decrease; the power and author¬
help foster this trait by offering ity of the Federal Government, in
good i wages and
good working Washington remote from the peo¬
conditions. But each of us would ple, would be greatly increased.
be

Directors of

Wheeler & Woolfolk Elects

instinct of workmanship." It

■'the

trade and the

German

job, to seek and take another.

been

flexibility of labor.
Human

are

as

-

the

Clay, expressed hope that the German in¬
be the "beginning of a new era" in the

will

Iverson & Doelz Elected

peo¬

prodding

efforts

best

his

To

take undue advantage

Lucius D.

exhibition

better America.

'7

.

completely

his

use

hold

more

unemployment

little

a

;"'7"'-\

as

tinue

reservations about

most

practical
cases of genuine joblessness, with¬
out taint of
charity.
Abuses of
the
system
must
be
guarded
against.
We need to strike the
right balance. On the one hand,
the employer must have an in¬
centive to put and keep men on
the payroll at productive employ¬
ment; and on the other, the em¬
ployee must have an incentive to
meet

if 1

not

General

contacts with the rest of the world.

'If; ■!*; Woolfolk, Inc., Whitney Building,
Unemployment insurance should the
following
officers
and
di¬

recognize that some per¬
Have
had. at times, certain

would be less than frank,

I

and

at lower

half-wages.
did

tives

needed.

government

Purchasing power in the form
of
un employment
benefits does
not

For

theme.

same

ple, it appears, that both incen¬

Sound

through organized com¬
munity effort, or through institu¬
tionalized
insurance.
Today we
bors,

this

Stick," which stressed

,

Unaer our
traditions of
,

heavy

W.
rot and the

was

of

development* of

food, and that ?'
"miscel-

products

for two weeks.
The
manufacturers in the
Germany and the Western Zones of Berlin, in¬
machinery, toys, precision instruments, cameras and

Zones

dustries

business. The costs of housing, of public utility services,
item

manufactured

German

W. John Logan, Director General of the Joint Export-Import
Agency, the foreign trade unit of the military governments in Ger¬
many stated that the Occupation Powers were endeavoring to in¬
crease the sale of German goods in
the United States "to take the
load off the American taxpayer." A message received last Saturday

Democracy

conduct these Institutes.

of

Munich beer.

one

anyone.

exhibit

Center, New York, and will continue
exposition of German made products of 511

is not "pushing people around."

This

industrial

feller

not instruments for

employees to remain off job hurts everybody.
our

it

government:

suasion.

but insurance against unemployment, points out ever-present 4'

possibility of abusive

opened this week at the Museum of Science and Industry at Rocke¬

opinion is equally impor¬
tant.
The spirit of democracy is
self-rule by discussion and per¬

President, Chamber of Commerce of the United States

ance,

Democracy is more than a form

majority

Mr. Shreve, stressing objective should be not unemployment insur.

German Manufacturers Exhibit Products in N. Y.

dividual

,

23

(1635)

and

representatives,
employers
citizens generally.
of

CHRONICLE

the speakers, union

who are here:

Pitfalls of Unemployment
Insurance

FINANCIAL

&

WATTS BtfltDfNG

BIRMINGHAM, AHA.

THE

(1636)

24

Public

COMMERCIAL

(Continued from page 4)

West Penn Electric
Company is the top holding company for
the electric portion of the old American Water Works system, now
segregated from the water companies, whi,ch still retain the old
name.
The present capital structure of the system is estimated to
be as follows, giving effect to recent financing:
/
Electric

Penn

Write-Ups

Subsidiaries—Debt

Mill.

Pet.

Mill.

$150

46%

$150

Preferred

Holding Co.—Debt
Preferred and

"A"__

19

63

22

5

1

5

1

13

37

23

100%

$326

——

12

34

11

74

Totals

52%

63

34

Common

Pet.

The

holding company write-up is an item of $37,016,053 "excess
of carrying value of the investments of the Company and of its
subsidiaries in securities of their respective subsidiaries over the
underlying book equity of such subsidiaries at their respective dates
of acquisition, as subsequently adjusted."
Elimination of this item
would reduce the common stock equity of the top company from
23%

to about

13%.

•'

Probably due in part to the rather thin equity ratio, West Penn
has enjoyed a remarkable increase in share earnings in
recent years—from lc a share in 1938 to the recently published $3.68.
Following are some of the salient figures:Electric

Cal.

Oper.

Year

Revs.
V

1948

1947

i

"

1946
1945 A
1944

1

(In millions)

$10.9

73.2

9.5

64.1

7.6

61.9

4.2

0.17

4.1

0.11

4.0

0.08

4.2

0.17

1943

58.1
53.6

1940

•

483

4.7

44.2

5.4

1939

40.3

4.8

1938

37.2;

3.9

/

2.29

V'

due declines in prices of Treasury
oonds. it has given an important

:

.m+mmmm.rn

bona

m

mm

mm mm

stability
and

to

If

had

we

not

taken

maintain confidence in the sta¬

of the bond market—if, for

ment

govern¬

obligations had experienced

the gyrations which followed
first World War—there would

doubtedly
ment

have

been

of confidence

situation

in

which

the
un¬

impair¬

an

finan¬

our

would

have

had serious consequences, not
only
in this country, but throughout the

world.

...

Our position of world leader¬
ship has brought with it serious
new responsibilities.
!

We
in

follow

must

firm

a

course

maintaining our strength, and
maintaining, unimpaired, the

confidence

United

felt

now

the •world

in

the

throughout

-

credit

the

of

States Government.

All

in all, our experience since
war: has
been: evidence
of

remarkable

basic

mw

give

Mm'

of

assurance

confidence

continued

a-

prosperity.
V.;-

Present Readjustments Helpful
mm

m* mm

mm

The

0.39

now

0.01

taking place

mmmmmmm*

West Penn Electric is currently selling around 18 to yield 5.6%.
There has been

some curiosity in the Street as to why the dividend
should be kept at the low figure of $1 when earnings are
running so
much larger.
But the parent company "took ' down" onW $1.65 of

$3.68 in

readjustments
are

which

are

both helpful

healthy/ , We must remember

that for the last three years it has
been our aim and goal to halt in¬

flation

and

to

adjust prices. We
have
had
periodic / first-of-theyear adjustments in 1946, in 1947>
and again in 1948.: Now, we are

1948, and $1.21 out of $3.07 in 1947. The rest of the
apparently! "plowed back" in the construction pro¬
gram.
Giving effect to construction work now in progress and experiencing some additional ones.
budgeted, $150 million of plant property will have been added to Each of these readjustments has

earnings

were

the

system in the five years of 1946 through 1950, * an increase in
plant of approximately 70% during that period. The greater part of
the public financing required
by the subsidiaries to provide the
funds for this expansion
program has been completed.

therewith, the
of additional

company

common

In connection

invested about $7.8 million in the purchase

stocks of its subsidiaries

«arly part of 1949, including

during 1948 and the
transaction, now being completed.

one

On Feb. 3 this year the
company filed a new plan with the SEC
it© effect: further progress in
complying with the

tended

to

to

us

stop, look,

and listen. Each one has reminded

of the necessity for caution, for

us

taking stock of the situation, in
make sure that

order that we may
we

pursuing the

are

adapted

,

■

provisions of the
Holding Company Act./At the present time there is a tangled rela¬
tionship (as to intercorporate :■ holdings)•; between several system
companies. The plan is designed to lodge practically all the common
stocks of the three principal electric subsidiaries in the treasury of
the top Company, and also to conform to the
"grandfather clause"

cause

of

to

best

course

an> orderly
stabilization

promote

toward

progress

the

high-produc*
tion, high-employment level.
our

tractor,

this

the

was

acreage—and

most of
labor that

txie fulfillment of human

economy on a

which

be

will

made

pos¬

through this program, will
justify our referring to this new
era as the Atomic Age.

require¬

ments.

might also call it the Plas¬

We

tics Age, or the Age of Synthetic

Undoubtedly, there will be

measures

example, the market for

the

of

applied to it—has been freed lor

entire financial structure.

uur

and

the

and

generally,

mm

•1'",

0.65

•'

strength

prices

tors in the present situation which
mm

0.36
•r: •'

of

element

economy are
taking
place, we have no reason to be
apprehensive, in view of the fac¬

mm

mm,

un¬

peacetime-

3.07
;

61.1

1942

1941

_

$3.68 77 :7 $1.00
7

and

advances

throughout this nation. Now, when
readjustments to a more normal

^

$83.1

unaue

medicine and biology,

in

in chemical and physical re¬

and

search

a

Divs.

Earns.

dustry,

sible

the

Common Stock

Net
Income

was

ing

in

-

All Fronts!

on

devoted to the
production of feed for 28 million
acreage

horses and mules.* With the com¬

cial

100%

$289-

farm

strained

Eliminating Holding Cos. bility

Bai.JSheet

Plus New Fin.

Thursday, April 14, 1949

past several years in cooperation
with the Federal Reserve, has re¬

iO

12-31-48

CHRONICLE

FINANCIAL

Moving Ahead

Utility Securities
By OWEN ELY

West

&

greater

during

changes

even

half

the

century ahead of us. Atomic en¬
alone, may transform our
And if we set our sights

ergy,
lives.

Materials,
of

and

types of plastics,

new

types

many

which

of synthetics

coming into

just

are

has been the

great

so

in

advance

use.

They are made into laminated
firmly on the opportunities open¬ products and in sheets, rods, and
ing up before us, I believe that, molded products. They are used
will not be deterred long, or
often, by the difficulties of chart¬
we

ing our economic course. .
Unfortunately, there are

some

today who apparently have little
faith in the nation's ability
to
maintain prosperous levels of em¬
ployment and incomes./ But, the
United

has

States

built

been

been

ways

There have al¬

few

a

gloomy view

who

the

nation's

surmount

the

obstacles

a

ability
that

to

lay

ahead., However, the main trend
of our national progress has been
fashioned

by those who saw be¬
yond the temporary obstacles.'
Factors

Maintaining Prosperity

continued

today supporting a
level of business

high

remain

unusually
strong.
satisfying ; of 7 accumulated

The
con¬

demands has not caused

sumer

a

drawing down of individuals' sav¬
ings. On the contrary, liquid as¬
sets of individuals, as I have said,
are at the highest
levels on rec¬
ord, and the recent expansion of
plant and equipment by corpora¬
tions has not brought a reduction
in working capital.
With the return to normal buy¬
ers'

markets,

believe

I

that

we

look forward to one of the
greatest periods of business devel¬

may

the

opment in our history. In the few
that have elapsed since the

have made only a limited
developing new prod¬

start toward

ucts based on the wartime discov¬
eries in new

materials, new man¬
ufacturing techniques, and new
types of equipment. Our factories
have been

occupied in supply¬

so

ing the quickest available goods
to fill accumulated demands that
the

of

introduction

new

many

*

.■

developments mark

new

beginning of a new era of re^
and discovery initiated by
concentrated

the

effort

of

our

scientists

during the war years,
particularly Tin electronics " and
chemistry.
Each new scientific
discoyery opens a new field, and
provides the basis for further dis-r
coveries. ;
A

Start

Long-Term

on

Projects

In

sp'eaking of the country as
a whole, it is fair to say that we
have made only a start on major

We have just
extend and modernize
highway
system
master program agreed

long-term projects.

to

begun

nation's

the
under

a

by Federal, State and local

upon

governments. On the basis of a
continuing traffic survey,:, plans
have been made for express high¬
systems to channel congested
through large cities, and

way

traffic

for

rebuilding

roads

rural

worn-out

traffic

modern

meet

to

-

About

1,500 miles of the
mile National Inter¬
Highway System have so far
been completed.

needs.

40,000

new

state

years

war, we

older industry./'--;

These

r

factors

The

possibilities to

offers, new

poses
an

search

took

the future; and

of

distrusted

construction, and in the

home

synthetic rubber for special pur¬

up

through its long history by confi¬
dence and vision.

in

automobile, furniture, and house¬
hold appliance, industries, for adhesives and for food packaging.
The development of new types of

The

of

long-deferred " needs

cities for new sewage

and

towns

and water

systems, for public utilr

ity services, for schools and hos¬
pitals have just begun to be met.
Other municipal facilities to. take
care
of the great shifts of popu¬
lation
to new areas during the

must also be provided.
connection, it is important
to remember the 17 million peo¬

war

years

In that

products has had to be pqstponed.

ple who have been added to our
is beginning population in the decade since the
get under way. Factories have -war
began.7.''.
present position,; it is reassuring to
gone through an extensive remod-i
To
discover how greatly the oppor¬
reap - the
greatest benefit
of the Act.eling and expansion program in from the
_.
■ „
■
"
tunities of the future loom up. I.
opportunities that lie
preparation
for
turning
out
new
I
Under the plan West Penn Railways will transfer to West Penn mentioned earlier the great
ahead, two precautions are neces¬
and improved products.- We have
Electric its interest in West Penn
sary: First, we must continue on
Power; together with a few shares changes; which have occurred in
made' a start
in
television,
but
Of Electric Preferred and $2.2 million in cash. >In return Electric will
the
alert
to
maintain our eco¬
our; economy during the past 50
even
there the mass production
surrender to Railways all but 1.000 shares of
nomic security—to guard against
that company's stock years. It is enlightening, when we
stage
has
not
yet
been
reached,
(presumably to permit cancellation of most* of the common stock try to assess our present situation,
undue
credit expansion, specu¬
equity on the books as an offset to loss of the investment in Power to remind ourselves that a half and the widespread application of lative buying, or other excesses
television to industrial and com¬
stock)
Electric will also assume-the
that might precipitate a business
liability for $4,372,500 West century ago the most; forwardmercial uses is still in the future.
Penn Traction non-callable
recession. Secondly, we must pro^
5s due 1960. Part two of the plan pro¬ looking citizens of this country
vides for
In the field of metallurgy, the
repurchase by Electric of the 58%
vide complete opportunity for the
stock interest in would not have dreamed of the
use of light metals and
Monongahela now owned by Power.
their
al¬
nation's economy to develop. This
Electric will pay. Power $7 changes which have already taken
jnillion, the original purchase price, plus simple interest at
5% and place.
50 years ago, the illumi¬ loys, with new techniques in han¬ means that we must make full use
the amount of dividends declared
up to the time of purchase.
nating gas companies, the carriage dling, is growing in importance. of our resources, and we must
When

we

do

little

get 'a

pause

and try

perspective.

to

our

on

Our

new

economy

to

•

(

At

the

assets of

end

of

1948

Electric

(parent

company)

had

net

only about $2.7 million.

quick

The company might obtain another
$2.2 million cash if its demand notes for that
amount should be re¬

leased. These notes
the old
American

expenses;

the

represent an escrow fund to
Water

Supreme

Works

Court's

Service case, exoected at
any
«us

question

So
/

The

company

and

Electric

decision

time,

may

would

in

pay

a

receive

5?^
another $2 million from
.w"ethfr these amounts would suffice to
wu

i

(plus interest, etc.) to Power remains uncertain,
Electric could effect substantial
savings
and
an

on-

preferred
the

furnish

also

the premiums

stock, plus
Engineers Public
precedent to settle
$2.2

v"

the $7 million
-

* V

(estimated at about 42c

°«a»
c®m"10n stock) if it
A

Class
issue

stocks

were able to refund its Preferred
(with dividend rates of 6% and 7%) through
debenture 4V2S. If the $34 million
preferred and "A"
stocks

of

were^ retired at call premiums this

However, it

would require about $39

payment to Electric might also require several

millions

appears

likely that the SEC will

want

Electric to

bolster its common stock ratio.
Assuming that the company might be
limited to a new issue of
$20 million debentures and that $25 million
jcash might have to be raised
by an issue of additional common stock
fit .(sayby rights at $15 a
share) this would require issuance of
about 1,667,000 new
shares, bringing the total to 4,010,000. On this
basis pro forma
earnings for the calendar year 1948 would
work out at about

$2.59.




were

first

experiments

with

?

New developments

iThe

development of electricity,
alone, should give us pause. Fifty
years ago, the gas mantle was a
invention..

new

were

a

Electric

lights

rarity; experiments which

later

led

were

still

to

the

going

tungsten

on.

lamp

No one could

have foreseen, for example, our
great aluminum industry, depend¬

ing

at

stage

every

on

electric

power.

Fifty years ago, we may
recall,.an American farmer

also
pro¬

duced only enough to supply eight
persons.

15
ray

Now,

one

people with
a

a

and in

have

demand.

sumer

cals for control

and

plant

a

half

cen¬

in

we

.

new

of weeds,

diseases,

and

continually developing,
cient

types

of.

farm

have

insects,

strength to meet the current re¬
adjustment to normal peacetime

we

more

are

effi¬

implements.

dustrial

a

Atomic energy

pect
our

economic

few

life

years.

atomic

energy

pushed

with

within

Our

program

a

pros¬

rela¬

national
is being

greatest vigor. To¬
day, nearly 70,000 people are em¬
ployed in the atomic energy pro¬
gram.

Last

The discoveries and in¬

developments

provide

new

era

a

of

recent

springboard

for

of progress.

With this outlook before us, we

-

.

revolutionary changes in

of

tively

?

offers the

Our economy has the basic

.

markets.

tion costs, and have lightened the
farmers' work load.

con¬

fident.

years

•;

to be

reason

every

chemi¬

These have reduced farm produc¬

when the full
long-range develop¬
got under way, $525 million

ment

tury ago. The reason is,.in part,
that as late as 1910 one-fourth of

:

Farmers are offered

year-round

ar¬

bottlenecks at any stage
production or distribution.

prevent

major household appliances ;
Looking toward the future —
new fields of con¬
and I include the nearby future—

program

millionaire

con¬

opened

farmer supplies

of farm products beyond the

reach of

in home

struction, in methods of heating,

moving

pictures, the demonstrations of the
i
million from" earliest automobiles? •'>

surplus earnings * in
pay

the
interurban
lines,
thriving industries, seem¬
ingly here to stay. Who would
have taken too seriously the flight
of a plane heavier than air, the

factories,

may

expect that the years
fully as great op¬

well

ahead will offer

portunities
and if

past,

we

a? the years just past;
heed the lessons of the

they

.

should

offer

greater economic security.

*

much
/;

Bell, Gouinlock Elects

year,

TORONTO,

of

ONT.,

;

CANADA—

this program, and

Bell, Gouinlock Company, Ltd., 25
King Street, West, have elected
Clifford D. McCreary and Irving

penditures

H.

was

spent by the government on
are

$725 million.

by 1950 the ex¬
expected: to reach

The advances in in¬

Campbell to the board of di¬

rectors of the firm.

Volume

Number 4794

169

dollar

Question of Currency Devaluation
By PAUL EINZIG

4

from

past and present attitudes toward currency devalua¬

on

Britain to devalue sterling and
of the British to force devaluation of European currencies

tion, Dr. Einzig notes

resentment

pressure

well

as

vision of

also

in

caused

re¬

by proposals of an
buying

been regarded

European currencies is overdue and blames International

the

as

weapon

of the

financially and economically
country, and never in his¬
tory has a single country achieved
such relative degree of financial
weak

LONDON, ENGLAND—Change of attitude towards devaluation

during the past quarter of a century provides an outstanding instance
economic doctrines. During the 'twenties and early
'thirties devaluation was considered a mortal sin which must be

economic

and

United

strength

the

as

States
today.
But
on
thought the solution may

of the relativity of

second

avoided at all

not, perhaps, appear, after all, un¬
reasonable.
It certainly deserves

unable

were

avoid

to

t

t

e m p

countries
i

-

st any

ripe for devaluation.
Continental
countries advise each other and

i Britain

since
quite recently they even take their
courage in both hands and advise
the

f

e

e n

d

Einzig

During .1925-31, Britain sacri¬
ficed her prosperity for the; sake
of keeping the pound at its old
parity. During 1931-33 the United
States jeopardized the stability of
her
banking system by a pro¬
longed resistance to pressure to
devalue the dollar.
During the
same
period Germany sacrificed
her democratic system and paved
the way for Hitler through the
economic depression arising from
her refusal to devalue the reichs-

1932-35 Mussolini

preferred to forego expenditure on
public works, on which his popu¬
larity largely depended, in an ef¬
fort to "defend the lira with the
last

during

stained

from

remilitarization of the Rhine-

man

land

rather

tion

of

than risk a

devalua¬

in¬

through

franc

the

military expenditures.

creased

ally to be regarded as a matter of
expediency. There was a tendency
to resort to it too easily and to
an
unnecessarily
large
extent.
From 1933 to 1939 governments
tended

to

criticize

sharply
petitive

on

the ground of "com¬

each

other

depreciation."

currency

year—it is usually "too late

and

too

trade
with

by underselling each other
the
aid
of
a
depreciated

undervalued currency.

and

This

practice aroused much bitterness,
and systematic efforts were made
by the government of the United
States and other countries to out¬

This hostile attitude con¬

law it.

tinued till about

recent

During

v

1947./
years,

however,
growing
The cycle

is

was

now

twenty

the

years

ago.

as

While,

1929 currency pari¬
a matter of

however,

in

ties

defended as

were

same

prestige and commercial reputa¬
tion, now the pressure to devalue
is
resisted
for
purely practical
consideration — because devalua¬
tion tends to change the terms
trade

of

against the devaluing coun¬

position to refuse to ad¬
mit any government which is not
prepared to accept a reasonable
adjustment of its parities.
But
this would have meant delay and
been in

matter

those

of

other

but

countries.

Indeed, during the last

have witnessed
the
strange spectacle of almost
every country hoping, praying and
agitating for the devaluation of the
currency of. almost
every other
year

two

or

country.
Britain

.

; v

in

we

left

was

untidy

open,

regarding parities is as

/

as ever.

that

piecemeal devaluations
solve the problem. What

such

not

do

conversation in

our

a

most casual manner. In

fact, he

was an

acquaint¬

of long standing and it turned out that he had the best
intentions
the world in wanting to pass some information
along regarding &
situation in which my friends had an interest.
ance

in

First he spoke with one of the three other
people who were in the
and he showed his clipping—then he went to another—mean¬

room

Placed

Market

on

investment

An

banking

group

by

Dillion,

&

Read

Co.,

Inc., Kuhn, Loeb & Co. and Leh¬
man Bros.,
offered to the public
April 13, a new issue of $50,000,000 C.I.T. Financial; Corp. 2%%
debentures
and

due

99.35%
yield ap¬
to maturity.

1959,

at

interest to

accrued

proximately
Proceeds

2.70%

debentures

from

will

the

be

sale

used

of

the

by

the

corporation
primarily
for
the
purpose of furnishing additional
working funds to its subsidiaries.
additional

Such

hands of

in

funds

the

subsidiaries will

the

be

available for the purchase of mo¬
tor and other

retail instalment

re¬

and

ables

and for

The

receivables

factoring

other corporate purposes.

debentures

are

subject

to

prior
to April 1, 1950 and thereafter at
prices decreasing V^% per year
to 100% if redeemed after April 1,
1953.
*
-V^
redemption

The

at

101%

on

or

principal businesses of the

subsidiaries of the corporation are
instalment

financing/? including
and also factor¬

related insurance,

ing and writing of fidelity and
surety bonds and casualty and
certain other types of insurance.
The

corporation

itself is

not

an

operating company. ;
The

principal group of the sub¬
operates in the instal¬
credit field, financing
at

sidiaries
ment

both wholesale and

of

automobiles,

retail the sale

well.

meant

casual

It

to enter in

as

long association permitted it. Yet there
the whole thing—we all sensed it.
!v
When

i-

headed

he

and
so

he

left

one

of the

men

is

unlikely that he
he did unless his
something wrong aboul
very

the

was

way

'

t

in the

.

: ,'V..

turned to the others

room

and

said, "You know, he's an awfully nice fellow, he really meaiit
well, but dammit, I think he is trying too hard to tell us how gooifl
that thing is.
He looks anxious about it.
Everytime he sees some¬
thing good in the paper in the way of pending legislation that may
favorably effect that company he barges in and tells us all about it.
Every month if they make a couple of dollars extra profit he tells u*.
J know he is sold on it and owns quite a bit of the stock himself, but
he's too anxious for me. Frankly, I am beginning to doubt whether or
not he is really as sold as he pretends to be.";

'

;

/

Here

''

'•

'

■'

■

'

.

extreme case of

overselling. Firstly, no matter how
acquainted he weakened his case and his story
by the way he rushed in and pushed his clipping in their faces! Tt &s
difficult to believe that any experienced person (salesman or other¬
wise) would not appreciate the fundamental fallacy of saying the
was an

well these

men

were

RIGHT THINGS but in the WRONG WAY-and at the WRONG TIME.
In his enthusiasm this well

meaning man actually began to UNSEIjL
was to convey information that

his friends when all he meant to do
would bolster their confidence

iq the project.

The

right way to approach such matters is based on commoa
sense and judgment.
Get undivided attention before you say what
you have to say.
In this way you DIGNIFY your proposition. Never
interrupt others and don't talk at all unless you can also do so with¬
out interruptions.
Certainly every salesman understands these im¬
portant facts of life. Yet, here was a man who had achieved success,
he had many years of academic training and business experience be¬
hind

him, and still he messed it up. That is why I thought this little
might serve as a reminder to some of us who might also grow
careless once in a while and by > overselling dpi what this fellow ac¬
complished—HE DREW A BLANK. ,
>*
f
i*
•
^
item

.

and
products.
The
together compromise
one of the largest organizations in
this country and Canada, engaged
in
the
financing of instalment
equipment

subsidiaries

The

sales.

business is conducted

chased by financing and factoring
subsidiaries for the calendar year
1948

amounted

220,000,000.

to more than $3,Premiums written by

the insurance

subsidiaries

during
$58,^

1948 amounted to more than

through offices located in all states

290,000.

and the District of Columbia, r

solidated net income for the year

„

The volume of receivables pur¬

trucks and other

The

corporation's

$17,071,475.

was

C .U

con¬

V

willing to consider a reason¬
their curren¬

are

able devaluation of

deal to be

There is a great

attitude. Take for
instance the case of Britain. Had
this

for

British

the

yielded

Government

to devalue Sterling
unilaterally, Sterling would have
become
even
more
undervalued
in
relation
to
the
continental
currencies and to the Argentine

to

pressure,

peso

than it is now. It would mean
material abroad

that food and raw

Britain to
her exports

would be too costly for

true,
in

increase
Sir

wonder

re¬

devaluation. " Even

unilateral

Cancer to live

a

There

that

the

would

sider

a

effected

parity,

provided

that

V laboratories and scientists who are

ing their lives to find the
Cancer.
V V

.

ment,

the

Sterling;
way

as

well,

solution

a

as

the

would

some

toward adjusting the trade
between the Eastern and

balance

stimulate

from all sides to devalue Sterling

United

America.:

It would
exports to the

Hemisphere.
British

States,
At

Canada and Latin
the

same

time

the

,

•

new

dedicat¬
cure

of

_,•!/... •"

EVERY DOLLAR I send

establishes

buys

new

equip¬

facilities for treating and

Just write "CANCER" on

dollar.

go

' "

cause—and

curing Cancer.

parities of a number of important
currencies are lowered in terms of
Such

V

EVERY QUARTER I give helps support

/

part of a gen¬
scheme involv¬

an increase of the American
buying price of gold. In that case
Sir Stafford Cripps might agree
to
a
lowering of the Sterling-

recognize Cancer and what to do

about it.

as

devaluation

dollar

to

to believe
Government

only be prepared to con¬
devaluation of Sterling if

were

eral

give helps teach new thousands how

is reason

British

by

again.

EVERY NICKLE AND DIME I

devaluation of Western
European ' currencies
is looked
upon without enthusiasm in Lon¬
general

don.

help those stricken

to

the idea of a

of hand

out

...here is life-giving money

It is no

Cripps

Stafford

TO YOURSELF

but

volume,

decline in value.

would

jects

is

It

—from




quainted with the members of the firm where I was visiting, be¬
cause he just passed
right through the reception office and entered

they want is a general readjust¬
ment in the course of which they

.

America, from the conti¬

feel

governments might

Some

Western

particular is pressed

the

and

compelled to devalue, but most of
them are inclined to take the line

ing

currencies

the IMF was

and

naturally anxious to begin to op¬
erate and to admit the largest pos¬
sible number of countries. So the

import requirements.
There de¬
veloped a strong desire in the
minds of statesmen and experts to
of

a

complications,

it

devaluation, not of their own

the

have

would

IMF

The

created.

tries, and makes it more difficult
for them to cover their essential

see

when

effected

been

International Monetary Fund was

reluctance to devalue.

it

:

have

to

would

has become completed; the popu¬

growing realization

a

revision of all
gold parities is overdue. It ought

import.

attitude

is

from the

would have been

ceivables, wholesale motor receiv¬

thorough

a

most countries showed a

lar

little."

There

that

cies.

a

devalue

to

as

last

said

indeed

advice

there is a possibility
of avoiding it.
When they do de¬
value—as
France and Italy did
long

so

scramble for

was

devaluation of almost

unsolicited

on

the diminished volume of foreign

There

in fa¬

including the dol¬
lar.
There are, of course, weighty
arguments also on the other side,
and no government wants to act

however, devaluation came gradu¬

-

be put forward

the

situation

'thirties,

middle

the

Toward

,

his blood." yjEven
1936, France ab¬
resisting the Ger¬

of

drop

later,

argu¬

were

perfect gentleman

~

V

During

of

array4

sitting in an office talking with some friends
interrupted by a smiling intruder who had a clipping
morning paper in his hand. Obviously he was very well ac¬

when we

was

we kept on talking.
There was nothing offensive or brazen in
breaking in—in fact he was leaning backward to make certain
that he wasn't interrupting an important discussion. The man
was^i

C.I.T. Financial Debs.

currency,

any

currency.

mark.

'f.

;•

can

of

devalue the

States to

-

formidable

vor

Paul

Dr.

national

their

•>

ments

parities of

devalue,, while

United

A

thec~

;

to

dollar.

;!

sacrifices to
d

overvalued and are

are

day I

his

ex¬

;

.

mo

British

Moscow.

from

The other

while

consideration.

serious

Area,

even

mingled^with Cii
pity. Most".
gov ernments V:
.were
p r e-r >'
pared to maker ^
al

Sterling

perts, in turn, insist that most con¬
tinental
and
Latin
American

with ",

upon
c o n

gold-producing

the

-

it;

looked

were

of

countries

.which

the

from

nent,

Coun¬

costs.

Salesma
By JOHN DUTTON

the American

of gold is understandable.
the past devaluation has al¬

ways

Monetary Fund for not undertaking it. Holds general and not
unilateral devaluation desirable, including U. S. dollar.

tries

Securities

the

price
In

Sees growing realization that thorough

the dollar.

as

of

increase

pressure on

25

exports

would

States

United States

(1637)

Commonwealth

British

United

gold

CHRONICLE

ihcrease.

The

Commenting

of

proceeds
the

the

to

FINANCIAL

&

COMMERCIAL

THE

containing your check or money

the envelope

order. It will be

delivered to the American Cancer Society office
in your

state.

;

AMERICAN

-i

,
i(-

CANCER

SOCIETY

-

v,

;

26

THE

(1638)

FINANCIAL

&

COMMERCIAL

I think that

other animals; nor do

will feel that
largely animal.

is

man

you

not

is that if we are to build success¬

fully
be

in

Carriers
contend

with

histories

this

very

northwestern

the

what

was

section

of

the

country

had

to

probably the most severe weather in their
a result, earnings, or deficits, have made

As

winter.

comparisons with the like period of 1948. Mostly these
normally make little, if any, money in the first quarter of the

sorry

roads

with the seasonal peak coming in the late summer and early
fall. What has gone on so far, then, is of relatively minor signifi¬
cance.
What is important is that the prospects for this territory over
year,

of

balance

the

the

quite favorable.

appear

year

Once the adverse

earnings comparisons in this terri¬

weather influences are eliminated

structure

a

have

that I

appreciate fully

taken considerable of the time al¬
lotted

to discuss the matter of

me

have, it must disqualification

of

strength

but

benefits,

of

certainly it has been the basis for
most
of
the
criticism
levelled

beauty that will afford incentive,
against the program and I feel
opportunity and protection; not a
that more weakness has been ex¬
glistening bit of fabrication that
will lure men to it oniy to have perienced in this regard than any
other single phase of unemploy¬
it crumble upon them.
ment compensation laws.
There¬

Unemployment compensation
benefits should never
be large

enough to make them an attrac¬
substitute

tive

should

for

they be

nor

wages,

Of the major car¬
riers this is primarily of importance to Chicago & North Western and
Great Northern.
The former, as a matter of fact, has already been

in

fore, it would appear that any
building for the future should pro¬
vide for proper strengthening of

through participation in an unprecedent all-rail move¬
the Gogebic Range in upper Michigan to Bir¬

is

paying for the necessities of life
when he has lost his job through
fault of his

no

other employment.

seeking

ment of iron ore from

and while he

own

Equitable
that

is

compensa¬

is, I believe, worthy of brief
The problem of em¬

comment.

mingham. The Great Lakes have opened for transportation unusually broaden immediately the coverage ployment and unemployment is
early this year. Stocks of iron ore at lower Lake ports and at fur¬ to protect workers who are em¬ national in
scope and as^we well
naces are quite low.
As a prospects point to a continued high level ployed by employers who have know from
past experience, knows
of steel production it is generally expected that iron ore shipments to one or more
workers, for certainly no State boundary line, so that it
the Lakes will be heavy this year. There is a feeling in some quar¬ these workers are
subject to the is a problem which is a proper
ters that the 1949 season may see a heavier tonnage than even the same hazards of unemployment as
concern
of the Federal
as
well
peacetime record set last year. .
are all other workers.
as State Governments.
Grain yields in the territory last year were large and the carry¬
On the other hand, our country
over at the beginning of this year was much higher than it had been a
Employer Interest
is so large, our peoples and indus¬
year earlier.
This grain has been moving in heavy volume recently
Experience rating is a must. It try ana agriculture so varied and
and should continue well above a year ago. So far as can be judged
may or may not be a real incen¬ complex that it is difficult indeed
at this early date there is every prospect of another year of high tive for
employers to stabilize em¬ to think of a single UC law that
grain yields in 1949. Prices will be lower but farmers will still be ployment, but it most certainly is could
possibly
give
the
same
assured of continuing prosperity. This will in turn help to bolster the the
primary means by which em¬ equitable variance as is presently
inbound rail movement of miscellaneous manufactures to the rural
ployers' interest in the program is provided by the provisions of the
■

areas.

maintained

bolstered by the particu¬
year's corn crop, the management of Chi¬
cago & North Western has been quite optimistic as to the road's 1949
earnings outlook. In estimates filed in connection with the carriers'
request for another freight rate increase the company forecast a rise
of some 6.2% in gross revenues for the year.
This was on the basis
of present rates. Net operating income for the year was estimated at
§14,356,000. This would compare with net operating income of $10,011,000 realized last year. Earnings on the common stock were placed
at $7.50, up from $2.75 in 1948. V
v
Traditionally Chicago & North Western has long been a high cost
producer. It gets a relatively short haul on a large proportion of its
traffic. On the other hand, it is saddled with extensive and expensive
terminal operations. As a result, it has one of the highest wage ratios
in the industry and its transportation ratio consistently runs well
above that of the industry as a whole.
Also, its margin of profit is
naturally considerably narrower^than that of the average for Class I
carriers. Last year it Carried only 7.1% of gross revenue to net oper¬
ating income before Federal income taxes. Only three major roadsAtlantic Coast Line, Central of Georgia, and New York Centrallight of these general prospects,

In the

larly wide increase in last

did

fundamentally high operating costs and the nar¬

In view of the

margin of profit the company

row

levels has considerable appeal

to any sharp decline in business.

in the opinion of many rail analysts.

Unemployment
Compensation Benefits

The Case foi

(Continued from page 22)
benefits in order to assist workers

out, it is Socialism; if the land¬
lord, the bondholder or stock¬
holder win out, it is Capitalism;

opportunity system.
Whatever this figure is, business

wins out—it is,

if the management

helping themselves
more fully under our

generally
to

in

prosper

can

it, but to pay one dollar

pay

more

and

far, unnamed."

is to take from the worker

not

give to him.

We prosper
when the op¬
is left free to

best in this country
Human

It
we

to

occurs

Mobility

me

that

portunity

as

long as

operate under the opportunity

system there is too much discus¬
sion by too many people on what
is

labor and what is
business by way of an
adequate unemployment compen¬
sation program.
The vicissitudes
wanted

by

wanted by

of

fortune

mit of

are

false basis

too

fickle

planning

men

as

to

per¬

such
this, for who knows
on any

system

work with fewest

restrictions.

It

is elementary to say that

what the
workers of this country want is

full

we

labor

are

provides
a
most
unique and equitable method of
collecting enough tax at all times
finance

to

the

same

matic

ing

funds

ment

my
or

to

the functioning of the

system

opportunity

with man's

or

right to a

job is indeed not security but in¬

security.

sons

we

must

ture.

When taken

into

captivity
plan for the good of all—not on and given complete social secu¬
the basis of how much can busi¬ rity,
he remains powerful and
ness afford to pay by way of taxes
proud but wholly dependent upon
or how
much can labor demand mankind
for his wellbeing—not
by - way of benefits, but rather able to care for himself or his
how much should be paid by way offspring without the aid of
man;
of
unemployment
compensation nor is it different in the case of




It

is

being un¬
have
about isolated
as

principle, but
to

say

many

are

receiv¬

for

reasons

other

than

having lost their jobs through
their

no

The

of

matter

benefits,

disqualification
know, has re¬

you

as

ceived considerable attention. The
extreme

is

represented by
laws containing the clause which
one

to call your attention

the

war

the

partnership

to realize

fully just what

by

means

that

building

sayings in administrative costs. I
think

this

points out

rately than
fact

that

any

more

accu¬

words the obvious

Federal

people watch
expenditures
much
more

State

will do better to build slowly

surely than to build too hasti¬

ly and be forced to tear down tnat
which

clause such

as

this forces the im¬

penalties
in many
which, in equity, should not
of

of

and those you represent

the champions of our present
ar¬

rangement and without your

dili¬

effort

have

gence

and

would

we

ment

In its own right, unemploy¬
compensation is a big busi¬

ness.

It should be administered as

ware.

such, with

.

of the
for the worker's separation

regardless

penalties

reason

from work other than

a

postpone¬

ment of benefits.

In my opinion,

whether

ciding
had

the people;

There
need for

not a

cause

for

leaving

Likewise, if it

ner

proper

event

an

depending
in

each

impose

the

upon

de¬

that

the

pass

individual

at

present

Through

one

us

of

today;

on

money

for

rounding such

demanding the

It is my belief, based upon years
of

experience

of this
are

in observing

cases

kind, that when penalties

justified, they should be of the

type

that

wipe

out

the

benefit

if

is

but the most
which

that

the fact

namely,

see

fit to

the

that it collects from em¬

though

case.

all

too

been

administration,

ployers

.a

ihe

years,

Congress does not

penalty

should

crying

a

have

to mention,

commensurate with the facts sur¬

case,

the

financing

numerous

serious

circumstances

your sup¬

problems regarding adequate and

faces

such

nevertheless, it bears

is

nanced.

his work voluntarily without good

in

to

closest

is

improvement in the man¬
by which the program is fi¬

is determined that the worker left

cause,

which

repeating and warrants

worker

compensation law.

partment,

possible is that

government

government

the matter of de¬

his
employment should be left to the
good

best

port.

or

financing to in-t

proper

sure

efficient management, to ren¬

der

full

in

value

service

to

and

of the
workers, employers and the com¬
with

progress

munities it

needs

the

;

serves.

-

Employer's Responsibility

...

'

You,

representatives of suc¬

as

cessful

business

and

of1 the

nation's

most

members
influential

as

body of citizens should be particui
iarly interested in whether

and

you

not

or

fellow businessmen

your

receiving the full benefits of

are

your

tax

ment

of

investment in manage¬
unemployment com¬

the

:> V

pensation business.

^

■

Individually, I am convinced
that you are interested. I am con-i
vinced

that

Chamber

United

the

Commerce

of

States

has

ex¬

pressed the thinking of its mem¬

bership
equally

this matter. But, I am
convinced
that
in the

on

tempo of today's life and legisla-

tionf your influence as a respected
organization is probably not as
effective
efforts

berSf"

that of the combined

as

of

your

—

individual

mem-

•

is

It
men

not

enough that business¬
their ideas regarding

express

legislation to the professional

ex¬

ecutives of their business organi¬

zations.

With the amount of mon,

that is being sent by
businessmen

ment,

in their government.

nection

afford

active interest

more

a

govern¬

can't

In this con-r

I

might also add that the
interest we show in any desirable
program
involving legislation is

much
fest

more

effective if it is mani¬

the

at

public

time

servants

select

we

our

after

is

it

than

office.

assume

Bell Tel. of Pa. Debs.

field of government but in others,
seek to remove the administration

of
statutes
from
their
rightful
penalized. Such action gives place close to the people they af¬
rise to justifiable complaint on
fect, to the far more distant baili¬
the part of workers so affected.
wick of Federal bureaus. It may
The other extreme is provided be elementary to state that the

by laws that have no provision for

It

economy.

business, industrial and social wel-

not to take

a

partnership

is

sustaining supplement to our

a

continue to strive for

Federal-State

compensation

national

sound

a

is

Issue Oversubscribed

be

any

have constructed.

we

accepted as a vital component

they
provides, in effect, that a penalty lost it long ago.
shall
be
imposed
against
any
Nevertheless, I plead now for
workers
who
voluntarily leave even more of your support in this
their employment, unless the rea¬
regard, for surely without it we
son for their leaving is attributable
are
certain to lose in our fight
to
the
employer.
Obviously, a against those who not only in this
position

It also seems to me tnat

time job.
we

and

ey

are

unemployment

an

compensation program is a long¬

closely than they do their own.
Even so, there are many who

you men

it

remember

to

us

think

I

proud.

of

all

of

way

completely
Federal system of unemployment
compensation. I realize fully that

own.

Disqualifications

of

like

the Federally operated system of
the employment services during

of workers who

of

would

to the fact that under the Federal-

record of the increased costs from

to condemn it

much

fault

government activities, but I

the

action.

evep the severest critic,/of
unemployment compensation • has

benefits

most

•

a

plan wisely,

our

compensation, v*.

cases

that the profit motive is lack¬
ing in the administration of un¬
employment compensation as with
you

Administrators, we find the next
benefit best substitute for the profit mo¬
large to tive. One only has to look at the

Not

dared

remind

not

system of unemploy¬

such

sound in

need

when

sufficiently

are

heart of

I

and means for grant¬

reduction

warrant

laws.

State UC
partnership, with the
while at Federal partner jealously watch¬
time it provides auto¬
ing the every expenditure of State

ways

tax

several

the program,

employment; a job—not un¬
discretion of the department ad¬
employment compensation. Any¬
the
unemployment
thing that tends to interfere with ministering

It is a humble illustration, but I
will be a part ask you to remember that the wild
part of business, horse, in his primitive state, is a
and what will be the place for
powerful, proud, brilliant, intel¬
my grandchildren and yours?
If ligent,
self-reliant, capable crea¬

whether

of

it

moreover

cases

ing salaries and bonuses, and the
State demanding taxes.
"If the worker or the State wins

so

terest, fraud and chiseling would

is naturally quite vulnerable to any ing • unemployment compensation

Its
stocks, in particular, must be recognized as highly speculative. More¬
over, the common is one of the most highly leveraged of the rail
equities. Thus, per-share earnings tend to fluctuate widely. Whether
the optimistic forecasts of the management as to 1949 will be realized
is a moot question. There is little question, however, but that share
earnings should be well ahead of a year ago. The management is tra¬
ditionally liberal with respect to dividends—$2 was paid last year.
For intermediate term speculative purposes the common at recent

further possible cost increases or

in¬

this

multiply beyond all reasonable
bounds. Experience rating affords
incentive
and
opportunity and

had

worse,

without

and

justly

for

now

partnership
for adminis¬

responsible

be

can

well

unemployment

Variations

unemployment

tering
tion

Every effort should be made to

exceptions this record is one of
the people of our country

which

Finally, I would like to say that

Federal-State

The

amending their unemploy¬

compenasian laws to provide
for
a
more
adequate program,
other than tc say that with few

ment

this feature of UC laws.

small that they
materially

so

States through the orderly proce¬
dure of

we

and

penalty

a

inflicted.

fail to assist the worker

tory should improve sharply.
The iron ore outlook is particularly promising.

benefiting

what

upon

is

week

each

amount for

I

point I am trying to make

The

Thursday, April 14, 1949

CHRONICLE

for

the

this

purpose

workloads
use

I

not

April

on

their

comment

by

are

upon

the

bid

a

issue

new

Bell Telephone Co.
of

The

coupon.

debentures

101.419

for

3%

a

debentures,

due

April 15, 1974, were reoffered to
the public at a price of 101.77, to
yield 2.90%, and the bankers an¬
that

nounced

the

oversubscribed

issue

had

the

and

been

books

closed, the day of offering.

;

Proceeds from the sale of these
will

debentures

be

toward

company

used

by

repayment

the
of

advances made to it

Telephone

can

&

by the Ameri¬
Telegraph Co;,

parent, which are expected to ap¬
proximate $28,000,000 by April 19,
for

1949,
ments

extensions,

and

improve¬

enlargements

of

the

company's plant.

Burnham Director
I.

to
&

the

several

Burnham

W.

New

Co.,

Welch

made

12 for

of $25,000,000

Lazard

tlie successful

were

ever

paying.
will

Co.

of Pennsylvania 25-year

of these funds

receive the service for which they

progress

Loeb & Cov and

&

bidders

even

are

employers and workers

are

Kuhn,
Freres

Pogue

directors

Inc.

5

of

2nd,

York

have

Burnham

City,

and

been

elected

Western

Air

L.

Lines,
-

Volume

THE

Number 4794

169

COMMERCIAL
1

<

.

Impact of Military Preparedness
(continued from page 6)
may level out or give way to re¬
newed forces of inflation. More¬
■

the weakness that has been

over,

to

measure

of

the

budget.

At

time, he had to resist

same

the

present

clamors

of

individual

and

toward

recommendations for maintenance

cient

situation

of

surplus

in this

It might therefore appear

would feel

economist

area.

that the

relieved

of

the

apprehensions of such a de¬
velopment as that by which he
beset last November.

was

In fact

even

the

need

in¬

taxes

by at least as much
military spending rises above
the level of last year.
To pro¬
vide even $15 billion for military
crease

as

spending, he had to hold down

on

useful and welcome

a

prop

commodity and labor market

a

which

what

shows

some
people
alarming tendency
to sag?
Is not this just the com¬
plementary factor that, added to
the
spending plans of business
and the "propensity to spend" of
farmers and city consumers, will

regard

give

as

an

the

vvell

economy confidence as
funds to go ahead on a good

as

level of

prosperity-at least to the

middle of

1950?

This idea

has

security

level

of

his

—

own

inclination

and

strong demand by the people. All

Hitler

played it,

fidence

the

of

have the

we

free

a

which

resources

con¬

people that all

call for adjustments sq se¬
that

vere

might,

they

added

present soft spots, produce
less

or

serious

suitable

'

made.

could

be

viYi.vv/

But that is far from

the

before

recession

readjustments

to

a more

saying that

penditure
economy

is really good for the
and that a few billions
be better.

would

more

Truman,

scaling the several
his executive budget,
weighed the needs of

in

of

parts

President

carefully

safely be

can

enterprise and public enter¬
prise to raise the living standards
of the whole population.
For

Guides

Defense

a

Program

for "cold" war
will accomplish its objective only
.

.Preparedness

clearly can be continued for
long a period as may prove

as

necessary.

Preparedness for pos¬

^

social, and economic system that
is
worth
defending.
This
ap¬
plies

any

of

a

fifth column in

an¬

tic

had to be curtailed
or deferred during the war years
an^l the early postwar years when
programs

the

reconversion of private busi¬
drew

ness

heavily

so

man¬

on

materials and funds. Few
people
appear
to
realize
how
great was the accumulation of de¬

A few

maintenance

in

total

our

school system during the war and
the
further ; deterioration
that
school

both

personnel

plant

have

postwar inflation.
can

be said

as

teaching

and

suffered during
Much the same

to streets and high¬

types of public
facilities.
This type of problem
is further aggravated by the fact
that the accelerated rate of family
other

and

ways

formation

in

the

and

war

early

postwar years has brought more
than normally increased demand

community

on

facilities

beginning

just

to

bring

door.

sources
a

-of

is

larger

The

than

a

govern¬

expenditures
for socially
economically protective pur¬

compared with spend¬
ing for military defense purposes.

poses are as

dollars

billion

Fifteen

a

year

approximately $300 million
As compared with

means

week.

President

housing, and farm housing; a little
less
than
$300 million for the

promotion
a

little

health;

public

of

and

than that amount for

more

electrification.

rural

This economist

approach to the

analysis of the preparedness prob¬
lem must now be applied to the
newest

development

in

the

se¬

curity picture, namely the North
Atlantic Pact, and its effective im¬

plementation.
not

Of course, we can¬
the value of this

measure

merely

Pact

dollars

the

by

amount

These

involved.

of

expendi¬

tures are small in relation to the

regretfully

or¬

penditures in 1947 and




1948 and

.

funds

available

Deposit institutions

.

for

arc

the

.

banks

.

.

should

be prominent in these operations, especially
maturities, because they must build up income.

distant

more

declined

cost

or

in
.

.

the
De¬

.

the

said earlier

intermeshing

of

the

that

ECA

be

ad¬

and

funds

ministration must

regarded

as

integral part of the plan of
American security and sustained
prosperity within the setting of
the world economy—that is, the
international economy of the free
nations.
The relative parts to be
an

higher prices,
issues are

concept and with
backward look at
traditional positions of prestige,
historic roles, or impressive trap¬
pings. We cannot afford to make
the costs of its implementation a
no

most of the
groups.

Rather must we re¬
whole " operational and

financial plan so as to

Corp.

Officers

quarter than

.

The

.

.

should

significance of the un¬
dertaking and also in relation to
the total budget or the total pro¬
ductivity of our national economy.
it

But

clude

would
that

whatever

they

to

wrong

can,

these

add

cern,

be

we

con¬

without con¬

expenditures,

are,

present

to

tional

taxes

or

to

the

making of

budget deficit.
The

the
our

fore

issue

basic

North

Atlantic

With B. C.
(Special

The

to

with

B.

C.

period.

associated

& Cp.,
Building, members

Exchange.
Mr. Atherton was previously with
the Scoular-Bishop Grain Co.
of

the

Chicago

national

require

Pact

danger

us

is:

Does

there¬

to make additional

.

the

of

.

be

sizable with

sections

all

getting attention.

This could

.

.

.

year

give

no

come

the

of

list from

the

.

are

anticipated dur¬

consideration to

may

reserve

be changed during the

about either through tangible action

lapsing of legislation that made possible higher

of member banks for

temporary period.

a

...

reserves

If there should be

further deterioration of the business picture, there will undoubt-

edly be

changes in member banks'-

,1

requirements, prob¬
ably by allowing the legislation that expires on June 30 to run
out.

.

This would

.

.

banking

investments

$2,000,000,000 of reserves to the
available for either loans or

be

.

.

quite likely to get the

.

POSSIBLE

NEW ISSUE

When

reserve

with the latter classification

bulk of these .funds.

(through

add about

system, which would

the

increased

is

demand

refundings

and

redemptions)

or

or

the

supply is curtailed
constant, prices

remains

generally advance, unless something is done tp augment the supply
side of the equation.
This is bringing forth the idea that there may
...

be

some

bonds offered in the June

ing 2s) with
ber
.

by

num¬

of the well-informed followers of the money markets.

some

Such

.

.

refunding (for at least the matur¬

1%% issue being considered a likely

a seven-year

obligation would

an

itself be enough to meet

not in

because it would be used

demand,

an

replacement

only for

purposes.

An
reserve

of

care

enlarged demand such

as

would result from changes in

requirements of member banks would have to be taken
by other

the entire

probably by

means,

of restricted

list

making specific issues or
for purchase by the
The coming quarter could

eligible

bonds

member banks in limited amounts.

.

.

.

witness important changes in the money markets.
mine

authorities

far the

how

.

The trend

.

.

the force that will largely deter¬

of economic conditions will be

are

likely to go in making credit

available if there be need to bolster

a

faltering

economy.

.

.

.

.

SHORT-TERM RATES ON THEIR OWN
action

the

of

in remaining largely

Federal Reserve Banks

Stock

recently has had the money markets somewhat on the un¬

them

certain

side.

telling

the

are

on

It

...

their

seems

from

own

as

though the monetary

markets that

money

now on

tected by the authorities as

short-term

mand

and

authorities

government

are

securities

and short-term rates will not be pro¬

they have been in the past.

level of short rates will be determined by

.

.

.

The future

the normal forces of de¬

supply, with the authorities interfering only when it is

to insure an orderly market for short-term Treasury

necessary, so as

With First Trust Company obligations....
(Special

The

to

has

Radcliffe

—

For

Chronicle)

Financial

LINCOLN, NEB.

William W.
associated

become

with The First Trust Company

of

10th and O Street. Mr.
Radcliffe was formerly with E. E.
Lincoln,

some

time it has been evident that the powers that be

wanted to free the short end of the

indications

(Special

The

to

KANSAS

Financial

CITY,

Howard

Johnson

Wahler,

White

&

their
will

Chronicle)

...

own

Cone
with

member

banks'

Dwight

used by

these institutions to adjust

Co.,

they

banks could

(Special

to

The

Financial

Neben has

rick,

&

Reed,

Inc.,

Liberty Street, New York City.

55

and certificates which have been

their money positions. . . . The
Banks instead of selling bills
The discount rate would have more significance
banks would be less dependent upon the Reserve

.

.

Banks for their supply

Bruno W.

joined the staff of Her¬

Waddell

.

and the commercial

Chronicle)

—

holdings of bills

borrow from the Central

and certificates.

Waddell

supply of funds,

market. . . . Also
probably will be able to prevent quick and sharp changes in

give greater flexibility to the near-term money

—

Building.

With Herrick,

Banks by allowing short-term rates to seek

levels depending upon the demand and

now

MO.
is

& Co.

are

adoption of this program.

for the

The Federal Reserve

WitiTWahler"" White

government list from official

they believe conditions to be right
.
.
.
From now on the longer
Treasury obligations will be the only ones that the authorities
will have to be concerned about when, as and if support should
support and

be needed.

Henkel Investment Co.

increase

and

.

of the authorities or by automatic changes such as default because

to

Chronicle)

Christopher

Board of Trade

.

piling up because of government expenditures.
government securities under such conditions

for

to

easier money market conditions that

The

Christopher

R. Atherton has become

.

passive when offers to buy and sell bills and certificates were made

CITY, MO.—William

KANSAS

in the first three months of the year.

requirements of member banks which

V ,>

Financial

LEXINGTON, NEB.
here

demand

continue

The

and C. L. R.yan, clerk. Mr.
Keegan
and
Mr.
Magee were
^

income tax period without

that credit will be easier in the second

ing the second quarter of the

urer;

Arthur Warner

are

case

shortest to the longest

dents; A. R. Magee, assistant treas¬

& Co.

the

was

for funds that will be

president and treasurer; R. S. Bat¬
tles and E. B. Smith, vice-presi¬

formerly with J.

being taken by these two

are

Treasury will be spending funds that were collected in the first
quarter and this will mean that many banks wijl be seeking outlets

T. S. Keegan,

are

taps and the eligibles

The

BOSTON,, MASS. — Investment
Research
Corporation
is
being
formed with offices at 53 State
Street.

.

.

.

increased

Investment Research

in the longer eligibles unless the tap
Savings banks along with the smaller
dominating the government market since

.

The money markets have passed the

simple addition to other military
plans as they stood before the new
the

.

are

casualties and indications

strategic

alignment.

.

.

EASIER CREDIT AHEAD

dangerous

work

nar¬

looked for im¬

are

especially

reopened.

deposit institutions

played by military and by indus¬
trial preparedness in each of the
participating countries, and the
relative roles to
be
played by
each arm of the military service
at the most effective points must
be reexamined in the light of the
new

sharp break-aways

The government market is none¬
theless in strong technical condition, which could be conducive to

security

In line with what I

no

mediately in either direction...

lower cost than would
be required.
ThaPis,
we
are
now
giving tangible ex¬
pression to the belief that joint

about

seeking tem¬

money

backing and filling within relatively

trading limits and

row

at

is the truest and most
economic pattern of security un¬
der our present development of
air-borne atomic
power and
of
political enlightenment.

slightly because of the large amount of
investment.

The list has been

security at
in due

even,

historical

a

postponement of more
billion dollars of such ex¬

firm-to-buoyant trend is looked for in the government market

investment should continue to expand.
expected to put away sizable amounts of
eligibles, with the shorts and longs both coming in for purchases,
according to„the institutions' needs.
Out-of-town commercial
.

otherwise

$300 million for Federal aid to
education; about three-quarters as
much for slum clearance, low-rent

Any addition to the budget would
contribute to the need for addi¬

the

buy better

same

time,

it is proposed to spend for
next fiscal year as a whole

Delay in developing
power caused
in important areas

last year.

dered

our

budget items for national security.

electric

brownout

moderate

the school-

numbers of infants to
house

and

simple figures may illus¬

how

trate

power,

ferred

midst and

our

thereby undermine its own effec¬

the

economic

A

because

Under this integration we

to

development

tiveness.

others.
our

military

impair

may

give fuel to the

or

this,

making

econ¬

unsentimental business efficiency.

perfect

most

considerations

thfr relative claims of each of the

In

omies.

operative

eco¬

that is guided exclusive¬

by the

each

alysis of the military problem, we
must not forget that many domes¬

the

man¬

nomic and financial preparedness

A defense

ourselves.

as

program

of thes3r;directions because of

'

of

business

gain maxi¬
mum
security
with
minimum
strain
on
our" economy.
The
problem needs to be handled with

well

as

ment

absolutely desirable in

the other free countries

to

and

one

economist and the

In the

terms

evident

vate

military

seem

technical

somewhat

used

from 'armament can be
under forward-looking pri¬

reconstruction

security and European
against the strong
claims of "domestic improvements
and welfare." He pointed out that
we could not spend all that would

reasonable interpretation.

military machine and the indus¬
trial plant and labor force, it is

ly

present scale of military ex¬

ties, and particularly to ourselves
as
the prime target of possible
aggression?
The latter seems the

spared

place during the next from the future but build up the
year or so under a military budget economic potential and strengthen
of presently indicated size will be the social fabric.
Such a long-run
an*, important
demand factor in; program must combine military
the domestic economy.
If ;that preparedness with economic and
amount were quickly and drasti¬
financial preparedness and, last
cally reduced, the result would but not least, conditions of life
undoubtedly be the injection of that give the citizenry a deep con¬
uncertainty into business plans viction that theirs is a political,
a

By JOHN T. CHIPPENDALE, JR.

a

plan of mutual assurance, to les¬
sen the danger to each of the par¬

the

take

and

in

Governments

on

expect

health, and
far below the

sion should not borrow resources

cash

joining

by

Reporter

services for.education,

disbursements that

the

will

Our

restore
the
proper
military security? Or

propose,

27

social

sibly prolonged international ten¬

that

we

(1639)

porary

if it
some

CHRONICLE
1

•

function to effect

its

and

resources

.

validity but
requires important qualifications.
There can be no argument but
.

<

public
plant and limit the scale of social

expansion of the nation's nat-

or

tural

assert or intimate these deferred civilian needs are
implications of a military still there, ready to employ any
budget of not much over $15 bil¬ manpower or block of materials
available by reduction of
lion are positively favorable in the; made
Instead of
present situation of the civilian preparedness effort.
economy.
Is not the rising scale military spending being needed to
of disbursement under this pro¬ cure or prevent unemployment, as
to

•

11

mand for short-term securities has been sizable and the bill rate has

that the

gram

r

ager, we have turned
to hori¬
zontal integration of the defense

people

some

do

J

Our Economy

in

to

easing, but it is not suffi¬
in magnitude to create a

1

them

the

FINANCIAL

&

J

outlays

relief, and

recent

occurred

•

•

on

pointed to

in

has

'

only moderate provision for

price move¬
primarily in
the area of soft goods.
In the
field of hard good's, where addi¬
tional defense expenditures would
have their main impact, there has
been, it is true, some tendency
reflected

P

made

business taxpayers for

ments

•

of bills and certificates.

...

short-term money market from complete
Federal sponsorship is a favorable development and probably a
sign that more normal conditions are returning to the government
Freeing

market.

of

the

THE

(1640)

28

FINANCIAL

&

COMMERCIAL

CHRONICLE
C

Placing Corporate Earnings Under
Individual Income Tax Affects Risk Capital

How

such
of

$100

each

of

division

The

1948

3.2% of total reported
taxable net personal incomes.3

of

rate

is identical with

personal

entire

his

on

under the Federal In¬
dividual Income Tax.
Therefore,
net income,

Taxpayer B, with his net taxable

personal income of approximately
$54,000, is in a neutral position
with respect to this double tax¬

It would be a matter of

ation.

bases, by $38, or from $22 to $60
each case.
Then A's tax bill

indifference to him whether he is

share of

taxed on his entire

porate

earnings

vidual

tax

taxed

or

cor¬

would

would be
$29.23; and C's would be $45. But
the total of these tax payments
would be only $85.63, as compared
with the original total of $145.40

shown in

as

who is
$5,000 income class, loses

Table.2
in

in

the indi¬

under

But Taxpayer A,

the

heavily through this double tax¬
ation, since his share of corporate
earnings is taxed at a combined
which

rate

his

is

tax.

whose

But

Taxpayer

personal

income

net

$352,000, makes a substan¬
gain from the operation
•of this double taxation, since his
share
of
corporate earnings is
net

taxed at

20.50 percentage
rate under the

from the double

of these

corporate earnings. Hence

if

has

a

tial

pro¬

was

as

revenue

the

of

Federal

Federal

is to be pro¬

revenue

dividends

have

would

be

to

fer

that

$60 per $100 of earnings used in

incomes of the

its

dividends

this analysis.
be

foe distributed under an impartial
application of the rate scheduled

nance

One

presently.

solution
of

raise

would

rates,

incomes

between rates of levy on

That

sources.

ferent

4ownward-shifting of the Federal

the

load

tax

obviously makes a big
difference in the disposable per¬
sonal

incomes

left

to

the

present U.

46,000

B.

amttee

M.

Industrial

Report.

mercial

&

Securities

Quoted

Financial

day; Dec. 23, 1948,
2 This neutral

"The

Chronicle,"

Com¬

Thurs¬

ures

income
of

ratio

4

by

case

its

the

also

with

It

100%.

can

shareholder,
on

by

his

the

corporation

(after

earnings

that

neutral

rate

pays

keep

down

the

sources

the

tax

on

Tax

Government

Fig¬
1948-1949,

Finance,

total

unless

Federal

it

load

which

system

of

either

(1)

reduced

the

or (2) maintained
shifting .of the Federal tax
produced by our present

revenue,

the downward

corporation's

is

double

taxation

of

corporate

TABLE 1.

Effects

three

of

Corporate

Taxation

on

Tax

Taxpayers

Burdens

A

Shares of corporate earnings.-.
Corporate income tax, at 38%.
Retained earnings..

>.(5) Dividends paid out
,,<6) Individual income tax rates on
taxpayers1- personal net in¬
comes

(after

exemption

lowances)
(7) Individual income

of

Shareholders

in

taxes

taxation

on

taxation

on

$100

C

$100

38

38

38

40

40

40

22

in the

trated

subject

ers,

the

hands of sharehold¬

to

22

22

of

of




and

as

in¬

over,

large (or

larger) than the revenue for¬

even

48.72%

75%

$10.72

$16.50

rates

of

Sources

$48.72

$54.50

42.18%

48.72%

54.50%

—23.18%

0.00%

+20.50%

the
Capital?'

Risk

of

V
'

Suppose
that
the
immediate
revenue problem
were solved by
bringing shares of corporate earn¬
ings under the U. S. Individual
Income Tax.
lution

do

What would that
the

to

two

sources

so¬

of

risk

short-

the dis¬

upon

of corpo¬
the different in¬
certain;

The

re¬

however, is a shift: in the
location of disposable personal in¬

sult,

in favor of Taxpayer A and

shareholders

in

the

this

possible

the

upper

reduction

net

supply

4.

of

rate

shareholders

is

by.B), and/or if

of

the

lower-income

amount

of

would
the

furnish
risk

new

be

share¬
smaller

a

capital than

furnished
amount

of

out

duced

by this change in the

tax

structure.

There is

that

It

one

to

final note

on

corporate

income

is

der the influence
holders
would

like

-

of

large share¬
Taxpayer
C,

our

the

to

come

upper

this

possible to imagine
corporation, perhaps un¬

our

of

rescue

its

income
shareholders
by
a larger iraction of its

paying out

dividends.
paid $80.50

as

it

If, foi
in divi¬

Taxpayer C would
sutler no loss in disposable
in¬
come, as compared with his orig¬
inal
position under the double
our

taxation, since

this rate of divi¬

dends would increase his dividend

increase in the corpo¬

an

hands

of

the

corporations

in Federal

crease

if

But

revenue

of

the

obtained

were

increase

an

revenue.

additional
in

taxation, and if

come

levy

tax

bill

raised.

was

But

the

on

shareholders

three

our

receive

in

$38

additional

dividends, under our present as¬
sumptions. Then A's out-of-pocket
individual

income

rise

would

increase

tax

payment

from

$4.18 to $19,
$14.82. Therefore,

of

an

A
would find his disposable income
by

or

from

$23.18,

$17.82
on this

to

$41.00,

one

block

corporate holdings.
Our Taxpayer B would

gain

neither

lose in disposable in¬
since his out-of-pocket in¬

nor

come,

dividual

income

tax

payment

would increase by $38.

•But

with

the

examination

of

what

happens to the disposable
of Taxpayer C, we come
practically to the end of the in¬
vestigation of this alternative to

income

an

For, although he
additional $38 per

$100 share of corporate earnings,
his out-of-pocket individual in¬
tax

payment

$16.50 to $75,

an

rises

from

increase of $58.50.

Therefore C's disposable personal
income would be reduced by $20.50

(per $100

of his share

of

corpo¬

earnings), through this change
the

system.

same

to

all

It would also
shareholders

in income tax brackets above that

neutral position occupied by Tax¬

B.

5 This

The best that Taxpayer

simplification would correspond
to
the facts only if a small fraction of
these taxpayers' personal incomes were
derived from corporate profits.
But this
simplification does not affect the nature
of the conclusions; in fact, it reinforces
the conclusions by making the plight of
Taxpayer C look better than it would be
in reality.

per

$100 of corporate earnings,

as

assumed above.. For the additional

dividends

given

C

to

would

be

snapped up by the tax collector
as
just described, leaving C no
better

(that is,

different

brackets), then

off

in

personal

of

terms

income.

disposable
Meanwhile,

income

chain of

a

would

quences

result

conse¬

similar

to

those described under Question 3.
Either the addition to the tax lia¬

bility of our Taxpayer C (and'also
B, in this case) would drastically
reduce

his disposable

ceived

from

income

re¬

corporation

our

in

Table 1, or the corporation would
have to increase its dividend pay-*

in

order

leave

to

C's

dis¬

personal income unim¬
paired.
In either case, the actual
and potential sources of risk capi¬
tal

would

than

the

be

reduced

addition

by

more
Federal

the

to

revenue.

For

example,

payers

on

little
nue

8%.

over

three tax¬

our

raised

was

that the

suppose

total tax burden

by

But if the additional

Each of

in¬

change

no

rate schedule of that tax

the

would

means

made in the steepness of the

was

ration continued to retain the $40

+.

Federal

by

individual

in the matter of risk capital sup¬
ply than it would be if the corpo¬

;

would

fall dollar-for-dollar with the in¬

sonal income.

,

the

took

income

even
if this (and all other) cor¬
porations could bail out their large
shareholders in this way, the econ¬
omy would still be far worse off

,

If

revenue.

taxation

tax, then—assuming
change in dividend payments—
the supply of risk capital in the

receipts by $58.50, the amount by
which his out-of-pocket individual

income

maintenance

mere

Federal

same

in the ratios between the rates of

alternative
taxes.

analysis holds

no

of

disposable
personal income in the hands of
the upper-income shareholders. If
that happened, the total supply of
new
risk capital
would be re¬
same

-a

increased

rate

would

for

as

form of

insurance, bonds,
greater than that of C,

Corpo¬
Income

well for increased Federal tax¬

their tendency to invest in "safe"

(life

Increased

Individual

vs.

All of the above
as

securities

those

the
aggregatecapital in
the

Taxation?

the

then

in

risk

What About

higher than that of Taxpayer C
(and those in the brackets above

holders

of rescuing
shareholders

economy.

that represented

is

method

income

-

gle taxation of corporate earnings
would inevitably produce a sharp

ation

etc.)

would

back into

way

from the consequences of the sin¬

if, as generally believed, the
"propensity to consume" of those
income

shareholders

supply of risk capital offered

And

-

of

all

in the equities market. Therefore,
it appears reasonably certain that

represented by Taxpayer B;

lower

It is

that

income tax

brackets below that neutraL posi¬
tion

imagine

capital, retained corporate
earnings and disposable personal
income?
First, suppose that our
corporation
continued
to
retain
40% of its earnings. Now see what
would happen to disposable per¬

payer

$42.18

earnings.

What Would Happen to

do

shares of corpo-

earnings

38%

would be

revenue

in the tax

paid

shares

(10) Item (6) minus Item (9)

individual

an

rate

tax

come

rate

$4.18

corporate earnings
(9) Effective
combined
rate

$100

B

earn¬

ings
(8) Total

.

19%

shares of corporate

the

ownership of corporate shares was
(and remained) slightly concen¬

come

al¬

...

on

if

And

sources.

also receives

Different Income Brackets

'.

these

corporate taxes.

,Vj;
(1)
(2)
(3)
(4)

these

conditions, Tax¬
payer A would pay $19, Taxpayer
B would pay $48.72, and Taxpayer
C would pay $75 per $100 of their
respective
shares
of
corporate
earnings. This would give a total
of $142.72 in Federal revenue from

of

-

Any scheme for eliminating the dou¬

below,

narnings by his share of the corporation's
narnings minus his dividend receipts.

.

Under

increased

Foundation, Facts and

the U. S. Individual Income Tax described

corporate
would
be

calculated, for any
dividing the corporate
of

to

other

taxation of corporate income by giv¬
ing tax credits to individual income tax¬
payers for corporate taxes collected from
their shares of corporate earnings would
necessarily have the same kind of effect
on
the sources of risk capital as that of

be

share

be

ble

the

paid out to earnings
corporation.
In the ex¬

where

entire

taxation)

tax

and

dividends

retained
treme

taxation

■

In¬

would

that

Table 79.

under the individual

tax
varies
directly, though not
proportionately, with the rate of corpo¬
rate

order
3 The

22.

p.

rate

in

in

as

Com-

income

nut

the Individual Income Tax.5

the dif¬

Individual

S.

But

ratios

same

brackets

derived from

come

in
1 I.

Tax.

to
tax

"robbing Peter to pay Paul," for it
would be reducing disposable in¬

brackets, whose

over

the

income

net

come

individual income taxpayers in the

$50,000 and

keeping

be

income

individual

in U. Si Individual Income Tax to
all

mainte¬

this

to

revenue

the

the

above

That possibility will

referred to

shareholder, as compared with the
way in which that tax load would

from

would

taxes

come

in¬
probably be

depend

brackets.5

come

come

corporate

the

as

of ownership

tribution

other

alternative; to

come

rate stock among

income

posable

the

to

would

tion

is not only the
this

would

result of this change in taxa¬

right down

levels.

those increases of disposable per¬
sonal income thus given to lower-

ments

creased

load

which

to

capital,
in the

sums

promptly find their

of the total net loss
personal
income

disposable

difficult

ings,, then

Income shareholders and to trans¬

lower-income

The ampunt

in

risk

as

the lower-income

to

dends out of each $100 of its earn¬

raised, unless the corporation in¬

of the tax

its former level.

to

use

those

hands of shareholders

taxation of corporate

rate

tax

investing the pro¬
ceeds in other types of securities,
to restore his disposable income
and

classes),

rectly into the tax bases of in¬
dividual income taxpayers.
This

simplest solution;
but it also shows most clearly why

cor¬

lower-income

for

putting

merly obtained under the double

double taxation. For
only $135, which
substantially below the

load off the incomes of the higherpart

received—di¬

dividends

of

stead

those

in

others

and

three times $45 is

duced, the effective rates of indi¬
vidual taxation applied to corpo¬

income taxation
tendency to shift a substan¬

fraction

revenue

of

porate stock to Taxpayer A (and

available

duced by the

same

+ Table 1 shows, therefore, that
of corporate

of

to

bring the
entire
shares of corporate earnings—in¬

double taxation.

use

be

for this
problem

solution

similar position)
try, by sell¬

a

most of his holdings

ing

run

simplest

maintenance

original $145.40 produced hy the
Therefore, if the

individual income

tax.

•

The

(and all in

could do would be to

earnings
example,

is' still

points below his

Taxpayer

much

as

combined rate which is

a

taxation

derived

Even

about

tial

B's

C owned
every
share of corporate stock
represented
by
those
earnings,
this solution would not produce

C,
is

,

$11.40;

Treasury would lose $59.77 in
revenue from these sources alone.

under the individual In¬

rate

come

be

the

double

than

more

classes.

come

damaging to the supply of risk
capital.
One way would be to apply the
Suppose, then, that our three
individual income tax to dividends taxpayers were each obliged to
add
their shares of corporate earn¬
paid out.
In order to test this
method, we shall assume that the ings to their net taxable incomes.
corporation (in Table 1) pays out In order to simplify the descrip¬
tion of the consequences of this
as
additional dividends the 38%
of its earnings formerly paid to solution, suppose that the inclu¬
sion of shares of corporate earn¬
Jie Federal Treasury. That would
increase
each of our taxpayers' ings in the individual tax bases
dividend receipts, as well as each did not push any shareholder up
of
their
individual income
tax the steps of the rate schedule of

combined rate of levy under the

the

There are

total Federal revenue?

burden
because his

B,

Taxpayer

upon

How could

without reducing the

actually several ways to do this;
but they all amount to the same
thing in their effect on the sources
of risk capital.4

additional

double taxation

we

dividual Income Tax.
this be done,

earnings, resulting from the use of
corporate income tax, does not
aqy

income derived from cor¬

on

would

repeal the cor¬
porate income taxes and
bring
.hose earnings under the U. S. In¬

the

impose

Revenue?

ducing the Federal

Suppose that

that the
corporate

shows

taxation

Cor¬

load

porate earnings, with no advan¬
tage for potential supply of risk
capital gained either in the total
amount of disposable income, or
in its distribution among the in¬

porate Earnings, Without Re1

any particular combination
the sizes of those three fac¬

This table

Individual Income

Tax Alone Be Applied to

upon
tors.

or

How Can the

1.

earnings, and dividends paid out,
is roughly the same as the esti¬
mate of that division for the 1948
national aggregate of all corpo¬
rate profits.1 But the conclusions
drawn in this paper do not depend

double

totaled

billion,

corporate earnings, in Table 1,
between corporate taxes, retained

of

taxable net incomes in
approximately • $4.5

reported

(Continued from page 7)
simple arithmetic examples,
as shown in Table 1.

Thursday, April 14, 1949

$12,

If that extra

or

a

reve¬

raised by a corporate in¬

was

the corporation's re¬
earnings would fall by $12,
by an amount exactly equal to

come-tax,
tained
or

additional

raised

revenue.

revenue were

the individual

by

tax, with

Federal

income

change* in the progressivity of its rate schedule, then
no

A's

additional

levy

on

effective

of

rate

his $100 share Of corporate
earnings
would
be^l.6%;
B's
would
be

be

4.1%; while C's would

however, the corporation would
have $20.50 less retained earnings

tax

incomes

Taxpayer C

6.3%.

The

additional

income

liability of Taxpayer C would
at its disposal per $100 of profits.
more than wipe out his
disposable
And shareholders in income brack¬ personal income (from this
source)
ets, higher than that of C would which was only $5.50 in Table 1.
not even
have
their
disposable Such a. development would put
which

restored

resulted

to

from

the
the

level

original

double taxation of corporate earn¬

ings.
and

Therefore, for Taxpayer C.
all

position
tax

shareholders
on

above

C's

the individual income

schedule, there would result

in

the

financial dilemma

sort

same

of

shown above

as

under
the

Question 3.
Similarly, if
corporation increased its divi¬

dend payments by

enough to bail
Taxpayer C out of this new dilem¬
ma,

and to restore his disposable
income
to
the
level

greater net loss in sources of
risk
capital represented by re¬
tained
earnings plus disposable
personal income than would result

personal

from the corporation maintaining
its $40 of retained earnings per

risk

$100 of earnings. Shareholders be¬

Federal

low C's

much net loss in the supply of risk

a

position

on

the individual

shown

in
Table
1, then three
$6.30, or $18.90, would be
taken directly from the
supply of

times

in

the

ration

in

income

capital

course,

expedients

tax
schedule
would, of
enjoy a net increase in
disposable personal income under
this plan for rescuing the upper-

income shareholders from the

con¬

bringing shares o'
corporate earnings under the in¬
dividual income tax. But this plan
would result in transferring large
sums
of corporate
profits away
from the disposal of the corpora¬
tion
itself, where it is already
sequences

of

would

more

the

ers

did

loss

in

by

result

would

the

corpo¬

increase

$12.

the

' How-

from

these

depend

upoii

their increased dis¬

with

posable

incomes.
But as argued
above, the net loss to the ;risk
capital supply would almost cer¬
tainly be greater than if the same
addition to Federal
secured

by

revenue

increased

were

corporate

income taxation.
on

This Alternative to

Corporate Taxes'

ownership of corporate

brackets, the greater the total
disposable personal income.

of

to

what the lower-income sharehold¬

Conclusion
6 The

stock is concentrated in the upper income

hands

order
revenue

The

conclusion

drawn

by

the

writer from the above analysis is

Volume

169

Number 4794

the following:

THE

The, elimination of

the

present double taxation of
corporate income through the re¬
peal of the Federal corporate in¬
come

taxes and the

same

amount

of

revenue

through the single taxation of all
corporate
earnings
under
the
highly progressive U. S. Individual
Income

Tax

liquidation of their holdings would

ism

not

being

would

the

reduce

reduce

future
the

raising of the

Federal

supply

be defi¬

would

nitely wrong, if it could be proved
that (1) the fraction of disposable
personal income invested in cor¬
porate stock is larger for the
smaller than for the larger dis¬
posable personal incomes, and (2)

risk

or

or

capital

in

r

is

FINANCIAL

&

drifting.

CHRONICLE

heavier investment in certain cap¬
ital goods sectors than can be sus¬

Harbor.

favorable

conclusion

tained in steady

until

ports and stock piling.

Again, last October, he said:

are

Most im¬

and

while the interest of lower-income

a
large world-aid program,
both without foreseeable terminal

shareholders

points

their

corporate
in

income,

increase

an

in

the short run)

western

more

The Overshadowing Problem

(at least in

nations

likely to reach

settlement

without

will
a

be

lasting
h

bloodshed

they formulate their just demands
while they have the atomic powei

If

interval

since

II

from

our

Pearl

no

the chaotic

over

the

end

comfort

such

derive

There need

Munich and

no

look back

we

War

of

as

World

we

may

during

success

this past year in Western Europe
is more than offset by the extent
to which

we

cold

in the Orient.

as

war

have been

losing the
Desirable

the Atlantic Pact and the

re¬

armament of Western

Russian" Com¬

the

before

munists have

disposable personal incomes

would be best served

"The

and

to time or amount.

as

be

may

far

the Continent of Asia.

wait

we

increasing dependence on public
subsidy through high price sup¬

We

taxation

of

if

they have got it,, too.
We
absolutely sure that tne
present situation cannot last."

volume.

b.y the continuance of the double

served

likely to reacn a

2»;

stopped
Nazi
rearmament
and
kept the Japanese from invading

more

disposable
best

are

cannot

would be

stimulated?

portant of all, we are bracing up
our
levels of activity by a huge
military
preparedness
program

their

I

gone.

have been

ply of risk capital and the interest
of the upper-income shareholders
incomes

already

think that any sefious discussion
which it may be necessary to have
with
the
Soviet
Government

correct, then both the interest
of the whole economy in the
sup¬

maintaining

have

Our economy is

(1641)

by 'fortuitous
developments and temporary stop¬
gaps.
We are depending on a

are

personal

This conclusion

present

If, however, this conclusion and

in

.

total

the analysis upon which it is based

omy.

.

the

economy.

supply of risk capital in the econ¬
.

COMMERCIAL

got it too."

In the first volume of his story

of Peace

Europe may
be, we must not be lulled into the
belief that they are final answers
to the problem of lasting world

of World War II, Churchill has peace.
You may have seen a recent
eloquently recounted how the vic¬
torious Allies, after World War I, article by that prophetic exponent
raising of the required Federal
revenue
by means of the U. S. alluded, are all overshadowed and permitted the vanquished Ger¬ of air power, Major Seversky, who
made infinitely more complex be¬ mans
that
corporate
stock
that
a
forced Individual Income Tax.
"The
to
indispensable
regain their
military states
cause nearly four years after the
power and to plunge the world condition for West European re¬
war there is, as
yet, no peace.-You into another global war. That is armament is the existence of a
may have noticed a recent ad¬ why Churchill termed it the "un¬ force
capable
of
shielding the
dress by Bernard M. Baruch in necessary war."
"Invincible stra¬
He pointed out undertaking."
which he said:
"'
that
until
1934
the
victors
of tegic air power," he writes, "oper¬
"The overhanging threat of an¬ World War I
possessed unchal¬ ating in part from the' British
other war penetrates everywhere. lenged power not only in Europe Isles and in the main from-the
Until we make up our minds what but throughout the world.
American Continent must there(Continued from page 8)
to do about this threat of war it
"There
was
no
moment," he fore^ have number one priority fr>
and local governments are asked show a
high level of statesman¬ is impossible for anybody to know wrote, "in these sixteen years planning the economic revival arid
to provide a vastly wider array of ship and do all in
their power to what to do.
V
when the three former allies, or military defense of Europe."
It is
public services as an ordinary guide the government wisely in
"How much of our resources are' even Britain? and
France with his belief that such a strategic air
day-to-day matter of satisfying the development of policies that to
go to the 'cold war' and for their associates in Europe, could force, whether
it delivers atorii
community wants.
would
maintain
em¬
maximum
how long?
Are we to be called not in the name of the League of bombs or any other kind of de¬
We now have a Federal debt ployment and production.
In the upon
continually to make new Nations and under its moral and struction, is the only deterrent
of $250 billion.
international
shield
have
con¬ that will be effective against the
It was only about type of economy we have today, commitments?"

that the individuals in the income

by the elimination

the problems of

But

of corporate intome taxes and the

of

brackets above, say, $50,000, hold
such an insignificant fraction of

today and
which I have

to

tomorrow,

.

.

,

■

-

,

$1

billion

Before

that

tax

War

bility will not, and cannot be re¬
solved
alone by business, farm,

"Today the

the

Up until

Federal

debt

relatively subordinate

a

The Fed¬

economy.

eral debt was

of

capita.
receipts

tax
than $300.

II

place in the
fourth

Federal

per

capita

per

occupied

And, he added:

revenues

about $7

to

average more

World

the issue of national economic sta¬

War

the

war,

Government's
amounted

Today,

I.

before-World

equal to about
entire

the

debt

one-

of

the

labor

and

the

of

entire

Fiscal

and

agement policies have
assumed

debt

of

debt

the

man¬

accordingly

strategic im¬
portance in relation to the prob¬
lem of economic stability.
;
Our

a

new

more

and

complex economy has

fundamentally changed
of
personal
security
methods

achieving

of

our

ideas

and
our
it.
In the

developments.

In

nities

under

futile

enterprise.

and

mentum
I

the

the

period

necessities

provided

a

devastation

The

of

gov¬

mo¬

slowed

of

World

stimulant

new

the

backlog of demand

lated

of

initiative

When

this

of

the

down,
War

a

individual

during this period

war

and

accumu¬

gave

us

'20s.

the

a

uneven

to

give

make

a

him an
living.

opportunity

to

Responsibility for Leadership
To

recognize
in

cumstances

frankly the cir¬
which democratic

capitalism finds itself today need
not be an endorsement of New

democratic

the

have

Democratic
over

to

in another World

again postponed the need for so¬
lution.
,s."; . /.'V.
v

reasonable degree of stability and
provide a reasonable degree of
individual
security.
This
was

adjustments

recognized for the first time by
government when the Con¬
gress passed the Employment Act

plished,

some

the

of 1946.

Such

-

1
a

.

need

intervention

to

'

for

government

maintain stability

all

us.:v':.

advance

much

.'

;

We must adopt

it."

ers

moral and phys¬

to stop the Soviet lead¬
cold and we should not hesi¬
it."

tate to use

It

his conviction from

was

mate

contact

daily

deal

with

them

them

with

a

the

inti¬

Soviet

of

the

present

to

was

decision, not with a

Every

negotiation.
move

with

that the effective way to

leaders

action

and

Soviet leaders since

confirms General Deane's

war

conclusion.
Let

to secure a bet¬
But

war

that

How

levels

the

do

we

of

informed

another

cite

me

of peace

.

take

the

measures

have

a

to reason or

munists.

been

to deal

increasingly

.

in asking the
settlement. It is idle
argue with the Com¬

_

It is, however,

oossible

with them on a fair,

istic basis,

capitalistic

.

initiative

the

Soviet for

in the world?

Various

is too

This would imply that the
western Democracies
would
late.

maintain satisfactory
over

to a head
settlement with the

is to bring matters

Soviet Government before it

this
is accom¬
question remains:

employment

That

treaty.

objective by peaceful means will
be enhanced immeasurably if we
prepared to defend our

are

conditions

of

a

posi¬

at any point where
it is threatened.
Nothing induces

less threatening if we prdand postpone a settle¬

grow

crastinate

"A<"

ment?

this

All

tion by force

greater

restraint

my,

outside

admittedly, is

.field of monetary, .banking

on

.

will viets looms behind every major
crossing issue. At the moment huge ex^
penditures for military purpose^
swords with those who have."
and foreign aid also serve as eco¬
In any realistic appraisal of the
nomic props for which we have
outlook today we are bound to ask
not
yet
developed substitutes.
ourselves whether we are
em¬
They waste rather than add to oh?
barking on the road' to peace or
national
wealth
and
there
to war, and whether we are not
always the danger that we writ
relatively better prepared now—
restrained

be

could

or

soon

become better pre¬

pared—to enforce
a
settlement
than we will be in five years, or
ten

years

the

Soviets

from

now.

Certainly

not been idle
ended in strength¬

have

omy

do

do we follow this path? We
have inexhaustible sup¬

not

manpower and

supDort
point in
magnitude
shouldering
armament,
abroad, and
to

resources

indefinitely, with no
sight, programs of the

He added:

On the sea and

,

that

the

challenge

The

to

today

capitalism

democratic

comes

—

fi?st,

.

all this the question
is how long, to what end, and at
what consequences to our econ¬
But beyond

end

said

not only

the way
peace, but also because they
sustain economic activity at home.
to

from its sworn enemy; and, sec¬
their position—nor will
they be idle in the future. There ond, from the failure to face up
to the problems of how to achieve
is every indication that they are
and
maintain
stable
economic
consolidating their position and
We must meet these
mustering their strength as rap¬ progress.
challenges, in my opinion, boldly
idly as they can.; You can find
We would do well to
little hooe in reading history that and soon.
heed Churchill's warning when he
a
competitive armament race is
wrote in his current memoirs:
the way to avoid war.

they will keen their bargains as
long as it is in their interest to
do so, which might, in this grave
matter, be a long time, once things
were settled."

"I

cling to them indefinitely,
in the hope that this is

ening

real¬ plies of

and, in my experience,

from

which

we

are

«.

.

.

shall

We

counsels of

see

prudence and

how

the

restraint

prime agents of
mortal danger; how the middle
course
adopted from desires for
safety and a quiet life may be
found to lead direct to the bull seye of disaster."
,
become the

may

now

contemplating for
both
at home and
for other foreign aid.
or

in the air we are

possession of unquestionably in the same rela¬
the atomic bomb would give three tively dominant position today to
plies that individuals having great and timing of such actions and or four years' breathing space. enforce a peace that the Allies
were at the end of World War I.
economic
power
or
occupying their effect on economic stability. Perhaps it may be more than that,
The Democracies then could have
At present, democratic capital¬ t But more than two of those years
other positions of leadership must




the

and

tions

would have avoided violence

since the war

and come to a

ter balance in our economy.

assuming

clauses of the peace

yielded

atomic bombs of her own, she

witness, namely, Winston Church¬
ill.
In addressing the Parliament
Our immediate short-run prob¬ on Feb. 23, 1948, he said:
"The best chance of preventing
lem is to get some healthy re¬
so as

not

had

which is designed not
our American
way of

program

"We have the

acknowledged in. suggested in the past which might
democracies, and well be a part of a positive pro¬
practically all of them have gone gram
looking toward economic
much further than we have.
The stability, such as public works,
problem is how to keep such in¬ including housing, adequate social"
tervention at a minimum.
This security
and minimum
wages,
can be done, I think, only if there
farm support prices, etc., coupled
is information and undertsanding with appropriate fiscal, monetary
as
to what the enlightened self- and
credit
policies.
We
have
interest of the people is.
This im¬ much to learn as to the amounts
is

so

history

our

ical power

long-run period, given conditions

.

had

in

And he added:

War

have today there must be
planning and action by the
government if democratic capital¬
ism is to achieve and maintain a
omy we

hardly deter

can

if the clarity to me that the best way to
to avoid ultimate war, the best hope
counsels of appeasement,
if, in of peace in our time, is to con¬
fact, they had through united ac¬ front the Soviets with the deci¬
tion
enforced
the
disarmament sions which will lay the founda¬
Democracies

.

effectively for the distribution of
Dealism, Fair Dealism, or Social¬ wealth as it was technically or¬
No
ism; nor is it in any sense a com¬ ganized to produce wealth.
mitment to the idea of what is satisfactory answer to the problem
called the Welfare State. > I do had been found by the time in¬
volvement

alliance" with

strange

forces which threaten

as

assert that in the kind of an econ¬

mies and navies

? •'

'

:

is his contention,

It

the part of and credit matters. Yet it is im¬
Soviet leaders than a display of possible to consider realistically
to defend
either our short-run or long-run
strength by their adversaries."
life- passively but offensively to He added:
economic outlook without recog¬
•;
counteract
constructively
those
"Until
the
Soviet Union, has nizing that the shadow of the So¬

capitalism.

organize

strength

could have been prevented

peace

is

before

.we

fronts
a

slow

unable

was

many." '

effort of the Soviets. "Under present-day con¬
of Ger¬ ditions," he contends, "huge ar¬

mere

a

armed

overhanging

warning of the peril which con¬

and uneven.
capitalism the world

was

by

the

needs

Soviet, wrote:

"Never

Expenditures failed to absorb out¬
put and to provide adequate em¬
ployment opportunity.
Interven¬
tion by government was too long
delayed and when finally under¬
taken it was entirely inadequate.
Recovery

will

and I cer¬ .a nation whose great might is on
tainly think he is right, that the the surface."
It has seemed with increasing
tragedy of the second World War

equally futile
planning until we have

"the

calls

of support
prosperity of the

we

for

trolled

and lasting peace while we have the
As I understand him strength to do so.
If the Kremlin
deeply believed since the war bloodshed.
ended and it became unmistakably now, it is his informed judgment is not willing to accept such a
clear that the 'Communists mean —and again I think he is rightsettlement, backed
up
by the
of free peoples all
to have another war, if need be, that the best chance of avoiding a moral force
to exterminate capitalism.
third world war is to compel a over the world and by countlessNot long after the war, Majorsettlement promptly.
That, like¬ others now enslaved, then is it
Gen. John R. Deane, who headed wise, represents General Deane's not better to know it as soon as
our
As he put it:
possible?
Will
this menacing
military mission in Moscow conclusion.
throughout the period of what he
"The chances of attaining our cloud that hangs over the world

only succeeded in
maintaining high levels;'of .'em¬
ployment during the '20s by rely¬
ing upon excessive expansion of
domestic and foreign credits, cul¬

crisis

is

peacemaking."
quoting his words because
they so well express what I have

which

velop, the average person, willing
to work, inevitably look to gov¬
ernment to do something in order

It

It

I am

stability of the economy
he participates.
When minating in the debacle of the '30s.
That period was one of major
unemployment and depression de¬
in

war

enterprise

function.,.

first.

free'enterprise

of

threat of

We

peace.

cision in the

carryover

But

no

this

determined how to achieve a de¬

postwar inflation boom and also

provided

is

with

talk

to
a

free

to

tech¬

great opportu¬
system

our

for

by
the

our un¬

and

resources

provided

ernment

for

than the

there

deal

with

-

early part of this period,

is

by too few people
through individual effort and sav¬
ings alone.
Today, the average
pel-son's security is no greater

that

must

to talk of

chance

interdependent society that we
have developed, personal security
attainable

inde¬

and

is

ment has too often been hidden

nologies

country.

own

for

1945

thirds

their

During the past 50 years our
problem of maintaining employ¬

developed

it

in

pendent responsibility.-

country in 1940.

By the end of
represented nearly two-

leaders

self-interest

of

areas

!
of our problem

crux

Bear, Stearns
Leonard
mitted

to

Stearns & Co.,

Street, New
of the New
1.
has been with the
1 Wall

York

City, members

York

Stock

Mr.
firm

Admit

will be ad¬
partnership in Bear,
Dickson

Exchange, on May

Dickson

for many

years.

30

COMMERCIAL

THE

(1642)

CHRONICLE YY

FINANCIAL

&

point.

Advertising in Securities Merchandising
doing

(Continued from page 4)
one

sentence: 'What bait will

they

been

of

written

articles
the

about

have

to

way

your

of

tion
use

simmers down to this:

sign reads—"20 miles an
hour"—and very few autoists give

is, consciously or uncon¬
sciously, the dominant idea in his

it

mind all the time.

tie this

you

in

wants

How

you.

In

can

miles

a

doing of it will bring him

This

step

a

one

This

hour

an

reads: "20

one

fine."

$19.00

or

He gets

a

mind

me

know

wouldn't

Shirts

think

of

love

or

money.

For they have proved,to

their

for

satisfaction

own

next

them

will

get

that

it

impossible today, to du^
plicate 'LongWear' quality at any
thing like my price.

specific objective in order to ac¬
complish a specific purpose. Pin¬

Department

GOOD

for

Shirts

at

follows*

action

be

a-plenty.

yY::Y;' r-Y-YYY'-Y

going to

are

the Shirts

get

comers

due

are

for

OF COMMERCE."

John

,

-I'll

start

acid- tomorrow."
Washington came

and

"Thanks

back:

wrote

,the. .advice.

Mail

using

Back

night

a

"John Simpson,

"All you need to do is fill in the

other medium.
Direct advertising

any

(2)

made

be

can

personal to the point of be¬

ing absolutely confidential.
(3) Direct advertising is:a
single advertiser's individual
and

for

with

other

the

qualify this to add—"In the sanie

is

in

mes¬

sage

not

competition

advertising.

would

I

from

envelope."

mes-

Direct advertising does not
have the limitations on space and

sag^Y-

disap¬

pointment.

few

Direct

markets with greater control than

processes make

Be¬

'LongWear' output is still
only half of normal, 'early birds'

Individuality of

YY/Y:;^

"Watsrtown, New-York.
SH:"Uncertainties of reactive

price,

cause

The

This, according to Direct Mail
be used to clean a certain type of Advertising Association, covers 10
boijbe^jtube. The answer came as points:
(1) Direct advertising can 6e
Y
:Y directed
to specific individuals or
"John Simpson,

Broad

LOW

a

pared to shotgun shot.

asking

Commerce

of

the use of hydro¬
human
nature! chloric
acid
undesirable where
When the good news of this bar
alkalinity is involved.
gain flashes over a nation full of
"U. S. DEPARTMENT
starved

point bombing compared to satu¬
ration
bombing, rifle shot com¬

4$phether hydrochloric acid could

"Remember

men

the paratroopers of ad¬
Can be directed to .a

are

vertising.

,

is

to

cloth

sages

it

.Example of what I mean—GET¬
TING IT STRAIGHT!
: .Yv Av^all/businessman
wired the

these

seen

with

late

really stops them.

this sign—"Blind."
coins in his cup.

The bait, line, hook,

cloth

wear

on,

own

let

'LongWear' Broad

new

involved.

too

reader

An, Example of Straight Talk

v

parting

there'll

A blind man on State Street has

his goal?"

nearer

doesn't

California, however, there's

another sign.

to the things he
way
that the

up

such

thought—it

second

a

"stop" them.

"You want him to do a certain

for

few openers or

A road

them

definite thing

a

chance to

a

stoppers:

for

desire

The

things.

you don't have
the other three.

your

your decision?
"Men
who
have

handsome

Let's consider

"The reader of this letter wants

certain

or

don't get" the reader's atten¬

you

business letter

every

successful letter

every

bait (the opening or stop¬
which gets the reader's at¬
tention, is perhaps the most im¬
portant of the four—because if

tie up the

purpose

in

per)

reader? How can you
thing you have to offer
with that bait?
For the ultimate
tempt

4
"

them—and

up

years-

them

try

you

make

The

compressed into two sen¬

be

can

"Will

them,
about

get

the

so

straight.

had in perhaps several

seem

mailing piece.

tences: 'What is the bait that will

i

so

are

what you
want, but the meat of them all
letters to bring you

use

up

You may even mix
into one grand goulash,

that, to the beginner, they will
to be not there at all, but
they—or their close relatives

bite on?'
"Thousands

so.

them

Don't

Write

Thursday, April 14, 1949

format

i/tY

v

.

(4)

of

mediums

ether

do

as

advertising.
(5) Direct

"WCtertown, New York.

-

with a pen¬
advertising permits
Another blind handy postcard enclosed and
-^Regrettable decision involves
alty and close rules are used by
man
at Post Office Square has hurry it into the nearest mailbox. uncertainties.
Hydrochloric acid greater flexibility in materials and
many of the most successful di¬
this sign: "It's spring and I am No money to send.
processes
of
will
production
than any
No obligation
produce submuriate invali¬
rect mail experts of our day.
other medium of advertising.:
blind."
His cup is filled to the to buy a thing.
■
But a real Shirt dating reactions. The bait is the opening which
(6) Direct advertising provides
thrill is awaiting you the day /
S. DEPARTMENT
gets the reader's attention by fit¬ top in short order.
a
I walk down the street.
means for introducing novelty
If you your
box of 5 sparkling new
OF COMMERCE."
ting in with his train of thought
and realism, into the interpretation
"You 'LongWear' arrives at your door
and establishes a point of contact approach me and say:
"Thanks
again,"
wrote John, of the advertiser's story.
/
Or for your week's FREE trial.
with his interests, thus exciting dropped your wallet," I stop.
This
(7) Direct advertising can- be
"Better get that card off to me "gla£ to know it is O. K."
his curiosity and prompting him to if you reach for the ground as I
timq.came an urgent straight wire produced according to the needs
'
approach and say: "Is this your TODAY!"
'

read further.

The

$10?" I stop.

line

is the description or
explanation which pic¬
tures your proposition, and its ad¬
vantages, to the reader by first
outlining its important features;

then

filling in the

sell

selling,

mind

what

for

you

are

when
it

as an

I

and

1,200 on the second mailing.
(See Chart No. 4.)
John

Blair,

President

the

the United

over

mail.

I

States.

Sells

recently received

from him.

Let

me

a

by

letter

read it to you

—just the bait, line, hook with a
who is study¬
penalty and close paragraphs:
writing resultful
letters or mailing pieces.
After a "Dear Sir:
"If I send you within a few days
time, they come to be a sort of
second nature so that you weigh a box of five
genuine Broadcloth
the

man

or women

ing the

art

of

each

being

of

these

features

conscious

that

without

Shirts—the best fitting, best look¬

are

you

best" wearing

ing,

Shirts

you've

fro$i ■ Washington:

of the advertiser's

"Jojgi.

schedule.

Simpson,

"Watertown, New York.

sentences.

devM out of your tube.

"Dear Mr.
"I

with

have

to send

compliments, individual
analyses reports covering the
stocks in your portfolio:
"They will give near-term pros¬
pects, long-term outlook, charac¬
teristics of stock, income statistics,
my

pertinent
and

balance

analysis

an

sheet- statistics

of

balance sheet data.
is

enclosed.

earnings and
Sample sheet

These

analyses reports will

individual
go

tion

to

Poor's

forward

Investment

revisions

S." DEPARTMENT
OF

Assume

you

in Stock

Ratings—some

straight.
a v e
developed

h

what you think is a good piece of
copy. V You
power

must

profitable promotions
test, test and re-test.

"

-

advertising can
controlled for specific jobs of

be
re¬

reaching
small
groups,
testings ideas, appeals, reactions.
(9) Direct advertising can be
dispatched for accurate, and in
some cases, exact timing, both as
to departure of the pieces as well

you

For
must

their receipt.

as

its pulling

test

before you "spread."

Direct advertising provides
means
for the

(10)

thorough

more

reader to act or buy

through ac¬
tion/devices not possible of em¬
Test copy, me^ia, mailing lists, ployment by other media.
sizes, styles, and shapes of ads and / As you progress your campaign,
mailing pieces.
Test
postage you must key your ads and mail¬
classes, timing, amd other impor¬ ing pieces—watch y'our returns
tant

elements

that I'll talk about

like

atei^r

hawk.

a

will

You

You

must

newspapers

recently made many

COMMERCE."

Then John got it

Ad¬

visory Survey.
"We have

"U.

immediate

search,

■ft.

you,

own

Direct

(8)

"Hydrochloric acid will eat the

' !

:

arranged

Process

for

are

of

letters

pulled 45% return in 1946;
43% in 1947; 42% in 1948.
Just
the bait, line, hook paragraphs and

Company, Warren, to you in a substantial little loosePa., understands this technique. leaf folder to show my apprecia¬
He
has
2,000,000 customers all tion of your continuing subscrip¬
New

opportunity

course,

in to the

orders

of 2,000 on the first mailing

of your own

one

that

this

opener, or

the subscription

The close tells him exactly what
to do.

rules, of

use

a

tune

once.

These

should

use this
bait, line, hook
penalty and close approach,
does stop them and it brings

with

that will be his if he does not act
at

if I

bait line,
in my promotional piece, it
wouldn't
stop the reader.
But

The hook with a penalty gets
immediate action by holding over
your
reader's head the loss in
or

1

a copy of Standard
&
Investment Advisory Sur¬

sentence

impfels him to do as you
want him to do, by describing—
not your proposition, but what it
will do for him—the comfort, the
pleasure, the profit he will derive
from it. Y
YVY"1

prestige

"Could

say,

you

Likewise,

or

money or

and

vey," I don't stop—I keep going.

tails—the motive (or reason why)
which creates a longing in the

reader's

street

Poor's

de¬

necessary

the

on

Here's

if you should approach me

But

specific

select

the

proper

andjs.ecure good mail-

ing /lists—Security Advertising is
highly selecting, '

outright,
newspaper

;

lists,

rent

develop your
lists from list

them

buy

through

build
them
advertising.

mailings

As

you

rent

and

brokers, you'll get

Expe¬
;Bifeet Mail and local newspaper all sorts of list offerings.
rience will show you types of lists
advertising rin/^ay opinion, offer
You
tion you should know of these you the best opportunity to reach that should pull for you.
your
sharer, of^the 15-some-odd will have very little trouble dig¬
changes."
';;; Y ,,7: •
Study the art of plain talk—use million investors with the least ging up lists—you'll be swamped
to
'BUY,' others down
to
'SWITCH.'/ In the present situa¬
up

plain

talk

letters—be

your mailings and
simple, sincere to the

in

ost

Mail

They'll accumu¬
think.

offerings.

with

late faster than you

■■Em-.

ar*'

CHART I

/ Y // Y;:.
^advertising mes-

circulations*/

Direct

The

CHART If

Master

Y

File

Now the Master

MWEHISMG SCHEDULE TOMBSTONE ADVERTISMG
Advertising
Annual

In

Guide
Outlook

Mar

Apr

May

Jwn

Jul

Aug

•

t

t

•

•

•

•

&

A.

Oct

Nov

Dec

§

#

%

t

the

prospect list.

#

•

f

m

S.

•

•

Y.

•

•

ft

Let

Name

Deleted

Issues

Name

V

Deleted

.

■

9

f

Cincinnati

•

j.

*

MemLtri

XfW York Cut 6 tfhniiLf

9

Service

ihicMgo

Register

of

T
t

Directors

•V-

•

Statua
Stock

of

Bonds

Sor.

ft
for

Trustee

Stock

Reports

BROADWAY

Stock

firhottf*

ll

•

ft

9

00

NEW

YORK

TJ^rrc
IMfl.. ZXBBCS-

•

Guide

Unlisted

31

*
'•

Stock

suc¬

a

•

FJ«I r.arlh

Sli.,1

n.ll

Trl.Opcl

y

•

Y

Pa., 11 years ago to take
Reynolds Company of¬
fice.
The first week a prospective
customer wrote to the home office
caster,

the

over

.

Outlook

Railroad

about

you

operation.
"Baldy" Smith arrived in Lan¬

•

Reports

tell

me

cessful

m

m
Surveys

Stock

fire.
■

•

ft

adver¬

investment

tising is like pin-point bombingcompared to saturation bombing;
rifle
shot
compared to shotgun

#

f

t

Dividend

master file to make sure
is not already on your

a

name

Remember,

t

Record*

Forecast*

Industry
Liated

through

•

Bond

Daily-Weekly
Tact*

Sep

f

t

Corporation

Nea

Feb

t

Report*

Called

I.

Jan

Dividend

Bond
Bond
Bond

Action

File—
To put advertising on a highly
efficient basis you should avoid
duplication of names on your lists
—r-sift all your new lead, names

S

in

wears

He
spats

in

Lan¬

Philadelphia to complain.

*

said,

"A

will

man

never

be

So

caster."

who
a

success

Baldy

took

off

his

spats and went to work.

t
•

in a town of 61,345, he
active accounts.
Here's how the Reynolds "Lan¬
Now,

Jt

has 4,000
caster"

plan operates:
Window Displays

AfMgriunpi
JAM

Ctrry-vnr

Libby,

no

MU

API

KAT

1,000

1.000

2.000

1,000

m

JUL

ADO

OP

00T

mum
m

1940, about the time of the

In

eg IT i ffi.

POT

1,000

1,000

AppreyrUtlea 2,000

2,000

2,000

2.000

2,000

2,000

2.000

2,000

2,000

2,000

2,000

2,000

30,000

3,ooo

2,000

3,000

1,000

1,000

2,000

2.000

2,000

2,000

1,000

2,000

2,000

23,000

Oil, uvos




McNeill & Libby recapi¬
(when Swift & Co. be¬
beneficial
owner
of

talization

1,000

came

the

3,018,639 shares of common stock),
with all the attendant publicity,
"Baldy" asked the Libby,
&
for

Libby
a

McNeil

advertising department
displav 'of their

window

products—cutouts,

dummy

cans,

COMMERCIAL

THE

Number 4794

169

Volume

The

ice" cards in envelopes for mailing

Time

Cost

Study
and everything that
This
Libby,. McNeill &
study
developed
some
startling
information about the
Libby display.
The
following day, the local time consumed and the exorbitant
display man stopped in at the of¬ costs effected through the con¬
fice of Reynolds & Co. in Lan¬ stant use of the telephone in call¬
caster.
He couldn't understand ing
certain customers to keep
paper

crepe

with

goes

CHRONICLE

FINANCIAL

&

that

a

tions.

the Experts

-

why

brokerage office would
display of canned goods.

a

want

a

in and
"Baldy"
sold
15,000 shares of
Libby,. McNeill & Libby common
stock.
And
"Baldy" has been
put the display

he

But

good

using the display windows to
advantage ever since.

abreast of the action

of the

mar¬

Checking their work on the
basis of cost-plus-time-plus bus¬

meth¬

od, they came up with a most dis¬
couraging return.
It
was
time
to
change their
methods—to look about for

new

a

form

Daily Market Letter

daily market letter

& Co. issues a

placed

is

that

display in the

on

o'clock every

banks UZ 9:00

local

Reynolds

things,

other

Among

morning.

for

do

today?"

you

The

there's
of

Welcome Is Given New

A Cordial

Arrivals

When

The

This

Company!

something the Stand¬
Business-Building

was

neighbor is immediately of¬
the Reynolds & Company Kit proposed

fered

"facilities.

/

has an
The leads are
by letter and by per¬

mailing list.

active

followed up

call.

sonal

mailings

The

supplemented

are

offering
For in¬
stance, "Baldy" used Standard &

by local newspaper ads
.specific lists of stocks.

TEN
LOW-PRICED

Poor's Listed Stock Reports'

ATTRACTIVE

13, 1948
basis for one such

STOCKS, from the May

issue, as the
campaign.

The cashier

residents.

local

for

rights

cashes

Company

the setting up of

.

their

of

customers

This

and the securities they held.

undertaking

formed
their

of

structure

the
basic
personalized

letters in
Letters

system of watching customers' se¬
curities. It'took them more than
six

months

but when it
worth

all

time

pays

promotional plans:

On girl is assigned to its main¬
tenance. She can tell at a glance

rec¬

holdings of

were:

these cards

holding record; ceive
replies most promptly.

yellow.

are

(4) Placed first by both groups

ords the number cashed, the name
When

the

as

Watching Service

and address of the holders. "Thus,"

says
Baldy, "by the number of
by Standard & Poor's in one of its
rights cashed, I can tell how many
Listed Stock Reports, Prescott &
shares
of
stock
the
individual
Company
sends
a
note
to
its
holds.
When; Standard & Poor's
clients who are holders of the se¬
reduces the rating pn a particular
curity mentioned.
.issue, I follow-up by' recommend¬
It is really something out of the
ing the purchase of some other
ordinary to step into their cusr
security."
-

which

form

change in rating is made greatest

a

and

cleats

a

sell

me

sell

me

frame

mind.

of

(13) Help your reader solve his
problem by giving him useful in¬

formation—helpful ideas.
Determine

(14)
your

not.

by

by

length

the

of

sales

story,
arbitrary ideas of the

copy
any

your

relative merits

of

long and short

copy.

(15)

Ask

write

for

your

to act—

reader

literature—request

a

specific

study—submit a list for
by
your
Research
De¬
partment—or send in an order.

review

And make it easy

home that has comfort, con¬

"Don't

receptive

a

Sell

furniture.

in

promotional piece or news¬
paper ad—but tell enough about
that point to put yoilr reader in

for him to take

action.

tentment and cleanliness.

Sell

books.

About

me

three

weeks

I

ago

was

interviewed by Arthur Karl, Pres¬
ident of Names Unlimited.
(A

pleasant hours and the profits of
knowledge.
"Don't sell me tools.
Sell me

sell

Now

any

to the customer's

"Don't
rne

ance;

as being the best form for
creating prestige or for creating
good will.
(2) Placed first by both groups
as the form from which they se¬

spent.

the

longer

'

point

sales

one

each

team

list broker.)

more

Panel

effort

and

it

Placed first by the Selling

(1)

finished, it was

was

the

that

fact,

Panel and second by the Support

complete this file,

to

piece

In

best.

cure
the greatest number of re¬
of the firm's
plies,
clients. This file is composed of
(3) Placed first by both groups
two sections. The first is devoted
as the form from which they re¬
Reynolds

another angle,

Here's
and

.

.

file

master

(

Company

&

Reynolds

a

Poor's

&

ard

dons

Stress

31

Here's the report of

that

brief

the

Names

Organ.

interview—taken
Unlimited

from
House

It's headed:

1

—

The Master File

with

town, "Baldy" has a tie-in
Welcome Wagon outfit.

the

new

:

daily usage stems from the out¬
the
customers
call

side—now,
Prescott &

which

football

off
often the pleasure and profit of making"
works the other way. The simple fine things.
"Don't sell me things. Sell me
piece v/ith a good sales message
feelings — self-respect —
very often outpulls the elaborate ideals
and more expensive mailing.
home life and happiness.
"Please don't sell me things
(e) The last Research Report
of the Direct Mail Advertising As¬
To
which
might
be
added:
sociation, in which a series of ten "Don't sell me financial service,
Sell me
questions was asked of two panels or investment counsel.
of
experts
(representing
more profit, or securities sell me con¬
servation
of
than 200 large users of the mails)
my capital; sell me
brought out a surprisingly broad preservation of my purchasing
field of agreement on the value of power; sell me investment assur¬

are

in

arrives

newcomer

a

a

mailing

the

busy today, but
difference.
The weight

'phones

It is not always the elabo¬

(d)
rate

...

I can

"Is there anything

ask:

saw,

in at they went into it full speed ahead!
worked beautifully!
day It worked

One of his salesmen stops

each of the local banks every
to

dicted.

of what they

because

(12)

have to

ours we

a

copy

business-getting that was less
expensive and more resultful.
peal test the most frequently re¬
Right at this point, they came
quired test is the test of lists.
It
upon Standard & Poor's Business
is rare indeed that the productive¬
Building Kit. It was 1942. They
ness of a mailing list may be pre¬
tried it. Cautionsly at first. And
then,

of

like

Just

appeal of the sales changes its selection of plays on
letter is the most important single a muddy gridiron, so must we ad¬
factor
in
any
mail
campaign. just ourselves to a "wet field."
Tests have established, time after
Maybe some new ideas can be
time, that the sales letter is the developed from an item which ap¬
most
important element in the peared in a popular magazine re¬
mailing "package."
cently. It reads as follows:
"Don't sell me clothes.
Sell me
(b) The ideal mail "package"' is
—a
sales
letter, circular, order neat appearance — style — attrac¬
'
form, order card or request form tiveness.
..j
and a return envelope combina¬
"Don't sell me shoes.
Sell me
tion.
v. v ■■■; foot comfort and the pleasure of
(c) Next to the sales letter, ap¬ walking in the open air.
(a) The

ket.

iness received through this

In this game

adjust ourselves to varying condi¬

evening to their clients.

A Few Nudges From

(1643)

number

of

produces the
replies per

in

gestions
sales

me

An Interview With

Mailer

"In

services of interest to individ¬

investors, brokers, dealers, and

business organizations.
"Based on his unusual

(5) Placed fifst by both

in

(3) Clean

your

your

copy.

of

your

form

selling

experi¬

developing
leads on factual and advisory serv¬
ices, by mail, I asked John Mcence

the

Poor's

&

21

how to present your

(1) Change style of

Standard

ual

Kenzie

for

his

and

ideas

on

some

thorny mail order problems:
"(Q.) How often do you make

maling lists reg¬

ularly.

mailings on your advisory serv¬
(4) Try
various methods of
ices?
•;'".stamping envelopes.
"(A.) Every month,
(5) Use your good pullers over
"(Q.). When you secure the
and over again.
name of a prospect how many ad¬
(6) Change size of your envel¬
visory service mailings do you
ope.
make before you decide that he's
(7) Change color of printing ink. too 'tough' to sell?
(8) Experiment a bit with the
timing of your mailings.

dollar invested.,

1948

ganization in the world, prepared
19 000,000 promotional pieces on

story—

(2) Change
mailings.

Investment

Corporation, the largest invest¬
ment advisory and statistical or¬

conclusion—a few sug¬

on

the

in

Succeessful

Advisory and Statistical Field

mind."

peace of

A

Through
have found that we

Sixty mailings.

"(A.)

experience

groups

we

(9) Make your copy specific, can profitably mail to our own
new prospect lists for five years.
factual and interesting.
welcome change,
All leads
of
course
are
sifted
(10) Combine the greed and
try writing your Ad or mailing
fear appeal (possibility of profits through a Master File to avoid
piece as if it were a letter—a
duplication of names that may be
—avoidance of possible losses).
sincere, interesting letter. It's all
on lists of previous years.
(11)
Talk directly to the pros¬
tomers' room after the close of too easy to lapse into stilted, bor¬
Special Forms
"(Q.) How do you build you
in a
human,
enthusiastic
the
market and
see
their cus¬ ing prose—prosaic prose that not pect
: : On
one of the previous pages, I
own prospect lists?
manner.
Do not preach to him.
tomers' brokers signing and en-l only discourages reading, but dis¬
mentioned that "Baldy" is a stick¬
Talk his langauge.
(Continued on page 32)
;
closing their own "Watching Serv-. courages confidence as well.
ler for detail. The board boy
a

instance,

on

the General Mo¬

Wo kmoo

j

card, he records the number
.of shares sold that day, to whom,

i

price. When the cus¬
tomer sells, date of sale and price

vtotk

J

Soma

}

bo

J

22 J

♦

if it «««rf

j

Card, each sales¬
entry in his Cus-

»

is

Holding Book.
by

kept

loose-leaf

When

dexed.

This

form

each salesman in a
binder—carefully
in¬
salesman

the

talks

k. ksar -A
!•» 10 ffirt

M

jft

at

1mm

lot

4i.M1.O4.
50

J

9H

a

the

customer, he knows just what
customer holds in his port¬

Hi M
Ma,

,aat»
UM Hi yaara

fmnlvi

low Tart •

M WALL WHIT, ItW

our

awat

In

opinion

that many atoeka ahould be aold now.'

lapreaalve "name atoeka,"
study, are roted

the attaohed

Poor'a.

,

aereral of which are
unfavorably by Standard
;

.

Till I

J
Tbis

55-

line

ad

2^0

one.slngle-oolumn,

28-llnes,is also a good

on

40 STOCKS

Pulled

offer.

they retire from any coraltnenta In

the

Here's a varietion

have

275, leads from
tions.

V

inser¬

two

should not be

This
the

Insertion.

per

of

oonaldarad

prepared a speoial list of over 400 atooka that are un¬
favorably altuated, and we are recomaeadlng to our clienta that

single-column,

leads

4

aacuanuu

v/e

This

about

our

deacribed

|

*n> T»rk 5

Is

Soate

J

f.UX-** I#H

'*

pulls

BAIT

ratra.

It

1 t/i
MMM ascvOM*

M WaM ***

>R. H. Johnson & Co.:
Wall Itfwt

»•*

R. H. Johnson A Co.

puller."

to

ttt.FIH

Wl U..

.1 M .Ml Mil till

Hal

imrnrmxr

'.44

I*

TB

UP

II tllLIBB UI01H til

•
—>

R.H. Johnson & Co.

I

TltlDI

•

caa

purthaaod
ytoto 1% rotor*

WARNIRG

Alt BIVMCBB EATIHI

•

yaara.

stock*

|

HUB M HUH M I •%
£** tint /«re

pul

Hmm

Li* —mi ft— om r*qu4*

ifveki

feu

ka.a
j—t

of

to

|

"T"

I

•tomer

•wry

tkmo

put

40 STOCKS

40 Stock*

—IhuMg —Mf

•

an

i

Iff

I

makes

j

«

recorded.

From the Key

50 Dividend
Paying Stncks

J

and

date

man

CHART IV

CHART III

tors

are

a

day—a card for each issue.

every

•

Why not, for

keeps

security record card up-to-date

For

the most valuable form.

as

aala

of

thase

theae laauea.

Interpreted aa bearish.
atooka

should

be

The funds released froa

reinvested. We are presenting

list of strongly situated atooka — stocks for
ateady Income — atoeka for safety first -- stocks for profits;
la ahort, reinvestment reooraendationa covering different objectives.
o<jr

.

clients with a

This is very helpful to the

folio.

salesman in making switch or buy
recommendations when necessary.

"Baldy" also has a complete as¬
of legal forms, waivers,

sortment

With Our

matter of convenience
for local lawyers.

...iWYvm-eadCepy rfSteedwdiPaar'i

etc.,

as

a

successful

Another

LINE

w<

forces.

At

were

undecided

close

up

time

that

liatcd in

in

the

hands

of

Harvey take

off their

a

and

1

w*4+r art m
-i.bmwoM

coats, spit

went

of

to

ations
'

the

Hadg.d — k— o kffc

on

their hands

Now

BACHK&CO.

this

successful

is

oper¬

;' (2) Set

up

a

Van ra*

11

r

1

rfj.

,r

-1.0

——

a

"i-

Coutraaa SL, Boalo* »

jTSaaaall Pd».rA
Ediaood A. R.llar.

Jiryslrr KiiAluij!

Co-Maaar»r.

1240

■»

HOUMt. DATTOM 4 COJ*OH
mo PUni TMv,
Sand

U—4—i A IWl

.HA

CTTT airi

STATS

tention.

Wamo—0* 1 Warn.

osmpJimonttfy

«

a.,,

-OP

Note

up

to

This

■

From theae two

ada,

Master File.

watching service

total

of

,

at¬

timely appeal

ties

brought a




k-'i'i '-f-"5

.

.

.

lr you decide

to

switch later

from now — your atoeka may
you might have bought may

stocks

talk about preparedness.

the present

:

Guide.

Here's
&

56ft-re¬
:

quests forStsadard t Poor'*
Stook

v

a

the

how

attracts

The

gap

the

loss

atooka

handsome batch of leads.

-aay, all months or a
be at Point D or Point F. The
then be at Point C or E.

between C and D — the gap between E and F -- represents
you may take later by falling to awltob into better
The difference In profits could be substantial.

bow.

advertising 200?t.

tombstone

double-column

Dayton t Cornon

Holly,

received

"21"

C
> —

Outpulled

J

price penalty.

no

year

how the large

another

Company,

cently.
current

;

small

Note

how

interest

space

that

Boston,

it
in

I

ties

ad

in with

rer

.-a

W.jl-

.nut

,wi».

A

CLOSE

<i'

WITH

PENALTY

the

television.
!

«»

HVTTTr-V)

HOOK

by Bache

noticed

-

'a'-'.

today at Point A.

pay

BUT

Notice

If you switch Into stronger stocks now, you
Por many attractive laauea are In the same

Ve are

price range as laauea with poorer prospects.

*^6-llnes, one-column,

they did—

up a

(3) Set

for clients.

ewrrot

our

ia

ph—4 Itr

IWW./WMI, .11,

TM—kmmu UlgOy 4.—

Mhllimn Dfltcc: 4

(1) A cost time study.

v

h

Bache & Co.

W fcm

M W.ll Si., Tirw York S. N. Y.

HOUJEY, DAYTON A GCRNON

in Ohio.

Here's what

fnu

DiraanunTd

towaMtofy'

f*4—. Wo'— mt# it »* iMawasf *•*.

fling at run¬
The boys took

work.

most

brxldeaoipuoo of aota. ol
lb. I.tdm| oooip.oi'. ia
cooiaiood

Apwroa in *v» ywr —4 n—

Maidr. rum

NAJit

one

iaauc ol

L—, t-t —i

man¬

Lloyd Birchard, and Harvey
Gotschall, a customers' broker.
They finally decided to let Lloyd
and

our rcccnl

Atk for your copy now.
fh«

ager,

ning the business.

A pngroa trport on ihia
dvnamtc to4u.tr. wilb a

"Counaanvt

they

leave it

office

the

military

T,omr*H»Tivt Valuu"

f

or

"tomorrow

allrarlivc in

.a

jtrcparcdncM program arc

whether to

to

as

the business

regard

view of our curii-nl

Ohio.
Back
in the
war
days the senior partners of
Prescott & Company joined the
Cleveland,

armed

today and

Imlu.trira wl><>-<• .cctiriltr*

Company,

j

TELEVISION-

21

STOCK GIM0C

operation

from Prescott &

comes

Complimtuli

Remember, dolag nothing In today's market may be dangerous and
costly.
The rery least you should do la to cheok your holdings
Nail the enclosed oard and tbla
helpful list, plus our Supervised List, gill reach you In a

against our Switch List now.
few days.

32

COMMERCIAL

THE

(1644)

&

FINANCIAL

CHRONICLE

ditions

Advertising in Securities Merchandising
"(A.) Oh about 75

(Continued from page 31)

"(A.)

I

trial

Through special $1

offers

ment

newspapers,

proofs

galley

vance

in

names

of" Directors

of

Register

Executives

and

est?

*

,

v

for
-

one-time use?

~

"(A.) Yes.
"(Q.) What types of such lists

have

it?

in your lap.

- •

'<

i.e., buyers of books

the stock

on

market, inflation, or the economy,
ex-trial subscribers to competitive

*

services, ex-full term subscribers
competitive services, subscrip¬

to

tion lists of stock advisory services

have

of business
and ex-clients of brokerage houses
out

gone

that

no longer operate.
"(Q.) What types of such lists do

consider second best for

your

purpose?
"(A.) Certain mail order buyer
lists

where

dise

purchased

the

type of merchan¬

gives

indi¬
might
be mature, preferably male, and
able to buy luxury or self-im¬
provement items, a few profes¬
sional lists and certain specially
compiled above-average
income
cation

that

in

individuals

of

of New

some

individual

the

the

States

York, Illinois, Ohio, Penn¬

(Continued from page 22)
which

"(Q.)

What

percentage

return

mailings when

make a $1 trial offer?
"(A.) Range between 2%

you

10%

with

few

a

How

-

potential

compare

with your $1 trial offer on news¬

con¬

-

market

for

them.

quarters

of

1949

fairly good.

are

This increased supply will become
available to the automobile indus¬

try because other manufacturers
using
sheet
steel
are
reducing
production. Where any percentage
of their supply is conversion steel,
that
the

in

will be the first to feel

source

cut.

However,

prices

seem

of

mill

reduction

any

steel

does

not

a

possibility for 1949 and it
is extremely unlikely that major
producers

car

avoid purchas¬
steel during the

can

conversion

balance of the year.
There will
probably be a return to normal
operations for facilities producing
conversion
steel, such as foun¬
and electric furnaces.

will
in

major factors then which

affect

the

production and

automotive

prices

industry

are

tions

have

been

kind

of

in

were

for

creased

it

as

occurs.

along with several other

major

producers, has been con¬
ducting merchandising schools for
dealer personnel for the past two

with the idea always of im¬

proving
of

been

equipping

some

in

service to

has

Much

the

done

this
it

measure

customer.

in the way

force,

is

like

in

but

an

army

fine fettle but without combat

experience.
They have been so
long from the field of aggressive
action that they have forgotten
what the experience of competi¬
tive selling is like. Even after this
sales

force

gets

going

there will

interval before it begins to
function once more as a seasoned
be

a

this

serv¬

Consumer

fact,, it

ratio

of

Forecast

and

Semi-annual

"(Q.) Do

you

time

your

countless

improvements in exist¬
At the same time we

ing plants.

N

.

news¬

Let's take

look at Ford's sell¬

a

buyers'

as

we

market and

enter the

perhaps

you

engaged in designing, engi¬
will get some idea of the problems
neering and tooling for a complete
that face the industry generally.
changeover in all of our cars and
"(A.) Yes
we plan co-ordi¬
trucks.
Approximately 40% of all Ford
>
nated
mailing
and
dealers might be termed "rookies."
newspaper
Ford Expansion Goes On
campaigns.
That is, they are dealers who have
-*"(Q.) Do you ever get better
Obviously we cannot continue joined the Ford organization dur¬
than a 10% return on your mail¬ to make
capital investments at ing the war years or immediately
ings?
that rate indefinitely, but we are thereafter and have never
experi¬
"(A.) Yes, here's the record on still engaged in expansion and enced a competitive market with
one letter than we have used for
improvement on a nation-wide us. Many of them, of course, have
were

advertising to dovetail with

paper

and supplement your
.

.

mailings?

.

three consecutive
it brought a 46%

In

years.

1946,

basis that affects
of

return, in 1947,
1948,
42%.
We
wouldn't change a period in this

force Ford to start

letter.

program^

45"%

and

in

Can you blame us?

"(Q.) In

your

opinion which is

important, good

more

(.good mailing list?

copy
-

>

.

or

a

~

.

"(A.) Good mailing list. In my
opinion, poor copy has a better
chance

of

pulling

on

than good copy on
as.

good

copy

a

and

good

a

list but,

poor

good

lists

available, why not let them
together?"

-

Now in
you

reached

-

old

over

One

like

;r

■

Moses

Biel

from
had

—-reporters
all

work

Mississippi.-* He

the

about his

are

closing I'd like to tell

about

Natchez,

- -

list

ripe old age of 102
gathered round from

country

to

ask

Moses

philosophy of life.

interview went something

this:

our

stances

our

-X?"

During 1948
$90

Only

economy.

beyond

million

good segment

a

control could

contracting this

\<v

Vi.'w.

spent
tooling

we

in

bring out new model
please bear in mind
model

lete

automobiles

about

the

circum¬

•

than
alone to

that

become

time

new

obso¬

in

and

the

by

number

sales

By this I

mean

line of

cars

tually as
go
into

must

soon

as

be

the

production.

started
new

In

vir¬

models

had

actually

fhajority of the
out of

assume-,

is

continuous

a

that

a

are

i",IX.". 4-.1

forging

efficient

an

and effectiv Ford dealer

tion

sell

older dealers

training.:

The job of

to

And it is

organiza¬

of

mediocre
a

satis¬

factory profit to the dealership.
•

have

We

campaign
aimed

*

been

for

conducting

6

the

some

time

atX'the

specifically

now

Ford

dealer organization.

The program

stresses

essentials

the

four

of

sound dealer operation: Sound fi¬

nances,'. efficient management,
words, it requires approximately competitive spirit and
completely
two

for

years

a

new

to

design and tool

up

model and the expense

is very great,

."... X A '."

,}

modern* facilities.

subject

headings

has: been
deal

of

the field.

"Under

much

these

indicate

great

a

have

had

substantial

which
the

has

done

vacuum

much

still only 3%

were

adult

to

of demand.

in

in

middle

But

the

of

years

or

year

is

soon

factor in the domestic

a

sequence.

Yet there

more cars

of unit
sellers'

but the general

war

fill

year

the

postwar

market,
feeling in the in¬
dustry is that it is of no real con¬

pro¬

of the

though
the

of

The question of
importation of
European cars has been mentioned

pent-up

as

We

duction since the end

Ford

per

imported' approximately

12,000

this

English

units

for

sale

country in
1948 than in 1941. in spite of the

through Ford dealers during 1948,

fact

but this

person

that

per
capita i n c o m.e s
buy 16% more goods than

would

in 1941.
In

1948

the

industry
and

cars

billion dollars.

increase

in

1947

over

in

half

a

units

of

and

Total

car

and

sales

as a

their

field

would

used

car:for

rather

.

Most

•

European low priced

smaller

are

with

than

competitively what American
tional

in

size,

appointments.-

always
this

be

sports

pean

will

On the

ture,
the

fact

in foreign countries for the
purchase
of
Detroit's
products.
contraction during

a

point.

for

cars

It is

this:

both for

The

new

activity holds

probably remain at the

into

of the

I

want to

picture is the

been made to

get

in the

and

the

that

the

automobile business

historical

record

shows

that fail in
this venture don't last long.
Only
companies

constantly

battle

Because

larger than normal number
the road,

the

that has

battle

of

ownership

of over-age cars now on

cur¬

the rest of the year.

by improved manufac¬
turing methods and efficient or¬
ganization. This is a never-ending

demand

up.

definite

and will

costs down

statistics, but I think they make
a

a

1948

The last item which

that

lot

a

in

Euro¬

but such imports
factor in the gen¬

This market underwent

A\-;'X '

out

market
racy

availability of American dol¬

introduce

throwing

a

the

export side of the pic¬
major consideration is

the

effort

been

and

lars

annual average in excess
1,900,000. There were 12.4 mil¬
cars 10 years of age and over
in 1948 compared with 4.8 million
in 1941.
X

I've

limited

for

car,

be

never

horsepower:

There will perhaps

a

country

lion

the

car

eral market.

prewar

of

cars

makers have established as tradi¬

of

aware

cars

American

considerably lower horse¬
ratings.
They cannot offer

power

very

am

have

a
good
$1,000 than a new
European 'import at
slightly
prices. X X\^XA < A' X/
;V/Ai ' •

for

rent level for

I

of coopera¬

measure

lower-price

in

with

over¬

low-price

British organization
efforts to obtain dollar

856,000.

compares

partly

the

for

our

estimate for 1948 is approximately

This

meet

•

But in a normal do¬
mestic market the average Amer¬
ican car buyer in the

of

16.1%

truck

to

taken

exchange.

of dollars.

terms

and

tion with

This represents an

number

effort

an

cars

produced
with a

trucks

wholesale value of six and

10.2%

in

measure was

whelming demand

A'AA."■ .:X:;"X:

5,285,425

the

industry

price of

It seems to
ered

fighting

the

can

me

cost

hope

to

cars.

that I have

cov¬

lot of

is reasonable to >; assume that
1949 scrappage should at least ap¬

ground in the last
few minutes and registered a lot
of opinions—some of them rather

proach

conflicting in nature.Perhaps it

it

the

prewar
average
and
high as two and a half
million units.X,/ X./'X' '
XAAX
may go as

It

is apparent

that there is
fied

a

from the figures
backlog of unsatis¬

replacement

mand
on

demand. * It is
unsatisfied de¬

will be reflected

dealers'

books

in

in orders

the

coming

market, but it does exist. It is
the job of automotive sales forces
to translate this demand into sales.
If

dealers

a

would be

good idea to try and
briefly and see if
we
can't get a picture that will
stay in focus.
X A AAA A
a

summarize them

The economic factors

prevailing
time, such as back¬
log of unsatisfied demand, accu¬
mulated savings which could be
made available for the rpurchase

-

-

at the present

of

goods

credit

and

services,

consumer

and- continued

high

em¬

heavy, well ployment, have made our exec¬
developed drive during 1949 much utives. optimistic about the out¬
of this invisible backlog might be look for 1949.
'
■
i
*

put

on

a

•

*

converted into actual orders.

material

prepared and a great
has been done in

work

T

thereafter.

Certainly these sta¬

doubtful that this
a

al¬

likely to disappear generally by

has in¬
million in

need.

During

one.

years even

other

We undertook to bring out new
"(Q.) How many children have
cars in the middle of the
greatest
you, Mr. Biel?
seller's
market
we
have
ever




never

management could return

that while there

be V so-called

"face-lifting"
changes made during the life of
a
particular model, actual design
and tooling for a complete new

may-

have

either goods or services.

his
car

*

another peak

even

market

country

almost

years.

tistics

the

ward to

reduce the

them

of

many

lor
new

Peak Year of Unit Sales

iness

good

a

a

of

ing

but

value

more

purchasing
.

in

they are in¬ the past few

troduced to the public.

deal

in

made good in other fields of sell¬

And

cars.

good

and to offset scrappage should re¬
main high as long as general bus¬

Reasonably safe to

•

.

more

It

get

consumer

an

ing organization

condition.

lowances.

.

nual

X X':

.

whole regards

as a

healthy

a

com¬

v

.

'

Forecast offers.

re¬

normal

because of increased trade-in

credit restric¬

as

as

money

the
'" X v- ^ \
years • 1942
through
1948
: material costs,
wages,
pensions combat team. It is pretty hard to
"(A.) On newspaper advertis¬ and increased- tax: burdens/ An keep a salesman sharp when he amounted "' to
approximately
14
million units, but to get a more
ing we must get back 50% of the upward trend in any of these fac¬ has nothing to sell.
accurate
picture
of
the
actual
in¬
«ost, on average,' before conver¬ tors would inevitably affect the
Therefore, it is, only reasonable
sion to full term subscription, or car market
crease let's take a
look at regis¬
through curtailment of to expect that during the period
the newspaper is knocked off our expansion
trations for that period—the num¬
programs, smaller prof¬ of transition into the
buyers' mar¬
list.
We key ads, keep a close it
margins and very possibly price ket, and for a brief time there¬ ber of cars operating. At the end
check on all newspapers (A, AA increases which would narrow a
of 1941 the total of cars and trucks
after, car sales may take a marked
or
on U. S.
AA*)
according* to
highways was 34,854,000.
pulling market already feeling the effects
drop. It will be a period during
In 1948 the total was 41,038,000.
power on various types of mar¬ of
buyer resistance in certain which seasoned
management will
kets.
The "A" list—1,900 news¬ areas.. •;
So, although more than 14 million
-., ■ X?,X.X:X; A-..X' ■'! be
set for the shock, take it in
units were produced over the pe¬
papers for use in brisk bull mar¬
As
early as 1945, Ford em¬ stride, and then start moving for¬
kets only.
"AA" list—150 good barked on an
riod
the net
gain was slightly
expansion and im¬ ward again.
pullers on average markets and
over 6 million.
The difference can
provement program calculated to
"AA*"
list—50 newspapers that run at
be accounted for in large measure
Ford Selling Organization
$100 million a year for five
will pull orr any kind of a- mar¬
by scrappage. Obviously the mor¬
years.
That program is still very
I have spoken of meeting selec¬
ket if the offer is attractive;
much under way.
tality during the war years was
1
tive buying in some makes of cars.
"(Q.) Do.you have newspapers
held to a minimum and even dur¬
To date we have built four new There
is
some
question
as
to
on your list that will return
better
ing the past three years the rate
assembly plants, four new parts whether this is due to customer
than 100% of the cost before con¬
of scrappage has been abnormally
depots, acquired two large manu¬ resistance or lack of sales
aggres¬ low. Less than half a million
version?
units
facturing plants, expanded our siveness.
"(A.) Yes—particularly on An¬ steel
were
dropped in 1947 and the
producing facilities and made

papers?

car

is rapidly

means that the consumer will
a

could

lifted.

1940

families

mar¬

eight

years

industry

buy

economy that is
basically sound. At the same time
savings are three times what they

We have been accumulating
studying market surveys and
grooming a sales force to take up

slack in volume

generally

it is

used

With these prospects for the re¬
savings compared to 63%, in mainder of1949, the automotive
1940.
This would seem to indi¬
industry can logically look for¬
cate a national

ket.

Ford,

level—in

present

and

any

business

long¬

no

and

,

engineered

preparing

this

for

time

before.

ever

are

The

and

a

our

fully/''proved by use before
entering the competitive market.
We

will

debt in this country is but 32%

and

some

whole

a

continue to rise

,

designed

rare exceptions, are
selling at a premium
logical to think that the

credit is still well below the sup¬

which cost us approxi¬
mately six- weeks of production.
But we wanted to have a product
newly

than

portable

known,

The

prospects for increased quantities
steel for the third and fourth

of

The

this

i

to

would at the same time reduce the

'flops' that pull dries

does

well

A slowing of
general business
activity would increase the avail¬
ability of steel to make cars but

' ';

under...2%*

"(Q.)

and

be

sider.

sylvania,1 Michigan and California. ing
do you get on lead

it. might

as

larger quantity of goods and

V

;

with
er

turning to a more
has any money to petitive market. X
Current income of con¬
The

spend.

The Automotive Outlook

lists—

interest

Investor

"(A.)

lists

-

*

for

nobody

sumers

consider best for your par¬

•

you

that

ices

ticular purpose?

that

:

-

demand

excess

spending has not declined
spile of the popular impression

in

I'm throwing it

to you.

up

..

do you

more

application of the rules—the test¬
ing—is

urgent

.

current

than the
results.
The

But it'll take
vehicle to get the

There has been

spending

goods which bid ; up prices and
resulted in backlogs of orders, but

given you the Security Ad¬
vertising "vehicle"—the rules, to¬

"(A.) Oh, about 15 times.
"(Q.) Tell me—how did you do

-

rent outside lists

you

the

;

I've

been married?

you
•

"(Q.). Do

get the results he got.

night.

spring buying normally turns the

program

in
tptal tendency on the part of used car
continues to hold up well in spite dealers to blame all their
troubles
of the selective buying I have re¬ on
Regulation W but this seems
ferred to. There no longer exists an easy way out. New used
cars,

it took

"

i

"(A.) Oh, about 20.'
"(Q.) <How many times

and

exchange of so-called 'private' or
'retired' lists, v.; -

-'»

this

market upward.

Consumer

bicycle."

a

drive

to

home.

Yes, Moses had the vehicle but
more than the vehicle to

*'

/'(A.) Oh, about 85. ]
"(Q.) And how old is the young¬

manage¬

own

our

recollect.

can

outright
purchase of stockholder lists, ad¬
•*.

"(A.) I had

as

"(Q.) How old is the oldest?

~

in

nearly

as

Thursday, April 14, 1949

The used
a

definite

part

can

car

They

market has taken

downswing

which

in

be attributed to seasonal

We
can
better
again, it will prob¬ characteristics.
ably take actual competitive con¬ iudffp this after Easter when the

are:

confident

ability of business
men

to adjust to

a

and

,

that

the

financial

gradual level¬

ing of trade without dumping the
economv

into

one

of

the

deep

Volume 169

than

Number 4794

measure

to the job to be

up

done.
It

tend to

COMMERCIAL

that the customer gets

see

what he wants.
their hope

is

take

THE

realistic

a

nomic

climate

mands

that labor will

view
and

of

our

guide

eco¬

its

de¬

It has

lower

still

accordingly.

They have faith that the

Ford princi¬

a

and better

more

and

lower

The period we are now

gov¬

cars

prices.

It

ernment will recognize the

chang¬

ing

efforts

is
exactly what we have been
anticipating for three'years.
We

toward the support of business so

should be able to deal with it with

trends
to

as

than

and

inspire
raise

ical

confidence

actual

blocks

its

direct

and

which

rather

psycholog¬

will

tend

to

confidence
We

and

calm

judgment.
returning to what we like

are

to call

normal economy.

a

There

reduce expansion, production ana

do

employment.

too many unstable elements in the

Automobile
their

men

that

of

accompanying
It is their convic¬

responsibility.
tion

aware

the

and

economy

are

in the national

importance

made

cars

priced right have

right

and

large unsatis¬
fied market to supply.
They ina

not

which

at this time

be

to

appear

picture

could

upset the applecart.
clear-headed

ful,

periodic review
picture,

suddenly

It is

■

for

nomic

only

time

a

thinking,

and

care¬

the

of

eco¬

ag¬

gressive action.

us

(Continued fr
them.

Everybody takes all this for

granted in the case of totalitarian

Socialism,

first

page)

others. Socialism
est

means

the high¬

possible concentration of
and

trol

power

con¬

within, but dis¬

integration and disunion without.

It would, of course, be in¬

The national concentration of the

the- communist

or

barbed

wire

we

well

are

of

aware

whichcorresponds
tween

rather

this

immaterial

we

that

be¬

manslaughter,
difference must be
this difference

without

not

are

victims.

the

to

But it is exactly for

that

difference

a

to

and

murder

though

im¬

the

overlook

to

hope in

warning the democratic Socialists.
There is
a

no

homicidal

useless
on

to

to

but

;

:

.

is

Road

a

that

it

Supermonopoly,

to

Serf¬

a

Road

is

economic

to

disorder and to economic paraly¬
sis.

But there are still many, I
afraid, who will be surprised
when they are told that Socialism
is equally a Road to Supernaam

cord.

Let

Dis¬

effort

an

to

order

to

the

see

impact

international

on

must first ask what

we

its economic principles.
not shun

of

rela¬
are

We must

bit of mildly abstract

pros¬

means:

national

the

sov¬

ereignty to the n-th power.
So¬
cialism is in practice invariably
to

is

it

and

in international

affairs,

alarmingly many of the
features of the defeated German

lesson.

that

a

and

government
come

farce.

a

clearly

that

eralism
For

then

we

be¬

quite

see

Socialism

and

mutually

exclusive.

are

either

federalism

Now

there

is

Fed¬

regional

So¬

(as in postwar Germany),

Socialism

destroys the na¬
community — or Socialism

national,

then

it

of

the

destroys

the

political

life

munities

(States in U. S. A., can¬

in

lower

Switzerland,

municipali¬

in

federalism

separatism,

center

the

or

center

The

nomic

monetary

reforms

carried

which

through

and

eco¬

have

been

there

recently
that
the
Allies, together
the
responsible
Germans,

mean

with

prefer

the

combination

of

fed¬

eralism and free economy, where¬
as
the
Socialists
Gdrman and
—

British—prefer
of centralism

the

and

combination

Socialism.

We

must

of

European

have

to

What

is

there

or

But

economic

of

life.

point of the ut¬
most importance, let us consider
it more closely.
As we saw, we
establish

a

the

truth,

equally

by reasoning and
perience, that the collectivist

supported

centration

within

a

of

economic

political

unit

ex¬
con¬

control

be

must

bought at the price of the disin¬
tegration
of
the
higher
units.

is

no

longer under the

government.

Then, under Social¬
ism, the national economy will
crumble
into as many regional

economies

economic life into

ing and controlling authorities.

a

process

which

governmental task like

a

the army or the law courts.

being steered, in

every

It is

detail, by

the administration which gives its
orders

and

instruments

enforces

of

them

means,
will
be

furthermore,

steered

economies

as

sovereign

by

-coercion.

many

its

That

that there
compulsorily

as

there

political

are

units able to
plans.
These po¬

still

will

is

federal

be

no

union

as

in

the

federation

a

all.

at

of

case

of

Eu¬

is impossible if its economic

system is Socialist.

International

.

tional

no

federalism

patible

with

than

more

is

indeed

Socialism.

na¬

com¬

On

this

point theory has again been tested
by experience. I refer to the noble
endeavors

Belgium
on

the
Netherlands,
Luxemburg to do

smaller scale what is needed

a

for

of

and

the

want

whole

of

Europe.
bring about that

to

They
merger

of their national economies

in

the

which,
Century, would have

19th

been called

customs union.

The

first stages of this "Benelux"

con¬

sisted

in

a

unifying

the

customs

regimes of the three countries.
They revealed themselves as sur¬

prisingly easy.
It was quickly
discovered, however, that such
customs

unions proper

the

genuine
con¬

cluded by Socialism as an eco¬
nomic system. Nationally as well

internationally, Socialism

and

incompatible with

are

It is one of the most tragic
ironies of history that
Socialism,
which so many
desire for the
sake

of

is bound to make

peace,

unsurmountable

the
difficulties
which stand in the way of inter**
national
God

community

knows,

and

which,

already

formi¬
enough without that.
But
this international
community is a
goal of such paramount impor¬
are

dable

tance

that

cialists,

and

more

So¬

more

they understand the
rigor of the choice, may be ex¬
pected to sacrifice their Socialist
ideal,
which
is
an
extremely
once

doubtful

one

anyway, to the ideal

of international

community which

is the most genuine and
supreme.
In this they could be
inspired

by

the example of the Socialist lead¬
ers
of the Belgian Government
who are
imploring their Dutch
colleagues to drop their policies of
Socialist
planning in order to
make £hp Benelux
really possible.

The lesson taught by the un¬
happy Benelux experiment is so
convincing that today, in Holland
well

as

in

as

Belgium,
to

be

informed

no

today
no longer
very difficult precisely
because they are no longer im¬

man

seems

sion

that

portant.

unless; Holland dismantles com¬
pletely, its collectivist system.
>

The

jY'
real

of

battles

nationalism
on

are

-are

economic

another terrain where it is not

import

duties

of

which

matter

but

quotas, exchange regulations, and

give credit to the German
Socialists for having understood
that, in Germany as elsewhere,
we
can have
only Federalism or

trade monopolies.
Between more
or less Socialist countries the bar¬

Switzerland.

too

capital

day

under

illu¬

any

real economic union
the three countries is possible

It

being fought

now

Here, however, two
points are obvious, and
both have an immediate bearing
the

on

wider

problem

union.

ropean

Y

of

State because

would

bination

centralized gov¬

that
this

France

of

peaceful

different

are

com¬

This

as

has

there

been

are

command¬

by the
conclusive .force
of
an
experi¬
ment, in Germany when, after the
defeat in 1945, the administration
of

Socialist

the

Third
the

Reich

conquerors

among
once

was

proved,

system
taken

but

now

the four different

the

German

of
over

the
by

divided

zones.

national

At

econ¬

of

der

nationali¬

The secret of the

won¬

multinational

Swiss

the

structure of

strikes

the

at

Swiss

roots

very

State

of

existence of Switzerland.

end

of

therefore

Swiss
of

Switzerland.

of cantonal

would
or

it

break

will

comprising
in

which

Y

federalism

either it will be the
case

the

second point is pre¬
Socialism would be

Now, the
cisely that
the

de¬

is federalism, and every¬
which endangers the fed¬

thing
eral

of

up

be

a

the
case

more

and

For,

unlikely

Socialism, which
the Swiss union
Socialist system
whole

country,

federalism

and

self-government would become a
sham.

thors

It
of

seems

the

that the wise

Swiss

au¬

Constitution

customs

unions

;

But such
it mean?

,

no

like

allow

the

to have a
merely optical effect.

Eu¬

The first point is that Switzer¬
land is possible only as a Federal
ernment

if

a

is obvious that all this has

bearing

on

deavors

to

called

the

well-meant

bring -about
'international

an

a

en¬

what

i®

cooper¬

ation" of the ERP countries.
There
seems to be a
widespread idea that

to¬ this about as long as the different
than national systems of Socialism with
their exchange controls
subsist.

of

more
'

unification, what does

It

means

no

less than

a

cpmplete political union of the
States
in question
into
a
uni¬
fied super-State. This super-State

however,
cause,

as

be federal be¬
that would be

cannot
we

saw,

incompatibile

with the Socialist
It must be highly cen¬

and

national

make

life

government.

manding
would

national

of

self-

The planning, com¬

and

push

national

and

short work

coercing

center

the

former

around

States

in

a

manner

which,

in Switzerland,
Geneva
would
certainly not stand from
Bern.
That is only another way
of saying
that such a political
union

force

is
in

Stalin;

feasible

not

the

and

fashion

of

except

by

Hitler

or

that is impossible

in

Western Europe. A Socialist union
would be

nothing else than a sort
"Grossraum" or "Co-Prosperity

of

Sphere."

only
we

the

This
very

however, is not
opposite of what

want but also

no

union at all.

We arrive at the conclusion that

into as many have been aware of the fact that Socialism—because it means the
enforce their
existence
of
this
Federal "politicalization". of economic life
regional economies as there were the
litical units are generally the na¬ commanding authorities
so
that State is bound up with the free —makes the political union of
tional States.
Inside these plan¬ there sprung up not only an econ¬ economy, for they put in a spe¬ Europe the prime condition of her
ning and corrlmanding units there omy
of
the
British,
Russian, cial article which makes just this economic union. But at the same
is
the
utmost
concentration
of American, and French zone, but economic system the only consti¬ time it makes this political union
power in the hands of the national even an economy of Bavaria, of tutional one.
It is possible to in¬ impossible because it destroys the
government., But all the deeper Hesse, or of Lower Saxony. These terpret the 5th and 14th Amend¬ only form of union which is ac¬
must be the gulf separating each regional economies were—and to
ments of the American Constitu¬
ceptable in Europe, i.e., the fed¬
of these lumps of power from the some extent still are—small col¬ tion in the same way,
eral form of union.
As long as




has

a

.

Since this is

That is to say: Socialism turns the

becomes

union

second

part.
Switzerland is

for

exactly

control of the central government,
but becomes an affair of regional

—

true

its

indeed equally true for Europe as
a
whole.. Either there will be a

and

"statization"

federal

learn

serious-

any

who

that

union which is both

each other.

economy

enterprise, Socialism means es¬
sentially what some economists
term
the
"politicalization" — or

doubt

advocates

Economy
free

slightest

as

now.

there

Socialist

Federalism

contrast

markets

Is

minded

But

rope

the

is

not

fact

cialism.

understood fairly well
I am afraid that most

Under

Socialism, either the parts

is

this

part of the Swiss lesson has been

Switzerland

up

second

union

it adopts Socialism for
its economic structure.
The first

whereas in
ihe second it ends in centralism.
eat

The

federal

if

European union which

ties everywhere).
In
the
first
case
ends

com¬

such

viable

mocracy

free

a

ceivable and desirable? Very
well,
it is just this form which is
rig¬
orously and
unequivocally ex¬

But, as we
saw, this is only the first part of

pen, however,
that even within
the national State the Socialist

on

we want economic
Socialist Europe, and
is the
prevailing So¬

in

the Swiss

leave

cannot

regions that minimum of
autonomy
without which
self-

tralized

based

union

federalism is the only form of Eu¬

government

the

regime.

Free

fact which makes it

very

indispensable if

ropean

to

the

cultures.

the

litical union will be counteracted

by the

like the Swiss Union.

central

Socialism,

It may hap¬

to

as

the Socialist economic
system is
prevailing in Europe—as, in some
sort or other, it
actually is—po¬

tions, and cultures of Europe, it
can be
only one which is federal

under

will be the nation.

shall

a

heart.

to

model for the unification of Eu¬

end, like most people to¬
day, in loose and muddled think¬
ing on these matters.
Now, in
we

this

teaches

Union must take

Switzerland is often mentioned
a

ties, languages, temperaments, and

without

because

example

-

-

lesson which all advocates of Eu¬

Generally, this political unit or¬
ganized as a Socialist economy

a

reasoning

■

.

which has given such a
riers of import duties have be¬ the success of the ERP depend®
come
ring to that term.
The Socialism but not both.
relatively
unimportant. on the realization of some scheme
Even after they have been abol¬ of
melancholy consequence is that
European
Economic
Union.
Unfortunately, most Socialists
the difficulties of establishing a
in Switzerland are still behind ished there remains the whole This idea, however, misses the
real community of nations (which,
system
of
.Socialist real point. There is no short cut
the German Socialists in this re¬ formidable
God
to
the noble and
knows, are already
great spect. While
indispensable
preaching Socialism planning and control and espe¬
end of closest economic
enough anyway) are being made and national
coopera¬
planning they re¬ cially the separation of the na¬
tion
of
tional
the European
positively unsurmountable by So¬ assure us that
money systems by exchange
countries.
they want to re¬
cialism.
'
There
is
no
control.
V
All this must be unified
possibility of bringing
spect; the
federal
structure
of
regime

sinister

can

National Socialism

as

Socialism

tions

make

us

Socialism
In

International

and

this convincingly.

prove

enhances

adopt,

also

tionalism

the national scale. That

it

bound

driver

reckless

a

in

no

Socialism is possible only

maniac, but it is not

put

that it

dom,

—

is

there

none

Socialism

of the Paradoxes of Socialism. We
know

State—and

National

well accustomed to most

are

on

Since

point in arguing with

his guard.

We

world

pect

But the Statism of

State?

Swiss

preserved

Nazis.

100% Statism.

Federalism '»

The

33

rope, and it is quite true that, if
there will ever be a political union
of all these different
races, na¬

economic process must be

what

Socialism and International

ropean

the parts. In the latter case, what
bought
there might still be called fed¬
mense
difference between totali¬ by
international
disintegration.
eralism
would
be at best
only
tarian and democratic Socialism, Small wonder that, all interna¬
folkloristic federalism.
That
is
as
far as the motives, the aims tionalist phrases notwithstanding,
the reason why the much-adver¬
and the practical execution of So¬ the grim reality of Socialism is
tised "Federalism" of Soviet Rus¬
cialism are concerned.
invariably severe exchange con¬
sia or Jugoslavia is nothing but
Nobody wants
to
insult the trol, frozen exchange rates, mone¬
a
propagandist fiction which can
representatives
of
"democratic" tary nationalism, bilateralism and
deceive only the ignorant.
That
or "moderate" Socialism by lump¬
the destruction of free multilateral
is also the reason why the Allies
ing them together with Nazis or international trade, "Schachtism,"
in
Germany now discover that
Communists.
The only question arbitrariness, State monopoly of
they
cannot
organize
Western
is whether, in spite of their good foreign
trade,
bullying
of
the
Germany as a Federal State—as
intentions, they will not arrive smaller States, rigid control of
indeed we have every reason to
finally at rather much the same everything which crosses the na¬
wish—and at the same time retain
result if they do not stop in time. tional border, be it goods, money,
the
Socialist ■: economic
system
By referring to the repellent ex¬ capital, men or finally even ideas.
which
they inherited from the
perience of totalitarian Socialism,
In other words: ^Socialism means
defensible

(1645)

compatible with the unity of the
nation.
Inversely, it follows that,
if the unity of the nation is to be

tons

va¬

socialist

riety.

national

it of the

be

>m

other

The German experience teaches
that regional Socialism is in¬

tional

Today

each

Socialism and Federalism

is

Socialism in 1 Suiope

the

across

cialism

decisive,

with

fences of collectivist foreign trade.

is

entering

CHRONICLE

lectivist and autarkic units which

major goal.

our

FINANCIAL

communicated

long been

ple to make
at

&

omy

fell

asunder

Once these have been

however,
tional

the

Europe will
The

dismantled,

desirable

economic

interna¬

integration

of

ensue

automatically.
disruption of Eu¬

economic

is the inevitable consequence
(which, as we have
seen, is bound to be National So¬

rope

of

Socialism

cialism).
moved

The effect cannot be

unless the

suppressed.

lishing
Union

tion)

Any efforts in estab¬

European

a

(or
are

fluous.

re¬

has been

cause

even

a

Economic

mere

either futile

They

are

coopera¬
or

futile

super¬

long

as

a®

National Socialism prevails.
Once
his has been dismantled,
however,

they are superfluous.
calamity of Europe is
and nothing else.

The

real

Socialism

With Herrick. Waddell Co*
fsrwipi

to

The

BEVERLY

Financial

HILLS,

Frederick

J.

associated

with

Wilson

Chrontcle)

CALIF.—
has

become

Herrick,

Waddell
& Reed, Inc., 8943 Wilshire Boule¬
vard.

Mr.

Wilson

with

Conrad,

First

California

formerly

was

Bruce

&

Co.

and

Co.

C. E. Abbett Co. Adds
(Special

LOS

Leighton

to

The

Financial

ANGELES,

McMurtrie

Chrontcle)

CALIF.
has

—

been

added to the staff of C. E. Abbett
& Company,

vard.

3277 Wilshire Boule¬

34

THE

(1646)

and parcel for a long time of
empire. But there are limits to such things—
the more so as the regime in Moscow is itself always under
the necessity of keeping its own subjects undividedly in
support of their ways and their policies. X.
Certainly the hundreds of millions of the inhab¬
Some

As We See It
believe.

important effect as Dr. Evatt appears to

or

Some

good

have been done. No one can

may

hap¬
such machinery in existence.

degree of certainty what would have

tell with any

pened had there been

no

President of the As¬

But the weaknesses 16 which the

,

"great

of what most

manifestation

informed and

persons were sure would block any and all
forts to reach that idealistic state of affairs envisioned

thoughtful

World"

"One

the

of

dreamers

dreams.

fact is,

The

simply stated, that this is not "One World." It does not
greatly whether these great power disagreements
occur within or without the United Nations or whether they

tant

has

are not "completely independent" of it.
The impor¬
thing is that they exist—and that the United Nations
not been able and is not likely to be able to do anything
or

be wise to jump to the conclu¬
growing popular that it is "two
the "East" and the "West."
There is, of

Neither should

which

worlds"
course,

should

-—

denying that Russia and her satellites (or

no
we

her victims)

say,

United States with

on

the

attitude and behavior of what is left of the world
the moment

have

to

importance—except, of

but

■

course,

align themselves with the
,

groups. Viewed
a situation can

seems

secondary significance

or

these peoples may
the other of the two

as

one or

masses

we

who is able to detach himself
from the immediate scene for dispassionate contemplation
is very likely 16 find himself led into an inquiry as to
whether this two-world concept is not even at the present
moment rather misleading. So long as there is war or threat
of war on a vast and cruel scale, may countries which are
afraid that they may become embroiled without being a
party to any quarrel producing it, are inclined to exchange
at least a part of their
"sovereignty," political, economic and
philosophical (or should we say ideological?) for some meas¬
ure of
security. Thus there is what appears on the surface
to be developing a United States, not of Europe, but of a
much larger and more varied segment, or set of segments,
of the earth's surface.

For somewhat the

same

reason, pos¬

sibly, but also because of impotence in the face of over¬
whelming Russian power, a number of heretofore indepen¬
dent and usually self-willed smaller powers are
being ab¬
sorbed into the Russian orbit—and others, for

what different reasons, are
of the globe.

possibly some¬
being threatened in other parts

The Outlook for Interest Rates
their

increased

have

a

that the signers of the Atlantic Pact, for
so-called ECA nations of Europe, or the
of smaller

dimensions

sort of permanent
peace

or

war

are

now

on

example, or the
other groupings

their

way

to

some

federation which will stand through
Just how long they will

in perpetuity.

be able to work together in a semi-federationist sort of
basis it would be difficult to say. Much will
depend upon
the threat from outside and much will
depend upon

the extent of the aid they can obtain from us—that is '*

the price they

exact for full cooperation in
be taken for granted that centripetal forces, merely counteracted not destroyed by
opposing forces at present, will soon or late reassert
upon

the future.

may

But it may

themselves.
Problems of the Kremlin
It would be

similarly foolish to suppose that any bond
"ideology"—that is, devotion to the communistic
philosophy—is very likely to overcome and destroy the
urges of nationalism in the other half of this two-world
planet. It may or may not be possible for the Kremlin by
of

common

such

inhuman

methods

as

it

is

accustomed

to

employ to
bring much, if not all of Eastern Europe more or less perma¬
nently into its orbit—that is to conquer the spirit of these
peoples, or kill them off and replace them, and in this way
make

these

areas

an




divi¬

On

over-all

the an¬
of
the
reached
peak of $34.2 billions in 1944
and dropped to a post-war low of
$8.8 billion in 1947, are continu¬
ing on the upgrade from the an¬
an

integral part of the Soviet empire.

critically said that the "com¬

been

pensated economy" has worked in;
reverse
since 1945, the tact re-,

personal
savings
American people, which

nual

last

billions attained

of $13

rate
year.

Consumer price resist¬

and

uncertain business out¬

ance

look

Treasury receipts from taxes and
sources exceeded
cash out¬

other

lays by some $14 billion. By means
of this surplus, the Treasury was
able

its policy of
redemption of govern¬

to

inaugurate

selective

debt

ment

Management and Interest

Debt

Rates

controlling effect of Treas¬

debt management on interest
is well known.
Despite the

ury

rates

"experts" who said it couldn't be<
% rate on long-term
government obligations has been
the cornerstone of the entire in¬
done, the

structure for several years,

terest

will

continue

all lines will keep

government

counts;

expansion, and
receivable expansion

ac¬
are

bound to be smaller than in 1948

will

which

1947,

or

the

reduce

amounts needed for such purposes.
It

drop in prices will reduce, all

along the line, the amounts cor¬
porations need to carry on their
business.
In
addition, ^declining
prices and uncertain business out¬
look will
cause
corporations to
postpone
other

construction

new

betterments

far

so

as

and
it

A:

VV\:v/>vir:. ;'"\v

SO.

/

'w

which

now

us

the

on

the

can

Because

which

turn

to

of the

are

forces

the

enormous

bring

sums

be

continued, I would place agri¬
price maintenance high
the list of government influ¬
on

interest

a

be

severe

more

par,

despite
and)

better,

or

public

criticism

active opposition from some of the
insurance

a

companies. Viewed

they not only did hot
substantial
portion of

group,
a

rates.

ment

obligations—as

been

might have

'in

particularly

expected,

view of the uncertain international

cultural

ences

at

widespread

invest

required if the
present
policies
of unrestricted
planting and active market sup¬
port at high percentages of parity
may

as

their premium income in govern¬

government can
interest rates.

on

To

the

effect which price has on the total

situation—but actually dumped on
the market some $3 billion of gov¬
ernment
eral
to

obligations that the Fed¬

Reserve

Banks

Since

buy.

were

forced

last

November,
however, few question the ability
or

inclination

the

of

the

govern¬

maintain the rates it de--

ment

to

sires

in

the

markets.

money

and

Considering

capital

past

per¬

credit, we must formance and future probabilities,
add the effects of the government I think we can take it for granted
that the money and capital mar¬
spending and, in addition, the
kets will continue to be managed
powerful effects of the deficit fi¬
and dominated by the government,
nancing which seems inevitable if

of the demand for

current

policies

From

an

are

not modified.

economic

standpoint,

the support of agricultural
t

in

be

This

than the government

life

Influences

Interest Rates

is

humanly possible for them to do

deflation

counter

safely said,

as

on

remembered also that

must be

any

possibility that the
institute meas¬

may

Government

in 1949

facilities

prices from any
But there

will overshoot the mark!

to bear

Smaller

and

to

ures

which

Will Be

to

future.

tions

personally believe that the ex¬
production capacity which is
becoming evident in nearly

now

Let

Capital

for

render

to

support

is always the

I

cess

savings inevitable.
Demand

otherwise

and

the market
price of government bonds.
'
powerful

further upward climb.

which means high wages,
high taxes, and high prices.

economy,

in

increase

further

makes

and 1948,

mains that in 1946, 1947

test
bond market
successfully met last
year
can
hardly be imagined.
Faced with
the dual and mutually contradic¬
tory responsibilities of combating
inflation and supporting the exist¬
ing long-term rate structure, the
monetary
and
debt
authorities
maintained
government
obliga¬

basis,

nual

and taxing

spending

its

policies can have a powerful efiect on the economy.
While it has

and

at

prices
high levels under present con¬

which
bonds

means

will

that

remain

government

protected and

pegged (whether at par
is

under

beside the

or

slightly

point) in the

foreseeable future, and unques¬
ditions
and
outlook
is
indeed
tionably throughout 1949.
alarming, to put it mildly! In ad¬
What influence will the Federal
housing, has created the problem dition to heavy purchases for ship¬
Reserve
System bring to bear on
of rows of unsold houses in many
ment abroad, non-recourse loans
interest rates in 1949?
- ./
of our cities throughout the coun¬
and repurchase agreements in 1948
On Feb. 14, in a statement be¬
try.
This reduces the demand for wheat and cotton alone involve
fore the Joint Committee on the
housing money and also makes nearly $2 billion. These loans and
Economic Report. Chairman Mcmortgage lenders more cautious.
repurchase agreements on wheat
In real

estate, particularly, price

weakness

especially

From this

All this

gives, or is likely to give, the easy reasoner
false impression. One would be rash indeed to assume

over-all basis, the Treas¬

an

by

foreseeable

promises to be smaller than in
1948.
Inventory expansion, plant

person

On
ury

The

may

The demand for capital

thoughtful

re-arm.

everyday affairs.

conclude that we are not living in any
definitely and permanently fixed two-world system—and of
course no such system offers a millennium.
Another question
is, of course, whether in light of what has been said any
one-world system would either.

in this way, or viewed in any way, such
scarcely be regarded as reassuring.
Fear of War

But the

many cen¬

any

dend rate.

number of allies and, in a sense,

a

another for

or

(Continued from page 11)

dependents on the other, are "lining up" in ominous
fashion.
Certainly the appearance is thus given that
the whole world is dividing itself into two camps. The
at

are

them

hand, and the

one

be enslaved. They

a sense

suppose

we

is

now

of the

there

Thus

at all about it.

sion

many

tical

by

very

we

in

sort

They probably are not as much in¬
in who these masters are—and

the past.
as

one

signatories to

to aid the European

"conquest" of such areas really means in terms of prac¬

ef¬

matter

are

They

not too much interested in whether
such masters. But this st^te of affairs is
without doubt in part due to the fact that the mastery
has not in the past directly touched the ipasses in these
vast lands.
It remains to be seen what communist

disagreement" trouble is but a simple

power

may

turies in

Not "One World"

immediate

can

in this fashion.

terested

meaning of the term.

This

not be dealt with successfully

itants of the Far East

have had masters of

sembly points his finger are fatal to any hope that
through it, or through any other mechanism, this may
be converted into "One World" in any really significant

and

parts of them were part

Czarist

the

(Continued from first page)

profound

Thursday, April 14, 1949

CHRONICLE

FINANCIAL

&

COMMERCIAL

quick

on

new

of

survey

Cabe

sup¬

ply and demand factors, it seems
clear that the total of capital will
be

more

normal

in

the

than

needs

adequate
that

may

for any
develop

cover

ton,

364,300,000 bushels;

some

heavy

on cot¬
bales.
With
either
already

5,000 000

plantings

made, or in prospect, on all the
major farm crops, with prices fall¬

reiterated

the

intention

of

the Board of Governors to "lower
reserve

adjust

requirements and similarly
on installment

regulations

and stock market credit in accord¬
ance

with

the

needs

of

business

in the next few ing despite government support,and
finance."
Since
then, his
months.
There is, however, one and with
demand, particularly for¬
statement has been implemented
qualification which must be made eign demand, weakening sharply,
regarding this conclusion—a re¬ what the final outcome will be, by the relaxation of Regulation W
and the lowering of the margin
vival
of
the
upward trend
of no man can say. But of one thing
prices might upset it. While I do you may be certain: it will involve requirements on stocks to 50%.
Reduction of reserve requirements
not expect the
forces of infla¬ heavy expenditures by the gov¬
of member banks,
also, is immi¬
tion, at least, in the immediate ernment for faie farmers.
nent; it seems to be merely a ques¬
future, again
to dominate * the
Any broadening of social secur¬ tion of the best time, from the
economy, the possibility of such
ity legislation will have both di¬ standpoint of public psychology,
a development is inherent in our
rect and indirect effects on spend¬ to make
the announcement.
present economic situation. We
ing and saving patterns. On the one
The Federal Reserve' System is
are
so
delicately balanced be¬
tween inflation and deflation that hand, taxation \$11 be increased; thus definitely committed to an
and, on the other, people will easy money, low interest rate pol¬
during this transition period a
spend more freely when they feel icy, and what is more important,
sharp increase in foreign assis¬
that
the
government will take they have the power to effectuate
tance, a substantial acceleration
care of them in the future.
such a policy..
in military or veterans' spending,
As only half of,
vi
i
Increased government expendi¬ their $23 billion of gold certificate
or
a
sizable expansion of social
security benefits could revive in¬ tures for public housing, and the reserves is now being used, they
economy

they
still fear the possibility of further

which the support is ex¬ have sufficient "free gold" to dou¬
tended, will affect interest rates. ble their deposit and note liabili¬
Also,
the North;. Atlantic Pact, ties if necessary to carry out their
which will increase the
tension policy. I hasten to say that I do
with
Russia and thus
probably not think any further Federal Re¬

inflation.

lead to increased expenditures for

flationary
carry
the

pressures
economy

which might
along with

them.

The President and his

nomic

advisers

insist

If this seems farfetched

in view of the spreading
you

eco¬

that

deflation,

should call to mind that the

present Administration is definite¬

ly

committed

to

a

"high

level"

basis o$i

defense at hornet In

addition, the
Pact will undoubtedly be imple¬
mented with legislation providing
for substantial military lend-lease

serve credit expansion will be
quired to keep rates low*

Now let

ply

this

us

be

pattern

re¬

practical and ap¬
of natural and
special fac-

artificial forces to the

Volume

tors

Number t7.94

169

which

exist

in

•

"

>

the

of

some

ijelds of lending.

THE

and .the
term

.

stability

of the longest-

amounts

government bonds under such

conditions.

In .mortgage

COMMERCIAL &

upon

FINANCIAL CHRONICLE
plant

and

equip¬

ment, which, are "bound to make
possible increases in efficiency.

lending, increasing
substantially stiffened
rates throughout the -country. This
trend may be expected to-continue
unless the government intervenes
in some more 'effective way than

In; conclusion,. the money and Certainly a gain in efficiency of
capital 'markets during 1949 — as about 3% over 1948 is a reason¬
during the past few years—will be able estimate.. That would mean
controlled by:
an increase in
;gross national prod¬

is

demand for it.>/.

risk

-has..

now

anticipated.

-

.

The

1.

v

,

...

.

,

supply of capital and the

"

Increasing
cause

-

will

risks

likewise,

over-the-counter
to

continue

firm,

rates

but

government

more

a-

marked effect will be the - widen¬

The position of the

2.

Treasury,

which will determine whether the

to

will

borrow

or

will

redeem

outstanding debt and what
ing of the spreads between the method of refunding maturing ob¬
various categories on the basis of ligations will be used.
"
the risk involved.

;

3.

The

policies of the monetary
; As -stated earlier,
government authorities, which will depend on
bonds will remain pegged; in fact, business conditions and outlook.

issues

and

thus

exerted

.

of

family has scarcely
changed. The backlog of housing
an
increase in unemployment is demand is also still high. Unfor¬
about $10.3 billion a year.
tunately, the figures on the in¬
crease in dwelling units in recent
in
vyears leave much to be desired.
How might an increase of ap¬ There is no doubt, however, that a
proximately $10 billion in sales at large number of American famil¬
present prices be accomplished? ies are living in houses which are
The present outlook is that there quite unsatisfactory to them. It is
will be'no net purchase of Ameri¬ also clear that the incomes of a
can goods and services by foreign
large number of families are suf¬
countries beyond the goods sup¬ ficiently high so that the families
plied by the Government of the would be willing to buy new, and
United States through the Mar¬ better housing at pri c e s only
shall Plan, In 1948, for example, slightly below present levels.
net
since
the -number
of
foreign investment by the Finally,
United States was only $1.5 bil¬ families will increase by about
lion, and during the latter half of 800,000 to'900,000 during 1949, con¬

obligations

are

While I do not expect fhe

.

rate regardless of economic de¬
velopments,
which
means
that
they can view the long-term gov¬
ernment issues as highly liquid
and utterly risk less;
This being
the case, they will undoubtedly
insist on a higher return on cor¬
porate obligations, as even the
triple A issues lack the liquidity

important factor

in financial' af¬

billion in sales of goods to govern¬
ment

and consumers will be nec¬
analysts and
investment analysts will again, as essary to prevent a rise in unem¬
in the past, have to work overtime ployment. Purchases of goods by
to
differentiate the sheep from the local, state, and national gov¬
the
goats.
This is a challenge ernments are rising. The Federal
which the good banker will wel¬ Government alone is likely to take
come
the examiners will'take $6 billion or $7 billion more of
goods in 1949 than in 1948, and
care of the others!
local and state governments are
likely to take about $1 billion or
$2 billion more. This means that
consumers will need to buy about
$9.6 billion to $11.6 billion more of
(Continued from first page)
goods in 1949 (at present prices)
time in the last three years that than
during the second half of than in 1948. In other words, in¬
retail sales in any month have 1948.
dividuals who had personal in¬
been less than in the correspond¬
comes
last year of about $213.6
\
II
ing month of the previous year.
The drop in the willingness to billion, paid $21 billion in taxes,
and
spent about $177.7 billion on
The drop in willingness to spend spend means
that, for the first
consumer goods, will need in 1949
extends to business enterprises as time since the period of conver¬
to
spend $187 billion to $189 bil¬
well as to - individuals.
The de¬ sion from wartime to peacetime
lion on consumer goods at present
clining willingness of business production over three years ago,
prices
in order to prevent a rise
concerns to spend is indicated by
business is confronted with the
in unemployment.
the fact that they are less and problem of preventing a rise in
less willing to seek outside money unemployment.
In order to pre¬
IV
in order to spend
beyond their vent a rise in unemployment in
Can business persuade consum¬
incomes.
In 1947, for example, 1949, business will need to pro¬
ers
to increase their takings of
out of every dollar spent on in¬ duce and sell about $265 billion
goods by $9.6 billion to $11.6 bil¬
vestment
by
corporations,
54.4 in goods at present prices, or about
lion at present prices?
There are
cents was provided
by internal $10 billion more than it produced
a
number of important favoring
funds, such as depreciation allow¬ and sold in 1948. Why must pro¬
circumstances.
ances
or
sales
increase
plowed back earnings, duction and
by
(1) Personal incomes after taxes
and
45.6
cents
came
from
the about $10 billion in order to pre¬
have a higher purchasing power
outside. In 1948, 66.9 cents out of vent a rise in unemployment and
than a year ago. As I have pointed
every
dollar of investment ex¬ what are the chances that busi¬
out, these incomes had about 4%
penditures by corporations was ness will succeed in increasing
greater purchasing power in Jan¬
provided by internal funds and output and sales sufficiently to
uary 1949 than in January 1948.
only 33.1 cents by outside money. prevent a rise in unemployment
(2) The rate of personal spend¬
in 1949?
Particularly significant is the
ing is still low in relation to per¬
There are two principal reasons
drop in new contract awards and
sonal holdings of cash and demand
new housing starts.
Expenditures why production and sales must deposits. In 1939, annual expendi¬
on plant and equipment are
still increase by about $10 billion in tures on consumer goods ran about
order to prevent a rise in unem¬
funning above the corresponding
six times personal holdings of cash
period of last year, but new com¬ ployment. The first is that the and demand deposits; in 1948, they
mitments to make such expendi¬ labor force may be expected to were only 3.3 times holdings of
tures are considerably less than increase
by about 600,000—the cash and demand deposits.
normal amount.
An increase in
last year.
Total contract awards
(3)
Consumer short-term in¬
of about 600,000 debtedness, although considerably
in the first two months of 1949 employment
would raise the total gross pro¬
larger than several years ago, is
were
19% below the correspond¬
duction about 1% or $2.6 billion still low in relation to personal in¬
ing period of 1948 and private at
present prices.- The second is comes after taxes.
In December

Less
~.

fairs.

The

credit

—

Spending, Threat to Stability
,

.

*

'

"

awards

contract

low

vate

1948.

In

were

29.9%

be¬

February, 1949, pri¬

contract

awards

were

39%

that
in

there

efficiency

The

New hous¬

ing starts in January, 1949
5%

below

February,
below

February,

survey of
merce

they

were

1948.

The

7.3%

joint

the Securities and Ex¬

change Commission indicates that
corporations expect to spend about
,

.,

14%

less

during

on

the

,

plant and equipment
second

a

increase

1949 over

increase
year.

has

rise

half

of




1949

has

been held

down

in effi¬

by material

shortages, by the fact that
number

of workers were

a

large

holding

jobs at which they had no experi¬
at least

recent

total

consumer

credit

been sonal income after taxes in

I believe that

more-than-normal

1948,

1948. 8.0% of the annual rate of

were

the Department of Com¬

and

2%

some

ciency is to be expected. During
1948 and in the last several years efficiency

January,
1949

a

be

in

normal

about

below February, 1948.

will

experi¬

per

„

they may be expected to do
opposite. By now, the insurance
companies must realize that the competition has returned and the appears and gross private invest¬
monetary and debt authorities are" resulting weeding out of the in¬ ment drops by $6.8 billion, an
determined to maintain the 2Vz% efficient makes risk once more an increase of approximately $18.6

year

the

cars

.

billion, in expenditures on
another $3
plant,
equipment, and housing
business readjustment to develop seems likely.
If net foreign investment dis¬
into a depression, old-fashioned
Risk

matter.

siderable
will

be

construction

of

houses

to prevent the
shortage from becoming

necessary

housing
acute.

V
.

.

How

can

to

sumers

of

business persuade con¬

increase

their takings

goods by $9.6 billion to $11;6
It is obvious that this is a

billion?

problem of marketing—that is, a
problem of bringing out new and
more attractive goods and quoting
prices which consumers find
more acceptable.
I wish to say a few words in
particular about the problem of
prices. A good way of measuring
the willingness of individuals to
spend money is to compare the in¬
crease in their outlay on consum¬
er goods with the increase in their

after taxes.

incomes

quarter of 1946 and the
fourth quarter of 1947, the annual
rate
of
personal incomes after
taxes rose by $13.3 billion, but the
annual rate of expenditures for
consumer

billion.

goods increased by $14.1

This meant that there was

$1.06 in expenditures on
consumer goods for
every dollar
rise in incomes after taxes.
Be¬
tween the fourth quarter of 1947
and the fourth quarter of 1948,
however, an increase in the an¬
nual rate of income after taxes of
rise of

a

$18.5 billion produced a rise of
only $9.9 billion in the annual
rate of expenditures for consum¬
er goods—an increase of 54 cents
in
expenditures for consumer
goods for every dollar rise in
income after taxes. This drop in
the

willingness

reflected

is

credit in

spend money
in the fact that

to

also

increase

the

in

ence,

or

no

and by the fact

that many

present time there
passenger

are

cars

level.

total

consumer

the four months, Octo¬

Some

these

of

industries

may need to increase prices to
offset the rise in costs during the

last three years. In addition, many
concerns are not

to

charging enough
high replacement
their plant and -equip¬
the

cover ;

of

costs

ment.

Sooner

prises
prices

must

later these enter¬

or

either

raise

their

achieve substantial

or

omies in

econ¬

operating costs.

Although further price increases
in

industries

some

immediate

the

calls

are

necessary,

situation

business

general rule for im¬
provements in quality and cuts in
prices. Enterprises will be as¬
as

a

sisted in giving consumers more
for their money by the increases
in

.efficiency which Tiave been oc¬
curring and which can be achieved.
Improvements in efficiency are
being facilitated by the -better
flow of raw materials and, as I
have indicated, by the growth in
the experience of supervisors and
of the work force.
Furthermore,
before managements decide that
the cannot afford to adjust prices
to the drop in the willingness to
spend money, they should con¬
sider the consequences of not re¬
ducing them.
!
If prices are not reduced, many

people will
than their
will

in

that expenditures drop,

mean

they drop, profits will also

and as

fall.

to spend less
incomes. This

begin
recent

not know which

do

I

drop

greater — a

profits would be

about the
physical' volume of goods

drop resulting, from
same

sold at

smaller spread between

a

prices or

direct costs and selling

resulting from a smaller
physical volume of goods sold at
an unchanged spread between di¬
rect costs and selling prices.
I
suspect that for business as a
Whole the difference in profits be¬
tween preserving volume through
accepting smaller margins and
sacrificing volume in order to pre¬
serve margins is not great.
Cer¬
tainly it is better for business in
the long run to sacrifice margins
a

drop

in order

than

to preserve

order to

employment

employment in

sacrifice

to

margins.

preserve

Fur¬

January, 1949, was thermore, if b u s iness .adjusts
less than half the prices to induce individuals to
increase in the corresponding pe¬ spend a higher proportion of their
incomes on consumer goods, there
riod of a year ago.
is a good chance that the greater
It is plain that price policies
which were appropriate when the pressure for lower costs will stim¬
rate of
consumer
spending was ulate efficiency and help enter¬
1948

ber,

to

substantially

than consumer in¬ prises preserve the margins be¬
tween average direct costs and
appropriate when
prices.
consumer spending is rising far
less rapidly
than consumer in¬
During the last three years the
comes.
The problem is obviously support of the boom has varied
to persuade consumers to raise from
year to year.
In 1947 con¬
their rate of spending. As I indi¬ sumer demand and foreign de¬
cated a moment ago, business has mand were
particularly important.
two ways of doing this—bringing In
1948
these two dropped
in
out new and better goods and relative
importance and private
investment and government pur¬
making reductions in its prices.
Many
managements will not chases of goods and services in¬
like the idea of reducing prices creased. The following table shows
rising

comes

to

faster
is

not

demand. the changing pattern of demand
will argue during the last three years and
they cannot afford to reduce the approximate pattern which

stimulate

Sqme
that

consumer

managements

(Billions)
1

per¬
-1946

com¬

parison with 12.0% in 1940.
(4) The backlog of consumer
demand for some products is still

million

cially those which sell at publicly
regulated prices, have not been
raise their prices during
the last three years in proportion
to the advance in the general price
able to

was

large.
Automobiles are an ex¬
ample. It is true that considerable
progress has been made in in¬
creasing the number of auto¬
mobiles in the country.
At the

industries

sales have not changed. It is also
true that some industries* espe¬

Between the

fourth

Total gross national product
Consumption expenditures.
Gross private investment—
Purchases of goods by govt.
Net

foreign investment—-

209.3
147.4
26.5
30.8
4.7

100.0

231.6

J 00.0

254.9

100.0

265.2

100.0

70.4

164.8

71.1

177.7

69.7

188.3

71.0

12.7

30.0

13.0

39.7

15.6

32.9

12.4

14.7

28.0

12.1

36.0

14.1

44.0

16.6

2.2

8.9

3.8

1.5

0.6

0.0

0.0

will be needed in 1949 to prevent
a

Q4.Q

(1948,Prices)

-1948-

-1947-

rise in unemployment.

ture, and yet if the country enjoys
peace for the next several decades,
long-term trends seem

several
VI

about 34
What long-term trends can be
registered
concerns
were
compelled to use in comparison with 27.4 million in distinguished in "the American
inexperienced supervisors. Fur- 1940. The average age of automo¬ economy? No one, of course, can
thermGrej
during the last 2lh biles has increased from 5.7 years pretend to see very completely
years,
industry has spent large in 1940 to about eight years at the the economic picture of the fu¬
ence

small and that in many

Although average real income per costs per, unit of goods sold have
family is about 25% greater than advanced as rapidly as selling
in 1940, the number of cars has
prices during the last several
not increased as rapidly as the years so that
profits per dollar of
number of families and the ratio

t]he spreads between the different Market Committee of the Federal iness is also likely to be less in
ratings as risk increases. In par¬ Reserve Banks should be-able-to 1949 than in 1§48. Certainly the
sit back and feed out a large part accumulation of inventories
may
ticular, I expect a widening of the
of the bonds they had to
buy in be expected to cease. The increase
present artificially low spread be¬
tween the "triple A corporates and the heavy going in 1948. Impass- >iri-inventories absorbed $3.8 bil¬
tire government issues.
Whereas ing it should be carefully noted lion of the output of industry in
last year the insurance companies that they have already-disposed-of 1848.- Furthermore, a small drop
sold governments and bought cor¬ most of their bank-eligible bondsK of nearly 10%, or approximately
porate

mand for automobiles still exists.

billion

present prices of about $7.7
a
year.. Hence the total
rise in output needed to prevent

35

beginning of 1949. Hence an ab¬ prices—that their margins pre too
normally large replacement de¬ small, jit is true that margins are

uct at

While all these factors are
1; see no likelihood that the policy
which was followed so rigidly in not
entirely clear, particularly
1948 ^will be abandoned, or even whether we shall have
a budget
materially modified in the next surplus or deficit financing, our
few montns. Municipals, however, analysis has shown they all point
should be subjected to increasing to little change, if any, in the rates
scrutiny. -They should no longer on "money" obligations. As I see
be bought,-or held, blindly.
Once it, government debt management
has
weathered
an
"again; quality will tell!
r
extremely the year there "was no net foreign
As for the trend on * corporate severe test with flying colors. For investment by the United States.
the next few months, the Open The consumption of goods
by bus¬
issues, I anticipate a widening of

double pressure on the spread, this

(1647)

highly

The

probable.

six appear to me to be

probable:
(1) Government
will rise about

as

(Continued

following
the most

expenditure^

fast

as

on page

produc-

36)

.

36

Less
and

possibly

faster.

During the last 60

Hence

the cost of government chargeable

trial

worker

decline

,

unit

of

and

may

eacn

will
rise.. As

output

plant

the national product.

of the

Back in 1910
expenditures of he Federal Gov¬
less than 2% of the

were

national

gross

1929,

in

product;

they were 3.5%; in 1939, 1Q.6%;
in 1948, 14.5%; in 1949, tney will
4b>e

over

the

local

4have

The expenditures of

17%.
and

also

state

governments
rising faster than

been

There

fast

have

as

been

pro¬

great

year

—

'30s

and

during part

period. In 1929 indus¬
plant
and -.equipment per
was

little

a

than

more

er

around

12%

of

the

national

net

product between 1879 and 1929 to
the

increase of capital. Over half
increase in capital during

the

period, however, had to be
devoted to provide plant and
equipment for the new members
the

of

the

labor force.

labor

In

will

force

the

future

stands out

in

time when govern¬

expenditures in countries of

European civilization

were

low by

historical standards in relation to

plant and

worker.No

•

grow

more

equipment

per

V''"'."

-

estimate accurately
the rate at which output per manone

can

production. I see no early pros¬ hour is likely to rise. The Coun¬
pect, however, that the ratio of cil of Economic Advisers has re¬
government expenditures to pro¬ cently suggested that the increase
duction will drop. New demands
may be about 2.5% a year. This is
are constantly being made on the
a conservative estimate.
With re¬
government. Military outlay will search expanding more rapidly
rise, lend lease will be provided than in the past and with capital
for Europe, a support program for
per worker rising faster than in
crops will be maintained, expendi¬ the past, the increase in output
tures for roads and many forms of
per manhour may easily run 3% a
public works will greatly increase, year, and possibly 3.5% or even
there will be large subsidies for more.
/
housing, and aid to veterans, the
(4) The hourly earnings of em¬
aged, the sick, and others will be
ployees will rise faster in the fu¬
Increased.
The philosophy of the
ture than in the past, and prob¬
times requires that help be given
ably faster than output per manpeople who are in need and un¬ hour. Hence
labor cost per unit of
able to produce.
In 1929,' pay¬
product in the economy as a whole
ments to persons in need repre¬
will probably rise over the long
sented about 1.5% of personal in¬
run.
During
the last
hundred
comes; today they represent over
years hourly earnings have risen
5% of all personal incomes. The
at about the same rate as output
policy of giving to people in need
per manhour. At any rate the ad¬
is subject to
great^imses, but it is vance of wages during this period
inevitable in a humanitarian com¬
has not been so fast as to bring
munity. Fortunately, some of the
about much of a rise in the
gen¬

government

expenditures, such as eral
price level — though it has
those on roads and on
research, been fast enough to
prevent a fall
are
highly productive and thus in the
general price level. In other
help to increase the national prod¬
words, the gains of technological
uct. It is likely that the
expendi¬ progress have
gone in the main to
tures of the Federal Government
employees, not to consumers.
alone will
regularly run well over
one-sixth of the
During most of the last hundred
gross
national
product. £his means that by the
time that the gross national
prod¬

years

uct

future there will be

has

reached $300 billion, the
expenditures of the Federal

cash

Government
running

will

be

regularly

over

$50

billion

well

a

year.

(2) The rate of taxation will not
drop and may slowly rise. This is
„

almost inevitable result of the

an

huge demands being made

on the
If increases in taxes

government.
are

necessary, they will fall in the
main upon corporations
and upon
persons in the middle income

groups.

These

sources

of

Which

are

the

additional

two

large

revenue

strong/ unions

limited to

in

most

or

a

industries.

believe
able

have
been
few industries. In the

that

strong unions
Many people

unions

will

willing to push

however, hourly earnings in
ufacturing

increased

between 1947 and 1948, 8.7%. This
around three to four times as

fast

as

output

last

several

manhour

per

likely to grow.

years

have

been

favorable to increasing
both money wages and prices and

last

any

additional revenues which
may be
necessary.
♦

(3)

rise

Output
more

per

manhour

about 2%

a

will

in

the future
In the past, out¬

than in the past.

put

manhour

per

rapidly

has

increased

This has been

year.

be

much

slower

several

the

than

of

rise
run

will

during the

Nevertheless

years.

the

difficulty in believing that
strong unions which are likely

to exist in American

industry will
pushing up wages
no
faster than output per manhour. Consequently I reach the
be content with

conclusion

that

labor

costs

per

of product

are likely in the
partly by industrial
partly by the in¬ long run to rise.
in industrial
(5) The long-run movement of
plant and
equipment per worker. For some prices is likely to be upward. This

research

and

crease

time

expenditures on
industrial
have been
growing

is

almost

inevitable

if

hourly

research

by earnings rise faster than output
They were per manhour. The prospect that
high in 1940 the long-run rise in prices will
as
in
1920
and
they are now be upward is of great importance.
double prewar. The growth of in¬
Although the economy has fre¬
dustrial research is reflected in
quently operated during short pe¬
the fact that
engineers, physicists, riods under conditions which led
$smd chemists for several genera¬ most people to expect a short-run

leaps

and

about

nine times

tions

have

bounds.

been

10 to 14 times

as

fully employed.
eral

years

the

as

increasing from
fast as the gain¬

rise in prices, it has not operated
under conditions which led the

In the last

community to expect

Federal

sev¬

Govern¬

ment

has
greatly increased its
support of research. Much of the

work done with government
sup¬




continue
of

source

be a
funds.

to

corporate

vVuh the labor Jtorce growing more

slowly in the future than, in the
past, funds from life insurance
companies, retained earnings, and

price level will eventually
believe, by the ex¬
pectation of a slow rise in prices.
Even if prices increase at only
2% a year, the price level would
roughly double in a period of 40
years—the working life of most

There is always the possibility, of

people.

course,

be replaced, I

|

s.:,.

v

:

(

The share of employees in.

(-u)

rise

in

prices.

munity
more

or

In

seems "to

less

a long-run
fact, the com¬

have

taken

for granted

that

it

in

the long run the price level would

continue

to

25%

of the national

income went

to

property owners in the form of
rent, interest, and corporate prof¬
its.
Today
that
proportion
is
around one-sixth or one-seventh,
depending upon how one measures
the

national income.

It may seem strange that a rise

in capital per worker should be
accompanied by a decline in the
proportion of the national product
going to property. The explana¬
tion is simple. It is that capital is
not easily substituted for labor.
There
that

is,

of course, a possibility
growth of industrial re¬
cause
capital to be¬

the

will

search
come

easily substituted for

more

If

labor.

it

becomes

increase in

an

sufficiently

raise

will

share

capital

worker

per

than reduce the

rather

directly from the

general public will make it pos¬
sible for capital per worker to
grow

rapidly

as

.

that

in

as

the

past.

will

companies

suc¬

in

ceed

tapping 'important new
sources of funds by bringing out
new
types of securities, such as

Consequently,

conclude

that

the

of

trends

must

one

past

likely to continue, and that as
capital per worker increases, the
share of property in the national
income will slowly decline.
are

employment,
the thirties

manhour

per

rises

rapidly, and
is maintained,

employment
standard

of

full

the

living will also rise

rapidly.
is easy to

It

about

the

the

be too pessimistic

long-run

pansion.

of

people are
American industry's

of

unaware

prospects

Most

economy.

In 44 out of the 60 years
1889 and 1948 inclusive,

great growth of technology gives

between

industry

the national

far greater capacity to
adapt itself to new conditions than
it

has
Let

a

possessed in the past.

ever

summarize these obser¬

me

vations

dollars

of

power,

was

than

greater

(1)
Government expenditures
likely to rise as fast as the
output of the economy and pos¬

ing the 40

sibly faster.

terms of present dollars)

(2) Tax rates
high
(3) Output
as

likely to be at

are

they

as

are now.

(4)

per

Hourly earnings

likely

are

increase faster than output per

manhour.

(5) Prices

likely to advance

are

/

■

The share of employees in

(6)

national

to grow

faster than it did dur¬

no

between 1889 and
1929, it would be about $3,100 (in

This

years

would

mean

by 1980.

annual

an

in¬

of about $9,300 for a family
of three.
If the growth in the
future were to be around 3% a
come

manhour is likely
to rise faster than in the past.
to

the

Even if output per capita were

are

least

in

preceding year.

long-term trends:

on

product, expressed in
constant
purchasing

product is likely to

year, per capita income by 1980
(in terms of present dollars) would

be

about

for

a

$4,250, or about $12,750
family of three. This amount

might well be regarded, I think,
as

reasonable

a

It

economy.

for

the

within

the

target

is

well

grow.

range

By far the most important item
this list is the prospect that
output per manhour will grow

provided the country is fortunate
enough to enjoy peace and pro¬

in

more

rapidly in the future than

in the past.
the

This is important be¬
rate

which

at

output

manhour changes determines

what

happens to the
living in the

average

standard of

commu¬

practical

of

the

vided

achievement

people of the country

understand

that their well-being
depends fundamentally upon the
productivity of industry and are
willing to make the encourage¬
of

ment

productivity

principal

a

objective of public policy.

V*

tions of mine concerning probable

long-run trends make

capital

worker

You

sense.

will have difficulty in

seeing how

can

be

ex¬

pected to increase if taxes

per

unit

of

per

product

labor

continue

rise.

My conclusions

the

price level will

that

assume

be

per

to

permitted to adjust itself to in¬
in

creases

If

costs,

is

it

al¬

not

lowed to do this, then these views

trends must be dras¬
tically revised.;,
-,
s;
of long-term

concede

I

investment

from the

the

that
funds

likely

are

to

in

sources

the

quite

be

future

In

funds.

willingness of individuals to

invest

has

investment

of

sources

The

American

in

been

very

Depression—Neither
Inevitable Nor Probable
(Continued from

duction

methods, and increased
the supply of goods placed on the
market for eager buyers.
Farm
output has also increased sharply,
in part because of good weather
but also because of increased
of

We

the

made

urgent

good

backlogs

of

clothes,

house

the new
they have been

new car or

which

for

corporations

waiting.

Businesses managed

low and is likely

increase

their

inventories

new

they have established

groups

of individuals

be

per¬

mal

suaded

to

of

cor¬

become

can

owners

estimates

The

the

of

Securities and Exchange Commis¬

indicate

sion

that

for the

period

1933 to the end of 1948. there
a

net drop

of
demand

many

left by the war.
Many consumers
have at last managed to get the
new

was

of nearly $700 million

in the investments

of individuals

to

until

more

nor¬

relationships
with
sales.
Nearly all the backlogs of demand
for soft goods have now disap¬
peared.

Even in the

of most

case

durable goods

the backed-up or¬
ders of recent
years
have dis¬
appeared. The day may come soon
when one can even buy one of the

in the stocks and bonds of corpo¬

"big three" automobiles and drive

rations.

it off the showroom floor.

last

Indeed, in 10 out of the

16

this

in

bonds

and

investment

the

years,

individuals

corporate

diminished.

of

stocks

During

period, however, the in¬
of iindividuals in pri¬
life insurance were booming.

same

vestments
vate

Between

1948,

1933

and

investments

the

of

end

of

individuals

in life insurance and annuities ac¬

for

counted
sonal

be

an

$36.7

savings.

annuities

billion of

per¬

Life insurance and

will

likely continue to

important

source

of invest¬

ment-seeking funds.
Corporations
nanced

their

a

,

have

always

considerable

capital

back earnings.

needs

by

part

were

profits.

1

of

plowing

Indeed, during the

period 1910 to 1929, retained
ings

fi¬

about

Retained

52.3%

earn¬

Another factor in
pressure

total

earnings

will

in the
have been growing up

to

lies

enlarged

money
supply.
issues of the war
period were the basis for a great
increase in bank deposits.
The
war thus left us with a supply of
money
which
was
abnormally
large in relation to the volume of

The huge bond

business \we were doing.
Con¬
and businesses were un¬

sumers

usually liquid.

Since the war the
increase in the money supply has
been

relatively small; in fact, our
supply of money has declined
slightly in the last year.
At the
same

time

business

the

has

dollar
been

volume

greatly

panded, partly through price
creased

page 13)

and
partly
production.

through
As

a

to the value of output

money

and

income is

from what it

(2)

not very

Consumer

spending

of
ex¬

in¬
in¬

result

the present relation of the supply

war.

business

and

have

different

before the

was

declined

slightly*.

Consumers'

expenditures

have

fallen

slightly

recent

off

Total

January, 1949,

in

retail

were

sales

in

about 2% be¬

low sales in

ably
a

January, 1948. Prob¬
significant is the fact

more

that

consumers

smaller

are

share

now

of

spending

their incomes

than in earlier postwar years.

1947,

for

example,

spend 95%

In

consumers

of their incomes after

taxes, and saved only 5%, In the
fourth .quarter of 1948,
on
the
other hand, they spent about 91%
and saved 9%, and the share of
income spent apparently has not
increased

far in 1949.

so

There has also been

a reduction
in the rate at which businesses are

spending
January,

for

inventories.

In

1948,

inventories

in¬

creased in value

reducing the

demand

we

creases

of

of

fact that
our

of

months.

have

to continue to be low unless

porations.

use

machinery and better farming

methods.

different

in the past.

sources

of

fact, during the last 15 years there
have been important changes in
the

A

not drop and ii
unit of product

do

costs

r.

the experience of

as

shows. >-If output

ing capital-saving inventions. The

per

Many of you| I am sure, will
question whether these observa¬

rapid rise

a

capacity for growth,
cally scarce, there is the possi¬ and have difficulty in visualizing
bility that industry will be able the results of growth. The typical
to meet the problem by develop¬
behavior of the economy is ex¬

cause

VII

pro¬

manhour may be ac-;
companied by a high level of un¬

tremendous

will

for labor.

important because

ing funds should become chroni¬

slowly.

substituted

and

increases

vided reasonably full employment
is maintained.
This last proviso
is

the

easily

manhour

per

in output per

in the national
income.
At
present,
however,
there is no evidence that capital
more

Regardless of the trend of
or-prices, the standard of
living will rise provided output

taxes

funds obtained

of property

be

nity.

term loans from banks plus some

to substitute capital for labor,

easy

have

unit

made possible

un¬

usually

ernment

of

is

Undoubtedly the

in the long

obtain most

and

is

also

will

man¬

11.9%

money wages

Con¬

wages

faster than the rise in output per
manhour. Between 1946 and 1947,

undoubtedly

politically weak.

no

trie

in

be

not

up

sequently they are the part of the
community from which the gov¬

are

of

undoubtedly
major

rise and the share of propertywill continue to drop. This will preferred stocks Which are at¬
be the result of the rise in capital tractive to investors of moderate
means.
And if investment-seek¬
per worker.
Back in 1880 about

slowly than in the past. Hence a
given rate of saving will make
possible a higher rate of increase

as a

much. This ex¬
long-run cnange

very

Thursday, April 14, 1949

the national income win

as large as in 1879. This rise
plant and equipment per work¬
was made possible by devoting

changes during the last few cen¬
turies in the relationship between
government
expenditures
and
production. The 19th century
ment

CHRONICLE

twice

this

duction.

FINANCIAL

in

The time may eventually come
when the expenditures of govern¬
as

at

war

worker

of

ment will not rise

a

the

of

trial

the national product.
.

per

increasing

though there
were serious interruptions to this
increase during the great depres¬
sion

.

been

change

pectation

indus¬

years

equipment

and

has

about 2%

every, one knows, for several
generations government expendi¬
tures have increased faster than

ernment

not

port nas applications for industry.

against
not

&

Spending, Threat to Stability

(Continued from page 35)

tion,

COMMERCIAL

THE

(1648)

billion.
ever,

In

the increase

million.
of

by

this

It

seems

reduction

the rate of

than $1

more

January, 1949.

how¬
only $165

was

clear that part

is

building

decline

a

in

the physi¬

up

cal volume of inventories.

Busi¬

ness
expenditures for plant and
equipment seem to be holding up
well thus far, running at about

the level of the latter part of 1948.

(3) Prices
are

of

softening. As

products

many

knows,
prices have declined sharply,
mainly as a result of larger crop
yields.
Farm prices at whole¬
everyone

farm

sale

are

about 15% below those of

last

June.

the

average,

and

are

slightly;

Non-farm

have

prices,

levelled

possibly declining
it

is

probable

next few months

will

that

see

on

out
very

the

further

,

Volume 169

THE

Number 4794

declines, particularly
soft goods.

the

among

ly eliminated. In most lines gray
markets have disappeared. The few
that

left

are

are

shadows of

mere

after the

war.

(5) Production

has

declined,

but only slightly. Along with the

general easing of the
demand has
industrial

of
decline in

pressure

come some

production.

According
to
the
Federal
Reserve
index,
production is down from its peak
of 195 in October, 1948, to 189 in
February, 1949. This is a decline
of only 3%.
Most lines of ac¬
tivity have shared in this decline;
the drop has been largest in the
non-durable goods, especially tex¬
tiles and leather goods.

(6) Construction
remained

high.

tion volume for

volume

has

construc¬

Total

January and Feb¬

this year was slightly larger
than in the corresponding months
ruary

Housing starts so far
this year are running about 5%
below a year ago. 'Recent esti¬
mates predict over $18 billion Of
construction in 1949, almost the
same as a year ago.
The year may
a

year ago.

see

decline

some

in

and some other types

residential

of construc¬

tion, with increases in public
struction.

con¬

(7) Unemployment
has
in¬
creased.
Probably the most dra¬
matic evidence of some softening
in

the

current

been

has

the

business

increase

situation

in

unem¬

ployment. (From just under 2 mil¬
lion in December, unemployment
rose to 2.7 million in January and
to 3.2 million in March.

movement

ward

The up¬

arrested in

was

March, however; figures just re¬
leased

show

ployment
lion.

March

that

remained

at

unem¬

3.2

mil¬

So far this year unemploy¬
has
been
running about

ment

600,000
to
700,000
above
the
figures for the same month a year
ago.
If this same relation to 1948

throughout

should be maintained

the present year,

average

unem¬

the

we

of

rest

have stabilized.

the

year,

possible. Which ac¬
occurs
depends in large

tually

million,

we

or

about 5% of the labor
to now

In other words, up

force.

have

had

a

rise

could be considered

from

an

what

abnormal¬

ly low unemployment figure to
figure which is at or close to
normal high employment level.

1

a
a

What Are We Now?

which
Get Us into

Could
It

Depression?

a

is

certainly .possible for us
to have a depression. There are
many ways to get into a depres¬
sion

and

have

we

used

record

we are

I will

give

say

this year repeats on a somewhat

scale

larger
a

what

happened

on

smaller scale in 1947. What has

happened so far and I repeat so
far, has not been serious in itself.
It has given us higher productivity
and has ended at least temporar¬
ily the evils of continuing infla¬
tion.

It

has

not

so

far

been

a

I think this is a real¬

depression.
istic and not

Pollyanna-ish view.
really concerned
about is what may happen during
the rest of the year.
The real
importance of the development
What

we

level

of

of the last six months is what it

hold for the future.
This
development raises the question
may

whether

will continue the decline
from our previous inflated posi¬
tion through the present position
of approximate balance in a real
depression, or
(a)

we

stabilize at high employ¬
ment, in which case the gains in
productivity which we should and
can achieve would permit us not
(b)

we

only to meet the greater demands
of government, but also to pro¬
vide higher real living standards.

an

which

investment

and
every

diture

prices
expose

business investment expen¬
to the risk of arbitrary

decisions by a government agency.
In

this I certainly do
imply that all that we
now need
is for the government
to behave itself and keep its hands
saying

not want to

business.

Business has

a

re¬

sponsibility to understand what
the government is doing and not
to see "red" at every new step
taken
I

do

and

by

the

mean

government. What

is that

both

business

government must discriminate

between the kinds of

government

action which will make

our

eco¬

nomic system, basically a private
business sytem, work better and

those that will not.

(3) The third mistake we can
bring on a

make which will help

depression is that business,

1949
on

the

basis

of

economic

and

political uncertainties, should
radically cut its present plans for
plant and
equipment expendi¬
tures. These plans, as most re¬
cently reported by the McGrawHill survey, seem to contemplate
a
sustained high rate of invest¬
ment outlay. This could be a most
important element in our con¬
tinued prosperity
and progress.
To revise them downward sharply
would

help greatly to produce

depression.
(4) A fourth
real

a

is

impossible

to tell at the

business decline would be

a

general nolicy on the part of busi¬
to increase or even, in some

ness




cases,

to

market

excessive

part

will

wage increases
in the form of
they have been
the last three

on
as

during

A

years.

situation

determined

drive

out

and

policy which

clarify

need

erage
years.
ness

for

existence

Third: Business and labor must

comes
on

to

down

need
of

consumers'

Now more than any

time since
than any time
since the rude shock of the early

force the

1930's, we have the opportunity to
do what no other nation on eartli

can

increase

of

real in¬

much beyond the growth of

cannot

succeed

only lead to inflation

or

but

has

un¬

demonstrate that

we

make

is

to

fright

at

for -consumers

take

real and fancied eco¬
difficulties and begin to

businesses
war

is

resume

the: normal

aggressively

sales,

practice

to

The- number

can

namely;
develop

economy as a free economy;
require new attitudes, and
unprecedented willingness to
cooperate.
But I am convinced
that we can and will do it.
the

over,

It will
an

of

pricing and marketing their prod¬
ucts

do,

we

the economic level to preserve

on

still

that their particular sellers' mar¬
ket is gone, and that they must

can

to

able

been

enough wisdom and statesmanship

H

...

thaj; the

hoard their money.
-

in¬

the war, now more

productivity

.[

The final mistake

nomic

real

Or if there is hos¬

another.

tility among Jhem.

our

is needed.

(7)

one

that

continuous

a

as

selling effort—ad¬ employment.
vertising and sales promotion —r
Fourth: Many
jqst at a time when greater vol¬ need to learn
ume

hand

one

for-

productivity grows and
the other hand that an attempt

comes

v

the

on

is

increase

(6) Another mistake would be
to

and

country is a necessary condition
stability and progress.

reduce
the chance for
profitable business operations and
insure a curtailment of employ¬
;

intelligence
in, the
American
people to work together for the
public good so that the free en¬
terprise system can be preserved
and improved.
It will not be
preserved if the elements withiri
the economy—government, busi¬
ness, labor, the general public—
attempt to impose policies upon

for

there

.

and is dedicated

was

to the faith that there is sufficient

respect to the
kind of economy we want in this

recognize

duration since 1854 of four
But it believes that busi-t
fluctuations
can
be
kept

The CED

common

goals

common

stability.

booms and busts of the past are

assumptions with

greatly

ment and investment.

of

reasonable

not inevitable.

in maintain¬

us

and

within moderate limits—that the

to

agreed

an

the

serves

interest of all of

wage increase as large as those
of
other
postwar
years
would

promote

of

persons

By making these mistakes I am
employed in trade today is con¬
that we could bring on some
siderably lower in relation' to
sort of depression. Even if we do
manufacturing employment than
all of these wrong things, I do not
it was before the war. We should
believe that we would have a de¬
expect as we move toward a sus¬
pression as bad as that of the 30's tained
peacetime prosperity that
Given certain basic features of our
a larger proportion of our national
present situation, I am quite sure effort will be devoted to
selling.
that would not happen. We are
Fifth: We should try to use the,
not going to have a collapse of
large Federal budget in a way
our
banking system and money
that will help to stabilize the
supply. We will continue to sup¬
economy.
The
Committee
for
port farm prices. We will

NYSEGsbSlale

sure

"

/

,

cushion
Economic
Development has
unemployment with unemploy¬
ment compensation. Whether we spelled out in a policy statement
the essential steps for doing this.
like it or not, We have a very
I would only mention this morn¬
large piece of the total market
assured by the high level of gov¬ ing the most relevant point that
if we get some decline in national
ernment expenditures. For these
and other

reasons

economic catas¬

trophe seems to me out of the
question. But, if, as Mr. Boulware
says, we study hard enough to be
half-wits, I am sure we could get
a
visible depression.

been

result in

a

we

even

that we shall go down
that road. I think that collectively

possible

have enough good sense among

we
us

to avoid it. And remember

use

to

,

are

that

the

steps in this direction—relaxation
of installment credit controls and
the relaxation of

There

ments.

margin require¬

are

still

a

ti1"4

one

we

need to maintain pros¬

perity in these

favorable condi¬

tions is roughly

the following.

;

appreciate that
has much
greater capacity for maintaining
stability than it ever did before.
I have already mentioned a num¬
ber of the cushions or built-in
First: We should

our

economic

system

stabilizers, such as unemployment
compensation and farm price sup¬
ports, which would tend to re¬
strain

any

Perhaps

movement.
important is the

run-away

more

Ameri¬

people not to have another
serious depression, and the grow¬
ing evidence of agreement on the
monetary and fiscal policies to be
used to prevent another serious
depression. There is no reason to
believe, and we should not think,
that the bottom is likely to fall
can

As

we

all know, Russia has been

predicting a depression in this
country ever since the war.
She
has been counting on it.
Our
economic collapse would be her
opportunity, not only an opportu¬
nity to improve her position in a
highly benefical way to her, but
an
opportunity to
justify the
Marxist ideology which has al¬
ways
predicted capitalistic col¬
lapse.

what the
Committee for Economic Develop¬
ment has been saying since its
origin is true.
Today

We

more

cannot

than

ever

leave

stability

to

chance.

organized under
the basic principle that major de¬
pressions were not God-made. It
was set up to do what it could do
was

Members

"•

*

of

the

(for term off

Board of Governors
three

years): Richard M. Crooks;
McKinnon, Harold W«
Scott, Dean Witter & Co., Homer
A. Vilas, Cyrus J. Lawrence &
Sons, Amyas Ames, Kidder, Pea-*
body & Co., Winthrop H. Smith,
Thomson &

Merrill Lynch, Pierce, Fenner &

Beane, Latham W. Murfey, Cur-^

tiss,

&

House

Cleveland;

Co.,

Nathan K. Parker, Kay,
& Co.,

Richards

Pittsburgh.

For Two Trustees of the Gratu¬

ity Fund (three-year term): Clin¬
ton S.
&

Lutkins, R. W. Presspri^h

Co., William D. Scholle, Scholle

Brothers.
For

5
Members

Five

the

of

Nominating Committee (one-year

term): Page Chapman, Jr., Tucker,

Anthony

&

Meehan,

M.

Co.,

J.

William

Meehan

&

M.
Co.,

Mark C. Meltzer, Jr., Asiel & Co.t

Joseph W. Dixon, Graham, Par¬
son

&

Co., W. Fenton Johnston,

Smith, Barney & Co.
Members

proposed
a

are

■

also voting on a

change to provide for

Nominating Committee, serving

one

year,

members

The CED

■

year.

Seven

For

'*

Boylan

Co., for the term

E. F. Hutton &

of

number

many

P.

Robert

,

What

:■

'I

';

elements
of of. arrows in this quiver which
strength in our present picture. As could be used if needed. Among
I
have already
said, plans for these are a reductioh of reserve
business investment expenditures requirements and an increase of
are very high. Moreover, govern¬
bond purchases by the Federal
ment expenditures are rising, and, Reserve.
whatever else may be said about
It needs to be re-emphasized
that, and there is a good deal to that the American people are de¬
termined
not
to
have
another
say about it, increases in govern¬
ment expenditures do tend to sus¬
serious depression.
The stakes
tain economic activity. The in¬ are higher now than they used to
ventory position of business is be. Today depression would mean
good, as is the financial position not only unemployment, reduc¬
of
consumers,
agriculture
and tion in living standards and loss
business. And the latest figures of progress.
It might well mean
show that we are holding our own also the loss of our freedoms, of
with regard to unemployment.
our independence as a people.
there

'

must be prepared to
full the instruments

monetary and debt policy for pre¬
venting depression.
The Federal
Reserve has already; taken two

or

Chairman of the Board of

For

Governors; Robert P. Boylan', off

we

we do all the wrong things,
could
get depression. I do

not think it is inevitable

mittee for 1949:

further decline in the

which the government has in its

hbW, if

;

following nominations for
the positions to be -filled at the
annual election of the New York
Stock Exchange to be held oil
Monday, May 9, were reported
today by the Nominating Com¬
The

raising tax rates. That would only
national income.

showing

I 'have

far

So

For 1949 ElecKm

income and in consequence some
decline in tax revenue, we should
not try to restore tax revenues by

Finally,
IIow Can We Maintain Prosperity?

clear determination of the

contributor to a

sustain profit margins.
As productivity rises,
and par¬
moment on a day by day basis
ticularly if business investment
whether the decline is still going .expenditures are not rising or are
It

in

unlikely

seems

im¬

portant ingredient in a prescrip¬
tion for depression at this junc¬
ture. So also would a system of
over

It

be passed
higher prices

in

business investment

the tax collector would be

the

to

expenditures. And so long as we
have
a
high saving
economy,
which we do, a high level of in¬
vestment
expenditures will be
necessary for maintaining pros¬
perity. Government policies which
regard
the
main
function
of
profits as a hunting ground for

depression

provide them out of increased

permit

(2) Increase this great uncer¬
tainty with government policies
apparently based on failure to un¬
derstand and appreciate the
crucial role of business decisions,
especially investment decisions,
in maintaining prosperity. So long
as we have
a private
enterprise,
private profit economy—and ours
is predominently such an economy
—the outlook for profit and the
supply of venture funds will be
essential factors in determining

a

namic

It recognizes that we have always
had business cycles—with an av¬

be

any

is

promote

productivity.

many

the

to

that

a

which

as
derstanding • between
reduces and government,
We

31

implement business thinking ami
the goal of a dy¬

Second: We need to get an un¬
business

prices

productivity

(1649)

*

action toward

,

brought about
of

-.a..."

.

out xoi
our
economy
at
any
moment,
because it would be
wrong. And if we do not think
that, we will not act as if we
thought it. This in itself would be
a major, contribution to
avoiding
a serious depression.

work

that

minds enormously exag¬
gerated by the perspective of the
past 20 years. We all have in the
back of our minds the experience
of the tremendous depression of
the 30's and the great abnormal
boom prosperity of the 40's. If we
regard any relaxation from the
postwar boom as the beginning of
the prewar type depression condi¬
tions, we shall be making a great
and terribly expensive mistake. J

consumers'

(5) A fifth mistake which would

lo

you one

situation

some

be

^

for
labor
to
insist ing stability in a free
enterprise
vigorously on wage increases be¬ system.
Confidence in the exist¬
yond the capacity of the economy ence of such a policy and in the

(1) Encourage the already great
feeling of uncertainty about the
business

decline

by

would

overdue.

getting into

of

is

help

prescription
depression this
year, if anyone wants to do it. It
is not the only way but 1 believe
it is a pretty sure way. Just mix
well the following ingredients:
for

a

are

on

rise
can

*

depression every four years since
right before the Civil War. This
period of rising or high business
activity has been going on now

Certainly

that

costs.

them in the past 100 years or so.
On the average, we have had a

for almost 10 years.
odds maker would

that

so

real incomes

improved

of

most

rise

they
may purchase the increased, flow
of consumer goods that will be
available. One important way in

What Are the Mistakes Which

off

What has been happening so far

should

comes

paid Upon what we as government,
business, labor and consumers do.

ployment in 1949 would be about government controls
3

declining, ^continued prosperity
requires that consumers' real in¬

either

alternative is

their former selves. The long

wait¬
ing list, the backlog, the charges
for extras,
are
already largely
things of the past; instead of these
we now have businesses building
up their sales forces, going after
business and being nice to buyers.
Another aspect of the reduction of
shortages has been the reappear¬
ance of the seasonal business pat¬
terns which had been wiped out
in many lines during and just

whether

or

For

(4) Shortages have been large¬

,

on

COMMERCIAL* & 1 FINANCIAL. CHRONICLE

ta be composed of six
and

bers of the

three

three

members

members

as

allied

mem¬

Exchange, instead off
and

at present.

two

allied

38

(Continued from page 2)
all

times

certain

that

and

variables, such

dividends

changes in

earnings,

as

and

assets, may be re¬
lated to the corresponding changes
in prices.
If we can find that a
certain relationship between prices
the

on

hand and the variables

one

opinion, expressed in price, of all
the buyers and sellers participat¬
ing in a free market, most of the

heard, is a single line which ex¬
presses that correlation.
In that

We cannot be
the variables of

of

habit

and

assets

and

dends

perfectly sure that
earnings and divi¬

ion

make certain assumptions and

a

we

mind,

even

or

will actually

then test them

sell whether

the market deviates from
long-held relationship, the
distortion is a measure of disparity

exists

between price and value.

and assets

years, as

this

We

can

that at such times as a given
level of earnings, assets and divi¬
dends fails to command the price
that has been placed on such a rate
say

of

earnings, assets and:; dividends
past, that

most of the time in the

is

a

time of overvaluation

dervaluation.

ly

this

And

we can

or

defi¬
nition of value, but as a descrip¬
tion of it, and as a method for
use

measure

not

the

as a

move

by

way or

is the virtue of

ship that it

a

readjustment.

It

normal relation¬

can.

be

expected to

prevail most of the time. What

we

over

placed upon

the

the
a
span has
earnings, assets and

earnings,

and habit of
and

mind

prices on

on

the

If

we were

to correlate earnings

I think that the meaning, of such
rating of value, or the meanftig
a concept of normal value
as distinct from price, could
best
be illustrated by a series of charts.
a

of such

grounds of chance.

simple method of multiplying ex¬
pected earnings by 10 or 15 or 20.
which

stock in

because

of

matically,
a

mind"—if

this
we

we

were

correlation
should do

computation known

so

to

mathe¬
through

as a

multi¬

ple variable correlation analysis.
The

Value

Line

Rating,

about

the

1929

only two

not

was

three

or

100

years

the

later

market.

us

The

market

price between 1929 and

the

1932,
be

an

of

100

Let
a

investor then

assumes

have

100

We

60

reliable

mJL

ture

u
to

40

40

ui

30

U

times
line

around

1929 high and

then that neither the

price

nor

of

measure

But

the

prices stand
sig¬
nificant distance, there is reason

the Value Line is not

to

in* dividends

marked

a

cient

of

.76

was

this

of

and the

correlation

assets

coeffi¬

The

determination

equation
of

and

degree.

coeffi¬

In

.87.

age

price

and

we

of

the year preceding,

have ,' correlated

these

•

a

on

invalida¬

an

Line truly expresses the market's
normal

value,

or

The deviations

having
tions

chart

I

same

have

see

that this

nearly fits the actual
price history than the horizontal
average line that was drawn.
It

the

are

value
be

about

overvaluation

stock.

reason

for

did

no

not

sense

in

occur,
your

undervaluation
or

or

in my

discussing
things.. It is fortunate in¬
deed, that deviations from normal
do occur, else we should not have
an opportunity to
practice our ab¬
sorbing profession..

of pure

This

past winter

have had

we

number of very warm days. Yet
it is still valid to say that winter
a

is

cold

a

We

season.

may

have

cold days next summer. Yet

it would still be valid to say that
summer
is a warm time of the
year.

.

tually

that
an

we

.87, ;; which
is
so
significant that it cannot possibly
be

that the

variables

have related to prices in

are

dismissed

conceivably

be

regarded

as

product

a

thus

disposing

of

the

the best

If

through such a correlation
a period of 20 years we can
determine what weight the mar¬
ket will give to the variables, of
earnings and dividends and as¬
over

sets,

then

of

a

what

the

will

stock

with

can

we

determine

in

be

we

forecast

can

correctly,

why they

or

the only

certainty
will

-

that

accord

the

between

statistical

ie applied

correlation

earnings

ap¬

tests

to

in

and

sets

as

with

probability

prove

price

will

term

sense

on

normal

the

to

as¬

determined by the 20-year

changes
assets

with
price

capitalization of earnings and

that

can

or

future

we

the

of

price, provided only that

the'

that

value

terms

market

experience. But

which

reason

future

variables that, could be employed.
are

possibility

of spuriousness also.

But

there

of

chance. Such high coefficients are
found for over 300 leading stocks,

of that stock. We cannot say

cannot be

we

effort to. determine

fluctuate

ac¬

coefficient pf

the

*

earnings and dividends and assets

Statistical Tests
As I said before,
sure

.76, and

correlation

proximately correctly, the future

' Y

'

chance. Here though our

coefficient of determination- is

such

fu¬

line which represents 20
the
earnings reported in

You will

from

there would

talking

the

of

Value Line. If the devia¬

a

perfectly

chart of the

this

evaluation

a.

20

the

below this line by a

or

average

a

year.

oc

a.

of

changes

more

would

at

sum

You gather that when
above

some

Now here is
stock.

each
Ui

30

prices

price expectancy.

drawn

<n

fluctuate

not

reason

UI

<

50

the

is

you,
(Chart IV), the
question fluctuated with

in

cient

him

to;

price experienced over a given
period of time can be taken as a

80

<

value

low.

current

90

u

no;

the average of. the
1932

mJ

that that too would

of

simply did

120

70

see now

been

because in subsequent years

140

UI

through the chart

price of 54 based
the 1929-1932 range. *

You.

160

then that he draws

assume

this average

upon

180

High Price 100

us

average1 of the high price
and the low price of 8.

horizontal line

at

200

which

tion of the theory that the Value

suppose now

tuation in

300

line

before

stock

.

the

that the value of the stock should

300

as

two,

,

that having
experienced the tremendous fluc¬

400

record

but superimposed
the price chart you now see

upon
a

price

same

other

r

price had fallen all the
independent s variables
to 1 the
100 to .10, and an in¬ to believe that the market is tem¬ dependent variable of price. There
vestor who bought the stock at
were 20 years of observation arid
porarily out of line with its own
100 in 1929 on the theory that be¬
.4 .independent
variables leaving
sense of value as determined over
cause the market was paying that
15 degrees of freedom. The con¬
a long period of time.
ventional statistical test of signifi¬
price the stock was worth that
You will notice that prices do
cance
would hold that if the co¬
price suffered a disastrous loss.
deviate from the line which is the
His subsequent experience proved
efficient- of determination f were,
market's long-term sense of value.
that price at a given moment was
as
high as .4, dhe relationship
The fact that prices deviate from
far from value, even in the opinion
would be beyond the possibility

Let

VALUE UNE RATING

the

is

V-

;

example, in the chart which

from

way

of

400

the

shows

For

plain
weights that the market itself has
Here, for example, is a plotting assigned to earnings and dividends English this means that the fluc¬
tuations in price above and; be¬
and
assets
over
a
period of 20
going back to 1929 by months, of
a stock listed on the N. Y. Stock
years as defined
by a multiple low-an-average price during the
whole 20-year experience, ape ex¬
variable
correlation
Exchange. Each vertical bar rep¬
analysis. You
resents the price range for one will see that this line fits
the plained to the extent of 76%-by
fluctuations in the related vari¬
month. This is a chart of prices price record more
closely than
ables of value.
'
\ v,
only. From the standpoint of the the other two. When you com¬
In establishing this correlation,
investor
who
wants
to
know pare prices on this chart with the
whether to buy or sell, this chart line of value, which we call the we have used four independent
is meaningless. The price in 1929 Value Line
Rating, you will see variables, namely earnings,' divi¬
was 100, but apparently the value
at once that it has some meaning. dends, book values and the aver¬
of

average

the

entiating value from price, by the

as

long time past have determined
value of a stock, in differ¬

a

Now here is my last chart,

changes its mind.

U

And

all know, many analysts for

you

experience.

price of a given
stock last year's average price is
the
specific way of expressing

.year's

CHART I

~

value.

the

a

as

that

price
20-year

dividends at the various levels of

and dividends and assets and last

"habit

probably

in the
dividends

such correlation is
exist, whether that cor¬
relation is so high as to be beyond
the possibility of explanation by
pure chance.

express

will

correlation

a

changes

and, if

the

price

not

found to

determining the direction in which
market

of
hand

one

other

mathematically to

or

between

variables

un¬

logical¬

have

we

of

standard

one
hand and prices on.' the
other,
is
highly significant
isignificant far beyond the possi¬
bility
of
explanation
on<
the

have

may

you

'

can

for

tained

dividends and as¬

the other has been main¬

of

some

market

time.

long period of time,

on

line

Thursday, April 14, 1949

,i

Undervalued?

which

might then rightly say that at
such moments, or even in such

sets

CHRONICLE

,

wish to know is what will be the

the interest rate,
determine the opin¬
of buyers and sellers. But we

of earnings and

FINANCIAL

&

Stocks

Are
at

COMMERCIAL

THE

(1650)

conform

can

to

of value is

future

the
so

that

say

the

long-

high

as

justify the effort and to prq-

CHART II

20

VALUE

LINE

RATING

400

400

300

300

200180
160

Price! Is 54

Average 1929-32

10

140

120

10

100

9

9

8

8

7

7

60:

6

6

40

90
80

70

m

50

5

u
«/>

Low Price Around 10

1

30
■

at
a.

4

4

100%
<
oc
UJ

S
D

60%
40%

60%

40%

20

Q
5

10

2

98

20%

20%

T

>

10%

10%

t

6%

o
z

5

4%

**

2%

2%

.1%

1
t

3
P

1927

1928




1929

1930

1931

1932

oi oo%

% 60%
5 40%

O

Z
<
Q
OC

>

5
4

•J 20%
3

10%

§

6%

o

Z

2%

CV

<

1%

'

1927

1923

1929

1930

1931

1932

1933

1934

1935

1936

[1937

1938

11939

1

""

1940'

19*41

1942

1943

1944

1945^ 1946; 1947

f

1940

1:949

1950

'

*

Volume

vide

169

Number

basis for

a

rational invest¬

a

ment program.
»

4794

>

Summary and. Conclusions
the

In

absence

of

definition

accepted

a

of

we

to be practical, go on the
assumption that value is in the
long run the equivalent of price.
But we may also proceed on the

must,

assumption that price at any given
time is not always the same as
value, because there is such a
thing as a long-term price ap¬
praisal which may differ from the
current price appraisal. We find
that the changes in price which
bccur from year to year can be
ascribed in significantly high de¬

corresponding changes in
as assets, earnings

gree to

such variables

COMMERCIAL

dividends and habit of mind

and

conclude, there¬

level

fore

evolution

a

with

a

though

that

the

of

value

correlation

based

of

upon

between

changes in
price and changes in the factors
of value, when found, should en¬
able us to project the probable
future price of a stock, not with

certainty but with a sufficiently
high
degree
of probability
to
validate the premise that such a
projection is a: practical standard
by which to identify areas of
undervaluation
not
a

overvaluation,

or

only in the stock market as

whole but in

the

dividual stocks
It is

as

prices of in¬

well.

recognized that the practi¬

cability of such

a

reasonable

rating depends

CHRONICLE

which this

be

can

done, there is

analysis proves that the
capitalization, of a given

of earnings and assets can
determined in advance
and

stocks

that

whole.

that because the capitalization

is

normal, it will probably be real¬
ized.
The inescapable hazard of
projecting future earnings and
dividends remains, of course. But

the

earnings

market

given level

upon a

dividends

and

will

need

the

it

in the

open

during a period of 6
18 months, regardless

months

be

of

of

are

themselves

of

count

market

of

probably place

realm

follows that the
most deeply un¬
dervalued according to this stand¬
ard
should
give the best ac¬

then

sound,

level

that

the

If this method of evaluation is

least the

price

remain

guess.

pure

Al¬

evidence to prove that it can be
and has been done.
At the very
normal

longer

no

(1651)

not permit a
methods
by

accuracy.

space does
discussion
of
the

the

f

FINANCIAL

&

ability to forecast the future
of earnings and dividends

upon

(price lag). We
standard

commonly
value,

THE

to

trend

of the

This,

market as

a

matter of fact,
is a result that has been proved
in experience.
That is to say, the
stocks most deeply undervalued
as a

and therefore most

recommended

strongly to be

have,

stocks

that,

lower

as

class,

a

as

outperformed in the

market the

class, merit

a

a

recommendation, and those

CHART III

39

that merit the second best recom¬
mendation have outperformed as
a
class those that merited the
third

class

recommendation, and
In short, it is possible by
this method to separate the sheep
so

on.

from the goats

in the market ac¬
cording to value.
This is not to
say that every stock that merits
the strongest recommendation will
outperform every stock that de¬
serves only the second strongest
recommendation, but it is to say
that taken as a group, the most
strongly recommended stocks out¬
perform, in a practical market
sense

the stocks that

favorable

in

are

less

a

position relative to an
mathematical standard

objective

of value and this

tently,

as

happens consis¬
audited records prove.

CHART IV

VALUE LINE HATING

VALUE LINE RATING

400

400

400
300

300

300

300

General Electric Prices With Value Lirfe Rating
200
180

160
140

200

200

180

ISO

160

160

140

140

120

120

120

100

too

100
90
80

70

90

80

•O

u,

>u

60

-

<

50

90

70

70

60

60

-

50

50

u

4(j

40

30

30

20

20

u

U

v»

*

ui

v

"

40
UJ

30

«

^

oc
a.

20

10

10

9

The formula that relates the •/ariable-s of value to price Is?

9
8

•

7

8 83

5

60*

40*

% 70%

20*

§

6%

1

»

<

t*

5 60*
2 40*

^

10*

3

6*

§

2*

I

1927

1929

>928

1930

'

1931

j 1932 j 1933 j 1934 | 1935 11930 1937 1938 | 1939 j 1940 1941 11947 1943 | '944 1945 1946 1947 1948 j 1949

1950

in time of

Trends in Finance

3 20*
3

am

tion and

what it tells

see

about

us

ships

the present state of our economy.
Two symptoms stand out above

free

everything else:

has

staggering Fed¬
eral debt of over $250 billion and
the highest peacetime tax burden
a

country has

any

ever

carried.

of

depression.

abuses did

and

do

However,
exist, and the

enterprise, or profit, system
been
largely!; blamed
for
them.
So
we
are
tempted
to
adopt almost any measures—in¬
cluding suicidal deficit financing

"Why have we been willing to
place these two terrific loads on
our people and on our
economy?"

and destructive taxation—to reach

"What made

depression.

fashioned
and

adopt

us

abandon the old-

'pay-as-you-go' basis
the opportunistic de¬

vices of borrowing against the fu¬
ture

confiscating

and

corn'?"

If

we

can

our

'seed

answer

these

questions,
we
may
have
some
inkling as to why the peoples of
the world are flirting with the
destruction

of

their

hard-won

freedoms.
There

in my

is,

and

one

only

almost

answer—an

opinion,

one

just
underlying

frantic mania

security and protection. What

is the

reason

There
related
tation

twp great

ly short
these

three, rather

are

inter¬

One is the devas¬

dislocation caused
wars

space

causes

by

within a relative¬
of time.
Due to

and other factors

we

also suffered one long de¬
pression and several smaller ones.
Wars and unemployment frighten
people more than we realize and
these tragic events are indelibly
imprinted .on the minds of our
people, particularly of the young.
The conviction that these things
must not happen again under any
have

Circumstances

has

goal of security and to leave

behind

At

number

one

the

the

horrors

of

war

and

6*

4*

1

2*

J

<

1*

*■»

e

With
tion

same

time

other

vastly speedier transporta¬
facilities

taneous

and

instan¬

almost

communication

through¬
out the world, each individual is
thrown

on

his

own

to

form

his

opinions and to reflect these opin¬
ions directly and immediately to
his elected representatives.
We
now

be

able tp

find out for

the first time whether

or

not

ma¬

jority rule is

sound.
It is, per¬
haps, sacrilegious to dispute our
long held theory- that, given time,
the people of the country will de¬
cide issues correctly, but I believe
firmly that up to the present we
have

never

had

a

true

basis for

determining this important
tion.

Heretofore

ques¬

have

largely
used Hamilton's theory that a few,
well-chosen, enlightened men can
we

best provide
intelligent and farseeing leadership for the coun¬
try's policies.
But we now have
what Jefferson would
probably
call

priprity in the censeiences of the

a

true democracy.

In

discussing this question, we
must analyze the nature of the
Abuses in Our Economic and
vote and the reasons why people
Financial Life
vote as they do;
Fundamentally
To these two factors, war and' a man or a woman is by instinct
depressions, we may also add the devoted .to his family's interest
abuses that over the years have above everything else.
This in¬
crept into our economic and finan¬ stinct goes back to prehistoric,
cial life.
Proponents of radical and even to prehuman days.
In

peoples of the world.

government and economic policies
have exaggerated these abuses as

fact, it is the basis of

they have exaggerated the hard¬

protected above everything. Even




civilization

and

as

our

such

Z

war

Lliuii,
1933

will agree, I

you

that the indirect threat

sure,

family security is a large
part of what we call patriotism.
Therefore, it is not illogical that
our
people cast their votes for
candidates who promise to pro¬
benefits

vide

modern
must

be

and

security

for

them.
Our

political parties have recog¬

nized this great

thirst for security

and protection of family and too
often have, unfortunately,
capi¬
talized

it.

They have fallen in
country's
short-term
thinking
and
have
followed,
rather than led, our people. The
people need, and should have, in¬
telligent, farseeing and unselfish
leadership from their elected rep¬
resentatives. Such representatives
are
supposed to have more un¬
derstanding and more wisdom in
matters of government than the
voters themselves.
Our hopes for
with

things
have been happening.
Science,
education
and
general cultural
progress have radically changed
the relationship between our
people
and
their
government.

will

for it?

reasons.

and

our

10*

5
0

on

the

the future rest

on

leadership to its

a

return of this

proper

place.

To

summarize, we find now that
people primarily want security
and protection after the bitter ex¬
perience of wars, depressions and
the abuses and inequities of our
economic
system.
Opportunistic
politicians, reformers and radicals
have
exaggerated and distorted
these influences and have urged
people to turn to various forms of

1934

1935

1937

1936

1934

|94C

I9P

I9.<

rrrrr
II
94'.

1947 !

1945

'9«ij 9>/ 1948 1949110.')

tions of

liberty and our cherished purpose in
enterprise system?
security.

free

to one's

(Continued from first page)

for

glOO*

5
2

4*

0

.76

4

100* Q

60*

5 40%

3' IO*

=

5

4

O>00*

Earnings *■ 12 56 Dividend <■ .14 Lagged Price*

Coefficient of Determination)

6

2

3.11

+

7

6

The

national

sitated

has

debt

maintenance

neces¬

The

of

extremely
cheap rates which in turn dis¬
courage private investment. These
cheap rates are necessary in order
to keep the interest burden on
$250
billion
somewhere
within

Now

the

world

today

—

'

•

Trend Downward

witnessing slowing
economy and a de¬
clining volume of business. How
far, and how long, this trend will
continue is, of course, impossible
reason.
In the national debt we to say. It is estimated that for the
fiscal year ending June, 1949, the
have, furthermore, the basis for a
deficit in our national budget will
severe
inflation, although at the
be approximately $1.7 billion, in¬
moment our economy is moving in
the opposite direction, as the im¬ cluding that period's share of the
money supply is losing its
velocity. The second item—taxa¬
mense

tion—can

be

and

is

now

very

a

potent factor in the elimination of

w

down

we

in

Marshall

Plan.

authorities

billion

$4

are

our

are

Next

year

talking
$5

to

billion

some

about a
deficit.

Between 1930 and 1932 there

was

a decrease in tax receipts
by the
growth capital. The siphoning off
of a large share of the profits, the government from $4,178,000,000 to
increased risks from government $2,600,000,000 without any change
in tax rates. No one knows what
regluation and from unpredictable
economic and financial measures tax receipts would decline to now
all have taken the heart out of if we had a really bad depression,
private venture capital. In addi¬ but an authoritative article pub¬
tion, corporate taxation has given lished by one of our large banks
us an extraordinarily high indus¬ recently gives some revealing fig¬

trial break-even point that is

becoming

now

apparent

corporations, as
turns downward.
The
of

in

just
our

business volume

above

developments have,
tended to redistribute
capital wealth of the country

and have resulted in
tion

of

in

funds

It stated for

in sales would

a

concentra¬

insurance

com¬

185
a

manufac¬

drop of 10%

mean a

28% in profits;

course,

the

ures.

turing organizations

decrease of

decline of 20%
in sales, approximately 50% lower
profits; a sales decrease of 30%,
80% lower profits; a decline of
over
30% in sales brings these
corporations into red figures.
Translate that into
corporation
a

panies, savings banks, investment
and individual income taxes and
stateism in order to attain these trusts and similar fiduciary in¬
you have some startling results.
stitutions.
Unfortunately,
or
per¬
objectives. As a drowning man
,
I think you will agree then that
carries the life guard down with haps fortunately, a large share of
tpe question of increasing tax
him
so
people seem willing to these institutions, by law or regu¬
rates in the face of such figures is
destroy and to risk the loss of es¬
lation are prohibited from making largely academic at the moment.
tablished institutions, even their
That leads us inevitably to that
investments.
Increasing
freedom, for the purpose of an equity
handy, but rathei* grim device
apparent and illusory security.
problems arising from lack of called deficit
financing. When our
private working capital can be debt was $50,000,000,000, we were
Implications of Debt Burden and
somewhat
aghast at such figures.
Taxation
expected in the future. This reach¬
Most of us said this is the end and
These forces are very great and ing of our people for protection
we can never go further. Here we
must be reckoned with if we are has brought us other measures in¬
are
at over $250,000,000,000 and
going to appraise properly events volving
financial
commitments we are still wondering how far we
and

tors

trends in finance.

for

These fac¬

and

further

example
willing to pile up

have made us
nomic
a huge govern¬

ment debt and to

continue

program

a

vast

of taxation. What are the

farm

prices,

on

our

economy

us

to

and

retain

will

our

they

I

vast

on

our

eco¬

refer to parity

flood

can run

be

it up and how

it will ever

paid.

public works, Confronted With Great Question

social security, medical care, pro¬

We

are now

truly

up

against the

natural resources, great question of how much, more
and drought control, etc.— security we can afford without a

implications of these two burdens tection, of

permit

drains

system.

our

institu¬ all reflecting the great motive and

40

THE

(1652)

Dealers' Comments

COMMERCIAL

FINANCIAL

Probably

'

little.*

very

complete

NEWARK, N. J.

Adverse

if

rarely,

Has dried it up.

based

CHICAGO, ILL.

to

corporations'

■

rule

is

hindrance

great

a

ourselves

finds

it

the

to

next

to

market,

impossible

we

rule has

bad effect

a very

on

to

get

we

Keep up your good

up

some

\

..

.

,

day.

<

,

makes

salesmen

most

done

in

Washington

there will be

assist

to

venture

no

be

brokers

and

dealers

Not much of any

and

resultantly,

good little issues.

entitled to

a

a

SMALL TOWN,

we

larger spread

on

Nor

can

imagine

considerably.

BOSTON, MASS.

BOSTON, MASS.

anything like 5% but there

securities, which in turn retards

5%

transaction

as

Small financing is

>

discouraged expansion of investment
costly, has greater potential

more
are

considered proper.

It must be

by law.*

BOSTON, MASS.

to

moderate

size, he can truthfully say that there has been
rule of the Association in carrying on a legitimate
On account of his interest in the
subject matter he has had

bar from

business.

any

innumerable interviews with partners of small
houses, many of them
individual proprietors, and finds that their views almost
exactly
coincide with those above expressed. The fact is that the Business
Conduct

Limits the market.*

matter

Committees

have

leaned

backward

BOSTON, MASS.
BOSTON, MASS.

BOSTON, MASS.

5%

because

the

difficulty of selling,

tees

BOSTON, MASS.

has

difficult to finance the smaller corporations through
•
7
✓
•

.

BOSTON, MASS.
It is discriminating.

1

*.■'

BOSTON, MASS.
studied

or

thought about it enough.

Think

one

of the

end results might be to keep many investors from
being sucked into

lousy situations where they

are

pretty

sure

to take

a

*

licking.*

WORCESTER, MASS.

.

Detrimental.*
•




•-

*

fair

in

the

there

is

taken

into

the

account

dollar

the

amounts

difficulty of buying,
involved, travel, and

That the Committees have been very
understanding and fair is indicated by the small number of formal
complaints that have been brought in the 9 years since the Commit¬

None.*

•

be

of

extraneous services performed.

Adverse.

more

to

of the Association

None.

dock issues.*

to

contribu¬

something really big and sig¬
I believe it will, and I
history will record these

v

•

began to function.
been

directed

Their attitude so far
toward education of the

»■

y ^ a

being punitive,

gradually it has
grown to realize that there is an
organization in existence which
protects its interests. Among the results of all of
this is-that your
attempts to pull down the Association have lost their force
arid are
considered entirely "out of date." The fact
is that where your efforts
in the early stages of the Association
were a source of interest and

-•

y .c jr < .i.

from

very small number of
are inclined to
charge more than the traffic can prop¬
to what the investor can afford to
pay for services. The
result of this has been a definite increase
in the good will of a
very
large percentage of the members toward the Association
and
a
diminution of sales resistance toward
the over-the-counter securities
on the
part of the public owing to the fact that

e

d

m..t3 * m.

'* i

J.w'ia

k.

u.i»

:*

s. a

a

u

«i

on
a

a

page
i»

agree

colors.
I think
that the system of

international finance under which
have

operated for so
many
is far from satisfactory and
completely unable to cope with
emergencies.
The
international
we

years

gold standard folds up in times of
war or depression or other severe

and

they also seek equitable treat¬

ment and fair standards of

living.

These

strains

great

41)
'j a j

a.jj

^

i*y»

*■:

t' i

si >11* 3

stresses

between countries

and

can

account for

large part of the international

a

influence

of

the

Communist

We find it hard to answer
the question as to why our friends
in England are living on insuffi¬
Party.

cient

food

well

all

when

the

their

border

cousins

in

Canada, as
States, have
possibly eat and

in the United

as

they can
Off hand the trouble would

more.

to

seem

lie

in

the

of

area

ex¬

change and international finance
as

much

in the realm of geog¬

as

raphy and natural wealth.
We

all

want

security from
We

lieu
or

a

world

thereof,
even

things
board

can
or

league,
I

Pact,

as

if
a

a

these

drafting

Great

evolve

in

,

on

a

things,
by

trial

painfully and slowly,

rather- than,
U

from

or

U. N.,

suddenly born

democracy,

8

adop¬

or a

doubt

table.

error,'
T-

advocate

government,

come

be

conference

and

a

and

peace

above all else.

Atlantic

an

compromise.

like

world

war

desperately

tion of

as

(Continued
v-;-. ,'.n

highest

will

you

houses which

erly bear

and events in indelible ink

the

across

over

mark-ups, having in mind the provision in the By-Laws
that the dealer is "entitled to a profit." In practice,
as shown by the official
reports of the Association, there is a very
substantial percentage of transactions carried on
at spreads exceeding

BOSTON, MASS.
None*

,

eventually

our

dislocations of international trade.

house dealing almost exclusively in the securities of
companies of

small
no

now

the interna¬

we

that

the

to

the impli¬

are

on

Will

say

and

us

Nations seek security and protec¬
tion just as much as individuals,

The writer has been for all the years of the existence of NASD
a particularly good
position to observe the effects on the public
and the market of securities of small
corporations. As the head of
a

remembered that morals cannot be established

•

on

BOSTON, MASS

'

risks than charges for service that

Haven't

course

in

.

Rules and regulations have

Made it

Of

(

.

Too scared to be identified.*

BOSTON, MASS.

.

profit.

a

BOSTON, MASS.

-

industry.

involving low priced speculative

are cases

small sale doesn't give the dealer room to con¬

on

Not any.

.

BOSTON, MASS.

*

We don't average

higher grade bonds
selling around par we wouldn't think of charging a mark-up of
5 points.
If we got 1 point or IV2 points on single bond trans¬
actions in this price class we'd be
doing well.

BOSTON, MASS.

Detrimental.*

to

What, then,

tions to the winning of two world
and recovery afterward led

of

7

I doubt whether it has any
appreciable affect.

development of industry.*

Bad.

and

insti¬

our

wars

years

BALTIMORE, MD.

duct the

None.*

of

and

believe

None.*

the dealer afford to make

stocks where

distribution

that

crisis

nificant?

investigation if he can't get his money back from profits.
We heartily endorse your efforts!*

the

rewards

cations of all this

BALTIMORE, MD.

extensive

Restricted

this

liberties

tional scene?

Do not know much about this as do not deal in them but

the dealer to lose interest in

causes

Crisis

conviction

survive

our

world.

BOSTON, MASS.
When profits are too small it

firm

my

will

;

vast

limited market.

it has restricted the market

the promotion of these securities.

is

tutions, at such tremendous cost
in things and in people, will reap

;•

BALTIMORE, MD.

securities of

houseless

of

another,
diligently and
himself, thus by
assuring that his own

be able to

*

is

for

one

with

PORTLAND, ME.

to

who

house

work

that the great risks we have taken

PORTLAND, ME.

Banks charge small borrowers higher interest rate and invest¬

smaller companies.

ME.

PORTLAND, ME.

Thin market created.*

the

him

We Will Survive

market lower than is justified

CHICAGO, ILL.

that

rich,

built."

Limited their distribution.*

very

shows

shall be safe from violence when

It

It produces a

him

not

down

example

Bad.*

CHICAGO, ILL.

rich

become

is

let

WASHINGTON, D. C.

Detrimental.*

be

may

build

I think it restricts the market.*

Impairs marketability,

ment bankers are likewise entitled

should

"Let

HARTFORD, CONN.

Too, underwriters and dealers, selling piece¬
better returri.
*
7t

ABlaham

1864,
,

"Property is the fruit of labor;

but

No effect.*

capital available.*

21,

property is desirable; it is a posi¬
tive
good in the world.
That

pull

BUFFALO, N. Y.

/-V.;CHICAGO, ILL.
interest

March

and
just encouragement to'
industry and enterprise.

effect.

very

for

our

Lincoln stated:

WHITE PLAINS, N. Y.

criticized

con¬

rush

easily.

hence

SYRACUSE, N. Y.

uneasy

if he will

firm

a

frantic

people will turn
higher goals before
have passed. The great
truths of liberty and free enter¬
prise on which our country has

others

Detrimental.*

in the marking up of
by NASD or
not.
In a great many cases the salesmen and house are greatly
underpaid for the work they have done, future servicing, etc., espe¬
cially in low-priced situations; and of course today overhead is con¬
siderably higher in relation to business, but the dealer must still
carry on and keep on servicing, etc., on securities sold several years
ago, etc.
There are many other things that could be said. Something
doesn't know

have

this

an

central

from it toward

some

Has killed the over-the-counter securities markets.

7

-

I

that

leadership

On

WATERTOWN, N. Y.

ELGIN, ILL.

liberties

many years

TOWN

business.

•

their

up

security and protection is tempor¬
ary and that with some semblance
of
enlightened and courageous

so

■7',,7;.

While it is hard to tell, I believe the need for NASD is unnec¬
essary as the SEC covers the governing or control aspects of the

AURORA, ILL.

it

7

..

SMALL UPSTATE NEW YORK

Retards the market for securities of smaller corporations.*

5%;- He

77..

by giving

subjugating themselves to

been built cannot be thrown aside

BUFFALO, N. Y.

7;,;' Hurt it.*

CHICAGO, ILL.
J

think

;

Very bad.*

are

direction, however,

strongly doubt if the people of
this country will answer the prob¬

viction

ELMIRA, N. Y.

salesmen.

of all that might lead

government.

Any ruling which tends to kill incentive to make
trade, naturally makes for fewer trades, and hence a market in
which it is more difficult to buy or sell.*

small

of

economic

all-powerful bureaucratic

the market.*

SMALL UPSTATE NEW YORK TOWN

financing of the small

ruled out of business.

are

the

and

living commission if

a

spite

in the other

us

and

a

work, may be the small dealer will wake
None.*

;

,

I wonder who is going to do the

corporations if

are

not

Unfavorable.:

industry should be allowed

to survive.

meal,

is

GLENS FALLS, N. Y.

CHICAGO, ILL.

on

opinion

Has hurt them very much.

CHICAGO, ILL.

Less

our

form

our

our

I

"■*

I feel that the 5%

Confusion.*

or

therefore

We

i

.

None.*

quickly

In

dealers' best interests.

as

issues,

self-interest.

on

CHICAGO, ILL.

be

well

lem

CHICAGO, ILL.

must

.

SMALL UPSTATE NEW YORK TOWN

Unfavorable.*

I

7

as

such

handle

ever,

Limited the trading.*

arouna

■'

and

system. I strongly doubt if we can
stand more tampering or regulat¬
ing without destroying the insti¬
tutions we are trying to regulate.

:

SMALL UPSTATE NEW YORK TOWN

CHICAGO, ILL.

like

;

.

Allows fair profit.

CHICAGO, ILL.

that laid the golden egg.*

change in

government

GLOVERSVILLE, N. Y.

Adverse.*

our

(Continued from page 39)

'

.

It depresses the market.

CHICAGO, ILL.

Finance

NEWARK, N. J.

7^v 77777

(Continued from page 8)

It's killed the goose

Trends in

effort the larger should be the
''Salesmanship is essential to distribute securities"—when
this concept is accepted by the investment community all this em¬
phasis on spread will disappear.

Of Smaller Corporations

dealer

Thursday, April 14, 1949

The greater the necessary sales

.

Surely

CHRONICLE

spread.

"5% Mark-Up" Spread on Securities

This

-

BOSTON, MASS.

J

Effect of

on

&

JM.«

easily. and
,«.M

S;

ti-'Xi

t»

£

quickly.
b.

,7f

Volume 169

Number

COMMERCIAL

THE

4794

FINANCIAL

&

CHRONICLE

(1653)

Perhaps international finance will

World

Federation

this

things
plished.
and

field

are

efforts

world
cial

big

and

great

being
accom¬
breaking barriers
world cooperation
eventually
even
through finan¬
It began actually

federation

after

and

World

War

I

when the United States made vast

loans to

allies in Europe and

our

other parts

of the world.
These
loans turned into gifts.
For the

first time
that

your

NASD has not only not hurt
assistance in building it up.*

lease

As

general rule

a

are

we

today

an

distribution

services and funds all

goods,

the world for the purpose of

strength.
These fi¬
nancial developments on an inter¬
our

national scale

nings of
will, in

the real begin¬

international

tion such
before.

are

world government and
my .opinion,
eventually

in

result

have

as we

We

coopera¬

known

never

well

for the
taking with

of life.
This

over 5%. If any concern is engaged
shady offerings their work is done long before the SEC can catch
up to them. The long established processes of law are adequate for
protection of the investor. In my experience the brokers themselves

derive

our

ample,
from
the

is

are

you

Salt

the

not

City

view

best

of

one.

Denver,
Rockies

*

While

A

of

the

Rockies

o* /»ri

f—

J

rule

has

The

contributed

any

du

Salle

Pont

&

to

Street.

Mr.

/

•

;SAN

A.

The

Financial

FRANCISCO,

Tormanen

small issues with

has

PITTSBURGH, PA.

The

Financial

SALEM,

None—same

PITTSBURGH, PA.
rule

is not

con¬

They will

soon

be

.'

I

•

'

;

•

-

\

•

■

..

Members

CITY

.'

..

are

• •

.

permitted in

especially

on

think 5%

is sufficient where

CITY

It

the

narrows

market

CITY

a

no

'

great

:

c.

.

"

*

*.

"

cases

many

to

go

*

'

above 5%,

V;

position is taken?*

and

Very little, if any.*

-

'

■

consequently has

an

i
unfavorable

None—for it takes

good.

purpose

which

was

to eliminate fantastic

could not afford to do

sale is involved.

It is

so.

our

Were

It makes it very

great deal

'

'

v-

•

small,

friend."

a

'•

Has played

We

y

CHARLESTON, S. C.

belief that the rule is good and

a

are
carried by the dealer.
The higher limit
close relation to the market for the security
case, 10% above real market should be plenty. *
j

a

Very bad—no dealer

them and enthuse salesmen for

stock

can

5%—not even for 10% in many cases.

'

NORFOLK, VA.

inventories

have

involved.

~ y

selling, etc., to help

more

difficult to "find

order, but allow greater profit when stock is a bona fide retailing
job from inventory.
It should not be too difficult to establish the
that

•

ICOLUMBIA, S. C.
hell.*
Y'Y^

to purchase

we

bad only as interpreted.
It should be changed to 5% on any essen¬
tially brokerage transaction when stock is bought after receiving

should

v'"

•

GREENVILLE, S. C.

Being

listed broker, usually we charge regular SE commissions on unlisted
or

-

corporation.

gouging

Someone should protect innocents from the wolves.

purchase

a

CITY
unknown

was

-

SPARTANBURG, S. C.

This rule very

very

In any

definitely slows

smaller corporations.

activity in the securities of

up

The unlisted security dealers cannot survive

j

? Y' NEW
Limited.*
X
'
'

;>.•>

YORK CITY
-

NEW YORK
None.*

'

: v;

"

on

•

a

5% gross profit.

It isn't in the books.

duplication of the SEC and

'

CITY

industry

•

-■

-

as a

NEW YORK

v >

None.*

•

v

,

,

•

^

~.\

/Y

' 3-:'

would be OK.

1
•"

CITY

great hindrance to the raising of venture capital.*

rV^T

Driven

the over-the-counter market

down

50%—has made the

little dealer sell investment trusts so the board could

—

get more busi-

profit of

I

*

Commented anonymously.

over

were

2Vz % to 3%

Accordingly there is

proprietors to sell

permitted that

client

a

a

a

on

arbitrarily

sale by us df

tendency among sales¬

security with

a

larger profit

Result—safety for clients' account is sacrificed, often, as the

"boys" must eat.
blood money to

We have been paying this "gangster organization"

have "our

A small WHITE MAN.*

ness.

■

transactions

(unlisted), even though the account should be buying listed bonds or
stocks.

NEW YORK CITY

a

listed bonds and stocks.

and

our

But these "Lice" go further than that, and

challenge and criticize

men

\

MILWAUKEE, WIS.

net profit of 5% on all

a

..

'Vi-'>

'

NEW YORK

^

If
•

energetic sales program.*

j

CITY

NEW YORK CITY

:

Retards

quantity of shares, which

to
;

securities

MILWAUKEE, WIS.

.

Detrimental to the street and industry.*

the

whole.

.

NEW YORK CITY

could be sold to the small investor.

The NASD is purely a

definite drawback to

a

throats cut"—too, too long.—(Signed^

own
•

•

Associates, Inc., Insur-




'•

ALLENTOWN, PA.
(

,

YORK CITY

NEW YORK

The original

Chronicle)

Building, Raleigh, N. C.

'

'

small orders and special circumstances, and don't yo»

Ruinous.

pre¬

C.

thing of the past—unlisted trader's (corner^

a

take—3-way profit—then try to get 5% and keep your customer.*

;

,

larger corporations.

as

NEW

CAL.—Leo

N.

helped.

effect *

Frank J. Walker is with Kirchofer

ance

PITTSBURGH, PA.

YORK CITY

NEW YORK

With Kirchofer & Arnold

Arnold

PITTSBURGH, PA.

and no one com-

,

—

added

limited,

adequately compensated.

PITTSBURGH, PA.

Chronicle)

been

"

to restrict their marketability if mark-up is

PITTSBURGH, PA.

NEW YORK

A

&

It is bound

None.*

Coburn

was

-

for greater sales effort is not

,

Street.

WINSTON

more

inactive markets the 5%

NEW

.

to

j

(

Constructive.

the staff of Merrill Lynch, Pierce,
Fenner & Beane, 301 Montgomery

(Special

equity

It has not

Has retarded sales, especially in small

to

Y,

,

other business makes

NEW YORK

With Merrill Lynch Co. Y
(Special

of

None.*

South La

Smith

depress¬

Ruinous.*

viously with Bache & Co.

;

freezing

the

NEW YORK CITY

Chronicle)

Co., 200

■.

Difficult to say.*

has become affiliated with Francis
I.

greatly

structive.

CHICAGO, ILL.—John S. Smith

i

■

are

Chronicle)

a

CINCINNATI, OHIO
'■■

NEW YORK CITY

On

Smith with du Pont Co. I
Financial.

!

marketability and has been

the prices of those securities.*

NEW YORK CITY

fact

The

Some

None.*

trades when only

with

on

NEW YORK CITY

Conn.

to

ing factor

Very little.

a

Financial

profits.
sell.

are hard to

It practically prevents the sale of

■

Detrimental-

Middlebrook, Inc. of Hartford,

(Special

CITY

block of securities and retail them, the 5% rule would be unfair.

connected

is

Has considerably lessened

plains.*

AUGUSTA, MAINE—Gabriel H.

Bisson
&

to

(especially small corporations)

None.

NEW YORK CITY

Middlebrook
(Special

YORK

capital.*

With Coburn &

j

k

V..-

CINCINNATI, OHIO
The

themselves."

ij ;

/'y

,.,

There should not be any hard and fast rules as to

Bad.*

looking back at them as you fly
over the plains that they rise up
before you in their magnificent
order, range behind range.
It is
only then that you have a vision
1

;

CLEVELAND, OHIO

No particular effect.

market—creates greater inactivity.

unfavorable effect.

very

you

and

you

;

.

risk capital.- Stops flow

NEW YORK CITY

actually over the mountains,
you see nothing but a maze of
peaks, ridges, gullies and crags.
It is not until you have left the
behind

•

...

CINCINNATI, OHIO
It certainly lessens the

are

mountains

,

CLEVELAND, OHIO

himself

to

•

Almost impossible to get

V

securities

on

the

-

.

into securities.*

money

:

Very bad effect.

when, for ex¬
travelling by air

Lake

nearest

new

securities of smaller corporations.

perspective, like opti¬
perspective, comes into focus
only when the observer has put a
object;

....

CLEVELAND, OHIO

"Mental

his

Detrimental!

.

of

None.*

between

\

-

' Y,

•

living.

None.

cal

and

,

,

NEW YORK CITY

says:

distance

v

CLEVELAND, OHIO

wary

ness,

history, Arnold Toynbee, who

certain

^

Bad.*

of such individuals. After all, if we want to keep in busi¬
why should we try to defraud our customers from whom we

were

NEW

objective, unbiased, and
long-range point of view, free of
emotion, passion and prejudice?
Let me close by quoting from the
greatest living thinker and writer
in his latest book "Civilization

.

CLEVELAND, OHIO

in

an

Trial"

Stagnates that market.

NEW YORK CITY

antagonisms that tend to cover up
what is really happening under¬
neath. How many of us can truly

on

.

NEW YORK CITY

the present or plan the future on
the basis of fleeting influences and

claim

None.

rities, the mark-up is usually

accurately appraise

never

can

.

noticed that in many "run-down" offerings of the lower priced secu¬

romantic, and overly optimistic.
Let me point out, however, that
we

DAYTON, OHIO
Adverse.*

expect NASD to recognize such.

continued campaign against the restrictive
efforts of the NASD you have all the logic and common sense on your
side. The smaller corporations need your continued efforts. I have

unrealistic,

seem

may

It is definitely the

CLEVELAND, OHIO

.

all

circumscribe

I believe that in your

our way

>

4. Demoraliz¬

to

power

rule of the SEC.*

BOSTON, MASS.

terrible

us

are

we

The

kill initiative and the industry.*

power to

Depressing.*

and

repay

risks

5.

CLEVELAND, OHIO

inspiring thing
contemplate, and that it may

to

few stockhouses.

a

England.

SMALL OHIO TOWN

BOSTON, MASS.

must admit that it is

thrilling

a

in

It is equally bad for small or large dealers.

.

seeing

are

unbelievable

sharing

like

issue.*

CITY

2. Wiping out the small securities

in

power

money?

no more

CITY

been of

the 5% mark-up, though we rec¬
where a larger spread is both necessary

cases

business

in the late thirties and

up

early twenties. The Marshall Plan
picked up where lend lease left

of

but actually

Concentrating

profits is the

approve

we

forties where loans left off in the

over

their business,

3.

the

BOSTON, MASS.

and desirable and would

Lend

Killing small corporation.

ing

trying to pull out of the fire."

In brief
good faith in the face of their observation that

ognize that there

needs.

1.

"whose chestnuts you were

they questioned

Selling "names" is much easier

NEW YORK

dealer.

barriers

human

and

companies.

Why do extra work for

Does not afford the distribution of this type of

(Continued from page 40)

of

almost

smaller

selling values.

discussion among many members, they have now ceased to pay any
attention to them.
I have had quite a few of them, query as to

could, and
should be, broken down in favor

off

the

to

CITY

tendency to discourage dealers from devoting their

NEW YORK

Of Smaller Corporations

recognized the fact

we

national

picked

than

u5 % Mark-Up"Spread onSecurities

are

processes.

during

definite

A

now

We

creating
perhaps

and

Effect of

on

Through

Financial Processes
In

NEW YORK

Dealers' Comments

show the way.

4t

*

Commented anonymously.

\

V

" "

42

(1654)

COMMERCIAL

THE

&

FINANCIAL

CHRONICLE

Thursday, April 14, 1949

bakers showed

The State of Trade and

Industry

(Continued from page 5)
In

midwestern

one

62%

area

the truck

shipments of steel

run

high

as

as

of the steel leaving that plant.
Steel

in steel.

users

demanding and getting exactly what they want

are

No longer are cold-rolled sheets being used when hot-rolled

sheets at

some pick-up last week.
Aside from this, there was
little activity in the domestic flour market with trading still
confined
largely to nearby requirements. Fairly
active trading

very

featured

with prices rising almost 2 cents per
pound during the week. Lard prices were steady with trading mod¬
erate in volume.
The market for cottonseed Oil showed improve¬
ment, aided by substantial government buying and a firmer tone
in soy beans.
Chicago livestock market, hogs were under consider¬
able pressure, with prices falling to the lowest levels since the

a

SteeJ

not

was off sharply in price again this week.
big as a week ago but it was substantial. "The
composite is down $2.59 a gross ton to $23.58 a
composite is off $19.42 a ton since the first of

steel scrap

The

scrap

and has reached the lowest

seasonal

gross ton.

Spot cotton markets
higher than a week ago.

this year

off scrap. The "Iron Age" steel scrap composite this week
is only $4.41 a ton higher than the OPA ceiling average of $19.17,
ings went

American Iron and

The

that

the

operating

rate

of

Steel Institute announced this week

steel

companies

steel-making capacity of the industry will
for

the

week

beginning

preceding week,

or an

April

1949,

11,

94% of the
99.2% of capacity

against

as

advance of 0.4%.
is equivalent to 1,828,800 tons of

steel

ingots

castings

and

1,821,400 tons

week

a

ago,

and 1,285,200 tons, or

1,281,210 tons for the

for

the

entire

1,880,400 tons,

industry,

102% a month ago,

or

71.3% of the old capacity one
week in 1940, highest

average

and

year ago
prewar

year.

30.50

for cotton

Loadings of revenue freight for the week ended April 2, 1949,
725,623 cars, according to the Association of American Rail¬
roads. This was an increase of 129,294 cars, or 21.7% above the pre¬

k

totaled

ceding week, due principally to heavier loading of coal and ore.
also represented an increase of 64,992 cars, or 9.8% above the
corresponding week in 1948 and an advance of 10,464 cars, or 1.5%
above the similar period in 1947.
It

OUTPUT

EASES

FOR

TENTH

SUCCESSIVE

in

the

week

Entries

electric light
industry for the week ended April 9, was estimated at
5,359,961,000 kwh., according to the Edison Electric Institute. This
represented a decrease of 17,701,000 kwh. below output in the pre¬
ceding week, 327,082,000 kwh. or 6.5% higher than the figure re¬
power

ported for the week ended April
excess

of the

10, 1948 and 740,261,000 kwh. in
output reported for the corresponding period two years

Production

■

•

:

of

cars

and trucks

in the United

States

and

Canada

to

units, com¬
units in the week preceding, according

(revised)
to "Ward's Automotive Reports."
119,088

for

was

in

in

Failures involving liabilities of $5,000

•

•

the

for

March

of

month

the latest

week

were

they

still

were

less

than

bales,

com¬

•

at 66,215

reported

week previous, while repossessions totaled 77,246

a

week earlier.

a

$10,267,193 as against
$9,374,119 in the preceding month
and $10,011,575 for March of 1948.

upward

These

increases

established
which

wool

the

and

the

1948'in

year

recorded

was

the

over

trend

the

follow

the

for

there

increase

was

last

little

very

activity

in

noted

the Boston

week.

Inquiries, however,

WEEK

OVER THAT OF PREVIOUS

raw

somewhat better

were

WEEK

40%

a

1947 when

year

As Easter shopping gained momentum in many parts of the
country, total retail dollar volume rose noticeably in the "Week and
was very slightly above that of the
corresponding week a year ago,
Dun and Bradstreet, Inc., reports in its current
summary of trade.
Promotions of spring merchandise continued
in many areas and
most shoppers continued to insist on good quality at moderate
prices.
There

was

substantial increase

a

in the

demand

for apparel

Women's gabardine suits and short-length coast in pastel colors
were very popular.
The retail volume of blouses, skirts, hosiery and

millinery
in

seasonally. There

rose

shoes.

The retail

was a

sizable increase in the interest

volume of men's apparel rose

largely

moderately with

Housewives bought slightly less meat than in the preceding week.
Sea food and dairy products were purchased
fresh fruit and vegetables increased in

frequently.

of

canned

the demand for candy and bakery goods.

and frozen foods remained high.

Interest
week.

in

Retail

furniture

volume

and

The supplies
sections. Interest

many

in
in

housewares

There
.

was

slight rise

a

.

dipped

slightly

country

dollar

the

past

for

volume

1900.

has

1948

Further, for the first

ter the

been

in only five years since

exceeded

quar¬

price per share of
stock traded was $14.08, whereas

the

average

is

cates

comparable

the

for

figure

period
fact

1948 was $10.96. This
important in that it indi¬
a
greater activity in the
of

higher priced issues being traded
our Exchange.
Some of the contributing factors
of- the
Exchange's progress are
the tremendous industrial growth
on

this

the last 10
in investor
population in Southern California
and the fact that the Los Angeles
Stock
Exchange
remains
open
of

furnishings.

on

of

average

nationally known corporations..
It is
also significant that the

AND

YEAR AGO

increased

slightly

numerous

as

to

59

from

54;

or more

rose

to

of last week

of

they

were

Retailing and wholesaling failures had the sharpest increases
rising to 122 from 97 in the preceding week and 32 wholesalers as
against 18. In both these lines, casualties rose to the
highest level
The Middle

Atlantic States reported a rise to 69
casualties, the
region since 1943, from 48 a week ago and 18 last year.
The only other marked
uptrend occurred in the East South Central
most in this

as

and

two

during

area

the

years,

increase

half

a

the

after

hours

major
Eastern
Ex¬
changes,' with listed or trading
privileges available in 245 stocks
the majority of which are actively
traded
on
other important Ex¬
closing

of

of

Coast unchanged

The

the corresponding date of last
year.
Grain futures prices were
irregular and moved in a fairly narrow
range. Trading was
comparatively light and mostly professional in
character. Wheat developed
strength aided by a steady tightening
in
cash wheat premiums
resulting largely from reduced country
offerings and an active demand for the cash
article.
on

6.

up

was said to be excel¬
reported in the winter

tfom thtj%brresponding

ungtfanged to

down 4,
'

.

up

volume

levels of

interest

The

number of buyers attending
r(sanyiT:iWholesaJi0 markets dipped
fractionally and was very moderate!# below that pf- the correspond¬
ing week in 1948.
y_
.

..

aI'coantryr.wide basis,

»




'

•

•'

snow

•

i

i

'

The

& Co., 231

with

from the

decrease of 16%

a

2, 1949, sales

Chicago Stock Exchanges.

With Bear,

.

byw,

■'

preening iveek. Fpr the four weeks

decre&sfei$*&y

f<& the

9% and

year to

date

(Special

to

The

past week continued to

according
a

to

advanced
week

a

week

of

of

10%

estimates,

to

advanc^
was

which,

year ago,

store sales

the

decrease of 17 %
For

»above

howey|i^Kaft Sa

Federal

by 8% from the

was

Bear,

ILL.

Chronicle)

affiliated

become

Stearns

Reserve

Co.,

&

same

-J.

was

(Special

to

TAMPA,

The

Financial

FLA;

—

Chronicle)

*

A.

Robert

Foster has been added to the staff

of_D,

E;;Artiest-Tam£a

Street/

->*•••

-♦

<.,•*>?*

April

1949,

anfcfor

Vl\

U

a

decrease

the year to

*

v

/•MIAMI,
well

is

Olympia

-

FLA.—Ralph

offices

opening

Building

to

T.

Fol¬

in

the

engage

in

the securities business.':'

With King
to

The

Merritt & Co.
Financial

Chronicle)

.LOS ANGELES, CALIF

—

■

Ralph Folwell in Miami

registered winder the similar

below that' 0$'last year

6%.

period.

department

.

periodjast year.Mrivthe preceding

{revised|

date volume decreased by

index,

135

..*•

D. E. Arries Co, Adds

>

tlfe^corresponding

posl^Easter

jfhe weekly periods to April 2, 1949,

the four weeks ended

reported

the

Board's

F.

Joseph

H;

La Salle Street..

South

Department store? sales volume, :

a^oidF*5%

in New York City for

1948.

with

Stearns Co.

Financial

.j,

With the advent of Easter; PetaiL trade here ii* New York the

•

South La Salle Street,
the New York and

CHICAGO,
indfex|foj^ the-week ehded April 2, 1949,like|peribcl of last yeart - This compared < Halloranyhas

in the

ended April

Adds
Ch°on"t.e)

of

the Federal Reserve Board's

increased by 8%

Financial

Clercq is with Clarence G. Troup
members

taken from

as

to

CHICAGO, ILL.—Robert R. Le-

■

volume

on

Clarence Troup
(Special

5 and North¬

up

are

a

With F. S.
(Special

to

The

Moseley

Financial

Chronicle)

With

An-

BOSTON, MASS.-—r Clifford A.
toine J. MacNamee is now con¬
wheat areas.
Worthing is now affiliated with F.
nected with King Merritt & Co?, S. Mbseley &
Co., 50 Congress
Corn displayed independent
firmness, reflecting continued small Inc.,
Chamber
of
Commerce Street, members of the New York
offerings and receipts from the
country. Flour purchases by larger Building.
Exchanges.
beneficial rain and

cutions

4, South and Pacific

]&flidwest~top 1 to
I

issues when such exe¬
in the best interest of

ly traded

the customer.

of man^huyaers in spring merchandise
moderately in the weekvwith total dollar
rising slightly above that m thf7 similar Iweek a year ago.
re-order

(Special

new wheat crop

2 to

According

fluctuating unevenly during the
period, the Dun & Bradstreet daily wholesale
commodity price index
finished at 255.89 on April
5, comparing with 255.53 a week earlier

f'

perce;htagi$sL_New England and South¬

2, East

to

increased

boosted

week

Trends in both industrial and
farm commodities continued to be
during the past week. After

4T^fuCfn^Ltioll of 5®,
lent with further

by the following

west up

below to 3% above that

'

Department store sales

mixed

b^f-from 1%

'

west down 2 to up

COMMODITY PRICE INDEX FOLLOWING
MIXED TREND
CLOSED A TRIFLE HIGHER
LAST WEEK

i

estimated to

was

ago.

Regional estimates varied

compared with 6 in the previous week.

FOOD PRICE INDEX MAKES FIRST
ADVANCE IN FIVE WEEKS
There was a generally firmer trend in
farm and food items in
the past week,
resulting in a slight advance in the wholesale food
price index, compiled by Dun &
Bradstreet, Inc. It was the first rise
„in five weeks and
brought the April 5 figure to $5.78, from $5.77 a
week previous. The current index
compares with $6.72 on the like
rate a year ago, or a
drop of 14.0%.
"
'
The index represents the sum total
of the price per pound of 31
foods in general use.
^
y
y

and with 283.67

year

year ago

in the corresponding week of last
year.

States which had 17

a

from

177

Small casualties
over
five times as

a year ago.

since 1942.

v

as

during

giftware^ibWltlffS. curtains and decorating changes. In addition to these, and
materials remained sizable.
to an estimated 236
Snoopers displayed more reluctance in perhaps most important, is the ef¬
the
purchase of electrical
preceding week, Dun
appliances than a year ago. The demand fort being made by member firms
Bradstreet, Inc., reports. This was the highest number occurring for garden supplies and.
in building the home market by
hardwari^ho^fcjyer, remaihied large.
any week since April 2, 1942. Casualties were three times as
heavy
Retail volume for the countr#in ^fry-period ended on Wednesday effecting local executions of dual¬

; 162 last week, exceeding the 68 reported
f

our

Commercial and industrial failures increase
the week ended April 7 from 216 in the

in the comparable weeks of 1948 and 1947 when 79 and 71
occurred,
but they remained below the
prewar total of 295 in the same week
of 1939.
as

period

$30,335,772

all Exchanges of
increased
approxi¬
spot quotations held nominally steady due to lack of burdensome mately 10%.
The dollar volume
increase has raised the position of
supplies.
Prices in foreign primary wool markets continued on a firm basis. the Los Angeles Stock Exchange
from fifth to fourth place among"
Imports of apparel class wools at Boston, New York and Philadelphia
the
Regional Exchanges of the
in the week ended March 25
represented 3,599.900 clean pounds,
Nation
and
emphasizes its in¬
compared with 3,070,000 in the previous week.
creasing importance as a market
RETAIL AND WHOLESALE TRADE SHOWED A SEASONAL RISE for securities of both locally and
market

103,004 units and

»
Last week's output consisted of 99,745 cars and 24,852 trucks
built in the United States and 3,592 cars and 2,008 trucks in Canada.

&

t

24, although
period.

turned

of the comparable week last year.

ago

BUSINESS FAILURES REGISTER HIGHEST LEVEL OF POSTWAR
PERIOD IN LATEST WEEK
L

.,

March
same

loan

increasing availability of cold rolled sheet steel."
year

totaled

the

of

period for last year. The

same

volume

Retail food volume did not change appreciably from the mod¬
erate level of the previous week, being fractionally less than that

a

the

$16,000,000 ECA authorization

a

"Prospects," states the publication, "are that schedules in
coming weeks will be moved up markedly in response to rapidly

for the like week of 1941, 99,260 units.

;

ended

interest centering

Output in the similar period

exchanges

For the three-month

previous.

last week and total dollar volume soared considerably above that
of the similar week a year ago which followed Easter.
|
^

for the past week rose to a new postwar high of 130,197
pared

the report of

month

a

staple into the government

bales, against 75,201

AUTO OUTPUT IN LATEST WEEK ATTAINS NEW

POSTWAR HIGH

by
other
country."

amounted to

the

pared with 49,878

ago.

>.

30.38 cents

from

pound

a

was

withdrawals for the

WEEK

The amount of electrical energy distributed by the

and

•

year

general decline in volume record¬
ed

China.

of

LAST

ELECTRIC

cents

to

Entries

There

CARLOADINGS RISE 21.7% IN LATEST WEEK AS A RESULT OF
HEAVIER COAL AND ORE LOADINGS

period of last

'corresponding
in contrast to a

compared with $27,548,637

to

compared

the

over'

ton

to

dollar

increase of 10% in

an

volume

firmer with prices averaging slightly

Transactions

Exchange during the threeperiod ending Mar. 31 reg¬

transactions

98.8% in the

This week's operating rate

the

istered

new

which

year,

The strength in prices last week largely reflected the gen¬
erally unexpected advance in the mid-March parity price for cot¬

Another factor

having

be

50th

gratifying showing for the

very

on

Domestic mill demand was only moderate
buying restricted to small lots for prompt shipment. Sales for
export were reported in fairly good volume.

*

its

Angeles Stock Exchange reported
a

month

;,y

high prices due to continued starvation receipts.
were

Entering

will be celebrated Dec. 7, the Los

first quarter of 1949.

with

trade paper.

concludes this

•

..

Iron Age"

point since Nov. 10, 1946 when OPA ceil¬

'

y,.y:
y;.y::
Fed lambs finished unchanged for the week after rising to

The drop

scrap

as

of OPA.

end

Ang. Stock Exch.
Reports Trading Gain

market,

cocoa

In the

cheaper price are required. Some customers, the maga¬
zine points out, are getting so quality conscious that they are calling
&nd getting steel mil) metallurgists on quality cases.
was

the

Los

•

Floyd D. Cerf, Jr., Co.

(Special "to

The

Financial

Chrontcle)

CHICAGO, ILL.—David F. Cerf
II

is with Floyd

D. Cerf, Jr. Co.,

120 South La Salle Street.

^Volume 169

THE

Number 4794

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1655)

Indications of Current Business
The following statistical tabulations
shown in first column
AMERICAN

IRON

Indicated

Equivalent

operations

capacity)

of

(percent

Previous

Week

Week

Apr. 17

_

month ended

or

Latest
INSTITUTE:

STEEL

AND

steel

either for the week

are

on

in

or,

71.3

102.0

and castings

(net tons)_

Apr. 17

;

1,821,400

1,828,800

1,880,400

ingots and

1,285,200

(net

INSTITUTE:

Crude oil output—daily average
Cruae

Gasoline

oil

Residual
4

(bbls.)

(bbls.)

—_

(bbls.)

output

and

and

(bbls. of 42 gallons each)—_

stills—daily average

output

Kerosene
Gas

to

runs

tuel oil output

:

—

:

i

dis^il'ate fuel oil output

(bbls

L_

.

(bbls.)

Gas

oil

(bbls.)
fuel

oil

fuel

(bbls.)

3,072,400

5,130,450

2

135,269,000
§17,635,000

§5,353,000

5,186.800
§5,515,000

5,388,700
5,475,000

Apr.

2

Apr.

2

Apr.

2

oil

(bbls.)

at

at

j

—

;

•>

2

§17,417,000

§17,705.000

§1,959,000

§2,014,000

§2,158,000

15,735,000
2,484,000

§6,658,000

§6,167,000

§6,947,000

7,586,000

§8,351,000

§8,305,000

§8,542,000

9,084,000

of

Apr.

2

Apr.

2'

Apr.

2

__Apr.

2

§127,769,000

§128,087,000

§126,266,000

113,261,000

§17,915,000

§17,700,000

§18,999,000

10,930,000

>§48,556,000

§48,721,000

§52,109,000

32,180,000

§58,710,000

§58,792,000

§59,568,000

47,959,000

■t

steel

of

stainless

AMERICAN

for

fre'ight loaded

Revenue

RAILROADS:

;

i

March

of

including

products,

(net

domestic

(number of cars)__

2

Apr.

■•■r

2

725,623

596,329

705,552

660,631

583,210

551,409

632,622

595,451

Natural

ENGINEERING

CONSTRUCTION

RECORD:

Total

U.

ENGINEERING

—

production

(bbls.

Refined

oil

output (bbls.)
output (bbls.)__

gasoline

products

Indicated

—

(bbls.)

imports

consumption—domestic

AMERICAN

_

.

Apr.

—

Private construction

$178,242,000

7

$184,579,000

$132,174,000

State

and

89,664,000

85,088,000

66,103,000

7

88,578,000

47,086,000

118,476,000

68,849,000

Apr.

7

71,977,000

39,331,000

67,962,000

54,965,000

Apr.

7

16,601,000

7,755,000

50,514,000

13,884,000

Federal

ZINC

zinc

output,

Bituminous

-4

•

coal

BUREAU

Unfilled

orders

BUSINESS

at

end

and

lignite

Pennsylvania

anthracite

Beehive

(tons)

coke

DEPARTMENT

STORE

TEM—19,15-.J U

(tons)_'______^i___^__

INDEX—FEDERAL

SALES

10,260,000

2,131,000

107,000

697,000

856,000

105,900

♦38,800

159,500

9,700

301

♦277

244

280

Apr.

2

9,600,000

::;._Apr.

2

960,000

Apr.

2

Apr.

2

(tons)—

♦2,415,000
'>

>

189,805,000

175,828,000

166,321,000

176,329,000

163,781,000

12,987,000

13,448,000

11,997,000

11,000

28,000

50,000

13,875,000

14,547,000

8,427,000

5,355,000

5,450,000

5,479,000

196,156,000

205,396,000

199,763,000

2,393,000

4,406,000

$110,029,000

78,121

69,193

74,322

71,017

68,522

77,334

28,204

21,100

45,631

79,722

87,898

61,610

$32,036

$32,081

$28,768

Month

—

grades

(tons

.___

of

(tons)

period

DEPT.

Feb.

OF COM¬
(millions of $):

—

Wholesale

8,602

8,542

7,885

13,948

13,517

13,625

$54,586

$54,140

$50,278

$743,529,000

$563,000,000

$508,096,000

344,058,000
399,471,000

374,000,000
189,000,000

220,715,000

236,154,000
163,317,000

169,000,000

188,288,000

20,000,000

99,093,000

32,800,000
2,373,000

44,458,000

♦2,927,000

34,399,000
4,928,000

395,200

♦607,300

325,000

272

♦274

284

256

♦227

285

Total

CIVIL

SYS¬

RESERVE

AVERAGE=100——_

INC.

all

of

INVENTORIES,

Manufacturing

MINES):

OF

179,319,000

period (tons)

MERCE—Month

COAL OUTPUT (U. S.

5,046,115

export

and

(bbls.)

INSTITUTE,

smelter

Stocks at end of

24,951,000

7

!-__Apr.

Apr.
i

municipal

stock

of 2,000 lbs.)—
Shipments (tons of 2,000 lbs.)

$93,800,000

'

Public construction

7,608,135

5,765,959

March:

Slab

'v-

1

♦7,480,721

5,519,938

42-gal

of

;

crude

output (bbls.)
oil imports (bbls.)

Crude

NEWS-

-

construction

S.

8,388,965

Benzol

of
CIVIL

Ago

INSTITUTE—Month

each)

Domestic

Increase—all

_____Apr.

Year

Month

alloy

tons)—Month of Feb.—

PETROLEUM

Ions

^\.

(number of cars)

Revenue lreight received from connections

■

,,

AMERICAN

OF

Previous

castings produced

(bbls.)
ASSOCIATION

Latest

Month

January:

Total

*

—

at

distillate

and

Residual

2

Apr.

Apr.

Stocks at reiineries, at bulk terminals, in transit and in pipe lines
Finished and unfinished gasoline
(bbls.) at——
Kerosene

Apr.

steel

tons)—Month

Shipments

J.

of that date):

AMERICAN IRON AND STEEL INSTITUTE:
Steel

PETROLEUM

are as

Ago

Ago

to—

Steel ingots

AMERICAN

t)

month available (dates

or

of quotations,

cases

Year

Month

98.8

99-2

that date,

'

^

Activity

production and other figures for the latest week

cover

43

CONSTRUCTION—EN-

ENGINEERING

GINEERING

*

NEWS-RECORD

Month

—

of

,

March:

EDISON

ELECTRIC

Electric output
•'

■'

'

*

Total
INSTITUTE:

*•

"

.

FAILURES

1

,

.*

(COMMERCIAL- AND

:;

'•'}£ 'I

Private

*__:___Apr.
V"

+

5,359,961

9

5,530,629

5,37-7,662

5,032,879

Public

INDUSTRIAL)—DUN

BRAD-'

&

AGE

Apr.

7

t236

216

179

79

-Apr.
—Apr.

5

3.75197c

3.73197c

3.75701c

3.28244c

5

$46.74

$46.74.

$46.74

$40.11

Apr.

5

$26.17

$31.17..

$36.25

$40.25

PRICES:

COMPOSITE

.Pig iron

1 per

8crap steel

METAL

PRICES

•Electrolytic
.

Straits tin
Lead
~

M.

&

retinery
(New

:

QUOTATIONS):

J.

:

York)

—Apr.

___

<SU Louis)

Zinc

(East

St.

at._„:

Louis)

at___J._-_;r____^—

—

PRICES

23.200c

21.200c

6

23.425c

I 23.425c

21.675c

6

:—---—-Apr.

6

v.>

-

BOND

22.950c

23.175c

..—Apr.

__'

•r
MOODY'S

"22.950c

-_Apr.-6
—Apr. • 6

at

(New York)-at

Lead

6

DAILY

U. S. Government Bonds

AVERAGES:

103.000c

94.000c

15.000c

17.000c

21.500c

17.500c

14.800c

16.800c

21.300c

17.300c

15.000c

16.000c

17.500c

12.000c

103.000c,

103000c-

V
•.

—

Apr. 12

101.64

..Apr. 12

112.93

Apr. 12

118.80

.

corporate

_____!

_i._-_livi.-_

—ri.—

—

Railroad
;

:____

•___

Baa

Group

uViC.Vv

Public Utilities Group...,
Industrials

U.

•

S.

:___

Group

BOND

Apr. 12'-

112.19

Apr. 12

104.66

DAILY

AVERAGES:

-

100.88

101.67

113.12

113.12

112.19

-.119.20

118.80

117.60

117.20

117.00

115.63

112.37

112.37

111.44

.104.83

105.00

104.48

106.92

108.16

.108.16

,108.52

Apr. 12'

113.89

114.08

113.70

113.70

117.20

117.60

117.40

116J02

,___viApr.

—

corporate^

-

Aaa
Aa

r

INTERSTATE

;

Copper (per pound)—
Electrolytic, domestic

Electrolytic,

2.71

2.77

2.79

2.80

2.87

3.04

3.04

3.09

Apr..l2

,,,.3.47..

v—

,'k

MOODY'S

i

iviliiv

-i-'' '■

'';

ASSOCIATION—WHOLESALE

>'

'

Farm

oils

'

—

products

Grains

Livestock

Fuels

Building

.

materials
and-drugs

Fertilizer

materials

All

Orders
j

Apr.

9

Apr.

9

r

y

;'v»

:

TAPERBOARD

OIL.
»

PAINT

205.1

9235;0

232.2

Apr.

226.3

231.8
»166.2

167.3

189.0

189.8

190.8
190.0

Apr.

9

Apr.

9

Apr.

9

- -

184.6

186.0

215.2

216.5

137.9

137.9

9

v

—Apr.

9

.

Apr.

9

150.5

-

,

--155.7

2Q8.5,'•'

150.5

217.4
142.5
142.9
150.5

-

155.7

155.6

7

♦209.0

210.7

142.8

142.8

.

.

K

■

__Apr.
_■_

at

DRUG

REPORTER

PRICE

AYERAGE=100

New

.

•

•

•

,

York, 99%

min. (§§)
S. price),
:
76 pounds)
(per pound) (E. & M. J.)
(per pound), bulk, Laredo
(per pound), in cases, Laredo
(per pound), Chinese, Spot
refined (per ounce)
(per pound)
(per pound)

NEW

SERIES—U.

178,967^

2

Apr.

2

Apr

2

178.515

149,388

HAntlmony
Antimony
Antimony
Antimony

§Cadmium

Farm

S.

DEPT.

Aluminum, 99%

Magnesium,

As

157,814

170,643

75-

271,986

U. S.

•

Fuel

and

foods

lighting materials

and

Building
All

farm

products

and

Metals

than

metal

products

materials

other

"

^

:

Apr.

5

Apr.

5

79

98

287,302

464,683

138.1

146.2

"

at

amount

pound)

that

may

Total

Livestock
;

Hides and skins
♦Revised

figure.

Total

—

oblgiations

fCorrected.

distillate and residual fuel oils.

'v'




not

public debt and

gross

As

tl63.4

171.6

General

+151.4

147.9

+144.5

149.9

5
5

Apr.

5

Apr.

5

197.2

tl99.7

+201.6

192.8

Apr.

5

130.7

tl31.3

tl30.8

135.1

Apr.

5

164.1'"'

161.7

164.6

217.8
211.5

»: •;

+141.6
ti34.4'

141.2

132;8

,

-174.0t!74.6

+134.8

131.0

+175.2

156.8

of

outstanding

total

amount of obligation

above

Net

March

5

205.1

211.2

208.1

Apr.

5

225:9

"224.7

220.4

184.6

185.2

177.6

.■•'■■■. '.,r

new

74.625c
45.000d
$4.02500

17.056c

17.500c

12.000c

103.000c

103.000c

94.000c

102.000c
$35,000
$87,296
41.730c
38.500c
39.000c
Nominal
$75,111
$2.00000
$2.05000
$2.10000
17.000c
20.500c

102.000c
$35,000
$88,091
41.730c
38.500c
39.000c
Nominal
$85,455
$2.00000
$2.05000
$2.10000
17.000c
20.500c

93.500c
$35,000
$76,000
36.120c
33.000c
33.500c
Nominal
$72,926
$1.75000
$1.77500
$1.80000
15.000c
20.500c

40.000c

40.000c

Not Avail.

$27,557,141

$27,579,534

$28,018,806

$275,000,000

$275,000,000

$275,000,000

251,641,514

252,721,282

252,989,915

24,083

26.110

78,154

$251,665,598

$252,747,393

$253,068,069

782,441

785,345

837,250

$250,883,156

$251,962,047

$252,230,819

issuable

24,116,843

authority

GROSS

DEBT

23,037,952 *

22,769,180-

basis of reporting in California.

incomplete data from
"
"•
.

241.4
192.3

Principal changes

the Pacific States region.

DIRECT AND

31

fund

balance

;

-

debt

WINTER

WHEAT

AND

RYE-^U.

April

wheat—Production

Rye—Condition
♦Revised

-

—

$251,665,598

$252,747,393

5,766,580

5,290,704

$253,068,069
5,352,930

$245,899,018

$247,456,689

$247,715,139

2.233%

Computed annual interest rate

Winter

'

Apr.

based on

;

outstanding public debt obli¬

STATES

.•,«/_+150.7

•149.7-;

5

70.803c
43.000d
$4.02750

GUARANTEED—(000's omitted):

T64;7'>-~'-*' v—4162.9

Apr.

§On

71.500c
43.500d
$4.02750

guaranteed

subject to debt limitation

Balance face

160.3

Apr.

mns.

15.000c
14.800c

the

by

obligations
gations not

181.5

5

^Estimate

owned
-

Deduct—Other

+172.3

5

Apr.

((Includes 266,000 barrels of foreign crude

cracking stock from

21.500c
21.300c

be outstanding

public debt

gross

AGRICULTURE—AS of

Meats

18.907c
18.715c

Outstanding—

+158.9

/•«-_

Grains

21.200c
21.531c

DEPT.

time

one

any

tl58.1

Apr.

•

23.200c
23.432c

(000's omitted):

March 31

of

face

171.5—""'"^-i~tl70.8

Apr.

'

23.178c
23.425c

;

,

158.0
'

Special indexes—

exclude

132.3

STATUTORY DEBT LIMITATION

GOVT.

—As

Total

186,484

80

242,374

135.0

134.1.

8

LABOR—

^

other

(per

(000's omitted)

Feb. 28

of

UNITED

commodities

Textile

plus, ingot (per pound)

ingot

MONEY IN CIRCULATION—TREASURY

Grand

Apr.

OF

products

Foods

All

pound)

(per

♦♦Nickel

233,919

1926-—100:

All commodities

U.

flask of

(per

Guaranteed

INDEX —192(^36
•_

PRICES

(Check)

Straits

(per ounce

Quicksilver

under
WHOLESALE

•",'w1iU23.7-

pound)—

York

Gold

ASSOCIATION:

-___'^i_^_-i-_eri^-,A!)r". "2^-V? '149,918-*

AND

269.8
254.5
348.9
271.8
238.5
228.6
173.8
212.6
163.5
230.4
156.7
137.2
143.7
138.5
218.2

205.6

9

—___—Apr.

(tons)

(tons)

1IH120.V

'

ounce)

per

Treasury

(tons)

orders

155.3

206.2

Apr.

9

Percentage of activity
Unfilled

231.5

236.9
310.4

__Apr.

*

217.7

—_

pound)—East St. Louis

(per

(per

New

Platinum,

'♦218.0

,

(pence

Exchange

tCadmium

310.9

9

Zinc

London

tCadmium

~
' • v" 145.6
9•^236.8i-^^?-J-234.7

Aor.

•

received

Production

21.9.1^
'144.0

,

-•••

NATIONAL

372.7

.;:;■•■■■■ •>;.

-J.

-166.6

groups combined

>

2.85

420.3

9

:

machinery

2.78

9

;

Fertilizers
Farm

2.77

■.•.■v--.',

■

v ^

Apr.

:•—w.__

Chemicals

2.97

Apr.

—

Metals

•

3.34

2.97

---Apr.

__v—

commodities

Textiles

3.25

236.2
235.9

—

Miscellaneous

-

—.Apr.

Cotton

,

3.45

2.95

-

______

and

(per ounce)

Tin

3.48

3.46

3.27

359.6
™

■

.

>

Foods
Fats

'. v..:.;:.

354.5

'

■

COMMOO-

ITY INDEX BY GROUPS—1935-39—100:

,

.

r—Apr. 12

——

'i

:

FERTJi/IZER

;'2"o6

Apr. 12''•-

INDEX

COMMODITY

'"f*

»

NATIONAL

'Apr. 12/

_.

.

.

3.27,

•

"

Exchange—

Sterling

2.69

,

Sterling

Silver, New York
3.05

3.05

Apr. 12

and

3.00

3.01

refinery

refinery—

export

pound)—
Common, New York
Common, St. Louis

Silver,

2.80

•

.

Utilities Group—
Industrials Group

—

Lead .(per

2.44

:2.71

____

Group.

Public

COMMISSION

COMMERCE

PRICES (E. & M. J. QUOTATIONS)—
Average for month of March:

2.38

Apr. 12

__:

Baa

Railroad

—

METAL

2.38

-Apr. 12
1

,A

RE¬

of March:

.2.38

3.00

—_Apr. 12

—

=

12

'

,

•

(FEDERAL

for seasonal variation
Without seasonal adjustment

'

Government Bonds..

Average

_

SALES

——

of Railway Employment at middle of
February (1935-39 average—100)——

Apr.
.Apr. 12

YIELD

STORE

a

Adjusted

Silver
MOODY'S

(net tons)—

Index

101.70

v-.

117.00

Apr. 12

;

A

lignite

'

Aaa
Aa

287,381,000

SYSTEM)—(1935-39 Averagc=400)
~"r
\

Month

•

•

Average

and

Pennsylvania anthracite (net tons)
Beehive coke (net tons)

SERVE

Apr.

;

(BUREAU OF MINES)—Month

coal

DEPARTMENT

%v

;

Municipal-

March:

Bituminous

-

at

Export refinery at

i

?:

(E.

:

ton)

gross

copper—

Domestic

-

ton)

gross

(per

;

and

OUTPUT

of

Finished steel (per lb.)
•

construction

Federal

"

COAL

IRON
.

construction

construction

State

«T'

u

_|

STREET, INC.

\

';(" '•

kwh.)__________

(in 000

S.

U.

S.

1,

DEPT.

1949:

2.225%

2.168%

OF
•

990,098,000

1,019,686,000

89%

_

89%

+Based on the producers' quotation.
tBased on the average of
the producers' and platers' quotations.
§Based on platers' quotations.
^Domestic, five
tons or more but less than carload lot packed in cases, f.o.b. New York.
»*F.O.B. Port
Colbourne, N. S.
U. S. duty included.
4%Decrease—all stocks.
§§Tin contained.
figure.

llliPreliminary figure.

44

THE

(1656)

COMMERCIAL

Securities
•

Alabama

Gas

mill

(5/2)
March 29 filed $6,000,000 first mortgage bonds, series A,
due 1971. Underwriters—To be determined through com¬
Corp.

class A

Corp.; Salomon Bros. & Hutzler and Equitable

Meals, Inc., Spokane, Wash.
April 6 (letter of notification) 500,000 shares
To

develop and ship
Allied

(one mill
share.
No under¬
property and to explore,

Price—15 cents

secure

additional

per

Hellenic

Washington,
April 7
stock.

Development Corp.,

share. No underwriter.
quantities of ore.

For pro¬

filed

•

Aug.

nancing plan

may

working capital.

1

of

a

stock.

Underwriter-

Price—$8 per

/

16 filed

200,000 shares of capital stock.
Price—
share in Canadian Currency. Underwriter
Proceeds—For drilling operations.

Light & Power Co.

(4/20)

Consolidated Caribou Silver Mines, Inc., N.Y.C.
March

30

filed

376,250 shares (no par) common stock.
Price—$2.50 per share. An additional 60,000 shares will

Fi¬

be sold to

the

underwriters.

Underwriters—By
Proceeds—To develop mining properties.

ment.

amend¬

Bidders:

gas wells.

•

Proceeds to

selling

will

shares

of

be

given

as

for

each

stock

of

a

bonus

$3,500

For. rehabilitation
new

machinery

the

on

bond
of

and

basis of

1,000

purchased).

No

present

equipment,
equipment, and for

•

Doman

Helicopters, Inc., New York (4/19)
(letter of notification) 121,800 shares of capi¬
stock, of which 21,800 shares are to be offered for

April 12
tal

immediate

cash

sale

to

the

public

(with warrants to purchase not

$1,875

share

per

than 4,360 shares
share) and 100,000 shares are to be of¬
fered for public subscription at $2.25
per share
(with
warrants to purchase not more than 10,000 shares at
$2.25 per share. No underwriting. Helicopter construc¬
tion, purchase of tools, etc.
:
at

■

at

$1,875

more

per

.

•

East

April 7
common,

,

,

Coast

Electric Co., West Point, Va.
(letter of notification) 13,125 shares ($10 par)
to be offered initially to stockholders at $15
,

-

share.
Underwriters—Woodcock, McLear & Co.,
Philadelphia, and Scott Horner & Mason, Inc., Lynchburgh, Pa.
To reimburse treasury and provide funds
per

Bonanza

Mining Co., Phoenix, Ariz.
April 4 (letter of notification) 120,000 shares ($1 par)
common stock.
Price, $2.50 per share. No underwriter.
For development work, purchase of materials and
equip¬
and

Wagner & Miller.

working capital.

Baldwin

Corp., Ft. Worth, Texas
April 6 (letter of notification) 50,000 shares of capital
stock.
Price, $2 per share.
No underwriter. For the
purpose of buying oil and gas leases, drilling oil and

shares

purchase

Halsey, Stuart

Oil

Ferriss

underwriter.

Corp.
'(jointly); Equitable Securities Corp.; Union Securities
Corp. Proceeds—Reimburse treasury for funds expended
in property additions, etc.
Expected about April 26.

Basin

and

(Mich.) Sulphite Pulp & Paper Co.
(letter of notification) 1,000 shares ($10 par)
Price—$15.50. Underwriters—Wnj. C. Roney &

Dewey Mining Co., Boise, Idaho
April 4 (letter of notification) $100,000 10-year 6% cu¬
mulative, convertible sinking fund debenture bonds and
1,200,000 shares (lc par) capital stock (of which 200,000

& Co. Inc.; White, Weld &
Co.; The First Boston Corp.;
Lehman Brothers and Stone & Webster Securities

Co., Cincinnati, Ohio i
April 7 (letter of notification) 3,000 shares of common
capital ($8 par).
Price, at market.
Underwriter—W.
D. Gradison & Co.
Tp pay estate and inheritance taxes.

construction costs.

Bradshaw Mining Co.,
Tonopah, Nev.
Oct. 8 (letter of notification)
1,500,000 shares (5c par)
common stock. Price—20 cents
per share.
Underwriter
—Batkin & Co., New York. To
repair and renovate mine
of company and to exercise
option to purchase processing

Ohio.

Proceeds—To

•

Greater

Seminole

Salt

April

11

Lake

bank

loan

shares

(25c

retire

working capital.
Petroleum

Co.,

City

(letter of notification)
600,000
Price—50 cents per share.
Co.

For

working
drilling and equipping of oil wells.

Underwriter

capital

and

for

construction.

•

Heidelberg

Sports Enterprises, Inc.,
Pittsburgh, Pa/
June 25 filed 5,000 shares of class B common stock (par
$100). Price—$100 per share. Underwriter—None. Pro¬
ceeds—$600,000 to be used for spectator grandstand and
balance for related purposes.

Horwood
Dec. 27

stock.

Lake

Gold

Mines

Corp.

(letter of notification) 100,000 shares of capital
Price—$1 per share.
Underwriter—Charles W.

Warshoff & Co.,
Newark,
mining properties.

N. J.

For development of

Hotelevision, Inc., L. I. City

(4/18-21)

Nov. 3 filed 480,000 shares (par 250) class A stock. Un>»
derwriter — Cantor, Fitzgerald & Co., Inc., New York.

Price—$1

share.

per

distribute

a

Proceeds—To develop, exploit and
innovation.
Expected week of

television

April 11.
•

Howe Plan Fund, Inc., Rochester, N. Y.
April 11 filed 300,000 shares ($1 par) capital stock.

Idaho-Montana Pulp & Paper Co., Poison, Mont*
(by amendment) 258,675 shares ($10 par) com¬
stock to be offered at $10 per share and
20,020

Nov. 23
mon

shares to be issued in exchange for $170,200 first mort¬
bonds.
Underwriter—Tom G. Taylor & Co., Mis¬

gage

soula, Mont. Proceeds—To erect and operate a bleached
sulphate pulp mill with a 200-ton per day capacity.

Del.

April 8 filed 50,000 shares of 4 V2 % cumulative preference
stock, series A ($50 par). Underwriter—Merrill Lynch,

Pierce, Fenner & Beane. Proceeds—Funds
to

will be added

company's cash

loans
•

and

Indianapolis
March
fund

balances to reduce outstanding bank
Commercial paper.

(letter

(letter

Indianapolis, Ind.
of

stock

common

(Ind.)
of

Paint & Color Co.

notification)

$300,000 5% sinking
Underwriter—City Securities Corp.,

Proceeds—To buy about
now

owned

1,864 shares
by Union Trust Co.
;
/
f

•

Indianapolis Power & Light Co. v..
April 12-filed $8,000,000 first mortgage bonds series, due
1974 and 107,226 shares of common stock
(no par). Un¬
derwriters—Bonds will

be sold at competitive bidding.
Halsey Stuart & Co. Inc.; Equitable
Securities Corp.; Blyth & Co., Inc.; Hemphill, Noyes &
Co., Drexel & Co. (jointly); Union Securities Corp.,
Lehman Brothers, The First Boston
Corp. and Goldman,
Sachs & Co. (jointly).
Stock Offering—Stock will be
offered
for
subscription by common stockholders of
record May 11 at rate of one new share for each 10

Probable

shares

bidders:

held.

scribed

Underwriters—Terms

shares

will

be

determined

of

sale

unsub¬

01

by competitive bid¬

ding.
Probable bidders: Blyth & Co., Inc.; Lehman
Brothers and Goldman, Sachs & Co. (jointly); W. C.
Langley & Co., Shields & Co. and White, Weld & Co.
(jointly). Proceeds—For construction.
Kansas
March

25

Power

filed

& Light Co.
(4/26)
$10,000,000 first mortgage

Underwriters—Names

to

be

bonds, due
through

determined

competitive bidding. Probable bidders: Halsey, Stuart &
Co. Inc.; White, Weld &
Co.; Glore, Forgan & Co.; Equit¬
able Securities

Corp.; Blyth & Co., Inc.; Union Securities
Corp.; The First Boston Corp. Proceeds—To reimburse
company's

treasury for capital expenditures and for
meeting, in part, the costs of future capital expenditures

and

Farmers Tool & Supply Corp.,

30

debentures.

1979.

Family Finance Corp., Wilmington,

April 8

Denver, Colo.

for

other corporate

purposes.

Expected April 26.

of

notification) 75,000 shares ($1 par)
common.
Price—$2 per share.
No underwriter.
To
pay off obligations and supply working capital.

bod^

First Springfield

Corp., Springfield, Mass.
(letter of notification) 5,471 shares of common
capital stock.
Underwriter—D. J. St. Germain & Co.,

Feb.

28

Springfield, Ohio.
•

Fox

Additional working capital.

CO

(

fovitv

hie

operations.
Frontier
'

Boston"

Philadelphia

Pittsburgh

Sax Francisco

Chicago

Cleveland

March 7

filed

iaOKERS

Refining Co., Denver, Colo.
$600,000 5%

first mortgage




to

all

offices

of 1949, $150,000 of 5 V2 %
debentures, due March 1, 1954,
and 5,000 shares of 7% cumulative
preferred stock

par).
and

Underwriters—Peters, Writer & Christensen, Inc.,
Sidlo, Simons, Roberts & Co., Denver, Colo. Pro•

'

'

1

•

ni

York
Sto

B°s'on

oel-

C*GO

CHV

bonds, series

($100

Private IVires

"W

Hills Petroleum

Co., Inc., Newcastle, Wyo.
April 4 (letter of notification) 10,973 shares of common
(par $25). Price, pai\ No underwriter.
For drilling

New York.

the

construction and repay short-term borrowings.

Co.

.

Probable

Columbus,

•

April 1
common.

3V2 shares

Arkansas Power & Light Co. (4/26)
March 18 filed $8,300,000
sinking fund debentures, due
1974.
Underwriters—Names to be determined through

bidding.

Co.,

stockholder.

Detroit

Co., Chicago. Proceeds—For working capital. ;

competitive

gage

Brass Inc., Kinsman, Ohio
>
/
(letter of notification) $150,000 5% first mort¬
bonds, due March 15, 1961. Underwriter—The Ohio

Idaho Power Co., Boise, Idaho
(4/26)
April 5 filed 10,000 shares ($100 par) 4% preferred and
200,000 shares ($20 par) common stock. Underwriters—
Blyth & Co., Inc.; Lazard Freres & Co. and Wegener &
Daly Corp. will underwrite common; Wegener & Daly
Corp. will also sell preferred.
Proceeds—To finance

filed

of common stock held.
With each share of preferred
purchased company will issue a purchase warrant en¬
titling the holder to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
Underwriters—Lea son & Co., Inc., and First Securities

ment

amount

filed 200,000 shares (no par) preferred stock.
Underwriters—Putnam &' Co., Chas. W. Scranton & Co.
and Estabrook & Co.
Proceeds—For construction.

115,315 shares ($10 par) 5V2% cumulative
Offering — To be offered
Initially for sale to stockholders at the rate of one pre¬

•

the

underwriter.

Connecticut

be revised.

ferred stock and purchase warrant for each

Glauber
March 14

March 28

convertible preferred stock.

•

■

50 cents per

Argus, Inc., Ann Arbor, Mich.
Nov.

No

—P. E. Frechette.

&

for

on

Coleraine Asbestos Co. Ltd., Montreal, Canada

:

and

credited

Bottling Co. of St. Louis (Mo.)
(letter of notification) 1,385 shares ($1 par)
stock, to be offered to employees at $31.50 per

7

share.

166,500 shares

indebtedness

9,285 shares will be sold by Norgreen Associates Inc. and
— None.
Proceeds — Company will
use its proceeds for additional
working capital.

Coca-Cola

common

Pump Corp.
Sept. 21 filed 200,000 shares ($2 par) convertible class A
ttock. Underwriters—Herrick, Waddell & Reed, Inc. and
Sills, Minton & Co., Inc. Price—$8 per share. Proceeds
retire

be

Mfg. Co., Inc., Brooklyn, N. Y.
(letter of notification) 37,400 shares of 500

26

April

($1 par) common stock,
Underwriters—Estabrook
Ripley & Co. Proceeds—For gen¬
eral corporate purposes.
Expected last week in April.

—To

will

Cantor, Fitzgerald & Co., Inc., New York.
share. Working capital, etc.

to be offered at $25 per share.

Steel

Proceeds

cumulative convertible preferred

& Co. and Harriman.

American

expan¬

others. Underwriting

Clarostat

Aug.

American Research & Development Corp.
30

including the

Gauley Mountain Coal Co., New York

—Weber-Millican

previously made by Pacific Capital Corp. to City
Coach Lines, Inc.

will receive a fully paid up life insurance policy
equal to the amount they pay for stock. The purchases
must amount to not less than $250 nor more than $2,000.
Proceeds—To purchase life insurance policies and for
working capital to provide funds for oil exploration and
development.

March

general funds to retire current

19, filed 10,666 shares of capital stock, of which
1,381 shares will be sold in behalf of the company and

par) common.

writer.

ers

v

to

Jan.

in units of

5,000,000

(4/26-29)

added

ment

loan

V:/

Explorers, Inc.
'
shares of common stock (lc
par). Underwriter—Tellier & Co., New York. Offering
—Stock will be offered at $1 per share. Stock purchas¬
filed

17

Underwriter—De Witt Invest¬

City Coach Lines, Inc., Detroit, Mich.
April 5 (letter of notification) 9,167 shares of common
capital stock ($5 par). Price, $12 per share. No under¬

American Oil

March

100).

be

bank loans and for other purposes
sion of facilities.

and provide additional

Industries, Inc., West Chester, Pa.

(par

ceeds—To

•

50,000 shares of capital

per

saleable

of

per share.
No under¬
capital and surplus.

Co., 910 West St., Wilmington, Del. To be offered
one share of each.
Building of factory, install¬
ing machinery, working capital.

C.

D.

/letter of notification)

Price—$2

duction

Mining

Price—$10

raise additional

stock

common

leases, properties, drilling, etc.
American

company's

March 7 (letter of notification) 68,000 shares of 6% noncumulative preferred stock (par $4) and 68,000 shares of

Oil

Corp., New York
Jan. 19 (letter of notification) 1,200.000 shares of common
stock (par lc).
Underwriter—Atlantic Securities Co.,
New York.
Price—25c per share.
Acquisition of oil
•

To

Chace

ores.

Western

the

on

March

Allied

common.

ISSUE

PREVIOUS

mill

such

erect

Thursday, April 14, 1949

Registration

SINCE

Cambridge (Mass.) Electric Light Co. (5/4)
29 filed $2,750,000 25-year notes, series
A, due
1974.
Underwriters—To
be determined
through com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; Harriman Ripley & Co.; The First Boston Corp.;
Kidder, Peabody & Co.; Otis & Co. Proceeds—To fund
presently outstanding borrowings.
Expected May 4.

Proceeds—To pay off $4,000,23/4% notes and the balance for construction and
working capital. Expected about May 2.

par)

and

move

capital stock.

writer.

000

writer.

ADDITIONS

California Life Insurance Co., Oakland, Calif.
March-18 (letter of notification) 15,000 shares ($5 par)

Securities Corp. (jointly).

•

and

in

property and for working capital.

petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc., White, Weld & Co., Kidder, Peabody & Co. and
Stone & Webster Securities Corp. (jointly); The First
Boston

Now

INDICATES

CHRONICLE

FINANCIAL

&

DCALERS

UNDERWRITERS
mm

BO sto*

1*69

Volume

Number 4794

THE

COMMERCIAL

Murphy

Ranch

&

FINANCIAL

Mutual

Water

Co.,

\ California
March 21 (letter of

April 14,

Hotelevision Inc

Class A Stock

—

-Common

Pepsi-Cola Bottling Co. of Wash..—

April 19,

1949

Doman Helicopters, Inc.__

San

.jf

V:;rr

.

_

National

April
April

Preferred

(PST)

20,

April

22,

1, 1974.

•

25,

Capital Stock

Service Co

Electric

Texas

26,

April

Arkansas Power &
Idaho Power Co..

1949

Light Co

_

May 2,

__

May 3,

Bonds

Corporate

_

Bonds

(EDT)

1949
—Bonds

W.

T. Bonn &

Co.

May 4, 1949
Notes

1,

Bonds

—-

Southern Indiana Gas & Electric Co

Price, $1.75

per

share.

purposes.

■

.

30

at

rate

ing—None.

of

one

new

share

for

each

Rights expire April 18.

five

held

Underwrit¬

Proceeds—For construction and to replenish

O'Dares'

Kentucky & West Virginia Power Co. (5/3)
March 31 filed $10,000,000 first mortgage bonds, due 1979.
Underwriters—Names to be determined through competi¬
tive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; Glore, Forgan & Co. and Lehman Brothers (jointly);
Union Securities Corp., Harriman Ripley & Co. and Kid¬
der, Peabody & Co. (jointly); Shields & Co. and Salo¬
mon Bros. & Hutzler.
Proceeds—To repay loans for con¬
struction and apply toward further construction expen¬
ditures.
Expected about May 3.

filed

25

(Nev.) Thoroughbred Racing Assn.

500,000

Underwriting—None.

shares

cumulative

6%

Offering—To be

share of each at $5 per unit.

preferred
stock (no par).

sold

in

units

of

Proceeds—To purchase

land and construct racing plant and for working capital.
•

Liggett & Myers Tobacco Co.

March 21 filed 784,235 shares of common stock (par $25).

Underwriting—None.

Offering—Offered for subscrip¬
stockholders of record April 13, in ratio of one
new share for each four shares held
at $50 per share.
Rights expire April 29.
Proceeds—To reduce shortterm notes outstanding under company's credit agree¬
tion by

ments.

*

V"I■:iV: ,/

Mayflower Co., Salt Lake City, Utah
March 14 (letter of notification) 100,000 shares (lc par)
common.
Price, 10 cents per share. Underwriter—The
Cromer Brokerage Co., Salt Lake City.
To liquidate
debts and provide funds for operating expenses.
Merck & Co.,

Inc., Rahway, N. J. (4/22)
March 31 filed 70,000 shares (no par) cumulative con¬
vertible second preferred stock. Underwriting—Goldman
Sachs & Co. and Lehman Brothers, New York.
—For

capital

corporate

expenditures,

working

capital

Proceeds

and

other

16

30

(Minn.)

109,039 shares ($1 par) common stock.
Offering—To be offered stockholders at rate of one ad¬
share

Kalman

&

for

each

10

shares

held.

par.

Electric Co.,

San Francisco
April 5 filed 1,500,0.00 shares of redeemable first pre¬
ferred ($25 par) stock. Underwriters—Names by amend¬
ment (probably Blyth & Co., Inc.). Proceeds—To finance
construction.
•

Underwriter—

Pacific

Lighting Corp.
8 filed 200,000 shares $4.50 dividend cumulative
preferred stock (no par). Offering—Stock will be of¬

April
fered

to holders

of

200,000 $5 dividend cumulative pre¬
ferred stock (no par) on a share-for-share exchange
basis, subject to condition that any new $4.50 preferred

exchanged will be purchased by underwriters on or
about May 9.
Exchange will run through May 4. Un¬
derwriter
Blyth & Co., Inc.
Proceeds — to
retire
through exchange or redemption $5 dividend preferred.
—

Palestine

Economic Corp., New York
600,000 shares ($25 par) common stock.
Price—$28 per share. Underwriter—None. Proceeds—
For development of industries and real estate and the

March

28

filed

balance for
poses.

working capital and general corporate

vj; •'

;

Peerless
March

28

'

Casualty Co.,

filed

50,000

Corp., New York.

Keene, N. H.

to

($5 par) common stock.
stockholders at the rate of

shares for each 16 shares held.

new

Monarch

cor¬
w

Machine Tool

Co.

,

v.

Sept. 13 filed 26,000 shares of common stock (no par).
Underwriters—F.

Eberstadt

Hawley, Shepard & Co., Inc.

&

Co.,

Inc.

and

Prescott,

Proceeds—Stock being sold
by certain stockholders. Offering indefinitely postponed.




Underwriters—

Herrick, Waddell & Reed; Geyer & Co., New York, and
Townsend, Dabney & Tyson, Boston.
Proceeds—To in¬
crease the company's capital surplus.

Pepsi-Cola Bottling Co. of Washington,
D. C., Inc.
(4/18-22)

address.

Rosecroft Trotting &
Pacing Association, Inc.,
Oxon Hill, Md.
April 12 filed 1,250 shares of common
(par $100) and
1,250 shares of $6 cumulative preferred
(par $100).
Offering—To be offered in units of one share
,

$1

will go into

company's treasury).
Price,
Underwriter—Willis E. Burnside & Co.,

share.
New York.-

per

Inc.,

Proceeds—To discharge taxes,
payable and for working capital.

notes

Inc.,

Detroit, Mich.
150,000 shares ($1 par) common stock.
Underwriter—Baker, Simonds & Co., Detroit. Proceeds
—For working capital to finance inventories and opera¬
March

28

will

be

offered by the

Proceeds—For

Association.

plant

working capital.

Un¬

construction

;

Royalite Oil Co., Ltd.,. Canada
1,250,000 shares of capital stock. Under¬
writers—Kidder, Peabody & Co. and Dominick & Dommick, New York.
Proceeds^Go to selling stockhold¬
ers: Dominion Securities
Corp., Ltd., Toronto, and Jamea
Richardson & Sons,
Winnipeg, Manitoba.
Issue to be
withdrawn from registration and
placed privately. - - March 29 filed

San

Diego Gas & Electric Co.

(4/19)
300,000 shares 41/2% cumulative pre¬
(par $20). Underwriters—Names to be de¬
termined through competitive
bidding. Probable bidders:
Blyth & Co., Inc., White, Weld & Co. and Shields & Co.
(jointly). To reimburse company's treasury for capital

March

18

filed

ferred stock

expenditures, etc.

Bids—Bids for purchase of the stock
will be received at office of Allen L.
Chickering, Viceup

to 8:39

(PST) April 19.

a.m.

•
Sharp & Dohme, Inc., Philadelphia
April 7 filed 208,373 shares (no par) common stock.
Underwriters—Alex. Brown & Sons and Drexel & Co.

Proceeds—To

construct

a

new

research

for other corporate purposes.

laboratory and

^

'

J

Shomee Oil Corp.,

St. Louis, Mo.
March 28 (letter of
notification) 150,000 shares of class A
common
(par $1). Price, par. Underwriter — John R.
Kauffmann Co., St. Louis, Mo.
For working capital.
•

South

Carolina

April 11 filed

Electric & Gas Co.

issue of

common stock (par $4.50) to be
subscription by stockholders. Number of
shares, record date, and subscription price by amend¬
ment.
Underwriter—Names to be supplied by amend¬
ment.
Proceeds—To finance construction program.
^

offered

an

for

Southern Airways, Inc.,
March

Birmingham, Ala.

.

28

(letter of notification) 100,000 shares of com¬
mon capital stock (par $3).
Price, par. Underwriter—Byamendment. To activate airline routes.
Southern

States Iron Roofing Co.,
Savannah,
Georgia
30,000 shares ($1 par) cohimon stock, to be

at

$10

share

per

on

behalf

of

three

stockholders.

Underwriting—None.
Southwestern States

Telephone Co., San Fran»

March 31 filed 56,000 shares of common stock

(par $1).
subscription by common
stockholders, and the unsubscribed to stockholders desir¬
ing additional shares. Underwriters—Names by amend¬
ment.
Proceeds—For extension, additions and improve¬
Offering—To

be

offered

for

ments.

.
.

filed

State Bond and

Mortgage Co., New Ulm, Minn.
28 filed $10,000,000 of accumulative savings certifi¬
series 1217-A.
Underwriter—None.
Price—$85.68

Feb.
cate
per

©

each to
$100 per share for both issues.

stockholders at
stock

derwriter—None.

sold

(letter of notification) 297,000 shares (100 par)
common stock, of which 214,500 is being sold
by com¬
pany and 82,500 shares by stockholders
(proceeds of
latter amount

Unsold

Feb. 21 filed

March 31

unit.

Proceeds—For investment.

Portersville

April

7

Oil Co., Baltimore, Md.
of notification) 10;000 shares ($1 par)
and 40,000 shares ($1 par) B common, to

(letter

common

be offered in

$5 per unit.

units of

one

A share and 4 shares of B

No underwriter.

Renaissance Films

Underwriter—Union Se¬

Proceeds—For general

April 19 at

•

shares

Offering—To be offered
five

pur¬

v

A

porate purposes.

(EST)

President, 111 Sutter Street, San Francisco,

.

f

Mississippi River Fuel Corp.
(4/25)
March 30 filed 327,610 shares ($10 par) common capital
stock.
Offering—To be offered for subscriptions by
stockholders of record April 12 at the rate of one new
curities

cu¬

.

Pacific Gas &

tions and for other corporate purposes.

12 shares held.

.

•

2,600 shares of 4%

Co., St. Paul, Minn.
Proceeds—To pay off
$750,000 of bank loans and to finance additions to its
utility properties.
v

share for each

,

(par $100). Underwriting, none.
Capital additions
:

Plywood,

Gas Co.

filed

ditional

(letter of notification)

and accounts

purposes.

Minneapolis
March

Pullman, Inc., Hialeah, Fla.

not

stock (par $5) and 500,000 shares common
one

Horse

mulative preferred stock

•

Jan.

noon

March 30 filed 5,000 shares of
7% cumulative ($50 par)
preferred stock. Price—$60 per share.
Underwriter—
None.
Proceeds—To purchase 40 additional
passenger

and

Price,

Las Vegas

to

up

Rojas Express, Inc., Manila, Philippines

March

Orange & Rockland Electric Co.

Bonds

_

same

present

March

1949
.

received

buses.

April 5 (letter of notification) 1,000 shares of preferred
stock.
Price, $100 per share. No underwriter.
To buy
new motor truck equipment.

May 10, 1949

June

be

2601, 61 Broadway, New York.

Northern Natural Gas Co., Omaha, Neb.
March 9 filed 406,000 additional shares ($10 par) com¬
mon. Offered—Offered to common stockholders of record

•

Public Service Electric & Gas Co.—

the

Underwriter—Charles

working capital.

Cambridge Electric Light Co—.— X

bidders—Halsey,

Bids for purchase
of the stock will be received
up to noon (EDT) May 3 at

Capital requirements.

at $29.50 per share.
-Preferred f*

———

—

_

and

Probable

.

Rochester Gas & Electric Corp.
Noon

unit.

per

__

Kentucky & West Virginia Power Co

250).

will

Room

Noranda Oil Corp.
March 21 (letter of notification), 65,000 shares of com¬
mon
stock
($1 par).
Underwriters — Aetna Securities

Corp.

Lighting Co

stock (par

common

Bonds

_

Utah Power & Light Co

Westchester

$25,625

Debentures

1949

__

_

bonds

H. Drew & Co., New York. Offering—To be offered in
units of one preferred share and 2V2 common shares at

Bonds

_

National Distillers Products Corp.—

Alabama Gas Corp.

shares of

Debentures

_

Preferred and Common

_

_

&

Power

Kansas

Light Co

of

Nielsen Television Corp., New York
Feb. 24 (letter of notification) 4,000 share of 6% cumula¬
tive non-convertible preferred stock (par $25) and 10,000

American Research & Development Corp._Common

Indefinitely postponed.

only); Harriman Ripley & Co.
(preferred only); Lehman
Brothers; The First Boston
Corp. and Smith, Barney & Co.
(jointly); Union Securi¬
ties Corp.
Proceeds—To redeem outstanding bonds and
short-term borrowings.
Bids—Bids for purchase of the

bank loans and to expand small loans receivable volume.

--Bonds

Fortson, Wash.

cumulative preferred stock.
•Stuart & Co. Inc. (bonds

so¬

Corp., Springfield, Mass.
notification) $150,000 of 6% de¬
bentures, due April 1, 1969. No underwriter. To pay off
(letter

4

stock, of
offered by company, and

mortgage
bonds, due 1979, and 50,000 shares ($100
par) Series G,

New Method Finance

April

1949

Mississippi River Fuel Corp

(subsidiary), of a metallic
plant at Ashtabula, Ohio.

>

common

Rochester Gas & Electric Co.
(4/19-5/3)
May 26, 1947 filed $16,677,000 of Series L first

by National

Distillers Chemical Corp.

1949

dium and chromium

April

Timber Co.,

Co. Inc.

other funds, to finance cost of construction

Everett,

payment of the
option purchase price of one-half of the stock
of Conifer

Proceeds—Prepayment of
$25,000,000 2V?% promissory notes; prepayment of $6,000,000 short-term bank loans and balance, together with

Preferred

271,025 shares ($1 par)

105,000 shares are to be
166,025 shares by 15 selling stockholders. Underwriter
Blyth & Co., Inc. Proceeds—To company from the sale
of the 105,000 shares will
be added to working
capital,
except about $275,000 may be advanced to a new sub¬
sidiary to be used by it in making part

Underwriters—Glore, Forgan & Co. and

Ripley &

17 filed

which

Distillers Products Corp.
(4/26)
$40,000,000 sinking fund debentures, due

filed

5

Harriman

1949

Connecticut Light & Power Co

April

Plywood & Timber Co.,
Washington

Nov.

equipment, additional land and buildings and work¬
ing capital.

(EST)

a.m.

Robinson

✓

Diego Gas & Electric Co.

8:30

Orchards, Inc., Cleveland, Ohio
(letter of notification) 6,000 shares of
capital
(par $25). Price, par. No underwriter. For addi¬
tions to
machinery, tools and equipment and for work¬
ing capital.
stock

and

-Common

-

Rochester Gas & Electric Corp.
Noon

1

_

_

_

Riverside

April; 4

•
Murray & Gee, Inc., Culver City, Calif.
April 5 (letter of notification) $150,000 of 6% sinking
fund debentures, due Jan.
1, 1959, and 15,000 shares ($1
par) capital stock, to be offered in units of one $500
debenture and 50 shares of capital stock.
No under¬
writer.
To acquire automatic book
binding machinery

1949

18,

45

tensions.

..Common

April

Whittier,

notification) 1,118 shares of common
stock to be sold at $9.18 per share.
Underwriter—San
Gabriel Development Co. For capital additions and ex¬

1949

Tracerlab, Inc.

(1657)
•

\

,

NEW ISSUE CALENDAR

CHRONICLE

at

To carry on business.

Distribution, Inc.,

Suburban

Gas Service, Inc., Ontario, Calif.
'
(letter of notification) 4,000 shares ($25 par)
series B preferred and 20,000 shares ($1 par) common-4
issuable upon conversion of preferred. Price—Preferred

March 31

$25 per

Oct.

29

filed

40,000

shares

(par

$25)

5%

share. Underwriters—Wagenseller & Durst,
To buy Antelope Liquid Gas Co.

and Lester & Co.

Montreal, Que.

Tennessee Odin Insurance Co., Knoxville,

cumulative

convertible class B preferred stock and 10,000 shares of
C stock (no par). Underwriting—None. Offering—Class

March 29

B

J.

preferred will be offered at $25 per share with one
share of class C given as a bonus with each 4 shares of
class B purchased.
Proceeds—To pay balance of current
liabilities and working capital.

.,

(letter of notification)

capital stock.
C.

Bradford

_

Tennl

3,800 shares (no pari
share.
Underwriters—^

Price—$8.50 per
& Co.; Elder & Co.; Strader, Taylor &

Co.; Bullington-Schas & Co.; Marx & Co.; Stein Bros. &f
Boyce.
♦
1

(Continued
_

Inc.^

on page

46)

46

COMMERCIAL

THE

(1658)

&

FINANCIAL

CHRONICLE

•

by amendment.
Proceeds—Will go to selling stockhold¬
Offering postponed.:

(Continued from page 45)

ers.

Texas

Electric

Service

Co.

(4/25)

March 22 filed $8,000,000 30-year first mortgage bonds.
to be determined through com¬

bidders: Halsey, Stuart &
Co. Inc.; The First Boston Corp.; Harriman Ripley &
Co., Inc.; Hemphill, Noyes & Co. and Drexel & Co.
(jointly); Blyth & Co., Inc. and Kidder, Peabody & Co.
(jointly); Union Securities Corp. and- Glore, Forgan &
Co.
(jointly).
Proceeds—Net proceeds, together with
$4,000,000 to be derived from sale of additional 2,000,000
shares of stock to parent (Texas Utilities Co.) and from
other funds will be used to pay short-term notes and
for construction of new facilities, etc.
Expected April 25.
bidding.

Thompson Industries, Inc., Boston
filed 120,000 shares ($1 par) convertible pre¬
ferred stock.
Offering—32,214 shares are to be offered
to

holders

the

rate of

of

present $6

one

cumulative preferred

share

new

for each

change basis.

The remainder

rata

other

basis

are

one

held

stock at

on

to be offered

an

on

a

Edison

is

but

Union

Securities Corp., and Salomon Bros. & Hutzler
(jointly); Kidder, Peabody & Co. and White, Weld & Co.
(jointly); Lehman Brothers and Bear, Stearns & Co.
(jointly). Purpose—To provide part of the new capital
required for construction. Expected this month.

Tracerlab, Inc., Boston, Mass. (4/14)
24 filed 104,000 shares ($1 par) common stock.
Underwriter—Lee Higginson Corp., Proceeds—To de¬
velop industrial applications for radioactivity and the
manufacture of equipment for that purpose; and for
working capital.
March

vertible

Blosser, Chicago; Carr & Co., Detroit, and Lester & Co.,
Los Angeles. Proceeds—To build chemical plant and to
replace working capital used for capital additions. [Un¬
der a previous registration statement (No.
7637), which
became effective Sept. 24, 1948, company sold 43,159
shares of 6% cumulative preferred stock for a total of
$97,108 and removed 131,841. shares from registration
March 21, 1949.]

Foods,

Inc., Sherman, Texas

Nov. 26 filed 200,000 shares of common stock (par $2.50)
of which 80,000 will be sold by the
company and 120,000
shares by certain stockholders.
Underwriter—Rauscher,
Pierce & Co., Inc.,

Dallas, Texas. Proceeds—For general

corporate purposes.

On

the

rata
later

debentures
basis

& T.

than

more

stock at
per

present stockholders

a

Power & Light

Co.

(5/2)

Underwriters—Names

to

be

vote

the elimination of restrictions

on

Boston

Corp^ (jointly);-Union Securities

.v.;:*.v

-

:

/J;;,oJ-\i.

Pennsylvania Electric Co.

.

.

{

-

ita 1949

coin

financing would be in addition to $1,200,000 which
raised in March by the sale of 60,000 com-*
shares to its parent, Associated Electric Co.
\

new

mon

.

debtedness.
in

the

Sale

future

to

of

additional stock

enable

j

will

be

sound

restriction

of

will

the

which

the

assure

limits

of

of

freedom

company

more

and

surplus

Caterpillar Tractor Co.
Apriil 11 directors have determined that after "distribu-tion of proposed 100% stock dividend it may- be prac¬
tical

desirable

and

authorize

to

and

sell

an

issue

of

cumulative preferred

stock for the primary purpose of
discharging $21,000,000 bank indebtedness. The author¬
ized preferred will be 350,000 shares ($100 par) which
will be issuable in two

derwriter:
•

or

more

series.

Traditional

un¬

company

shares

rate of

be

one

would

asked SEC permission to sell 249,334
($8.50 par) common stock. Common
new

be

share for each nine shares held.

used

permission to sell $37,000,009
insurance companies.
Halsey,

(jointly); The First Boston Corp.

!

:

Public Service Electric & Gas Co.

,

(5/10)

-

April 18 stockholders will vote
of $75,000,000 first

ance

Proceeds

from

the

on authorizing the issu-f
and refunding mortgage bonds.

sale

will be used in part to retire
prior lien bonds, to pay off bank loans and finance com-r
pany's construction and expansion program. Probable
bidders;, Halsey, Stuart & Co. Inc., The First Boston
Corp., Morgan Stanley & Co., Kuhn, Loeb & Co. and
Lehman Brothers (jointly). Bids expected to be opened
May lO./Vx^V' /
-;V/'''T:/
•

Blyth & Co., Inc.

Cincinnati Gas & Electric Co.

Proceeds

Hutzler

bidders for

•

large

& Co. Inc. and Otis & Co. had filed objections*.
denying the application, the Commission said the .sale
would not be in the public interest.
If company sells
bonds competitively, probable bidders include: Halsey,
Stuart & Co. Inc., Kidder, Peabody & Co. and Merrill
Lynch, Pierce, Fenner & Beane (jointly);
Lehman
Brothers, White, Weld & Co. and Salomon Bros. 8t

in

borrowing.
stock: Blyth & Co., Inc. and The
First Boston Corp. (jointly); Harriman Ripley & Co.;
Merrill Lynch, Pierce, Fenner & Beane.
Probable

company

three

to

*

In

indebtedness to

capital

denied

bonds

;: *

Stuart

necessary
.

unsecured

amount

aggregate

Potomac Electric Power Co.

mission

growth of the business
and to assure a properly balanced capital structure, ac¬
cording to A. S. Cummins, President.
Elimination of
10%

'•<

*
'
March 23 the District of Columbia Public Utilities Coml

unsecured in¬

on

for construction.

There would

underwriting under the proposal.
The SEC has
given interested parties until April 27 to request a hear¬
ing on the proposal.

Southern Indiana Gas & Electric Co. (6/1)
!
April 8 directors approved the filing of a petition with
the P. S>. Commission of Indiana for authority to issue
up to $3,000,000 in first mortgage bonds to be sold at
competitive bidding. Proceeds of the issue are to finance
a

continuation

of

the

company's construction program.
1.
' '
;

Bids expected to be opened on or about June

Southern Natural Gas Co.

no

.

,

V,■/*"

April 7

company plans to. make an early offer of about
140,921 shares of additional common stock to be offered

for

Columbia

Gas

System,

Inc.

subscription by .stockholders, in ratioro'f one new
for each 10 shares held, with privilege of sub-f
scribing for shares not subscribed for.
Proceeds are to
be applied to financing company's construction
program
share

March 28 reported company plans sale of 1,350,000 addi¬
tional common shares to present stockholders either in

May or June, with The First Boston Corp.
dealer-manager.

Expected to

be

to

and

Gas

Westchester Lighting Co. (5/2)
April 1 filed $12,000,000 general mortgage

Hutzler.

purchase additional

Corp., subsidiary.
Southern

May

stock

common

of

Alabama

Issue will not be underwritten.

Ry.

.y;.v".
17 stockholders will consider creation

*

.

of

a

new

first mortgage on the East St.

Louis (Ill.)-New Albany
and with approval of the ICC to sell $12,-

(Ind.) line,
474,000 principal amount of bonds in order to refinance
the

company's St. Louis Division first mortgage 4%
maturing Jan. 1, 1951. Probable bidders: Morgan
Stanley & Co.; Halsey, Stuart & Co. Inc.; The First Bos¬
ton Corp.
; ;r;:.
; .;L; //:/\V
bonds

•

bonds, due
to principal and in¬

(guaranteed unconditionally as
terest by the Consolidated Edison Co. of New
York, Inc.).
Underwriting—To be decided under competitive
bidding.
Probable bidders include: Morgan
Stanley & Co.; Halsey,
Stuart & Co. Inc.; Merrill
Lynch, Pierce, Fenner &
Beane; White, Weld & Co.; Stone & Webster Securities
Corp. and Lehman Brothers (jointly); Harriman Ripley

& Co.; The First Boston
Corp.; Salomon Bros. & Hutzler.
Proceeds—To be applied toward retirement of
$10,000,000

East

outstanding bonds and to repay indebtedness owing
Consolidated Edison. Expected about
May 2.
Western American Life Insurance
Co., Reno
30 filed 12,500 shares
($10 par) common stock.

Natural

Tennessee

Underwriter—To be named by amend¬
ment. Proceeds—To
qualify the company to sell life in¬
surance in any state.

Western Oil Fields, Inc.,
Denver, Colo.
Jan. 5 (letter of notification)
1,000,000 shares *(lc

a natural gas pipeline to the Oak
project. It is thought that the bonds
will be sold directly to institutional investors.
White,
Weld & Co. and F. S. Moseley & Co. of New York, Elder
& Co. of Chattanooga and Equitable Securities
Corp. of
Nashville, are said to be arranging the transaction.

El

energy

Paso

Natural

Gas

Co.

par)
Price, 10 cents per share. Underwriter
John Gi Perry & Co.,
Inc., Denver, Colo. To drill a well
and acquire additional
properties.

—

Wichman

Philippine Mindanao Development
Co., Cebu City, Philippine Islands
Jan. 5 filed 2,000,000 shares of
voting capital stock, one
centavo par value.

Price—25 cents per share (U. S. cur¬
rency). Underwriter—F. T. Andrews & Co. Proceeds—
To provide funds for plant

construction, diamond drilltog, exploration and repayment of loans.

WlegandP (Edwin L.) Co., Pittsburgh
Sept. 28 filed 200,000 shares (no par) common stock.
Underwriter—Hemphill, Noyes & Co., New York. Price,

■'

March 31 reported company plans to finance construction
costs through the sale of $18,500,000 first

mortgage 3%%

bonds.

Traditional underwriter:

©

Houston

April

7

•

company

a

Illinois

12

Central

company

approximately $25,000,;-

authority

of

$5,520,000 of equipment trust certificates.
ders:
and

re¬

RR.

asked

ICC

to

issue

jProbable bid¬

Halsey, Stuart & Co. Inc.; Harriman Ripley & Co.
(jointly); Salomon Bros. & Hutz¬

Lehman Brothers

ler; Harris, Hall & Co. (Inc.); The First Boston Corp.
Indiana

Harbor Belt

RR.

March 31

reported company plans the sale at competitive
bidding of $2,500,000 equipment trust certificates. Prob¬
able bidders include:
Halsey, Stuart & Co.; Harriman
Ripley & Co. and Lehman Brothers; Harris, Hall & Co.

(Inc.); Salomon Bros. & Hutzler.

Edison

Corp.

•

28

corporation asked SEC for permission to sell
competitively $2,750,000 30-year first mortgage bonds and
$4,000,000 in new preferred stock. Proceeds from the
bonds would retire the

company's short-term indebted^

and provide funds required for expansion. Proceeds

ness

from preferred stock would be used

by company to carry
plan of. recapitalization. Probable bidders on
Halsey, Stuart & Co. Inc.; The First Boston Corp.;
Harriman Ripley & Co.; Kidder,
Peabody & Co.; Otis
& Co. On preferred: W. C.
Langley & Co.; Kidder, Pea¬
body & Co.; Stone & Webster Securities Corp. and
its

cut

bonds:

&

Co.

(jointly);

Lehman

First Boston Corp.

000; for the five-year period, 1949-53, construction
quirements are estimated at $80,000,000. '

April

March

Island

Brothers; The

«

„

in its annual report stated plans to
substantial part of its 1949 cash requirements
for construction
through sale of securities. Its construc¬
finance

Staten

White.'Weld

White', Weld & Co.

Lighting & Power Co.

tion budget for 1949' amounts to

common.

Co.-

finance construction of

Ridge atomic

March

Price—$40 each.

Gas

March 15 reported company has plans under considera¬
tion for sale of about $10,000,000 bonds. The issue will

of




First

f

Dayton Power & Light Co.
March 25 company's expansion plans call for sale of
some $10,000,000 bonds later this year.
Probable bidders:
Shields & Co., Halsey, Stuart & Co. Inc., Morgan Stanley
& Co., Blyth & Co., Inc. and The First Boston Corp.,
Harriman Ripley & Co., Merrill Lynch, Pierce, Fenner
& Beane
and White, Weld
& Co. (jointly); Lehman
Brothers; Union Securities Corp. and Salomon Bros. &

■

The

the company

•
California Oregon Power Co.
May 24 stockholders will vote on increasing authorized
common stock ($20 par) to
2,500,000 shares from 750,000
(550,000 shares outstanding).
Stockholders also will

determined through com¬
petitive bidding. Probable bidders: Lehman Brothers
and Bear, Stearns & Co.
(jointly); Halsey, Stuart & Co.
Inc.; White, Weld & Co.; Harriman Ripley & Co., Inc.;
Salomon Bros. & Hutzler; The First Boston
Corp. and
Blyth & Co., Inc. (jointly); Otis & Co.
Proceeds—For
corporate purposes, including construction.
Expected
about May 2.
\

1979

|

Power & Light Co.

the sale of additional securities to finance

Smith,
be underwriter.

stockholders would be allowed to subscribe to this stock

Utah

construction

160,000

struction program, which is budgeted at $15,000,000. The

one-for-ten basis.
may

of

April 9 reported company plans to raise $11,300 000 by

Hydraulic Co.

on

sale

Corp.
its

development of properties.

Corp.
•

at the

common stock (par $9).
Names to be determined through com¬

for

and

con¬

March 22 stockholders approved issuance of 30,000 com¬
mon shares.
Stock expected to be offered in June, first
to

••

•

Gas

finance

to

the

'■

,

&

April 5 reported company plans sale in July of $6,500,000
first mortgage bonds. Probable bidders:
Halsey, Stuart
& Co. Inc.; Kidder, Peabody & Co.; W. C. Langley & Co/,

share.

Ramsey & Co., Bridgeport, Conn.,

part through

Pacific

3Y2%, would

Underwriters

—

and

conversion price or

a

in

of the

20, 1964, and would be

expects

company

;

.

Electric

.

a new

pro

Sept. 28 filed 200,000 shares of

March 15 filed. $3,000,000 first
mortgage bonds, due 1979.

r.r

offered

convertible

held.

not

Bridgeport (Conn.)

April 5

petitive bidding. Probable bidders include Kidder, Pea¬
body & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine. Webber, Jackson & Curtis (jointly).
Proceeds—
Will got to selling stockholders. Consolidated Electric &
Gas Co. and Middle West Corp. will sell
120,000 shares
and 34,000 shares, respectively; Copper
Range Co., 34,000
shares and several individual owners
11,200 shares.

•

of

rate

a

into A. T.

additional

Upper Peninsula Power Co.

of

stock

prices not exceeding $150

the

Detroit, Mich.

March 30 filed 131,841 shares 6% cumulative convertible
class B preference ($2 par).
Underwriters—Straus &

be

12

State

•

shares

interest at

bear

bidding. Probable Bidders: Halsey, Stuart &
Co. Inc.; The First Boston Corp.; Glore, Forgan & Co.;
Harriman Ripley & Co.; Equitable
Securities Corp.;

Mrs. Tucker's

$100

of

mature not later than June

Co.

to

York

Norma Oil Corp., Seguin, Texas
<
April 13 reported the filing with the SEC through lettei
of notification at an. early date of
300,000 shares- of
capital stock (par 40c), which it is expected will be
offered at $1 per share through Cantor,. Fitzgerald &
Co., New York. Proceeds will be used to xepay advances

outstanding at Feb. 15, 1949, the
amount of the issue would be approximately $391,000,000.
Debentures would
be dated June 20,
1949, and will

petitive

I

exceed

to

of

March 18 filed $2,500,000 first mortgage
bonds, due 1979.
Underwriters—Names to be determined through com¬

Trenton Chemical Co.,

not

debentures

The amount is to be determined

number

operations.

(Ohio)

convertible

pro

modernize restaurant

Toledo

of

stockholders.

volume

shares of
preferred stock (par $25) later this year, probably before
July 1. Probable bidders: Harriman Ripley & Co. Inc.;
W.. C. Langley & Co.; 'Lehman. Brothers and Glorei
Forgan & Co. (jointly).;,
<

American

to

Corp., Huntsville, Ala.
plans public offering of 5,000,000
provide capital to en-*
production.
Underwriter, Greenfieldj

stock proceeds to

Co., Inc., New York.

program

exchanged for assets of other companies, or issued in the
future as a dividend, the company said.
Traditional
underwriter, Dempsey & Co., Chicago-

issue

&

March

Telephone & Telegraph Co.
April 20 the stockholders will vote on authorizing

Motors

corporation

common

New

Corp.

six shares

holders

Lax

April 14 stockholders will vote on to increase authorized
common stock from 1,000,000 to 1,200,000 shares
($1 par).
Company said it had no definite plan for disposal of the
additional stock. It might be sold privately or publicly,

for each

of $6 cumulative preferred
Underwriter—None. Proceeds—To

to

Admiral

ex¬

stock at $15 a share.

11

in

gage

Prospective Offerings

Probable

March 31

Keller

April
shares

Underwriters—Names

petitive

Thursday, Aprfl 14, 1949

•

United Biscuit Co. of America

May 18 stockholders will vote

on creating an authorized
issue of 110,000 preferred shares.
Traditional under¬
writer, Goldman, Sachs & Co/
.'
,

•

Western Light & Telephone
Co*, Inc. *
April
8
stockholders
voted
to
increase
authorized

preferred.from 200,000 shares to 250,000 shares (par $25)
and authorized common from 300,000 shares to
400,000
shares' (par $10)V This action is being taken to
place
company in.position ot sell the stocks when market con-i
ditions are favorable.
Traditional underwriters:

Hall & Co.

Harris,
(Inc.) and First Trust Co. of Lincoln, Neb. *

•
Wheeling & Lake Erie Ry. 1
^ ,v
i
April 8 reported company possibly.may be in the market

this

summer

000

first consolidated

with

a

new

issue of bonds to retire

$6,8.70,-,

mortgage 4% bonds due Sept. U
It is understood that the
road, up to the present, has
come

to no

decision with respect to the
maturing, issue..

THE. COMMERCIAL

Number 4794

Volume 169

King Summarizes Reasons for Bui! Market
Herbert G. King, member*)
and the improved foreign condi¬
ot the New York Stock Exchange,
has expressed tions in general.
(7) The
already
amply
dis¬
the belief that
there is a dis¬ counted leveling-off in business.
(8) The clarification of the do¬
tinct and not¬
able change in mestic political situation and the
Col

tion

.

hirh

,.by

(1)

and

in

duct ion

nmargins

has

doubled

the

XX.

breadth

The

reduced

There

Market.

fisted
v/ice

al.,o

sta-'kL g

are

.twice

place to build

up cap¬

Nonresidential

been

building

as

increase

as many

out-

because of stock divi-

mainly
tracts

was

attributable

to

—

awards in¬
(13) The era of peace that is creased 49% to a total of $53,942,more
000 in the first quarter.
Other
people in this country and more ahead for the world which will
major nonresidential building clas¬
potential investors know about permit mankind to concentrate
their best efforts on constructive sifications, with exception of so¬
the
Stock
Maiket
and
have
cial
and
recreational
buildings,
greater underlying public confi¬ enterprise. showed declines ranging from 2%
dence;
because of the SEC and
(14) The role this nation now
for educational buildings, to 19%
gever rnient supervision. ; v
plays as the world's banker and
for manufacturing buildings.
industrial leader.
tronics

^'*L^Plits, etcL
, v
.'(4) Trteil'M/e 30,000,000

(CO

The

(15)

emphasis being

new

The decline

*f"

of

c

country.

mmunism

Lower

9

Margins Will AM Stock Market

embei

of their statistical and research de-

-vV"

ment

/Tacks

prices

will
im-

prove,;/',./

educated

of

again in

William Witherspoon

practical Tor those who
in this practice, but during

more

tbe-yt ars of the New Deal Adminisfrafion the large traders in the
market

were

the

substantially reduced

their

operations
because of the growing bite of in¬
come
taxes.
However, with the
of

scope

of the 1948 tax bill, about
the large operator was
given, some reprieve through the

sanity Property clause of the

hilt
This places him in a
somewhat more favorable position

tax.

than he occupied in

1945, the last
time margin requirements were at
the 50% rate. Hence, it may be
expected that the potential de¬
mand for equities
from margin

even

it

was

somewhat greater

in

if this is

1945.
Howdver,
true, it] might take

several months to

a

fest-.

so

tself
to

seerns,

Outlook

prices.-

when

year to

much

the

business

and

stock

.

occupancy

orders

demand

for

stocks

in

market, but the reduc¬
tion will not develop a conscious
desire for equity securities by the
open

The

investment

banking
profession,' industry in general,
jfirni even the Federal Government
itself

of the American

response

Company has been very

good, ac¬

cording to Mr. Sakier.

down 32%.

else, how

their

can

the

.Nevertheless,

for

vigorous

and

has

the

task

before

it

of

educating the public in the bene¬
fits of, and a desire for invest¬




highways,
works

streets,

other public
light and

and

bridges

electric

for

and

for

power,

plants and mains, water sup¬
systems
and
other
public
utilities totaled $423,880,000 in the
first quarter to reflect a decline of
gas

ply

These contracts include both

11%.

publicly

owned

privately

and

owned facilities classified

heavy

as

engineering works.

raise

demand

to

an

for

extent

equity
which

se¬

will

stock

prices to reflect true
the supply
equities in the open mar¬

worth.1 Furthermore,
new

will

continue

to

burden

the

supply-demand equation. At the
the utility industry
blocks of common
stocks to liquidate holding com¬
panies in compliance with Federal
regulations and to finance capital
expenditures on a large scale. In
present time

is selling large

addition to this

growing supply of
utility stocks there will be indus¬

trial

issues

if

the

general

veritable
trial

state

of

beehive

of

new

activity.

indus¬

new

To meet the

needs

of the

immigration which now ex¬
ceeds 1000 every day of the month
—apart from the increase in the
native population—new

industries
are being established and old ones
extended. For instance, according
to A. H. Sakier, founder and head
of the American Palestine Securi¬

ties Company,

(1)
with
sq.

a

ft. of glass,

price

and

representing

The

concerns

can

be

refi¬
•

mon

issue market appearec

new

improvec

developed

have

to

of absorption this week
judging from the response which
greeted the largest outflows of
offerings in a month or more.
powers

of

total

the

With

cor¬

new

porate securities coming to the

$150,000,000,

running around
underwriters and

dealers

able to report de¬

stage

offering

were

encouraging

cidedly

reception

the part of investors.

on

bulk

-The

of

the

new

•

of such units, whom
the undewriters have dubbed the
"bureaucrats"
continued
their
aloofness,

sizable aggregation of
displayed real

a

smaller institutions

situation,

latter

it

SECURITY ANALYST

REPORTS-BULLETINS

•

SPECIAL SITUATIONS

•

shadow the

demand

MARKET LETTERS

though
probably be enlarged by
the reduction in margin require¬
ments.
Nevertheless, this action
by the highest board in the realm
of finance might be the opening
wedge by the Federal Government
it

in emancipating the capital mar¬
ket which has so long been bound

by the fetters of socialistic prac¬
tices."

•

to

dow"

operations.

suggest

background.

my

engineering

sizable

in

debt

securities

fered

fully

up

was

the yield

of¬

studies

top-sized

week's

Edison

Co.

15999, all for 3%.
Floated to put the

folk

held,

47,

Commercial

&

Financial

bond.

It was1

group

had

an

net

Edison

Commonwealth

the other hand was
yielding the sponsors $6.80
a
bond, the spread having
on

$7.70 and expenses about 90

been

cents.../.•■/.'-.-■..-..iiu..
the

of

One

/.

v....

Financial

C.I.T.

...

Corp.

infrequent

rather

negotiated deals came to market
yesterday when bankers brought
out $50,000,000 of C.I.T. Financial
Corp. 10-year debentures.
Contrasting

Common¬
term

with

Edison's

wealth

50-year

issue, of intermediate ma¬

turity, fitting well into making

portfolios, moved out quickly.
additional

raise

to

Offered

working capital for the big fi¬
nancing agency, the debentures
were priced at 99.35, to yield ap¬
proximately 2.70% to the buyer.

DIVIDEND NOTICES

THE COLUMBIA
GAS

SYSTEM, INC.

has declared this day
quarterly dividend:

The Board of Directors
the following

Stock

Common

No.

payable
at

on

58, 183/4<

per

share

May 14, 1949, to holders of record

close of business

April 20, 1949.
Dale Parker

April 7, 1949

'

Secretary

Essa

(Chicago),

AND WESTERN
COMPANY

issuer in

RAILWAY

Annual Meeting of Stockholders of Nor¬
Western
Railway Company will be
pursuant to the By-laws, at the principal

Virginia, on
at 10 o'clock A. M.,

the Company In Roanoke,

May

12,

1949,

April 22.

1949,

meeting.
By order of

The Board of Directors

of the

STANDARD' OIL COMPANY
(Incorporated in New Jersey)
declared the following dividends
capital stock:
A cash dividend of $1.50 per share.
A dividend payable in capital stock of
this Company on the basis of four (4)
shares of such stock for each two hun¬

has this day

for a term of three years.
Stockholders of record at the close of business

J

seen

public

and

Thursday,

Chronicle, 25 Park Place, New York 7.

sold

around

utility offerings,
$50,000,000 of
50-year debentures of Common¬

office of

work.

and

indicated

an

Commonwealth Edison 3s
The

Roanoke, Virginia, April 1, 1949.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS

and

for

to the 3% mark.

to elect four Directors

Box

101.77

at

paid 101.-

debentures

the

for

a

around, but current new material
appeared to be moving well at
latest reports.
This despite the
fact that in no instance involving

NORFOLK

See samples of

the

been

connection with the Bell

"out-the-win-

still some bits
few instances
"chunks" of recent issues

pieces,

The

by

P. A.

have

to

appears

in

deals

True, there are
and

REASONABLE SALARY

C.

Close Margin

on

not

little

MATURE JUDGMENT

Trained

Working

Underwriters, it appears, are
occasionally to work on
a
relatively
thin
margin
of
clearance in marketing an issue.
satisfied

was

Meeting Notice

•

in repay-,

use

tion.

though in most cases there was

even

will

issuer

the

to

point

1

"Therefore, the supply or po¬
offering of stocks in the
open market still appears to over¬

accruing

ing American Telephone & Tele¬
graph Co., parent, for advances
already made to finance construc¬

this

materia

designed pretty much for in¬
stitutional buyers and while some
was

out three group bids,
ranging from the winping tender
of 100.53 to the lowest of 100.-

recently created long-term debt of

„

short time.

a

earmarked for

The

brought

through the sale of com¬
stock at justifiable prices.

Funds
were

flotation,

wealth

SITUATION WANTED

level of equities advances so that

books within

for legal fees and taxes
$1.06 a bond, leaving
indicated net of $2.45 a bond.

New York City:

A new plateglass factory,
capacity of over 16,000,000

themselves

finding

sponsors

able to announce closing of the

of

developed to the
where
those1 sponsoring

a

issue

reported to have encount¬
ered
brisk
demand, with the

expense

said,

is

this

2.90%,

was

especially concerned
with the ultimate outcome, even

Israel

to

to yield ap¬

101.77

of $3.51 a
calculated that the

The

The

at

Priced

proximately

spread

interest.

New State of Israel

down

rate.

them

were

will require more
margins to increase

highest

the

101.26, all specifying a 3% interest

The successful group,

classified

Industry Booming In

Co. of Pennsyl¬
offering of $25,000,000 of

vania's

25-year debentures brought out, a
otal of five bids running from

419

of the larger

publicly owned.

to

capital

Telephone deal.

Thirty-nine percent of all build¬
ing and engineering awards re¬
ported by the Dodge Corporation
in the first quarter were for build¬
ings and public, works and utilities
as

re-

Bell Telephone Co. of Pa.

case

their

for

for

attempts

Bell Telephone

That

increased 23%,
awards jumped

dormitory

tential

the

masses.

total

curities

nanced

the

it

liberal

industrial

■'time, the lower margin re¬
quirements should tend to in¬
the

calls

"Hence,
than

doubt

"In

crease

of

commerce.

mani¬

prevail concerning
for

merits

enterprise?

task

and

ket

now

or

instances be

some

the

sterile instead of being employed
in useful expansion of industry

of

year ago,

traders is

in

portion of the current $18.4 billion
annual
savings will remain

a

than

The

investing public to the issues of
Israel securities offered
by the
Am e r ic a n Palestine Securities

of

passage

Cor

by

widespread action, or else a large

spoon states,
"speculative
commitments
are

the

the

tion,"
.Wither-'

pi?,r a

engage

state¬

corporations

general public be expected to in¬
vest their savings in the equity

"gin require-,

Mr,

proxy

ownership

of

equity;

own

ihifj nC% maruv'rd

the

ment should in

/

with

/ Now,

show

stock
in their
company, it -wodld ever! seem as
though the top level of manage¬

as

slowly

v

management

stock

as

some of the
of important

ments

which

after

However,

equities.

-

geading

demand

move,

in

own

Awards

<$>

partihent, expreyed the
view that, as
a result of the

o

owners'

to

43%, but other residential build¬
ing classifications declined with
Ly- ft to manifest itself
s factor in stock prices.
hotel contracts down 36%, apart¬
ment house awards off 20%, and
Commenting on the recent!
reduced margin requirements in
k
trading in the *' Weekly Fi lancial Letter" of April 7, issued by single-family houses built by op¬
Cq
membersl of the New York Stock Exchange, erative builders fojvsale or rent

Willi am Withers

■

HAIFA.

building awards in

built

and

Wither spoon of the
statistical and research department of
mnmard, Cook & Co., howevei\, contends it might take a year for

welt/

Israel, has just made its maid¬
en voyage. The AMPAL American
Palestine Trading Corporation is
one of the principal backers of the
line
owning and operating the

corresponding period of last
year,
effecting
a
19%
decline.
Contracts for single-family houses

!,

few

and

the

T

PffsLlicls

for

The HAIFA, the first ship
regular freight service
between the Western Hemisphere
(3)

to carry a

armament, European
quarter
amounted
to
placed on catering to the needs of the first
t farm subsidies.
the small investor throughout the $603,971,000 against $746,889,000 in

aid

x

Residential

the

50-year

101.419,

buge government

The

si'Viv-u ig for

w

building

Religious

air transportation.

and

|iired from Venice.

by the Hamashbir Hamerkazi, the
principal cooperative purchasing
and marketing company in Israel.

000.

101.30

at

new

debentures

in recent
years, this undertaking
was re¬
ported to be finding satisfactory
reception among insurance com¬
panies around the East, outside
New York, and in Canada.

plant, representing an investment
of $750,000, is about to be built

a

quarter with
The

of

One

(2) A new sugar manufacturing

showed a gain of 1% in the
a total of $771,219,-

group

the Hame-

and

of

cost

the

offering to yield about 2.95%.

glassmaking so that none will have
to be imported any longer—while
two experts in glass-blowing have

and
the margin

is the

Foundry

rubber works. The Negev
(southern desert area of Israel)
contains fine
sand
suitable for

public building con¬
public administration
buildings, post office buildings,
(11) The technical position of
the Market itself which has just armories, and similar structures—
the total for which was $42,751,000
completed a three-year decline.
;
against $17,012,000 in the corre¬
(12) The romance of new in¬
dustries such as television, elec¬ sponding quarter of last year.

Stock

shares

many

considerably

$1,000,000,

over

gaper

last year,

months of the year.

(10)

20 years ago and

as

as

the

of

of decline shown for the first two

best

Vulcan

record,

realization that the Stock Market
ital under the

.

of

the dollar
on

of

is going up in the industrial area
outside of Haifa, adjacent to the

the second high¬

was

first quarter

a

total for March

existing tax laws.
The decline of speculative
possibilities in commodities, real
chasing power. estate and war baby business ven¬
(2) The availability of capital tures is forcing many investors to
whit'the great reservoirs of credit watch for opportunities in the
are dill untappedStock Market.
.

for-

investment

an

being exceeded only by last year's
corresponding quarter.
March
awards were up sharply over the

investor's pur¬

Col, lieJ »ert G. King

in

financing

priced

were

raise

$1,799,070,000^-

was

the decline,

Despite
est

of the
stocks .coupled with the

leading

are:

The re-

awards

and

construction,

Dodge

volume total

of many

values

asset

W.

compared with $1,986,936,000
the first quarter of 1948.

public psy¬
chology now stabilize currencies, restore arbi¬
taking place trage, adjust tariff barriers and
which will re¬ maintain the high level of em¬
sult in a bull ployment.
/market.
The
(9) The high yields, earnings
listed

tal

Corporation reports that contracts awarded for
building and engineering works in the first quarter in the 37 states
east of the Rocky Mountains declined,9% from the corresponding
period of last year. The first quarter total of building and construc¬
F.

.

47

funds needed for working capi¬

Reports Construction Contracts Decline 9%

constructive efforts being made to

reasons

(1659)

CHRONICLE

FINANCIAL

&

will be entitled to vote at such
the Board of Directors,
L. W. COX, Secretary.

on

the

dred

(200) shares of $25.00 par

value

outstanding.

payable June 10, 1949
to stockholders of record at the close of busi¬
ness three o'clock p.m., on April 22, 1949.
No fractional shares of stock will be issued.
Scrip certificates will be issued in lieu thereof.
Checks, stock and scrip certificates Mill be
Such dividends will be

mailed.
A. C.

April 12, 1949.

MINTON, Secretary

(1660)

THE

COMMERCIAL ,&

FINANCIAL

CHRONICLE

Thursday, April 14, 1949
income,

BUSINESS BUZZ

so

soil conservation, and
The body of legal lore by

on.

which subsidies,

on

•

direct,

•

A
J
JljLMwU

Behind-the-Scene Interpretations
from the Nation's

•

~

Capital

whether

;

Speaker Sam Rayburn was said
be as hopeful of results from
a
10-day release from his little
charges as a headmaster of any

for

In

this

do

the

case

the

checkers.

House

fore

hatched

giving

the

the

little

scheme

little

dears

long Easter vacation
tough

labor

ask

can

little

<*3

boys

what

things

papa's

pet

by

project

kill

it

innocuous

some

the

form

local

duction, there would be
of

crease

committees

about

labor

the

number

be there to meet the
Congressmen returning home pre¬
pared to rest. The meetings will

the

United

of

be

not

adorned

with

flowers,

Is said, and it will all

prise to the

a

"if" there

unwary

In

been made

other

necessary to the House Democratic

£

If John

enactment of its "harmless" sub¬
said

to

a

line-up in the House

mined

delegations, then the
Administration may not be hit any
than

worse

by

subsitute which

a

or more the equivalent of
Taft-Hartley, which is roughly
the

Senate

is

expected

*

.

quarters that the labor law
vision will be such

the

furies

of

re-

to

arouse

organized

labor.

as

Big Labor has been

Senator

Michigan,

James

eve

day, but

own

of the

Carson made

a

ad¬

an

"liberal" than his

more

eminent

"

1

For

«

secre¬

election,

radio talk

"liberal"

ff

the

first

the

as

Hubert

as

the

champing

alive

persons

get out

House

on

before

major appropriation

every

Only

the

Appropriations

floor of the

Easter,
bill.

most

within

is going to

*

to

<i

time

House

committee
-

If!

of

memory

here,

decision. It is anticipated in all

late

of

.

most unpleasant

a

one

minor supply

bill

will be delayed.

at the bit hoping that something

This

better than Taft-Hartley can be
enacted in time for the spring

w:

hold

Scott

Congress

summer

here

before

the debate on every¬
thing as much as possible except
appropriations, so that when July
31 rolls around, there simply will
be

is

in

time

no

for

some

having to vote against
things.

of these

So

when

Lucas,
the
Senate
Democratic leader, threatened to
prolong the festivities, he was inferentially serving notice on the
GOP leaders that in Lucas'

j

Under

the

ganization

Legislative

Act,

of

1946,

formal

Congress

sentiments

are

sent to the Appropriations com- :

mittee

Mr.

signs the
eventually gives

bill

there

hand, if Mr. Truman vetoes,
not

are

enough

votes

to

.

year,

having delayed its

opera-

tions

in

that

"Dewey

be

obsolete.

majority
from

to

the

pass

a

two-thirds

law

employer's

"worse"

standpoint,

than Taft-Hartley.
So

if

Mr.

act,

vetoes,

now

on

the
the

books, will remain the law

of the land.
Thus

problem

Mr.

is

the

expectation

victory"

Truman

longer the GOP

can pro¬

long consideration of everything,
the
tighter will be the squeeze
the

take

Administration

what

they

done with

leaders

get

can

and

it, between early

Truman's

practical

determine




to

be

sum¬

of

closing shop not later than July
each

year.

This

was

a

great

of

irked

were

Congress

at

on

continuously during the

years to keep a close watch
how the Roosevelt Adminis¬

tration
This
does

was

conducting

war.

July 31 adjournment rule

not

bind

the

present

Con-

Financial

was

formerly

the First California

extended s'ession

session.

longed
cannot

or

The outlook

a

special

for

a

Congressional
be

Certain

appraised

pro¬

sitting
early.

so

legislation like the At¬

lantic Pact, foreign military aid,
extension of certain legislation

expiring

June

30,

and

Chronicle)

ANGELES, CAL. — James
A. Perry has become associated
with
Morgan & Co.,, 634 South
Spring Street, members of the Los
Angeles
Stock
Exchange.
Mr.

That is not to say there will be

officer of

an

Company.

With Walter V. Raynor
(Special

to

The

Financial

Chronicle)

one

way

longed

or

or

another

special

tree has joined the staff of Walter
V.
Raynor
Co.,
First National
Bank

Building.

appro¬

or

a

pro¬

session

may

Trading Markets:

become unavoidable.
*

Here is the
tion

of

*

the

Ralston Steel Car

*

of the evolu¬

essence

Brannan

plan

for

direct Federal subsidies to under¬
write farm

prosperity,

as

seen

by

old hands here:
Back

the

in

the

money

pockets and
Instead

they
of

of

have

Oregon Portland Cement
Riverside Cement A & B

Spokane Portland Cemeftf

early New Deal

Administration

take

wanted

out

of

give

it

calling

to

it

developed

rationalizations,

to

taxpayers'
farmers

just

that

all

sorts

like

would

Budget

HAnover 2-0050

LERNER & CO.
Invesment Securities

10 Post Office

;

Square, Boston 9, Mass.

Telephone Hubbard 1990 Teletype B8 69

parity

Teletype—NY 1-971

a

make

Firm Trading Markets

requests

The secret of this speed is sim¬

ple. At the beginning of the

rule that

no

on

than

more

Hill, Thompsons Co., Inc.
NEW YORK 5

FOREIGN SECURITIES
Executive £ Underwriting Offices

ses¬

All Issues

member could

70

one

working

simultaneously, instead of being
interrupted and delayed as mem-

STREET

r Am MAKES & P.O. INC.

appropriation

subcommittee. This meant that all
were

WALL

Tel. WHitehall 4-4540

serve

FOREIGN SECURITIES

Trading Department

SPECIALISTS

50 Broad Street
—

New York 4, N. Y.

AFFILIATE: CARL MARKS & COP Inc. CHICAGO

'

OMAHA, NEB.—Robert T. Flo-

priations, will have to be settled

hanging

war

The

LOS

Perry

and mid-summer.

mer

htif Now Is
Willi Morgan & Go.
(Special, to

So the

on

83

-

subcommittees

.

to

the weather for adjournment.

as

sion the committee adopted a new

Truman

Taft-Hartley
statue

....

ings until after the turn of the

all

a

con¬

,

legislation. Gome July
the sentiment will be as hut

its

favor

(.ppecIrii to The Financial Chronicle)
rjOS ANGELES, CALIF.4-Rob-

the committee didn't start hear-

override the veto, because it will

impossible to get

a

November 15, and get going on
this terrific job. For this session

Congress
him, labor will be mad and prob¬
ably will accuse Mr: Truman of
running out on them. On the
other

on

fidential basis, so the committee
can
start
hearings
beginning

Truman

in

sentimental triumph in 1946, for

little good to the labor boys in

if

declared

that

their

So

the

the

around

quarry.

is

all

Budget

House

which

Reor¬

proud creation of the Democrats

ily

the

opin-

tion they won't get away with it.

law

of

of

....

agreeable
31,

no

comfort of

Democrats

the

'1*^ '**■!

HI

I eti ?M. Marks has become
J
E F HuHort & Co..
^|UhSnr'ng Street Mr. M'arkf
have to kick over their own pet
J*
■" - "
—.m*
ts tormevly,
••
!pt.
scheme. On the other hand, short
of
war
the
Congress
has
no
Witt1-!«•**■
hankering to hang around this
"r*.
humid town and fuss with dis*

Fair Deal. This incidentally,
would save Republicans the dis¬

idea

of

"I '

and it isonly a smallpolitivj
liability for the Democrats to t

man

the

pieces

consideration

of the schemes of the Tru¬

many

31

performance
remarkable

more

employer

spe¬

of "full deliberation'

the

the

a

to

the

What the Republicans are doing,

the

of

during

heavily salted
being digested.

committee started late. Ordinar¬

pursuit

threat

call it back for

or

employer

hunting season. The
Congress passes will do

Lucas'

cial session must be

Mr.

enemy.

Humphrey of Minnesota would be

Incidentally, Mr. Truman will
be faced with

Trade

elected.

to

produce.
*

the

to

I

gress,

cal

particularly in the Senate, is uMrg

an

is 75%
what

as

Cooperative League official at¬
tacking the "reactionary Republi¬
cans"
for even thinking
about
taxing cooperatives, and pointed
with joy at the prospect that such

Tocal labor

conflicting subcommittee

commitments.

1 Senator

a

the

bers had

the process
to prolong

Mr.

to

v

Carson for many years was secre¬

tary. On the

ship's strategy results in maybe
only a dozen or a score of House
persuasive arguments of

voluble

views.)

l'

MarksJoins
Ru»o> & Co. *

L Sr.

it

r

Federal

naH^ePevita}

not coincide Vnth

"Chronicle'*" *>wn
>

"Just WHAT do you mean—'I'd better
get rid of my dogs'?"

;

*

the

^Congressional

Ralp* II.

tary

no

the

thinking,

vanced "liberal" in his

may pass.

If the House Democratic leader¬

sensitive

and

Couzens

tute actually tightening up on the

becoming

the

03C-AH

cur¬

private, business is
likely to find itself with a deter¬

the Administration's
bill "at best" may be voted down
and "at worst," the Wood substi¬

members

pretation from the

quar¬

Commission

is such that

Taft-Hartley,

of

assist

and waif orftay

worse.
*

;iv® what his
vhat the sa]-.

his

Carson is confirmed

member

a

total collapse. It is
that as of this

appear

moment the

anonymous

million, but not

re¬

peal of the Taft-Hkrtley law and

stitute, from

and

Administration

Post

,umn 1$ intended to re¬
(This colufan
flect the "behind the scene'- inter¬

drop.

were a

of

class

the

this

from
any
Committee hearing
hear

in

is

This

his
If

„

away

in¬

is anticipated that unemployment
this year for the most part will
hover between 3 million and 4

leadership, as it views the situa¬
tion, as a last resort to retrieve
the Administration's drive for

drop.

salary is,

of

on.

__

such

any

average

second

g(
^Jr^n
much
longer, industry representatives in
a
fright will steer <a wide ipath
so

Bean

ters, fairly representative of

■■

This procedure has

anticipate

turn

to ask every

stithV

represent

personal

million in
Mr.

the

in

proposed,

new

company

estimate of unemployment only

it

sur¬

rent
1

not

1%

here

new

departmental,

This

pro¬

unemployed

States.

production

Congressmen,
hitherto has been kept

for secret
well.

be

does

of

rates

aries

of

increases

Office

FR

an

a

couple of members of

a

business

mail

for

in the

about

House

300%

drop

opinion,

10-point drop

by

their

production.

Bean's

*:■

representatives

Appropriations com¬
questioning publishing and
paper
industry
representatives
who testify as to the effect upon

vol¬

a

as

Board indext of industrial

of

bdys will

^

Mr.

every

labor regulation.
The

industrial

In

Taft-Hartley law and substitute
for

of

dex

the

stoning

to

the

in the Federal Reserve Board In¬

home

dickens

mean

indicator

central

to

produc¬

mittee

of

such

that the

so

back

the

of

their

wanted
for

\

worried

taken

terrific

a

he

more

0

%

be

can

simply

Industry

quiry, Louis Bean, economic ad¬
to the Secretary of Agri¬
culture, was asked his opinion
about the effect upon employment
which would be indicated by some

deny it,

may

farmers

viser

big labor moguls,

though they

even

say

statutory

unemployment and the
selling of apples and big bread¬
lines, it was inferred from one
comment. In response to an in¬

leader-

and

give

ing less.

production can drop
few percentage points be¬

there

ume

birching

Democratic

chip and the

hopelessly entangled and
decided to break the whole web

Industrial
a

of

legal

tangled that Secretary Branjust got his intellectual

are

quite

of

nan

Taft-Hartley

*

web

feet

responsibility

the

*

consists of the CIO and the AFL.
The

of

The

rationalizations for relating each
new step to the others
became

act.

"papa" who

necessary

take

continued

existence

boarding school looking forward
to meeting the little so and so's
after they have been exposed to
a little parental discipline.
will

to

the

some

game

• m

A \JU

so

kids.

in¬

rationalized,

esoteric religion of the ancients
look
like
a
simple

WASHINGTON, D, C.—While they have not yet found out about
it, the boys and girls of the House of Representatives will in a day
or so begin to learn just why it was that
Speaker Sam Rayburn was
so unusually nice to them this
year as to give them a 10-day furlough
for Easter, just like the rest of tht<$>

to

direct and

legally

are

is .something which makes

I

48

120

BROADWAY

Tel. REctor 2-2020