The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
M
H^f -..**, M,i ftvtpeff '
1
1
\ "' "'"**
!•
\ _;lJf'*"J*-t Wt*'A^*
' rfM" M»^»•»
*«
'■
"'
i»n+
ilt'WW -
,'
r
r, jiv
«•'
t¥fj/* r YHX+V ■
'•','
'
'4ik-k^
'*••'•<!
-••
-.
ESTABLISHED 1839
BUS. ADM
■•
••"■
<•
bt^
*">>'
Number 4690
An Ideal
New
;T
.'.value of'gold.'
What would be
and. would; such
sirable? '..
ideal
an
' ,//
Chairman of the Board, Standard Oil Company of
v:.
Commenting
r'
on
.
;
f
,
provide
the
'
it
a
so
sion
C
in
size,
tent
ity;
•
;
that
Ivan
in
us
terfeiters;
the
oil
the
couraged
easily
installation of
oil burners in
the functions of exchange in
trade
effort
an
build
Dr. Robt. E. Wilson
was
vide
largely
an
to
a
mar¬
for
ket
that could be
a money
counted upon at all times to serve
what
by-product, to pro¬
off-peak load for our dis¬
a
tribution facilities and to create a
of price rela¬
steadier year-round operation of
tions.
The function of a store¬
both refining and marketing. The
house of value often ascribed to a
market that Was thus being en¬
good money is open to question.
In order that a money serve the couraged by' both of us has sud¬
denly grown to the point that the
purpose of a storehouse of value
winter
peak far surpasses the
it should be a money that would
and
the
measure
one, and has created sup¬
Un¬
ply, storage and winter distribu¬
is uniform in
tion problems that have become
is money, to
keep its purchasing
happily,
this
no money
respect. But
summer
power.
(Continued on page 28)
!
< Continued on page 35);, ; V
*An address by Mr.
fore
the
of
«
*
-<
!
Not Just This Year and Next
(often
a
form of bribery);
v
■»
the A
Institute,/
wellasvari-
publicaf
tions, includ-.
ing the "Elec-trical
World?
and the "Pub-
.
i
along with sufeh things, or at any rate have gone alonjg with Let it suffice
to! : say
them in the past'— these are .evidently the order
the there is that every,'
day among many of our political and probably all Of our indication,
particularly in;
military leaders. A gigantic, carefully planned propaganda
George D, Woods
the Southeast,;
campaign in support of these measures has .■ been greatly
of an enormous growth in" your
aided and abetted by the behavior of the Kremlin in recent
business over the next few years,
months. The result, or one of them, is that a surge of and there is
every indication thai
popular feeling has been aroused which appears to place the individual Operating compa¬
nies, while varying in detail, will
many of these projects or proposals in that politically
(Continued on page 26)
sacrosanct list which no politician and few individual
citizens care to question.
;'-r
;
*An address by Mr. Woods at
Many and
very serious dangers lurk in this situahave been at pains to point out in these
columns in recent weeks. There is, however, one aspect ^
of this state of affairs which we suspect very few of *
us have fully understood and appreciated amid all the
i
flurry of discussion about the possibility of war in the •:
tion,
as we
V;-
and
;
(Continued
on page
the
15th
Annual, Conference of
Electric
Ex¬
change, Boca Raton, Fla., April 9,
the
Southeastern
1948.
.
•
';'A
28)
Municipal
i
MUNICIPAL
■-4.
^
t
,J
BOSTON
Troy
THE HAROMAL CITIBANK HART SMITH & CO.
PHILADELPHIA
^Albany
Buffalo
Harrisburg
Teletype NY 1-210
Wilkes-Barre
London
Woonsocket
(Representative)
/
.
BONDS
:
INVESTMENT SECURITIES
with
supplied
of the*' j
Elec¬
efforts
\
1927
,
St, New York 4, N. Y.
Geneva
•
?
j
Bond Department
and other Exchanges
•-
Wilson be¬
64 Wall Street, New York 5
Member* New York Stock Exchange
Cleveland
j
well
statistics
such
Rearmament, foreign aid
—
Hirsch & Co.
Chicago
extremely
is
"
through
:
/
;
R. H. Johnson & Co.
;
BAnover 2-6600
-
.
Institute
Oil-Heat
Established
25 Broad;
Industry
o u s
STATE
LiHiograpbing Co.
*
your
Edison
America, Inc., Chicago, 111., April
8, 1948.
:
Havana
Certainly,
revival of the wartime "draft/• universal military training;
lie; Utilities?
industry have
aided and en¬ and all the regulations, restrictions, and controls Which go Fortnightlv;?v
divis¬
fool-proof
against coun¬
you.
■
require¬
years
and
Wright
■■ ■.
i:
n
transferable
Di.
Copy
a
competitive bidding procedure as handicupiffiif fale of
UpboMs rolej of investment, banker as adviser;
as well as uuderwriter in utilities:
flnancing;
be
i
Also, in past
most of
con¬
small quan-
or
iy
il am going to make the assumption this morning thatISe statis ?
ties relating to the prospective growth and the requirements' for new
capital of the electric Hght and power industry are well known, to
burner
■
scores
r
necessary
oil
,
EDITORIAL
ments.
ible into large
tities;
.■'••
equity securities.
tric
money
is
on
and
as
and quala
•.•:
competitive bidding and break-up of Holding compames.Urgetlocsl
utilities consult investment bankers regarding fiusuciuf problemi!
F
ade-
could
fuel
uniform
was
considered
-
F
madefor sharp
would be
money that
a
••i;;^-,/V"'.' vJ
, -
After tracing i financial growtii of utilities,- Mr. t Woods: (^Btends:
serious problems*: are in prospect for future, because of enforced"
increases
to
me,
•*
that
:
quate
money,
f seems
even
oil industry with quantitative data
sales by areas,—-——1——-1
general > pub;
lie; welfare.
Such
In fact, it wasn't
they always had been.
to
the
o r
if- A'>'.
-
Eirst Boston Corporation
Chairman, Executive Conunlttee, The
-
.
may
■
best
'■
>'\\/'\:6 ■i}-}.1?-jfftv
;ByGE<WRGED. VYGODS*-
v
duds, barring unforeseen, eventualities, expanded oil output m 1948
reach 8%, but foresees madefuate fuel oil supplies for at least
three years* Says real hope lies In technology aiul free enterprise,
but, because oil situation will be tight for next two nr three years,
recommends;oil burner concerns limit business to replacements.
■
money
that would be
y
Price 30 Cents
the rapid increase in fuel oil consumption, Standard
be de¬ :
Foresees rapid development of tidelands > oil resources.
; j
-•
'■:• *;
.To describe an ideal money that
In prior years the burner
industry proceeded on the assumption
would
suit
everyone
may
not that fuel oil
supplies. would continue to be adequate in peacetime as
,•;,
.:";''.t^';;'
'■'•'■
.^.w
: v
.pre-;;,
a money
be possible. But it does seem pos¬
sible to; describe an ideal money
••
.••■>W5^I
;v.-V:
Indiana;
Oil executive reviews efforts of industry to expand production. Lays'.]-blame for shortages largely on overselting of oil burners, and
•
credit rather than fluctuations in
,J
York,N. ¥., Thursday, April 15, 1948
By ROBERT E. WILSON*
Dr.
".
v*
-
Oil Cannot Heat All America
Money
By IVAN WRIGHT
Wrigh^ in analyzing ^ ideal V
money, finds no other standard
bettor than gold.
Cites difficul¬
ties of ''managed money" based
on index numbers, and
lays busi¬
ness
depressions to abuse of
•.
f^'' P"c j'-i
Hbqahx
Volume 167
rWA'^h^i^R
•
OF NEW YORK
Scrantoa
■
'>'■
F
Syracuse
Members
'
Bond Dept. Teletype: NY 1*708
52 WILLIAM ST., N. Y.
New York
j
r
THE CHASE
Dealer* Assn.
Bell Teletype NY
/Springfield
Washington, D. C.
:
New; York Security
;
NATIONAL BANK
HAnorer 2-0980
1-395
Montreal
OF
Toronto
THE CITY OF NEW YORK
;
NEW ISSUE
For
AMERICAN MACHINERY CORP.
Banks, Brokers and. Dealers
(Orlando,>Pla.)
Dated Mar. 1,1948
CANADIAN
National Gas & ]
SOUTH AFRICAN
$295,000 10-Year 1st Mort. Cony.
6% Bonds
Underwriters and
Due Mar. 1, 1958
SECURITIES
Electric Company {
BONDS & STOCKS
I
Distributors of
Price 100 plus Accrued Interest
'• 'Snd
Convertible into 333 shares
of
common
request!
OTIS & CO.
SUTR0 BROS. & CO.
(Incorporated)
Est. 1896
Gordon Graves & Co.
INSTITUTIONAL INVESTMENTS
30 Broad
>*
t
,
Tele. NT 1-80J
Established
•
1899
CLEVELAND
.
Street, New York 4, N. Y.
Tel. WHRehsll 3-2846
';
.
Chicago
; Denver
Columbus Toledo Buffalo
New York
Cincinnati
Analysis
Bought—Sold—Quoted
Corporate Securities
stock per bond
Copies of Offering Circular on
Municipal
Members New York Stock Exchange
120 Broadway, New
Dominion Securities
Grporatiotj
f
40 Exchange Place, New York 5, N. Y.
York
Telephone BEctor 2-7340
Teletype NY 1-702-3
,
•
\
:
'
|
I
ira haupt&co.
Members New York Stack Exchange
and other Principal. Exchangee ,!
Ill
Broadway, N. Y.
WOrth 4-6000
Bell System
" V'
upon request
Boston
\6, |
Teletjrpe NY 1-270^
Telephone: Enterprise 189M|:
v'i- J
2
Marion Power Shovel*
7%' Preferred
*Memo
By EDWARD HOPKINSON, Jr.*
Members, New York Stock Exchange
Pacific Gas & Electric *
Prospectus
(or utilities companies with sound capital
structures, Mr. Hopkmsod stresses need of strengthening market fot utilities', shares by encouraging
Venture capital investment.
Points out difficulties in utilities' equity financing because of heavy and - '
inequitable tax burdens and high margin requirements on stock transactions.^ Reviews importance of :1
maintaining sound capital structure so as to make utilities' obligations legal for savings bank investments.
request
on
BOUGHT—SOLD—QUOTED
v
New York Hanseatic
market and economic conditions and
5
Teletype NY 1-583
7-5660
BArclay
I have
dustry.
no
be
a
more
tailed
sion
low
side
-
billion
approximate
$5
figure is probably
Members
Exchange
the
prices
ice
ap¬
i
one
n
seg¬
Tel. REctor Z-7815
certain
eral
observa¬
have
tions
,
a
ACTIVE MARKETS:
Bfdg.
depend
upon
the
disastrous
episodes
.■t-;
'
*
y
Steiner, Rouse & Co.
Members New York Stock Exchange
25 Broad
St., New York 4, N. V.
NY 1-1557
New Orleans, La.-Birmingham, Ala.
Direct wires to
for
branch offices
our
addition
;
Com. & Pfd.
program,
with the enor¬
of money required by
mous sums
the
electric
In
familiar
are
you
the
to
Elk Horn Coal
serv¬
regardless of price levels.
^Bought
telephone companies. In 1947
offered' by American
six- issues
System should continue to
follow, its present policy of mod? Telephone & Telegraph Company
its
subsidiaries, aggregated
est action to restrain a further ex¬ and
E. Hopkinson, Jr.'
the
cost
of
pansion of bank credit, but for it over $1 billion, practically all for
utility com¬
new
money.
This included $360
panies of financing that portion of to take aggressive action to re¬
million convertible debentures of¬
their
capital
requirements
for duce the existing supply of avail¬
which cash cannot be generated able funds, might well produce a fered for subscription by stock¬
within the industry by deprecia¬ disastrous check upon the expan¬ holders,.
of
business
enterprise
so
tion reserves and retained earn¬ sion
Likewise, the gas industry has
necessary to increase production. substantial
capital requirements.
ings.
:
:
The demand for natural gas for
To
A business recession in the com¬
bring about deflation by
serve
definitebearing upon
\
will
in
our financial history.
I am firmly
convinced that the Federal Re¬
those
in
gen¬
very
Curb Exchange
BROADWAY, NEW YORK 5
vVf'["/
on
increased
to
due
"V*
■.
and some
mate customer demands
than
be
ment of bonds.
frfc ppNNELL & TO.
Chanin
This
precipitated and, once started, was
hard "to stop, as has been proved
deflation
Nevertheless,
New York
would
with the result that deflation was
would
Prospectus on Request
New York Stock
the
this discussion
policies
3%*, 1963
^
Bought—Sold—Quoted
projected additions. This
wisdom with which the author¬ construction program has not the
ities exercise these controls. This same flexibility as in the indus¬
caution and wisdom was not ex¬ trial field, because a utility com¬
ercised in 1920, 1929 and 1937, pany is compelled to meet legiti¬
propriate
120
not
commercial banks of the country.
ernment fiscal
Bought—Sold—Quoted
t
authorities,
The balance between inflation and
gov¬
%'i *
*^
*
HAnovar 2-0700
monetary
de¬
discus¬
of
'
<•>-
of
Virginia Elec. & Power
'
Louisiana Securities
will hear later in the
doubt, in the discussion of government bonds you
day, there will
Conv/ Deb.
public utility bonds will be, affected, both by general
by conditions within the several branches of the in¬
The outlook and markets for
Corporation
Broadway, New York
120
;
;
Forecasting relatively stable basic lohg-tertn money rates
Common
**
'
iVrCxef & Co., Philadelphia
Partner,
,
Alabama &
A1; •,>*;
'
request
on
Thursday} April 15, 1948
&'FINANCIAL CHRONICLE
COMMERCIAL
THE
(1642)
Sold
~
—
Quoted ''
•''•' ;v;.y 4,i •• •.
;.••••
MitclielkCompttiiij
Members Baltimore Stock Exchange
120 Broadway,
N. Y. 5
WOrth 4-3113
y:
.
Bell Teletype NY
1-1227
:
'
.
1965
1st Mtge. 5s,
2nd
Mtge. 2s,
3rd
Mtge. Is,
c
t
1970
1970
less likely as a general credit restriction, it must
developments in be such as to create unemployithe adoption of the European? Re¬ ment and an indiscriminate reducf
lief Program on a non-partisan tion in consumers' disposable in?
basis, the corrollary rearmament come before it could be effective.
ing months
result
Lex. & 42nd St.
Common
and
program
tax relief
^Teletype NY 1-1942
passage
of the
the Pres¬
over
added
While the
foods and goods required for these
programs should not represenUan
important percentage of
our
total
the adoption of the
themselves
should
strengthen
confidence.^ Recon¬
struction of Western Europe and
our own preparedness for war, if
need be, is the best way to min¬
production,
goods) by following a policy of
allowing
government
security
prices to seek their, own level, or
by forcing security prices down
by Federal Reserve sales to con¬
tract
cfedit, unless, the7policy
were carried to a point that sub¬
programs
dctuftl TtlarkeXs 4u
Aetna Standard Engineering
American Time Corp.
imize the likelihood of
Baltimore Porcelain Steel
Blue Moon Foods
All this
Boston & Maine R.R.
inflationary
Clyde Porcelain Steel
International Detrola
Kirby Lumber
LaSalle Petroleum
Mackinnie Oil & Drilling Co.
Northern New England
,.;f
Taylor Wharton Iron & Steel
"v
Time, Inc.
.
,
United Artists Theatre
i
United Piece Dye Works
U. S. Finishing Com. & pfd.
Merchants Distilling
Telecoin Corp.
Utah Southern Oil
Members N. Y. Security Dealers Assn.
Bell
g:
available,
turing
St., N. Y. 5
Hanover 2-4850
Teletypes—NY 1-1126 & 1127
,
Established 1856
employment,' and, therefore, con¬
sumers' disposable income.
monetary
inflation
Utilities' Capital Requirements
York.
New
New
York
Cotton
Commodity
Chicago
Curb
Board
This leads
the
over
natural
gas
timates
of
& Gnt.
United Kingdom 4
'
*i.
t:
•V;.:
'
•
a
'
DETROIT
,,
4
it
PITTSBURGH
GENEVA, SWITZERLAND
Securities
N'o es¬
transmission.
expendi¬
subsequent
Members New
York Curb Exchange
Chicago Stock Exchange
New York 6
39 Broadway
Digby 4-3122
Teletype NY 1-1610
us
to
a
survey
next
five-year
Ltd.
*
% '90
*Air Products
^Tucker Corp.
(Continued on page 31):
——
I
of th£
(
FREE
.
^Prospectus on request
LETTER
s'
BY
:
MEANS OF THE
AND
I
-•
^
change
South African Mining Shares
.
.
a
.71••
v
Empire State Oil
Figure
on
Charts of stocks and
.
jJ
Teletype—NY 1-370-377-370 t
traders and investors
modities
•
METHOD
FIGURE
Also literature
Members
New York Security Dealers Ass'n
\
Widely used by successful
V. S. FUNDS for
■
request:
Capital Growth
period
Brown Co.
on
A
Nofdtfda Mines
Paper
y:/;V;/v; Lear,
i
■<
: ;
Utah Southern Oil
com¬
daily price
service
.
.
.
and
Equity Oil
instruction material.
British Securities Department
'
f.
.
construction
Federal Power Commis¬
fore the
All
\
HAnover 2-947C
are
of
f
Goodbody &. Co.
Members N.Y. Stock Exchange and
115 BROADWAY
above
on
will
request
be
.
.
Write for Portfolio S-l.
.
;
James M. Toolan & Co.
Other Principal Exchanges
NEW YORK 6, N. Y.
.Teletype NY t-672
67 Wall
MORGAN, ROGERS & ROBERTS. Inc.
■
Telephone BArclay 7-0100
the
free
sent
CHICAGO
NEW YORK 5
Curb and Unlisted
over
available, but, having
regard to applications pending be¬
years
Trade
N, Y. Cotton Exchange Bldg.
i
100%
1948 ' and
for
tures
Canadian Securities Department
Inc
And other Exchanges
I
y'
Teletype NY 1-1140
previous year. The construc¬
figure for 1947 includes the
purchase from the government by
private interests of the Big Inch
and Little Inch lines and
their
conversion from oil carrying to
POINT
Miitt.
Exchange
NEW YORK 4, N. Y.
'
tion
J
capital requirement of the util¬
ity industry.
A 1947 survey Of
*An address b,y Mr. Hopkinson the "needs of the electric com¬
at the Investment Forum of the panies by the Edison Electric In¬
Savings
Banks'
Association
of stitute, showed the aggregate con¬
Connecticut, New Haven, Conn., struction expenditures necessary
Powell River Co.,
New Orleans Cotton Exchange
< -
■:/.
1923
York Curb Exchange
New
WALL ST.
the
Exchange
of
of almost
increase
-
Exchange
Exchange,
Members
64
This
transmission' facilities.
mmmmtmmmamirnmmmmmmmtmmmmmmmm
We Maintain Active Markets in
Stock
Frank C. Masterson & Co.
\.:*i'K'-iEstablished
•''v
figure compares with about $300'
million of construction expend¬
an
:! Hoving Corp.
;
facilities, with more than
the total going into natural
half of
,
dur¬
ing the war was inevitable. Con¬
trol of the supply of money is now
in the hands of. our fiscal and
Members
York
New
spent for
been
Detroit Int'l Bridge
gas
gas
H. Hentz & Co.
/:•
$700
1947 over
have
will
million
in
that
sion they will be very substantial.
mosphere for business and stim¬ expect fluctuations in these rates
from time to time as the law of
ulate greater production, so as to
Future Utility Financing
more
nearly bring into balance supply and demand asserts itself,
How is this enormous expend¬
as
is illustrated by the current
the supply of goods with high de¬
iture going to be financed? Obvi¬
mand, which is a natural corollary higher yield required to success-;
ously the form the prospective
of full employment at high wages. fully distribute new issues com¬
pared to comparable outstanding new money offerings of particular
issues, often of the same company. companies will take, whether sen?
War Inflation Inevitable
;
April 8, 1948.
\ l
Detroit Canada Tunnel
as
and
estimated
new
Mackinnie Oil & Drilling
un¬
stantially reduced production and itures in 1946 which, in turn, was
v
less
Great
and
37 Wall
..:
in areas
use
where it has heretofore been
at¬
Pacific Telecoin
■'
increase in
pressures.
of thought has more
consistently
advocated
I do not believe this should, or
monetary and/or price controls to
will happen, and therefore I look
cure
inflation.
In
my
opinion:
for relatively stable basic long?
there is no magic formula to halt
term
money
rates.
This means
inflation, and I believe the only
the public utility companies, with
real answer lies in greater enter¬
sound capital structures, should be
prise and in greater production.
If this is the right answer, then able to finance some portion of
their new capital requirements by
the measures which should be en¬
senior securities, over the nearcouraged by government, and by
term at Jeast, at around present
private
enterprise, t are '■) those
interest levels. However, one must
which will create a healthy
or
Empire State Oil
Equity Oil
General Aniline & Film "A"
Hood Chemical
-
some
war.
One school
Electric Bd. & Share Stubs
Punta Alegre Sugar
means
mixed
straight and
well as in manufac¬
processing operations
where gas has demonstrated its
Th£ food price situation is one of superiority to other fuels, has re¬
our
most serious problems and sulted in extensive plans and ap¬
continued high or rising prices plications for further additions to
trunk lines network.
More
for food makes much more likely the
another round of wage increases, than 320,000 miles of mains were
in use at the end of 1946, and sub¬
and 'so oft. But Hve cannot expect
a
reduction in the aggregate de¬ stantial increases for main mile¬
mand for food (or other consumer age were made during 1947. It is
by such overwhelm¬
ing majorities.
Dlgby 4-2370
N. Y. 6
the
measure
ident's veto
SIEGEL & CO.
3U Broadway,
seems
of recent
,
r
64 Wall Street, New York 5, N. Y.
*
-
-
..
.
v
.i
.
.
■
•
1
•f
Street, New York 5, N.Y.
Tel. HAnover 2-9335\
Bell Tele. NY
;
1-26^0
:,,,
Volume
167
COMMERCIAL
THE
Number 4690
FINANCIAL
&
I N DEX
Articles
Bidding:—Barrier
Competitive
—George D. Woods___^
to Utilities Financing
r->
V
■
^
;
tional
deposits, to be increased further if demeed
,
Budget—Sir Stafford Cripps
Sound Money Is Good Politics—Thomas I. Parkinson.
—L.
12
.
Banks and Liquidity of U.
Pruyne.
Savings
thority to im¬
pose
special
Social Security
Sumner
S.
Government
Bonds
me
commer-;
cial banks
Long-Term
as
15
Investments
Hotv
and
curb
Them—George M. Grinnell
*
19
Truman's Council
of Economic Advisers
L
-.
_
:J
The
re-
—1., ■ .*4
-——^
Florida State Comptroller; Opposes New Credit
r
Rep. Jacob K. Javits Praises ERP Act.
Later?
:f 1.2 A A—_ 13
_
(Bdked)....^.^....^...-.....-
Paul F. Douglass Says We Are in
17
...
inflationary...*; 17
18
Age of Managed Money
an
Austria to Be Added to Monetary Fund and World Bank ...I
San Francisco Exchange Sponsors Tour of Rheem Mfg.
SEC Reports Savings Lowest Since
1940___.._._ii
Street Journal" to Appear June 4___
22
Stock; and Curb .Exchanges
_I___.L
__
25
ivieeiin'g-i—21
18
______r29
T
Securities_.iu^l^:-*:-iIi^i^.^.Ltl'L;A.r£l}-:!!;-^l'' 22
Events irf the* Investment Field._..... AZIIa ■ 8
DealerrBroker investment Recommendations
Einzig—What Conditions for Britain ERP?.
4*
_
Indications of Business Activity * ■ *
Bargerbn..-
7
41
^
...^
20
.
44
™
our Reporter on Go vet mneftts
_
-
Prospective Security Offerings
; 23
.
1 46
.
tJtility Securities-.
21
...
...
16
_w_
._
Securities Salesman's Corner.
1
_
_
24
.
Securities Now in Registration.
The State of Trade
44
and Industry.
5
r._.
Tomorrow's Markets (Walter Whyte Says)
Reg.
WILLIAM
B.
25 Park
;
(J.
Twice
S.
Dominion
and
CHRONICLE
Patent
/
.
Place, Mew York 8, N.
HERBERT D.
D.
RIGGS,
Business
(general
issue)v and
records,
corporation
and
Other
city
$25.00
land, c/o
made
'
and
ary
25, 1942,
N.
Y.,
York,
Monday
the
clearings,
Possessions.
office
Act
United
Union,
/When
I
testified
-
before
this
Committee last Nov. 25, I empha¬
sized that I was speaking only for
the; Board of Governors of the
Federal
Reserve
System. In pre¬
further statement today
a
covering the monetary and credit
situation as it has developed in
the
intervening four months, I
again speaking only on behalf
Board. ■■■% j. t
V,;
We, of course, do not partici¬
pate in the Government's mili¬
tary or rearmament planning
in
or
the formation of programs for
foreign relief. Accordingly, what
the
has .authorized
Board
to
me
with regard to the impact of
of military and re¬
lief expenditures is said solely
our-economy
from the
standpoint of the impli¬
cations so far as monetary and
credit policies are concerned. We
monetary
and
the
situation
should
we
credit
now
alternatives
of
the
fluctuations in
in
New
York
funds.
.
problems
existing,
recognize the
clearly
before
the
and
us'
economic consequences of
expand¬
ing military outlays superimposed
upon
the present large budgets
for
military
program
and for our
purposes
of world aid.
•;
f Never in our memories
world
been
fears,
confusion
ment,
arising
and
disappointments
the
of the
of
uncertainties
The
great
of
past
because
chiefly
the
has the
by greater
discourage¬
pervaded
Dorset Fabrics
Southern Production Co.
foundations for peace
and
$35.00
at
of
engulfed
by the
problems
grow more menacing the
longer the establishment of a firm
Haile Mines
social
basis for permanent peace is
layed.-
: ■:
^
Monetary
■
i
.
de¬
'y
1.
■
J.K.Rice,Jr.&Co.
Established
Situation in November
REctor
Last November the country was
the
fu¬
had
achieving a
hopes
we
faced
ished
because
a
few ruthless
with
Bell
rapidly mounting in¬
The
issue
flationary
is
hold
men
was
how to curb mounting
inflationary
forces
by
striking
directly at the basic cause, name¬
ly, an effective demand—com¬
posed of spending out of past
savings, current income and new
credit—in
of
excess
Lea Fabrics
Punta
ment
tion
this
to
Committee,
inflation
of
its
at
Alegre Sugar
Susquehanna Mills
over-all
the
supply of goods and services. ,As
pointed out in the Board's state¬
; ^
correc¬
,
U. S. Sugar
Dan River Mills
advanced
stage had to be on a broad front;
fiscal policy had to be our main
DUNNE & CO.
reliance; and monetary and credit
policy
was
supplementary
to
fundamental
other
felt
Board
then,
25
it feels
as
Members N. Y.
The
actions.
now,
that effective monetary and credit
policy would require legislation to
provide the Federal Reserve Sys¬
tem with new powers that would
serve
as
a
partial substitute for
those
traditional
powers
which
had become largely unusable in
view of the huge public debt.
Broad
Security Dealers Assn.
St., New York 4, N. Y.
WHitehall 3-0272-*-Teletype NY 1-956
Hungerford Plastics'
Corp.*
The
essential monetary fact in
inflationary situation at that
time was
the amount of liquid
the
BOUGHT
purchasing power in the hands of
the public* that is, currency, bank
deposits and Government securi¬
ties, aggregating in all about $254
billion, or more than three times
the
in
held
amount
amount of cash,
large part inherited from
financing of the enormous
Federal deficits incurred in prepa¬
the
ration for and prosecution
bal
—
QUOTED
\
on
Request
'
FIRST COLONY
CORPORATION
cash equivalent
or
SOLD
*recent Bulletin
This
1940.
—
52 Wall St.
New York
in
was
Not
war.
only did
Tel. HA 2-8080
5f N.Y.
Tele. NY 1-2425
of glo¬
have
we
this huge volume of
cash or cash
equivalent already available last
November, but at that time, de¬
spite
ence
of
Government's
the
liquid
State
-V'V
WALL
STREET
NEW YORK 5, N. Y.
rapidly
bank
expansion to finance busi¬
funds
increased
nesses
99
large
budgetary surplus, the amount of
credit
LAMBORN&CO.Jnc.
anti-inflationary influ¬
the
a
local
Because
of
of .;
result
individuals
and
and
being
was
as
as
well
the
SUGAR
as
governments.
;
[:
•
Raw—Refined—Liquid*
for
necessity
Exports—Imports—Futures
of
the
if not impossible, to
difficult,
Assn.
Broadway
System Teletype N. Y, 1-714
then
and
sword
a
2-4500—120
pressures.
protecting the Government's fiscal
and debt management position by
Damocles over the heads of free
maintaining an orderly and stable
peoples throughout the world. It market for Government securities,
despotic
1908
Members N. Y. Security Dealers
Federal
Reserve
DIgby 4-2727
System was
„
(Continued
rational economic fu-
a
We
on page
39)
.
The Public National Bank
interested in offerings of
are
Prudence Co.
Members
S.
Members
of
year;
in
:
15 Broad
>
New
York
St., N.Y. 5
' Bell
Teletype
Stock
Exchange
WHitehall 4-6330
NY
1-2033
;
Company
Spencer Trask & Co.
New
25 Broad
\
•'
Tel.:
'■
York Stock Exchange
HAnover 2-4300
/
V,
Members New .York .Curb Exchange
135 S. La Salle St., Chicago 3
t
Tel.: FJffancial 2330k
'
--Teletype—NY 1-5
t
Albany
>
Street, New York 4
-
Boston
-
Glens Falls
■
Schenectady
'
First quarter
C. E.
on
analysis
request
Unterberg & Co.
Members N. Y. Security Dealers Ass'n
61 Broadway,
New York 6, N. Y.
Telephone BOwling Green 9-3565,
■
--
'y-
;
available
Members
New
& Trust
of New York
PREFERRED STOCKS
Lawyers Title & Guar. Co.
March
U.
High Grade Public Utility and Industrial.
:
Newburger, Loeb & Co.
States,
per
American Overseas Airlines
,
which
during the war for
lasting
peace
in a prosperous
world have been steadily dimin¬
Lawyers Mortgage Co.
-v.
■
post
the
Territories
Pan-American
account
N. Y. Title & Mtge. Co.
Subscription Rates
in
Record—Monthly,
Bond & Mtge. Guar. Co.
etc.).
I. 1879.
Subscriptions
v
CERTIFICATES
(com¬
bank
news,
under
Publications "
Quotation
year.
year.
second-class matter Febru¬
at
statement
prepared
4-6551
U. S. Finishing Co. & Ffd.
es¬
quotation
Company
as
Eccles
STREET, NEW YORK
TITLE COMPANY
J
ad¬
Copyright 1948 by William B. Dana
Reentered
Mr.
to the Committee follows:
plan for
135
S.
La
Salle
St.,
III.
(Telephone: State 0613);
Gardens, London, E. C., Eng¬
Edwards & Smith.
v.
per
yeaf..
(Foreign postage extra )
Earnings Record — Monthly,
per year.
(Foreign postage extra.)
per
Note—On
Offices:
Drapers'
per
rate of exchange, remittances for for¬
eign subscriptions and advertisements must
Chicagof3,
I
and
S38.00
£42.00
Monthly
be
market
—
news,
of
25%
first
game.
Telephone: WHitehall
our
are
league
Manager
news
every
plete statistical issue
•tate
Canada,
the
Thursday, April 15, 1948
Every Thursday
vertising
$25 00
Y.p V';
to S576
SEIBERT, Editor & Publisher
WILLIAM DANA SEIBERT, President
v
WILLIAM
of
Countries,
Bank
Office
COMPANY, Publishers
REctor 2-9570
#
'
Weekly
Other
DANA
made
once
deposits.
ture.
COMMERCIAL
FINANCIAL
at
and
Other
The
38
n__
and You________
Published
i
be
reserve
under
5
......
Our Jtetforter's Report-.
Railroad Securities
23
..............
pbserVatioiis~-A. Wilfred May.i....
Washington
to expand it to
feel that in any effort to deal with
...
News About Banks and Bankers..;
Public
reserve of 10%
deposits, with power
25%, instead of his
previous request that the special
demand
on
say
1::... 13
.
From Washington Ahead of the News—Carlisle
NSTA Notes'
proposing that
;
....Cover
........
Canadian.
Mutual Funds
assert
and
opening
bush
behind
Obsolete Securities Dept.
em
we
get
us.
over
immeasurably
sooner
those
Then
the
S9 WALL
prospect oi
peaceful
physical power to
economic
Eccles
man
of the
Stocks
Business Man's Bookshelf
Coming
Chair¬
special primary
a
am
Regular Features
-
Ecclea
-.
senting
* !':
_
}j
As- We. See It' (Editorial)
and Insurance
:
•
Group of IBA td Hold Spring
Texas
Bank
22
...*,
for Redemption._l_2_-...__ 22
Strike Against New York
$ Continues
the
and
sell
Us.
for
previ¬
immediate provision be made for
19
Plant 21
Export-Import Bank Grants Italian and Norwegian Credits._ 21
Belgium Bonds Drawn
S.
7 vv
;
11
Eccles Says Pending Housing Legislation Is
;•
hangs
the
and
to
Eco¬
the
on.
in
stocks
.
6
_
Marriner
form
ously,
v
moral
we
milder
3
Stress Inflationary
An Appreciation of J. Herbert Case, L.L.D.
"Bawl
hanced
be
the
how¬
took
a
ever,
Credit Curbs
on
>;•. Curbs
or
will
means
before
than
Now
come
removing the threat by
tablish
quest,
'
-t
*
-
■
Eccles Again Presents Federal Reserve Views
Tren d s
sword
think "that
credit
pansion.
16
as a
present
•;
C. M. Gay,
that
We
against
undue
to
The World Bank and Latin America—John J. McCloy
;■ ^
necessary td prevent
_
Bonds
Select
re¬
quirements on
Outlook for Prices—Roger W. Babs'on
Railroad
reserve
while
You're
Behind-
replaced by Thomas B. McCabe, renewed the request that the Reserve
System be ?
-■ ^-i"1 ■ : -• '
!;
■••■A-.
granted au¬ ture either at home or abroad
_—
Influencing Canadian Credit—W. T. G. HackettJ___10
View of Compulsory
—E. H. O'Connor..
reserve
nomic Report on April 13, Marriher S. Eccles, on behalf of the Fed¬
eral Reserve Board, of which he. is Chairman, .but is about to be
Situation and Outlook—Charles F. Roos—__—
Realistic
of authority to impose addiof 10% of demand deposits and 4% of time
Reappearing before the Congressional Committee
;
Factors
primary
If
Report inHation-
Economic
on
urges grant
| banks from expanding credit through sale of bonds to Federal
(Reserve.
The Employment Situation—Herman B. Byer-^-_v^-)-----j--
Business
persist, and
*;
Before the Big Break—John E. Loshar......
The New British
ary pressures
[
Money—Ivan Wright___—---Cover
Tells Congressional Joint Committee
f
Wilsoii—-—Cover
Problems Ahead in Utilities Financing
Hopkinson, Jr..
3
on
v
Cover
i
—Edward
(1643)
Pace
__________
Oil Cannot Heat All America—Robert E.
An Ideal
*
Presents
News
and
CHRONICLE
T.l.tvn.
Worcester
NY
1-1666
;
-
t
1
THE
(1644)
President's Advisers Stress
In report
COMMERCIAL
prices
as
Stock market observer maintains
larly advanced for
G. Nourse is Chairman, asserted
intensify inflationary tendencies
would
in
come
future which
a
as
addi¬
rurbs. The text
memo¬
reasons
popu- .t"
a
and inflationary effects of tax cut will soon be reversed.
Asserts
alleged precedent of war threats blocking of substantial rise will
was
continue.
A
tremendous
swing
to
bullish
thinking
has occurred
during
recent weeks.
Comments about 'The New Bull Market" could be
found in financial columns almost every
day up to the present writing
(April 10).
Even the most conservative of the services have recom¬
mended
mod-
fol¬
:
€>
broad¬
erate
extremely unlikely. Agricultural the opening months of 1948, the
ening of com¬
lows:
prices were not being forced down last few weeks have witnessed de¬
mitments.
The
Presi¬
by any surplus of farm products velopments which have given new
What has
either at home or abroad and they impetus to the price-wage
dent's Eco¬
spiral
ciaused
this
were not falling into a
vacuum. of inflation and threaten seriously
nomic Report
s
u
d d en
o£ Jan, 14,1948
They were declining toward the to retard production and to impair
The
stressed
con¬
support levels provided by exist¬ the real purchasing power of con¬ change?
three ! factors
tinued
ing agricultural legislation.
Ce¬ sumers.
infla¬
most
com¬
reals and meats were unlikely to
tionary ten The first of these developments
monly men¬
test those levels in the face of
dencies as the
Edwin G. Nourae
was
the
mark-up; of prices of tioned
by the
the fact that at least moderate
prime danger *
,
- • ■
semi-finished steel; on Feb. 13 as
bulls are high
to be combatted in early 1948.
It scarcity of food would exist in the climax of a
creeping advance earnings,., in¬
! recommended maintenance of the the markets of the world during
in various steel prices that had
creased. govexisting level of taxation and the the closing months of this crop been going on during
January and
tightening V of 'credit - controls as year even if conditions for: the early February. This advance in e r n m e n t
spending; and
restraints upon, the general price 1948 v crop should develop yety
prices of a commodity so basic t a
John E. Loshar
x
cutting.
leyel, and extension of rent con¬ favorably.^'. •••.; ' ; ;. 77 . ./•.
as
steel threatened compensating
Since I be' >0
.•7
trol and initiation of allocation of
It was most fortunate for our price
advances; in a wide ranee lieve that all three, if valid, could
materials as specific devices for
people that this first open break of steel-using .' industries! 7 Thi 5
and : should, .have : ;been
"dis¬
meeting the inflationary dangers. in the inflationary movement oc¬ would
aggravate the general in¬
counted" by the market at least
It recommended stand-by controls curred at the one place where
flationary tendency or, encounter¬
of prices and wages, .to _be in¬ it would induce no chain reaction
3 year:;ago—certainly none of
ing the; consumer resistance which
them; has taken any intelligent
voked if crop conditions during in the
shape of reduced produc¬ we have already mentioned, might
observer by surprise—1 am forced
1948, the actual impact of Euro¬ tion and of loss of employment lead to an impasse and curtail¬
tb the conclusion that
the big
pean Recovery Program as au¬ throughout industry. The decline
ment of production. The furore of
thorized by the Congress, or other in
agricultural prices did not have public criticism of this move, the change in speculative psychology
has been brought about by one
economic
developments
should iany direct effect upon production
prompt investigation by the Joint
thing, t and one alone: an actively
bring particular inflationary situ¬
pnd employment, and when the Committeemen the Economic Re¬
ations to a critical levelgrain markets had become fairly port, and* Reports on the subject higher market. In order to sub¬
stantiate j my
reasons
for
this
These
recommendations
were Well stabilized before the end of
by the Departments of Justice and
opinion I'll try to show that the
made in contemplation of a for¬ February, we could feel confident Commerce
and y the
Council
of
eign aid program approximating that the economy as a whole had Economic Advisers served to check bullish arguments, whether or not
the $6 billion program enacted by been distinctly benefited.
While the spread of price increases to they were a year ago, are not
valid today.
»\
the Congress for the fiscal year the break had not created any finished steel. But the steel
wage
randum
unfounded the
as
bull movement; contending earnings are vul¬
nerable, defense spending will not last as important securities boom,
President by the Council of Eco¬
of
Big Break
By JOHN E. LOS1IAR
movement which constantly drawing nearer.
would spread throughout the eco¬
The Steel Price Raise and "Thirdnomy.
As the Council then re¬
Round" Spiral
*
ported, however, there were clear¬
In contrast to the favorable eco¬
ly discernible factors which would
make such a general movement nomic factors which characterized
tional fiscal
of! the
Before the
recessionary
a
Thursday, April 15, 1948
year,
a
arpls of wages
•vfll
CHRONICLE
Inflationary Trends
memorandum issued on April 9 to the
nomic Advisers, the three man board, of which Dr. Edwin
new devel-nments since the first of the year threaten to
£l|id require
<*thought it was the beginning
^nd-by con-
According to
FINANCIAL
they s;e greater need for wage-price controls and stand-by
Say $6 billion European aid and defense plans have changed situation. * " "
covering first three months of
rationing.
■
&
>
•
help,
other
,
the
could
"business
just
comes
a
—
volume
normal
business
tained:
main¬
be
usual"
as
of
be¬
after Uncle
memory
Sam
steps in.
A soap company
can't make millions of pounds of
GI
and still satisfy
soap
demand.
A
.
thousands
weave
of
civilian
mill
woolen
can't
yards of OD
cloth without reducing its output
of
.
.
if
blues,
grays, and browns. Since
government business
less profitable per se,
but also
duces prof its in other
lines, there¬
fore,
the
is not
only
re¬
bullish
implications of
heavy defense spending are^ most¬
ly illusory.
V:;;v.
"
...
.
,
,
,
1949.
the
of
three
months, we should now examine
and
evaluate
certain
important
ments, it had induced a
passage
new
factors
degree of caution in the
world.
since
that
have
January,? and
develop¬
desirable
business
settlement
and
J
changed
there
prices,
was
of
page
:y.
In Contrast to the break in ag*
.
ricultural
the
yet
was
whole
be
to
made,
situation
First, it is apparent that the
currently high level of earnings
is extremely vulnerable. Costs, in
general, have increased far more,
March
no
Up
15. s.:<
.-'.'y
this
to
;
- on
trope the so-called
this basis
percentage-wise,
sult in inflationary deficit financ¬
ing,
But
is
perhaps their strongest.
here, I believe, there are
possible flaws.
One is that
even
two
there
hasn't
been.
a
tax
cut
yet
which didn't bring in greater rev¬
enues in time.
The other is that
administration, faced with the
problem of increasing the national
any
debt
reimposing some form of
profits tax, will (I believe)
or
excess
choose the latter alternative.
(The
administration will be faced with
problem, but due to heavy
spending rather than the tax cut.)
Earnings Vulnerable
was
coal y production
Likely
V The third and last argument of
the bulls, that the tax cut will re¬
this
!
thrown into confusion by the stop¬
_
factors that have entered or
old
.
recessionary
specific
After
.
;! Excess Profits Taxation
Since any excess profits taxation
will
be deflationary, the infla¬
tionary
effects
of
the
tax
cut
should be short-lived at best.
/
profits.
than
The three major reasons for an¬
important reduction of industrial third round of wage adjustments
prices during the first quarter. had progressed without extensive This means that even if there ticipating a bull market, there¬
policies are now called for.
The weekly wholesale price index work stoppages and with advances were no further cost increases to fore,
all
seem
to
have
shaky
be considered, it would take only foundations.
of goods other than farm and food of wage rates
mostly limited to a
Earnings
are
ex¬
The Commodity Price Break and
a
slight decrease in volume (or
products, which had been rising range of 5 to 15 cents an hour.
tremely vulnerable, and likely to
Other Anti-Inflationary Factors
prices) to turn a large gross profit turn
at a steady rate for full six months, They did not conform to a
"pat¬
down; defense spending is
J
One important new factor de¬ dropped only one-half of 1% in tern" but rather to the peculiar into a net loss. In many lines not tne great market boon that it
veloped early in the quarter in the February to a level which it has situations of the various compa¬ supply is approaching, if not al¬ appears
to
be;
and
the infla¬
I form of a sharp break in prices of since maintained without appre¬ nies and in the main were not ready exceeding, demand. When tionary effects of the tax cut
may
I agricultural pioducts, particularly ciable variation.
,V. at once reflected in proportional this happens, fictitious order back¬ soon be reversed.
7 v-7 7
logs disappear, leaving in their
(grains and livestock. The strong
During the first quarter, reports or larger, price: advances. v> There
.
consider
what
on
new
or
modified
'
inflationary push given to the genjeral price and wage situation dur¬
ing 1947 had, among other things,
reflected a condition of poor crop
j
yields in much of the world.
In
the first half of December,
1947,
| reports of crop conditions both at
.
of
seemed
resistance became in¬
consumer
creasingly prevalent and indica¬
tions that competitive conditions
were returning,
or would return
over wider areas as the year pro¬
gressed, carried
that
some '
labor
without
ences
main
held
be
wake intensified competition.
It
is reasonable to assume, then, that
for
manage¬
volume
their differ¬
strikes
adjustments
wage
ground
and
ment would compose
intimation that
an
to" be
hoping
and
would
within
in
limits
will
industries.
that
in
decrease
in
Even
certain
industries
where volume is maintained, prof¬
its will depend on the extent to
the
that
which
rising costs can be cur¬
approaching a would not require further priee
\ home
and abroad became more
The
"topping out" area in which the increases. Such an outcome would tailed, or prices increased.
favorable, and the January report forces of inflation would be abat¬ demonstrate our ability to use recent steel ? furor indicates the
of the grain carryover was larger
ing. This was reflected in a grow¬ voluntary bargaining methods to¬ improbability of further price in¬
(than had been expected. This betcreases
even
in a "non-competi¬
ing sentiment in commercial and ward the containment of inflation¬
terment cf the food outlook was
tive" industry, and certainly in
industrial circles that the "honey¬ ary forces. '
the
economy
was
As
against
reasons
these
three
quasi-
for expecting a bull mar¬
ket, the big bear argument—lack
of
confidence
prosperous
in
peaceful and
a
future—
term
near
gains strength day by day.
As I
write
good
these words
neighbors
out
this
are
our
own
fighting.
Through¬
war is
talk of
country,
gaining volume.
The market has
yet had
never
•
t
reflected in
considerable fluetua-
moon
is over,"
the "bloom is off
jtion in agricultural prices, which the peach," "it's time to put our
| culminated in a sharp break in house in order," "we've got really
| late January. From a low about to sell the public, not just book
I the middle of February there have orders," and • the like. Of course,
| been several short periods of re¬ this trend of thought and action
covery, but with these prices in has been most marked in - soft
| the main making a plateau forma- goods and light manufacturing. It
ftion somewhat above
fpoint of the dip.
I
.
the
bottom
'
■
tural price break was hailed as
f the end of, inflation. Some even
American Hardware
as
these
a
or
sobering
sense
Texas Eastern Trans.*
•
Sold
* Prospectus
-
Quoted
on Request
7 '
\
—
Goodbody & Co.
Mcmberx A. Y. Stock
JW.
Exchange and Other Principal Exchanges
ProiMlway, New York•' * ' 105 West Adams St., Chicago
■•••-- 1
- •
^ •L -
Telephone BArtlay 7-0100
-
Teletype NY 1-672
Hence any
come
out
threatened,
valid
tional
buoyancy
injected
which has
precedent
trend
for
will
can't
see
by
Profit
,'V.v
In
Curbs
broken
this
be
77:
SURE-SAFE
'
PROFITABLE
Government
on
Orders
7;
•
:•
the
to
answer
second
bull
argument, government orders are
generally filled on a considerably
■
lesy^pi ufrtaDii?11 basis
lliat
others.
may
There
housing shortage is still acute and
First, government business (above
a certain
minimum) is subject to
statutory renegotiation.
Second,
be 10% below the supply last
year.
In the case of rent, the
rent control has been loosened by
succession
of legislative steps.
high cost of living still per¬
sists as an important element in
the
wage
negotiations that are
ahead. And significant industrial
a
bid
several reasons for this.
are
contracts, especially those for
"new items" which
tant
a
part
of
usually contain
leaders have expressed in no un¬
written
some
redetermination
certain
terms
determination
their prediction
that
any
or
on page
32)
.
,
so
impor¬
purchasing,
kind of price
clause,
or
are
cost plus a fixed fee
a
substan-,' basis. But the third
tial wage increases would be fol-
(Continued
011
are
war
reason
is per-*
US
haps the most important, because
teven
low
profit
-
*
•
volume
•
'
would
v
7;
any
that
.
is
was
believing
of
earnings will turn down
before very long.
7
been
" thrT tal!
•
I
and/or
the
defense
plan,
certainly 1 no assurance
that the consumer price index will
go down, and for such important
items as meat and rent, there is
strong reason why it may go up.
In the case of meat, it is estithere
reason
of
year.
and
war
to rise.
lag.
The
-
must
substantial rise when
it appears that costs will continue
represent on\v
time
customary
the
-
costs
price
profits. Since
the
third
round
wage increases have but started,
com¬
occurred in
-
Tenn. Gas & Trans.
in
rise
But in
view of the recent stabilization of
that their turn
Firemen's Ins. Co. of Newark*
7
may
the
With diminishing volume
increasing costs probable,
commodity prices, and the addi¬ therefore, it seems to me that the
the
industries, however, showed
Stromberg Carlson Com. & Pfd.
/
February. This
basic, materials, such
II'. Puh. Serv. y
Detroit Harvester
7
modities break which
industries
trend should be down.
consumers' price in¬
dex has failed to reflect the
coal, petroleum, and steel. Even
Portsmouth Stect
Bought
Thus far the
did not hit automobiles; heavy in¬
dustry,
In many quarters, the agricul¬
competitive
The high cost of living still ex¬
erts an upward pressure on wages.
a
SAVINGS
BONDS
r-wwiflMTr-
Volume
167
Number
4690
COMMERCIAL
THE
FINANCIAL
&
CHRONICLE
N. S. Greene Joins
\
Steal
The
Production
Auerbach,PollakCo.
Electric Output
-•
Carloadiit|i
Retail Trade
of Trade
*•
Industry
theNew York, y
Britain's Capital Lfevy—-Collectivism via the Back Door
;
.
.
Over-all industrial output continued to show
the past week and closely approximated the level of the correspond¬
ing week
•
year ago.
-a
Strikes in
:
7
of
some
the
• *,;
.• ;
industries bad
basic
an
tation facilities stemming
of some raw materials.
> • ?
adverse effect
-
'
,
...
"
.
The accumulative effect of four weeks' suspension of coat mining,
states the magazine "Steel"'in a current release, is beginning to bear
heavily
the supply of steel and is producing an industrial paralysis
that is creeping over the nation.
Unless coal shipments are resumed
quickly, the trade paper adds, industrial output will be reduced
to
in
trickle
a
matter
a
For
the
of
in
tons
the
J
:
■■■'
.
'
corresponding
for
A. Wilfred May
packing plants
the
V'- *
-.'Vr ;
continuation
The
-
week
had
a
walkout
slight effect
decreased
•; "■'?"
*
the
of
to
;
of
total
on
'••"
"v'''
workers
in
output.
■ ■;
•
taxation, she is .now pandering to Labor's whetted
appetite for further confiscation-of-the-rich by a back-door anc
punitive levy on capital.
Sir Stafford's proposal is wholly-indel'ensible economically both as to kind and form.
"The Special Con
,
I a-
,
„
x.
,
tribution," as it is to be called, constitutes a terrific blow at private
The combined rate of income taxation on the upper brackets
will become 147V2V0 of the income.
A levy on all capital, assuming
that it could be administered, would be bad enough. But the narrowing of the levy against the size of income, rather than against
\
ci rflhlif
wnrsp
the amount of invested or other capital, is immeasurably worse
It directly penalizes the man who invests his capital productively
for the benefit of the community, in lieu of hoarding it.
The
w
jjiw'
to
data
renorted
to
th«
Federal
Power
4.
il.
v
*
According
G
y;a s "Q
r e e n 6
man a
bf
g e r
?
the
unlisted.y
trading dfe- ;
partment. Mr,
w a s
formerly man-'
the:.
> of
ager
:
unlisted trad¬
depart¬
ing
mons,
,
Nathaniel S. Green
Si¬
for
ment
Linburn & Co, and-prio
was a partner in Manney
V
.....
thereto
& Greene.
Morgan Stanley Offersy
Greyhound Corp. Stock
Morgan
ciates
Stanley & Co. and asso>r
offering
are
(April
today
15) 344,400 shares of Greyhottnt
Corp. common stock (par $3) tat
Motors
The stock; is
behalf of Genei'a
share.
per
being sold
on
The
Corp. i
the
among
Truck
&
stock
was
assets of the Yellov,
'Manufacturing
Coach
Co., acquired by General Motors
in 1943.
,,
savings.
in
164,600,000 pounds from 178,400,000
' Strikes in some sugar refineries, however, worked to cur7
meltings considerably.
tail
traditional abstention from
>
firm ;'of t;
Nathaniel5
SA.f
thg,
$11%
Back-Door Confiscation
^
capital gains
pounds.
i.^:i
w#.
,
■'•••.
Production
Labor further, let us in this
taking a look at the
In direct contrast to Great Britain's
meat¬
many
appease
planners.
__
m
—
to
article confine ourselves to
capital levy constitutes epochal progress (?) along the road of the
States' capture of all available capital, and the complete ending o'
every vestige of economic freedom.
1
,
railroad service.
desire
of this major forward step of the
Despite Sir Stafford's sugar-coating
proposal oy alleging its price-lower *ng effects and that i
is to be non-recurring, there can be no doubt that this form oi
™
on
equality with freedom; and of how false a goo
is the apparent Middle-of-the-road-ism betweer
the Right and the Left which American "liberals'
"are increasingly worshipping.
; Apart from the reasons for the British Gov¬
ernment's new attack on. capital, such as the
-significance
'
February, 1948, of 48,390,000 net tons and
figure of 55,455,000 net tons for the March, 1947, period. The decline
in production for March, 1947, reflects the adverse effects of the
soft coal strike on total output during that period. .,
>
;
|
As the impact of the coal tie-up spread, more than 164,000
workers- in other affected industries have been dropped from pay¬
rolls.
The Office of Defense Transportation, in an effort to conserve
dwindling supplies, ordered a further cut in the operation of steam
locomotives to 50% of normal beginning on Thursday of the current week.
le
However, with the return of the soft coal miners to:
the pits starting on Tuesday morning, the Office of Defense Transpor¬
tation rescinded its curbs
sociation with,
Greene
just another
represents
of his tax
revised
a
■v.:..,;.'.'
1
s
and
period of April 5, 1947. .Preliminary
estimates of soft coal and lignite output for the month of March,
1948 totaled 34,016,000 net tons.
This compared with a preliminary
estimate
;
^
ended
week
coal
:
example of how
plannirlg prevents intelligent private planning by individuals; of how Socialism confuses
It
,,
'.
April 3, 1948, estimated - production of
lignite in the United States, according to the
Bureau of Mines, amounted to 2,135,000 net tons compared with
2,120,000 net tons in the week of March 27, 1948 and 3,998,000 net
bituminous
.
state
•
couple oi weeks as coal stocks, are
■<": ■.
V,;
•/
a
;■■ v
brazen Communist doctrine,
;
>
on
hearing exhaustion.
e/7'arinpqncetheas-;rr
-
front the soft coal strike slowed deliveries
\
S toe k VEx-
t
where, although waving- the flag of ''middle-of-the-road" Socialism.
must slowly
but surely move- ever nearer ;to
complete Stat ism.
Although such collectivism
V; encroachment may iii Great Britain as well as
elsewhere be unwitting as well as gradual, it k
thereby even more dangerous that the clear and
over-all industrial production and curtailment of some transpor¬
on
1 The budget which
£5ir Stafford Gripps offered to his fellowcitizens last week truly has the very widest social; and economic
implications^, v Jfcperfectly exemplifies how economic planners every¬
declining tendency
a
of
xiiemoers
Auto Production
'X1 Business Failures
f
;.-r :
30 Broad
By A. WILFRED MAY
Food Price Index
and
Auerbach, Pollak & Richardson,
Street, New York City,
v
Commodity Price Index
flnmmissinn
vvY rv* ad
1 r.
■X?i
With King Merritt & Co.
""
Chronicle?*
to The Financial
(Special
1
^
-
ANGELES, CALIF.—FM
LOS
King Merritt &
H. Seaman is with
the
most
Building.
Chamber Gf Commerce
Co.* Inc.,
.
The
government securities has less of his savings
the other hand, the individual who hoards his
money
completely inactive in J the .bank; :is relatively rewarded
by being permitted to keep his savings intact, .and, wholly apwy from
the controversial ideological phases such as class warfare, the pro¬
ductive effort so indispensable to the country's survival, is dealt a
investor
1047
In
a
new
record
peak, load was reached and totaled
kilowatts during December;- This represented a 10.1%
increase over December,: 1946, andwas far above the. wartime maxi¬
mum of 38,253,000 kilowatts in '1945.
V ; >
taken
47,554,537
'Annual energy requirements for the year 1947 totaled 251,521,919,000 kilowatt-hours. This was an increase of 31.5 billion kiiowatthours or 14.3% over the 220,068,692,000 kilowatt-hours in 1946. The
1947 total was substantially larger than any preceding year, topping
-
the
maximum
previous
of
kilowatt-hours in
225,103,105,000
1944
in
away.
riskless
V On
death-blow, Vl••■;
y'
■
:
*.*
This
of
the
new
planning
of
miracle
"'
•
'
effect
will have the disastrous
ending the voluntary private saving which is required to satisfy
nation's crucial capital requirements.
For the pool of savings
the lower income groups must also be progressively
Calgary Edmonton
available from
has been > completed, the government
capital needs. Thus, it cannot be long
before the country's capital requirements will end by being entirely
financed by the National Budget—meaning the State.
-y , y ;
drained.
The
usual
post-Easter decline in retail volume occurred during
the past week.
Total dollar volume of retail' trade was slightly
below the level of the corresponding week a year ago, the com¬
parison (being affected by the fact that last year Easter occurred
on
April 6. While clearance sales of ; apparel were less prevalent
than a year ago, mild weather and Spring promotions helped to
v. stimulate consumer buying.
7;
v
'-vnyK ;
:
Dollar volume
of
wholesale
trade
increased
the week and remained close to the level of
V at the wholesale
centers
increased
moderately during
year ago.
Attendance
a
considerably and retailers
gen¬
erally, sought merchandise suitable for promotional sales and goods
stock replacement. *
'
.
1
for current
STEEL
r
SCHEDULED
OUTPUT
DEC.
9,
1946
,
LOWEST
AT
WEEK
RATE
SINCE
v^'y:'/
operating rate since the week of Dec. 9,
period
1946, when operations at
slowed down by another coal strike.
"r
were
the industry,
to
coal strike
in the
operations—will
st^ike
this may be
because
of
which
was
next three weeks
terminated
or
so,
gets
1,400,000 tons of
hundred thousand tons
on
Sir Stafford's hypocritical defense of
r
steel.
more
loss
to dislocations
and
pre-
Added
over
the
damage to equipment
the prolonged mine
shut-down, according to "The Iron
Age," national metalworking weekly, in its current review of the
steel industry.
•'■••••/••
•
/j .■ IS,
••""V;SS;'''.
Another concomitant
With
,
ne
characteristic of
steel
company
International Petroleum
:
HART SMITH ft CO
WiLLlAM ST., N. Y. 5
52
HAnover 2-WW
I
Bell Teletype NY 1-395
New York
Montreal
-
Toronto
iota of the sorely
government of Socialist
a
planners is that nothing is being done about the cutting of expend¬
itures
(made possible, of course, by relying'on American ERP
bounties). Like the Harry Hopkins' "soend-and-spend and tax-and-
JOHN F. GRAY
DEL
philosophy which continues in the United States, the British
planners have made no attempt whatever to eliminate the food
subsidies or other of their inflationary expense outlets, i;
• •
CALIFORNIA
MAR,
-
AVIATION
V
The
Single-Dose Alibi
•
>
or
invalid.
If it really is
alibi of non-recurrence is
v-;Vxx*.; '..'v
•.
justifiable
on
ANALYST5
(
•
1
;
,
fiscal grounds, then this
FIELD
•
CONSULTATIONS i
'
on page
25)
■
;.
,
LETTERS
;
•
,
SURVEYS ;
WEEKLY MARKET
•
superfluous. This is particularly so since
(Continued
:1
SECURITY
,
give-away as to the government's sincerity about its defense
of the soundness of the new tax is its protestation that it is a "special
once-for-all contribution" for one year only and not to be repeated
In fact, of course, either the I justification for the-levy is valid
One
,
i
the new tax measure only
actually increased, and there is effected not one
needed increased national production.
x-yv ^
•:
Imperial OH, Ltd.
process
highlights its economic ineffectiveness. The bait of anti-inflation and
of implementing America's contribution to European recovery is
brandished. But, being coupled with rate reductions, for the lower
income groups, general inflationary pressure on the price level is
Monday—
back to
total about
several
months due
next several
this
-
The cost of the
if
After
itself will have to supply all
tax"
'^- Scheduled steel output the current week will touch the lowest
that
:
Inquiries Jnvlted Without Obligation
holding ample stocks of coal above
the ground, the industry is helpless against another mine shut-
:
down if it should occur when present coal contracts
li'
;
June 30.
.
',
■
:Vv<:\vT:~'.
,
run
out on
A i-
Dravo Corp.
Wu/;-;The coal miners'^pension plan means higher steelmaking costs
for all
steel
companies and mineworkers' wage demands, after the
present contract runs out will also mean higher coal * costs.
The
chance of the steelworkers getting more than a token raise now that
Mr, Lewis has wrung what he wants from coal and steel operators
In view of this outlook a steel price rise later
is better this week.
NATIONAL BAN!
of INDIA. LIMITED
Ohio Match Co.
j
s•_ ""
Bought—-Sold—Quoted
:"
;
•
Bankers
..
Head
.
/
The. steel labor talks
,,the meetings <are5resumed ?the corporation is expected to give its
^ansWer-—theb the bargalrung-will' start. It will get rougher as the
time-' draws close to April 30; : If no: agreement is reached then,
present
.
wage "rates
-
;
will apply for another
(Continued-on
page 33)
and; management
year
*
•
•
20, Bishopsgate»
.
?
,
S-
f
India, Burma, Ceylon, Kenya!
Colony and Aden and Zanzibar
Branches
were adjourned last week until U, S. Steel
management looks over the union presentation given them. When
v,.
Offices'
London, E. C.
!in % year is no longer a possibility, but a probability, the maga¬
zine "states.
to the Government im
Kenya Colony mad Uganda
FREDfWO H. IMTCH t CO. INC.
_
Established 1888
Subscribed Capital
P»id-Up Capital
Reserve Fund
The
,1
J
MEMBERS N.
7. SECURITY DEALERS
63'Wall Street, New York 5, N.
ASSOCIATION
"
•
'
1
,T
Y.Bell Teletype-"W t-B87
;
u
in
i
conducts
banking and
Bank
£4,000,000
£2,000,000
'Ml
£2,300,OOO
"
€
THE
(1646)
COMMERCIAL
FINANCIAL
The New British Budget
By SIR STAFFORD CRJUPPS*.
v
Thursday, April 15, 1948
Florida State
fea
'0s
- y
£haneeIlor «f the ^Exchequer
CHRONICLE
Comptroller Opposes
Mew Credit Curbs
.
^
In
explaining his Budget, British Treasury head asserts its keynote is to fight inflation, and encourage
deserving producer, housewife, and small fixed-income recipient Lists reductions in purchase tax on
wide variety of goods.
Increased receipts to come from drinks, tobacco, betting and a special virtual ■'}
levy on capital of wealthy..
C. M. Gay tells Florida State Bankers' Association Federal Reserve
*
proposal for special
.
credit curb problem
against deposits is unnecessary and
best be solved by individual bank action.
reserve
can
■
,
Speaking at the Convention of the Florida State Bankers' Asso¬
ciation, St. Petersburg, Fla., on April 7, Clarence M.
Gay, Florida
Most of you
will have already heard the main points of this year's budget, and I am
think about them. You probably think we are spending an awful lot of
We shall not be spending as much as last year; we are economizing quite a lot—over
wondering what
money.
you
'
«>——
£400,000,000,
matter of
as a
there
are
than
new
the surplus, what's left
be
used
same
Indeed,
which
ward
move.
have
a
-will
more
sav¬
ings v/ill only
be
about
£200,000.000.
£200,000,000 is a
to
Sir Stafford Cripps
•j;.'v
/■
is
ceptional
a
It is
a
very
special
ex^
year
because—as I've explained before
must somehow
—we
and
from
want
to
ever
we
we
shall all
them,
yet
the
can
that
off
'
.
of the ways
pricesY If
we
money
buys less and less.'
get
we
/Yl^Y/j^Y^Y
Production Must Be Encouraged
But as well as getting this big
surplus to fight inflation we must
give as much encouragement as
possible
to
the
them
producers.
to
We
produce
in taxes
money
pressure
salaries,
rise, even
may
the
the in-
as
and
wages
lower
better
:
more
up
prices
so
want
collect
refer to
we
pressure,; the
puts
and
the
in
f J a tiopary
faster
one
rise
a
reduce what
we
in which the government'can
help
to stop the
that
Indeed,
be.
budget is
to get
that, big surplus.
nearly everybody agrees
big surplus is necessary to
that
because
can,
more
things for us to buy, either things
imported Y from abroad
in
ex¬
♦Transcript of radio broadcast
change for our. exports, or made
by Sir Stafford Cripps over Brit¬
for us at, home.
-%yy:ki
ish
Broadcasting
Corporation,
And then too, i
April 6, 1948.
tnought,/and I
'
\
am
sure
you'll agree with/mo,
BOSTON
that
thp
government
ought
when
prices
agement
the
so
going
on
a
expan¬
provide
of the
troller Gay:—
the
"I
a
for
cannot
up.
these
a
gressmen who
Con¬
&
Maine
Southern
000
Traded in Round Lots
Y
Company Y YY
to
Tele. BS 128
Teletype
1
" v
PH 73
American Air Filter
Southern
:■
Textile Securities
;.;'Y;:'Y/■ Y,Y
Co.
and
Properties
.V'
•
BANKERS BOND m
.
'Y
lieve.
act
L- p-
PHILADELPHIA
C,
encouragements, to
So
we
or
by? extrj^
,
-
■
•
-
1
Data
1
on
Request
by
and
its
proposal
Y;..;
y..-
:
;,:K;
alleged benefits.
asserts:
'-(1) The plan would have about
call,
This,
may
you
proposed
alternative in the
'
was
the
as
1945
re4
third
Annual
..YYvs
effective
more
moves can be
hold the same volume of earning;
by the; individ¬ assets that they hold at present,
uals within the
state, rather than whereas an increase of basic re¬
by the federal government. Y-^YYYy serve requirements would make
Y
withdrawing sup*, necessary their reduction of earn-/
port from the government securi¬ jng . assets,:; with- adverse ieffeetsy
ties market- and
letting interest upon .'the earnings position of
made
rates
if initiated
rise
on
government securi¬
ties
government' securities"
gold
to
offset
imports.^
"A proposal offered by the Fed?
Reserve as what the Propo¬
call,- :'one—which will not
eral
make the
fairly
And
as we can,
restraint, that, will
little,
if
any,
impose very
hardship
on
th(.
banks/* seeks Ytq i^strai^^
indirect
On
are
alcoholic
drinks
and To¬
must raise the money, I think
the fairest thing is to take^a little
more
from these and from betting
So we increase the tax on
notes,
or cash, interbank balances
balances with Federal Reserve
Beer; is
This reserve, of course, is
addition to present reserves.
in
V. "The idea of this proposal is to
,
apply
a restraint upon all com?
mercial banks equally. This will
be effected, insofar as that withir
the .-next few months,, there if
increased by half a penny a glass,
and spirits and wines proportion? likely to be little need Tor, this
special reserve. The large amoun!
ately. That will mean an extra
of ? Treasury surplus funds, taken
£ 45,000,000 a year in reyenue.YA
from, the market through taxes,
little more is going on tobacco,
will be available to retire bankjust to remind the smokers that
held public debf. In this way bank
we
cannot afford-to goypn MY
credits/expansion -would be 1; re¬
porting as much tobacco as They
stricted at least temporarily.
/;:M,
are now using.
A packet of 20
-Y "It has been argued by many
cigarettes will go up from three
and four pence to three and six bankers, and creditably,. so, thai
such a proposed requirement is
pence, and other kinds of tobacco
in proportion.,; That will bring in unnecessary.. They deem it advis¬
another £20,000 000
are
a
year.
Then
going to increase the tax
able
for the
matter
banks
to
handle the
individually by exercising
prudence
in
extending credit
betting on football and other
When all is said and done, nc
; (Continued on page 47) ;V. YY amount .of legislative restriction
ATLANTA.
'
f;
^anks.-"yY ;";Y;\;-;V.;Y; Y i
6 to
1
,
.1 to nearly 2V2 to L
Y
Exchange from 10:45 to 11:30
A.M., Pac. Std. Time:
Sp-82 at
;
,
An increase in interest
rates 011 private debt would be
brought about, and would increase
earnings of the banks from this
^(3)
GA.
CORPORATE
v
;
ac¬
Yt
.
securities
ernment
market.
The
plari, jn effect, would divorce the
market for private debt from the
market for government securities.
,
,
"(4) Not only would thq plan
rejy on higher interest "rates to
restrain private borrowing,.but to
the extent higher Interest rates
restrain such borrowing, the pro¬
posal would make use of the interest rate mechanism. Hence, the
cost of restraining credit would
be^ borne by -? private borrowers
who are incurring additional debt,
and not by the government which
^is reducing its debt.
.
"as
;s.Y;
: •
Yr
.
■
-.
-'
'.'It iknot
pnreasanable lhat.we,
bankers, Ydo not i welcome/ re-
strictions
on our
'
activities. Labor
certainly doesn't approve pf wager '
controls; / agriculture doesn't liker-y : - •
price Y ceilings; therefore, is y it
strange thai bankers don't like
sisuch restraining proposals?
It is
only fair, therefore, that the ad- r
ministration
of
Federal
the
Re-
serveplan be placed in the Fed-'
eral
Open Market Committee, as
//Y'YY
planned. - The Committee's
members, in addition to the Reserve
Board, are five presidents y
it
is
pf the Federal Reserve banks/'
Trading Mgr.
For R. V. Klein Co
,
;S
■
'!fe
A-':"-.-;sssV}'//.
r/Hssss;:
Y Daniel J. McMillen has become
with
associated
BONDS
R.
V. Klein
manager
of
the
trading
ment. Mr. McMillen was
Co.,
City,
170 Broadway, New York
LOCAL STOCKS
hours.
■
are
mitting unstable prices jn the gov¬
McMillen
MUNICIPAL BONDS
.
complish thjs purpose, moreover, twithout increasing dhe interest
cost on the public debt or per¬
fi.
STATE AND
Immediate Execution of Orders
Quotes call TWX Sp-43 on
Floor
other
-; ■
-
•
,
requirements.
C. M. Gay
nents
remissions.
must do it as
of
Beryllium Corp.
,
the same effect in limiting credit
expansion as would a character-istic increase- in primary reserve
For
Buffalo Bolt
has
government and the tax¬ source where rates on loans
^enough
taxes Y;to enable payer bear .the ladded cost of, the,; comparatively low. It would
to give these
NORTHWEST MINING
SECURITIES
Seminole Oil & Gas
that
,r
have- got to raise
SPOKANE, WASH.
Portsmouth Steel Corporation
\Y
1
}
.|q- fteflistribute-Tax
{
"
Teletype SPBG 17
it
terference the better, and in this:
Report of the Federal Reserve.
particular; case it is my opinion The banks would be enabled to
•
other.
on
SPARTANBURG, S.
Bell Tele. LS
186
as
the producers, in one, way or, an¬
we
<EfUbli9)ied 1/892)
Floor, Kentucky Home Life Bide
LOUISVILLE 2, KENTUCKY
.
:
v
A. M. LAW & COMPANY
Incorporated
1st
Long Distance 238-9
'.■\;.y;Y''Y:v:Y;
This is
—
effectively—and if given
proposal
>
American Turf Ass'n
Varnish
some
banker.
tradition
,
beer, spirits and wines.,
SPARTANBURG
Consider H. Willett
make
-
would not substantially in¬
altogether in the small centers of
"(2) Y The
ratio? of Ypotential ;;:
crease the power of the
System tc 'credit expansion .on.a given in¬
population in the rural areas, to
offset increases in bank
reserves crease in reserves would be
encourage our agricultural work*
nar^fY/ i
from gold acquisitions. -J cannot rowed
ers in their vital job of
Y to the extent that the)* Y !
providing
think that there would be a cer¬
us
with food.
All these remis¬
special reserve was required. At
level of interest rates a' the
sions of tax will cost about £ 130,- tain
maximum: requirement pro¬
which; we coyid dispose of
pnoiigl posed, it would be lowered from
000,000 a year and will, we be^
too.
Murphy Chair Company
to
theatres, sports, and so on, and
to take pff the entertainments tax
we
Exchange Bldg. Phila. 2
RIttenhouse 6-3717
LOUISVILLE
also
on
individual
chance—will continue to be ef¬
The
bacco, which are already pretty
banks.
heavily taxed.,, Nevertheless/ as
PHILADELPHIA OFFICE
Stock
Telephone
Tel. HUbbard
2-3790
of
can
"I should like to expand on this
less gov¬
ernmental in¬
or
H.M.
?4 Federal Street, Boston 10
some
entertainments tax,
entertainments like the
allow
tax
;
Walter J. Connolly & Co., Inc
ofY
regulation
adequate substitute
judgment on the part
American
fective.
taxation ci ar¬
bank credit expansion. This plar..;
consumed, and part
by" direct taxation on those who "suggests that all commercial bank^'
be required as a
can still afford to pay more.. The
temporary ineasY;
ure to hold
a certain
percentage
indirect taxation side is not so
of their demand and time
deposit?
easy because we do not want to
in a ..special reserve in the form
put
the prices of essential
up
of Treasury bills, certificates artel
goods. We shall have to raise the
Stromberg Carlson Co.
Warner
eneour*
going to relieve
are
year;
a
remissions-
ticles that
Sterling Motor Truck
/
of
way
lower" incomes
part
Gas
Pittsburgh Rys. Co.
RR.
we
By
be held against
an
sound
worked
with
g r e e
bit.
their tax,! roughly £100,000,000 a
to diminish the purchase
tax ever a wide variety "pf ar¬
ticles, to the extent of £ 24,0Q0,-
we
Nazareth Cement Y
Prior Preferred
>
help
a
has
year;
us
Empire
BID
m
keep
things.
sary
money
Central Louisiana Elec,
Reliance
be
who
We want to get them down
;
•
YlY'YY■
Boston
would
-
It- is my con¬
thing we contribute more, or else we shall
that
not be able tojdo all these neces¬ viction
Then, of
the
first
see.
in¬
rising.
get
can
The
other try
or
bring prices down wher¬
we
the
were
You
personal
stop prices and
comes
is
course, came the question of how
we
must
remember that this
year.
a
That
housewife
difficulties over the goods
she needs to replace in her home
prices.
down¬
up
the
over
sion .of credit.
Said Comp¬
many
That's why we must
aimed at in the budget.
save.,
'.You
for
re
have
we
to Federal Reserve pro¬
reserve to
administrative
or
big
that
So
But
lot
launched.
spending
might the get
we
campaign
special
a
aga.nst
budget surplus this Y Now, if we are going to have would like to
year
to
try and
make
things the big surplus and encourage see, extended
easier for you and me, a very big
people to work harder, and have control of the
surplus judged by all ordinary some reduction in purchase tax, Federal Re¬
standards, V'YY/Y' Y^': then, pf cpurse, somebody must serve System.
•money so that
net
reduce
to send
pressure
health service,
our
to
help in the price
some
ducticn
over,
and if there is less spend¬
power then there is not the
ing
new
take
give
need to spend during the
power
education and
the
we
can
like
Comptroller, voiced strong opposition
curb
year,
fact. But then
services,
—
State
posals to enforce upon the banks
deposits as a
as
depart- /
formerly
trading manager for F. H. Roller
BUCKLEY SECURITIES
CORPORATION
1420 Walnut St.
44 Wall Street
Philadelphia 2
PEnnypacker 5-5976
New York 5
I
WHitehall 3-7253
Private Wire System between
Philadelphiaf New,
York and tos Angeles
& Co.
STANDARD SECURITIES
CORPORATION
Members Standard Stock
Exchange
of
Brokers
r.
-
Spokane
Dealers
-
Underwriters
Branches at
and
Yakima, Wn.
Yr-Y/,:Y "'"'Y'Ys\ v"VYvH
-r^-rr
••••
r: tt
i
The
Robinscm-Humphrey Gornpany
F. S. Moaeley & Co.
(Special
•
Peyton Building, Spokane
Kellogg, Idaho
Y1'Y-.
Established
RHODES-HAVERTY
Teletype
BLDG..
AT 288
1894
ATLANTA
I,
GEORGIA
Lanjj Distance
108
fo
THfe. i^NANCtAu; pKnoNiew)/
CHICAGO,.: IU^.-^.Orvllle
R.
Thomas, .has been? added to the
staff of
F. S. Moseley &
South La Salle Street.
Co.,
135
1/
A,"
Volume
Number 4690
167
COMMERCIAL
THE
CHRONICLE
FINANCIAL
&
.7
(1647)
on
By GERMAN R. RYER*
y
,
Associate Chief of Employment and Occupational
Ahead
of the
Outlook Branch, U. S. Bureau of Labor Statistics
i
Gpyerpmept economist, though stating
By CARLISLE BARGERON
out
Some weeks ago, Senator Milliken of Colorado, was on a radio
in which he was interviewed by some so-called top potcjh
Washington correspondents. Asked his preference for the Republican
Presidential nominee by one of them, he replied "Bob Taft."
:
rising prices
close
;
watch
program
The
t i
ques-%
e x-
oner
pressed ?su rpr-Lse
and
'masked
he
if
f thou g h t
ywh ere
.^ a n
had
w"
voted
to
duce
ERP
re¬
billion
a
b,y
dol¬
lars.
The Sen¬
ator
ri'. could
o
guln
n1y>
that, after; all,
.
T aft
Carlisle
finally
Bargeron
//';:
h
::Tfor "ERP.
r
the fact that he had
it by
duce
a
But
sought to re¬
billion dollars was
by the inquiring co•&,
a
looked upon
v;rDepartment, with an expenditure
of approximately; $6 billion but
not
v
i/ are a
approximately $5 bil-
assured , thab was arrived;
ai
by ^ the experts of the 16 nations
«which
1
of
onev
The $6 ibillion figure is one/ we
/•/
•
ERP
the
out pi
taken
hands of the
be
to
was
.do-gooders, the
pinks and rose tinted gentlemen
Df the State Department.
;• 'a;
are
to f. stop
Communism.
Inasmuch//as/ i they' have
; never
stopped Communism before, it is
difficult/io see what slide rule
they had to apply. ,The blunt fact
long and hard and' cut and shaved
here and there and arrived at this
irreducible figure, it was arrived
in
at
our
own
Sending it to
Department.
b,y special
having it
Europe
pouch
diplomatic
;
State
and
revealed from there, was
of the^ pageantry....' •
<
Whatever may
*
Anyway, the figure was arrived
at
and
of
those
few
have found
something" to the
business
you
some
titude
of
a
,
was finally hit upon was
device of taking its adminis¬
What
the
tration
away
from the State De¬
partment and claiming it over to
"hard
boiled -business
men."
A
"hard
boiled
business
men's
ad¬
ministration"—that
fellow,
a
the thing.
was
the
in
"abreast
of
guished
the times"
distin¬
as
those '"hard-boiled
from
-
most
found
one
Let
in
can't
behind these facts for a
fgw moments, however, to deter¬
mine their long-run significance.
A comparison of 1947 with 1929
(the earliest y,ejr for which we
have comparahle data) apd wifh
1940 can be extremely enlighten-
such dubiously directed
enterprises as the Committee for
Economic Development./ Its cre¬
ation was in recognition of the
espouse
of
to
us
get together and "put our
shoulder to the wheel, and to
tegrate
other
in¬
ptp'pp^es ^jand^Jsillc^i
our
to prevent a de¬
nonsense,
pression.
O/^'l/Y'i'
/
Mr. ! Hoffman
who
windowfor this enterprise, can't
have looked at its personnel, the
dresses
bright
young
who
men <
the
of
hands
business
man
a y
have
hard-boiled
from the
and away
;/
lion above both 1940 and 1929.
while
output Jias
been rising
sharply. About ,8.3* million per¬
we
;
be
can
see.';
passed,
pro-
$15,000
at
attracted,
•/•;' / /
a
what
v/f/ ':
do
V'//"••/
The "hard-boiled business man"
who
is
appointed
as
is
farm
data
show
rose
that
and
1940, and 16%
1947.
,
'
;
t
ization
the
doesn't
think
filling
about
And
the
men
a
-
have
to
single place.
designated
/;
associated with
us as
Manager of
our
Unlisted Trading Department
//.
Members New York Stpck Exchange
/
■
v'/v
l'!"'
v
*
'•
**
30 BROAD
.-wk
1
-
•
-.#■ »«•
-
-t
>
4*
jr."
STREET, NEW YORK 4, N.Y.
New Rochelle, N. y.
'
^
//;,
Southampton, L. I.
<
farm
gross
1
*
between
y
-
We Wish To Announce The Opening Of
present
or
even
/
Trailing Department
;
We Also Announce
TELEPHONE NUMBER
.
with
jobs
still
are
i
American
■
C!
Our New
-
,
DIgby 9-2700
/
The Installation Of A
/ BELL TELJETYPE
N. Y. 1-1144
?
^
cannot
consequently
B. v. Klein Company
-/'An address by Mr. Byer before
ence,
.
,farm
fewer
today required.
National1-Economic
Under The Direction Of '\:;/////
S';i D. J. McMillen
larger
much
a
A
1940
Vl
^
'
Farm
He
that
30)
on page
Auerbach, sPollak & Richardson
.:
The significance of this trend is
fairly obvious. We have enough
people now on the farms to raise a
huge volume of products; : Iri fact,
with further; mechanization,
in¬
creased use of fertilizer, and im¬
proved methods of cultivation it
will be possible to produce the
chart, prescribing every job and
designating the man to fill it. All
he has got to do to get his organ¬
directions.
(Continued
announce
Confer¬
170 Broadway
:
i
»
New York 7,
N. Y.
Legion,, Chicago,
111., April 6, 1948.
for
PATHE INDUSTRIES, INC.
Owns..the
country's
facturer
oil
of
Another
Pathe
Twenty-five of them, unless Con¬
the top ad¬
gress
or
Mr. Hoffman
handsome
a
balks, get
increase
a
owned
construction
processing
INVESTMENT
of
SECURITIES
.
f
year,
Public Utility
i
fltates.
under that
ceiling of $15,000
subsidiary,
has just
what
is
to/be
the
largest
film
laboratory In the United
wholly
considered
Net
salary
manu-n
extraction machinery.
Laboratories,A Inc.,
completed
<
largest
Industrial
earnings from these two divisions
amounted approximately to
1947
in
■'
£2,700,000,
written into the law to enable the
pected
bringing
in
of hard-boiled- busi¬
ness men.
■
■
•
/
to
and
be
1948 results
substantially
are
ex¬
i
' A:-
Complete brochure, describing these
operations of other wholly owned
interested
dealers on request.
and
///;/■;■
Municip al
subsidiaries, is available to
ministrator, Mr. Paul G. Hoffman,
.
Railroad
higher.
/;
•
is
"hard-boiled business man,",
po
at all.
I
am
Hoffman's
about it.
But
had
in
much
(ability
as
know' little
I
man.
not referring
he
a
or
business
nothing
V;/V '
'
is not what
to Mr.
the
public
mind when there-was so
emphasis in; Congress that
Schoessling with Sutton Co.
Common
Stock
Currently
/(Special to The Financial Chronicle)
CHICAGO,
ILL. —Paul M.
f
,y
,r
Available at 5H
Schoessling has become associated
with
Sutton
Salle Street.
H.
C.
Speer
&
He
Co., 120 South La
was
formerly with
Sons Co.,
Doyle,
O'Connor & Co. and Otis & Co.
.
COMSTOCK & CO.
CHICAGO 4, ILL.
231 So. La Salle St.
Dearborn 1501
Teletype CG 955
A.CALLYN"®COMEANY
Incorporated
,
I
CHICAGO
NEW YORK
BOSTON
OMAHA
PHILADELPHIA
KANSAS CITY
ago,
10% in¬
in the physical volume of
a
'v""
6% between 1929
and
workers than
follow
months
jobs, Department of Agricul¬
ture
production
Qqtppt
to
several
prospects are for,
crease
most
yje
the aver¬
on
in agriculture last year, as
against 9/5 million In 1940 and
10.4 million in 1929. Despite this
steep decline in the number of
age,
Departments is that that
department, upon Mr*:. Hoff¬
man's confirmation by the Sen¬
is
now
\
.
employed^
the
y
/The first fact which comes to
the fore
in exploring/ long-run
trends is that agricultural employ/
ment
is
definitely
dwindling,
sons were
Commerce
MR, NATHANIEL S. GREENE
State
very
functioning
watch
to
ones
Statistics
closely in the months immediately
the 4'world is
our
that "hard-boiled business
year so
men"
jobs
with—the
1946 to
prepared by the Bureau of Labor
and the Department of
made gains except min¬
ing, but the rates of growth have
varied significantly; The most im¬
portant activities to be familiar
ing:.y;v:v
'
lor-<25
groups
recovered
that
see
see
Since then,
/ In June
of 1947, total civilian
changing," that "la¬ employment exceeded 60 million
bor has come to take its rightful for the first time jn our history.
With seasonal ups and downs, the
place in our society" and that our
nation has "come to assume its average for the year as a whole
rightful place in world affairs"^ was 58 million, almost 3 million
his
disposition
caused
him; to above 1946, and more than 10 mil¬
businessmen'" who
non-
we
peacetime
wanted a job
fairly short order.
in
While this is
considerably/above the averages
of both 1929 and 1940, it is never¬
theless well below our two previ¬
ous peaks, the one achieved dur¬
ing the mid-twenties, and the 1942:
high which came as a result of the'
wartime building program.
> /
According to a joint estimate
of
minimum, and
practical
million
field
Turning -to. the
agricultural employment,
fully
IV2
1% million in 1947.
not
to
close
from
progress
Employment,
that the ground lost after 1929 was
go
us
year.
rose
Non-Agricultural
industry made
in the past
Employment by contractors
considerable
•
our
who
persons
~
viding
;
Byer
real expansion.
Construction
in
The construction
until v 1940.
however, the employ¬
ment level has risen by roughly
12 million jobs, or virtually onethird. All of the major industry
a
B.
Herman
The' Outlook
a
un¬
employment
was
,
ufacturing.
father
unemployment
—
man-
way
V has no/confidence in
But after the bill is
in
before
history,
myself,
aforemen¬
that it the jobs by the State Department
State
aren't
the
hard-boiled
business
V Department. No move is made to
man type in the least.
They are
V-get rid of that State Department.
A lack of confidence/is just shown the same old crowd that has been
V in it.
around
Washington ;; for
years.
in this
says
'
Mr.'Hoff¬
like
say
those
toward
'Volt,,is pretty serious when the
Congress
;
man's broad-mindedness and that
of
people
had civilian
jobs than ever
had
j.'Vv,•■■■ : V
like
roan
than
of
constitute
——-
ahead—are construction and
year.
More
The difference between the at/
■
satisfac-
very
have
must admit they
arresting ideas.;
form
was
tory
who
men
a
therefore,
would,
1947
ate, handed him an organizational
ing it under pressure.
\
standpoint,
;'
/
.
interesting and
stimulating; you can't agree with
everything they do and say, but
in
pro¬
maybe cut it down, or at
least "do something" to shoyy they
didn't like iLand were only pass¬
praised in the.s>L—•
——
y,
light of their normally be expected to increase,
If they did it would almost cer¬
effect
upon
jobs.
tainly reflect poor employment
From this opportunities
in
industry "and
them
•
to "do
'
enjoying to the
^rim of the cup, the Washington
New Dealers for years. He is one
against the tremendous propa¬ Wallace, it was most vociferous
ganda behind it and also
up iri u
predicting 8 million unem¬
against an inarticulate feeling in
ployed following the war.;, »
the country opposed, decided to
But what is more fascinating
handle it -if* a typical political
about getting ERP administration
way/: This typical political .way
gram,
*
apparently
The^ Congress, getting it and drawn up its formulas and plans.
knowing it was the .bunk, but up Along with the CIO and Henry
was
,
be his predilec¬
,
but part
/ /' ■"
.
tions, Mr. Hoffman has been play¬
ing ball with, fraternizing with
is that, notwithstanding the bunk
peed for Management, and/labor
about how these: experts labored
iand government and all the rest
£
I should like to begin with an analysis of the employment situation, not only because
subject is the primary concern of this conference but also because employment is the
most important single factor in our economy.
Developments in other fields can best be ap~
:
,
respondent as puf^fftg one com- tioned category is that the only
pletely beyond the, pale of consid¬
thing arresting about them; and
eration by the American people.
their
ideas
is that they
should
It is an example of the propa¬
long have been under arrest. :, ' "
ganda that has been spread about
;'
Mr. Hoffman's public spiritedthis proposition/ Presumably ^ve
ness and effort to understand the
can head off Communism in Eu¬
"changing world7 - and to keep
rope, but
not in our own State
'
-
the
voted
a
<?n
Looks for higher living standards to absorb increase in future labor productivity.
y
this
a
;;man could get
employment trends are still primarily on demand side, points
change situation, by choking off this demand. Holds new defense program requires
inflationary developments, but sees no immediate prospect of lowered employment,
may
MILWAUKEE
WATERLOO
MINNEAPOLIS
FLINT
COMMERCIAL
THE
&
FINANCIAL CHRONICLE
Business Situation and Outlook
Thursday, April 15, 1948
Dealer-Broker Investment
Recommendations and Literature
It is understood that the
to
'-Million*
f50
—
POPULATION
DISPOSABLE
PERSONAL
INCOME
DtHors
ftOO
t
DISPOSABLE
>"•':
«*>
I
I
li I"
ll
1900
•'!.
♦
Vv''Installed
I il
nl
I
I
I
>.I»M
.
.1910
1
I
.
I
I
I
■
■
1920
I
I
I
I
* 1929
I
I
■
*
;1990
1
1
1
.
■
;MM9 '
■
.
,1
1940 y-
■
■
.
I
1949
~
n
Horsepower and Labor Productivity in Manufacturing:
;.
Industries" ' •
■„
,
.
I
,v
i
INSTALLED
'
I
1919
.
'■
capita
TIlE ECONOMETRIC INSTITUTE, INC.
.
■
I
PERSONAL INCOME
P£f
i
♦
•
IN
PRODUCTION
PER MANHOUR
WEEKLY
HOURS
TIIE ECONOMETRIC
IN
'
\
(MANUFACTURING)
1935-1939* 100
AVERAGE
■
I—r~
MANUFACTURING
1935-1939' 100
;
r
1
i
HORSEPOWER
'
Vs'
/''
MANUFACTURING
INSTITUTE, INC.
/
send
interested
firms mentioned will be pleased
parties the following literature:
v
s..«vV
Volume 167
Number 4690
THE
COMMERCIAL
7
President, The Equitable Life
Assurance Society of the V, S.
Holding it is the
licking if unsound
policies prevail, Mr. Park¬
explains relationship be¬
money
inson
$45,800,000
:
.
//
•
City of Philadelphia, Pennsylvania
man
average
CHRONICLE
New Issues
By THOMAS I. PARKINSON*
who is in for
FINANCIAL
7
Sound Money Is
Good Politics
.
&
2%, 23/4%, 3% and 4% Serial Bonds and Term Bonds
a
To be dated May 1, 1948.
•
tween money
supply and govern¬
ment financing. Points out there
was no "sound money" plank in
Democratic Party platform in
y
for
<
To mature
shown below. Coupon Bonds in denomination of $1,000, registerable asto principal only and exchangeable
as
fully registered Bonds. Coupon and registered Bonds interchangeable. Principal and interest payable at the office of
The
\
Interest
Philadelphia National Bank, Fiscal Agent of the City of Philadelphia.
>
•
■
Exempt from Federal Income Taxes under Existing Statutes and Decisions
1
and 1944, and concludes
1940
"tune has
or
Never
since
These
1896
Bonds,
to be issued for Sewer, Airport, Gas Works and various municipal purposes, in the opinion
when
Free
out
limitation
as
sufficient to
to rate or amount,
of
City of Philadelphia
been
P
a
i g
n
be
>
it
the
b
u
'
t
own
Prices
...
Rate*
J
to
'•:-4 %
side
7 posits
in
money
•
billions,
4
1.10
77
1962
680,000
110,000
mostly silver, $2
-
certificates
960,000
!
1982
23/4,
97
96l/2
2.50
1,020,000
1985
2.55.
1,040,000
1986
23/4
23/4
95Vfe
2.45 V
the
540,000
1/1/52
4
1.40
1965
720,000
110,000
3
;7"
sound
120,000
7/1/52
4
1.50;
1966
740,000
110,000
3
7
1967
740,000
110,000
3
1968
760,000
110,000
3
1969
760,000
110,000
1/1/53
4;:. -I
1.60
120,000
7/1/53
4
1.60
who is in
580,000
1/1/54
4
1.70
licking
'
47
1.70
1/1/55
4
1.80
7/1/55
4
1/1/56
4
1.90
120,000
7/1/56
4
1.90
3
2.00
•;
<
1/1/57
3
7/1/57
3 V
7
$28
620,000 '1/1/58
3
2.10
7/1/58
3
1989"
260,000
260,000
1992
23/4
100
2fc0,000
1993
110,000
23/4
100
280,000
1994
840,000
li0,000
23/4
100
280,000
1995
860,000
110,000
23/4
280,000
1996
2.70
820,000
110,000
23/4
1973
820,000
110,000
840,000
'
1974
J
1 1975
..
•
•
vJ976
V
'
*
993/4~
1977
880,000
110,000
23/4
99V2
280,000
900,000
110,000
23/4
991/4
280,000
Interest
'(Accrued interest
payable January 1
to
95
95
95
9434
943/4
943/4
23/4
23/4
23/4
1998
:•
95
23/4
23/4
23/4
23/4
1997
1978
*/;"J>
951/4
951/4
951/4
*
*
L,
953/8
23/4
23/4
23/4
1991
100;
2.70
23/4
'
96
23/4
23/4
1990
260,000
3
110,000
2.10
120,000
■
1,120,000
110,000/
777
,2.00
120,000
2.65
800,000
1970
"
'
our
1988
780,000
•::
600,000
1987
1,080,000
'1971
1.80
600,000
■vu/'V;
7/1/54
120,000
de-
1,060,000
2.65
1972
120,000
580,000
•
2.60
"V 1
98
23/4
2.40
3
billion
98*/2
1981
23/4
23/4 /
23/4 <
1983
3
110,000
totals
1980
1984
110,000
700,000
bank
99
920,000
1,000,000
680,000
1964
It
2%%
1,020,000
77/7 1963
1.30
540,000
$24 V2
2.35 7'
1.20
on
Price*'
1979
940,000
!
4
billion of silver
and
.
4
consisting of approxi¬
$l1/£
billion
in ' coins
mately
■
•:
*
•;
2.30
3
is
circulation
3
7/1/50
:
Rate*
900,000
$
;
>
1/1/51
Presently
money.
110,000
i.oo
2.25
7/1/51
which someone—the de¬
the^right to draw and
as
~ 660,000
4
•
120,000
positor—has
use
1961
1/1/50
average
and
110,000
520,000
for the
in .circulation
'. ey
660,000
Coupon
1/1
Amount*
Price*
2.20%
3%
3 /
•
120,000
if unsound money policies
prevail.
Our
"money" consists of the
combination of what we call mon-
:
$110,000
or
*
man
.
$640,000
1960
.'77
.90
«
Rate*
1959
Due
Yield*
Coupon
Due 7/1
1/1
his
of
Parkinson
V
Due
Yield
the
1.
»
.
520,000
if
,for
money.
T.
..
Amount*
Amount*
;
.70%
4:
<7/1/49 v
120,000
any re¬
will be
77V
'
•
interests,
gard
"M'f
Due
1/1/49
$120,000
;,
who,
V
Amount,
average
he has
be required to pay thereon or retain,
may
amounts, maturities, coupons and prices
Coupon
will
bankers
man
agrees to pay.
this
be
the
inheritance taxes, which the City of Philadelphia
law of the Commonwealth of Pennsylvania, all of which taxes, except as above provided, the
$37,400,000 Serial Bonds
And this
time
and
assumes
the principal of said bonds and the interest thereon. The Bonds will be payable without
or
it
as
year.
not
pay
gift, Succession
pursuant to any present or future
Cam-
will
■
or
i-
r e s
dential
pa
therefrom under
important
so
in
of counsel will constitute valid and legally
binding general obligations of the City of Philadelphia, and the City is obligated to levy ad valorem taxes upon the taxable property therein, with¬
deduction for any tax or taxes except
currency
Pennsylvania and New York
but
man."
Silver was the issue has the ques¬
tion of money and the soundness
our
opinion, for Savings Banks and Trust Funds
our
in
the wealthy who
demand sound moneys
the average
*
Legal Investments/in
when it will not
come
be* bankers
will
•
943/4
be added)
1949 and semi-annually thereafter
,
of
other
paper money, mostly FedReserve notes, which are
simply promises to pay and which
/.> eral
-
are
$8,400,000 Term Bonds
only into similar
paper; that is, they are no longer
convertible into gold.
7
callable at 100 on May 1,1968
interest payment date thereafter
Due May 1, 1978,
or
Total bank
deposits, eliminat¬
ing bdnk deposits belonging to the
'United States Treasury, are pres¬
ently $142 billion. This gives a
total money supply in the hands
,
$900,000 2% 15-Year Term Bon'ds
7 $7,500,000 23/<% 30-Year Term Bonds
convertible
any
the people of $170 billion.
approximately
.•was
1
j
,
before
$152
Interest
Price 96 and interest
(To yield about 2.80% to maturity)
(To yield about 2.32%)
late
war,
$60
and
the
payable January 1,1949 and semi-annually thereafter except the final coupon
optional bonds
are
,
which will be for four months. In the event
the coupon due July 1,1968.
called May 1, 1968, a proportional interest adjustment will be made on
It
/
billion
it was
The above Bonds
billion
(again eliminating
deposits belonging to j the
bank
V
the
May 1, 1963
Price 99 and interest
V
•
of
Due
of
are
offered
receiyed by us and subject to the approval
Bockius, Attorneys; Philadelphia, Pennsylvania.
subject to prior sale, for delivery when, as and if issued and
legality by Messrs. Townsend, Elliott & Munson and Messrs. Morgan, Lewis
United States "Treasury) at the
beginning of 1946, right after the
"
end
f
of
the
'77/7
war...
great increase in
.
ply
was
bank
due to
deposits
our
money sup¬
Harris Trust and Savings Bank ' V ^
the expansion of
created
by
-
~
Lehman Brothers
i
The Northern Trust Company
?
The First National Bank
The First National Bank
OF PORTLAND, OREGON
OF PORTLAND,OREGON
'
.Vv
Blyth & Co., Inc.
'
Stone & Webster Securities Corporation
pay for the large *volof government bonds ac¬
quired by the banks either- di¬
rectly from the Treasury or by
Stroud & Company
Sachs & Co.
/ v Goldman,
The Philadelphia National Bank
i >
Blair & Co., Inc.
;
the
banks to
v
Halsey, Stuart & Co. Inc.
The National City Bank of New York
-Everyone understands that the
tV
:
v'
,
Estabrook & Co.
Salomon Bros. & Hutzler
'
Incorporated
Phelps, Fenn & Co.
"
ume
V
%
purchase
v
the
the
on
war.
R. W.
war
B. J. Van
redeemed more
than $35 billion of its marketable
debt, the people's
f
money
supply
(Incorporated)
shortly after the end of the
i
y
Laidlaw&Co.
Mackey, Dunn & Co.
TVf
V
'
J
"
' ' *:
■%
W. E. Hutton & Co.
V\"
"
•
Brightwaters,
«i ■»» #
£) <
S~, 8#
Incorporated
.
Chas. E. Weigold & Co.
Hornblower & Weeks
•••''r-Incorporated
Dick & Merle-Smith
Bacon, Stevenson & Co.
■
[
Roosevelt & Cross
Incorporated
Dolphin & Co.
Eldredge&Co.
Incorporated
1
Weeden & Co., Inc.
-
"*■
Butcher & Sherrerd
_
Rambo, Close & Kerner, Inc.
Bramhail, Barbour & Co., Inc.
Wurts, Dulles & Co.
G. H. Walker & Co.
Buckley Brothers
The Illinois Company
The First National Bank
of
Newark
:
City National Bank and Trust Company
Singer, Deane & Scribner
Francis I. duPont & Co.
Kan*a» City, Mo. j
?
■
Hannahs, Balfin & Lee
K.-■
Wm. E. Pollock & Co., Inc.
Seasongood & Haas
Walter Stokes & Co.
C. C. Collings and Company
Incorporated
Memphi*
Aspden, Robinson & Co.
Schmidt, Poole & Co.
The National State Bank
Fidelity Union Trust Company
Moore, Leonard & Lynch
Hess & Co.
Incorporated
»
..
.
Thomas & Company
......
,
by Mr. Parkinson,
by
the Continental
Syndicate,
Braun, Bosworth & Co.
,
•., >
Sheridan, Bogan Co.
Glover & MacGregor, Inc.
R. C. Schmertz & Company, Inc.
Arthur L Wright & Co., Inc.
release
distributed
Press
Hallgarten & Co.
First of Michigan Corporation
.Incorporated
/
*A
Eastman, Dillon & Co.
Stranahan, Harris & Company
Newark
government borrow¬
(Continued on page 40) •"
.
Hemphill, Noyes & Co.
Kean, Taylor & Co.
r
Incorporated "■
A. Webster Dougherty & Co.
ing that put up bank deposits and
the money supply and that when
~
Equitable Securities Corporation
•
*
v
i? The reader may ask reasonably
i. enough, why does the money sup¬
ply go up when the government
debt goes down?
We were told
was
Inc.
■'•.
Supply
it
Barr Brothers & Co.,
]
"
V
war.
Government Debt and Money
that
V ;''
.
L. F. Rothschild & Co.
Ingen & Co. Inc.
Harris, Hall & Company
has gone up, not down—$170 billion
now
against
$152
billion
■
Incorporated
Mercantile-Commerce Bank and Trust Company
though the government has since
the end of the
£. H. Rollins & Sons .•--••f77'7v Paine, Webber, Jackson & Curtis
;i
'■
market during
significant that
'It-',is
V
Pressprich & Co.
i'.
April 14,1948.
.
v
J. R. Williston & Co.
1
COMMERCIAL
THE
S
(1650)
10
Factors
Missouri Brevities
••,'/;
'
Empire District Electric Co., of Joplin, in its annual
1943, it sold $4,000,000 of first mortgage
The
reveals that early in
21/2 %
report,
series due 1978, to the Metropolitan Life Insurance Co., The
Insurance Co. and The Connecticut Mutual Life Insur¬
Co., at a price of 102.345.' The proceeds from this sale were
deposited with the trustee, and may be withdrawn by the company
against certification of bond£ble$
them the right to purchase one
property additions.
A revolving credit has also been share for every eight shares held,
established with the Harris Trust at $12.50 a share. They will ex¬
The proceeds
& Savings Bank, Chicago, 111., and pire on April 23.
associated banks, permitting Em¬ of this financing will go toward
additions and
betterments.- Ed¬
pire District to borrow until Dec.
31,
1949, from time to time, ward D, Jones & Co., St.' Louis
$2,000,000,
with the right to convert on Dec.
31, 1949 into a one-year loan ma¬
turing on or before Dec. 31, 1950.
Interest on all funds so borrowed
will be at the rate of 2Vz% per
annum.
'
.
•■../■
,/
and
of St.
Louis, and Stern Brothers & Co.,
Cook
Newhard,
Reinholdt
Co.
&
Gardner
&
the bankers
were among
1963.
debentures due
25 of
to
bonds, 3%% series due
1978, and 555,039 shares of $3.50
gage
$22,180,485,
value common stock of the
same utility firm, the bonds at
102.72
and
interest, and the
stock at $7.35 per share.
They
are issuable under a .plan of re¬
costs considered ex¬
cessive, net earnings came to $2,484,731 or $4.80 per share on the
*
*
#
>
,;i
517,859 common shares outstand¬
Although the operating reve¬
ing/at the close of 1947. /This
nues of $25,638,247 were the larg¬
compares with earnings in 1946
est in the history of Kansas City
of $1,198,453, which was $2.48 per
Power & Light Co., net income for share on
481,880 common shares
1947 declined to $3,944,265, which
outstanding at the close of that
was $220,741 less than the $4,165,year.
006 earned in 1946. The substan¬
It is exnected that a further
tial increase in operating revenues
stock dividend will be made at
was more than
offset by higher
equipment
organization under /the Public
Utility Holding Act of 1935.
.
,
the end of the current year pro¬
/Total oper¬
viding earnings remain satisfac¬
ating revenue, in 1947 was $25,tory. A 2% stock dividend and
638,247,'an increase of $1,884,859
a 12 *4' cents per share cash divi¬
over the 1946 revenue of $23,753,dend/payable in the second quar¬
S88.
operating
expenses.
.
The
'/
construction
1948
its
cost
much
as
has
,
short-
consummated
term bank loans of $3,860,000 to
early months of
1948, with long-term financing
to follow by mid-year," he said.
the
through
*
*
common
plicable to the
\.'/:
the
on
preferred
common
stock out¬
standing were $3.10 for 1947 and
cents for 1946.
"4///'v//'
Co., Cape
offering
22,750
stockholders
declared.
stock, the per share earnings ;ap-
73
common
dividends
for
*
is
its
of
/shares
been
*
850 in each of the aforesaid years
The Missouri Utilities
Girardeau,
.v
Co., St. Louis, for the year 1947,
providing for all known ex¬
penses and taxes, was $507,906 as
compared
with net income for
1946 of $177,244, or an increase of
$330,662. After provision of $74,-
the construction program
carry
'•
;
1
group
103 in¬
of
the public offering on March 25
of
April 6. Rights were received by
the stockholders yesterday giving
$45,000,000
Reinholdt
were
&
Gardner,
Stifel, Nicolaus & Co., Inc. and
Stix & Co., all of St. Louis.
'
C. T. A.
..
v/'
/>;
If!
.
Stern
Brothers
*
Louisiana
Power
(Continued
&
BUILDING
mass
own
and
far
as
as
of
limits
the
hu¬
man
frailty
will
W. T. G. Hackett
permit,
unbiased.
Further, when an entire country
potential subject matter,
one's
is
the
arises.
selection
of
problem
to sift out from a
information and view-
must try
One
of
mass
ooints those
really significant in¬
have a present or
that
fluences
bearing
prospective
on
As
a
starting point, I would sug¬
gest that whatever our immediate
problems in Canada may be—and
we
have our; share — they are
certainly not those of an econ¬
omy
operating at a low level
of
productivity.
During the war
years
Canada
experienced
a
period
of
dynamic
industrial
growth, • while
the speed
and
nical
been
think,
accomplished provide,
further encouraging
of vigor and adaptability.
some
evidence
don't
I
reconversion
of
processes
have
I
which the tech¬
Vvith
smoothness
more
say
about Canada's wartime
economic
development than is necessary to
the present situation
into
perspective. The picture is one of
a
nation of 12.5 million people
that doubled its level of industrial
put
production, increased its agricul¬
output by one-third (despite
20% decline in agricultural em¬
tural
a
ing
of operating the
the job
on
Commonwealth Air
Training
Plan.
Canada,
as
you
know,
was
a recipient of Lend Lease.
never
Like you, we were
financial
time
extending war¬
aid to
the
United
Kingdom and other allied nations.
In the very early stages of the
47)
L D. 240
T
Mr. Hackett at
*An address by
the Investment Forum of the Say¬
ings Banks' Association of Con¬
necticut, New Haven, Conn., April
8, 1948.
•
\
<
.
j
Long Bell Lumber
~
/
A
/
*
-
Stix & Co.
war,
of financial assistance to
measures
allied
nations
amounted
to
ap¬
proximately $4.75 billion. If iyou
to multiply this by 16 you
would, have
an
approximately
were
comparable figure in terms of
your own economy—the compari¬
being 'made on the basis of
son
-
relative gross
the
national
prod¬
¥
_
509 OLIVE
«■*
.
•
Mf
.
STREET
-*
.
■
»
•
;
Southwest Gas Producing
common
^
.
;
.
The Dollar Shortage Problem;
/
It
obviOus that
was
a
war
Bought
—
Sold
—
«.
"
Landreth Building
Bell
Teletype
SL 456
St.
Louis 2, Mo.
r
Garfield 0225
L. D. 123
of
end
1945
ning of the
the begin¬
at
as
.
at
same
war.
Canada's
nancial
wartime
experience
domestic
is
all
fi¬
the
on
record/ and that record, I think,
generally regarded as a good
is
The
one.
and
the
government
public
nancial
might be '
in the phrase "pay as
as you can." Al¬
summed up
go
you
that
far
as
though
adopted/
a fi¬
supported,
program
the
Dominion
annual
half
during
Govern¬
increase
in
Canada's
materials, industrial
raw
the
six
from-
other half
needs for
expenditures
of
the
substantial
Borrowing
total
war
required
years
revenue
of
was
sources.
to meet the
necessary
was
substan¬
course
tial and between
rose
the end of 1939
component) parts
and the end of 1945 the Dominion's
from the United States. We expect¬
direct and guaranteed funded debt
equipment and
ed
have something
to
dollar
of
U. S.
early
had just
a
problem, and in the
the
of
stages
we
war
holdings of gold and
U. S. dollars declining from about
$400 million in/September, 1939
to the low point of $172 millions
in January, 1942. Later in
1942
we
began to receive a consider¬
that,
our
.
measure'of
able
assistance
from
ran
from $4.4 billion to $17.8
up
billion, the proportionate increase
being somewhat less than was the
case
in your country. At the end
war the Dominion's direct
of the
and
guaranteed
debt
uct, slightly greater than the rela¬
tiveproportion in the United
States (L3 times) and consider¬
ably less than the /comparable
figure
tered into in 1941; You will recall
(2.5 times). War finance
this
how
division
worked.
munitions
of
Canada
United
the
between
the
on
technical
tive
involved
It
a
basis of compara¬
advantage in but-
the
for
United
complished against
production of
States/and
Kingdom
easy
which
liar.
The
you
rate
average
well
are
result
interest
of
by the United States from Canada
certain munitions, ships , and
materials. This mutually
also
3V2%
in 1939 to 2V2%
is
be
critical
demption
a
common
purpose,
that is possible between two coun¬
tries
whose
•
^economies
,
permit
integration and who in ad¬
dition/know and .trust each other.
close
/.As
the
war
progressed, other
not be
developments that could
foreseen began to build
up ;Our
U. S. dollar
U.
position. There were
S. defense outlays in Canada
principally in connection with the
Alaska Highway and Canol proj¬
ects./There was (a heavy U. S.
demand for Canadian grain, aris¬
ing out of shortages in your coun¬
try, such grain exports in 1944
being larger than the total of all
merchandise/exports
to
the
States
in
Another
1938.
chase
of
influencing
Canadian
our
by
States
investors, attracted
by-the high interest rate differ¬
ential, and as time went on, by
the increasing -likelihood of the
of the
-return
Canadian
dollar to
gold
and
the
U.
S.
very
had
comfortable
dollars
figure of $1,508 millions. I hasten
to add, however, that this increase
in
cash
assets
almost
combined
from
1939
to
1945
exactly offset by the
effect
of
reduction
in
of
debt
the
the
on
in. 1945. It
that
net
payable
re¬
solely
optionallly in foreign countries,
just about completely elim-;
possible variations in the
or
has
inated
cost
of
external
sulting
from
debt
service
exchange
re¬
fluctua¬
tions. ; Today only about 3% of the
Dominion's direct and guaranteed
debt
is
in
payable
other than Canadian
currencies'
compared
as
with 35% in 1939./
To
sum
up
this
very
sketchy
re¬
view it may, T think, be. said that
Canada ended/the war with an
expanded industrial
with
some
capacity,|
toward
progress
greater self-sufficiency in indus¬
try/with full employment, with
high national .income; and with
price level that was relatively
low / in
comparison with, other
countries.'/////; /'/?//;-/ •'
a
a
.
,
-
-VV.vp!.
J
:
.•..
J
V../Y \
V-
,vV';:V V
I
''/
.
;
-•
•/>;"/ Canada's Foreign Aidv£/%S§
Even before the end of the
•■
securities
noted
fami¬
reduced from
of
of
ac¬
that
was
was
interests
was
background
money, through techniques
with
to
;
a
put, and the consequent purchase Dominion's debt
advantageous agreement, achieved
with a minimum of formality, is
an excellent example of the kind
of economic collaboration, in the
about
was
1.5 times the gross national prod¬
operation of the Hyde Park
Agreement, which had been en¬
was
^
the
duction program of the magnitude
undertaken would require a very
reached
SCHERCK, RICHTER COMPANY
•
other
In
practically the
was
covered
of
Quoted
area
about
pro¬
^parity. To cut the story short, by
.ft
Members St. Louis Stock Exchange
.
Canada.
during the war to six times those
of the comparable pre-war period,
-
.ST.LouisI.MO,
; • ■
.
in
period involved,
the end of 1945 Canada's holdings
M
branches and subsidiaries of U. S.
companies
ment's
United
Universal Match Company
INVESTMENT SECURITIES
United
of
form
ucts of the two countries over the
U. S. dollar position was the pur¬
'/
Southern Union Gas
Service
that up'to the end of the
Canadian extraordinary
important factor
*'Southern Production
'Southwestern Public
through a
of detail it will be enough
United
■v/:/'RockTOrelI*Mfg/^
/
thing.
same
you
the
to
intend
for the
taking
to say
long-run
Canadian investment values.
,
?
his
accurate,
Delhi Oil
2, MO.
Teletype—SL 486
Co.
the
of indebtedness to the U. S. dollar
soon
name
Without
in
also
Light
gave way to free
in
A.
another
country that
is informative,
Berkshire Fine Spinning
.
ST. LOUIS
Co.
on page
Peltasonjenenbaum Co.
LANDRETH
&
these
But
nature.
S.
States holdings of Canadian bonds
and
undistributed ; profits
of
gifts apd "mutual aid" which was
picture
a
conditions
♦
participated in the public offer¬
ing on March 17 of $10,000,000
3%—1978
techniques
of
Columbia Gas &
Electric Corp. 3*4% debentures
due 1973 at 101.25 and interest
this
of
ments
U.
sent
on
and raised an armed
force of over 750,000 besides tak¬
•*
Among the
his
dom's net Canadian dollar re¬
quirements by repatriation of se¬
curities and other special arrange¬
words, in spite of the rise in our
liquid reserves, our net balance
put
ployment)
vestment firms participating in
stock to
of record
Canada
therefore
financed the United King¬
war we
mettle to pre¬
after
scll, President, says, will require
additional financing. "The com¬
pany
*
The net income of Scullin Steel
as
This, Harry B. Mun-
and 1950.
have' already
■
program
$15,000,000
and that the heavy construction
program will continue in 1949
may
ter
estimates that
company
cles. A visitor
from
is
/;
plus appropriations of $400,000 for
possible inventory price decline,
and $300,000 for new plant and
cir¬
financial
$14,020,320 figure for
1946.
Net earnings likewise es¬
tablished a new record. After sur¬
par
•
spected i n
Canadian
.
increase of 57%
an
■
criminating judgment of New England investing institutions is fully recognized and re-
the
over
resulting
at the outset how honored I feel in being invited to speak to this gathering. >
I approach my task with considerable trepidation. The dis¬
say
During 1947 net sales billed by
Century Electric Co., St. Louis,
reached a new high, amounting
the public offering
$20,000,000 In¬
terstate Power Co. first mort¬
March
on
May I
314%.
C,
/'.r
//'• //'?■
By W. T. G. hackett* /
' /'*/..
Economic Adviser, Bank 'of Montreal
.'/v!
I hasten to add, however, that
bonds, se¬
mortgage
'
has already been checked* Sees ERP easing Canada's present dollar difficulties, and con^"
eludes Canadian investment situation is similar to that of U. S.'f
'•//>""/V":/
reserves
///////'//;
partic¬
in
ipating
gold
due June 1, 1971
at 101/ In addition, the company
has tentatively arranged to sell
$400,000 of 3%% sinking fund
ries
/•
-
■
*
*
#
first
of
Influencing
'■
expanded industrial capacity and greater self-sufficiency, has brought about a dollar shortage.'"
-Cites Canada's heavy participation in foreign aid program and its' liberal export credits as primary :/,/
cause of difficulty.
Defends restoring parity to Canadian dollar, and points out depletion of Canadian
ytilities Co. re¬
cently sold at private sale $2,500,000
Thursday; April 15, 1948
in
Missouri
The
/':/
4V:"
;>/ '
offering.
stock
■
CHRONICLE
Canadian economist reviews his country's recent domestic financial experiences, which, though
-
principal underwriter of the
is the
amounts not to exceed
"
:
.
v//""
bonds,
Travelers
ance
FINANCIAL
&
the
Canadian
.
Government
laying plans for
gram
was
war;
was
postwar, pro¬
of foreign aid.
The result
the authorization,
early in
a
1946, of a total of $1,845 million
of foreign
credits.
The largest
single credit was of course the
loan
of
$1,250
million/to theUnited
Kingdom which coincided
with the U. S. loan of $3,750 mil¬
lion to that country.
represented
amounts
credits
and
on
The balance
in
varying
somewhat
dif¬
ferent terms to a number of other
allied
nations.
The whole
was
a
large program for Canada—
of U. S. securities, and increases equivalent on the basis of relative
i;
in'our external liabilities to the'
(Continued on page 34)
*
other
assets
abroad
through sale
very
>
Volume 167
JHK COMMERCIAL & FINANCIAL, CHRONICLE
dumber. 4690
agricultural machinery, coal min¬
Javits Praises
of .House
Foreign Affairs Committee
says
total
depression and
Will not resjilt in renewal of allo¬
cations and business controls.
over
ward off
it -will
Sees
Act
"
Addressing the annual meeting
of the National Paper Trade Asso¬
ciation of the United States at the
Astoria
Waldorf
Hotel
in
New
York City on April 7, Jacob K.
Javits, (R.-N.Y.), a member of the
House Foreign Affairs Committee
and
of the drafters of theHouse
one
Re¬
European
Pro¬
covery
bill said:
gram
"American
business
need
fear allo-
not
cations and
controls
a
as
result
of
Eur
p e a n
R e
o
the
c o v e r
Program,
y
greatest
We know that it is not-true,
the Administrator and as soldiers
refrain from interference with the
-Gener¬ pf production who will serve in all
ally, the Administrator will seek the participating countries, we
to stabilize excharige rates and to need
American
technicians,
in what has made us
remove burdensome'trade restric¬ schooled
1 call for not less than
tions, quotas apd other barriers to great.
trade.
/
"
1,000,000
Americans
to
devote
of
ity of our age.
They refuse tp
continue to be chronically poor;
that is the key to the present ide¬
ological struggle. In this struggle
we, with our superior knowledge
Of production techniques, should
but it is,up ;to'us to,demonstrate
that it is not true.
They cannot
tated through the general aims of
if jail the others have
The common
the world, demand a
share in the enormous
productiv¬
"The Soviets say that ERP is
designed for economic imperial¬
ism,.
political independence. and social
life
of
these
countries.
JN>
"It >is well recognized
'.
rope
faces
the Act, and specifically.4
"Specifically, the Act approves
a
great
construction^ and*; management of
pf guaran¬
investments
program
new
for
American
industrial
the
aiding
may
ERP.
for
continue
•'nsure
the
currencies
guarantees finitely
Such
14
and
years
from
the in-
not
and
Europe, but save itself,
must by now. realize.that
save
we
change firm of Sage & Co., 1 Wall
•.net*
New York City; on April
16.
all
Under the
the Administrator is forced
so
others
the
only to procure goods, but to nation with
a
dictatorships,
the
remain
only
private economy in
Two with
,
(Special to
Herrick, Waddell
The
Financial
than
other
group
in the
y United y States
any
Hon. Jacob K. Javits
to
success
*
FROM
"I;; believe,"
vthat
Javits
Mr.
added,
gives, reasonable
we
l§^
assurance
a serious
shall not have
depression in the next few
and
if
years
and Subsidiaries
gives a platform from which,
American
blis.'ness
seizes
the
opportunity, not only -our own,
but world prosperity may be sta¬
bilized.*
...
"There, is
v
phase
to
.
-
of. acarce.
materials,
tion of such controls
the
status
Act of
just passed by Congress to
carry out the European Recovery
Program, as the items to be sup¬
plied are generally within availlabilities.
In addition, countries
participating in the program are
given priorities as to scarce ma¬
terials
over
non-participatine
countries where our supplies are
insufficient for both.
•"The
remains
can
flicts
the
Secretary
on
resolve
to
its
a
the
and
the
ERP
prosperity
areas of
-
a
Act.
for
developed
Rv
colonial
to
'utilize
commitment
by
United States.
the
Under them, pri¬
can
undertake vast
supply agreements with the re¬
cipient Western European nations
Great quantities of materials are
.
;
ipdeed involved.
of
ER*3
there will
the first
year
be.-shipment®'
Of 12,000,000 tons of food and food
products costing about $2pil¬
lion: 1.500.000 fons of tobacco and
cotton costing close to $1 billion;
*,&: /L
>
com¬
Ameri-
-
„,
''"
>,
'
'■
i
r
/
.
'
/
*
'wAfj/'- * '<t
Company, Incorpo¬
.liquidation of the
WEST
VIRCJIJJtA.
l&M v
/'m,
r
^company's Stock¬
/•.Ugh*.areas indicate
A* /-P
scope
of territory
iin.5.states .served >by»fhe system
c
*
.
-
Total
con¬
a
$96,900,000
ating
'from
over
A substan¬
output
A
/,•*P.--; A' '.y:
•
.
•'
»
DEMAND
'
/'
•
*
.
'•
/
••
.
Consolidated gross
a
income
$14,549,642
$15,975,275,
to
Consolidated
or
9.8%.
net
$7,642,464 to
$9,482,889,
24.1%.
or
'
of
consolidated
/
of
$7,20^127,
to
Jn addippn to ^regular .
rose
Jdlowatt-hours
from
to
f
1,348 kilo-
$5,360,254.
ferred Stocks, an
was
paid
on
offer to buy
or an
*-•
v
i
-
»
\
«•
**:>
i /"
York.4, N. Y.
offer to sell
any
securities of the
and notations applicable thereto, has been mailed
Company at 50 Broad Street, New York 4, N. Y.
•
>•
to
March 25, 1948.
?50. Brood Street/New
above summarized from the Annual Report does not constitute an
.
initial dividend
the Prethe public
per share
on
THE WEST .PENN ELECTRIC COMPANY
;
Company or its subsidiaries. The detailed Annual Report, with financial statements
to the Stockholders of the Company and a copy may be obtained upon request to the
4
/:;■
dividends,
Common Stockholders of 25 cents
Company's net income increased from $4,922,733 to
1,238
watt-hours per customer.
The information
34.3%.
As a separate corporation
(non-consolidated), the
use
electricity by residential
customers
or
DIVIDENDS
.
increased from $5,360,702
integrated
annual
of transmission and distribution facilities.
income
applicable to the
Common Stock and Surplus
net
system.
average
,
,
Balance
.
The
ELECTRIC SERVICE
.
income
increased from
of
the lines of the
from
FOR
Demand' for electric service experienced by the
?integrated, electric,system of the' Company, con-sisting -of three -main 'divisions respectively
headed by West Penn Power Company, Monongahela .Power Company and The Potomac
/
' Edison Company, has been unprecedented in its
history. This has resulted in the need for .addi¬
tional facilities. The $96,900,000 three-year con.'
^ -stru^tipn program is/the largest ever under¬
taken by the system in a similar period of time.
/ .It includes the,building pf additipnal electric
//....; generating capacity of 286,000 kilowatts, com/
/.prisipg an addition,already completed, to an
/
existing /station, .and/three new stations, apd
;the ^extension, enlargement and improvement
$64,075,900 in 4946
in 1947,
/
•
increased
revenues
increased
32,844 new
electric customers was Ridded
"to
//
$65,712,125.
to
f
total
oper¬
gain of 14.3%. Electric rev¬
enues alone increased
15.8%
increased
/ hours.
consolidated
$73,236,604
to
three-year period, 1947,
16.9% to a record : total
of 5,002,600,000 kilowatt-
private
Administrator to,, the pa rticipating
nations is provided.
These rcav
be; hypothecated or. assigned and
become binding obligations of the
vate business
made
that of
parent company,
publicly-owned enterprise.
Power
/.
channels of trade,' the issuance of
It
was
company to
parent
portion of the {funds
complete this
three-year program | have
/been raised through {finan¬
cings completed by the sub¬
sidiary companies. ^ j
»■
rrauv
private trade channels is
encouraged and facilitated. As'de
from an express direction to the
of
Company to its
needed /to
of
letters
history
for the electric holding
tial
the European powers.
Administrator
company
1948 and 1949.
"At every point in the Act. the
use
in the
holdipgs of the Common Stock of The West Penn
estimated
surpluses, and with enormous pos¬
sibilities of new development m
under
" .'/•• '•
•»
Company. It
subsidiary holding
struction program to cost an
Secretary
with constantly ex^andin"
foreign markets ready to take, our
the
a
Inauguration >of
years
/
* .«■
OTHER HIGHLIOHTS OF THE YEAR WERE:
con¬
any
good job, American busi¬
can
assure
itself and the
of
one
'
of
a
country
'•
••
1
"One of the great opportunities
in
eventful
was an
'//.'•
,/•"
s/holders, The West Penn Electric Company became //
of all time is put before America^
doing
ness
.
••■'■j
Water Works and Electric
Electric
of; Commerce,
business
v
•».
rated. With the, dissolution and
this subject between the
Administrator
1.
*' •/♦ "-••
latter? company, and the distribution last January pf
■;
Commerce under the Act and the
is
'''
•.
/.
of exnort controls
power
with
President
'
''-'a. *
'•?.*. "■s:
>
1948
.
/
business of its former
pany
result of
as a
of
| top holding
Assistance
foreign
■'
of The West Penn Electric
business needs to fear the imposi¬
■
*
notable by the transition of thei Company from the
,
the
power,>of export licensing, and
other governmerital regulations of
business.
I do not believe that
•1'
THE YEAR 1947
European Recovery-Program
./which relates .to allocations and
controls
-
"\
'•'
•
'
—
•
negative
a
v..'-v.
the
•
THE
of the program." 4
"that the European Recovery Pro¬
gram
#.
the
assure
4
*
partner
Chronicle)
WEST PALM BEACH, FLA.—
George A. Horton and Maurice J.
Meyer are now
with Herrick,
Waddell & Co., Inc.
,
.
business could
more
a
Chicago.
for
just
politically jf
are
cannot
we
Mr. Hicks has been
in Hicks & Price of
cannot remain the only free
as we
nation in the world
than the money
put in the ERP.
we
convertibility of local Act,
realized
more even
Theodore H. Price, Jr., member
of the New York Stock Exchange,
will become a partner in the Ex¬
of a jpb,
"By doing this kind
most
Theodore H. Price, Jr..
American business will not. only
agricultural
abroad.
The amount is limited in production of the 16 participating
the first year to $300,000,000 and nations. Such a contribution will
the guarantees apply to projects aggregate in terms of results, in¬
Our
troops in the struggle
forces of American busi¬
ness."
,
and
victor.
sure
a
effective
are'the
greater argument can be made
against the; Soviet system than our
kind of administration which will
build and not appropriate—im¬
prove and not seize.. .
themselves to the job of the re¬
tees
prove
a
American
do
11
economies.
people
Had.
gall upon American business, but
the expansion of normal American
business abroad. is greatly, facili¬
$4 Vz billion worth of Amerproduction in -the first -year
•Jpd not less than 50% of >this is?to
be shipped in American bottoms.
/ "Not alone is there this direct
reviying ^world-wide
the
soldiers democracy ever
calls/for qoo: for .the first year.
'figures
round
be
will
state
that Eu¬ understand how a million Amer¬
ican technicians can go in to re¬
production crisis and
the greatest experts ,in production habilitate
European
production
are in the United States,
They without dominating the partici¬
pating countries politically.
We
apd our skilled workers have
made us the most fabulous pro¬ must show that we understand
ducers of goods the world has how to split the two arid how to
rehabilitate production while we
ever known. "
Therefore, both as
ican
business prosperity.
y
technicians
r
in
the .world
procure
J'ron; >;iron ore and vsteel". costing papers and magazines, radio and
$200,000,000; 'and ^l -billiori >televislQn distributed in the par¬
countries, vbut
these
in vcpal, petroleum and t other raw ticipating
and semi-finished materials.
The guarantees .ate limited to $l5,000,over
Republican jnerober
and furnish .technical in^
fprmatipn and .-assistance, These
yestmept.of TJ.vS- business in the
ing machinery,trucks, freight cars,; participating .countries into - dpi-,
nd equipment costing over ;$3O0,- lark. • Similar guarantees are also
for
American
news¬
000,000; -about 2,500,000 tbns /of provided
(1651)
,
/
THE
(1652)
12
Realistic View ol
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, April 15, 1948
Michigan Brevities
Compulsory Social Security
By E. H. O'CONNOR*
:.v
'V.,.
Kaiser-Frazer
for
the
year
after all charges, of $19,0.15,678, equal
America
Managing Director, Insurance Economics Society of
Corp.
1947 reported a net profit,
to $4 per common share, as
against a net loss for 1946 of $19,284,681.
Net sales in 1947 totaled
".A
.
'
Contending compulsory social insurance is
a
$260,132,988,
compared with $11,504,443
Working capital at Dec. 31, 1947$>
—
deadening doctrine which frustrates ambition and achieve-
/ inent, Mr. O'Connor points out advantages of voluntary insurance
ated
...
as
by
well
Admits existing
government.
as
its ad/erse influence
I believe and I
future will evaluate
you do that we are living in a time
the high peak of human history or the
as
envy
and
As
it
be
developed.
Should
compulsory under
be
weakened
.
administration
or
should
it
voluntary under the auspices
of private enterprise?
Should the
law make participation compul¬
sory for all, but leave the exe¬
cution :> to ' private
agencies'"
If
compusory, should it be on a Fed¬
allowed to'
pendents? -Should benefits be
clompulsory social-security, on a
Rational, but /still limited scale
the
E. H. O'Connor
prop agation /
of such measures
-<
'
3
•
'
was
introduced in this country.
/'
governmental
v Prior to that time,
our people,
protection from "the cradle to the almost to a
man, had an Horatio
grave," compulsory state sickness
Alger outlook on life. Opportunity
compensation or proposals of a was their
-watchword, and they
like nature,
because when our neither wanted nor would brook
Ipeople ; place their faith in such any interference from government
^measures as complete social se¬
in their private economic affairs.
curity, /enacted either by the na¬ The
depression changed the minds
tional Congress or by the states, of
enough people, however, so that
as
rather than in their
own
willing¬
generous
ment of
scale
or
on
the American
social security.
a
•
|
to risk and'venture and take
The Society,
to
approach
worker
and
of
the
those of the farmer and
taxpayer
a
Deadening
Jeople want the compulsory form
,
,
lem
>ay
Program, ; Pittsburgh,
Pa.,
Lpril 5, 1948.
Therefore,
social
when
security
tioning whether
we
or
we
are
speak
not
of; factory,
ques-.
not the people
change.
I
economic
as
conditions
Frequently he is power-
(Continued on page 36)
for
been
writing
First
stock-
its
:
shares
were
sold
,
by
headed by The
Corporation
of
group
*
to
pared
to provide Standard
was
ports
that
i
Watling, Lerchen & Co., also
April 8 participated in the
public' offering
of
$7,099,909
Michigan Consolidated Ga« Co.
first-
volume
10
most
during; March
Detroit
were:
/additional
struction
plied
&
Cleveland
Warner
Navigation
Aircraft
sular Metal
Corp.,
•not
River
Raisin Paper
r,
•.
;;
;
Sales
of
Goebel
1948
show
increase
an
of
ap¬
proximately 11% in barrels sold
the
over
months
same
thereby > reflecting
in
1947
continuing
a
the
Not
a
offer to sell
any
nor a
solicitation of
an
offer to
of these shares.
(Par Value $3
per
1946 and $2,904,986 in 1945.
a
iv/.; *
f.
*
'
Sales of Hoskins
»
*
Manufacturing
Co.,
Detroit,
for January
and
February were good, according
who
Little, its President,
"However, the gas
added;
shortage seriously interfered with
production in February. Conse¬
quently our earnings for the first
quarter may be lower than other¬
wise."
Profit
after
charges
for
second
best
ruary
Anderson,
President,
.
net profits were
in
excess
of $170,000.
The
their
directors
decision
meeting
dend
in
point
at
out
the
omitting
the
on
that
27
Feb.
the
divi¬
stock,
common
normally declared at that time,
was
ultra
should
not
conservative
be
for
and
considered
the
as
remainder
"There is
payments
being
'for
Federal
the
year
in
year
surpassed
income
1947,
the
its history,
1947
will
be
March
*
*
'
quarterly dividend of
10, 1948.
^•;v>:■&
:
*
of
*
*
C. G. McDonald & Co., Detroit
offering
are
share)
in
resumed
a
1
at
300,000
($1
par
shares
of
per
com¬
stock of Federal Industries,
mon
Inc., the net proceeds to be used
as
follows: $75,000 to be paid to
Reconstruction
:
of
Finance
Cor¬
working
debentures
due
March
102% and interest;
1,
and the
Established
1919
on
account of
loan,
a
balance to be added to
capital.
Federal,
a
Michigan corporation, manufac¬
tures
and
sells
electronically
1978
door
April
on
two
types
operated
It
openers.
is
of
garage
also
cur¬
rently manufacturing two other
'products, namely "Power Take,
(Continued
Time to
on page
/ ./
32)
Investigate
1
L. A. DARLING
Members Detroit Stock Exchange
It's
a
"Honey"
'
'
Michigan Markets
MORGAN STANLEY & CO.
639
Penobscot
Moreland & Co.
Building
DETROIT 26, MICH.
•
Member Detroit Stock Exchange*
;
Randolph 5625
tu
DETROIT 26, MICH.
Teletype
,
.
DE2O0J
.
"i
♦•••
,1051 Penobscot Building
*4pril 15,19^8
-Telephone
r,
f.
paid March
25, 1948 to stockholders of record
indi¬
every
and
poration
at
■
only
\
30 cents per share was
875,000,000 Pacific Telephone &
Telegraph
Co.
30-year
3*4%
-f
"
by
1946
profit was $971,150, equal:
to $2.03 per share. Dividends of
$1.40 per share were paid during
a
the second quarter of this year,"
Mr. Anderson said.
Share
«•'
-
when
1, $40,000,000 Ohio Power Co.
first mortgage bonds, 3% series
due 1978 at 100.99 and interest;
r
./•;•■ ;V1
and
share,
J.
who added that January and Feb¬
Charles A. Parcells & Co.
Price $11%
for
966, compared with $3,462,716 ih
public offerings:—On March 17,
Share)
income
1947, after all charges
taxes, amounted to $3,139,-
year
and
Michigan Corp. also
participated
in
the
following
Common Stock
Net
year.
j
the
Edwin
First
Greyhound Corporation
during
taxes totaled $833,240, or $1.73 per
*
The
property
provision
New Issue
344,400
1
The
determined.
company proposes to
current
cation that substantial dividend
buy
been
company's product, according to
forecast
an
*
ac¬
favorable trade acceptance of the
the year.
This announcement is neither
depreciation
to William D.
Brewing
Co.,
Detroit, for the first two months
of
yet
; tional
Products Co., Goe-
Co.
I
forV
will be sup¬
program
from
utility
dustries, Inc., Kaiser-Frazer
Corp. and
required
>pend $10,971,909 for such addi-
Penin¬
bel Brewing Co., Gar Wood In¬
funds
form and amount of which has
:
Co.,
•
3%%
192.25
cruals, and other financing, the
Detroit.
Corp.,
at
the completion of the 1948 con-
-
Edison Co., McClanahan Oil Co.,
Gerity-Michigan
bonds,
1969,
construction of additional prop¬
erty. It is contemplated that any
•;
in
stocks
active
due
and
interest. The net proceeds are to
be used to finahce, in part, the
;
March, totalled 240,847 shares,
having a market value of $2,956,900, compared with 221,398 shares,
with a trading volume of $3,062,473 in February.
>*y V ;
The
mortgage
series
I Vy} Z
trading
$14,300,195 for the
Net profit for 1947
year.
mately 5% of net sales.
.
The Detroit .Stock Exchange re¬
*
and
com¬
on
additional capital
Z
;£;;»■,'
V;'A; *
Detroit,
$23*353,058 as
with
$1,201,061, equal to $2.15
per share on the 559,200 shares
presently
outstanding,
as
com¬
pared to a net profit of $742,848 in
1946, equal to $1.33 per share on
the
present
Net
capitalization.
profit in both years was approxi¬
»
Accident with
funds.
*
Inc.,
amounted
Corp., M. A. Manley & Co. and
Watling, Lerchen & Co., all of
Detroit. The purpose of the df1fering
*
dustries,
New York, and which included,
others, First of Michigan
at
/
under¬
the
1978
.
the exer¬
upon
Boston
among
the
employer,
by
136,849
of
have
i
.
gt the Accident and Health Con¬
ference of Pittsburgh Insurance
-
which I represent,
endeavored
Standard
subscription- warrantsand the remaining 3,901 shares
system of
subject on this broad and general
premise/, considering all of the
interests
involved, those of the
national
became
cise
"
has
subscription
subscribed
on
compulsory program
of the inventor and the whitepossibility. It was first
Ibare of themselves, the process of
tried on a restricted scale, but collar class, of the national econ¬
Jiecay will have begun and his¬ pressure for broad expansion be¬ omy and of future generations.
torians will record that America's
Wewant to find out not only
gan
at once
and has
become
what is
Iglorious era has come to an end.
good about compusory
stronger with the passage of time,
£
'
: •"/
social security but what is bad;
even though World War II brought
!; Compulsory Social Security—A". a return of
not
only what it does for the
prosperity and a wealth
people but also what it may do to
Doctrine ;/.>; of opportunities.
the; people. - Not
only what it
t Compulsory Social Security is a
No one can quarrel with the
aives to some but what it takes
deadening doctrine which frus¬ thought that it would be
heavenly from others.
If the ;American
trates ambition and achievement. not
to, have a single worry, to
fChe label is appealing but the have all that one wants to eat and
f social security I presume there
jackage actually contains a blend wear, to have decent shelter and
is no reason why they should not
)f demogogic pap and promises
to work Where one wishes with
have it.
But before they make
diich are too thin in vitamin con¬
complete assurance that one's old their decision
they should know
tent to provide the nourishment
age will be taken care of.
This both sides of the
question so that
jded to keep a strong nation
is
a
description of heaven to
they do not have to
believe
functioning in a free economy.
which we all subscribe, but the
everything they
1j There can be no doubt that a clash comes in planning ways to social security. \ are told about
•/
large proportion of the people of attain this goal.
In
planning
No one is more willing than I
fthis country want greater eco- thus, we must be alert to the
am to admit that the modern in¬
fiomic security. There can be even "camel" technique—for once the dustrial
age with all of the bene¬
less doubt but that this desire, not camel gets his head into the tent,
fits it has brought to the
So say need, poses a difficult prob¬ he soon has his entire
average
body in¬
man
has also created a host of
side.
Social Security expansion
for the leaders of this coun¬ is indeed like the camel, it does problems for him. In most cases
try — political leaders, business
the individual worker no longer
not
stop
at
part-of-the-wayowns his tools of production.
He
leaders, and social leaders.
measures.
Like
the «good
old
Southern expression, it's simply can no longer turn readily from
|' *An address by Mr. O'Connor "whole hawg or nuthin."
factory to farm, or from farm to
ness
a
for
holders,
.
1,
tfte year 1947 were the
largest in the history of Allen In¬
previous
offered by
April
totaled
Accident Insurance Co., Detroit,
.
■;'■•; •"1
stock
due
Sales for
100,-
*
-
year.
$25,000,000
6,
100.875 and interest.
Sept.
on
Of the 140,750 shares of com¬
.
mon
subsis¬
tence level?' In other words, what
considerations
and
what: prin¬
ciples should guide the develops
a
*
*
-
,
be
df normal ^sistahce. Thus, ih 1935,
or
was
car
govern¬
prior to the world-wide de¬
pression, beginning in the 1930's,
eral or State basis?*vShould .it
but the depth and length of that
cover Worker's»only;'or: also de¬
depression1 overcame a greatj deal
That
The
turned out
25, 1947.
be
ment
a
way
spirit must not
by
should
it
ments for them made little head¬
nations of the
die
000th
previous
—
bentures
March
on
automobile.
200,000th
which it should take and how far
result, adoption of similar
plans in the United States have
.been strongly favored. The argu¬
the
r<
security, but
questioning
the
form
the
April
Mountain States Telephone &
Telegraph Co. 30-year 3H% de¬
26, 1948 when the Willow Run
factory produced the company's
social
have
-are
we
bility in the hands of government.
Thus, government compulsory so¬
cial security came into existence.
of all the
earth.
should
good many years ago, the
peoples of European countries in¬
sisted upon resting this responsi¬
reached
was
in
on
Another
business.
the
remain in
milestone
the American people and their inclination to
A
keep this
country of
o u r s
moving
to
upon
and
subject to Federal income tax,
permitting the full 1947 profit to
which the historians of the
time of its greatest tragedy.
<£-
and
to
ahead
depends
$26,545,420, against $11,817,346 a year before. Because of the
loss in 1946, the 1947 profit is not
was
destructive of American ideals.
as
hope
.strengthen our
democracy, to
perpetuate
a
strong and ex¬
panding
free
economy,
individnal initiative and enterprise,
on
Whether it will be the former
renew
pressure
plans over bureaucratic devices oper¬
for expanded social security, and cites its heavy cost,
}
City
.—
Lansing
—
Muskegon
.]
V't'
1
Volume 167
THE
Number 4690
COMMERCIAL & FINANCIAL CHRONICLE
the, Administrator, that
to
bal¬
the
force
By PAUL E1NZIG
■
-
<
J':*V
-
rT, "4
-
•
-i-
<1
;
»-M
I
-V
,
•■■'"
■
Cites
conditions of the Anglo-American
severe
dignitiesihat
requirements
holding
coun-
equilibrium, in spite of tiie Mar¬ decisive'part.'
bal¬
and ■/ thereby to; insist oh
shall
Plan, which
the ♦ reduction of/ these* balance: to
pones
the day when Britain will
a
find herself devoid of any dollbr
ances,.
.
to
pre¬
sterling
the
Plam
Stage her defences by agreeing to would deplete her dollar
more
convertibility or non-dis¬ long before the end pf
crimination, simply ignores this would certainly not serve
fact.
Even in the abs^ice of hny of European
Recovery Program
concessions, Britain will have the which the consolid;atfOh of Brit¬
utmost
diniculty
in achieving ain's balance of payments! plays a
would
lorig-oyerdue action in
tries
Loan Agreement as,,
be encountered, and warns imposed
increase Britain's' task of meeting tradedeficit.,
may
aid.v This
British Government
senting counterclaims to the
Dr Einzig discusses uncertainties and fears of Britisli regarding U,S.
conditions to be imposed on aid nnder European Relief Program^
instant of
,
-
•
take
Marshall
the
make any such concessions, or large part of the benefit
she could weaken at this from
the < Marshall-
that
ances must he scaled down and
funded before Britain could re¬
ceive
(1653)
manageable amount,
r
s
merely
;;
the other
On
post*
hand, the diffi-'
culties of the American
tors is
negotia¬
fully realized here/ British
may
infbrmed opinion is aware that,
Fears; are; entertained in many reserves.
Without the Marshall Plan that apart frqm trying to cheek thb,
LONDON, ENGLAND—The speedy;pasnage: of the ERPSilliby quarters; /that > the Administrator
Congress has taken everybody, in I^ndon by suii)rise^includi»g the might insist on such conditions as day would be reached by the end pr o gr e s s.of y CommunismI in
Government. It was not expected until after budget day (April, 6)
the reduction
of
British ship¬ of this year, judging by the pace Europe. the object of ERF ik to
and when the news came through ChanceUor Cripjps had to redraft
building, or a curtailment of Brit¬ at which Britain is at present los¬ ensure convertibility and non-dis¬
<g>part
of
his
•
Budget speech
matic views on those .subjects are
on;
in order to
well known from past
ish
experience,
but the appointment of Mr. Hoff¬
man has tearought some relief.
deal with
Marshall
as a
aid
certainty
instead of
There
possibility.
were
shall aid. This is considered most
Rejoicing over
unlikely in British official circles
the
which
with
which
a!;#
endorsed
March 19 issue of the "New York
":V£V
Times,"
It is feared that the ERP
■
ministrator
might drive
Ad¬
hard
a
bargain with Britain in the mat¬
ter; of convertibility and non-dis¬
crimination.
Britain is
already
committed in principle under the
Loan Agreement of Dec. 6, 1945,
AA'A/V'A
but under the pressure of devel¬
opments during 1947 the United
A A'/AAA,/ States Administration agreed that,
while the principle must be up¬
hold, its application need not be
rigidly enforced for the present.
'
-'AA'
:aaaaa
This concession
was
made because
was
aid."
obviously not in
a
position to
It is
that
In the
during tbe
Far East; or a limitation of British
year, unless in the rneantime she
shall
or
'AAA A' now
\' '
that
the
Marshall
Plan
■AA'A
O',
the
in
Washington that, since
Marshall
will henceforth
be
position to apply
'•*
a
■mm
■
of
A/A/AA
ination. When it
"aa'AA/V'A"
*
.
"A-
.
1
V
X
-.r-
3
r
convertibility
Mr.
'
'
^
Ctayton
in
a
she
This is under
;;;
/.V
v
,
anointed
*;
was
was
no
MIIa
better
possibly
panic in
London, for
be
there
official
his dbg-
dissociating
themselves
the views expressed
common
;VA,
;
political opinion realize
come
first,
from
on
stockholders and such offering is
over
Those in Britain who
issuer instead of evadingvit
all their
of
a
hope
demand
.on
•,
.♦,'t
v
;
means
of the Prospectus.
';.W
'*'r\ t-v-'.
(without
par
'
I
value)
+*,
prior to April 1, 1958
His heart
Eastern Daylight Saving Time^ Apnh27% i9#^aa>more.TuUy set'forth
.
"'M 'i
Subscription Price to Warrant Holders,
/-A'
being put forward by
as
far from fraud
heaven from earth.
;
•
in the Prospectus.
.
During the:subscription period, the several Underwriters may offer and sell sharesof Cumulative Preferred Stock acquired or to be acquired by them through the
exercise of Warrants and any unsubscribed shares at prices riot less than the sub¬
scription price set forth above, less the amount of any concession to dealers and not
greater than the highest known price at which the Cumulative Preferred Stock is
then being offered by others in the over-the-counter market plus accrued dividends
and plus the amount of any concession to dealers.
His tears pure messengers sent
from his heart,
<
;
7*
as
-
business- Career at the bottom of
the ladder and
way
B
by the
a p
t ist
the. Biltmore
Hotel in- this
city, the fol¬
lowing appreciation by
? VAlexander.
i f Wilson of the
.J "Chronicle,"
7 was typical of
Copies of the Prospectus may be obtained from any of the several underwriters, includthe, undersigned, only in States in which such Underwriters are qualified , to <
act as dealers in securities and in which such Prospectus may legally be distributed*" -
^ ing.
came up the hard
equipped with : only a public
school education and finally be¬
Convention at
came
the- head
bf'the'Federal
j
Reserve Bank of New: York—one
1
Of the highest honors
>
ing. World.
.
'
•
-
.
,
.
j the
,
felicitations
of his 25 years of service as
Board's Financial Committee
Chairman:
/
;
J;*,*.-"/,■V7"
"The Bard of Avon must have
5
had
a
man
like Herbert
justification fori their exists
this earth. In this instance
the question readily answers it¬
self.' Any 'American couple who
have given the world, two dis¬
tinguished sons, now Presidents
of two of: this country's colleges
-H)we the wbrld'ttothing for havl
ing lived in it. Any mzaij like Mr;
Case, who has served this worthy
religious organization for .over a
quarter of a century with .fidelity,
Case in
/mind when he wrote the, following lines because they are the
ability and vision needs no enco¬
embodiment of his character:
mium to express our |ove and ap¬
5
His words are ttonds, his; oaths preciation of his good works* I
are oracles, ''»v/i
■
' i. humbly say that we honor our*
His love sincere1, his thought# solved most today when We 'honor
^iinmaculatey♦
>»>*■>■
:
r
r
Smith, Barney & Co.
!
^^-5::i ^: White, Weld & Co. ?,
ask themselves: what
is the
the
Corporation
Hornblower & Week#
■j
•
Goldman, Sachs &, Co.
+V1
Lehman Brothers
.•fa
ence on
Herbert Case
vfMr, Case received at the, complex
J tion
The First Boston
in tire bank*
^
■;,
;fThdeed/^Mr/tand";Mrs, Case do
not have to
r
r't
being made only by
build
of the North-
'
or a? a
Bights/evidenced by Subscription Warrants, to subscribe for these shares have been
! ,..
V- issued by the.Corporation to its common;
j-
Vf
the possibility
Benefit Board
?
offer to buyt
the importance of dealing real¬
"Shakespeare's words aptly de¬
scribe
a
modest, * unassuming
American: boy who started his
ern
7
or as an
insistence
Missionaries
r
•
*
Convertible
widely wel¬
here-4ts
Ministers and
*
' '
V,
?
British Government to face* tbi#
at a
testimonial
honor
v
offering of these securities for sale,
.50,Cumulative Preferred 1 Stock
!
";.V.'1
Bank Farmers Trust CoAa;7v;^a':!
given
their
as an
Allegheny Ludlum Steel Corporation
in' the article.
York Times" which is
comed
Case
in
V
v
v
r.
,
American
point in the article in the "New
j: dinner
•
increase of the indnV
April 14,1948
There is, on the other .hand, one
;
Of the many affectionate
trib-'f
utes paid to Mr. & Mrs. J. Herbert
'•
an
107,383 Shares
Former Chairman of the Federal, Reserve Bank of New York and
Director of the City
AAeAAA
a
non-discrimination
the second
Communism might make
of
ace
NEW ISSUE
Appreciation of J. Herbert Case, L.L.D.
'■Mh
-
or any
approve
convertibility at the present that first things must
circumstances to be construed
tion to its
a way
reported that have been trying hard, to force the
Administrator
in
An
AA
:a\A
rt£s& f6/
annual payment under that Plan./
solicitation bf an offer to buy; any of such securities. These securities are initially being offered by the Corpora-
interest of counter¬
American circles could find
of
and non-discrim¬ balance#*
might
minor
a
circles
A
British exports,
of
Administratis^
'
higher degree istically with the wartime sterling
'
--m
on
the
stage would not only prevent such and the Administrator, will not in¬
covers
United
the
ion it would be helpful if official
aid; will .improve
Britain's balance of payments,
-
<!a.V
;
are
by other countries. Any limi¬ Possibly
extension
and
dollars
which-her
;
liable to develop in British opin¬
feared that the view might be
-a'^'AA taken
■T:.:
A
used
public opinion does not tations
and
<
;
through
firsi ^e»r of tlte: MarW
Plan,
her trade mightJiind if diHicult to persudde;
balance and in stopping the leaks
here that American official opin¬
ion
in improving
succeeds
bitter feeling that is
acting the
carry out her undertaking.
,
is shown In that directiot:
progress
exports in Latin America
concluding
sentence
that
"the
British struggle to .defend sterling
was the greatest menace, outside
Communism itself, to the success
of the European Recovery Pro¬
gram" was that "the greatest men¬
ace to the British Empire, outside
Communism itself, is being saved
from
Communism by American
amidst existing difficulties Britain
3-
crimination; and that unless^
the last dellar by the end of next
American
States
sist on any condition which would
would insist on the breaking up of barely one-half of Britain's trade improvement but would inevita¬
Dr. Paul Einztf
un
mingled
the Sterling Area. That article deficit has not been made clear. bly cause a marked deterioration. impose on Britain a burden he^with fears ■
A A, ;/
provided a wealth of ammunition The idea that Britain could afford It would deprive Britain of a very yond her present capacity. *
"f
about the possible conditions at¬ to British opponents of the Mar¬
tached to aid under it.
'
shall Plan. Their reaction to its
••■
^
'*
are
Thanks .' to the: ♦ Mar¬
gold.
the
with
the
by Congress is
not, however/
■
•
ing
$46,000
shall Plan, Britain will have spent
-
equally unimpressed by
suggestion, contained in a realize the fuil gravity of the
Paris report
appearing in the British situation, and that the fact
the
Marshall Plan
was
follows:
as
that the Administrator
ferring td it in
ease
1,
competition
suggestions
trade with
Soviet Russia and
might in¬
sist on a devaluation of the pound countries behind the Iron Curtain.
as a condition to granting Mar¬
There is an uneasy feeling over
re¬
vague terms as
a
also
April
Mn and Mrs/ Case.?"
'
:
Drexei &: Co.
*
Stroud &
Hemphill, Noyes & Co.
-
Company
Incorporated
Bos worth,
Chaplin & Company
Geo
Kay, Richards & Co.;
Sullivan & Company
*
G^AppIegate
i-
Singer, Deane & Scribner
Moore/Leonard; & Lynch
A. E. Masten & Company
Fauset, Steele & Co.
Glover & MacGregor, Inc.
Arthurs, Lestrange & Klima
r,
S. K. Cunningham & Co.j Inc.
; -J
Grubbs, Scott & Company
t
'
4
McJunkin, Patton & Co.
Thomas & Company
Incorporated
III
mi II
rM'inn HiWi-'MiT
Is
■i
11
THE
(1654)
COMMERCIAL
Connecticut Brevities
•
¥
On
March
Walter
F.
Net income
year.
income
account for the year ended
cember
Co.
showed
net
share
share
1946.
in
Fixed
a
with
$147,320
the
River
The U. S. Finishing Co. in their
consolidated income account for
charges and
ported gross revenue from produc-1 was
tion of $16,026,672 compared with in 1946.
$15,999,080 the preceding year.
Ih the
Earnings
per
1947
$1,374,-
was
for
Dec.
for
the
if
the
1947,
year
showed
of
after
account for the year ended Dec."
share
31,
1947, The
1946; '•
Co.
showed
net
a
before
taxes
of
ry-back
in
tax
credit
1947, there
$49,888.
tax
This
credit
income
was
$42,086,)
$32,010 and
with
compared
of $12.25
share in
a
the Class B
Derby
showed
1947
with earnings of 52c
preceding
earnings
for
the
and
Manufacturing Co:
announcecb,re<jently that arrange¬
ments
haye been completed for
sale to the Travelers Insurance Co.
of $1,000,000 serial notes to be re¬
in
semi-annual
install¬
10-year period be¬
ginning October, 1949. Funds de¬
a
rived from the sale would be used
to
retire
$500,000
a
*
*
*
*
ended
year
a
net
income
of
$13,372
or
31,
25c
share after charges and taxes,
compared with $149,535
a share for 1946.
At
the
capital
year-end,
or
net sales of Asso¬
ferred
Dec.
$7.98
with
for
$990,751
share
in
or
$12.17
undoubtedly is found in the
insistence on sup¬
*
MINNEAPOLIS, MINN.—George
V.
a
on
the
year
the
Bridgeport
ended
showed gross
808
against
Dec.
■
whv savings banks gen¬
* 7V
Mer
sells
"breach
is the future
us:
sarily
is based
Therefore,
as
revenue of $3,059,$2,662,385 the pre-
been'
whichfneces¬
conjecture.
upon
first
major
point. I raise the question of the
extent to which a savings bank is
justified in concentrating 74%, or
even 65%, of its government hold¬
in
*An
formerly with Harris,
as
Upham &
bond and stock trader.
a
issues
beneficent
the
on
govern-
.
with Merrill Lynch, Pierce, -Fenner & Beane, Rand Tower. He was
Co.
my
long-term
theory that
not
cry
under-/
chimcm
you
a
before
address
by
Mr.
the Tnvestfrient
Pruyne
Forum
of
the Savings Banks Association of
Connecticut. New Haven, Conn.,
April 8, 1948.
Members
New
to
be/ asked
the
protect
War Loan Drives the
offered
"basket"
a
%% 8-10
one-year
governmen'
consisting
year
arid
2s
long-term 2V2S.7 In effect it sug¬
%% obligatiens
to
avoid
any
money
rate risk
However, if the government; in¬
tends to make the long-term bonds
in
PRIMARY MARKETS
York
Members
and
New
Boston
York
Exchange
Stock
>:
:
Hartford
YORK
STOCK
&
CO.
Hartford
EXCHANGE
New
New London 2-4301
New York Canal 6-3662
Waterbury 3-3166
.Hartford 7-2669
Teletype NH 194
Danbury 5600
\*
be bought only after, the bank has
a sufficient short-
assured itself of
term position to provide liquidity
against
possible
drawals,
withal;;'
deposit
possible
expansion,
and
mortgage loan
the possible de¬
sirability of buying power iri the
and
7-3542
question
to
why
with
the
-
System Teletype: HF 365
purchases to an amount of 7
it
is., willing., to, carry
through to maturity if necessary.
.
sounder
one-price level under any and all
circumstances?
'
%
,
7
Government Bond Yields
;
maftf
pbiht of discussion, I suggest that we study
the accompanying yield chart. Of %
particular interest are the bottom ;
and top lines of that chart;, indi¬
cating1 the yields of the various 7
a secohd
taxable
issues
before
30
Sent.
on
the real drop started and on Dec.
31 after the lowering of the sup¬
port prices.
"
/
1 "
.
-
Looking for a moment only at
those -two Outside; lines; the most;
r
noticeable
feature is'the
in
increase
yield
section
mediate
of
marked
inter¬
the
in
the
list
com¬
period; the Victory 2%s, in spite.
beihjg .th'e Iongest* issue and in¬
Of
paid a rate even as high
.2V2.%>; for such demand obli¬
.
^
.
wise at least to admit the
not be
that
possibility
'
circumstance*
could arise which would force the
government to choose between the
alternative of some reduction in
the
level
support
and-
another
alternative which the government
itself liked
less?
even
As
an
il¬
lustration; take the case of infla¬
Prior
the
to
tinued
drop
easier
nrices
in com¬
thi-
w?to be the distinct
that
if
inflation
the
rampant,
tween
con¬
government
its desire to fifht inflation
hand and its desire on tbe
one
hand
pattern
7-3191
such
bonds.
eligible for commercial bank purchase;*:dropped" in.. price only 2 V2;
points and increased ;in yield only 7
will find it expedient to continue 15: basis
points, white the 21/4s ;of7
support/at-oar- indefinitely but vl
1959/56, much shorter and bank£.
questioU'whether-i even*- goverrU
eligible,' dropped in* price* four
ment-spokesmen,would admit to points and increased in yield 46
you an
oblignHon to maintain 3 basis points.
There were three
particular level.
^ .
main reasons for this phenomenon.
7 In the second place, would it The intermediate bonds probably
on
York:
BArclay
Bell
f
argument why savings banks V
should hold no long-term bonds.
It is a suggestion that loi^ig bonds
gations?; Perhaps the government
of
maintain
to
will
a
rigid
This sort
of bond prices.
were
somewhat
high- in Septem¬
the government1, insisted on
no
issue breaking* par; and < the
attempt;
obviously ^ was'
being
made to penalize particularly the/
issues
eligible
for
commercial
banks as a part of the govern¬
ment's program to curb commer¬
ber;
cial
bank
lending.
the
While
r
intermediate
section
years' call
unattractive
your use before the break,'it
appeared to us that the artificial
of the list out to nine
date
was
relatively
for
the year-end
of
curve
siderable
mediate
banks.
ficial
gave
con¬
attraction to that inter¬
section
even
for
savings
Furthermore, that arti¬
curve ' gave
the
savings
necessarily
banks, the first opportunity
in
think- several years to buy into the bankeligiole section of the list with
you should consider the possibil¬
comparatively little penalty.
For
ity, that; the government might example, on December 31 a sav¬
choose to-modify its support pol- ings
bank- could -sell
2t4s
of
dilemma
recur,
New Haven 6-0171
right
vehemence,
in effect would have to choose be¬
Curb
Connecticut Securities
CHAS.W. SCR ANTON
our
It is not intended as
ernment
other
Information
7
of
part
by
pared with the relatively minor
always maintaining the market at
change at the long end of the list..
the issue price, has not the tax¬
For example, in that three months'
possibility
Primary Markets in
Statistical
major
demand' obligations
effect
there anoeared
Exchanges
Associate
discussion?
bor¬ 7; As
a
as
point^ of ~ the7 tlm# when7 thesc
bond" wc^e issued*; In most of the
tion;
Tifft Brothers
Connecticut Securities
first
an
£ Fundamentally
buyer against a similar change or
rate?
Look at it from the stand¬
modity
do
but
should .the government
rower
have
never
you
of faith,"
of interest rates.
as
have
we
dealing with facts based upon/ac¬
tual history, whereas what inter-;
for
NEW
90.
at
I
stand that th's is due to
some >
V'.%7
Up to this ooint
preferred
MEMBERS
f rst nlace.
the
payer a.
to'increase it.
7
Question of Treasury "Pegging''-:
pre¬
31, 1947,
Light Co.
govern¬
erally have been willing not only
to hold a long-term position,- but
*
Gas
long-term
your
Furthermore, there
strong suspicion that reliance
that support explains in large
measure
Jackish has become associated
this
of
Would;, it not appeal to you as
banking to follow the ap¬
conceded an obligation on the part proach just mentioned
than to
of tho Government to an investor place
74%/ or any appreciable
to maintain any particular resale part thereof, in longer-term issues
level.
For example; if a top-* on the general theory that these
credit corporate borrower sells ?
bonds are the equivalent of cash
2%%
obligation
at par wlfc> because of the sacredness of some
In
porting
ended
account
operations?
ments at par.
ings
income
the
even though it admits the
tremendous power of the Federal
authorities to engage in support
corporations buy
George V. Jackish
their
check
to
future,
gested that commercial banks and
is
In summary, what is the essence
a change of interest rates.
Furthermore, when
the bank
interesting to consider whether comes to buy long-term bonds,
those doubts have lost all of their the
suggestion is that it limit such
validity.
Were there not then; purchases by
making sure of the
and are there not now, two main
relative attractiveness of long is¬
factors of doubt to which a bank
sues; i aga inst
short a ndt 7 intershould give consideration in the
mediate Mssues and further limit
government's
1946.
*
In
the
startled
reason
why
a . material
change in interest rates has left
vou
as relatively unscathed
as if
Lynch Go.
important.
more
of event
of
George V. Jackish Is
compares
a
rather
even
year
This
1947.
mary
has
against
on
the
1947.
may
in tying together the two
thoughts just expressed. The pri¬
or earnings of $2.70 a share,
against net after taxes of $2,061,571.06 or $2.84 per share in 1946.
*
share
a
stock
how* that national
have changed since
Nevertheless. I
nor
31,
cance
027.50
,
31,
I
moment.
knowing whether
maturity pattern corresponds
was
Spring
ests
or
present
way of
banks,
Connecticut Railway & Lighting
Co. reported net income of
$650,277
the
no
Dec.-
$2.80
$332,257.
*
at
average
f/ 'v-
$357,994 the year before. Earned
surplus
was
$422,279
against
*
not help wondering what
maturity distribution looked
to the national average of savings
$1.81
working
$371,418
was
months,.71
six
past
mar¬
Corporation
of
year-end national average and to
Bristol
for the" year
1947' were 1
find 74% of total holdings
oij that
,$28,226,517.23, or an all-time higl>
date in issues callable beyond 10
except fur the war years of 1943
years and ineligible for commer¬
and 1944. This compares with sales
cial bank purchase.
of $22,900,157 in 1946. Net income,
Perhaps there is some s'gnifiafter taxes, amounted to $1,956,-
1947, Palmer Bros. Co. showed
a
'
like
y
Dec.
the
maintenance
With Merrill
and
the
in
could
outstanding
veloping and acquiring equipment
machinery.
■'; '•;;'
,;
•
price
October
sections of the bond
some
your
of
•.
,
in
that
of
your
bank loan and the balance for de¬
For
'
two months ago, and it might
par
Considering the marked decline
net income of
earnings
shrinkage
time
meeting.
have
;
over
,
be
the
the
the
doubts, about
L. S. Pruyne
at
by taking P/z
of coupon return and sub¬
tracting
Dec.
ended
a
arrived
since
•
Russell
deemed
%and
years
Electric Corp.
of $373,104
year
cer¬
net return has
77
Consolidated
ments
"7/;V
in
year.
ciated
The
&
ch
half since that
time;
This
income
against
$395,355
in 1946.
share the
a
Gas
net
1947
31,
a-
compared
and, to¬
day^ there is considerable com¬
placency.-a bout this whole ques¬
tion.I am not predicting a break
below par, but it is a good guess
that some of you
at least had
.or
mu
year
earnings of $1.47 per common
share
1946 while
common
deficit of 38c in
tax
.7>,/:
t
rate,
during the
$25,-
was
-
showed
of
or
$5.48
and more
1946; has
ket
prior
deficit
a
has been tested, has held,
Bowes, Inc., recently
sold privately an issue of 10,000
shares 4*4% convertible preferred
stock at the par value of $50 a
$111,390 the preced¬
showed
slightly
ne?t!
a
was
1%,
n o
Life Insurance Co.
a
port¬
why I felt if
over
in¬
share to the Massachusetts Mutual
of
with
ing year.^The $2 class A
preferred
car¬
a
deficit
a
compares
of
of
of
the part of good banking to work
toward a somewhat shorter-term
ber,
been
Pitney
with
$127,060'
the preceding year. After
*
»
which it regarded at that time as
some
been
$1,091,723
'
you
Frary
$2.60 against $0.06 for
are
to
ended
carry-back
a
outlined
reasons
liquid position, and time
will not permit me to review those
noirts today/ Since that time par
operating
was
I
1946,
the
the
on
tificate
1947
aga'nst loss of principal.
of
folio of Octo¬
$2,73^911
for
always to protect
the bank
In
net
above the
655
Hendey Machine
a" deficit
before
ment will see fit
It
your
return
credit' of $950,000. Earnings per
income*
taxes of $91,974 compared
as
interesting
that
income
Landers,
while the net for 1946
*
consolidated
years;
income
outstanding, against $10.03
preceding year when 181,222
were outstanding.
In
10
against a
deficit of $506,963 in 1946. Net
shares
it
for
31,
come
shares
the
77'7;%/7;:'V
' ■/.■
a
average
Clark
&
202,822
on
margin
is
times and 2.21
2.38
consolidated
account
1946.
share
common
$5.60 based
were
dividends
preferred
covered
were
respectively.
Net income
$1,383,560 against $1,235,073
$2,069,583
;7%7 ■/
-7
holdings of non-marketable, long-term govern¬
Contrasts yields on bank-eligible and non-eligible bonds,
too small to justify sacrifice of liquidity.
Sets up model portfolio of government
v
bond holdings for savings banks.
10 years
"years and
65%
beyond
Dec. 31, 1947, re-.times
for
•.
much for inviting me to join in your discussion today as I remember
great deal of pleasure being with your group in October, 1946. At that time the
average government portfolio of your banks included about 35% of bonds callable within
for
charges for 1947 against
! $2,126,678 the previous year. Fixed
against
;
issues^ which endanger their liquidity.
sees
with
re¬
available
$2,261,098
Power
fixed
Net income
■-
Thank ycu very
Connecticut
preceding
ported
the year ended
By L. SUMNER PRUYNE*
Vice-President, The First National Bank of Boston
-
in¬
year.
1947
and
of $231,881. This compares
come
902
ment
charges
5.76 times.
covered
were
Thursday; April 15, 1948
Bank executive calls attention to savings banks' large
1947
for
$312,659 and earnings of $1.72
De¬
1947, Segal Lock &
31,
Hardware
or
was
of $1.69 a
against
earnings
$306,505
consolidated
''•'',:7/<'/7.7>
~
ceding
CHRONICLE
U. S. Government
' %
>,
retired <$>-
Torrance
common
the
•
30,
from the board.
In
FINANCIAL
Savings Banks and Liquidity of
1948, the stockholders of the Plume & Atwood
Company of Thomaston elected five new directors, Clayton R. Burt,
Peter M. Fraser, Thomas Howes, Henry L. Shepherd, and R. H.
Valentine.
D. A. Williams,
Emil Mannweiler, Leroy S. Andrews,
tad
&
but
if
it
not
should,
I
icy: ;at some future date if by so
i doing
it accomplished
something
1962/59
and -buy 244s
(Continued
of 1959/56
on page
24)
.
.»
'
WJiytlW-i r's'aai-iitWM?4
Volume 167
Number 4690
THE
QOMMEBClAL., & FINANCIAL.€HRONIGLE
(1655)-15
BOSTON SECURITIES TRADERS ASSOCIATION
Arthur Engdahl, of Goldman,
ton Securities Traders
Sachs & Co., President of the Bok
Association,
ing, at Woodland Golf Club
on
Arthur E. Engdahl
'/
-
James J.
' The Committee in charge is as follows:
;
their 29th Annual Out1
announces
June 22.
Lynch
James J. Lynch, Chair¬
Sheave Co.; John A. McCue, May & Gannon; Fred S. Moore,
man,
J. Arthur Warner & Co.; John Rvan.
O'Connell & Co.; J. Russell Pot¬
ter, Arthur Wood & Co.; Jack A. Putnam, W. E. Hutton & Co.
1
BOND TRADERS CIjUB OF CHICAGO
The Bond Traders Club of Chicago will hold their Annual
•;
Party
on
June 12-at the Acacia Country Club.
-
—'
'
SECURITY TRADERS ASSOCIATION OF NEW YORK
Over 1300 members
Golf
'
' -
and. guests of the Security Traders Associa¬
tion of New York,4Jne., iiave made reservations for the Twelfth An¬
nual Dinner to- be
held*
on
April 19 at the Hotel Waldorf-Astoria;
This is under
no
to
•' ''
!
John
J.
O'Kane, Jr.
New York
&
Arnold J. Wechsler
Leslie Barbier
offering of these Shares for sale, or as an offer
offer to buy, any of such Shares. .The offer*
only by means of the Offering Prospectus.
circumstances to be construed as an
buy,
or as a
solicitation of
is made
't
Wellington Hunter
City, according to Arnold J. Wechsler, of Ogden, Wechsler
Co., Chairman of arrangements.
nent in the
About
a
hundred
persons
^
as
guests of the Association.'
-
-
;>•.
Ts:7.:!,.y"-I.
■•V-
*
>' '■
' ? 7
.'i'
'
,
are
Leslie Barbier, of G. A. Saxton & Co.,
Inc., and Wellington Hunter, of Hunter & Co.
A
very
valuable door
Shareholders^ Trust of
prize will be awarded, the nature of which has not been revealed.
John J. O'Kane,
500,000 Shares
i
promi¬
security business and allied fields have been invited
Assisting Mr. Wechsler
an
Shares, Par Value $1
Jn, of John J. O'Kane & Co., President of the Se¬
Boston
-
curity Traders Association of New York, Inc., wijl introduce the hon¬
ored
guests..r:At^,jpute^^ngi;array:. of; talent will present
a. fasW
'moying-reyiewyvf^yC^^/^gy^
y; PRICESu
SAN
FRANCISCOr BOND
TRADERS
ASSOCIATION
$20.83 per unit
The Sen Era^scoBond Traders Association will hold its annual
.
outing oinL.Mayi 22^and 23 at the Northwood Lodge
on
t,.:yyyv;
NATIONAL- SECURITIES TRADERS ASSOCIATION ;
V :
R. Victor
,
$20.41
v
/
but under $100,000
unit sale? of $100,000 or more
("Unit sale" is defined in Prospectus)
JVIosley, Stroud ft Co.j Inc.; Philadelphia, President Of
ap¬
year:
Membership Committee-—Herbert H. Blizzard, Herbert H. Bliz¬
& Co.,
per
;
;
Security Traders Association, has just announced
pointment of the following Committee Chairmen for the 1948
zard
y
sale, under $50,000
$20.62' per unit sale of $50,000 or more
the Russian
River in the redwoods about 75 miles northwest of San Francisco.
the National
:
;
Philadelphia. '.
,
be obtained from only such of the undersigned as may
in compliance with the securities laws of the respective States.
Copies ofthe Offering Prospectus may
legally offer these Shares
•
Publicity Committee—Irkin R. Harris, Scherck, Richter Co., St.
Louis.
...
Public Relations Committee—Morton A.
Co., Cleveland.
•
■
Moi eland,
■
Moreland
&
York.
••
Hayden, Stone & Co.
?'i-l-
Advertising Committee—-Harold R. Smith, Collin, Norton & Co.}
ffew
Incorporated
„
Special Legislative Committee—Paul I.
Co., Detroit.
Harriman Rip!ey & Co.
Cayne, Cunningham &
Tucker, Anthony & Co.
Pacific Company
of California
V.:,y-y
Municipal Committee^W illiam C. .Jackson, First Southwest Co.,
• •• :
;.
: :.,..
Bosworth, Sullivan & Co,
Dallas.
-
Piper, Jaffray & Hopwood
ConstttutionaiyCqrnmitte^r—Stanley Roggenburg, Roggenbiirg &
- ■
'V-'1.:
Co., New Yoik.
April 13,1948
Hayderf, Miller & Co.
Estabrook & Co,
Columbia Investment Co,
II
THE
(1656)
COMMERCIAL
&
FINANCIAL
CHRONICLE
Railroad Bonds
Thursday, April 15, 1948
Long-Term Investments and
as
How to Select Them
By GEORGE M. GRINNELL*
-■
City Southern common stock has been attracting consid¬
erably more speculative interest recently. Late last week it sold at a
new high for the
year, up more than 30% from the 1947 low and
87.5% above the postwar low established last year.
It is still the
opinion of most rail analysts that<$>
resumption of dividends on the reported at $2,272,414 but actually
Kansas
stock is quite some
.ommon
time
the basis
of present and prospective earn¬
ings, the growth potentialities of
the territory served, and the con¬
sistent high degree of operating
efficiency, these same analysts
Nevertheless,
away.
on
old
been deposited with
the trustee of the mortgage. Real
fixed
hancement potentialities.
alent
shares
out¬
as
to
than $1.50 a
more
share
Probably the outstanding char¬ on the common stock, before ad¬
acteristic of Kansas City Southern justment for Federal income taxes.
is its ability to control costs. Last
Last year reported earnings on
year, for instance, it had a lower the common stock amounted to
transportation
ratio
thah
any
$9.75 a share. These were under¬
other major class I carrier with stated to the extent of interest ac¬
the exception of Virginian. These crued on the old first 3s. Also, the
the
were
only two whose trans¬
portation costs absorbed less than
30%
of
Even
gross.
the
other
highly efficient Pocahontas car¬
rier (Norfolk & Western) had a
ratio slightly above 30%.
This
factor of operating economy is
particularly important under pres¬
ent conditions of
constantly rising
and fuel and material costs.
It is further notable that Kansas
wages
City Southern was one of the very
few roads in the country that was
able to start out 1948 with a
year-
earnings do not reflect the com¬
pany's equity in the undistributed
profits of the controlled Louisiana
& Arkansas. The latter paid divi¬
dends only on its preferred stocks,
which brought in $300,000 to Kan¬
sas City Southern. ; The equity in
the $1,699,642 undistributed earn¬
ings of Louisiana
&
Arkansas
(Kansas City Southern owns all
Another
is
the
of
measure
proportion
efficiency
of
the
gross
company can carry through to net
operating income before Federal
income taxes.
Last
with
year,
a
carry-through of 29.7% of its rev¬
enues, Kansas City Southern stood
fourth among 45 roads
accounting
for more than 90% of the
industry
Its record
gross.
was
tooped only
the
who
ago
that
ers
of
.
p
.
o
f
to
em¬
and
gross
through
and
are
PITTSBURGH, PA.—Arthur R.
Hefren has opened his own in-
largest
carry-through
in
also
years,
at
a
least
to
seems
unique
think
background,
debt
has
job.
funding
also
A
adopted
eliminated the
in
heavy 1950
good
City
good
re¬
1945
maturi¬
common
dividends
stock in the
Nevertheless,,
near
the
on
is
re¬
duction, having paid off
$1,854,000
last year. This
reduced the amount
Sw 3i?i947.t0 $3'546'000
beginning
$2,880,000.
Last
of
of the present
charS®s
amounted to
year
they
were
Guaranteed Stocks
.
'
Special Securities
bonds
with
Arthur
R.
Hefren
&
vestment
business
in
the
Union
Trust
Building. He was formerly
Pittsburgh
Manager
for
J.
S.
Hope & Co.
,
I
line
a
Sullivan's
in. railroad
amendment
CEDAR
am
Gondoliers:
you're
newly
Vavra
tered
formed
&
as
Co.
a
his
election, the
firm
of
Figge-
will
become
member
firm
regis¬
of
the
Exchange.
The new partnership
will/maintain 1 its office in the
Merchants Natipnal Bank Build¬
savings bank law containing
principle is now before
Massachusetts
legislature.
orinciple of the law is simple:
same
it is
to permit savings, banks to pur¬
chase bonds of the stronger roads
only, but to permit the purchase
such
of
periods of de¬
pression when they are cheap as
well as in periods of prosperity
when
they
are
high-priced.
Whether or not this principle is
incorporated in a law, the policy
should
followed
be
servative > investors.
Future
much
formerly
&
distin¬
of
ones,
qualified
the legal lists
pression.": ■
as
legal in¬
in
periods of
No
wonder
many
:\
the
investors
-
the
of
Now,
the
to
as
future.
I
briefly to outline why on
the; one hand all railroad bonds
are
not
necessarily sound invest¬
on the other
why many
ments and
railroad bonds
not only sound
are
time, nearly 20
when
were
generally regarded
railroad
years
bonds
as
still
desir¬
very
permits
I
one.
must
to mention only
me
mention
it
because
drink
of
railroad
bearing
on
railroad
change that I have
The
in mind is not recent.
began just
war
and
1930
after
the
In fact, it
first
world
comDleted during the
decade.
But
neither
in¬
was
As
:n
in
vestors
railroad
securities
nor
railroad managements recogn'zed the new order until quite a
while
after
lished.
there
it
sometimes
I
still
are
estab¬
been
had
think
of
number
a
that
a
a
vestors who
in¬
not fully under¬
do
matter of fact, an investment
stand the implications of this very
well selected list of railroad
important change,/
bonds
would
have
given
satisfactory results
I have made
a
Jan. 2. 1930, and
on
time.
present
refunded
I
in
telling
through to
Where
have
the
you
I think
issues
assumed
issues.
new
how
selection I will give
*An
over
assumed investment in
carried the investment
were
ex¬
I
made
the
defaults, the
address
the
by Mr. GrinneL
Investment Forum of
the Savings Banks Association
Connecticut, New Haven,
April 8, 1948.
coun¬
than
more
one
A great deal of it, in fact,
over several roads.
Prac¬
moves
tically
tion
over
road
everv
with
local
other
traffic
is
in
competi¬
roads, if not for '
then
through route.
of
part
as
a
Accordingly, it is
not possible to make any material
change
the
in
road,
one
structure
rate
even
or
in
roads
all
on
on
the
of
restricted
some
area,
without / benefiting other roads.
situation is ouite different
The
from that which exists in the util¬
ity industry.
In the utility indus¬
try it would be quite possible to
raise
utility rates in New Hamp¬
shire,
for
example, without any
effect on the ntilitv
particular
companies in Connecticut.
is
not
possible,
to
railroads
weak
rates
without
pick
raise
and
the
at
But it
the
out
their
time
s^me
admitting the strong roads to the
advantages.
same
the
reason
if
Hence,
-
situation
for-
of
the
acute that it
so
to raise the rates of
the weaker roads, the rates of the
stronger
roads
must
be
raised'
also and the'r position imnroved.
There
my
certain roads which, in
are
opinion., will be able to
cover
their fixed charges by
a
able nr»arcf?n under
rate struc¬
ture which
ber of
anv
comfort¬
would enable
a
num¬
the weaker roads to
operating
exnenses.
railroad
to
is
be
difficultv
dicates
which
roads
obviously
branches cloarlv in¬
public
that
sentiment
is
abandonment, it must:
to
under
will
to
the
a
and*
permission: to-
small and
even
oonosed
enough
abandoned,
obtaining
in
covers
Unless-
rate
a
enable
pav
wa<?es
it
schedule
to
earn
t^xes.
and
Bondholders have in the past been
forced to
railroad
fo
without int^re^t, but
being paid,
upon
insets
naturallv
labor
R0 do town and
county tax collectors.
V
;:;
;
Briefly, what has happened is
that the railroads have become
cyclical
industry.'V
greater; extent
To
than
a
a
much
formerly,
Nation
Those
Must
who
Railroads
opposed
railroad
in
vestment
Have
are
to
bonds
in¬
may
that this doctrine of interde¬
pendence is all right, but that it
may
be impossible to establish
freight rates which would enable
say
the
weaker
roads
even
to
earn
their
operating expenses.
Other
people may say that even if this
is economically possible the In¬
railroads have become carriers of
terstate
bulky
heavy goods. ; They are.
therefore, much more dependent
may
for their
Thomases.
revenues on
the so-called
heavy industries, iron and steel,
building construction and so forth,
Commerce
Commission
not permit it. There
are sev¬
to these doubting
Probably the simplest
answer r is
that
the country :is
thoroughly aware that it has to
eral:
answers
railroad earnings follow the have the railroads.
If they can¬
cycles of prosperity and depres¬ not be:-supported under tprivate
and
you
they will astonish
were no
interdependence of
even
.
before
Laurence El¬
experience
with
bonds during the last 20 years has
^en unfortunate.
But why put
all of the blame on the railroads?
investment securities
specializing
de¬
-
you.»' There
&
Yeropoli.
road;
which
Elbert
bert and Natale
moves
onerate
results.
soft
the
is necessary
record
in
Railroad traffic for the most
bonds.
reinvestment
Co., also of Cedar Rapids.
are
try.
part
important
the
Partners
is
reason
it has affected the whole industry
in a vital way and has a very
poor
anty Bank & Trust' Co.,> Cedar
Rapids, will be associated with
over-the-counter
the
con¬
investment
an
the various ra'lroads of the
anv
Prospects
for
year.
be
can
stronger roads in the industry the
results will be satisfactory.
The
but actually
encouraged the buying of poor
bonds in good times and the sell¬
the
and
an
Kosek
the
guishing between the good bonds
railroad bonds
stock.
if
railroads becomes
So
minor
to
bonds is confined to the
abandon
study of
in
con¬
that
railroad
unprofitable
method
Figge, formerly Vice-President,
Cashier, and director of the Guar¬
was
all
On
vinced
time
sound
a
18 years.
Ernest
by
only
year
investments.
the other hand. I am con¬
with
the last
Iowa.
in
bonds
shows
conservative
the
tremely
Rapids,
the
the
The
sidered
have
of
railroad
a
Not all railroad bonds
important changes in
the railroad industry.
However,
most
1930's not
within
cover
from
some
in
to
which
one
able investments, there have been
force
during the
Mr.
Cedar
by
Massachusetts
ago,
vestments in good times and many
sound bonds were removed from
RAPIDS, IOWA—Reg¬
With
bonds
by very conservative investments.
,
weak bonds
inald B. Figge has been elected a
member of the Chicago Stock Ex¬
change.
the
to
in
from
,
Yeropoli has been
formed with offices at 62 William
Street, New York City, to deal in
Telephone BOwling Green 9-6400
investment
em¬
regulating the
in
fluctuations
ing of sound bonds in bad times.
This for the reason that many
Figge-Vavra & Co.
Opens in Cedar Rapids
.
1-1063
of
difficult
only
did not furnish the
savings banks
in
states
./j-,
my
New York 4, N. Y.
principle has been
Iowa insurance companies and an
Poor
top
investors
reminded
Elbert & Yeropoli Opens
NY
1941,
the
same
bodied in the law
past.
Before
Teletype
at
The
shall try
•
Street
and 1937
Unforunately, the savings bank
connected-with
25 Broad
and
bought at the
were
John S. Vavra who
Bonds
i
again
sold
were
1940
and
1932
were
Defects of Savings Bank Laws
ing,
♦
in
ones
merely say that it is based on a
flexible yardstick which I devised.
Since that
future
the
company
making rapid progress in their
At the
bottom
ones
in
tending."
15
™19?5 and a bank loan of $6,C00,000. It is this bank loan which
precludes the likelihood of re¬
of
Poor
were
"Now to the other extreme
ties, replacing them with a single
$40,000,000 first mortgage matur-
sumption
at
the
comprehensive
plan
good ones
the bottom.
Poor
Gilbert
■
a
of
have
and
the
at
nad
oper¬
Kansas
bonds
bought at the
1929 and good ones were
in
sold
railroad
bought at the top
sold
always
1946.
past
done
Poor
been
laws
Southern
good, and, next,
no
railroad bonds
that
market
top
railroad which would have
swings in the popularity of rail-
same
industry.
ating
in¬
are
good.
the
use
in making up the list.
included obligations of
list
1945 and 1946 and good ones were
sold in 1947.
When I see these
24.1%
strong
escaped many
The
bonds
have
record in the
In addition to this
have
vestors.
and
On
was
the
elemen¬
seem
tary, but judging from the record
of
the
last
20
years, the
fact
933.
per¬
1947
may
tought at the top in 1936
held in 1941 and the
first postwar year 1946. It
was the
only one of the major roads that
was able to
duplicate its 1941
Its
real estate mort¬
poor
This
railroad bonds
was
formance in this respect in
bonds, just as
real estate mort¬
good
and
been
Opening Own Office
1937-
this
George M. Grinnell
railroad
poor
there
But I did not
Jersey. I will come back to this
law later.
At the moment I will
good
are
railroad bonds
are
|
probably saying to your¬
hindsight is better
present law governing the
investment of railroad bonds by
savings banks in the State of New
phasize is that
there
fund.
of the
point I
wish
the
qualified in 1930 under Section A
facilities.
The
of
value
that
every
terminal
to
Arthur R. Hefren Is
are
The
road
.
,
market
hindsight
our
18-year
moderate
You
railroads,
namely, a lack
and
one
nearly 4%% and there
appreciation in
was
a
the
as
the
over
than foresight.
«mes
ratio
was
selves
the
of
period
trouble
some
broad
a
_
from the same
bottom
performance.
said
ffer
su
is
possible, bearing in mind the remark of
income
average
speak-
many
field
as
,;'V
higher costs.
cover
<♦>
good
a
portant, is the consistent nature of
cost
;
tendency has been,
first, to think that almost all rail¬
.
(33.5%), and St. Louis
Southwestern (29.8%). More im¬
average for the years
1941 the
company carried
a
to
about railroad bonds and how to select them—par¬
you
The
brief
as
1947.
Western
road's
I shall be
properties will see even
higher earnings this year than in
by Virginian (37.5%), Norfolk &
the
speak to
genera tio n
gages.
ap¬
of
*
president of
gages
equivalent to
was
to-year cut in the transportation
„
limited time.
shares of all classes of stock out¬
ratio.
•
I have been asked to
a
as
higher rates needed
ticularly how to select them..
standing)
proximately $3.30 a share on the
Kansas
City Southern common.
Prospects are excellent that both
•
f
to maturity
ment of this interest
have already
standingly attractive for interme¬
diate and longer-term price en¬
the
in making investments, Mr. Grinnell
points out
guide to distinguishing between good and bad bonds.
Says railroads have become a cyclical industry and thus investments must be confined to selected
bonds of strong companies. Decries effectiveness of
competition of other transportation facilities, and
points-out railroads continue to carry bulk of nation's traffic. Sees no danger in traffic loss because
defects and inadequacies of savings bank laws
Funds for pay¬
3s.
first mortgage
charges, then, were less than
$2,100,000.
The
cut
in
fixed
charges since 1942 has been equiv¬
consider
still
Stressing need for careful selection of railroad bonds
they are somewhat less than that.
The 1947 accruals included 175,529 interest on unsurrendered
■
Partner, Dick & Merle-Smith; Members, New York Stock Exchange
of
Conn.,
sion in this division of the indus¬
ownership
trial field.
taken over
;
,
:
....
This change is a vital considera¬
in the selection of railroad
the
they will have to be
by the government. If
railroads
tion
the
bonds
are
taken
over
by
sible for the
as
long-term investments
The investor must use greater care
in selecting securities in a field
which is
government it will be impos¬
good railroad bonds
not
to
the
roads
be
fully
protected
should
markedly cyclical than ;(Continued
be
unless
taken
on page
38)
over
Volume 167
Number 4690
THE
COMMERCIAL
increased
Now
"There is
Later ?
or
now
crisis in
no
ing
seize
circumstances
.
the
must
or
■
va^eY
18
M
icies, not
Mm
7 Leon h. Keyseriin*
^
:
are
unwilling to
buy guaranteed and in¬
mortgages
our
attractive
to
*
our civil liberties?
"Can we look upon resolute
something to be called into play
as
This
...
;j
■■■
<•/
*
l,.:
*
these should be reserved to cush¬
ion deflation should it later de¬
of
velop.
Housing
Act
criticism
same
-
announcement
•
is
the real estate : and housing mar¬
in
subject
ures
the
as
ket
th$
to
as
large enough scale to protect
from
serious collapse such
a
developed
ties."
present
not
an
ojfer
sell
to
solicitation of
or a
•'
■
the early
in
.
Texas Power &
First
reprint these sentences from the address
Keyserling
appearing in our last week's
issue in order that we may add our own observa¬
tion that the gentleman seems to be
merely asking
whether
should
we
democracy at
until
some
with
the economic
>
;l||l7i:ll;77-
I I
Light Company
Mortgage Bonds, 3>% Series due 1978
*1.-i'lll" l-vli; llll
Dated
April I, 1948
N
||-v *.
!;'•
':7 - /'•
-v y "
Price 101.75% and accrued
complete our abandonment of
and be done with it, or wait
once
offer to buy these securities.
an
The offering is made only by the Prospectus
•
|
■
I:
.I.;in|
Due April
.
1,
.
;
1978
7
interest
future time when amateurish tinkering
system has brought
to dire
us
"straits."
'
The
j
Prospectus
be obtained in
may
State in which this
any
the undersigned and such other dealers
■
announcement is circulated only from
laufully offer these securities in such State. -
as may
Federal Reserve Warns Housing
i|| 7
Legislation Is Inflationary
HALSEY, STUART & CO. Inc
Acting Chairman Eccles writes Senator Tobey, pending bills, by
making additional credit available, would create demand for more
•
.,
-c
-
7v-
.
-r '
'
7
'.12
■
,
.-•?
:
labor and materials and thus raise prices.
•7
I-
a>>.
On
April 5, Acting Chairman Marriner S. Eccles of the Board of
Governors of the Federal Reserve
Charles W. Tobey
Banking
on
■■■■■■
,
v
and
System, wrote a letter to Senator
(Rep. N. H.), Chairman of the Senate Committee
Currency, in which he stressed the prospect of
further
.;
tion
infla-^
if
ing
ments under the European Recov¬
measures
on
Federal aid
to
housing
(S.2317
S.866)
and
were
enacted.
The
text
Ec¬
letter
lows:'
,v
"The
has
Board
been
vised
Marriner
Eccles
is
tee
ad¬
that
commit¬
your
S.
of
consid¬
our
commit-
Program and the recent
ery
7
Central Railroad
calling for a large increase
military
expenditures,
the
in
Government
deficit
for
the
anticipate a
than
a
surplus.
thus
additional
Government
to
reason
take
all
particularly
pressures,
those
;'
generated by an excess of credit.
"For these reasons the. Board is
opposed to
rv
with the major objectives
course,
of such
cord
legislation, and is in
ac¬
with some
of the provisions
of these bills.' We
feel, however,
that in view of the broad respon¬
sibilities of the Federal Reserve
System in the field of credit,
should
call
attention
undersirable features
posed
we
on
I
legislation,
we
several
of the
pro¬
of which
some
have had occasion to comment
previously.
am
In this connection
enclosing
statement
on
to
of
a
Housing Finance
Committee
port.
"The
even
on
I.;:
;
'November.
25,
the Economic
now
;
for
Re-
ary
pressures
There is still
was
a
last
short¬
relation to
the level of income, and, because
of
the
imminent
reduction
fiscal
and
Government
,
further
tion.
in
of the
agencies of the
with either
inflation
or
market
future
National
easy
Title
Housing
Housing
Act
of
program
7
VI
Act;
of
and
of
a
directly
a
of
•
■*,
annually $93,000 each April 15, 1949
r
v
I
,
'
.
,
\
,
•
'■■■
rl'
1963, inclusive.
to
,
•
\
, •«»
'
I
To be jointly and severally unconditionally guaranteed as to payment of principal
and dividends by endorsement by Central Railroad Company of Pennsylvania and
*
AND YIELDS
V'!' "
'
*
'
''
(Accrued dividends
' r
7li949:.!1.50% 7..:.^..'
1950
1951
CI'
0 0
I;
11952:11
1953
1.75
2.35
:
/
be added)
2.45%
1955
2.00
2.20
1954-
to
2.55
'1956
|:'V 1957
-
1958
2.607;
2.70
-
-
7
I
:
7
r;
1959
-
'-'^l.1^1
12.65
il l
.
'
1
•••..'>«
'2.75%
I960
2.875
1963
:
2.85
1962
v|
2.80
1961
v
-
2.90
Issuance and sale
*
of these Certificates are subject to authorization by the Interstate Commerce Commission. The
Offering Circular may be obtained in any State in which this announcement is circulated only from the
5 -.
*
undersigned and such other dealers as may lawfully offer these securities in such State.
HALSEY, STUART & CO. Inc.
by making
at} this
avail¬
able $500,000,000 for the purchase
mortgages, it would represent
added
'1
*
Government-
inflationary
time, because,
*" y?
per¬
financed secondary market would
be
5
excessively
mortgage credit.
of
'
-e
mortgage-insur¬
third, addition to Title II of the
manent
'
•'
defla¬
for
under
program
National
/"i
Certificates are to be issued under an Agreement to be dated as of April 15,1948, which
provide for the issuance of $1,395,000 principal amount of Certificates to be secured
by new standard-gauge railroad equipment estimated to cost not less than $1,860,000.
,
undesirable
ance
<
cope
mortgages
already underwritten by the Gov¬
ernment; second, continuation of
the
*
mature
will
"The Board is particularly con¬
cerned about three proposals con¬
tained in these bills:
first, cre¬
ation of a Government-financed
the
pV
These
?7
!;•! |-|
secondary
,
Certificates
(Philadelphia Plan)
77'?•.:l•,I;
by the Trustee of the property of The Central Railroad Company of New Jersey.
the capacity
to
1
To
intensify inflation¬
by making addi¬
credit
"Creation
is
£
•
of the provisions
some
which would
|
inflation
than it
age of many goods in
our
1947
the Joint
to
|.
prospect
greater
of
copy
November
*
v
of the bills before your committee
would reduce
of
2%% Equipment Trust
:
I7.1'I:-1
!UlI1
ering general tional credit available and thus
housing legislation, particularly increasing the demand for build¬
S.2317, introduced by Senator Mc¬ ing labor and materials. In addi¬
Carthy, and amendments to S.866 tion, some of their provisions
proposed by Senator Flanders.
"The Board is in sympathy,
Equipment Trust of 1948, Series A
;
steps possible to reduce inflation¬
ary
Company of Pennsylvania
must
rather
is
I
$1,395,000
pro¬
gram
There
Chairman
cles'
I'
taxes, coupled with
pend¬
the
of
"'"Il'/Cl "!'*1'I
either
Government spending and
To be dated April IS, 194«.
meas¬
proposed
the
are
Otherwise, the only
rela¬
loans
ling.
I
face
available1 would be direct
Government lending or subsidies,
$2,000,000
core problem of democ-in the twentieth century."—Leon H. Keyser-
We
posite of those.appropriate in,an
inflationary situation such as we
today.
Measures
such
as
mortgages
on a
of
for
7
.,t..
"This indeed is the
Mr.
offered
continuation
-
type which would be
a
combating a se¬
deflation, and are the op¬
rious
changes in Title II of the National
-
-v.;.;.,;
v.,
of
as-
of
are
appropriate
owner-occupancy
The Board has no
the
excessive
"Several
-
ing Act, by making credit avail¬
only in time of dire peril and then retired like
Cincinnatus, but rather as something the use of
which at all times is the
very premise on which
democracy rests?
;
/
;v
for
sals
tion to value.
compared
"Title VI of the National Hous¬
as a constant
economic health
terms
,
v:;vi4
f
leadership, not
racy
the
years are
also are
,
desirable
and
so
less than
no
:
to
houses
against
with other investments.
failed, but rather
excessive
40-year mortgages
of 90 and 95% of value for rented
housing.
- '• '
"
1 ■. '■
"Basically, these three propo¬
mortgages, perhaps the so¬ Title VI for rental housing, pro¬
is to improve the
quality vided safeguards are maintained
the mortgages or increase the
return
to
levels
which
make
everything else has
guardian of
return
objection
.
?
»''JmmKmk
feasible
under Title II as far
of
something to rust in
disuse until
■
lution
vigoreconomic pol-
as
to
boih
are concerned.
sured
look upon
government
ous
Hk'
we
is
it
private lenders
or
running for 30
and
deeply into debt. We believe
that- both builders and buyers
have larger equities
in
their properties in an inflationary
period like the present, and that
on
hold
building costs,
buyers to go
should
eliminate
M
Title VI program.
Mortgages m
small houses for 95% of
valtfe and
easy terms,
to the large rise
and has encouraged
the negotiability, of
mortgages. If
and then
another slow and painful
Can
excessively
on
contributed
too
the
depression
ascent?
to
was
(1657)
in house prices and
supply
Further¬
meed
for
direct
mortgage
lending
by
the. 7 Government,
partly by removing some of the
risks to lenders and increasing
oppor-
crash back into the
we
available
materials.
instituted
were
social progress never before so
nearly within the reach of man,
■
able
has
excessive,
objectives at the
the Government mortgage
insurance and guaranty programs
8333tunity for further economic and *
I
*
time
under these favorable
we
the
hous¬
new
already
CHRONICLE
more, one of the
we have, but nonetheless we are
enjoying
uniquely high levels of production and employment,
Can
is
of labor and
Problems
and national income.
FINANCIAL
demand for
which
considering
domestic affairs.I
our
&
Principal and semi-annual dividends (April 15 and October 15) payable in New York
City. Definitive Certificates, with dividend warrants attached, in the denomination of $1,000, registerable as to
principal. Not redeemable prior to maturity. These Certificates are offered when, as and if received by us. Certificates
in temjx>rary or definitive form will be available for delivery at thoofficeof Halsey, Stuart & Co. Inc. 35 Wall Street,
New York, N.Y. The information contained herein has been carefully compiled from sources considered reliable and,
while not guaranteed as to completeness or accuracy, we believe it to be correct as of this date.
> 1
thir¬
18
NYSE Renominates '
4
for
following nominations
The
An
Bank and Insurance Stocks
Boylan for Chairman
"
to be held on
Monday, May
Exchange
Stock
10,
ported by the
V
Chair¬
For
/•'
the
of
man
'.'V:''■
i
table
First Quarter
Board of Gov¬
ert P.
ton &
'
Bank
Boylan
of
nominated for re-elec¬
both
Co.,
terms.
tion for three year
.
nating Committee
—
0.44
'■
National
York
New
S.
U.
'
Trust——^
'Includes
City
■.
of
Bank
of
firm
306
119
94
505
1,118
1,325
450
576.'*
1,090
400
1,239
1.418
644
418
1,140
1252
3,731
4,295
1,726
948
1,169
416
751
V>486
74
3^ 9
r-:j 77
561
811
2,080
149
524
619
975
;361,
'"fi 74
621
:
F.90
81
fiti
1,416
744
:.i2,272
2,333
505
303
8jy
Hy5
v-
3,379
'
469
1,734
2,086
1,080
1,094
3,790
4,617
1,973
1,276
233
527
623
263
282
138
—
8o-;
"70
112 -
•;
$9,775
$6,157 $19,021 $22,096
———$22,602 $11,484
Bank
•
123
Farmers Trust.
>o
2.2%.
Trust and Public National.
1,661
521'
114
r
$6,905 $18,067
"•
head
Total
tions
to
\'
Public National.
14.9%.
'
.
*
But Bank
j
<<■
.
of total earning assets
1947, Governments constituted 60.4%
32.4%.
Excep¬
National and
This year the proportions
54.1%
are
industrials,
as
Date—
:
v.
^
■-
1948
year
—
—
—
39.5
'
Change
179.48
i;
-1.0%:
+ 4.2%, *
---t-t
hi
181.16
37.9
—
Dow-Jones,
Industrials i*
Index
y,'
—
WHOLESALE MARKETS IN
NEW JERSEY
<57
WHITEHALL 3-0782
I
n
:
of-these
>
.
,
of;
American
leaders—you, and other men like
you.'
■ ■■■'-•'■•'•■ •'
men,
university,.; office around the
from the -White House, I
corner
,
keeb
repeating
things:
^
:
myself
to
three
t)emocracy
r" (1) Stewardship of
"
"(2) Sound Policies
"(3) ; Competent
tion."
■'
4
Administra¬
.
Hoyt Pureed With
National
"(2)
The Treasury Department
and capital
Kansas
and
markets
Bank
loans
and
banks
government
are
Mr.
Pur¬
cell will work
or
fields
in
the
of
obliga¬
tions.
new
trust
business
More than half the assets
mutual
of
Trust Offi¬
cer.
insured
direct
commercial
guaranteed
Purcell
Hoyt
as
investments of
vested
in
banks
savings
every
Purcell
five dol¬
are
firm
invested in
government securities.
"(6) The Federal Government
l
Federal deficits and
dominant
the
in
factor
Hoyt Purcell
Fed¬
banking
'
•
-
debt, the
Treasury's adherence to a cheap"(8)
The
growth
of
policy, and the Treasury's
reliance on floating debt, have
Purcell, Kansas
City in¬
vestment deal-1
of the financial institutions.
"(7)
Mar-
of
tin-Holloway-
is-by far the single major debtor
eral debt since 1939 have been the
a.
was
partner in the
assets of life in¬
companies
surance
Mr. t
ments.
government obligations
of admitted
and
invest¬
trust
in¬
are
of
Co.
election oft
major financial
the
Trust
and
Mo., announces the
City,
dominates the money
'
/
v
in
ers
rate
corpo-
and
mu¬
nicipal securities, from 1933 until
his connection with the City Na¬
tional. He had,, banking experi¬
ence
in the investment department
of the
Fidelity National Bank and
Trust Co. after he graduated from
Kansas State College, Manhattan,
for fiscal au-, Kansas, which was his home.
?
thorifies to employ many of the
Mr Purcell served three years
controls formerly utilized to in¬ in the
.Army Air Corps, two years ;
fluence the financial situation. .V'
of which - were; in. the
it impossible
made
the face of. these facts, we
a
for
concern
of the unused
in
the
the
mainten¬
borrowing
economy
ca¬
CHICAGO 4
LOS ANGELES 14
SAN FRANCISCO 4
210 West Seventh Street
Russ Building
FRAnklin 7535
Michigan 2837
YUkon 6-2332
BS-297
CG-105
LA-1086
TELEPHONES
national
security in
a
our
^
#
day
of
,
* > *
:
*. *
#
I»
stability depends
wisdom
tp>
Hess 8 McFaal Staff
•
r
■
•
.
and
'
courage
of
•••'/"•;
Mcore
Hess
f<
'
PORTLAND,
has
&
t '
(
OREG.—Stewart
become
associated
McFaul,
American
Bank
Building.
Mr. Moore was
formerly Assistant Vice-President
11
•
"Indeed
M,
*
n't
our
government
now
is
position where it must manage
its financial affairs to induce an
Portland, Enterprise 7008
,9+
Air
Stewart Moore Jains
shock upon
J.
in
*
of the First National
<
*.
Bank, having
a
increasing volume of production
and
an
expanding ;real national
«-•.,
1 *r A?
now ;
the
new
with
the
'men.' •>.-■
Detroit, Enterprise 6066 '
7008
He
in
Corps. Reserve: -.v.;'g '• ^ g;
and controls. Its
on
NEW YORK, BOSTON,-CHICAGO,
TO: Hartford, Enterprise 6011
Providence, Enterprise
commission
a <
essential
SF-573
<
,
holds;
.
231 S. LaSalle Street
PRIVATE WIRE SYSTEM CONNECTING:
Theater,of; Operations.
managed money, with a belief in
formulas, regulations, mechanisms,
NY 1-2875
CLEVELAND, PHILADELPHIA, ST. LOUIS, LOS ANGELES, SAN FRANCISCO
to*
because of the acts
men—American
City National Bank
the economic system?
"Our new age
is the
"Wall Street
HUbbard 2-0650
1. S. Rippel & Co.
MArket 3-3430
nature.
economy.
some
structure withstand
BOSTON 9
Phone—REctor 2-4383
be¬
or
of
City NationaTs other trust offi^
cers are JEarl; Deputy and Richard
emergency. Can
we
by present Pendleton.
^
laws and organizations check on
incipient boom
or
depression?
Will
the-rigidity of;.;our debt
10 Post Office Square
1
God
of
convulsion
....
for
INCORPORATED
NEW YORK S:
t>
j;
pacity
GGYER & CO.
SECURITIES
•
American
our
summarize
me
ance
BANK and INSURANCE STOCKS
N. Y.
of
ture
Let
"In
Teletype—NY 1-1248-49
Established 1891
act
an
a
be
produced an effect on the struc¬
have
(L. A. Gibbs, Manager Trading Dept.)'
?
have faced together
people; it has
.
18 Clinton St., Newark 2, N. J.
says
European
Y.;
7-3500
we
fail,'
we
g, "Looking at Washington from;
American
an
will
a
■
money
Am. Banker
v'.
31, 194710,
stocks have thus far fared better this
the following figures show:
■
problems
as
situation.
38.2%, respectively.
than
Apr.
"
■
,
and Chemical report an increase.
and loans and discounts
and
Laird, Bissell & Meeds
12.1%.
or
earning assets have dropped $952,000,000, or 5%.
of Manhattan
City
>,
'
years
U"(5) Two out of
trend are Corn Exchange,-First
general
*-
X
•
of
cause
It
the gross Federal
public debt increased 228 times.
"This growth of our indebted¬
ness
represents something more
than an historical record of the
30
"In
lars
$748,000,000,
loans and discounts are up
the
■; -.
;
-
Tf
Hoffman, 'it will not be
of
1947)—Debt> increase—$215,000,-
000,000.
must
we
because
"Depression: (9years, 1930-1939)
—Debt
increase—$24,000,000,000.
"World War 11: (7 years
1940-
"(4)
ago.
a year
administration.
"(3) Three-quarters of the total
again, shows an increase; but all others report
holdings compared with
decreased
:
democracy
institutions.
Governments are lower by $1,710,000,000, or
of
Bank of Manhattan,
;
of
Paul G.
$23,000,-
—
in
have sound policies and competent
r
years,
increase
or
judged
'
1915-
1
(4
I:
War
Debt
—
when
' these
Note
^
000,000. .f;A
"
*
,
1919)
430
V
•: r- -26-
However, the following banks report
*<
nomic' ^depression; *.
it
"(1) Debt service today is pro¬
portionately between three and
four times the levy against Na¬
KANSAS CITY, MO. — The
tional income that it was in the
Board of Directors of the City
decade after World War X.
3,632
-
136
269
513
434
'
25
stewards
adjustment,
figures.„
W"World
like
we
effects:
835
249
504
.•
30 years of World War
a decade of eco¬
—
fact
a
question is not whether
534
X
496
2,311
-119
of
^;;.
■•:■
>
situation is
973
399'
405 '
'■1(183
•
and
private
terms of nostalgic idyl and recol¬
lection. The fact means that as
:
XI58,
1
231
higher deposits: Bank of Manhattan, Bankers Trust, Chemical, Irving
firm, R. A.
120 BROADWAY, NEW YORK 5, N.
,,
£ 270
National—
Holdings
Exchange
$836
433
626
,3
Asset
:
1,406'
4,754
2,104
Trust-
Trust—
City
-
463
lower than a year ago, or
of
Request
BArclay
74
244
Earng
*
768
Trust———J'
S.
Dec.
Telephone:
$434
471
.
Dell
Disc.
De¬
Examination of this table shows total deposits to be $508,000,000
March 31, 1948
Stock
and \
Sec.
1,115
Marketwise, bank
York
Gov.
$343
2.450
City__:
York
Total
Loans
posits
National——
'Includes
Bank Stocks
New
(000,000)
U. S.
$1,033
2,1401-
Trust———,
<948-
$770
4,488
Trust
"1
Total
763
In
Members
2
Assets
601'
Totals
AND ANALYSIS
on
people
Divi¬
not
Paul F. Douglass
problems we have faced as a
the
Earng.
1.472
Total
Circular
accounting
8.75
8.96
and
1,310
U.
f-
20 New York
0.50
!
—the
is
parks,
*
1947-
in
historical
Disc.
Trust
New
announce
& Co. and prior thereto was
COMPARISON
1.13
economy.
"The present
an
$404
318
York-
New
'National
office of Dean Witter
Ward & Co., Inc.
,
can
1.00
Sec..:
Hanover,
and New
the
of his own investment
,
_
buildings,
foremost
public servant,
the interests of the whole Ameri¬
our
$321
Chafe National
Cherpical B. & T,___
Corn
Exchange-!
formerly with the
was
—
*
Loans
Gov.
$980
Manhattan—
Bankers
Central
the municipal bond department.
Mr. Ward
1.56
r'm
':'■«(£ ££4."
(ooo,ooo)
De¬
Reginald A. Ward as manager of
New York
0.40
-
9.10
-
;:U. S.
posits
Wall
Street, New York City, members
with
0.78
0.01
0.77
i
higher this year than a year ago; net
are
;V'.!.
v'■
Bank
52
Exchanges,
.!
•
—March 31,
Dept. of D. H. Ellis Co.
Curb
0.60
V
*
"
Public
association
V
•
table
Manufacturers
Reginald Ward Heads
the
1.30
■
---
follows:.
First
of the New York Stock
0.20
gives a comparison of the principal earn¬
ing assets of each bank for March 31, 1947, and March 31, 1948, as
Guaranty
York
temporary
requirements are covered by all banks, the average ratio of
Three Mem¬
Burn-
Co.,
3.00
v
.\Y The second tabulation
'
&
4.89
If 0.62
earnings to dividends being 1.63.f Manufacturers and Public have
the two top ratios of 2.17 and 2.26, respectively, while First National
and U. S. Trust show the two lowest, viz.: 1.03 and 1.02, respectively.
'
Ellis
20.00
however, are lower—Chase even reporting a loss
indicated earnings of the other 11 banks are higher in seven
or
Irving
H.
20.52
instances, lower in three, with no change for Central Hanover.
L
D.
Douglass:
security profits,
Total
&
Kernan, White, Weld &
'
'
1.06
Bank Farmers Trust.
Ac¬
/ "Our public
debt, like the
wiil be observed that -'net operating earnings," in the four
It
Everett, Hornblower & Weeks,
1.
rency."
and
system.
Herbert Hoover,-
is di¬
recting
from
the
Normandie
Building on K Street, a study of
this problem of the- organization
and control of public finance in
cording to Dr.
0.70
1.55
instances where reported,
Exchange—F. Dewey
'
4.27
citizen
c u r-
0.40.
,
1.17
v
d
g e
0.45
'
ham, II, Burnham & Co.; Basil B.
Eastman, Dillon & Co.;
Augustus B. Field, Jr., Joseph
Walker & Sons. Two Allied Mem¬
Francis
'
0.41
Trust
Elmer,
the
1.00
'
0.76
man-
1.21
;
1.16
NatIonal»j;a«.-i;
Public
-
of
0.45
a
financial
America's
as
is the
of
0.45
0.23
City__
age
an
integrated.
and direction
control,
the.Federal
At the age of 74
"our
and
0.78
;
"
Manufacturers
planning,,
of
0.05
0.73
■
5.60
1.76
3.84
3.50
l.i>0
_—L
18.38
«
—
and
kets
——
have
do .not
we
effective v; means ; for.
mar¬
0.30
;
—•—-—-—:
.
income; yet
a s u r y
—0.18
0.63
0.88
V-'mi
0.30
0.87
-
0.47
0.20
the
t
ii a
Pre
day
;
$
5.36
'
*
...
-
yet for integrated planning.
means
iominates the
Quarter^
$
'
1.24
Trust
bers of the Exchange—I. W.
bers
0.03
0.68
(J
lew
cated
$
.
0.64
'
Trust
Irving
of the Nomi¬
For Five Members
'
effective
no
.
Dr. Paul F. Douglass, President of the American University in
Washington, D. C., in an address before the National Wholesale Drug¬
gists Association at Palm Beach, Fla., on April 6, stated that the Na¬
tional Debt has assumed such proportions in our economic structure
Rate
Profits*,
5.40
•
—
Div.
Indi¬
0.52
1.50
National
dend
For Two
"
-
Trust
Guaranty
Governors
tuity
York-
New
Total or
Net Sec.
0.47
}.
Exchange^——
First
Board
Trustees of the Gra¬
Fund—John Rutherford at
Joseph Walker & Sons, and John
K. Starkweather, Starkweather &
;
S
National——
Chase
Corn
(Baltimore).
Sons
&
Brown
Op r.
$
Chemical
Three
for
Serve
cated
$
'
Seven
Years—John
A. Coleman, Adler, Coleman &
Co.;
Harold
C.
Mayer,
Bear,
Stearns & Co.; Robert L. Stott,
Wagner, Stott & Co.; T. Jerrold
Bryce, Clark, Dodge & Co.; Lyon
Carter, Estabrook & Co. (Boston);
John Clifford Folger, Folger, No¬
lan & Co., (Washington, D. C.),
and- Charles
S. Garland, Alex.
to
Profits
Hanover—
Central
Board.
the
of
Bankers
of
Members
of
Oper.
y-
Madhattan.-
of
Bank
Boylan is now
P.
'
■'
'
Mr.
Chairman
Robert
Net
Hut-
Co.
For
Indi¬
$
Boylan,
F.
E.
Total or
tends there is
,
capital
•
^
1948
1947
Net Sec.
Rob¬
;
money
Net Earnings per Share
Net
ernors—
the
banks this
City
York
New
in comparison with figures for the first quarter of last year,
mixed results, as indicated by the following table. .Wherever
possible net operating and net security profits are shown separately.
Most figures, however, are "indicated earnings," as measured by the
increase in capital, surplus and undivided profits during each period
Nomin ating
at
/ t
year,
show
Committee for
1948:
of leading
earnings
First-quarter
were ' re¬
Bank Stocks
—
President of American University, holds Govern-
'^ment is now in position where it must manage its financial affairs V,
so as to induce increasing production and national income, but con--
the
This Week
Age of Managed Money
..Paul F. Douglass^
By E. A. VAN DEUSEN
positions to be filled at the
annual election of the New York
Thursday, April 15, 1948
FINANCIAL: CHRONICLE
&
THE COMMERCIAL
(1658)
-
recently retired under that insti¬
tution's retirement plan.
veteran
of .45
years
He is
a
in ^banking.
Volume 167
Number 4690
THE.-.COMMERCIAL & FINANCIAL CHRONICLE"
"usi'ia io Be Addedto
n nonil-A
am m 4V
HoMiarj F«miand Ba^The
virtf»lw
4wnn(ir
t%A<iAA
Al*r
i
fltffap*
■« Q#Mni4l W*
Despite absence of peace treaty with (Allies, former Gsrmajr satellite
given potential right to draw $50 million from international institu-"
Fund's
tiont
;•
v
1
already totaL $600 million add World
operations
•*
,.t
•
.
'y
^
•lt"f'
.
v"
-
,
'
•
-
Conference, institution i* seeking to promote recon¬
struction and development in Latin America;
Stresses need of establishing sound
currency #ystems
and protection for private internationalvinyestraent as foundation for Bank's
objective of promoting bal¬
was announced cn
of the international
anced .apd integrated
J
.
in Latin American ^countries^ and cites participation of Latin Americans in
bank's personnel.
that this Bogota-Conference is of the greatest interest to the Inter¬
economy
\
I
■
hardly need to
•.
say
national Bank.
The. nations whose representatives are
gathered here include 19 of the
w
Bank's 46 members*
economic problems with which
you are grappling are also our
th^t Austria
will" become a member of the Inter¬
national Bank for Reconstruction and Develop¬
ment from whictf it" may obtain long-term loans.
.V.V-.f Simultaneously with the< report that Austria
is to be admitted to membership, the International'
*
p
rob 1
T
our
tives
its* members" have
expand
$600 million in
the 13 months since the agency began operations.
(
;
In the month" of March, 1948, transactions
amounted to! $93.9 million, the higHest monthly
figure- since-last fall.
Drawings - which were all
over
1
e ms.
raise
living
We
'
taken
tains
as
an
a
"
'
whole
'
the
'
'
'
"
'
area
'
■
con¬
enormous wealth of nat¬
France;
Holland, Denmark and ural resources, only partially de¬
Luxemburg. We have made thus veloped, and capable of serving,
'far one loan to a Latin; American as : a base for almost unlimited1
country^ Chile.
We successfully productive effort. Tito population
the
stand¬
and to
ards,.
'
.
.
have made four European loans-
t he
productivity,
to
'
first: ready fOrr action.
were
to
are
1
,
objec¬
Monetary Fund announced that transactions with
totaled'
^
By JOHN J: McCLOY*
President, International Bank of Reconstruction and* Development
World' Bank executive tells Bogota Inter-American
Bank- shows loan commitments-of-$407-million.1 ••••••/•
r
It
*
w
v
!'}.
April 8 by Gamille Gutt; Managing Director
Monetary Ftind; fthat." Aust ia
/
" "f
is to be admitted to: membership and will have
the privilege of obtaining credits up tb an estiriiated amount of $50-million;
It is also expected
:
WorldBankand LatinAmerica
j
y.
(1659)19
sold
$250
million
of! the
Bank's
is
capable and most anxious to
improve its position/ There is
plenty of -space- space/ for new
people, new industries; new in¬
vestments, new ideas. There is an
unlimited opportunity for individ^
infU. SI dollars, comprised $60 million by the
increase
and
bonds to investorsr, in; the. United
United..
stabilize
the
international
States bond; market; and:? in this
manner augmented the amount- of
trade
your
funds
i
lending operations.
I am not going to dwell on the uall profit and an
equal oppor¬
importance; of: the: reconstruction tunity for community profit.
of the European economy to Latin
On the other hand in many of
Kingdom, $28 million by- India, .$3*4- mitlion by Denmark and $2.5 million by Norway.
This represented the first drawing on the Fund
by Norway and by India.
...
Canaille Gutt
of
t
c o u n
.
r
These
INTERNATIONAL MONETARY- FUND
tives
SUMMARY OP TRANSACTIONS
;
—Month of March, 1948—
Exchange
Currency
U.
S.
Sold:
13 Months Ended Mar. 31,1948
U. S. Dollar
Amount in
Currency
only
Y 594,100,000.00-, 594,100,000100
93,900,000.00
93,900,000.00
the,; Latin American countries the
before
general standard' of living remains
low. There is need for greater di¬
'
*.■
i
Currency Bought:
Belgian Francs-iLL--./
L
v1,446,308,913.00
i 272,800,000.00
32,633,199,98
: 6,800,000.00
;■ ; French Francs
i
14,888,-375,000.00 *125,000,000.00
:i; Indian Rupees
92,638,544-4-0' 28,000,000.00 r ; i 92,838,544-4-0
28,000,000.00
ij Mexican
Pesos
i ^i'LLzLiL^LL
109,237,500.00 - 22*500,000.00
Netherland
Guilders.
vV.-'Lf .LLLzLLLZ' Wh 181,839,626.94 f; 68,545,000.00
Norwegian Kroner
2,500,000.00
12,406,950.00
2,500,000.00
12,406,950.00
Turkish Liras
Y\:.;ziLLL_L,/
14,000,000.00
5,000,000.00
Pounds Sterling Liz- 14,888,337-9-5
60,000,000*00
300,000,00000
74,441,687-7-1
.*»*.->
;-;b,
,
Chilean
■V#
1
Kroner
■
Pesos
Danish
:•
16,316,590.99
_____
3,400,000.00
L ; LLLLLLLL
;
value in
.
force
the U.
represents
the
at
transactions
the
time
s.-dollar
equivalent calculated at the
effected.
were
<E
;
>•
unanimous
agreement,
that
what we* did.' in; the:way: of assists
ance
to, Europe during, our' first
year, of operations: was ( a. matter
of prime irnportance- to alh our
,
Latin American- members.:
The
during March
1948. _For the 13 months ended in March, however, the Fund sold U. S. dollars against
gold (690.415 ounces) at $35 per fine ounce, the dollar equivalent being $24,164.52.
^
..,
-
.
','l
Status of World Bank Loans.
,r
able to make
be
real contribu¬ nomic; frontiers is' nob generally
a
tion, but - most of the projects un^
;
.
prevalent: in
that1
have
not
yet preached
areas
the stage
is -
Which
the
now
exists in Latin Amer.
.
*
1
i
-•'
v
,7
(Expressed in United States Currency)
•
constructive
render
^,
As of March 31, 1948
' '
,
if not all of
There? is need for
promoting; the formation of local
capital so that it may be applied
to -productive uses.
Inflationary
pressures in a number of them,
must be combated and the
the
full:
realization
of
assistance in .outlined^ at Brett on: Woods when
;;"
f the* International! Bank was estab¬
development field.
4
s
The favorable factors
are
all
such
as
cam
be
What the Bank Can Do
.
„
.
"
* '
"
Loan
■'i'-^Commitment
Considerably
"
" XJnused.Balance of
Disbursement>'-"*eommilmen't''
:
arid
ago,
.
.
New York Bond Club
Harper Leavilt Joins
Will Hear Dulles
•
I
Foster
Dulles
will
be
guest of hon or and principal
speaker at a dinner meeting of the
Club
Bond
of
York
New
on
Thursday, May -3. at the Starlight
of
Roof
the
Waldorf
-
Astoria
T. Jerrold Bryce, Clark,
Dodge & Co., President of the
club, announced. '
Hotel,
has
Stock
York
New
nounce
that
^
Hummer & Co. to
with
the
200,000 Shares.
firrp in its bond department. Mr.
Leavitt
was
formerly head* of
Leavitt & Co,
'
Weekly Firm Changes
jAdmit John W. Lawlor
nora
Exchange, an¬
A. Leavitt
The Solvay American Corporation
ewYoifc Stock, Exchange
roe
sell
Harper
associated
become
record only and is neither art offer to
'
Hirsch & Co., 25 Broad Street,
New York City," members of the
been sold Ihis gnn&uncement {ippcars fts a matter of
solicitation of an offtir to buy any of these securities. •
of the 4% Cumulative Preferred /Stock having
All
-
John
;"V'sL
overcome
to
Help;
Now, what* I ■= have briefly and
boldly attempted to do is to give
.
-
strong
with determined effort..
.•
,
'
are
provide a firm %ase for fui-?
ther development. The handicaps
and;
nf
1
inherent
the
>
'V
less than a year lished.
a resume of conditions in an area
I have been with the
Bank Studying Latin America
which as a whole I have yet to
i^ft::-./Credit>-:-Nationftl.-;;4-Pi^neeiav^,':r-'-:. $250,000,000 ^ > $250,OOOvOOO*-.'L;>^^-'CiLizL^L-^-;'>? Bank, for
just a year, the Bank
,J, .Li.- Kingdom of Lrnmarlr
ihe Netherlands
195,000,000
I imagine you are much
We have been spending, much- visit.
Kinarlnm
1
made its first lending operations*
40,000,000
Kingdom of Denmark-z-LL-*-*
more
interested in what I have
12,000,000 *
Grand-Duchy of Luxembourg
In the course of the same year the of our time at the Bank studying
the potentialities and the to say as the President of the In¬
Bank also made its first borrow¬ both
S94; 186,287
$497,000,000- - - $402,813,713
ternational Bank, about what the
ing operation. Not only did we problems of economic develop¬
■Cs :v;
Bank can do to help you solve
Leans Sought by3 Brazil
consider the problem of European ment in many of the countries of
problems the nature of which, to
Latin America.
1
I - According to an Associated Press dispatch from Brazil on April 8 reconstruction 's a matter of ur¬
It is dangerous to
generalize say> the- least, you are as well
it is reported the Brazilian Congress is being asked to underwrite a gency but the applications of cer¬
aware of as am I.
tain of the European governments about a country and it is almost,
$90 million World Bank loan for electric power expansion, ,
;
I am on much firmer ground
impossible to generalize about a
The Brazilian Traction, Light & Power Co., Ltd., of Toronto, is to
when I speak of the International
-An address by Mr. McCloy be¬ continent. But with all the diver¬
use the $90 million to expand its power plants- and improve service
sities which this continent pre¬ Bank for Reconstruction .and De¬
to Rio de Janeiro and Sao Paulo, as well as nearby regions including fore the Economic Commission of
there. are
certain things velopment -and of its desire and
the 9th International Conference sents
Vplta Redonda, largest steel, mill in South, America.
we
can
venture to say capacity to be of help in the aaof American States, Bogota, Co¬ which
(Continued on page 37)
"
about it.
It is safe to say that ^
lombia, April 5, 1948.
i
"
■
,
many
times; yet productive potential jot the Lathi
clear: opportunity American v area.
\
l
for finance ica* fnt a sense the "coiiptf leg > 03
International Bank for Reconstruction and Devclopment
issued on April 8 the following financial report as of March 31, 1948? ing. It. is-in the Latins American this continent provide the firstl
on the status of the loans it has granted to France, the Netherlands.
countries that, for the immediate testing ground for the type1 of in*
Denmark.and Luxembourg.
future, I regard' the" Bank as ternational action: im the field; of
zy/-::-:.l_:■
V
;
having its greatest opportunity to economic development which was
FINANCIAL- REPORT OF STATui:<wlLqAHSv;f
\
.
the countries;
modern
where they are ready
The
•.
velopment in
.
rebuilding of the shattered;
der consideration for those
\-u;
-
versification in the economy and
stimulation of the industrial de4
general
European economy^is,an-essential economic and credit position must
and. inspiring, task* But'it is even be stabilized as is the case with
more exciting, more of a challenge
many countries in other parts of
to. the imagination, to look for¬ the
world.
Although technical,
ward to the basic4 development of managerial*
: and ' administrative
the still- young, economies of' this skills5 are present in increasing
and the Far East, the Bank Ex¬ Hemisphere.
The Opportunity- to measure there is gjreat need* for
pects, over a period of; years, to take part, in opening neweco¬ their further development for the
agreed par
,w
in
our inter¬
Board; of, Directors was
members and not; the least to our
and, although the
expects to play a substan¬
tial *part iii promoting the recon¬
struction of Europe, it will, during
the period of the European Re¬
covery Program necessarily play
an
auxiliary rather than a pri¬
mary role.
In the Middle : East'
^EDITOR'S NOTE—No gold transactions were effected bv the Fund
,
I The
Bank
600,145,000.00
93,900,000.00
figure
considered, and
national
Government
.
'.../This
member nations.
our
It isi sufficienLta say
me*
direct aid from the United States
______
:-om
all
American Republics con¬
stitute an area of special: interesti
for the Bank at just this time. The
33,000,000.00 most urgent) reconstruction needs
8,800,000.00 of
Europe are being met' through
v
■
our
that; we
but
.
600,145,000.00
93,900,000.00
.
America;. Others have done: that
for
6,045,000.00
1,500,000.00:.
;
the
for
publics
Equivalent
Sterling
for
had; available
we
American Re¬
U. S. Dollar
Equivalent
.
;:
Dollars_i..
Pounds
Amount in
;
A; A Currency
objec¬
coincide
with" ours not
'
■Transactions
e s.
.
4% Cumulative Preferred Stock
'HO
:
y■■
Par Value $100 per share
' 'V'
1 >;
The New York Stock
,'
Exchange
has announced the following firm
mer
changes:
CHICAGO, ILL.—Wayne Hum¬
& Co., members of the New
York
and- Chicago
Stock Ex¬
'
J
:
"v
^
Transfer of the Exchange mem¬
changes; will admit John W. Law¬
bership
lor >tp partnership on
Mr. Lawlor has bean
Charles E. Henderson will be
April
22.
with
the
firm for many years as Manager
of the Appleton, Wis., office, 123
of ' Oscar
>
L.
Malo
to
con¬
Henderson
will
act
as
an
indi¬
vidual floor broker.
South Appleton Street.
"
Newcombe
C.
Baker
•
'
which this announcement fa
including the undersigned, as may
Copies of the Prospectus may be obtained in any State in
.
sidered by the Exchange on April
22*
"It
is
understood: that
Mr.
\
i, /
.
.
,
,
circulated from only such of the-Underwriters,
legally offer these share? in compliance with ihe securities laws
t
4
of buch States.
"
retired
from
-'-i
v
&■
John W. Stokes Dies
-John
W.
Stokes,
Brooks- Stokes- &
partner
Co.
delphia, died
of
Kenneth'S, Adams; limited part¬
in
Phila¬
at his home of
heart attack at the age of 62'.
partnership in Laird, Bissell
Meeds on1 April' 5".
'
a
ner
the
firm
LA7.AKD FRERES & CO.
Dudley
Apri'rj.
Co.,.retired from
April 1".
M,
Cooper died on
on
,
V/Vv-L
Harriman Ripley & Co.
*
;
in Merrill &
April 15, 1948. '
Incorporated
' 1 :
COMMERCIAL
THE
(1660)
20
&
WEEKLY COMMODITY PRICES, JUNE 28,
Vith Bateman, Eichler Co.
(Special
LOS
r
to
Tm
trinnttciAi
ANGELES, CALIF.—Rich-
265
260
260
*
affiliated
'1
'
:
1th Bateman, Eichler & Co., 453
'
t.
250
y
buth Spring Street, members of
Los
1947—FEBRUARY 28, 1948
265
umku»iclei
;d H. Rue has become
Thursday, April 15, 1948
CHRONICLE
FINANCIAL
Angeles Stock Exchange.
By HENRY HUNT
;;i'
,
i
y
240
;
.
.
1
/
,
240
CR/ INS
.
230
230
1
"Making Two Bets"
/
conversation between an investor with surplus
experienced investment adviser actually took place
early in 1942 but it might well have taken place in 1948. •
TlohAL
series
and
INVESTOR: "Stocks look
f
your
request from
RESEARCH
CORPORATION
BROADWAY, NEW YORK 5. N.Y.
,■
do
170
lieve
higher levels and are
years.- •'.,
prospectus from
your investment
dealer
1
■
.
'you think you
cheaper
^V-*V -i
■
2,
PA.
■.
.
y:,
.•
•
yy:':
his
In
Blind
Venetian
mutual funds with assets of
.
World
most
the
our
times.
vestors, State Street, and Dividend
three hundred
years
yy;y:-.'-:
the
eleventh
-
' the
kids!"
the
World
New
significant fact of
"For
over
New
provision of the new
permitting
husbands
and
to split their income, will
save them much more money than
the cut in tax rates. The following
schedule shows the present taxes
for a married couple with two
children in noncommunity prop¬
$50,000,000. As of March 31,
Affiliated
reported . total assets
of
$50,750,000, y including
bank
loans of $11,000,000. ;v'l'yy*uyy^
Only five other individual mu¬
tual funds have assets today in
excess
of $50,000,000 as follows:
Massachusetts InvestQrs .Trust, In¬
vestors Mutual, Incorporated In¬
remarks at
to
taxpayers will find the community
more
than
;
Meeting of
the
Fund,
George Putnam, Chairman of the
Trustees, called the shift of power
and
leadership
from' the > Old
.v,
•'-> '■''■■"W
"To waste it on a bunch of
a
Annual
Especially in the months of spring.
"It seems a shame," said Michael
Sids,
Make
Significant
vy"'
He
wonderful thing,
a
magnitude of the
impelled thoughtful citi¬
ask questions—questions
Changed World Position of U. S.
Shades of G.
Youth is such
to
Stick your finger in his eye.
y
in¬
vested his cash after the "Dow"
crossed 145!
1948
1947
yf/i: f
7
sheer
How to
v,
second.
the
lost
he
FEB.
JAN.
DEC.
,
versation, the "Dow" stood at 105.
Two months later, it hit 93. The
investor had won his first bet!
But
PHILADELPHIA
-
-
NOV.
OCT.
SEPT.
AUG.
JULY
;
or
/<
^;
160
■
160
1948 Tax Savings
:
1
.
?
days is the result of an effort to
appraise a world where the funda¬
In a recent bulletin, Wellington
mentals of power and leadership
Fund discusses the recent cut in
without an answer. Is this the end
have shifted from one hemisphere
income taxes in part as follows:
of inflation? More important, is it
to another."
;y'.;: ■ •• •■ f;.'
"You
may
not
realize , the
the beginning of deflation? But
"Affiliated" Crosses $50,000,000 amount of savings you will get
no answer can be given with as¬
!
Mark
■
-_'y:
f.C'l from the new Federal income tax
surance. The reason is that there
i During the
month of March, law, especially, if you live in a
are
still
some
basic
economic
property
State.
Lord, Abbett's Affiliated
Fund non-community
ambiguities." rr y-/ ry-y;.v
joined the ranks of the select few Most middle and upper bracket
break
zens
of the above con¬
the time
At
"The
*
on,' you are making two
First, that the market will go
xower, and second, that when it
does you will act at the right time.
We have found that very few of
our
clients can win both those
bets."
170
:
'
memorable for pit traders in seven
recommend¬
jets:
1 MUM HVESIMENT W
180
180
later
established 1928
190
GEr IERAL COM MODTTY INI 'EX
tinued., Other commodities turnbled in sympathy. In spite of re¬
assuring words over CBS from the
j Board of Trade's President the
that over the next few years second- week in February went
prices will see considerably down in
history as the most
will be able to buy them
HM(
200
•;
190
on—but even if they
go lower, will you buy them at
close to their lows?
We be-
But when you say
<$►
'
...
stop inflation; The-decline con-
ing their purchase at this time.
Possibly our timing is a little pre¬
mature. Frankly, I wouldn't know.
vn;i.MVf,ios'
210
:
200
will be able to buy stocks
stock
t
V
"y'y:
cheaper later
or
120
think?"
"It is quite possible
that you
&
SECURITIES
f;.;: —-yy
:'.y\
companiment to President Truman's press conference concernfihg the need for intervention to
later on. What
ADVISOR:
investment deafer,'or from
NATIONAL
'
210
cheapo-
I will be able to
today but I think
do you
upon
/
*
an
buy them cheaper
Prospectus
220
220
The following
cash
*
1
has
World
as
occupied
Shares.
wives
law
the
and
or
amount of
Taxes
^
tV
;•
tax
(
Under New
Net :-: ' .'y: ; Non-Community
Bill
i? *y*Income
Property States
The Big Break
y
-'$432
$5,000———
$589
*
.
Calvin Bullock's March issue of the last fifty years the centre of
y
;598
economic gravity of the world has ■}y' V 6,000- 798
"Perspective" discusses the break
been gradually moving across the v;: yy, 7,000
y. 1,045 '
' y vy 780 C
in commodity prices in part as
J
8,000—-—
.y 1,292.Vyy: •yy-^'-vy974 :y
follows:.:
.y:V'V Atlantic Ocean. Just as it took the
V
9,000^
^
1,577; *.
1,167
"Even before rigor mortis had Spanish-American-war to make
1,361 y
10,000
y 1,862
set in for the OPA in 1946 the people realize that we had become
colonial relationship
towards the Old World.
During
dependent
under the
the taxes
erty States,
Present Taxes in ;■
.
a
new
law,
1 ' savings:.
*
,
property
Tax
-
y
Savings
$157
m
200 y
.
fy- 265
...
•(* :■
'■
•.V 318-
•
-
y
■SHv
,
market
stock
gave unmistakable
resigning from an
evidence" of
economic
system
dominated
by
a
world power,
it has taken
so
a
combination of two World Wars to
complete the shift that
was
going
on
wildered
.' vToday, the United States is be¬
ginning to realize that Western
Europe has become the depen¬
dency.
I mean dependency in a
even
fire
public
saw
stocks tumble
flames of the inflationary
licked
their
way
upward
as
semi-log graph
across
"The first
break
;
paper.
in
j
commodity
prices of significant proportions
began in the Chicago wheat pits a
few weeks ago early in February.
Starting in
corny, it
spread to
wheat and played a dissonant ac-
.y
y
12,000
15,000———.
y
y
y-,,-.
:
.
is
but
a
Temporary §xpe-
:y"Much of the current confusion
and
uncertainty
so
manifest these
1,804
3,638
5,890
,
8,521.
—
.
11,381
14,354
17,442
20,719
24,111
;
'
704
;•
:
1,126
;
3,045
4,075
4,978 "
5,824 6,700
7,533 '
2;002
5,476
9,376
>
i1
ivi.;
y;>
,y::
:
:^.^fy; 7,306
y
11,618
14,019
16,578
;r:
>r%y 45,643
100,000_.>_>^^— '62,301
si
16,658
■
..
■■
V'"
After deductions but before exemptions.
fi4
Mr !uAl?y,
—■
: :
..
yi
3,888
.
:^y
•
501
•
2,512
2,508 -.\-
45,000
50,000
;yy;
permanent sense, not to be con¬
fused ' with" the Marshall
Plan,
which
20,000—
25,000
30,000
.35,000—
40,000--
j
yyy
strong inflationary forces. A be¬
anyway.
.
,
410
■,
v
i-i
y! ■- ;■
—j
■-
—
First Boston-Smith,
iy
Barney Group Underwrites
Allegheny Ludlum Preferred Offering
"
Allegheny Ludlum Steel Corp. is offering to its common stock¬
holders an issue of 107,383 shares of $4.50 cumulative preferred stock,
without par value, at a price of $100 per share. The offering is on the
basis of one share of preferred stock for each 12 shares of common
stock held of record as of April v———
After repayment of a loan in
13, 1948. The First Boston Corp.
and Smith, Barney &; Co. jointly the amount of $1,000,000 outstand¬
head a group of investment bank¬ ing under a bank credit negoti¬
ing firms which is underwriting ated in 1946, the company will
the offering.
Transferable war¬ apply the balance of the proceeds
rants expire at 3 p.m. (EDT), on from the current financing to its
April 27, 1948. Vy.;'."','
program of rehabilitation and im¬
Each share of preferred stock is provement of plants and facilities.
yyiv'yy'.
Ke
"Rnnd runa
Pnnrl
Dona
Custodian
Fund;
OF BOSTON
*■■ ■&)*■:
7".
^Aassachusetts In vestors Trust
Certificate, of Participation in
convertible
INVESTMENT FUNDS
Massachusetts
common.
j vestors
IN
Second; Fund
.■
at
common
prior to April 1,
price
of
$32.50
per
Inverting tiieir capital
'
into
time
r,.y;
■y
'
..
■
1958,
share
,.v
.'
CSerie. B1-B2-B3-B4)
v'.
l
1
'
.
(Seri«.Kl-K2)
nuOoifou
A
■
i!}!
^°CK
Slum!
prospectus
relating tb the shares of any of these
investment funds
may
FUND, INC. yyy
:
separate
-
'
Dividend Notice
•»
The
Stock
or
terly
&
COMPANY
Keystone Company
111
DEVONSHIRE
,50
STREET
BOSTON
-
Congress Street
■
of
21,
14
U
'
NEW. YORK
6i
Broadway
CHICAGO
120
_
*
South LaSalle Street
,
210
cents
a
per
quar¬
30,
share
1948.
E. E. Crabb, President
Manager
no
funded debt.
>
y
Steel Corp.
In addition to
the preferred
stock being offered*
capitalization consists of 1,288,607
shares of common stock.
606,000,
an
the 1946 volume.
for the
CQnsoli-
tolled $106,-
increase of $11,543,000
Net income
periods amounted to $6,-
002,000
and
tlvely. /
■
Hi*
near
—y
Allegheny Ludlum
has
Minneapolis, Minnesota
T,
and, equipped
constructed
over
INVESTORS SYNDICATE
West Seventh Street
recently
plant from the Re¬
dated sales for 1947
'
LOS ANGELES
;:i!
&I
Investors
1948 to shareholders
April
corporation
a
construction Finance Corporation
A new research laboratory will be
Brackenridge.
Principal Underwriier and
i'yYu
,;i.
as
Investment
Boston 9, Massachusetts
i*Ii
of
on May
of
has declared
Inc.,
dividend
record
y..
of Boston
Fund,
payable
on
Directors
of
Board
purchased
,
;
G *
$6,^99,000,
,r
..
y
;
■
respec-
:;yy
y.i 'y y
■ -
/.'■.
yyy: ■■•:•••••(
;T;.:"y
■•yy
■v..
com¬
its
the
where
be obtained from the undersigned.
VANCK, SANDERS
Tke
the
Watervliet and at Dunkirk, N, X»
INVESTORS STOCK
Prospectus from
your local investment dealer
in
ment
-
'y
steel,
plans to install new machin¬
and modernize existing equip¬
pany
ery
.
•
silicon
and
less
of
.
•COMMON STOCKS
(Strict S1-S2-S3-S4)
and increase
Brackenridge and
West Leechburg, Pa., plants, j In
addition, outlays will be made at
PREFERRED STOCKS
C
to improve
the production of flat-rolled, stain¬
■
BONDS
■
In order
any
at a
til'
t
Volume 167
Number 4690
THE
COMMERCIAL "&
FINANCIAL
CHRONICLE
(1661)
.
San Francisco
American Power & Light
21
Exchange Sponsors Tour
—
^/
Two plans were recently filed with the SEC for dissolution 6i
American Power & Light, one by the
Company itself and the o titer
by its parent, Electric Bond and Share. •; These
plans supersede tlie
management plan filed Sept. 6, 1946..
Hearings were held on tlie
latter! plan • until
February, 1947,<3>
r I
.
and
another
counsel for
plan
filed
was
by
public—Minnesota Power & Light,
Which recently offered some > new
money stock through Kidder, Peibody at $27.50 (net to the Com¬
pany : being
$25.60).
.In
1947
Minnesota earned .$2.88 a share
after a plant amortization charge
stockholders' group,
a
but the SEC did not
announce any
decision. Under the 1946 manage¬
ment plan the
would
have
$6 preferred stock
been retired
and the $5 preferred at
at
payment in either
common
of
in
subsidiaries
amounts
par
and
or
arrears
stocks
of
cash.:These
$6.43
were
$150
$137, with
in
in the
excess
of
earnings.
$6 stock, and 69c more on the $5
preferred (call premiums are $15
and $10 respectively). Values of
the
common
:
stocks
in
the
cation
going
basis
years
ratio..;,
is -V much
to
the
contemplated
The
ago.
\plan
back
It
allo¬
this
for
is
probably two-fold: (1) the trend
thinking to disregard full
a
priority basis; and
(2)
the
favorable trend of the stock
ket, which in the
case
point
and
:
Florida
(as
|a
Texas
Power
■
&
j
reasonable
seem
the
entire
to
multiplier of
average
system.
9
this
On
of
amount
$200,000,000
and the allocations under the two
plans would work out
on
follows
as
in millions of dollars: V
un¬
::
mar¬
V:-;-*''
Amer.
Preferred
merely divides
b.&s.
Stocks—
Common Stock
common.
Elec.
p:&l.
of Ameri¬
$168
a
$200
With
stock.
shares
thus
;
42
;
$200
;y;
3,000,00C
work
about
of
presenting
was
followed in the
tric
Power &
case
of Elec¬
Light in
1946, but
new plan
recently pre¬
for
that
Company.
If
sented
in
earlier EL
promise
The plan does not indicate how
the total dollar amount assigned
to the preferred stocks would be
It
of; the
case
plan is allowed,
AP
between
will be
the
the
formula
two
divided
a com¬
ally
submitted
is
a
comparatively
simple
that
issues:
two
the
value
points apart,
previous- plan
the
assigned to the $5
Francisco
ferred
consummated,
higher by the
would
make
the
than
75
houses
one of the subsidiaries
has any stock in the hands of the
$4-5
same
amount.
This
the
for
The National City Bank of New
York, Halsey, Stuart & Co. Inc.,
Blyth & Co., Inc., and the Philadelphia National
a group of underwriters to whom the
City of Phila¬
delphia on April 13 awarded
$45,800,000 of various purpose bonds.
The bonds comprise
$37,400,000 of 3>—2%%, 3% and 4% serial bonds' and Trust Funds in
Pennsylvania
due
1949-1998 and $8,400,000 of and New
York. Interest is exempl
2% and 2%% term bonds, due from
Federal income taxes.1968.
The
winning bid
for the bonds was 100 for a com¬
bination of coupon rates
resulting
in a net interest cost of
2.8045%.
The
The
City has no present inten¬
of making
additional; bond
offerings this year.
j ^
tion
.
serial
bonds are being re¬
publicly at yields ranging
from 0.70% to about
2.95%, ac¬
cording to maturity. Prices for the
are
99%
and
$7,500,000 of 30-year
bori&s, due May I, 1978, and call¬
able M&y 1, 1968. and 96%'and
accrued
interest for $900,000 of
15-year bonds, due May 1, 1963.
-'
The serial bonds consist of
$10,-
000.000 due January 1, 1949-1998,
Inclusive; $24,000,000 due January
1,* 1950-1989, inclusive: and 4 $3,-400,000 due July 1, 1949-1978, in¬
clusive,
-
with
VINEYARD
-
On
Kidder, Peabody & Co.
formerly did business as an
'
for
Sewer,
various
municipal purposes, are legal in¬
vestments, in the opinion of the
underwriters, for Savings Banks
in
up
of the warehouses for
one
dealer
-
•
in
Vineyard
was*with
*
/
'
i.
\
f
a
\
;
from
credits
The
&
yp:
benefit
the
of
Thf
group.
newest product added to the liite
a water softener for
domestic
is"
P
,§
This was one of a series of trips
past or planned for the future to
keep member firms and the finari*
cial fraternity abreast of
devejbr
opments in various industries. ;!
use.
;
.
Bank of
ities will affect the
and
one
and
livelihood
one-half
workers
ities
Washington reported
Italian handicraft company
an
of $4,625,000 have been approved by the
Export-Import Bank.
The company's activ¬
Board of Directors of the
ofS>—
million
1—
non
profit
-
of
the
House
of
organization
estab¬
city of New
lished in 1945 in the
Financial
Chronicle)
i
ST. LOUIS, MO.—Leonard H.
Cramblet has joined the staff of
G. H. Walker & * Co., 503 Locust
Street, members .of the New York
and"St/ fidufe Stock"Exchanges.
Italian
Work¬
ing with and through established
trade channels, it will serve both
the Italian producers and Amer¬
ican buyers.
The
;■
Board
of
Directors
of
the
Export-Import Bank also reported
approval of the establishment of
York by American citizens for the
purpose
Kabelfabrik
aging
the purchase of American
source
change
sales
to
to
of
Italy,
tourists
engaged
foreign
ex¬
both
through
in
Italy and
tion
of assisting and encour¬
Italian handicraft produc¬
exports to the United
and
States. The Compagnia Nazionale
exports.
Direct Artigiana will be endowed with
exports
have
been' running
at a grant of $100,000 from the Ital¬
about
$25 million a year, with ian Government for the purpose
the United States absorbing about of supplementing its initial work¬
$10 to $15 million.
,r ,y-'
y;/y;y\," ing funds, especially for such pur¬
poses as marketing and promotion
On
Dec.
through
direct
4, 1947 the ExportImport Bank approved a line of
credit
of $4,625,000 for the pur¬
of assisting Italian handi¬
craft industries and artisans to
pose
ex¬
and thereby to make their
contribution
of
the
to
Italian
foreign trade.
the
restora¬
economy
and
The credit is to be
used for the purchase of raw ma¬
terials
v
United
and
^
equipment
States.
*;■
■
in
the
*'•/■; V,
■'?.
-
The
beneficiary of the credit,
Compagnia Nazionale Artigiana,
will be incorporated under Ital¬
ian
law.
will
be
One-half
subscribed
of
by
its
capital
represen¬
tatives of Italian handicraft
With G. H. Walker & Co.
to
the
Handicrafts in New York.
~
abroad.
would
to
The
Italian
have
also
company
made
available
it without cost the facilities of
the House
set
up
of Italian Handicrafts,
year
a
ago
in New York
by Handicraft Development, Inc.
a
focal point for its various
as
activities and exhibits.
orable
who
Ivan
Matteo
the
to
came
The Hon¬
Lombardo,
United
States
in 1947 as head of an Italian eco¬
nomic mission and who has
con¬
trade
the
business
and
foreign
experience, has agreed to be
users
and
artisans, and by Italian credit
and
other
institutions
actively
encouraging handicrafts and -• as¬
sisting independent workers. The
other one-half of the capital will
be
subscribe(i
.hj,
Development, Inc.,
Pres dent
of
the
Com¬
new
,f\
pagnia Nazionale Artigiana.
#•
-
A
"
?
-
4
;
*»'.■.
"
,
The Compagnia Nazionale
American
ment.
able
of
credit
of
The
until
nancing
of
Standard
of
in
og
Oslo, Norway for
equip¬
credit
Dec.
up
$250 000
Telefon
is to be avail¬
31,
1948 for fi¬
to 65% of the equip-;
ment.
be
The remaining 35% is t6
provided by the International
Standard
New
Electric
York.
terest
at
Corporation of
The credit bears in¬
the
rate
of 3Vz% per
principal is to
be repaid in approximately eight
annum,
and: the
equal quarterly installments com¬
mencing a year from the date of
the first advance.
The largest
commercial bank
Christiania
has
of
Bank of
offered
its
Norway, thd
KreditkassdJ
unconditional
guarantee to the credit, while thd
availability
of
dollars
is
guar¬
anteed
by the Bank of Norway^
the Norwegian central bank.:
*T
'
Arti¬
•
The
Norwegian
company *
en|
gages in the manufacture and sale
of cable and
wire, and in the as¬
sembling, sale and installment of
telecommunication equip m e nL
giana.will be a cooperative enter¬ Though most of its business is
prise and will engage in stimu¬ done in Norway, the corporation
lating the development of addi¬ exports significant amounts, espesf
tional Italian handicrafts suitable cially to such countries as Swedi
for export and in increasing out¬ The
equipment to be finai
lets in
In under the credit is for expandi
ill- the cable plant facilities of
of the activ¬ Company; in-,Oslo^r.Tr7rt^;r.t: r ^
the United States
other, haxd
an
line
a
favor
siderable
.
P
fSneciai
and
associ¬
George D. B. Bonbright, J. & W
Seligman & Co. and Moore, Leom
ard & Lynch..
P
P P
"
of steel per month which is less
than one-half of capacity. A more
complete products display was set
April 8, the Export-Import
to ^benefit
tion
.
now
Haven, and prior thereto
*.
The bonds, issued
Airport, Gas Works
^
ated with
individual
*
heater tanks are produced at the
Richmond plant- Operations due
to lack of steel are currently curtailed to approximately 2,300 tons
arrangements for the establishment of
full
HAVEN, MASS.—
William R. Wigley is
He
s
;^;p.p.y
Export-Import Bank Grants Italian and Norwegian Credits
ports
Kidder, I Peabody
accrued
interest for
the
;
increase their production and
offend
term bonds
P
Ppv.
\
Drums, containers and hot water
:
portant
Market
Lehman Brothers,
Bank jointly head
and
(President of the
Exchange), Gene Root, Elden Grim, Dan Berg, and William
in
handicrafts throughout Italy.
Handicraft exports are
an
im¬
545,800,000 Philadelphia Bonds
1963
in
were
Left to rightr J. Howard Burgess,
Exchange), Douglas Atkinson (Chairman
Arranges for $4,625,000 for establishment of handicraft company
in Italy and $250,009 for telephone
manufacturing concern in Oslo,«
some
oa
banks
P.
artisans
Placed
March 30. More
from brokerage
on
persons
and
group.
pre¬
about
receive
$5
break-up value
the $5 issue
range between
$84-90 and the $6 between $94-100.
ings. Only
under
President, sponsored a
Richmond plant of Rheem Manu-
less than the average share figure,
the $6 preferred would be
cap¬
StoqkPExchange
San
Kaehler,
trip to the
and
earn¬
The
%
"4:
th^ pail line.
about 9% less than
was
would
—
the direction of Ronald E.
facturing Co.
press on
(Plant Superintendent).
FRANCISCO
given to the $6. It appears
that in the present plan
when
1947
approximated $22,000,000.
Under
present market conditions these
earnings could probably be
the
10
SAN
likely
November 30,
italized at about 8-10 times
.
preferred
System earnings for the 12
months ended
in
cash
matter to estimate the
break-up
values for AP preferred and com¬
mon.
sell* about
and
forthcoming.
between
The $5 and $6 preferreds usu¬
.
somewhere
now
McKcnzie
price around 9. The value for the
preferred stocks would range be¬
tween $89 and $95 a share.
; 1
not in the
precedent
'
compared with the recent market
open house for some 75 partners and
Exchan ge member firms. Gene Root of the Rheem Com-
Stock
Hubert Hynes, Ronald E. Kaehler
of the Board of Governors of the
-
$11 to $14
plans
two
Manufacturing Company held
Ppany is explaining the lithographing
stock would
common
out
of Rheem
.representatives of San Francisco
outstanding, the break-up
pro¬
cedure
'
Richmond Plant
approximately
value of the
the Electric Bond and Share uses
a 79-21 allocation. A
similar
$lp8
32
;
Total
the preferred
group) and the com¬
American's own plan
would
do this
on
an.84%-16%
basis, while the plan submitted by
stocks
mon
from
of > view.
y\>;r;;
an
round
a
makes it is difficult to
satisfy
preferred claims and have
any¬
The present plan
all assets between
probably
the worst of
nor
can
thing left for
was
basis the portfolio would be worth
of SEC
satisfaction of preferred claims
is
subsidiaries
would
take
few
a
for
reason
basis the
Light would probably be entitled
to sell at higher
price-earnings
ratios than Minnesota,, while the
northwestern
companies
might
not
qualify for even a 9-times
principal operating company
i-;i' /.LV. Ky
..present
system
Utilities
ex¬
stocks.
The
this
Minnesota
market
change packages would have been
by the bid prices received
by the Company in the proposed
public sale of 15% of each of the
simpler,
On
neither the best
the
fixed
five
share.
a
between 9 and 10 times the stated
of the
case
93c
.
offering price to the public
will take
over
some
and !
9')
;the
(1662)
commercial m .financial
chronicle
SEC
Alfred
Plumley Joins
Harris, Upbam & Co.
rt
Sri"
Reports Savings Lowest Siuce 1940
$8.9 biUion saved in 1947, mortage indebtedness was
increased
MINNEAPOLIS, MINN.—Alfred
,
It is becoming increasingly clear that the failure of the Canadian
authorities to take forceful action to assist the Dominion gold-mining
Canadian economy?
pression
ties
From the de¬
of the early thir¬
the outbreak of
gold certainly constituted
year3
and
to
up
the war,
one of the Dominion's most valu¬
able
assets.
During this period
industry flourished and pro¬
vided a healthy stimulus to Can¬
ada's depressed economy.
the
other hand
On the
since the
tions
during and
when boom condi¬
war
have
prevailed, gold finds
relegated to a less
prominent position in the national
economy.
Cold statistics today
itself naturally
should
sufficient
be
the
cool
the
of
ardor
to
my
their
efforts to
privileges
important
Government would evoke justifi¬
able criticism if at this critical
juncture, at wasted valuable time
and effort in singling out the goldminmg industry for favored treat¬
ment;
...
.
Vv
tration
nomic epoch in the
important
eco¬
history of this
mining industry must be consid¬
ered
The
in
its
proper
perspective.
gold in • the
discovery of
far-flung
Dominion's
has
blazed
the
trail
to
ments of still greater
Largely
as
a
territories
develop¬
importance.
result of the quest
for gold Canada's enormous wealth
of nickel,
zinc,
and
also
copper,.iron,.coal, lead,
silver, platinum^ uranium
other valuable minerals
uncovered.
The
of
■p billion less than that in 1946, substantial
creased
eflecting higher
As. of
Canadian
the
have
scheme
favorable
can
Alfred N. Plumley.
also
;
>
in
consequences
Upham & Co., Northwestern Bank
other directions. The Dominion's
Building, as Manager of the trad¬
financial prestige has never been
ing department. Mr. Plumley has
enhanced
by the high-pressure
recently been with the Central
tactics employed to sell pennyRepublic Company. "
/4/'144//
gold stocks in this country. The
Canadian public also has had lit¬
tle choice of investment outside
an innumerable array of alluring
gold-stock opportunities.
Now perhaps we are approach¬
ST.
LOUIS,
MO. — Merrill
ing the time when U. S. and Ca¬
nadian. capital will flow into more Lynch, Pierce, Fenner & Beane
constructive channels, as a result has acquired the investment busi¬
of which impetus will be given to ness of Bitting, Jones & Co.. in
the development of Canada's tre¬ the Ambassador Building. Ken-,
mendous virgin wealth of iron, neth H. Bitting will manage the
Merrill
Lynch Firm
Opens St. Louis Office
section
the
of
bond
market
mained dull and inactive.
ternals
other
the
on
re¬
The in¬
hand
dis¬
strength not
the firmness
played exceptional
entirely related to
market.
also
The stock-arbitrage rate
developed
a firm tone and
discount in com¬
15%
at
new
a
recent quotation of
were
active at
still
remained;
despite
the -idoldrums
production
operative mines,
encouraging
results
and
in
the
of
promising
reports
of
new
properties now on the verge of
production. It would appear that
this
section
been
of
the
market ] has
unduly deflated
of recent
at
now
level.
as
result
a
disappointments and
attractive
an
-
,
is
investment
,
.;
Frederic A. fakas Is
Opening Own Office
Frederic
A.
Pakas
is
opening
offices at ,2 Broadway, New York
City, to act
as
broker and dealer
new
which will take
office
the
entire
over
Lewis B.
"Bawl Street Journal"
To
Appear June 4
The
"Bawl
which
Street
in
securities
and
/•]:.'/;•"
commodities.
Mr. Pakas
he
ness
is resuming. the busi¬
originally established in
1930.
A. E. AMES & CO.
INCORPORATED
He has recently been with
Joseph Klein & Co; as manager
of the securities department.
TWO WALL STREET
NEW, YORK 5, N. Y.
to
life
NY-f-1045
this year on June 4 as a
of the (Bond Club Field
!
a
.://•>;■;.]//,
joint announcement, Chair¬
John
W.
Street
Valentine
Journal
Editor John
A.
of
the
Committee
Straley said
compared
same
as
in 1946.
Mortgage debt showed
increase of $3.8 billion,
pared with an increase
amounting to $22 billion.2
/
During 1947, the composition of
«avin«s
changed
substantially
from the preceding, year. Currency
billion
in
Other
1946.
*
a
;;
record
as
com-,
$3.3
of
consumer
debt increased
by $2.9 billion, as
compared4 with*-$3.2 billion in];
bank deposits,
1946.
/
The inCfease in
mortgage
debt in 1947 represented over
75% :
purchases of new homes by
individuals.
')
of net
During
1947,
the fourth quarter of
individuals' liquid
saving
amounted to $2.5
billion,3
a some¬
what lower rate than in the third ;
Individuals added $2.0
their -holdings of cash
deposits, $1.7 billion to their
quarter.
billion
and
to
fruity in $1.0 billion and the m
insurance to hpension
reserves,
vestment
in
$300
and
securities,
million to their
equity in savings
and loan associations. Individuals'
indebtedness
the
from
arising
purchase of consumer goods in¬
creased
pared
by $1.5 billion as com¬
with $400
million for the
previous quarter, while mortgage
of $5.4 billion and $6.4 billion, re¬
spectively, during 1946. .Holdings
of Currency declined by $400 mil¬
lion; compared with an increase of
/ 3 This does
increase] in
/The
not include
of
inventories
the increase in
unincorporated"
business*
(net of the change in notes and accounts
the- amount--ofr this ]
increase
not. known,- it..i*;believed1 to /
have
been in the neighborhood-of $75/
million in the fourth quarter of 1947. payable>i
,:
is
individuals'
Although
in
Series
viduals'
F
and
G
bonds.
Belgium Bonds Drawn
Redemption
/
For
J. P. Morgan & Co. Inc. and
Guaranty Trust Company of New
York, as Sinking Fund Adminis¬
trators, are notifying- holders of
Indi¬
equity in U. S. Govern¬
ment securities; other than savings
by $1.3 billion,
Kingdom of •] Belgium ^External
reflecting, net' acquisitions of $400 Loan 30-Year Sinking Fund 7%
the
financial
business
in
New million and repayments of bank Gold Bonds due June
1, 1955, that,
York or elsewhere. Contributors loans of $900 million. About $165
through the sinking fund, $223,500
whose material appears will re¬ million of these* net acquisitions
principal amount of these bonds
ceive free copies of the paper, f
representedissues
of
Armed have been drawn
by lot for reNews and cartoons dealing with Forces Leave bonds in excess of
demotion
on
June
1,
1948 at
any humorous phase of the finan¬ redemptions.
Holdings by indi¬ 107%%. Subject to the provisions
cial business
or
advertisements
political
scene and
satirizing firms
fore May 1.
to Mr.
Hall & Co.,
sent
Mr.
viduals of state and local govern¬
Straley
Co., 48 Wall Street.
,
ment/securities
million./There
t
this
analysis ■ individuals'
to
The
Financial
'Chronicle.)
FRANCISCO,
CALIF.—
William E. Rodden has been add¬
has
Francisco
Co., 45 Montgomery Street;>members
of
the
New
Stock
York
the
Order
No.
drawn
8389, as
bonds will
be
paid at the office of J. P. Mor¬
& Co. Inc., or at the principal
office of Guaranty Trust Co, of
New York.
•
'
L*
*
gan
,
saving
includes
.(Special
Executive
amended,
was
.
^
Dean Witter & Co; Adds,:
SAN
of
increased $300
-a
large in¬
Contributions may be crease in individuals' holdings of
Valentine at Harris, corporate
and / other
securities
37 Wall Street, or to during 1947, amounting to $1.2
at Hugh W. Long & billion. This increase reflected net
ior
products should be submitted be¬
ed to the -staff of Dean- Witterr&
1
Insur¬
about
from anyone connected with
that John Van Ness Bar-
retired as director.
Life
of $1.7
about the
be wel-; bonds, increased
has; resigned as Assistant
Secretary and Assistant Treas¬
urer, and Ira Jewell Williams, Jr.
nounce
barin
WORTH 4-2400
Series A-E bonds and $13 billion
in Series F and G bonds, with
/ T In
PHILADELPHIA, PA.—Paul &
Co., Inc., 1528 Walnut Street, an¬
Service
increased
$800
with an " in¬
billion the previous
year. Equity in savings and loan
associations increased $1.2 billion,
crease
was
much greater than in 1946
$4,6 billion as compared with $1.0
billion.. Holdings of U. S. savings
bonds increased $1.8 billion, with
net acquisitions of $300 million in
Series A-E bonds and.$1.5 billion
comes
,
Paul & Co. Official Changes
Fund
million,
other U. S. Government securities
and
National
ance
mainly
U.
S.
savings
bonds,
amounting to about $33 billion in
burlesque the doings of Wall
come
CANADIAN STOCKS
the
in checking
$200]million; the] previous year.> /
Journal,"
that contributions would
/
was
Individuals' holdings of
U. S. Government securities were
holdings of: securities during 1947
and
'F. A. Pakas
$52 billion
accounts.
ohce ia-yehr
Bawl
•
in
the form of currency, $55 billion
was in time and savings deposits,
and
year,
New York Stock
and deposits during 1947 was con¬ debt rose by about $1.1 billion.
Exchange, in charge of unlisted
siderably less than in the preced¬ The $1.0 billion increase in se¬
trading. Mr. Hughes Was formerly
ing year and the lowest since 1940. curity investments was accounted
Manager of the trading -depart¬
Individuals added $2.2 billion to
for by net purchased of over $700
ment for Dresser & Escher and
their time and savings deposits
prior thereto was with Hoit, Rose
million of stock issues and $300.
and $1.4 billion to their checking
& Troster.
'
accounts as contrasted to increases million of U. S. savings bonds.'
In
•
was
the
over
Equity in gov¬
ernment insurance increased $3.4
billion, about half in social secur¬
ity funds. Individuals' equity in
Hughes Joins
Day.
/.■•
billion
policy loans showed
increase
the first since 1932.
the total of cash
deposits, $25
small
a
members of the
man
•CORPORATION
and
Of
1947 in¬
compared
as
,
feature
MUNICIPAL
billion.
billion
$6.6
insurance
in
reserves
billion;
$3.2
lion and holdings of U. S. Govern¬
ment securities amounted to about
$68
pension
with $6.9 billion in 1946.
Equity
in
private
insurance
increased
Staff of Homans & Co.
lished
PROVINCIAL
of
end
..
to
GOVERNMENT
Individuals' equity in
which consti¬
tuted the ...,predominant! form, of
Riley and Otto C. Hoffman. Mr., saving in 1946, were approximate¬
Bitting has been in the invest¬ ly: equalled
in
importance .by
ment
business in St. Louis for several other components. Indi¬
more
than 25 years.
He served viduals added $3.3 billion to their
overseas
in
World
War I
and holdings of currency and bank de¬
World War II. He became Presi¬ posits, $3.1 billion to their hold¬
dent of Bitting, Jones & Co. in ings of U. S. Government securi¬
•1929.
: ties, $3.2 billion' to their equity in
'V, Also associated with the new private insurance, and $3.4 billion
office will be Harold Hans^r, for¬ to their equity in government inmerly President of Hanser & Co., surance. They also increased their
n^t- hniaincrc
n-f
BPr»nritip«
nthpr
Inc. /I v ■_
r ,-i.
* ... '.M;",/'■ net/holdings of securities other
than U.- S. Government by $1.5
!r
billion, and their investment in
savings and loan associations by
$1.2 billion. During the same pe¬
riod]; individuals increased their
mortgage
indebtedness by $3.8
Lewis B. Hughes has become billion, and other consumer in¬
associated with Homans & 'Co., debtedness
by $2.9 billion,
65 Broadway,
New York City,
The growth in individuals' cash
including
Edward G. Hotchkiss, William B.
personnel,
Street and its people, will be pub¬
CANADIAN BONDS
the
consumer expeh-
1947, indi¬
viduals' holdings in cash and de¬
;// posits amounted to about $132 bil¬
the less glamorous minerals. The
diminished importance of gold in
was
value
the
mated the 1929 level.
Canadian stocks
country. In a similar, way at this
stage of Cahadian development
the service rendered by the gold-
In
reduction
rected towards the exploitation of
realism in thje
higher J prices led by Canadian
proper quarters. IA the past gold
Western oils, and the
has played an invaluable part in Pacific^,
base-metal issues, but the golds
the development of the Dominion,
an
small
a
and
....
the California# gold dis¬
was
ijtures. The proportion of income
gold-bloc
overdue healthy
as
there
individuals' holdings of bonds,
about
saye^, though considerably lower
than' during the. war, approxi¬
yield to the persistant
parison with
by the powerful
22%.
IS
an
indication
of
coveries marked
was
net increase in outstanding bond
issues being absorbed by institutions.
pressure exerted
just
pf taxes, liquid saving
bubble would have
highly beneficial results, if as a
consequence, Canadian prospect¬
ing efforts were primarily di¬
is
to
purchases by individuals of new
corporate stock issues amounting
to $1.3 billion. On the other hand,
war-time
rate.
high
While there was, during 1947, an
increase in income after payment
flated! gold
of the Canadian dollar in the free
.On the other hand the adamant
.This amount of liquid saving, which exceeded that of
represents a#
——
——
——i—•
year,
normally
,
.
refusal of the Canadian Adminis¬
pre-war
substantial decrease from the ab¬
glamorous yellow metal.
;
The bursting of the over-in¬
gold propagandists
secure special
for this decreasingly
item in the Canadian
base-metals and other
economy. While gold occupies its coal, oil,
present lowly position in tne list, utilitarian minerals.
of Canadian exports the Federal
/During the week the external
in
credit by $2.9 billion.
consumer
.
Commission.!
industry is not unpremeditated. Despite extraordinary lobbying ef¬
forts for greater generosity, the distinctly unglamorous Emergency
Gold Bonus tiiil nas just been3>
presented for its first reading in these secondary discoveries has
the
House of Commons in
its now far outstripped that of the
highly criticized original form.
When the case presented by the
gold-mining interests is subjected
to
dispassionate analysis many
glaring defects and inconsistencies
are
revealed.
In the first place
how does gold rank today in the
by $3.8 and
During the year 1947, individuals saved ,,$8.9 billion in -liqujd
Plumley has rejoined „Harfist
form;^ according to- the, quarterly analysis nf savings by^individuals in
the^United States made public today by -The Securitie&and Exchange
N.
By WILLIAM 3. McKAY
Thursday,' April 15, 1948
t
and
Exchanges-
San
^
^
Unincorporated business saving
specified in the SEC table.
Corporate and government saving are-not
Included;
The
change
in. individuals'
equity in, gqvernment .insurance • is, how¬
ever, considered
as
part of individuals'
of
the types
'sivmg;•-*/-
•/
=• *•
':-2Netof- 1 oansbyba.nk& to individuals
(including, brokers) {or the purchasing or
parrying of, government securities. There
was
;$60C -millk>n of such;, debt' outstand¬
ing1 a&'of the* end of t947.
William H. Cates Opens ]
Own Offices in.Tallahassee /
(Soecial
to
Trav Financial
Chronicle)
TA LL AH ASSEE^ FLA^—William
H. Gates has
fices: to
opened his own of-,
engager,in .the-'; securities r
busmess ;a$
He
was
individualrdealeri:^
formerly
; of Emerson :Cook Co: *vrw'
•
?. Volume--*
167
COMMERCIAL
THE
Number 4690
-
and Peter
CHRONICLE
Cooper Village—in ad¬
dition, to
Side
FINANCIAL
&
the
surrounding
East
V
area.
Our
Hews About Banks
George
CONSOLIDATIONS
NEW BRANCHES
the Home
'
Bankers
and
OFFICERS, ETC.
NEW
REVISED
old.
Mr.
•
1
Harold C. Strait has been elected
Vice-President
:
•-
of
Trust
Bankers
Company of New York and will
head
become
•;
of
Rockefeller
the
Center Office succeeding James I
Clarke who becomes Supervisor
of
y,."'
the
three, uptown
bank's
of¬
fices, it was announced .on April 7
byS. Sloan Colt; President.//Ml
Strait, who has been an Assistant
at the-Rockefeller
Vice-President
Center Office since 1946,
has been
meeting of the directors of
National Bank of New
April 13 James M. Nicely
elected a Vice-President of
At
a
lirst
the
York
on
was
Second
the bank. Mr. Nicely was
Vice-President*
National
the
of
1927-29, and has been Vice-Presi¬
dent of the Guaranty Trust Co. of
N. Y. since 1929. He has served
Company since
1848, looked -out upon land
sloped to the East River
which
than
blocks
two
To
commemorate the anniversary the
bank hag arranged an exhibit at
Main Office
away. "
at *26
Cortlandt
exhibit at the-Main Office is
one
...of the several exhibits which the
bank
BANK
HANOVER
COMPANY
"
AND
NaW
TRUST
YORK
OF
Dec. 31,'47
Mar .31, *48
is., presenting
depositors
to
and
Cash
Being 100
business
old is
years
with
the'
East
ter
ohtainedy April 11/ and
carry through to the day the bank
opened, May 22. (Due to Saturday
holidays, the celebration will ac-r
tually be April 12 to May 21.) The
old exhibit has
a
turntable
the
ture: booko in
Jan. 29.
U.
S.
Govt,
se¬
643, 385,6l5,r- '>718,666,057
hold'gs
verity
bhls
and
Loans
407,10^962
410, 236,261:}
discounted.
-411,395,077
26,528,256
413 155,809
__
27, 053,265
There
are
Greater
offices of the
26
now
located
bank
the
throughout
York
New
1941
In
area.
its
-moved
building at 37, Broad
own
The Empire Trust Company i
New York announced on
C.
of
Loeb
L.
of
April ,13
board of direc¬
the election to. its
tors
To-
Kenneth
Baxter; John
J. Ryan.
Clendenin
and
,day, all signatures are taken on
cards and
promptly filed away
from public view. The Museum of
the City of New York has. loaned
office., equipment of * 1948 for the
exhibit., Each visitor at the ex¬
hibit
will
be given
a
souvenir
.
Vice-President
Treasurer
and
of
Donner
the
Corporation, Chairmart ^of7 the boaM pf ;Deep Rodk
Oil Co. arid a- director of Inter¬
national
Silver
Co;,
ACF-Brill
Motors Co. and several other cor¬
Mr. Loeb,
porations.
York
New
che
partner in
Exchange
a
Stock
lirm of Carl M. Loeb, Rhoades &
is also a director of Rorrie
Corp., Rome, N. Y., and
Co.,
booklet which reproduces a pass¬
book of a century ago as well as
Cable
the present-day system.
Pa.
At the Rockefeller Center office
mejnentos/bf former trustees will
remind
depositors of the famous
of the past who have served
men
.the Board.
Daniel
H,
'Brooks
These
and
Brothers),
include
men
Elisha
John
felin, founder of the drug firm),
John
Crosby
Beekman t, (once
of
the
Mr.
Ryan's business interests
Beekman
Museum)
and John
29
Jan.
20
stock
each.
par
'
,
Sgt
1
banking,-real
estate development,
mining and
oil exploration. He is President
and owner of Big Horn Cattle Co,
of Colorado.
On
New
York,
stitutions
to
dean
the
on
century-old
the
Savings
Bank,
of
of financial in¬
Square,
host
was
than 300 businessmen of
more
Union
the
13
Square
Square
area
at
a
re¬
each
office depositors will sign a signa¬
ture book imitating the 1848 sig¬
book.
nature
The
forms
At
will
be
dated
"1948-2048—Your signature
today is our history tomorrow/'
pared by R. H. Brownell, Presi¬
dent of the bank, was presented
to
each
guest. According to the
the
bank
was
founded
jointly by the New York Cham¬
story,
Commerce
of
ber
cantile
Guaranty
New York
Trust
Company
announces
of
the appoint-
\meht of J. Brougham Wallace, Jr.,
as a Vice-President.
He continues
'
his
association -with
department
"the
group-
the
banking
that -embraces
-company's business1 in States
Library
and
as
the
was
Guaranty: for-20 years;
first appointed Jan officer
"
in
1937, .and
has been Ja .Second
Vice-President since
1943.
an
pay
a
April
Association.
since 11868
Square
known
of
the
at
245
Street.
Clerks,"
by its
Mr.
the
of
and
present
Brownell
^
bank
Union
has been
title since
announced
anniversary year' will be
by the opening next fall
bank's
First
This
first
branch
office
Avenue, - near
office
will
serve
14th
the
family Metropolitan Life
Insurance "Company's housing de¬
velopments — Stuyvesant-Town
12,000
.
Maturities
.
.
through
1951
will
be pretty
well
adjusted to the
As for the longer maturities
.
.
.
opportunity.
♦
new
condi¬
price weakness that
any
upon
as
a
buying
.
.
Maintenance of income is still very important to financial insti¬
and this is responsible for the better tone in the
longer
maturities of Treasury obligations.
'. Considerable switching goes
;
tutions
.
.
in portfolios with
factors, the opinion of most well-informed
tor.
D. A.
is
He
of
on
April 8, which
Morrow
President
.
direc¬
a
of
the
4
4
1
good for at least the next month and
By the middle of the
'
The death on April 9 of John R.
Haven, Vice-President of the Re4
public National*"Bank of Dallas,
"Times-Herald"
the
of
half.
.
.
}
.
:
; some
.
.
,
^
;;
inst.
10th
a
income tax payments will again
year,
a
restricting influence upon the money markets, while
of the domestic and international forces, should be being
I felt from the monetary standpoint.
A better gauge of ecoi nomic conditions should also be possible by that time., *
Like-
'
reported in the Dallas
was
market followers
money
have
•
Tex.,
.
is that the demand for the longer government obligations should be
Joy
wise, the policy of the monetary authorities might be more definite by the time June rolls around. . . Despite the imponderable
from which the following is taken;
; i
"Mr, Haveri began his banking
career in
1898 with the National
}| district that the
Bank
in
born.
When the First State Bank
Denison,- where
Jthere,
organized
was
a
he
was
post he held for 10 years.
He then returned to the
National
Vice-President.
In 1922,
Bank
as
Mr. Haven
to Dallas to be¬
came
Vice-President of Republic.
come
He had been in the
banking busi¬
continuously for 50 years."
Mr/ Haven was 70 years of age.
ness
,
.
in the situation it is believed
4
*
r/ next month
<
«
its
or
so.
.
.
,
,
"
v
*
The floating supply of
government bonds continues light with
small.side, but this should not be taken to:>
seriously from a market trend standpoint because the powers that
be have plenty of long-term bonds that can be used to meet
enlarged
demands,As to when the authorities might let out bonds is any¬
one's guess, although the feeling seems to be quite prevalent that
as long as the market does not get wild on the
up side only minor
amounts will be sold, just enough to keep the market orderly.
dealers' positions on the
,
San
of
75th
Francisco
National
buoyant
April
have
.
still
considered
been very
an
.
important
.
,
substantial in certain
of
.
Price advances
.
.
these
obligations, be¬
covering of shorts.
While the supply of tax protected issues is limited, some of the
5.
recognizes its
date of origin as April 5, 1873,
when the Anglo-Californian Bankj
Limited, was established. How¬
ever, it is announced by the bank,
is
government-market
market factor.
"
What about the partially-exempt issues?
/;/•;
observed
anniversary on
.
.
....
A
■
Anglo California
The
quarters of the financial
SMALL SUPPLY
money
Bank
in many
more distant maturities of the Treasuries will
i continue to show a firm to somewhat higher price trend for the '
Vice-President and Cash¬
elected
ier,
he was
cause
v
of
the
oversold
position
and
the
recent purchasers of these securities
that would not be
.
.
evidently of the type
to taking profits
on at least a portion
other hand, it is indicated longterm holders of the partially-exempts would not be inclined to
their holdings.
of
}
.
were
f disturb positions,
averse
;x.
On the
.
even
with price adjustments.
.
.
.
the roots of the institution may
traced back farther in early
fornia^ history.
outgrowth of
be
Cali¬
bank : is an
importing busi¬
RESERVE
The
an
established in San Francisco
by J.
identified
& W. Seligman
with
the
financing
of
REQUIREMENTS
One of the many question marks in the money markets is what
is going to be done about reserve requirements in the Central Reserve
cities? v
Some are looking for a further upping of these require¬
.
&
Company, merchants and bankers.
The bank early became closely
1850
.
ments in the not too distant future.
be
some
time before
.
.
Others
.
believe that it wi31
there will be
changes in the large city reserve
positions.
•.
; This talk could again
be "Open Mouth Operations'*
with a purpose behind it.
*
*'
.
foreign trade and the development
of
western
business.
In
1909
the
Anglo-Californian Bank was
merged
with another old San
.In
i
resident
a
,
.
.
elected J.
Gazette"
Bank.
been
whole?
added that stockholders also
"Post
of
Merchants
a
these reinvestments still going into the higher
income obligations.
; While it is getting more difficult to forecast
the market action of Treasuries, because of the many conditioning
&
has
as
LONG MATURITIES FAVORED
contained in the Pittsburgh
were
Anglo
1905.
he
Mer¬
market
for short bonds
tions.
a
Paris National Bank, to form the
marked
with
the
bond
However, by the time a change
might be made in the certificate rate it is believed the market
7,
Legislature on April 12, 1848, as
".The Institution for the Savings
that the
of Columbia. Mr. Wallace has been
April
on
.
...
Assuming that the certificate, rate goes to 1%% on June 1
July 1, is it going to make so much difference to the govern-
ment
Fidelity
Francisco
Maryland, .and the District
-
and
yearly
( could be affected slightly.
L
Chartered by the New York State
fof New York, New Jersey, Dela¬
ware,
or
>
i
the
the
...
increase in capital
$2,000,000 to $2,500,000,
result, it was planned to
stock dividend of 25% on
15. Advices to this effect
approved
ness
years.,.
of
in
maturity?
Accordingly, the bill rate and
"Federals" bids on outstanding certificates are being watched
very
closely for clues to short-term rate changes.
,v
stock from
in
100
able
;
Union Square and the Bank, pre¬
in
.
market
] might develop would undoubtedly be looked
let narrating both the history of
the. bank
certificates, sometime in the future, to 1 xk %.' -»
What has the
concerned is when is the higher return likely to be avail¬
on
4
4
special meeting
the
of
5
■
because of the narrowness of the spread be¬
Treasury bills and certificates of indebt¬
The small differential in yield between the shortest maturity
the 12 months obligation seems to indicate a change in return,
and
67,000
One of the old banks of the West-,
April
the money markets,
at
a
"
edness.
the Anglo officially
Union
getting the bulk of
on,
,
Trust Company of Pittsburgh, Pa.,
274 trustees have served
founder
the
/
Stockholders
.
tween the return available in
five-for-one
a
whereby
,
.
Short-term interest rates continue in the forefront of discussions
in
of $100 par stock were
changed to 335,000 shares of $20
New
and
approved
split,
.
RATE CHANGE?
shares
ception in the bank commemorat¬
ing its 100th anniversary. A bookV
York
Jan.
,
Leveridge (Second Cor¬
poration Counselor of the City of
bank).
our
issue, page 524, that while the
authorized capital stock of the in¬
stitution
remains
unchanged at
$6,700,000,
the
stockholders
on
investment
include
Brooks
; (of t Harper ^Brothers),;-Richard L.
Schieffelin (son of Jacob Schief--
owner
National Radiator Co., Johnstown,
(of
Harper
effective
became
noted in
was
4
v-
five-for-one
the
which
the buying.
Manufacturing Company.
Street.-
has been in charge of the Donrier
interests in
Philadelphia. He is
of those who wished to look.
Feb. 13, representing
after
It
.
still the sought after obligations among the restricted
are
bonds, with the eligibles due from 1951
cents
.
Mr. Baxter for the past 18 years
left open for the observation
was
its
to
National
Public
of
>4"'
signa¬
of those above and the book
names
stock
split-up,
banks
*rcm
dividend
on
issues
May 14 payable
paid
1,630,727,835
'
to the forefront to give the bank
come
issues competition, but this is not due to any decrease in inter¬
est in the higher income eligibles.
The lowest premium
divi¬
a
the first payment on the new $20
1,492,339,864
'*'".//> U
of ,1848,
see-^the
style
wheifedepositoifsy could
-
pay
was
1,556 494,716
due
main office from 76 William Street
:k
will
it
cents
65
v'L- 1,417, 743,348
Di.pOi.itS
The
serious
River t Savings . Bank, - and
they
celebratedrom the date their char¬
;
that
65
April 30.
par
Total resources,
The ineligibles have
>
;
initial
i
-
niversary,
on
National
//,,/
to stockholders of record
•
and the public to celebrate its an¬
a
Home
.
...
a
.
1932-
•
•
Jndiv.
■
a
Savings
The Fidelity-Philadelphia Trust
Company
of
Philadelphia
an¬
France,
35.
prolixs—
Street, featuring. a teller, in cos¬
❖
*
tume, who displays banking in
the "quill pen"'era and frustrates
E. Chester Garsten, President of
depositors who appear at his win¬ The Public National Bank -and
dow, even, as people were told; in Trust Company of New York is
the early days of savings banking
receiving congratulations on the
to "Wait your turn."
In parallel 40th anniversary of the bank's
1948 exhibit, a young girl with the
founding.
Established April 14,
'tnew look" presides at a stream^
1908, the bank has enjoyed a con¬
lined accounting machine, and in stant
growth both in. volume of
-the. best 20th Century> public rebanking 1 activity and resources,
lationS(.fashion, handles all trans¬ which exceed $549,000,000; capital
actions with lightning speed. This funds are in excess of $30,000,000.
....,
the
re¬
was
,
.
1
cluding 3 years in
New York, born on Cherry Stree*
;
of
his
He
He became
years.
Bank in 1901.
dend of
The East River Savings Bank of
its
51
director
nounces
;
^
Bank for
Milford
Milford
the
Although signs of caution are appearing here and there in the
government market, a constructive attitude toward prices is still
in evidence especially in the longer end of the list.
While some
issues may have gone ahead a bit rapidly and profit-taking is to be
expected with advancing quotations, the underlying demand is sub¬
stantial enough to indicate that only minor setbacks are to be antic¬
ipated if and when they may develop. ;
Investors are still anxious
to employ funds in the most productive-Treasury obligations, which
are the longer-term
issues.-'A'.,;V/."■
"Herald"
until
Governments
on
By JOHN T. CHIPPENDALE, JR.
of Mil-
hardware
a
Milford
in
trustee :r of
capacities, in¬
CENTRAL
less
conducted
tirement 20 years ago.
the bank in various
1930.
in
business
Boston
the
to
Ellis
Reporter
of
An
with Bankers Trust
'
National Bank
of Commerce in New York
Bank
President
For many years, said
advices
'
Ellis,
ford, Mass, for 34 years, died on
April 6.' Mr. Ellis was 85 years
CAPITALIZATIONS
.r ■
W.
related
tion,
institution, the London
London
Paris
National
this bank and
1932
trust and
its
savings institu¬
offices.
in
cated
branches
cities
tion
in
has
TOLEDO.
OHIO
of Toledo
has
—
The
elected
Bond
E. F.
The head office is lo¬
Francisco,
and
located in various
Goshia & Company, as Treasurer;
and Ross
Harris, of Stranahan,
Company, combined to form the
present Anglo California National
Bank. The Anglo Bank today has
24
Cooper; Ross Harris; W.
Williams, of Ryan, Sutherland
Company; William J. Smith,
Bell & Beckwith Company; P.
Elects New Officers /
Club
San
are
California.
assets
of
The
institu¬
approximately
Harris & Co. Inc.
as
Secretary.
The Board of Governors elected
the
one-half billion dollars. 'Allard A.
for
Calkins is President.
Edward
current
F.
fiscal
Heydinger,
year
Smith; Leonard
C.
Heydinger of Roose & Company,
President for/the ensuing year;
Guerdon
D.
Smith,
of
Collin
Norton
&
Company,
as
VicePresident; Leonard C. Cooper, of
Anglo-California Trust
the
Co.; Guerdon D.
Bond Club of Toledo
are:
Roose
&
D.
&
of
P.
Prudden, Jr., of Foster Brothers,
Young & Company.
Chairmen
mittees
of
the
various
com¬
are:
Burt T. Ryan,
of Ryan, Suther¬
entertainment;
Collin Norton &
Company, membership and pub¬
licity/Tom E. Cox, of McDonald
& Company, legislative; and Cal¬
vin
M.
Yeasting,
of Ford
R.
land
&
Den
Craft,
Weber
Company,
&
of
Company,
finance.
.
U
COMMERCIAL
THE
(1664)
Securities Salesman's Corner
''
:
.
York
City Security Dealers placed some very attractive
advertising before the investing public last week.
Notable was the
emphasis upon small single and double column ads that were pro¬
jected toward bringing in definite and interested leads.
analysis of
competition that every investment dealer
faces in his own territory will usually show that most of his poten¬
tial customers who are now placing their funds in other forms of
investment are doing this because they do not appreciate the oppor¬
the
tunities which abound in
Savings Banks, Building and Loans,
have
a
the Life Insurance companies
They have
or
attractive medium of investment to offer.
more
better job of advertising their products, and of sales
done a
tion
It is not that the
the securities markets.
PRODUCT, namely safety of principal and liquidity.
soft
spots in
the
Life
But there are
Loan, and Savings
Insurance, Building and
page
14)
Bank type of investment.
Not the least of these is the almost
ligible income return which they provide.
neg¬
It is our opinion that Securities dealers should NEVER
try
compete directly with the savings banks and insurance com¬
panies. That type of investment has its place, and the wide usage
of such investments by practically everyone today is an acknowl¬
cember 31
have
the Victory 2y2s could
been
exchanged for bankeligible 2y2s of the same maturity
at a cost of only % of a point.
Undoubtedly there will be those
you
who question how
much, if anything, you would be
willing
to
pay
for
immediate
bank-eligibility,
and
naturally
this
is
question
a
for
individual
Furthermore, one has
to
admit the seemingly remote
possibility of circumstances aris¬
ing which could
ble
bonds
PLUS
STOCK
APPRECIATION
PAYS
cause
the
eligi¬
are
10%
commercial
v
OPPORTUNITY
orders
continued
assure
unlisted
?
Ask
good
earnings
bank
period of
years,
a
Capacity operations and six months backlog of profitable
for
What
*•',
willing
to
eligibility
pay
over
and I would be
a
this
reasonable
MODEL
equity.
7;.'f77r'
for Special Bulletin E
give
at
that
the
tentative
least
December
31
leader in its
1947 dividends)
on
field, this company's
presently selling at
future prospects.
2.1
common
stock
artificial
and
had
curve
over-penalized
term
bonds
look
at
the
and
bank-eligible
the
memorandum
request.
on
If
1st.
par cost
$600.
in
Obligation of New England
1956
December
call
at
curve
dates
has
created
A Model Portfolio
to translate
into
curve
bf
that
to
curve
portfolio. After
PORTFOLIO
change
OF
Prices and Yields
:
we
try
Information, free
as
101-10
100-26
101-2
with
company
payments.
86
as
2.03%
for
you
a
T9
■
LIST
which
have
of
paid
these
40
can
13
illustrate
one
every
be
free
for
year
purchased
to
50
-
the
of
all
long-term
bonds,'
and that any rate
higher than 2%;
would
inadequate
give
you
liq-'
Cost
Yield
1.08%
Yield
1.74%
2.08%
x
Cost
$21,610
17,608
7
42,141
2.50%
25,000
2.40%
24,312
2.44%
24,595
2.43%
49,110
$204,376
(10%) U. S. Series G and A Bonds
100
1,000,000
(10%) U.S. Treas. 2V2s of 6-15-67/62—
101-22
(10%)U>S. Treas. 2y2s of 6-15-69/64.
Cost
101-30
100.034
*
Yield
$2,000,680
1,013,125
2,038,750
1,000,000
1,016,875
1,009,375
2,029,375
v
100-30
...
(20%) U.S. Treas; 2y2s of 9-15-72/67
request.
on
were
exceptional
v■
101-15
two
inch
single
opportunities
for
:
■■
Average Yield
Average Maturity \
Average to Call Date
8%
column,
GROSS
They
Yield
1.09%
/
x
Cost
$21,807
1.71%
17.324
2.00%
40.775
2.50%
25,000
2.36%
2.42%
23,998
24,427
2.40%
48,705
$10,108,180
$202,036
2.00%
12
years
9 months 19 days
10 years
YIELD OF TAXABLE BONDS
investment
Offered in the securities
markets today.
PmI 1. Just New Willi Qrmond E, Laird Willi
IkeareM, Hanmill
(Special to
The
Financial
Go. C. D.
Chronicle)
CHICAGO, ILL.—Paul A. Just
has become associated with
Shearson, Hammill & Co., 208 South La
Salle Street.
He was formerly
With Daniel F. Rice & Co.
in their
Chicago and Florida offices. Prior
thereto he
was
a
partner in Car¬
ter H. Harrison & Co.
-
(Special
Mahoney & Go.
to
The
Financial
Chronicle)
MINNEAPOLIS, MINN. — Ormond E. Laird has again become
associated with C. D. Mahoney &
Co., Roanoke Building, members
of the Minneapolis-St. Paul Stock
Exchange. Mr. Laird was former¬
ly secretary of Frank & Belden,
Inc.
'
■
.
•''
•
'
Over-the-Counter Quotation Services
7 For 35 Years
7a
MAT10NAL QU0TAT10N
BUREAU, Inc.
-
.
;
T
;
Chicago
:
; ; ./
; Established 1913
'
46 Front Street, New York 4, N. Y.
t
'
San Francisco
YEARS
TO RUN
I
2
3
+
5
6
7
8
9
::
of March 31, 1948
101-10
years.
yield
which used two inch double column
space.
forcefully
rea-.
years
1,000,000
memo
oft
10 years 2 months 9 days
(20%) U.S. Treas. 2V4s of 9-15-59/56j_._
$10,000,000
foregoing advertisements
except the first
Our
'
purpose
STOCKS
dividends
List
investment.
request.
OF
stocks
return.
The
sound
on
our
the
1
(20%) U. S. l1/8% Certificates
110%) U.S. Treas. 2s of 12-15-54/52
1,000 000
2,000.000
dividend
This is
portfolio
J; 2,021,250
1,000,000
2,000,000
consecutive
Common stock paid $6 in 1947.
suggestion to
Some
of
years
$2,000,000
.
For
$10,081,505
Average Yield
Average Maturity
Average to Call Date
•X
to
rate
necessary
earning
banker feels is advisa¬
seek.
$2,000,880
1,011,875
2,026,250
;
1,000,000
1,013,125
1,008,125
101-6
(20%) U S. Treas. 2V2s of 9-15-72/67..
Prices and Yields
.
.
to
average
I feel that it is on the liberal side
•
100.044
Price
DO YOU WANT INCOME?
A
an
of December 31, 1947
(10%) U. S. Treas. 2Vzs of 6-15-69/64..
request.
on
portfolio, it is
GOVERNMENT ISSUES
101-10
now.
at¬
believed adequate at that time.
Second, because it is 80% of the?
highest rate you could earn on a*
dras¬
as
(10%) U. S. Treas. 2V2s of 6-15-67/62..
tfWVytifi
been
sented what your banks as a whole
;
100
established
income
your
has
a
thing,
First, it is the rate which
the
average
portfolio
of
your
banks was earning "at market" at*
the time of our meeting together
in 1846, so it must have repre-;
savings bank
a
a
same
sons.
practical application
a
in turn have
the
2% has been chosen for two
a
study of the yield
our
from
suggesting
this study a rate of approximately4
third and final major point
of discussion I suggest that
is
which the
ble
the
considerably better market
action of the bank-eligible issues
than of the ineligible issues.
a
you
what
that
choose
straighter line, and has reflected
As
you,
me
retical
the
$10,000,000
company
Increase
to
starting
am
In order to have some objective
in the preparation of such a theo¬
the
extent taken out the "bend"
the
were
tempted on the other sheet whichhas been handed to you.
curve,
you
will find the
yields at the end of March. You
will notice that this curve has to
some
he
Because I
and
yield
(10%) U.S. Series G and A Bonds.—.
Annual interest will be paid May
1835; assets $260 million.
that
the
on
if
right to ask
will
you
line
1,000,000
1,000,000
2,000,000
BARGAINS IN BONDS
$1,000
levels
intermediate-
middle
would be
yield
banker
to take a blank sheet of
and to set down on that
the manner in which he
scratch.
was
particularly
issues.
every
would invest his funds at the new
undoubtedly
1,000,000
is
times earnings, with excellent
Our
paper
evidence
Price
(Based
curve,
paper,
to
seem
be¬
December,
September and
think
well advised to draw a new
period for conclusive proof, the
history of what has happened
since the year-end would
that which took place
as
tween
I
a
$2,000,000 (20%) U. S. iy8% Certificates
7 1,000,000
(10%) U.S.Treas. 2s of 12-15-54/52—
2,000,000 (20%) U. S. Treas. 2y4s of 9-15-59/56..
11% YIELD
A
tic
is
to
surplus funds
in every nook and corner of this
country that should now be going
into attractive securities.
For yield and appreciation, stocks and
bonds today have no competition from
any other form of investment.
$3 ELECTRONICS
feature.
"reasonable amount"
a
among
sell close to price
..parity with comparable ineligible
issues, ; although
such
circum¬
stances probably would be the re¬
sult
of
price levels artificially
fixed by government authorities.
Following are examples of advertising which appeared in the
However, I can only state my
New York press over the
signatures of progressive retail security
personal feeling that .if I were
organizations and illustrate the exceptional use of both income and
handling a savings bank portfolio,
appreciation, as bids for inquiries from investors who may have an I
would prefer the probable bet¬
interest in this type of investment.
v
ter
marketability
inherent * in
But there
constitutes
again a matter of individual
change it would shorten maturity judgment, but my personal feeling
by three years and would gain was, and is now, that the pay-up
immediate bank-eligibility instead at the end of the year was defi¬
of a call on eligibility
years nitely within reasonable bounds.
While three months is too short
later. As another example on De¬
judgment.
to
edged recommendation of their worth.
that
for
amount
loss of only 16 basis points
of income.
However, on the ex¬
a
,
promo¬
the years, than the investment industry has accomnlished.
have stressed the ADVANTAGES OF THEIR PARTICULAR
over
They
Thursday, April 15, 194R-
U. S. Government Bonds
(Continued from
at
An
CHRONICLE
Savings Banks and Liquidity of
By JOHN DUTTON
New
FINANCIAL
'
<
8
&
10
II
12
13
14
15
16
17
18
19
20
Number 4690
167
Volume
THE
uidity and inadequate protection
any
p o s s i b 1 e
upward
money rates.
Frankly,
COMMERCIAL
&
FINANCIAL
apology is offered for
no
against
cause
is
it
presented
to
mind
my
i
significant
the
the yield curve
end of the year which we
have just been studying, a sav¬
ings bank could have made a
major shift from the long-term
position which seems to be typical
of the savings banks in the coun¬
try as a whole without decreasing
its yield below an average of 2%.
point is that,
on
at the
This
is brought out at tne top of
a theoretical port¬
the sheet where
folio
of
offered
been
tion
at
million
$10
a
lor
your
has
bank
considera¬
prices and
yields of De¬
cember 31.
The following points
are of particular interest. -f: ;■■■';*•
:
of the portfolio is
20%
tificates and 10%
term
able
because
desir¬
seems
this
on
cer¬
in fairly short-
which
bonds,
in
end
of
the
primarily as a provocative and as
challenging maturity distribu¬
insistence
with you own position. Its
advantages may be summed up as
follows:
It produces a yield at
pare
2%;
60%
is
of
rity
it
callable
of
70% of the issues
mediately; and
30%,
10%
"A"
and
eligible for
purchase im¬
the remaining
of
represents
bonds.
Because
stressed ; particularly
the
change which took place between
September and
December, this
portfolio has been shown first
on
the basis of year-end yields.
sponsibility
Our
has indicated
that the
of
offsetting
deposit
of
providing funds
for increased mortgage demand,
and
of
providing
purchasing
power in the event of lower bond
prices. 20% of the portfolio has
been
assigned
to
the
214s
of
1959/56 because of what
found
we
their
be
to
greatly increased at¬
tractiveness on the yield curve at
the end of the year." In a $10 miL
liori bank it was assumed that
bank-eligible bonds have
rise in price since that
time, so it may be that you will
not feel justified in following up
that bank-eligible market to the
had
some
extent
of
the
That is
ing to
by
must
be
ident
Stock
at the bottom
show
though naturally this! percentage
bers
on
this
week,
further enlarged to
would
average
banks.
be
lower
in
the
larger
Following out the thought
previously
expressed
of
buying
commercial bank eligibility when
comparatively little premium has
to be paid
foi;; that feature,: 20%
has been
portfolio
folio
has
points
on
speed
:
/
and efficiency. This is made pos¬
sible, of course, he added, by the
splendid cooperation of members,
1953.
Let
us
grant -im¬
mediately that no portfolio /can
be suggested which will fit the
•
coordinated
,
against the average portfolio held
by savings banks generally.
discussion today I can on¬
a personal preference
much shorter-term
portfolio,
heavily weighted with bankeligiole securities, but still yield¬
ing an average of 2%.
nection
Observations
need excuse.
Actually,
.
,,
',
the
,
on
tax
new
once," wrotfe David Hume two centuries
The Fantasy
ago.
rr
of "The Centre"
We should above ail; realize that this British tax is not just a
minor incident, but another manifestation of a
"continuing trend!
This process has been most
clearly depicted by a distinguished visitor
now in this country, Professor F. A.
Hayek, who has literally seen
;
"it
happen" in
economist
other parts .of the
world.
As
this
noted
Austrian
living in England wrote some years ago, in pointing
danger of unwittingly entering into full collectivism
through the back-door of bastardized socialism*: "If we are, never¬
theless, rapidly moving toward such a state [authoritarian], this
out
the
now
fatal
likely to
more
our
appeal
reasonable
to
people,
than the idea
goal must be ndther the extreme decentralization of free
petition
proves- a:
bear
admixture! of
regulation,
it
cannot
be
combined
with
planning; to
any
extent
small
its
cjoses^
can
we
like without ceasing to act as
Nor is 'planning'
a
the
thoroughgoing application;;
one
alternative\principles;,used
mixture
the
of
two .means
the result will be
relied upon.
can
worse
to solve the
that neither will
same
might hope from
incomplete; they
problem,
really work
than if either system had been*
and
and
that
consistently
Or,;to express it differently, planning and competition
*"The
Road
/
to Serfdom,"
Chicago Press, 1944,
p.
42.
April 10 its quota¬
continues
firms
No
Quotation
im¬
to
adamant
/ .4;-
by Friedrich A. Hayek. University of
April 13 the Central Trader
Council, main body of
the American Federation of Labor
in New York
City, asked Theodore:
Kheel, director of the City';?
Division of Labor Relations, toW.
the
in
intervene
tempt
strike
at¬
and
settlement.
a
N.Y.S.E. Reports Deficit
reference
Without
the
to
em¬
reported
March
three
for
months
the
the
and
first
a
of
months
31, against
$32,336
in
loss
net
a
the
for
a
$107,058
ended
of)
net profit df
•
three
of $85,797
previous
net
loss
quarter of 1947.
Shareholders Trust
Slock Placed
Market
on
An offering of 500,000 shares ol
$1
value of the Shareholder:;;
Boston was made April
par
Trust
of
13 through an
underwriting group
Harriman Ripley & Co.
offering will be lim¬
ited tO 30 days.
: ;
;
headed by
initial
The
The
offering price to the public
will be
follows:
as
unit
On each
sale under
membership
interesting
to
union
the
learn
100% basis with
on a
part of its regular staff.
"At the time
its
shop
and
demands
for
for
offering
in¬
Co.; Piper
Jaffray & Hop wood; Estabrook &
Co.; Tucker, Anthony & Co.; the
Pacific
Company of California;
Columbia
the
Investment
Bosworth, Sullivan
den, Miller & Co. =
&
Co.;
r
•
Co.;
Hay¬
Solay American Sleek
a
arrange¬
an
the
Placed
on
Market
■
small
a
in
in
underwriting group headed
union
Would
refuse
to
handle
by Lazard Freres & Co. and Har-;
public customers' orders of mem-,
riman Ripley & Co. on April 13
ber firms with which the union
offered 200,000 shares of Solvay
may claim to have a dispute. The
American
Corp. 4% cumulativeExchange cannot, as I have ;told
the union time and again, meet preferred stock, $100 par value,
priced at $100 a share and accrued;
such demands. I repeat that, as a
dividends.
matter of fixed policy, the Ex¬
The stock is convertible up to
change has never discharged any
employee for joining a union or March 31, 1968, into Allied Chem¬
for refusing to join a union. As ical & Dye Corp. common stock at
modified procedure, is now oper¬
ating
either
Associates
clude Hayden, Stone &
An
that, the
Corporation, under
to
reported
tration, issue and sale will be paid
by the underwriters.
ment under which members of the
'
_
be
is
began in December. The union is
extraordinary efficiency with
will
progress
by the "Big Board" or the Curb
Exchange in the conciliation ef¬
forts made by the Federal agents.
According to Mr. Schram, "very
little
progress
has been made
since the outset of the talks, which
and
members
the remain¬
Stock quotations on
ing Curb Exchange issues, it is
said, will continue to be published
as
fully as possible on the Curb
ticker tape.
This
Stock Clearing
discussions
these
preparations were
continue,
with
the
rate
of
46-100ths of share oL
Allied Chemical for each share of
NEW YORK STOCK EXCHANGE AND AFFILIATED COMPANIES
Condensed Comparative Statement of Income and Expenses
,
]
l -INCOME; 7/7:-vh§>H•$,
Mar.
Other direct charges
Listing
•
31, 1948
Dec. 31, 1947
Mar. 31, 1947
$257,812.50
$257,812.50
903,228.71
to members and mem:
-fees
other
income—
—
929,984.35
959,564.63
237,060.00
444,265.00
256,537.46
246,982.12
$1,888,599.31
7$1,702,770.51
1,094,757.82
4*1,000.161.12
$1,679,946.01
77
EXPENSES:
Salaries
and
995.994.04
,
—
Federal
4
Excess
Income-Tax)—
of
Income
Provision
LOSS
"Denotes
over
Expenses,
before:";
r
for
Federal
'
Income Tax_
PROFIT___^^____^,
OR
.V
loss.
>
i'-f* 28/72L36
; —135,779.67
and Federal-Income-Tax-r.*
Depreciation
NET
139,374.44
134,615,33
180,003.32
-417,886.82
338,854.54
154,217.75' r
369,035.83
—
V
65,948.90
-
V;%$1.651,224.65'';$!,717.967.98.
depreciation
I
—
«
131,977.01
Advertising
Taxes (excluding Federal Income Tax)—„
All other expense (other than depreciation
and
.
■-«
■
losses
shown
for
$1,653,634.31
•"
170,631.33 t. 49,136.20
and
1948
■
;
to take
the major-
over
part of the United States invest¬
ments of its parent,
can
North Ameri¬
Solvay, Inc., which is itself
beneficially owned by
Solvay &
will apply
net:
"proceeds from the sale of its pre-/
ferred stock primarily to the pur¬
chase/at
$42.80
share,
per
Of
297,897 shares of Wyandotte Chem¬
icals Corp. class A stock.
Solvay
American has contracted to make,
134,933.35
(See Note)
additional
$32,335.87
?$85,797.15
$4,000,000 and $5,750,000, in Wyan¬
dotte A stock or common stock;
V-
1947
/
.^-138,295.46
(See Note)
"$107,058.31
:
*
periods do not reflect the applicable
portions of the estimated recovery of Federal Income Tax through the "Loss CarryBack" provisions.
NOTE—The
recently
Cie, of Brussells,
wages--,.—17 4
\
238,411:26
281,844.80
*; ber' firms-'
'
'
Solvay American Corp., formed,
$257,812.50
Membership
;'
Solvay preferred.
..
-Three Months Ended-
a
be combined only by planning for competition but not
by plan¬
ning against competition."
the
of
to
operated.
"It
on
effective
Both competition and central direc¬
tion become poor and inefficient tools if they are
are
an
so, many new
will
welcome
which the Ticker Department has
medicine which, taken in
produce the effects for which
erations and
this, bids and offers are printed
throughout the day on the stock
ticker. This addition to the Quo¬
tation
Department's service has
been commended widely, as has
All
guide to production.
and, in doing
unquestionably
com¬
the complete centralization of a single plan, but some
mixture of the two methods. : Yet. mere common sense
treacherous guide, in this field.
Although competition can
some
ex¬
department has ex¬
panded its list of active stocks
that,
are
continuously
quoted,
from 225 to 300. Supplementing
that
nor
judicious
will
Board
service
member
,
is
dures
ideas have been developed
smooth
prove.
is
largely because most people still believe that it must be possible
to find some middle way between 'atomistic'
competition and cen¬
tral direction.!-Nothing, indeed, seems at first more
plausible, or
On
the Exchange's effi¬
on
Department
I,
either side of the Atlantic can doubt that not
only will
be recurrent, but that it will be levied in ever more
punitive degrees. "It is seldom that liberty of any kind is lost all at
one
being picketed
total of 608, are handling
the
"The
as
pending the demolition of incomes
through the progressive raising of the tax to a maximum of 97V2%.
the
of
operation of all de¬
partments of our organization.
revenue-
but has been content to hold off
expedient to modify some
the normal operating proce¬
found
suggestions from the membership.
us have gained experience
that will be useful in continuing
with all "reform,'V this tak must be regarded as an
additional wedge in the
long confiscation process. The British Labor
party has been advocating a capital levy ever since World War
No
wellmem¬
All of
(Continued from page 5)
the resulting substantial budgetary surplus eliminates the
personnel, not only in
City but throughout
the country as well."
//i'4;/..;
York
New
$50,000, $20.83 a share;
tion department effected a partial on each unit sale of $50,000 or
ciency Mr. Schram stated:
resumption of its telephone quo¬ more but under $100,000, $20.62 a
"I am glad to say that, in many tation service to member firms. share; on each unit sale of $100,000
instances, the application of emer¬ The department had not been in or more, $20.41 a share.
These
gency
procedures, for example, operation
during * the
current prices are equal to net proceeds to
floor comparisons/ have been so strike.
the Trust from the financing of
satisfactory that some of the in¬
Codes 4, 5, 6 and 8 of the Curb $20 a share plus underwriting dis¬
novations introduced will become
counts and commissions equal re¬
quotation department's service
permanent, resulting in increased were
reopened, making available spectively to 4%, 3%. and 2% of
efficiency and in reduced operat¬ to member firms and their cus¬ the public offering price.
y
ing costs. This is a matter which tomers by telephone bid and fcsked
Expenses in connection5 with or¬
will be discussed by our Board of
prices on 367 stock issues traded ganization of the Trust will be
Governors at its weekly meeting at seven
trading posts on the floor paid by John P. Chase, Inc., of
tomorrow, Thursday. In this con¬ of the exchange.
Boston, and all expenses of regis¬
suggest
a
a
the strike
to your
for
measured
are
as a
four
In connection with the effect of
more
as
The
the orders of their customers
average return in the neighbor¬
hood of 214 %. As my contribution
distinctly unorthodox
collec¬
settlements,
which
result in a
peditiously. These four houses are considerable change in the method
gradually replacing the employees of conducting the Corporation's
who went on strike, and report operations."
v' vv-'. 7 y 1
that their operations today
are
Similarly, the Curb Exchange
virtually back to normal.
announced approach to normal op¬
the whole port¬
The average
ly
unit.
ber firms that
out of
spite of the price increase in those
needs of each and every bank and
that
this particular portfolio
is
bill
taxes, and the daily accumulation
of statistical information. It was
the
and
Exchange, all working
with
savings bank today
ible 2i/2s of 1972/67 and the re¬
evidently feels justified in putting
maining 20% has been placed in 74 %. of its account in long-term
the
short-term
ineligible issues ineligible bonds and on such a
which become eligible
in 1952 portfolio 4 probably
receives
an
and
mission
personnel of
member firms and of the Stock
tion in bank-eligible issues and in
placed in the bank-elig¬
of the union to at¬
part
restored include conducting com¬
tion of Federal and State transfer
members
only 3 basis
spite of the concentra¬
issues.
cidental services which have been
allied
officials,
floor
governors,
decreased
in
Schram
normal
prices and yields of March 31. To
the significant fact is that the
yield
Emil
the, floor. On Monday of
the procedures were
provide clear¬
ing members with a daily money
settlement. In addition, other in¬
ex-
with
ecuted
of the sheet which
same
strategy
only handling deliveries of se¬ ployees' strike, which did not ma¬
curities, the procedures were en¬ terialize until the end of the month,
larged to provide a daily clear¬ the New York Stock Exchange and
ance of contracts made by mem¬
affiliated companies on April 13
being
me
the
Ex¬
rity
transactions, are
individual buyer, but. I would now
call your attention to the figures
10% might already be invested in
series "G" and "A" bonds, al¬
York
change, on
April
7,
the
public's, secu¬
the
to
Daily
since the outset of 'the
strike, the Corporation has been
increasing the scope of its serv¬
ices. On the first day, instead of
the
of
New
indi¬
portfolio.
left
JE mil
Schram, Pres¬
matter of market guess
a
which
state¬
a
—
being made to meet the threatened
strike, it was believed the Stock
Clearing Corporation would pro¬
vide only a limited
amount of
sdrvice to its clearing members.
day
to
today. Accord¬
percentages
cated in this theoretical
work
<$>
ment issued
curves
curves
have
reported
from
study of the yield
our
study of the
been
series "G"
4
handle
to
tempt to involve the Exchange in
the
relations of member firm*?
Exchanges report arbitration and
N.Y.S.E. reports loss in first quarter.
the
and Labor
are
bank
refuse
to
'struck work' indicates a
on
work
ten
bonds;
on
right
with their
the matu¬
"G"
series
your
commercial
within
upon
the
The strike of employees of the New York Stock Exchange and
the New York Curb has continued
during the week, but with little
excitement or disturbance, and
operations of both organizations were
reported near normal.
Slight additions to employees reporting for
between 55% and
depending
years
without difficulties
on
go
and reduced operating costs.
■t
tion which you may care to com¬
market of
both N.Y.S.E. and Curb
on
and Schram points out strike conditions have increased efficiency
conciliation efforts fail.
a
list might well fall the triple re¬
withdrawals,
Operations
it seemu
continued
the union shop and
apparent progress,
evident that the union's
110
you
•
To
(1665)
Strike Continues
the iact that it is unorthodox be¬
change in
CHRONICLE
not
later
investments,
than
between
three/years. aftor?,
the date of the initial
investment.
26
COMMERCIAL
THE
(1666)
FINANCIAL
&
with the adminis¬
sion, charged
Competitive Bidding—Barrier to
capital.
Naturally,
of
our
the
bers
industry did an enormous
of financing, but it was
,
amount
primary concern is with the'fu¬ predominantly for refunding pur¬
ture, but in order to appraise the poses. During this period practi¬
future intelligently, it might be cally
every
operating company
enlightening to review briefly a bond and preferred stock which
had been created and sold during
little past history.
Starting something over 25 the preceding era was refunded,
years
ago, in the period which and in many cases re-refunded.
The rent paid in the form of in¬
may be roughly bracketed by the
terest and preferred stock divi¬
years 1920 to 1932, a number of
large
companies
holding
utility
reached
the
fluence.
During this period per¬
of
peak
their
in¬
haps hundreds of small operating
units
merged
were
chased
into
pur¬
or
by larger operating units.
Distribution
tended
systems
were
ex¬
communities and areas
to
which had not previously enjoyed
central
station
electric
service.
At
the
these expand¬
time
same
invested in
dends for the capital
the
industry
reduced^
was
sharply
very
Many of the refunding opera¬
provided a relatively small
amount of new capital as a by¬
tions
product, but, as I have observed,
the aggregate amount of new cap¬
ital raised for the industry during
this
There
period was small.
several
for this.
reasons
are
Perhaps
ing operating units became parts
of the various holding company
the
groups.
requirements for capital expendi¬
/
During the early part of this
period; that is, in the early 1920's,
capital requirements for the very
important
most
reasons
are:
first, during the depression periM
tures
nies
operating utility compa¬
such that depreciation,
of
were
amortization
other
and
non-cash
rapidly expanding industry were charges were in many instances
provided, generally speaking, sufficient to provide the necessary
■■
"•/*
>y
'v
through the sale of first mortgage funds. •;
A second reason can be traced
bonds,
preferred
stock,
and
to the enormous additions to the
through the reinvestment of sur¬
plus cash from profitable opera¬ central station capacity in certain
of
the
tions.
The mortgage bonds rarely sections
country
which
carried
interest
an
rate of lower
financed and constructed by
were
than 5% and there are many ex¬
the
amples of 7% and even 8% cou¬
political
Generally speaking, these
sold to-«e«urity deal¬
ers who, in turn, disteife«ted^hem
to investors
for -4JwM*rge*part,
private investors—over- a period
standing and widely known addi¬
pons.
bonds
were
—
months.
of
The
customary
un¬
Federal
tions
Government
subdivisions.
of
are
Tennessee
by
or
The
those
course
Valley
Bonneville
the
out¬
the
of
Authority
and
Adminis¬
Power
tration, as well as the Hoover
Dam, but as you gentlemen know,
derwriting commission was 4%. there are many others which are
less widely
The preferred stocks in most in¬ smaller and
publi¬
stances were sold locally in -and cized spotted throughout the na¬
These > additions
to
the
adjacent to the territories served tion.
to customers and employees. nation's generating capacity un¬
Thev
of
usually earned a" dividend
6%
6r'T%.
interest
and
basic fact,
that
in
To
relate
these
dividend (rates
it should
1921
to
a
be observed
of about 5%, in
1924 of about 4% and in 1927 of
yield
a
about m%.
growth.
era
we
era
;
was
In the
are
light
and
Thirdly, the last four
the
1932
to
1945
era
made
minimum
a
one
of
last half of
waj
necessity
cam'tal
of
ex¬
the
is,
largely car¬
ried on through the medium of
the* holding
companies.
There
was some first mortgage bond fi¬
nancing by operating companies,
Oenerallv
speaking, during the
1932
to
1945 era the operating
utilities continued to relv on hold¬
was
the refundings aM re-refundings
were at their peak a few excep¬
tionally well regarded utilitv first
^orteage bonds
investors
but the customer-ownership cam¬
paigns for the sale of preferred
stock of the operating companies
mous
fell
area
The
holding companies
investors
possess
now
there
,
before my
before the
The
will permit continuation of
holding company* structure
under certain conditions and will
to the various so¬
systems—the right of free
speech and expression of individ¬
ual viewpoints must be availed of
Sometimes, I think we continue
to
accept : regulatory
practice?
at
were bought bv
interest,
an
approximately
2V2%.
principal
cost
An
amount
of
enor¬
of-mort¬
cialistic
and
ties which have been proven
regulatory au¬
thority in such instances. > An
example is available, within the
purview of this conference.
Ala¬
bama
Power Company, Georgia
Power
Company,
Gulf
Power
stringent
retain
and Mississippi Power
Company y will,
under
present
planning, be wbollw owned sub¬
holding
sidiaries
of
known
The Southern Company.
as
a
company
the-public through
The savings to
the coordinated operation of these
companies
so.dearly demon¬
was
that it would have been
unwise to fail to permit the hold¬
strated
ing company structure. However,
fact remains,;that the entire
the
common,
has
utilities
the
stock ot many operating
oeen
^distributed
to
public and that this procedure
at-an * accelerated
continue
will
distribution
This
rate.
is,
as
I
essence a substi¬
security'with in¬
vestors for another, security.
It
does not represent new capital.
It is a procedure entirely separate
and distinct from the sale of orig¬
have
in
stated,
tution
of
one
issues
operating
of
company
period before we exercise oui
democratic prerogative and ag¬
a
gressively advocate
point of view.
•
interest
So
much
the high
for
inescapable that those of
vou who are nrincioal executives
of operating electric utilities, the
common
stocks
of which
h^ve
been distributed to tbe
will in the foreseeable
future be sn distributed, must do
'me of two things with resoect to
alrpady
public,
or
the questions and
and,
were
whether it is
number,
neak
relatively small amount of new
capital raised for the electric light
and power industry.
Of course,
3%% for
in
and
a
very
large
very
few
a
a
this
of
-
refunding
phase
the U. S. Government bonds
at
prices which
as
little
the investor
gave
and
as
were
durirw t.hn
greater
part of the period ranged
between this figure and 2V2
Since 1945, the necessarv ex-
nansion of generating canacbv. as
well as transmission and distri¬
bution svstems. has heen raoidlv
accelerating.^ Omcidentallv, the
deficit
of
era
financing
government has
us—at
least
combination
been
bv
loft, bebmd
temporarily.
of these
year,
tho
two
in
The
factors
increasing
costs of new canital. regardless of
medium
of
raised
senior
through
securities
the
or
eauity securities.
•
was
for
a
tivity, I should state that at the
grandfather
During the period bracketed by
rate
of
area
The
law
f
,
nn
appreciable amount of time on
subject of financing.. Unless
the
to become as
intimatelv familiar: with matters
relating to financing as you are
with the various Operating phases
are
vou
prepared
is
ocour
to
nations
as
First,, such or<mmr
Fbasco Services. Middle
me:
Service
Corp^y Stone
&
Webster cervir»e Corn.. ar>d others*
West,
several r»r
ncrsonnel in
theii; utility loan di¬
visions.
my.judgment,
arrive at
a
decision
then
organize
economy
of
the
nation
the proba¬
to
you
on
this
should
ques¬
apd you r should
to keep your^-ad-
tures.
12-months'
tures
a
period
the expendi¬
as
I would arrange
made.
are
credit
revolving
bank
commercial
with
or
a
good
a
of
group
completion
the
the
of
to obtain regula¬
necessary
tory body approvals and the con-',
of arrangements with
summation
investment bankers.
this
month:
this
fall;
general
a
raise
form
than... next
rather
month
next
As
would plan to
in permanent
principle, I
my
capital
spring
rather
than
this year rather than
next year, as the case may be.
I would pay . the going ;rate ofinterest
or
dividends, and the
going rate of selling or under-•
or
.
will-want
to
provide
issues of
stock. This
common
best be done where there is
stant
new
some
from the, sale of origina
capital
car
In this connection the pos¬
sible
inadequacy of current re¬
serves for depreciation should bf
considered.v To
surplus
the
the
earnings
business
tha'
extent
ir
retained
are
flow
and
company's
has
the
to
cushior
of direc¬
board
set
different
a
of
fact;
hard andTifas'
rule would be impractical.
Eacl
weigh,
and
situation
considered
be
it
However,
that
will
higher
a
must
separately.
ors
*
for
have
to
learn
regard
can
be
time: * invest¬
in
>
a
managements
which distribute smaller percent¬
60% to 70%. of the cur¬
available earnings in the
ages, say
rently
form
dividends
of
on
,
commor
stock,
as
opposed to those dis¬
tributing larger percentages
There is, of course, the ever pres¬
ent
temptation, in connection with
the distribution of operating com¬
pany common
stocks from holding
company
rate
pitch
portfolios, to
dividend
on
writing
commissions
relating them in
costs lor
a con¬
history of past dividend pay¬
ments.
in
ments
last
your
of /great
era
industry;
rather
during the refunding
new^'capital require¬
prevailed
when
era
ments
at
were
addition
would
as
a
minimum.
to
I
times to add
my
I
I
policy,
general
a
strive at all
would
equity base. In other words,
try to sell maximum
amounts of equity securities and
retain
sums
of surplus
business. The time ■
will come—it always has—when
to finance your capital require¬
ments you will have no alterna-.
larger
earnings in
tive
but
my
sell
to
bonds.
mortgage
Always keep that reservoir avail¬
able, and always keep enlarging
it.
Whether -you like it or not,
you are in a business where you
must
provide
service.
of
and
with
that
you
welfare
continue
Therefore you must re¬
so.
tain your
any
economic
nation
the
to do
public
the
Indeed, it is vital to the
industrial
ability to finance under
conditions.
7-
Customer Ownership
In
reviewing
ferred
higher initial price for the stock.
the chiei
executives of the operating com¬
panies should resist this tempta¬
tion. Looking to the future^" it is
of vital importance that the divi¬
dend records of all operating elec¬
tric utility common stocks show
ago many
You gentlemen who are
mind to the
my
than to the rates and costs which
the
rather the high
the
in
growth
cheerfully, -
\
capital paid by manage¬
side in order to obtain a possibly
the
to
the
I
past,
fact that
re-'
25 years*
excellent operating util->
in what were
ities were engaged
called
then
customer-ownership
It seems to me en¬
possible that some5 varia¬
campaigns.
tirely
method of providing
tion of this
equity
; capital
may v again
be
I tan readily conceive-
availed of.
that any one
of several nationally
banking firms,
known investment
including
take
my
own,
might under¬
the organization and
tion of
large;
a
group
educa¬
M local
se¬
today, and which may be reason¬
ably expected to exist in the fore¬
curity dealers for the purpose of
seeable
good operating utility companies
on
a
so-called "no commitment
future. **
All
companies
should appropriate the
amounts
permitted
clear
as
maximum
Federal in¬
deductions.
tax
that
a
greater
It
seems
measure
of
flexibility should be permitted by
the Federal Government in de¬
termining
tion
reserves
Federal
under
regulation
Generally
for
deprecia¬
income
tax
administration.
accepted
practice in
and
posted witk respect to the business world is to determine
for capitaktfexpetidi- depreciation- reserves on the basis
It is well known that
He will be best equipped of cost.
viser fully
your
erally speaking, within the same
.
bility that from time to time you
come
wbmb have well trained
ing for their ultimate elimination
the
banking firms*
co^m^rcial
finallv.
promptly
passed in 1935.
By 1945, the
Securities and Exchange Commis¬
look forward
must
competent people to
tion
from
owned
be
vesting .public
institute; an
to
with
companies' activities and provid¬
was
the
on
commor
the alternative
an un broken continuity*}
i
arrangement
advise If, I have touched on the question
of the adequacy of current ap¬
vou with -respect to your financ¬
ing.
There are three categories propriations for depreciation' ireserves
under conditions existing
of such competent people which
of your company,
„^In
regulating holding
the
o
by the in¬
rather than
be¬
holding companies, the advisabil¬
ity of a reasonably conservative
policy which would tend to assure
continuity; of dividends at the
established rate is apparent. You
will
stocks
observed
is
It
current
great grandfather.
of
abling a perspective for the fu¬
the
entirely happy to have the
money-raising function handled
soots
ture.
grams.
No doubt the senior exec¬
utives of the operating companies
dividend
select few,
4%.
general
question
dividends
that
assumption
tors
They are helpful in en¬
second- jp-^ostment
the
re¬
were
the
stock
common
should'
you
coincidentally arrive at a plan for
providing the capital, and that
you should raise that capital, gen¬
work
Each
the past.
suing 12 to 24 months,
pending
Problems of Dividend Policy ;
Approaching
against inadequate charges for de¬
preciation
reserves
is :; created.
for Future
issues, but I do mean that when
have planned your program
you
of capital expenditures for the en¬
them, against which I could draw
securities for the purpose of pro¬
which means that you must spend
3V>%
in
stocks
opposing
an
viding additional capital to take
care of plant extension.
Again, fo^purposes of rela¬
270% to 2.80%
a
Preferred
un¬
ineffective for too long
or
earned surplus account, a
instances
of
activi¬
governmental
other
sound
Company
problems relat¬
ing to your financing. " You no
longer have, or you rn longer will
have father, grandfather or great
grandfather to handle this impor¬
tant phase of y°ur company's af¬
fairs for vou.
You must handle it
wHhin
your
nwni organization,
bonds were marketed in the
gage
opposed
—as
the
resulted, in 1947 a"d during
a
sion
has
a
con¬
exceptions.
be
will
pro¬
the years 1932 and 1945 there
will
Securities and Exchange Commis¬
personnel,
or
a
tinue, in all probability, for an¬
Of course, here
and
there
through
the nation
funded
or
To
other five years.
lic, through security dealers, vari¬
ous forms of debt and preferred
stock, as well as common stock.
Proceeds from the holding com¬
pany securities were used in part
to finance the operating compa¬
nies and in part to make acquisi¬
tions of additional operating com¬
panies. By the end of this era of
increasing influence by holding
companies, nractically all matters
relating to financing had come to
be the responsibility of the hold¬
ing company officials—principally
in New York and Chicago.
The
senior officers of the operating
companies in the holding company
groups were fully occupied with
questions
relating to operating
problems, such
as
public rela¬
tions, rates, franchises, operating
for them by father
mem¬
is
organization, as well ar
Waiting For Better Market
general public and the
regulatory bodies, at all times
As a general policy I would do
These thoughts are intended tc
permanent
financing
promptly.,
posit boxes of tens of thousands provoke some thinking and reas¬ I would not
spend very much time
of investors, of common stocks of oning on your part and will be
waiting for a better market. By
operating utilities for securities of briefly stated.
If the democratic this I do not mean that you should
holding companies which these system of government is to work
have a whole series of very small
oost
construction
all
conference.
this
created and marketed to the pub¬
and
to
prior to 1945, and at
increasing tempo in the past two
years, holding company securities,
bonds, preferred stocks and com¬
mon
stocks, are being replaced,
so to speak, through the distribu¬
tion of the operating companies'
common
stocks
comprising
the
assets of the holdiftg companies.
The substitution, in the safe de¬
Financing by Holding Companies
approximately 192-3 to 1932— ing company officers in matters
th6 raising of the vast amounts of pertaining
to
financing.
When
off.
known
A Perspective
from
capital required
practi¬
to
respect
give you sound advice if there physical property, could not be re¬
continuity in the flow of in¬ placed today at anything like cost,
relating to your opera¬ and that replacements are in fact
tions and problems related to being made at as much as twice
times cost. If special reserves were financing.
.
*
In
the light of the historical created to reflect this fact, net in-'
come of all corporations would be
background, it seems to me that if
I urge that
I were in the electric utiltiy busi¬ appreciably smaller.
you study this phase of your bus¬
ness today on the operating com¬
iness and, with a knowledge of
pany level, or, for that matter, on
the level of an integrated holding the facts, take every jppportunity
of presenting your point of view
company, I would embrace several
fundamental policies and belief! to your Congressmen, your Sen-;
which I would keep constantly ators, and your regulatory bodies.;
to
formation
to
great
discussing—that
well
of
inal
of
years
were
and the industrv of
vears
power
capital.
new
and
with
small degree
penditures during this period.
'
Era of Public Utility Growth
This
electric
the
of
the
-longest-term
U. S. Government bonds paid the
investor
questionably played an important
part in reducing the requirements
*nd"strv for
studies
course
(Continued from first page)
new
its
cally all of the holding company
groups.
The broad pattern is of
Utilities Financing
all require substantial amounts
completed
reached its con¬
tration of the law, had
clusions
Thursday, April 15, 1948
CHRONICLE
plans
,
raising
basis.''
new
equity
money
The need for
mitment
to
accept
a
firm
for
com¬
delivery
and
for. the new securities on a'
specific date, which is present in
the case of a refunding operation,
does,- not
necessarily exist with
pay
respect
to funds being raised for
capital expenditures.
This is par¬
ticularly true if the procedure of
obtaining
a
revolving credit from
commercial
believe
that
banks
is followed.. I
offerings
of
equity'
/
Volume 167
Number 4690
-
.THE
-
■
C WrtifiiaiMi) AL
&
FINANCIAL
CHRONICLE
j
securities sponsored by a nation-
*
Kaown xirui, and actively en¬
gaged in by a large group of well
educated
security
guidance may
its
*
•
'One
reason
lor
af ler-maricet
.
iar a
lew
sold..Senior securities are bid
are
which have
Y ia
the
tne
as
for, and
an
it,costs
unsatisfactory
widen
nas
to
come
past
-
exisced
half,
l/sue was never
distributed,/ani-security
V* have disposed
'
whether
extra
man¬
bids
is
the
open
market, where it has
churned around at constantly re¬
ducing
in
that
seem
prices
until
it
is
"
such
either wise
in
end
economic
enormous
these bids when
the difference between the various
aeaiers
of the "tag
the
waste in making
has
fully
*
less
siowly
assimilated by bona fide investors
at bai gain prices.' Tnis result nas
*
in
issuer
an
administrative assistance,
power,
tne market
and
year
Vbeen that the
■
small
a
there
would-be
the
Commission
fail ness
without going to
time, both
of
price
or
.
•
f'and make payment to the issuing
v.
company as the stock was sold,
y
this
4
,
hurdle
would
be
removed.
Another by-product of
_
no-com-
a
ymitment procedure mignt b'e the
/sale of >• preferred and common
y stock on an instalment basis. Dur-;
'
.
only to take delivery from
were
ing the past six
•
buying government bonds
'
/basis
^ they
■
of
weekly payments,
are
not strangers to
••;../ ' ;procedure..
This
is
and
the
method
a
cludes
ures
a
rfew additional bad feat¬
peculiar to it alone.
served,
will
to
operating
be
utilities
of
subsidiaries
:
of
after
common
interest
stockholder
pays
stock
charges.
Federal
a
that portion of those
on
remaining earnings which he
ceives
stock
in
the
form
dividends
dividends.
or
of
Experts
re¬
preferred
common
stock
unanimous
in saying that this is
Ordinary people are en¬
unanimous
in saying that
The elimination or
is* unfair.
mission regulation under the Pub¬
lic Utility Holding
be
exempt • from Holding
Company/Act and Securities and
Commission
proce¬
creasing number of States.
Fur¬
raising /equity1 capital that/Will iresponsible investment security thermore, some companies oper¬
unquestionably receive increasing dealers are unwilling to expend the ating interstate and not subject:to
State Commission
security regu¬
yconsideration in the future, '/ p; t.me and take tne risk involved
To Hold
FT,
150
of
securities
the
would
common
received
have
the
in¬
by
effect
of
of money in
the hands of individuals who are
sums
ration in this country who is faced
with * the
necessity , of
raising
lation
*
,
-Competitive Bidding-Procedure
y»y The competitive bidding proce/*•" dure, particularly with respect to
to
non-institutional preferred
stocks, and with respect-to com¬
mon stocks. The reason- is
simple.
curities, is so obviouslya deterrent Tnese types of securities must, in
to the orderly and efficient
large part, be sold to private in¬
marketing of these types of securities, vestors. This type of selling rethat if I were in the
utility busi- qu.res, first, a campaign for the
non-insiitutional
:
;
y
*
type
equity
se-
I would shout that fact from
ness
the rooftops,
education of
I would inform my
*1
facts.
*'
I would
friends
-my'
local
real
try to bring about
understanding
in
on
dealers.
of smaller
number
then
tne
on
requires
a
their part to
individual
investor
the relative merits and the at-
on
regulatory
It
selling effort
educate
the part' of
state
a
dis.ributors of securities, that is,
Congressman and Senators of the
: inn
bodies, in the Federal Power Com-
tractiveness of. the particular, se¬
mission, and in the Securities and curity
being distributed.
This
Fxcnange - Comirassion regardiiig process of education is time con¬
the difficulties.
suming and expensive, it is not
To refresh your recollections, susceptible of the procedure which
*
y
*
-
,.
-
the Securities and
•
be
Co. n
Excnange Com-
followed
with
respect to
high grade
May 1941. Prior to that time pub- institutional type preferred stocks.
lie hearings were
held, at which In those cases the buyer-13 sophis¬
/ Y the • public" was composed prin- ticated and well informed ' and
,* i'Cipally of irwestmeht bankers and
does not have to be sold or1'edu¬
security dealers. Issuers had in- cated on the security. The con¬
j
finitesimal representation, and in- trolling factor is price, plus avail¬
; vestors similarly were absent. It ability of investment funds. / Rec¬
.-.Pf- was.contended that the Securities ognizing this difference, and ap¬
and Exchange
Commission; witn parently agreeing > that some non;;
an .* obligation ^underYfheY-Pubiie institutional
types of- preferred
/■// 'Utility Holding Company Act to stocks and common stocks should
find that securities, in the case pf be exempted from the competitive
; y
transactions with "affiliates,*' were bidding procedure, the staff of the
; ' ' being sold at a fair
price, had no Securities and Exchange Commis¬
has brought i into
setstandards against which to sion
being ja
Y rmake such -findings; The submis- modified competitive procedure
mission adopted its Rule U-50 in
i
the
or
Securities
senior
securities
and
*
-
*
"
and
fall
Federal Power Commission
diction.
I
believe
Ex¬
under
juris¬
review
a
and
revision of the regulations in this
regard is of just
great impor¬
as
tance to the managements of the
operating utilities of this country
it is to the investment bankers,
as
security dealers and investors.
be
of
It
greater impor¬
"/•/// /; / ..y
investrpeht banker and
security dealer, I take this oppor¬
tunity of publicly requesting that
the Securities and Exchange Com¬
mission
review
the
efficacy / of
its competitive bidding rule. After
seven years'
experience with its
actual operation, I am inclined to
believe that electric utility exec¬
utives, as well as investors, would
have viewpoints to express.
I am
sure that many representatives of
investment banking firms would
similarly welcome an opportunity
to comment publicly on the pro¬
may
even
tance.
As
;• ■
an
in
Congress with respect to suchrevision
a
vital
to
the
of
the
tax
law.
financial
It
is
well-being
pf the nation's industry.
at
Function
of Investment Banker
result of its promulgation.
<
\
Modification of Competitive
Bidding
It
-
market
is
and
in
with/ investors.,
constant
fcion of sealed bids
-
Commission
the
:
evidence.
sary
course, the
that certain
y
"
-
'
firms were
i others in
i
-
.
to provide
was
with
the
There
$
neces-
of
was,
subsidiary
allegation
investment' bahkirig
more
prominent than
the field of electric util-
~-ity financing, and that this situa1
tion
improper.
was
my sincere belief that a
;
reconsideration of the competiYtive bidding procedure and a re5
"
f
Vision of the rules and the prac-r
tices imder the rules are essential
;YpT/ if the very substantial amount of
,
\
-
(
new money
which is required
in
the' form
of equity capital is to
be provided through existing ma¬
.
!
chinery. In making this statement
,/, I have in mind, not only the rules
1
and practices of the Securities and
1
/Exchange
Commission,
but
also
those Of the Federal Power Corn-
■J.-
mission and of certain state
com¬
missions. Tt is my belief that the
competitive
;
Y
,Y,>
after
-
.
bidding
procedure,
7-year try out, will not
a
work under existing conditions.
-
-
In
so
far
as
the senior securities
4
/
•
p.
is
not
possible
to
has
be
to
come
known
as
ditions":! or /^'shopping around."
Under this concept the chief exec¬
considered
my
industry can be very mate¬
rially accelerated, and that time
and energy-consuming, economi¬
cally wasteful practices can be
power
utive of the operating utility com¬
minimized if
is expected to talk to 2 or 3
pany
or
more
investment
formally about
an
bankers
issue of stock
cannot,/possibly
market
lor
from
in¬
30
to
come
90
to
days,
an
intelligent modi¬
bidding
fication of the competitive
rule and procedures is arrived at.
I believe equally firmly that such
a
modification
can
be
reached if
the
regulatory body and the oper¬
ating utilities and the investment
bankers agree that the objective
one
of the 4 investment
banker,
is desirable and worthwhile, and
firms
as / the
underwriter with
whom he proposes to negotiate. proceed aggressively to attack the
problem.
V'.///./- ■/./
; ; •
He and his banker then start the
Intelligent modification of the
process
of dealer: and /investor
competitive, bidding
procedure
education.
In due course they
would markedly improve the me¬
come to the point where an agree¬
chanics
of
the
distribution
of
ment on price must be reached.
equity securities, and would cer¬
The
terms
finally agreed upon
tainly result in the flow of j a
may or may not have a relation¬
larger proportion of the money
ship to those mentioned at the
available for equity investmertts
initial informal discussions.
The
into the electric utility field. How¬
utility executive is thus in the
ever, even more basic is the ab¬
position of having two negotia¬
solute necessity of increasing the
tions rather than one. The invest¬
pool of available money for equity
ment banker finds
and
as
tions
a
result of those conversa¬
he is
expected
to
designate
himself in the
position, at the time of shopping
investments for which the electric
utility
industry ' competes
around, 'of-either naming the most
other industries.
successfully
favorable terms and conditions he
crease
judgment
securities of the electric light and
go,
of public utilities companies
it
-
'maintenance of competitive con¬
which
'
*
! ' It is
(
which
is
this
-
pool
He
ties
are selling and the kind and
type of securities in which,inves¬
tors
of 350,
history
largest
ture
will
Worth
Vultee
B-36.
be
visit
a
,plant
in
the
of
Group.^officials predict.
the
Texas
One fea¬
to
the
Ft.
Consolidated-
of
Aircraft Corp., where the
world's
largest land-based
bomber/is being made.
Speakers
R.
Black
will
include
Eugene
Washington.
of
U.
;S.
executive director of the Interna¬
tional
Bank
for
Reconstruction
and
Develooment..
cuss
the
Julien
who
will
dis¬
bank; Julien H. Collins,
Collins
&
Co.,
Chicago,
President of the Investment Bank¬
Association, and Lt.-Col. S. L.
ers
Austin,
former
dve
Va., will
ture
member
the
of
illustrated
an
lec¬
"The Occupation of Ger¬
on
many—How Are We Doing After
Three Years."
L.
'
■
f
.
guests will include
Billett of Chicago, Chair¬
R.
the
of
National
Securities
Association
Dealers.
Wal¬
Inc.:
are
interested.
He
can
Boiling to Represent
Wa'ker in Illinois
tell
in advance the kind and type
provisions your securities must
He backs up this daily
experience with- the market and
his constant experience with in¬
vestors by agreeing to buy from
you a security at a definite price.
To too many executives of public
utility companies this final price
to the company is the be-all and
end-all without regard to where
has
of
G.
contain.
and
or
how
ties
or
to whom these
securi¬
are
services
your
of
a
pays
distributor.
been
H.
appointed
Walker
&
to
Broadway
the New
Louis
St.
and
Bolfing
represent
Co.,
members
Locust,
York
Stock
changes, i" Central Illinois,
April 1.
Mr. Bolf;ng.
Louisan,
Ex¬
as
of
native St.
a
graduated
was
St. Louis
from
in
Universitv
1936
School
of Commerce and Finance, where
he majored in
about
with
experience
an
investment
the
for
the
in
firm
Statistician
lyst
-V/'
Bolfing ha« been with the
Walker
the
Walker,.
Statistician.
as
Mr.
year's
a
counsel firm, iomed G. H.
& Co.
,
Economics and Fi¬
after
and
nance.
much Tor
too
you
/
ST. LOUIS, MO.—A. T.
you
rapacity
of
and Investment Ana¬
the
past. TO
years,
with .{%
in
the
; If
securities
he loses
immediately./ You
some
may
that this does not adversely
your future financing be¬
cause
you
have obtained your
money for a lower and immediate
net cost. You are overlooking the
whole
question of public rela¬
tions with your investors and the
fact that it is the public investor
who - holds
your
security at a
price somewhat less than he paid
for it.
If you will recognize thai
you
are
dealing in .something
exception
three
of
years
Army. durin<* which he was
to the Finance Depart¬
ment and served in the Philip-
assigned
argue
nines
affect
from the service, Mr. Bolfing has
than
more
the
mere
f
sale
of
for your common
stockholders. In
the long run, if the security dealer
does not prosper you will not be
able
you
obtain
to
so
the
equity
Since returning
campaign.
specialized
assisted
security
in
analysis,
work,
in /underwriting
investigations
field
conducted
of
analyzed indi¬
vidual investment portfolios.
He
corporations
and
has also been
ticles
a
contributor of ar¬
economic
on
and
financial
pub¬
subiects to various financial
,//'
lications,,
y
V;
a
commodity when you sell securi¬
ties, you will find that you have
a great asset in your relationships
with security dealers, and in the
long run you will do a better job
money
Luncheon Meeting of
La Salle Street Women
ILL.
CHICAGO.
Street
—
at
a
women,
La
Salle
luncheon
meeting to be held at the 19 South
LaSalle
April
Street
Y.
C.
M.
have
will
20,
as
A.
on
their
speaker Mrs. Esther O. Kegan, a
sorely need.
member of the law firm of Kegan
NYSE Summer Schedule
and * Kegan.
The New York Stock Exchange
will
will
resume
summer
the
five-day-week
schedule, closing
Satur¬
days from May 29 through
tember 25.
with
One way to in¬
New
and
take
promptly
pro¬
touch
knows the
price at which comparable securi¬
money
that the flow of capital into equity
speaking
schedule
conclusion, I suggest that you
lace
H.
Fulton
of
Washington,
give a little thought to the func¬
executive director; Murrav Han¬
tions of your investment banker
son of Washington, general coun¬
and security dealer.
In the final
sel of the IBA. and Alden H. Lit¬
analysis he does something more
tle of Chicago, Secretary Emer¬
than merely buy your stocks and
itus.
;'/ /
'' V ' // '
bonds.
He is trading daily on the
i—■m——in
banker
<
of
and
full
entertainment
will draw a total at¬
gram
of
In
.
a
Association
May 1.
An outstanding
man
//!;.//,'./■ and Dealer
a
'
Bankers
Prominent,
placed. /
»
properly constituted
By too sharp bargaining you
inquiry. It is my belief that this can, of course, force your banker
conference would request a reap¬ to pay you more than your securi¬
praisal of SEC Rule U-50 and the ties are actually worth, taking into
practices which have grown up as consideration the real value of the
cedure
including
Texas
Group.
Colonel Austin,
equity capital should take every
now on dutv in the office.
Chief,
opportunity to insist on affirma¬
tive action by his representatives Army Field Forces. Fort Monroe,
.
operating under the competi¬
tive bidding system with respect change h Commission
States,
meeting of the Texas Group, In¬
vestment
13-year
dividends
Some
—
from all jbarts
nationally known figures in the
investment and banking fields, are
expected
to
attend
the
spring
tendance
vestors
TEXAS
men
United
respect to preferred and
stock
Spring Meeting
WORTH,
*
in
Group of IBA
practically America, in Ft. Worth, April 29-
are
equity
investors
for
additional
equity investment. Psychological¬
ly and practically it would bring
about a demand on the part of
private investors for dividendpaying preferred
and
common
stocks, the income from which was
either exempt from taxation or
subject to only a -modest tax.
Every executive of every corpo¬
Securities and Exchange Com¬
Exchange
number
The
the
to
may
increasing
dividends
on
earnings available
preferred and
income tax
38%
leaving greater
groups
tive. /: Ant
of
its
Texas
The
registered holding companies, and
therefore will no longer be subject
*
;
of
bow
modification of taxes payable with
I have previously ob¬
many
cease
for
it
Companies
as
balance
tirely
State Regulation of Operating
While,
to the Federal Government
unsound.
it may find itself en¬
In the field, of ^equity securities., dures,
the
s a m 0
regula¬
he competitive bidding procedure countering
tory 'requirements
in
an
in¬
uas. broken down and is ineffec¬
the
on
nearly all of the bad features
competitive «bidding
procedure ^and
the
negotiated
procedure, and miraculously in¬
both .the
tutions/^/ -i /; ppp, p/T/Y: Hp;-/
thousands of private inVestors have formed the habit of
/
shopping
pass
of
chinery for selling bonds to other
than a Relatively few
large insti¬
dreds of
*
The
Company Act
bidding for bonds with in the foreseeable future, it is un¬
the sole purpose of selling them fortunately true that many State
to a few insurance companies. If Commissions, without the staff or
the insurance companies do not facilities for independent investi¬
buy. the issue ' immediately >de¬ gation/follow the lead of the Se¬
clines in price. The result has curities and Exchange Commission
been a complete breakdown of in this area of regulation.
Thus,
even though
an operating utility
Hl^/investment distributing ma¬
in
hun¬
years many
consideration.
around device manage^ to encom¬
could
ment dealers and tne issuing com¬
; time of tne original issue, on the panies. Far more serious than the
; y theory that they may be able to waste of effort, is the iact that
:do better later: If
security dealers competitive bidding has resulted
:
imposed on equity earnings.
corporation pays a tax of
way
all the waste
elimi¬
ting down to realities immediately
before .the offering, or being com¬
pletely frank and naming reason¬
some
the part of invest¬
on
dramatically would be to
nate the double tax which is
It woulu
arbitrary and expensive
which
is
amount,
or necessary.
determine /the
■•:y causea-many investors habitually
to refrain from
'investing at the
;
conceive of in order to assure
can
his being-selected, and: finally get¬
answer
cf the original issues of -and wear and tear on executives
-and ' common
I question
stocks to call for such bids.
; preferred
_
..
in many cases, particu¬
larly in the smaller issues, there able terms and conditions at the
to the general question "Where is are anywhere from 6 Ho 8 bids. initial discussion, and as a con¬
tne equity money
coming irom?" No one has ever found out what sequence being eliminated from
develop
important segment of tne
■:
competitive bid¬
the
ding procedure will not bring re¬
sults in the sense that securities
dealers1 under
-
that
argue
Yahy
York
Sep¬
It is expected that the
Curb
Exchange
similar action.
/
will
be
Your
Commercial
Mrs. Kegan
attorney.
Mrs.
entitled
is
a
Kegan's /talk"Trademarks,
Signature."
registered patent
She has been
to the Illinois Supreme
admitted
Court and
the United States Supreme Court
bars.
.
w
23
COMMERCIAL
THE
(1668)
relatively'
hood (as
certainly be, it would moreover add to
"purchasing power" at the same time that it
placed the objects sought by the holders of that purchasing
power steadily in short supply.
In short, once we concede
that what is now being planned necessitates the sort of
restrictions and controls being suggested, we come dan¬
accumulated
(Continued from first page)
near
we
see
future./ That is the still greater Jikeliit, at any rate) that the situation much
it is
today will continue for many years to come—
C with the result that on the basis of the responsibilities
as
•
is all
nent
-
now assuming and of the reasoning* which now * <
Tbut universal, we shall have to have as a perma-.
feature;of our economic and social life a military,:,
The True
;
•
/
?
this
be
required.
We say
"if
we
We, for
visedly.
.
must train
part,
our
are
necessity of such training
on
large
a
now" ad-
army
not ready to concede the
and almost
certainly desired by military leaders. What
saying here is that whatever of this sort is really
required now will be equally necessary years in the
future
assuming that'we continue to feel under ob-' :
ligations to shoulder burdens we now are said to have
to carry in our own defense. Such, in general, has been
~
history of world politics.
When
any
one
powerful
nation insists upon enormous armaments —never mind ;
whether allegedly for defense or for some other pur¬
'
pose—other nations which feel their interests
or obligalikely to come into conflict with such a power
keep pace in the matter of their own preparedness
tions
y
must
for war.'
>
•;
:'/:;///
^
;
t;
Continuous "Necessity"
conceivable that certain
travelers
,
taking the rearmament and foreign aid programs now being
proposed, then there is no good reason to suppose that in
to
years
come
third world
a
weakened
selves)
we
war
Russia
(assuming, of
course,
as
must that
we
has not meanwhile
without
destroyed or greatly
corresponding damage to our¬
shall not be under the
upon.
being proposed
now
;;
or
restrictions
no
the part
in the ash
.
that
ners
can
and
file
we
and
discarded
controls
that they
must
argument
has
been
vigorously resuscitated 'in
weeks
the
basis
of
soon,
on
ment and
.
things
controls
they
as
renewed
and
are
our
until
demands
foreign aid. But if this
permanent feature of
other
be restored
longer.
added
This is the
crux
for
harder and
of the matter and it takes on
these
restrictions
said to do at present.
Less
True
from
years
-
.
/'v .V; ■
Growth
of
Consumption Units in Use/
Passenger cars (thousands)—
Trucks and
Tractors
Space
Oil
Petroleum
buses
(thousands)
1946
1947
26,901
28,416
5,680
6,000
2,672
2,844
4,682
.
4/
:1,783
(thousands):
2,000 ^
(thousands)
locomotives
1947
Over 1946
Over 1941
5.6
5.6
A
6.4
-28.2
•
6.4
3,035
4,250
2,673
3,200
19.7
41.0
5,281
25.9
411.7
.
/
1,032
ket.
were
wanted
There
the
quite moderate.
increases
now
winter.
last
that we
couldn't
actual
The
The second three
quantities
types of consumption units show
what really hit us in the "middle
distillate"
apparent,
have the figures, why we
the
market.
I
believe
it
S.
did
we
supply of the
principal petroleum products
is
shown
Consumption
in
the
in
following table:
during the war." .The various
aid
programs, now proposed would.
demands placed
upon the economy.
1941-1946-1947
of
real
a
duty
of
the oil industry, there
of some short¬
danger
petroleum
products,
par¬
% Incr.
Over 1946
Over 1941
the
8.1
15.2
47.9
817
22.9
:-/;.'//72.7
473
1,315
1,420
8.0
4,740
5,075
7.1
fuel
field
takiqg
over
sources
of
our
energy
United
since
time the
At that
a
shift
re¬
States
coal
supplied
over
requirements.
Of
the
growth in our nation's
80%
of
consumption
has
been
total
our
in
oil
since
supplied
665
back
the
expansion,
on
fallen
far
oil
either
short
of
or
35.2
-
31.4
T
•
that have
demand,
but
industry does not fall in
category.
'•
•
However, some of those who
recognize the job that has been
done
in
demand
either:
(1)
meeting
O"" /'
The
growth
and
tion has
shown
no
gain,, whereas
Some
oil production has increased five¬
even
fold and natural
to
gas
even
more!
/
•?'
/'
y.
While
governmental authorities
urged
stalled
against industries that have held
date
an
our
industry last fall
that
no
one
oil burner after
would
_
the
industry was rather
slow in expressing general agree¬
ment regarding the prospects of
shortage, I
dividual
am
as
a
was
sure
that each in¬
expressing his honest
to the outlook, because
was
close
would
question.
have
been
Indeed,
no
short¬
had the first Bureau of Mines
of
only
a
gain in
4.3%
been anywhere near cor¬
demand
primarily the unprece¬
dented and unanticipated sales of
oil
burners
and
space' heaters
which your industry made during
the
was
and
summer
fall!; which
changed the situation fj-pm being
merely tight to one where the in¬
dustry was short of meeting total
demand.
•
.
>
'
'
..
^
,
••111
.
-
/.it
Longer-Range Warnings
n ..
4
>;•
•*>';;/
As to the longer-rapge' warn¬
'*V ings, I pointed out in a talk befbre
oil companies for not
announce
Criticism might justly be leveled
/year
spread to the East Coast.
soon
in
.
::
the
still inclined to blame
are
,
this
of
which, with the unfortu¬
delay in getting the govern¬
ment-owned tankers into service,
rect. It
/
then
by
remainder
estimates
19.1
281
1,050
the
1918.
1947
2,178
244
3,861
show what has been
in
1946
2,015
L
1
to
primarily concerned. Through¬
out "the
spokesmen for our company and
an
increasing number of other
age
1947
','ti Incr.
Bbls./Day-
stills.
___
fuel
runs
amazing
foreign
inevitably add to the
Improperly managed,
it is my
to the public that, in spite
almost superhuman efforts on
it
190
energy
armament and
I feel that
.
say
there
1,829
energy
accumu¬
Shortages
During
the
Coming
Months,"from which I quote in
part as follows:.//
;. '
opinion
II
1941
quirements in the
95%
are
shortage, or
(2) The burner companies for
overselling in disregard of pros¬
pective oil shortages.
with demand
on
nate
supply quite all the heating oils
readily
con¬
so
up
talk be¬
June
Oil
midyear meeting
1947, entitled "Threatened
ficulties
mar¬
creases
£°°ds has catight
troleum Institute I gave a
companies repeatedly emphasized
the fact that we faced supply dif¬
59.5
112.5
40.0
4,196
2,269
(units)
Incr.
natural
gas
rless basis than ever for the statement here¬
output!
Water power has sup¬
often heard that controls must remain
until the
plied 5% of the increase. Over
economy has "caught up"-with itself, that is until "supply this 29-year period coal produc¬
lated
greatly exceed the
estimates of both: govern¬
and / industry statisticians.
However, as ,Vice-President for
Refining;; Of the American Pe¬
is
:$)
warning the public of prospective
'?
supplies during the past heat¬
ing' season.This was due partly
to the fact that the industry did
not anticipate the Texas City dis¬
aster and the /prolonged strikes,
the part of
The first three types of
sumption
units
represent
major portion of the gasoline
place
There is
ad¬
oil
is
in¬
tofore
criti¬
be
must
„
Consuming; Units "
1947
26,713
longer period, consider the
•
It
f
that; last spring the oil
companies did not speak with a
age
1941
(thousands)
heaters
burners
Diesel
To
Than Ever
justified?
either
are
mitted
.
/- r/c- Incr.
Residual
/.;/
extent
ticularly in the Middle-West, dur¬
during a pe¬ unjustified criticisms of both our ing the next ten months.
This
riod of steel shortage. The burner industries
and
even
recrimina¬
shortage
appears
probable
in
industry has succeeded too well! tions between representatives of
spite of the fact that the general
I feel sure that it achieved sales the two
industries,. which latter level of the country's crude pro¬
levels in 1947 far beyond its ex¬ I consider particularly
regrettable. duction, refinery runs, and im¬
pectations. At any rate, oil burner Certainly the time is appropriate
ports are all making new high
sales were at a rate nearly five for the two industries to sit down
records. The causes are primarily
times the average for the 10 yeats and counsel
together on where and unprecedented growth in de¬
prewar
or
the 15 years before they are going.
It is only by do¬
mand, coupled with a shortage of
1946.
Sales of space heaters ex¬ ing thiS; that we may avdid the
transportation facilities. The lat¬
unfair and prejudiced accusations
panded even more rapidly.
ter stems back to wartime and
On the petroleum
industry side, recently directed toward the two postwar limitations on construc¬
the market for distillates grew to industries.
J
,,
7
\
tion, together with shortages of
a point where distillate fuels were
construction materials, and par¬
Oil Industry Performance
no
longer a by-product, but a ;
ticularly delays in the delivery
main product costing more and
So far as the oil industry per¬ of steel
pipe for many important
more to
make as we had to cut
formance is concerned, we need
projects which would largely have
into our yield of gasolines and
apologize for nothing.:1 We.? fur¬ alleviated the situation."
//s/.fev///
other products../The magnitude of
nished far more fuel oil in the
This statement was given wide
this
shift, coupled with severe season just closed than ever be¬
publicity in trade publications and
winter conditions and a shortage
fore.
We did it in spite of the
newspapers and was concurred in
of
transportation
facilities,
re¬ handicap of not
being able to get
by
nqmerous
industry /leaders,?
sulted in the recent tight supply
needed : construction ;- materials.
though others were inclined to;
situation.
Certainly an industry which sup¬ minimize the
prospects of a short¬
However, the. magnitude and plies over 20%
more
distillate
age. My statements were reiter¬
severity of last winter's problems fuels and kerosene than in 1946
ated in a radio talk on June 18,
were
certainly exaggerated
by cannot be fairly criticized for fall¬
and our company published sever¬
unwarranted
hysteria
in
some ing 1 *or 2%
short of an almost al advertisements
indicating that a
areas and by political propaganda
unbelievable demand. Lei us see
shortage of petroleum products '
in many. There have been many what happened.?
was imminent, particularly in the
Midwest with which our company
;/•/,
TABLE 1-1/
Distillate
even
,
na¬
(Continued from first page)
recent
now
cisms
what
above-mentioned
almost unsuperable
Product—
remaining^ unchanged, "require" these
the
2,
Oil Cannot Heat All Ameiica
Kerosene
•
of
fore its
undertakings.
proposed
Gasoline
a
Now to
of
Crude
life, then it must,
that it
agree
free country.
a
to
This
rearmament is to be
economic
I
work
to
1947
rearma¬
.
on
the relatively permanent
importance from
of
ture
willingness
a
'
—.
plan, I cannot
legal
our
enforce any
ment
only if the great rank
consumers
—Thousands
plan¬
regulations too
and
>
restrictions
—
without considerable sacrifice
—
develop
U.
all this easy talk of the economic
of
or
would have been either good eco¬
nomics bjr good public relations in
early
be given effect
can
of American
this
change the outlook?
Does
such
an
assumption place much that is currently heing said in
a different
light? We think so. For one thing, it tosses
-
' /
"necessity."
same
materials will have to
scarce
TABLE
Does
such
question
announce
united voice as to the outlook for
;
What is clear is the fact that such programs as are
Estimated
people have apparently been convinced
that we must check the Russians. In this
they may be right
or
they may be wrong. We ourselves, as is undoubtedly
apparent to the reader, entertain doubts at several points.
What we are
saying now is that if the situation now exist¬
ing throughout the world and the present attitude and
policies of the Kremlin lead to the necessity of our under¬
the
right to
demand would
insist
now
The American
the
ri-'i-X
'ir
our
,
the scale often mentioned
we are
the
•
from
piled" for a time in such a way that civilian
consumption of them may have to be curtailed, but it jS which reduced refinery output
is a far cry from this to the sort of general management
substantially, and partly because
it had no reason to expect that
of the economy many of the New Dealers and fellow
Light
.
,
be "stock
light that the intelligent man will,
believe, consider the situation as it presents itself at
time, and it is in this light that reiterated demands for
regulations,* restrictions, controls, rationing and all the rest
must be viewed.
"Stock piling,once adequate levels of
surplus supplies have been accumulated, would, one sup¬
poses, tend to; make smaller demands upon the economy,
but otherwise it may. be doubted whether these prepared¬
ness plans now being suggested would cost
us very much
less ten years from now than is now envisaged as the peak
of rearming —; that is, quite without regard to possibly
higher prices and costs. Wear and tear upon equipment
and obsolescence; constant and vigorous research of an
expensive sort;'the manufacture and testing of wholly new
weapons; and much more of the same general sort would
constitute a continuing burden of large dimensions.; In
addition, if we must train a large army now, we should be
obliged to keep it in condition and to be constantly training
personnel both to take the place of those who drop out for
various reasons,- and to make certain that no one group is
required to carry more than its due part of the load of
preserving the constant state of preparedness which would
But in
//
humble judgment there is no real reason
to make such concessions in either case.. It is, of course,
/
;
At least it is in this
v/e
existence.;-';'/";:;
part" of our
v.
approximately; the proportions now being
sponsored: by the military and' most; of the political
figures of influence and power in our national life.
of
.burden
near conceding that permanent controls and re¬
strictions of the same sort will henceforth be a necessary
gerously
./
are
we
.
Thursday, April 15, 1948
it would almost
as
As We See It
.
CHRONICLE
FINANCIAL
&
get oil;
who in¬
a
givfiSn
Quite apart
in New York Several
that,
with
mbdfern
cracking processes, the oil indus¬
your group
ago
years
try
could
in effect convert most
of its fuel oil into
that
cluded
would
be
not
sold
as
a
gasoline.
result
I
fuel
con¬
oils
much
on
a
longer' h#ve\to
price basis deter¬
mined by competitive fuel
prices,
though they would continue to. be
available
for
uses
which
could.
Volume 167
THE
Number 4690
COMMERCIAL
&
FINANCIAL
CHRONICLE
mm
justify prices
tillates
high
as
worth
the dis¬
as
for
in
not sound to
ma,y
of
like much
you
increase, but it
an
ment control
sharp bidding
of prices by competitive users.
my opinion, the only way we
up
depressed price
ceilings
which
prevailed during the war delayed
fuel oil from reaching tnese high¬
spend¬
expand
every branch of our industry to
handle nearly 400,000 barrels
a
day more
crude
and
products.
This
within
price levels. However, as many
industry spokesmen have pointed
of
were
cracking
use
make gasoline.
The
by the OPA of the
to
continuation
er
out
recent
over
bound
were
years,
fuel
in
increase
to
oils
price
rapidly .than gasoline
as
soon
as
they ceased to be mere
by-products and took rank among
more
the
principal products of
our
in¬
dustry.; There is a great differ¬
between the
ence
of making
cost
ing
about
S3
represents
plishment in
many
,
a
able to
increase
burners
major
a
time
in
in
7
mands
of
a
1948, for several
to have been taken
by surprise by
the price increases and supply dif¬
ficulties which have developed,
though the matter came to a head
somewhat
sooner
anticipated.
<
4
,
-
Nov/, how about the criticism of
oil burner industry for over¬
selling in disregard of prospective
oil shortages?
It must be recog¬
de¬
I
shall
point
but will do
so
ask whether the
may
in 1948.
available
for' home
is
business
in
make
to
tion in studies which have reached
the
next
two
tial
;
my
one
than
for
the
further
oil
products
in
a
time
short
of
facts
of
too, are relatively simple.
The oil industry is not running
facts,
oil, but until pipe lines and
other facilities are completed to
out of
position of
never
do
having to choose
be
creases
in¬
in heating oil demand of
take
anything; like
the
increases
of
care
the
we
past two' winters.
especially :--|coal,
further
magnitude
on
have
met
the
with
reserves
enormously greater than those of
oil', will have to take up the bulk
of any further
increase in the
home heating load. It is true that,
barring strikes or catastrophes,
our
industry can be reasonably
sure of its ability to produce, trans¬
port, and refine 7 "or 8% more
petroleum for, domestic use in
.1048 than it did in: .1947, That
.
,
?
any.oil
oil-burner
men
who
industry
to
a
a
preference to see you fol¬
course
that
will keep you
sound basis for the years to
come.
If .you oversell your market
this year, it may well have disas¬
a
trous
ar¬
results for
both
our
indus¬
tries. Many of you have recog¬
bitrarily between its customers.
nized the situation and are already
Why should we favor the owner of
taking constructive steps such as:
a new automobile or diesel engine
all
our
(1) Directing your engineering
and research efforts to produce
:
units that will deliver
and
other customers, as one of
reduce
Such efforts
the journals of your industry has
of recently demanded, threatening
Natural gas and
our
low
possible for the Middle- as against, the v man who has
East to supply most of Europe's bought a new oil burner, or favor
needs, our industry will not be new oil burner purchasers over
to
know
the
commit hara-kiri. Rather, it would
make it
able
not
waht
that the oil
be put in
us,
united ef¬
your
Patterson Director
Robert
P.
Patterson, Secretary
of War from 1945 to 1947 and now
.
advertise¬
statements; but
representations made
to
fuel
on
an
basis will in the long
us
more
heat
consumption.
industry-wide
run
save
a
oil
orders
burner reads
a
an
Robert P. Patterson'
head of the law firm of Patterson,
Belknap & Webb, has been elected
accurate
director of J. Henry
Banking Corporation. ;
statement
increase
I very much hope
en¬
overcome
the obstacles in
path Of continued progress
and better standards of
living for all.
prone to minimize
supply problem and this
can
probably be overcome only
by making sure that everyone who
the
because
Those industry will
have
understandably
heating
to
avoid
price
control,
which
mind the answer, to any would undoubtedly have led to
real believer in a free economy, is
rationing,
black
markets,
and
fundamentally a simple one. It is much worse shortages.
merely to make sure that every
Allocation Problem
prospective buyer of a new oil
the
which
official
or
extends
supply will not work to the ad¬
vantage of the burner industry.
To my
outlook.
technology and free
overcome
by all your employees or agents
transportation. who contract the public; Oilburner
competitive bidding for salesmen on a commission'basis are
Straight
:-'v.
per¬
emma?
understands
in
fuel in the field of
*
oil vi supply
pros¬
domestic
the
for
attention.
ments
in sight as a
gasoline or diesel
,
burner
best
new
does not end with your
own¬
,
the
f;yi'unijimi,uuiui|!il '
of crude oil.
and will
consump¬
.
anything
substitute
ihihii
sources
(5) Making sure that prospective
purchasers
of
oil
burners
are
given the facts about the oil sup¬
ply situation. Your responsibility
oil-burning equipment, but over
the long pull stoker-fired coal is
closer to being a satisfactory sub¬
ers
fuel
the
major
terprise
adequate storage facilities. This is
a
vital need.
Our company has
already taken steps to help in this
connection, as it has made avail¬
able to its customers, on the basis
of
cost
plus
a
10%
handling
charge, thousands of additional
storage tanks,
v
'
'
who has only
stitute for oil for most home
in
mm,
the long run, of
course, the
hope for both our industries
forts to get consumers to provide
middle of winter oil is almost in¬
dispensable to
economies
(4) Continuing
Also, before the nation seriously
may not be greater than the esti¬ considers the
large scale conver¬
mated 7 or 8% increase in crude sion
of coal into oil by highly ex¬
runs,
as
it-was during recent pensive synthetic processes, which
years.
That is a possibility, but have to sacrifice two-third of its
large
rests
In
in this field than I
or
during
years.
cannot
be
heating value, economics would
industry yields of dictate that the coal be used for
heating oils during the past year heating homes and the oil thus
and sell oil burners and that last
were
very close to the practical saved be converted into gasoline
year in most cases it was less a
maximum. Furthermore, military or diesel
fuel, which can be done
question of selling than of meet¬
and other demands for other prod¬ with little loss. ■
•
;j 1 •
<
ing widespread public demand. In
ucts,
particularly
gasoline,
jet
Another possibility which might
recent years, with the gas indus¬
fuel, and diesel fuels, bid fair to force a reduction in
heating oil
try unable to take on new cus¬
show another substantial increase
tomers in many areas, oil burners
consumption arises from the fact
this year, and the users of these
that in a future war, or in an en¬
have been practically a "must" in
products will in effect be bidding
new houses.
?
'
larged/ training and stockpiling
i
;
against the home-owner for the
program in preparation for a pos¬
On the other hand, the existence
available supplies of petroleum
sible
war,
aviation fuel would
of a great demand does not ex¬
products.
•
come mainly out of kerosene and
cuse representatives of the burner
Now if the oil industry were op¬ distillate fuel oil rather than out
industry for misinforming its cus¬
erated on the basis on which some of gasoline as it: did during the
tomers as to the facts regarding
of its detractors profess to believe last war. This
is, of course, due to
oil supplies. / Many of your indus¬
it is, we would encourage our oil the fact that, for military pur¬
try, especially individual sales¬
burning and all other customers poses, jet engines are largely re¬
men, denied any possibility of oil
to build up their demand and bid placing high compression internal
shortage
in
spite
of
repeated
against one another for the prod¬ combusition engines using 100 oc¬
warnings from leaders of our in¬
ucts, to our financial advantage. tane gasoline.
Furthermore jet
dustry. Even worse was the prac¬
Instead of that we K have urged, engines use far more .fuel than
tice of some dealers in guaran¬
and are urging, conservation by conventional engines,
and many
teeing oil to purchasers of new
all users of all products in order naval vessels are diesel-powered.
burners when the only way they
to hold the expansion of our mar¬ Accordingly the
oil-burner user
could supply it was to take it
kets within the limits of probable may wake up some day to find
away from their regular custom¬
supply. Furthermore; practically an almost insatiable competitor—
ers.
It was such practices that led
all of the larger companies and the military — demanding — and
even some of the ardent free-en¬
most of the smaller ones have con¬ getting—a very substantial part of
terprisers in our industry to ad¬
tinued to sell their products at the country's distillate fuel oil
vocate severe restrictions on fu¬
prices well below the real free or production.
ture oil burner sales.
However,
"gray"
market;
prices
widely
no true believer in free enterprise
Constructive Steps
quoted in many areas. It may be
could consistently
advocate the
Perhaps, these points will ap¬
open to question whether these
elimination of freedom of choice
companies have been entirely wise pear unduly discouraging to you.
for the home-owner in selecting
in not allowing price to play its I hope they do not. Rather, I view
his fuel, even though the exercise
full, traditional part as a regulator them as constituting sound reasons
of such freedom got us all into
of both demand and supply in a for moderation on the part of the
difficulty last winter and a con¬
free market; however, I am glad burner industry. Barring govern¬
tinuation of last year's trend will
that the industry has in the main ment interference, I am sure the
create worse trouble next winter.
charged much less than the traf¬ oil industry will continue to exert
What is the answer to this dil¬
fic would bear, and thereby helped its maximum efforts to expand. I
nized at the outset that the burner
industry
sources
but
am,
rea¬
the last year and did not use their
full annual requirements in 1947
vj You
efficient
real
out.
installed in the latter half of
were
the
better posted
physically produce,
can
insure
constitute
for
pect
performance for which your units
were
designed. You men are far
keep
of what the oil
f
oil
the
all
to
and
To the oil burner manufacturer
oil
centage increase in the amount of
Overselling of Oil Burners
that
lations
who does not favor any attempt to
discourage demand, I would point
In the first place, at least 2% of out that in the long run, if de¬
that
increase
in
oil
supply is mand outruns supply, the user
who can most readily find a sub¬
necessary to fill up our tanks to
offset the fact that stocks of heat¬ stitute .for his requirements of
ing oils and other products are at petroleum products will be the
extremely low levels. If we are one who, either by the action of
to avoid the local shortages that free
prices or
by
government
plagued us last winter, we must edict, will eventually have to fore¬
build up inventories and fill up go such products. Of course, in the
which
sons
than most of us
«
see
which
,
al¬
m
.
velopment of tidelands oil
reconditioning of fire¬
boxes, draft controls, and burner
adjustments have offered substan¬
three
relatively small amount of by¬
product fuel oil and the cost of
making maximum yields at the
sacrifice of gasoline by changing
the operations of our refineries.
This is particularly true of heater
oils which
are
approaching the the new pipe lines and terminals
ultimate limit of yield which can that are
being built to help avoid
be produced in many refineries.
future shortages.
In any case, I am sure that no
In the second place, the remain¬
thoughtful
member of the
oil
ing 5% will be necessary to take
burner industry could fairly claim
care of the new oil burners which
a
to
moderated
the limits
rapidly
further
mew
is
undesirable
(3) Utilizing your burner re¬
pairmen during the coming sum¬
mer to inspect your former instal¬
which limits cannot be expanded
will
we
these
are
industry
shortage
of
8%
or
ternatives
materials.
that
care
avoid
can
accom¬
of
mean
take
In
to
construction
But it does not
be
means
billion
the
or
a
regarding the fuel sup¬
ply situation. I am sorry to say,
however, that your latest booklet
entitled
"OHI
Questions
Answers
About
.Your
Frederic J. Del Pino Joins
Oils"
falsely optimistic impres¬
sion of the oil supply situation.
While you may be able to sub¬
gives
Burning
a
Staff of Henry F. Swift Co.
/
booklet, the over-all impres¬
conveyed to the lay reader
about
need
the
not
be
adequacy
fuel
Co.,
*
'r.
v
CALIF.
Pino has
—
become
California Street,
the
of
San
mem¬
Francisco
Stock
Exchange.
Mr.
Del
Pino
was
formerly San Francisco manager
.
.
J. Del
490
bers
oil
supplies, and that is unfortunately
not true.
FRANCISCO,
associated with Henry F. Swift &
concerned
of
SAN,
Frederic
in the
is that he
(Special,to The Financial Chronicle)
r
stantiate the individual statements
sion
Schroder
for
v
Barbour, Smith & Co.
!
:
(6) One of the greatest problems
the
oil industry has faced has
been the fact that state
data"
oil
on
or regional
installations
burner
With.Herrick, Waddell t' Co.
i
:
have not been available until they
were about two years old. In the
earlier years it wasn't necessary
for the burner industry to advise
■
1 *
-
•
„
(Special
i.
-• *'**'•
<
The Financial
to
SPRINGFIELD,
B; Nelson
Herrick,
is
now
Waddell
JMJk
•
•
'
"*■
Chrqnicle)
MO.—Clifford
connected with
&
Co.,
Inc.
the oil
New York.
was
of
John G. Kinnard & Co. and
industry where the market
growing, how fast it was
He
formerly with
prior
Springfield Manager
was
growing, and the number of in¬
thereto
stallations
for White & Co. of St. Louis.
being made.
The oil
industry did not- have any accu¬
rate means of evaluating a state
market
until
your
organization
started publishing estimated sales
With Conrad, Bruce & Co.
v
and estimated total number of in¬
stallations
in
the
of
fall
1947.
ated
813
template making this information
hereafter,
:V
;S:'A;
:''
ter
"Oil
&
•'
V'.'
to
do
to
to
can
quote
my
Heat
you
All
This
so.
do no" bet¬
subject—
America."
you
stantial
cannot
be
gentlemen, but that
does not make it
ever,
Jennings
Bruce & Co.,
Alder Street.
Mr.
previously with Field
Co., Inc.
V
"
I do not think that it will be called
upon
Conrad,
was
—
has become associ¬
Summary*
-
summarize, I
Cannot
news
Jr.
Southwest
Stendal
basis
•/ //•/.'/ /
than
with
.
-.
.
To
quarterly
a
on
'PORTLAND,. ORE.
O.'Stenclal,
It
is my understanding that you con¬
available
was
will
welcome. How¬
still have
a
Joins Davis,
to The
(Special
SAN
Skaggs & Co
Financial
FRANCISCO,
Chronicle)
CALIF.—
Pierre M.
Kimball, Jr., has joined
the staff of Davis, Skaggs & Co-.,
Ill Sutter Street, members of the
San Francisco Stock
Exchange.
sub¬
replacement business. To
the extent that such replacements
readjustments save oil, or some
present oil users switch to coal or
or
natural gas, we should be able to
handle
a
moderate
number
of
new
installations
The
oil
minute
tinue
industry
relax
its
its
even
will
this year.
not for
efforts
to
a
con¬
expansion, but in spite
of such efforts the outlook is for
tight
at least two
Our industries
must both attempt to keep each
other and
the public fully in¬
formed as to all facts bearing on
the supply situation as we see
a
or
supply
three
years.
for
Liquidation
Purge in
the
of the Monetary
Netherlands, The—
Synopsis of the regulations—Amsterdamsche Bank N. V., Amster¬
dam—paper.
:
-
large quantity of oil and make it them. If and when the Middle
to
supply
more
new East can complete the expansion
hope possible
of its facilities to take over the
your industry does not share the burners.
'Opportunities in Latin America
delusion that government control
(2) Directing most of your ad¬ greater part of the European mar¬ —Ralph Hancock—Duett, Sloan &
will solve either your problems
ket, we may again be able to tell Pearce, New York City,
r.."
vertising and sales efforts to the
or ours—I
am
sure it would de¬
replacement market.
Savings of your industry that adequate sup¬
crease rather than increase over¬
fuel from this source can be sub¬ plies of fuel appear available for
/.Wage Drives and the Outlook
substantial
all oil supplies, and from what I stantial. I sincerely hope that the a
expansion. *1 am
have heard in government circles, engineering standards of installa¬ afraid, however, that that time is For Tomorrow—Chamber of Com¬
merce
of the United States of
one of the first steps would be to
The
tion of replacement burners may at least three years away.
Washington/- D.' C.—
stop all oil burner sales except be on a new level of efficiency as only other good prospect for a America,
replacements.
I
certainly hope compared with that of many of substantial expansion in the next paper—10c • (lower rate oil quan¬
■■■
that we can avoid either governs the old units.-*** h> -A f- =•> few years would be the rapid de~ tity orders). v>.. 4 44,M
with
did
a
not
"government edict" if we
do
so.
I
certainly
■
,
THE'COMMERCIAL
(1670)
30
Thursday, April 15j>1948;
FINANCIAL CHRONICLE .'
&
of
million
a
have
who
persons
unsuccessfully seeking work
for more than 15 weeks.
been
(Continued from page 7),
new
construction in 1948, with
about a quarter of a million more
workers employed at the peak of
activity this coming fall than a
year ago. Skilled workers are ex¬
pected to account for about half
of this year's employment rise.
Roughly, 35,000 additional carpen¬
ters will be needed, along with
about 10,000 more bricklayers, and
5,000 each of painters, plumbers,
and plasterers.
:
As we have
long recognized,
housing is a very special concern
of veterans because
many
so
servicemen have had to live
overcrowded conditions, or
ex-
under
in un¬
servicemen
plant facilities not only for
expansion purposes but also to re¬
place old,, worn-out equipment.
numbers of veterans will be com¬
new
most
The
indica¬
current
recent
tions are that replacement and
mprovement demand continues at
peak levels. Also, the demand for
consumer durable goods—not only
equipment
operating
influences
uniquely in the soft goods field—
particularly in textiles and cloth¬
ing—seem to be less substantial.
But in February, these industries
dwellings. Nearly a
million permanent nonfarm hous¬
ing units are likely to be started were operating at peak strength.
in 1948 as against 860,000 last year' One
important consideration in
and! 670,000 in 1946. If the 1948 analyzing the trends in this field
satisfactory
estimate is achieved it will exceed
by
the previous
small margin
a
record set 23 years ago.
«"
Despite the expected increase,
adequate housing will continue to
be one of this country's greatest
problems for many years to come.
With the huge backlog of needs
built up during the war, and with
the recent' record-breaking mar¬
is the seasonal nature of its opera¬
The
tions.
prewar
cycle of high
activity at certain seasons of the
year and layoffs at other periods,
which characterized these indus¬
quite no¬
sudden
result of the
program,
can
,
It
that the major ob¬
expansion of housing
appears
stacles
to
at
activity
materials
are1 neither
labor but high costs,
'
„v>;
/
The Current Demand
Situation
present
nor
with - emphasis on the
costly type of single family
houses
rather
than
on
smaller
together
more
Surveys show that
most veterans who plan to build
units.
rental
'
economy,
buy a home feel that* $7,000 is
their limit, yet the selling price
of" new one-family homes prob*
or
averages
nearer* $10,000.
About" half: oF the veterans who
ably
In
1948, as in
1947, the under¬
lying economic pressures affect¬
ing employment trends are,'pri¬
marily on the side of demand,
although there are some factors
of weakness in the situation. Pur¬
strong,
continues
skill
in
and
with
of food alone "could
only the
not
and
for
of the young men
out of the job
■;t Increasing the work force is not,
of course, the only way to expand
market situations. Tht
output, assuming that the mate¬
rials and facilities are at- hand. drop in grain prices," for instance,
was
primarily due to improved
Another method is to expend the
work week although our surveys crop prospects. It was not partic¬
indicate that the five-day week- ularly sharp, as the bottom did
not fall below the price for last
and the eight-hour day tend ; to
summer, and it did not spread to
yield the rest results in terms of
industrial prices. Many of the lat¬
efficiency, absenteeism, and work
ter, in fact, actually continued to
injuries.; ^-;v: *'••
.'"".A
•
ruary's break in farm prices and
chasing
power
and the
dominating factor eclips¬
ing in good measure the doubtful
elements is that a healthy, effec¬
tive demand
still continues for
of
subsequent developments shows
that the basic situation is quite
different from 1920, when- prices
collapsed, y
kU.- y y
year.
This was particularly note¬ y During the first World War and
worthy in manufacturing, which its aftermath the prices of agri¬
is generally subject to the over¬
cultural and industrial products
time pay requirements of the Fair
rose in about the same degree, and
Labor Standards Act. All the mar
reached a peak about the same
jor groups except apparel and time.
When the break came it
leather have been consistently at
spread widely and most prices fell
or above the
40-hour average in
swiftly. .This time, the prices oi
recent months. Since the average
farm products paced the upswing,
is always reduced by normal ab¬
so that at
peak they were almost
sences
and turnover,: it is clear three
times as great as in 1939:
that the scheduled work week was
whereas.the: prices* oF industrial
considerably higher than 40 hours
products are less than twice their
week.
y
nonagricultural. industries: as
whole, fully two out of; every
nonagricultural ^ workers
have been working more than 40
hours a week.
About an equal
In
Another
a
price
five
make
number
anything we can produce.
started
tirq^. Included in this
latter
group1 are
a
substantial
number of part-time workers such
autumn
last
which* could
tures
families.
mora
By
struc¬
were
two or
of con¬
house
way
get out of hand. Fundamentally,
our economy today is in much the
same
condition
it was in
last
put in less
as
and' housewives,
students
for
greater
current
the
which
tends
stability
to
and
--v."'.*The?-Veterans*,'-':ii"----
*..
- vif
who are out because of
illness, bad weather, and materials
L;
August, when I called your atten¬
tion, on the one hand, to the
shortages,
veterafts only*.as. they -fit
be
strong pressures of demand then
of rental units stimulated, there
existing,. and on the other hand,
to the dangers of high and rising
productivity. In 1947, there ap*- because veterans do not live in a
have jobs- only
pears to have been a modest but vaecum.wiThey
definite improvement^ oveF'194&» wherr jobs are 'available- industry
the . going ? rate, and
It is encouraging to note that sur¬ pays " them
their economic status is healthy
veys of management opinion have
the economy-'as z
reported a steady improvement in only when
the efficiency of workers during whole is healthy; > I have also done
1946
and
1947.
With favorable this to highlight the fact today,
labor-management relations, fur¬ at least, we are not confronted
ther improvements will come with with the crucial question of how
trast,. rental units in the twenties
constituted about 40% of all hous¬
ing erected.
li the-present price barriers can
overcome and the construction
is
building and
allied industries can be a strong
prices cutting into buying power.
support of the, present or even
higher levelstef total employment
Now,
already
for
comes
doubt
no
that
some years
iF costs get
residential
be
among
suffer.'
the
to
come,
However,
too far out of hand,
construction can well
the first industries to
Manufacturing has shown even
greater strength than construction,
during the past year as well as
the past two decades.
employment
since
1929
curred in this field.
all
In
nonagricultural
34% in both
the
has
But this much is cer¬
tain— goods already scarce will
certainly not become more abund¬
ant.
More than ever it will be
1947, 37%
wage
and
1929 and 1940.
two
in
the nondurable ^-seg¬
ment. Today, although both groups
have gained sharply, their posi¬
tions
are
reversed,
8 million at work
with
in the
and somewhat fewer in
nearly
durable
the
non¬
inflationary developments.
In many cases,
the
same
influ¬
em¬
ployment in each of these indus¬
try groupings. Among the more
important factors still at work are
the great amount of domestic pur¬
chasing
power
resulting
from
wartime-savings and full employ¬
sumer
war
huge
needs
years,
backlog
of
con¬
built up during the
and
the
world-wide
demand for American goods.
In
addition,
each
responded to its
segment has
special in¬
own
Supply of Labor
much
So
for
thd
-
demand
for
The supply of labor proved
labor.
flexible enough in 1947 to keep in
remarkably close balance with in¬
dustry's needs for workers. There
was
no
real labor surplus, nor
particularly seri¬
ous
manpower
bottlenecks.
The
scattered
labor shortages which
still occur are either in specialized
there any
were
lines
else
or
are
in
with
areas
Even
their
at
armed, forces
the
with
authorized
strength, there is no reason to ex-r
pect a change in this generally
balanced
situation.
Currently,
are
about
in
would
presently
IV2
million
be
of
the
labor
force
more
than
basis
expected on the
trends. Actually this
of IV2 million is a net, re¬
prewar
excess
much larger excess
of older persons and teen-agers,
partially offset by a deficit in the
younger
adults group. The ex¬
tremely high " postwar marriage
sulting from
and
than
ages
In
a
birth rates
IV4
have taken
million
women
mal
in
the
20 to 34 off the job market.
addition, the number of
men
more
younger
is also somewhat below
largely
because
many
nor¬
ex-
'
.
Another factor
So far- I
have
additional
experience
the
on
time jobs.
to reabsorb the veteran into civil¬
peace¬
on
' '
-
ian life.
,
He
—quickly
The
Unemployed
spite of the essentially full
employment which we have been
enjoying, it is important to take
note of, the
unemployed in our
There
are
not
very
many
this
seasonal low of last fall, and about
2.6 million at the seasonal high
American.
living—up
to
years
connection,
sue
jobs, about half
of
More
now
million
a
have
out
are
work, and a million and a hall
are
in school
either
are
full
other
the Bureau
ployment situation, but it
immeasurably by two
aided
when the severe
weather and shortages of indus¬
trial fuel caused many industries
cific
to curtail
his
kind
training
decisions
It
pursue;
operations. Virtually all
of the improvement in unemploy¬
in
ment
been
the
past two, years has
veterans* Currently
among
>
education
or
will
contain?
was
aid in the
life without the
A
,
Look
sity of taking makeshift .employ¬
ment.
than
workers,
15 million veterans of World War
but
other
the
men
difference has
rowing steadily for
been
some
Unemployment appears to be, as
it has been during the past year,
of two distinct
types.; Most of the
were
laid off for
unemployed
such
reasons
as
climatic
condi¬
tions, inventory taking, and mate¬
rials shortages, and they remained
out of work for only a
short time
ever,
b
relatively
The other group, how¬
consist of workers who have
II
more
at
nar¬
time.
least
ment .allowance.
5
Ahead
whites,
vouths.
non
•
and inexperienced
According to Census es¬
women,
timates, there
are
about
a
quarter
nearly
received
ternational,
economic,
a
re¬
A
political, and inwell as the purely
as
It would be very easy
About
•
conjure up a com*
binattompf tdrceswhich caa play*£
havoc with out
comparison
prosperity.. But a
conditions
today?
of
In addition to the
assuring.
demand
which
have
we
strongi|;;n:n
already .•'/,/
discussed, there are many .other.';
salutory factors tending, to mia- imize economic difficulties today.. ;
Among them are the social se- I
curxty, system, the Gt Bill ot •
Rights, and stock and commodity
Perhaps, asimportant*as any is , n
the; fact - that; today; all ofn us*-* "F• >
businessmen, > workingmen, a a d
consumers—have ready, accessvast
a
data.
fund
of>
Back in
information,
to..'
available
and
at
alj^
piecemeal
so
t-
as
to-be. almostuseless;
teLooking
three-
with
an¬
even
*
further
'
ahead*
barring wars or other ca-*^"
tastrophies, completely different- years?
considerations will affect the
nomic
eco;
In the first plare,f»
picture.
the labor force will
no
doubt
con*-
both
to
the
and to the economy as
a
whole is the education and train¬
ing program—the largest activity
ever undertaken in the
of its kind
:
"
* v
tinue to grow;
in the second place, v
productivity is bound to increased
the
over
years.
With
these
two? r
factors
at
work
we
can
have
either great unemployment or
an:.-
outpouring of goods and services
before experienced.
never
alert
are
and
If
principles
ap-
which
called forth, there is.
war
'
why
cannot
we
standard of
no
;
*
the *
'
rea-
a::
achieve
living higher than the
world has yet known. v"
*
we
we
ply in peacetime the devotion ta
American
v
:
we
imaginative, if
think cooperatively and if
"•
t*.
With J. M. Dain & Co.
(Snecial
>-
*
,
to
The
Financial
:
Chronicle)-
MINNEAPOLIS, MINN.—Cath- :
E. /Stukei
er.ne
staff
of
J.
M.
has
Dain
joined
the
'
Co., Rand
&
;
Tower, members of the Minneapo;lis-St.
Paul
Exchanges.
and
Chicago
She
was
,
Stock *
formerly r
v/ith Piper, Jaffrav &
Hopwood.
.
J
'«**• I
1
—iBMW—:
■
With Bache & Co. in Miami
•if
(Special to The Financial
ond
has
&
become
;
M; Col- 1
In the oast
he
was
a;. 5
Levin With Bache & Co.
;
(Special
MIAMI
Levin
to The
•
connected, with
Co., 96 North East Sec-
Avenue.
~
Chronicle) (a.
MIAMI, FLA.—Francis
lins
of the Fed¬
Government which has been
value
.
L
economic
1920, much of this.'
if
late
so
basic
a
6
'•
other half billion being disbursed
under the self-employment phase.
inestimable
:
exchange controls.
employment
of
a
.
!
with those which existed after.the«
first World War is generally re**v;
with Thomson & McKinnon.
The other activity
.
for the fates to
Bache
,
/
.
In¬
■■
'
the
persons,
::teVvy.-.V.
psychological,
payment for
program,
-
.,
a million were on the
long enough to exhaust all
their rights. A total of $2 billion
has been paid out under the un¬
rolls
veteran
older;
million
;
>
quarter of
eral
main,
7
benefit
of
unemployment, and another 600,000 drew at least one self-employ¬
experiencing considerable
difficulty in finding new jobs. Reoorts indicate that these are, in
e.e n
than
one
-
.v
During the coming months both
prices and jobs are likely to be
affected
by numerous factors—
neces¬
unemployment among
continues
higher
among
V
vocational guidance of
veterans.
our
the service¬
out
'
ap-
an
war
readjustment
program
which
gave the
new
veteran a
chance to get himself readjusted
Altogether,
*
spe¬
ex-servicemen
rate of
;
to
States and should be of invaluable
:
to civilian
;
,
the
to
as
in
praisal of job prospects in 200 major. occupations
of
the
United
Federal
the
of
programs
Government. One
de-
of the veteran
use
making
of
purposely
men's
February
•
?
;
information
signed for
son
:Vyy
reasons.
:
;
time
out of the labor force for v,.ii-
ous
i
to- new
come.
manual of occupational out-
a
•
J
shortly is-
reabsorbed
efficiently.
This highly satisfactory showing
reflects, of course, the overall em¬
at the
of them—about 1.6 million
this
has been
and
than 12 million veterans
In
midst.
In
the
into: the ifeis^lear*. that'a in: another
I have done this
general picture.
affecting output
touched
is
the
inadequate housing.
people
have served to increase
ment, .the
The
there
durable group.
ences
to keep close watch for
necessary
oc¬
major sectors of!
manufacturing, the - hard goods
group has been considerably more
dynamic. In 1940, there were 5
million employees in the durable
goods industries,- as against almost:
® million
program.
appraised un¬
til more is known of the require¬
ments in terms of supplies and
Almost
salary workers had jobs in manu¬
facturing establishments as against
Of
defense
new
Its effect cannot be
half of the total gain in nonfarm
of
demand
strong
the
the
picture,
upon
manpower.
.
The Outlook in Manufacturing
over
superimposed
v
of
heights in the
was
also many
,
now
purchasing power.
With employment at- peak levels,
with wages not lagging hopelessly
behind prices, and with savings
and ycredit; reserves
still <*, high,
buying power today: is
much
greater-than back.imd920.* v%
week, and fewer than one in five
Rising prices can choke off mudi
of that demand, but there is no
reason
why prices should really
in
factor
^situation
than in 1920 is
working 40 hours a
are
almost
housing want rental units,
but only jabput 15 % of the units
level.
prewar
seek'
standard
A detailed analysis of Feb¬
rise.
ords, the work week has actually
been exceeding 40 hours in many
establishments
during the past
a
production —and
look
of specific
fact, in order to achieve the
peacetime production rec¬
;
a<
challenge to our economy,
a great hope.
With their j
ambition and their newly acquired yy,
skills, they will need only a fa- - ^
vorable economic climate to push a ",
February's price developments
can best be explained on the basis
*
only
but also
of Labor Statistics will
ment.
market.
•
students-
now
are
tending to increase total employ¬
■'"y:
now
women
bolstering purchasing power
other commodities and thus
of
entrants into the labor force
but also many
hand, decreases in the cost
have the effect
other
workers in the near future, there
available
who
men
great
general.
A
sustained ; decline
in
prices
could lead to large-scale lay-offs
and
business
failures.
On the
Should conditions call forth more
be
It cannot be said too often that
these
and trainees constitute not
ment and the economy in
training.
and
serious¬
affect the outlook for employ¬
ly
com¬
line
in
earnings
education
their
previously indicated,
As I have
and will be seeking jobs
commensurate
manding
In
the same
be expected to
riage and birth rates, we will need recur this year. In any event, op¬
to produce homes at the rate of a erations
may
very
easily, slow
million or more each year for at down more than, seasonally in a
least another 10 years.
! few lines without upsetting the
defense
new
few years
-
"
or
aking training—nearly one out of
five eligible veterans.
\
/
price developments could
current
ticeable in 1947. Barring a
phenomenon
The Price Situation
■
tries before the war, was
influx of orders as a
,•
pleting their schooling in the next
new
(particularly items used, in new
houses)—still appears to be ahead
of supply.
The
the normal course
would
automobiles, but also refrigerators
and similar household
are
in school
are now
every
In
of events, large
still in school.
Affecting the hard goods
industries has been the need for
fluences.
More than 2% mil-
United States.
lion veterans
Financial
BEACH,
Chronicle)
-
FLA—Harry
has become affiliated
~
,
,
with
Bache & Co., 2809 Collins Avenue. :
He was formerly
with Carl M*;
Loeb, Rhoades & Co.
,.,
vis?s
THE
Number 4690
167'
Volume
COMMERCIAL
&
FINANCIAL. CHRONICLE
fined
Problems Ahead in Utilities
./••• (Continued from page 2) > •'
ior or equity financing, will depend on the situation- within the
particular company,'- My ; comments, however, will necessarily
-
'
r
r
"
have to deal with the
industry
as
fully recognizing that
application to specific companies will1 develop
variations
from the general pattern.
Fortunately the utility industry as a
-
whole,
a
their
/
•
«
"
V
whole
r
shows
balanced
overall
an
'capital
wellwith
structure
sound debt ratios.
Securities
,
missioner
•
and
Exchange
McEntire, in
an
Com-
address
.before the National Association of
Railroad and Utility Commission-
r
1
ers
in
the
of
summer
1947,
de¬
1947, the
common
stocks of these
companies sold
at an average of
earnings and 20.5 times
Group B showed only
slightly higher debt ratios, the
median being 40.8% but, due to
greater use of preferred stock, the
average
common
equity
was
40.1%.
Earnings of this group
were
valued
at
an
average
of
13.1
times earnings at June 30,
1947, and sold at 17.5 times div¬
idends. Group C had a larger debt
burden, the median being 54.2%.
Preferred stock was less promi¬
nent than in Group B, and com¬
mon equity amounted, on the av¬
erage, to 34.2%, of the capitaliza¬
tion.. The average Group C equity
was
priced at June 30, 1947 at
16.4 times
dividends.
financing
panies
some
chiefly to the larger com¬
in the; public utility and
fore, I see the danger that even
excellently
balanced
capital
industries; and the market structures may, to some extent, in
'virtually nonexistent'
for the coming years, have great pres¬
other stock offerings. Time and sure to permit their funded debt
new issue market and new issues
of preferred stocks to be success¬ again,' he added, 'the report of from time to time to exceed the
fully distributed have had to be anticipated common stock financ¬ sum of their capital stock and
offered
at
yields
substantially ing was sufficient to depress se¬ surplus. To keep a broad market
higher than those represented by verely the stocks of even the for their securities I can well see
a
the averages of outstanding shares strongest and most successful cor¬ how
utility company would
and, in many cases, substantially porations.' The Stock Exchange think long before it made its
higher than the yields of preferred study points out that the volume bonds ineligible for savings banks
outstanding issues of the same of stock transactions in relation to in Massachusetts, New York and
company.
The
preferred
stock national income and to the num¬ Pennsylvania, but the Connecticut
market has been so thin and so ber of shares listed has sunk to
savings
Banks may well find
unsatisfactory that many new is¬ abnormally low levels, indicating themselves unable to purchase or
tics based upon a
was
however, do not reflect the recent
have
sues
been
failures
the
and
Securities and Exchange Commis¬
sion have granted numerous ex¬
that
'the
breadth
which is
of
the
retain bonds which would qualify
in the other important States I
market,
important element in
an
have mentioned.
providing liquidity for the revolv¬
ing fund of risk capital, is being
severely restricted.'"
through private negotiation.
It would be beyond the scope
Encouraging Venture Capital
of my remarks to do more than
While
in
dollar
amount
the merely mention some of the re¬
emptions to permit
distribution
a
mediable
causes
situation
appears
ings
utilities whose common stocks are
-
quantity
sufficient
in-
traded
reliable market."
provide, a
'T'l"!**- reported:
.
r
.
used
He
:
Common
at
\
nine of these
-
much
•'.* nine
companies carried as
debt; five of these
preferred stock out-
had
no
standing, so that common equity
1 accounted for j the remainder of
Only
capitalization.
the
;
of
two
companies had an equity
these 70
^ of less than 20% at the end of last
.
and
; year
.
r
respect.. At the
under 25% in this
of 1935 the books of nearly
close
-
fell
others
onlynine
'
v
a
:
i
of
-third
"
these
companies
70
i) - shdwedle&than 25
t; i ratio was per books, and,
'
eliminated
now
5 action.
"In
.
1935,
of
because
,
were als0 overof inadequate de-
r preciation reserves.
T 8.75%
depreciation
about average and
f
much
as
T
^
addition, the ratios, per the
stated
l,
ti
■
•
books
:
as we
much ,'water
by regulatory
reflected
know,
This
as
15%
In
1935
reserve
a
was
reserve
rather
of
"
'
,
.
The
Securities
and
Exchange
'Commission's objective with
-
re¬
com-
,
gard to new financing of
panies subject to the Holding
"Company Act, has been, wherever
'
»
.'possible, to limit funded debt to
assets and to
,' limit additional bonds to 60 % of
of net fixed
50 %
additions
to
fixed
property.
Generally
speaking,
their ob¬
jective has been to limit debt and
preferred stock to not exceeding
75% of total capitalization, and
net
.
'♦,
which,
1
"'Commissioner McEntire further
demonstrated
in
that
all
companies
the
sample having Triple A
bonds, fell in Group A; Group B
companies, to the extent ; rated,
were
of Double A credits, while
A and Baa credits uniformly fell
other types of busi¬
equity capital. It is there¬
fore vital that everything possible
be
done
to
encourage
venture
capital..:;
v/.;1"
The March 31, 1948 issue
of
"The Guaranty Survey" has its
lead article entitled "The Shortage
of Venture Capital."
The article
well points out the existence of a
large shortage of venture capital.
This is evidenced by the rapid rise
ness
for
in commercial bank loans in 1946-
in
Group C.
At June .30,. 1947, 1947, while individual holdings of
Moody's Triple A sold 'on a 2.53% corporate securities were showing
average yield basis; Double A .on no increase whatever, indicating
a 2.60% basis; A on a 2.72% basis
that business concerns were forced
and
Baa
at 3.05%.-
end these
were
At
the
year-
to resort to commercial
2.88, 2.98, 3.08 and meet
lower
price
earnings ratio
which such
less
investment;
dividends;
Capital Gains Taxes at a rate
high enough to discourage risktaking investment and tending to
freeze existing investments;
High
margin
requirements
ket
since 1935 has
total
much
as
corporate
Importance of Equity Capital
new
financed by stock
ments
are
limited to bonds meet¬
ing certain qualifications set forth
in your law, you are very defi¬
public utility' companies to
raise the equity capital necessary
to preserve . sound capital struc¬
tures^: and maintain or establish
eligibility of their bonds within
the
terms
of
I have
already referred to the near-term
capital requirements of the elec¬
tric utilities, in a'sum reaching, if
not exceeding, five billion dollars
over a five year.period. It is esti¬
mated that something more than
half, of this sum may. be realized
without new financing through
depreciation reserve accruals, debt
discount
and
your
other
law.
.
reserves
and
as
12% of
plant; ahc^ equipment
for
the>proportion
been
the. period
is
inclusive
1936-1947
for
iisues/and that
less
than
6.2% "The Survey" points out that
nitely: interested ; ih iHe : ability of during the depression
the:
year
no
expenditures
While your
savffigs bank invest¬
in
years
of the
1930's, there was little demand for
private capital of any kind and
that during the war the need for
million after
taking credit
as
part
being
under
which
file
must
statements"
"sworn
eligibility of
from
bond
any
section should be de¬
this
termined. However, as
Commissioner
by
present
built up
pointed out
McEntire, the
have
reserves
been
so
those of an earlier
period that the 10% limitation is
not too important whatever con¬
cept of "value" may be intended.
activity and liquidity of stock
:
over
minimize
of
amount
to
dividends
reasonable
holders.
I
the
Illinois Sees. Dealers
stock¬
'
;v'
have
recently,-reviewed the
nhmes of tjie electric and gas util¬
ity companies whose bonds 'are
eligible
for
investment
under
law, and find
your
substantial
a
number of good names,
including
many Double A ratings which do
not qualify, such as Metropolitan
Edison Co., Ohio Power Co., Co¬
lumbus
and
Ohio Elec¬
Southern
Elect Sills Pres.
i
CHICAGO,
:
ILL.—The
Annual
Meeting of the Illinois Securities.,.
DfealCrs Association was field On
Tuesday, April 13, in the Chicago
Room
at
the
i > :
^
La
Salle* Ho¬
tel.
fol¬
The
lowing slate
of Officers
and
Directors
elected:
Co., Buffalo Niagara Electric
Co., Houston Light and Power Co.,
were
Consumers
Sills,
"It is generally agreed that the
country now faces a period of
large and sustained demand for
new
capital, to supply the needs
of a growing population, replace
Electric Service Co., Texas Power
man
and
Board of
was
worn-out
and obsolete plant
t
e
and
give effect to
chnolo g i c a 1 improvements.
and
equipment,
needs
These
when
time
must
be
filled
at
a
prices and costs will,
probability, be considerably
higher than they were before the
war. The inactive capital demand
that has long served to conceal
the limitations on the supply of
in all
seems to be giving
radically altered situa¬
tion, in- which the problem of
venture capital must be frankly
venture
a
with if
our
.
doubt
reversal.of
is to expand
But there can be
economy
thrive
little
dealt
constructively
and
faced
and
capital
to
way
that,
some
unless a broad
of the trends of
recent years
takes place, the sup¬
ply ok venture capital in the form
of demand for common stock and
of? funds fon; investment in
unin¬
■'
tric
~
'
common
stocks.
Toward the clos¬
ing months of the year, he said,
stock offerings .were con¬
common
Power
Co.,
Texas
Light Co. and Virginia Elec¬
tric and Power Co.
have
Several good
been' re¬
legal list, such
as
Atlantic
City
Electric
Co.,
Consolidated
Gas -of Baltimore,
Potomac Electric Power, Public
names
recently
from your
moved
Service
of
Oklahoma
and
San
Gas & Electric. There is
also one Triple A company, Kan¬
Diego
City Power and
sas
which
Light
Co.,
just misses out on the pro¬
vision
that
"the
funded
debt
of
the
corporation shall not exceed
the sum of its capital stock and
surplus," which is more restrictive
than that of the legal require¬
ment in any other important sav¬
ings bank State, with which I am
familiar.
it
Indeed,
is
this
provision
which is the bar in most cases, as
the
other provisions
of your law
readily met for the kind
of securities you would be in¬
terested in buying for a savings
bank.
In my own State of Penn¬
sylvania the requirement is that
the outstanding capital stock shall
William
H.
Chair¬
the
of
Sills,
Minton & Co.,
elected
was
President.
James
M.
Dick, Sales
Manager
of
William
H.
William H. Sills
Fientye & Co.,
of
Illinois,
Aurora,
dent.
Vice-Presi¬
y.'.1:.
.
elected Di¬
rectors to serve two years: O. G.
Corns of H. M. Byllesby & Co.,
Chicago; Joseph E. Dempsey of
Dempsey & Co., Chicago; Edward
The
following
M. Harkness of
were
Mason & Moran,
Chicago; Paul Yarrow of Clement,
Curtis & Co., Chicago; David-L.
Heath
of
Heath &
Co., Elgin,
Illinois.
Ralph W. Davis of Paul H.
was elected a Director
Davis & Co.
to
serve one
year.
,
.
should be
the
at
time
of
investment
be
equal to at least two-thirds of the
total debt. A similar provision ex¬
ists in the laws of Minnesota, New
York and Washington. In
setts
the
requirement is that the
equal to at least 60% of the total
funded debt.
The provision in
law for the addition of surr
your
plus to capital stock does not, in
most instances, help the situation
to
many
great extent, because
companies have had
write
off-
any
substantial
and
States
(Special
to
Chronicle)
The Financial
,
CALIF. —
Quincy Cass Associates, 523 West
Sixth Street, members of the Los
Angeles
Stock Exchange, have
added Walter J. Maguire, Jr. to
LOS
ANGELES,
their staff.
With Chace,
(Special
to
to
amounts
agencies. There¬
Whiteside Co.
The Financial
Chhonicle)
Philip ; D.
Whiteside,
Sears, Inc., 24 Federal
BOSTON, MASS. —
Carter is with Chace,
Warren &
Street.
so
against surplus to comply with
accounting requirements of Fed¬
eral
Quincy Cass Adds to Staff
Massachu¬
capital stock and surplus shall be
'
corporation
met largely through
the issue- of ^Government securi¬
ties.
It then goes on to say:
;
capital
of equity
little' preferred ferred stock market in recent
stock, and common equity includ¬ weeks, and the latest average is
ing surplus of 58.7%. At June 30, reported as 3.99. These averages,
is
High corporate income tax rates
calculated
that
over
"value" for dif¬
statute
your
which the
mar¬
has
Exchange
if
the
earnings that can be retained for
business expansion and still pay
Stock
York
*
very
the
of
Double taxation of
which reduce the volume of
As
have
amended, it might be well to clar¬
ify this point for the benefit of
securities represent a
suitable form
section.
there
controversies
constitutes
time
for
New
■
37.5%,
units
smaller
The
.
of
-
the sale of securities to investors.
respectively.
The
recent
improvement in; the bond
has lowered these yields
as of April
1, to 2.77,- 2,89, 2.99
and 3.28, respectively.
' ;V; L:
contribution for the ap* corporated-business is likely to be
'than the stocks of companies more proximately 500 million additions grossly / inadequate.
,,:
"This aspect of the situation is
Vc»nseryatively capitalized. ; Of to surplus through retained earn¬
"course the price earnings ratios ings. Pj V/:.:.'■
forcefully presented in a study of
; of individual companies may be
; At
the peak of the preferred conditions in the capital market
distorted by an unusually high or
stock market in the summer of published last October by the New
unusually low percentage of earn¬ 1946 this form of financing was York Stock Exchange and in the
ings paid out in dividends, as the very attractive, and Moody's reeent testimony of Emil Schram,
yield factor is probably of more Average High-Grade Public Utiir i president ?ot the exchange, at the
'importance with relation to cur- ity Preferred Stocks, for a number hearings on the tax-reduction bill.
v
rent market prices than the times of
weeks, were at a 3.40% basis. Mr. Schram cited figures of the
earning factor..:;.I.;';/?
There was a marked change in Securities and Exchange Commis¬
Commissioner McEntire divided this situation, however, during the sion showing that, of the $4.5 bil¬
the 70 companies referred to, into later months of 1946 and 1947 and, lion of new money raised through
f, three groups. The companies in in February, 1948, this same aver¬ the capital markets last year only
Group A constituted the upper age was 4.07.
There has been a $1.5 billion was represented by
third and had a median debt ratio slight improvement in the pre¬ stocks and only $784 million by
a
into
the
and the considera¬
tions entering into "value" at any
particular time. At some future
equity securities by forcing liqui¬
dation and by breaking up large
estates
in
aware,
many
what
invest¬
for
risk-taking
market
'
vat
to
all
are
ferent purposes
and depress the market
modest
"
the weaker capital ratios, sell
incentive
3.29,;
-
'
you
The word "value"
defined
been
bulk of venture capital;
which
surplus earnings available for
construction; in other words, not
and surplus of at least 25 %. Divpaid out as dividends. This latter
\ idend restrictions have been imitem may approximate half a bil¬
:
*
posed where the latter ratio rep- lion dollars. If we assume the new
resented less than 25% of capitalcapital requirements at the five
^SSization.
billion minimum, it leaves some-?
^
These are sound objectives. The thing less than half of that amount
"management of any particular to be raised
by new financing.
If
company is well advised to en- this be divided
into, say, 50% debt,
deavor to maintain or attain them.
25% preferred and 25% common
\
In the same address Commis- or surplus, then one might con¬
%
sioner
McEntire Vsatisfactorily template there being .raised by
demonstrates
that
the ■ common new bonds approximately one bil-*
'stocks (and I am.sure the same lion and a half, by new preferred
;
r thing would be true of the pre¬ stock ; 750 million, and by new
ferred stocks) ; of companies hav- common stock approximately 150
\v
is not
taxes which weaken the
Estate
banks to; investments; and
requirements
capital
some
the great
ment
corporation"?
which normally supply
brackets,
which
value of the fixed property of the
able, such as:
•/
'
The heavy tax burden on indi¬
vidual
incomes
in
the
higher
that should have been financed by
ex¬
ceptional.. Today .? the
average
J company in our 70-compan,y sampie
has
depreciation
reserves
amounting to 22.5% and the reserves of
only seven companies
1 ' fall below even, a 15% level.
re¬
.
.
•
an
was
Averages
June
slightly lower at 33.27.
60%
as
Stock
Utility
Public
30, 1947, were 34.73.
At
the end of March 1948, they were
,
/
Commissioner
'^Dow-Jones
the
panies averaged about 50% debt,
17%. preferred stock, and 33%
-' common stock and surplus'. Only
'
by
have not been disclosed, but
"At the end of 1946 these com¬
I
serious, however, it must be
McEntire membered that these electric util¬
their
ity equity securities must compete
market
prices
probably -corre¬ in the
general market with the
spond pretty closely to those of needs of
all
to
comment
one more
law,
shall be not less than 10% "of the
attribut¬
to be
bank
says-that
the combined surplus and reserves
for depreciation and contingencies
this
which
to
May I make
about another section of your sav¬
.
.
31
oil
interesting statis¬
SEC study "for nine times earnings and 15.4 times
dividends.
•;
V-i ■;
'1; -j equity capital requirements of the
a
group of 70 companies• which
electric utilities do not sound too
constitutes nearly all the electric
The names of the 70 companies
veloped
(1671)
With Paine,
(Special
Webber Firm
to The Financial
Chronicle)^
•
Wilbur M.
Fullaway is with Paine,, .Webber,
OMAHA,
Jackson &
NEB.
—
Curtis of Boston,
^
,
,
THE
(1672)
32
FINANCIAL
&
COMMERCIAL
CHRONICLE
must be power
There
(Continued from page 4)
immediately
by
further
Appraisal of the combined im¬
.
lowed
price increases.
Stoppage of work in the bitu¬
minous coal mines on March 15
pact of these two plans may be
undertaken
by an examination,
with
surplus already felt in 1947. As
finally adopted, the European Re¬
covery Plan will involve an ex¬
demand for
tons
of
sands
of steel
and
post¬
the time when the supply of
automobiles and other items fab¬
ricated from steel will catch up
demand.
surplus in
port
The Defense Plan
the
of
reminder
this
Against
billion
below
October
1948
at least $2
level
the
that
the
report contemplated and
This leaves room
continuing narrow margin of sup¬
found to be safe.
ply at the very basis of our indus¬
for
trial
of considerable
magnitude. The defense program,
as now
formulated, implies a $3
to $4 billion commitment for the
fiscal
year
1949.
In the Presi¬
dent's letter of April 1, transmit¬
system,
President
the
on
March 17 addressed the Congress
on the seriousness of the interna¬
tional
situation
and
launched
a
absorption of a
safe
the
fense
de
program
policy
are
the
to react to
ily be aggravated, and substantial
ness
increases in the demand for cer¬
gram
tain
new
In
ary
the
goods might quickly initiate
been
analysis of this inflation¬
our
shall assume that
strike will; be ^ settled
problem
coal
within
x
we
relatively short time. The
a
loss of coal production
of
in terms of an incipient new
has abated, and there has
an increasing
disposition to
boom
price advances. v,.
even
a
in
a
strike
month would entail the
the
assess
plan
as
an
offset
be,
developing during/1948 rather
than
as
a" further
stimulus
to
an
already strongly inflationary situ¬
ation.
yy
But while
-y'y
$3 to' $4 billion pro¬
a
not seem disturbing to
billion
economyr: when
viewed generally, the conclusion
gram
may
the
defense
must
poned
they
But
program.
in
be
post¬
measure
some
for the
the government
peared need to impose either price
present revised
During this period if
any group insists that its income
will fairly
control
shall
which we believe
well restrain inflation
if labor peace is maintained and
the defense program
is not greatly
will
the
expanded, the first
three
operate through influencing
entire economy,
the others
directed at points
sure.
'
■';
:
Control
are
of specific pres¬
"T
v •
tioning—There
has
and
not
Ra¬
yet
rationing, other than in
a
few materials, as
discussed
above.
The
prospects
for an adequate meat supply are
or
the
case
so
however, and there is so
uncertainty about the gen¬
food situation, that the Presi¬
of
eral
should
dent
have
authority
to
in propoprtion
advance in prices or that
it shall be in a position to pay
up to whatever level is needed
to
still avoid a destructive gen¬
can
eral
monetary inflation,
or
even
though there might be a consid¬
erable rise in particular prices.
Consumer credit,
ing that
also, should be
The President's warn¬
restricted.
th^ef fvould be impru¬
dent, competitive easing of credit
terms when control was dropped
has been
Savings
Bond
Campaign—The
its
accustomed
of
men
in
involved
protecting our
These economic facts of
be proclaimed along
with every step in working out
the practical details of the de¬
country.
life
should
fense
program.
Michigan Brevities
:
(Continued from page 12)
operations
will
not
The
exceed
the
in
crease
blies" both for Willys-Overland
Motors, Inc.
#
labor
and
ever,
ties
the
in
incident
Net sales
market
the frictional
way of any
distribution
of
labor will
in¬
1948.
is tight,
how¬
difficul¬
accurate
lead to
use
of the United
ment Service.
To this
we
$592,-
were
were
$277,198.
This
/■:/';"/1
/
28
.124, while current liabilities
States Employ¬
V;
end,
at Feb.
rent assets
local shortages. These can
minimized by making better
many
be
❖
of Rudy
Manufactur¬
ing Co., Dowagiac, for February
totaled $253,420, compared with
$175,333 in the preceding month
and $152,624 in December, 1947.
Net profit after taxes for Febru¬
ary amounted to $9,182, as against
a loss of $1,606 in January and a
loss of $7,628 in December. Cur-"
thereto
in
#
con¬
the expected
labor force
/
Offs" and "Pulley Drive Assem¬
templated increase in the armed
forces and in the expanded indus¬
trial
of
burden of
common
num¬
the
amount
from other users, it is
in effect demanding that it
be
exempted from sharing in the
away
V
ber
company
known
believe that the
the
national office of the United States
as
name
by
Employment Service would have
to be enlarged and strengthened
of
Co.,
Furnace
of which
vote
March
formerly
was
Rudy
was
changed
stockholders
on
1.
*./■/*
*
The
Employment Service should
Briggs Manufacturing Co., De¬
to develop a smoothly
troit, .reported 1947 net sales of
functioning program of (a) pri¬ $204,831,337 in automobile bodies,
ority referral in local offices, and parts and components and Beauty(b) comprehensive inter-area re¬ ware
plumbing
fixtures.
This
undertake
cruitment.
We should make sure
a profit of $7,512,156 after
taxes, equal to $3.86 per share on
yielded
that the Selective Service Act and
regulations
ministered
fully vindicated.
bid
goods
imprudent make ready a price and rationing
reduction in taxes increases the system and to put it into effect
need and by no means ends the selectively as conditions require.
Where price controls are imposed
opportunity for helpful fiscal pol¬
icies.
New taxes should be de¬ there should be a prohibition of
such
wage
increases as would
manded in proportion to (or even
break through the price ceiling,
in anticipation of) all subsequent
increases of defense expenditures except for certain necessary equit¬
which are not clearly offset by able adjustments and except for
such wage increases as might be
practicable reductions of govern¬
ment expenditures in other direc¬ necessary to recruit people for the
tions. Reduction of public expen¬ defense program in the absence
of manpower controls.
|
ditures should be made wherever
Distribution of Labor—The
be advanced
to every
poor,
much
or
downward.
ap¬
Fiscal Controls—The
to
softening tendencies which might
serious
disruption
of
railroad
transportation, steel production,
the defense pro¬
controlled mate¬
permitted quantity in author¬
Price-Wage
policies and programs of
Of the
On April 2, the Con¬
completed passage of the
possible.
European Recovery Plan and on ting an additional budget request,
Credit Controls—So long as in¬
the same day removed approxi¬ there was outlined a program in¬
flationary danger continues, the
volving
additional expenditures
mately $5 billion from government
central banking system should use
for the armed services of only
revenues through its tax reduction
its powers to restrain the creation
act
and
added
this amount to $1.7 billion in fiscal 1949. Of this
of buying
power through bank
amount not more than half will
civilian spending power.
loans.
The imperative need to
represent actual payments to the
These
developments must be
protect the government bond mar¬
evaluated against the background public in 1948, and only a part ket prevents the use of the tra¬
of this will represent a demand
of an economy of relatively little
ditional method of limiting the
additional goods.
Thus, in
slack in employment or produc¬ for
expansion of bank credit by rais¬
terms of its general impact upon
tive capacity, of high prices still
ing discount rates, but something
the
economy,
the defense plan
can be accomplished
strongly colored by inflationary
by increas¬
would seem to be something the
forces, and of a precarious balance
ing
reserve
requirements, and
country could readily take in its
between prospective Federal rev¬
authority should be granted to
stride.
v"v/•'
enues and projected
scale of ex¬
take this action.
If we avoid a
With increasing appreciation of
penditures. In such circumstances
government deficit and prevent
these facts, the tendency for busi¬
the inflationary threat might eas¬
the expansion of bank credit, we
defense plan.
gress
use
ized but limited projects.
Recommendations
the economy,
pone
did not grow out of a
anti-inflation
adopted.
first, of their general impact upon
and, second, of their
impact upon specific situations of
shortage. Viewing first the gen¬
eral impact, we concluded in our
October foreign aid report that
the export surplus in 1948 under
an
aid program of the size then
contemplated would not inject a
new inflationary influence because
it would not, exceed the export
higher wages, but it had the effect
of immediately aggravating short¬
age of material at a point basic to
our whole industrial system. Even
if settled at an early date, it will
result in the loss of many thou¬
dent's
to make it numbers of people would achieve
higher standards of living than
rials in unnecessary projects, or had
ever
been
realized
before.
to use controlled materials beyond Those hopes are not nullified by
unlawful to
President's Advisers Stress Inflationary Trends
Thursday, April 15, 1948
are so
as
drafted and ad¬
suitable de¬
the
to give
who
outstanding
This
ferment to individuals and groups
compares
$125,598,031
in
common
with
1946
stock.
of
sales
net
and
a
net
especially needed in the profit of $4,380,115 in that year,
program.
Procurement after income tax refund and other
arations for the nation-wide cam¬
fore the restoration of fuel pro¬
agencies likewise should exercise adjustments, equal "to $2.25 per
paign to sell savings bonds for¬
duction constitutes our foremost is different when we turn to its
care
to
see
that 'contracts
are
share. .,,v-:
v..
tunately comes at the most ap¬
domestic problem since indefinite specific
impact upon particular
placed
in looser labor
market
The
$79,000,000 increase in
propriate time to give maximum
areas and, so far as possible, with¬
continuation of the
coal strike production and market situations.
1947 net sales over 1946 reflects
effect
to
the
anti-inflationary
Just as in the case of the European
would bring industrial paralysis.
held
from
tight labor markets
the
increase in
material
and
value of consumers' savings.. Sav¬
Efforts should also be made to
On this assumption of an early Recovery Program, to which it is
labor costs, the
company
re¬
ing by consumers is the only antinow
added, the real issues as to
prevent labor piracy
or
unre¬
settlement of the coal strike, it is
ported. This has boosted the
inflationary
measure
which
is
whether additional economic con¬
strained intro-industry hiring.
our belief that the European Re¬
V;
average cost of an automobile
pleasant.
It is also one of the
trols are needed grows out of the
// In general, our position is thai
covery Plan and the defense plan
body by 60% between 1941 and
most effective of such measures
concentration of both programs on
as now proposed should not gen¬
1947.
No effort
should be spared in manpower control should be of an
certain classes of goods and areas
.U,
-Kb
v/-;.
erate inflationary pressures which
pressing to the fullest advantage indirect rather than direct sort,:
of
production
where
shortages
at this time require resort to over¬
Net
sales
for
the
the fine
enthusiasm r;which has
year
1947
have been most severe and per¬
In Conclusion
all controls of the war economy
amounted to $35,129,642, the larg¬
been built up in the great army
sistent. These areas include prod¬
At this early stage of the de¬ est in the Holland Furnace Co.'s
type. We believe that the safe¬
assembled for this campaign.
r
ucts of farm origin, particularly
fense plan, two points should be 41 years of continuous business
guarding measures included in the
Materials Controls
Since we
livestock
products and textiles,
President's 10-point program in
clearly recognized and made plain existence, and represented a 40%
steel and other metals, and the start the defense effort not from
November and reiterated in Janu¬
increase over the year 1946. Net
to the public:
a position of industrial and com¬
sources of power and heat, includ¬
for the year 1947 amounted to*
ary should be promptly enacted
mercial slack, as in 1939, but from
(1) We are in a peace economy,
and somewhat extended but that ing coal, petroleum, gas and elec¬
one
of activity so high that sig¬ not a war economy.
The main¬ $3,696,320, compared to $1,986,600
V'/'r
SC
this will leave free competitive tricity.
in
1946. Earnings per share
of
nificant material shortages already tenance of an armed force is as
While we do not yet have spe¬
common stock were $4.10 as com-,
enterprise to operate through most
exist, we believe that ordinary much a part of the peacetime sys¬
cific information as to the size
of the business world.
.::
Iv
pared with $2.21 for the year pre¬
tem as is the maintenance of a
and timing of these particular de¬ prudence requires that increased
vious. Current assets at Dec. 31,
We are aware of course that the
attention be given to perfecting a police force by States, counties,
1947 totaled $21,026,823, as against
international situation with which mands, we have already, in eval¬
and cities, or the employment of
system of allocations, priorities
current liabilities of $7,627,819.
the President must deal is most uating the impact of ERP, urged and
detectives
and
factory
export and domestic use lim¬ railroad
the adoption of allocation policies
it
uncertain
and
that the defense
i;.
it
itations
which would
build
guards. The last two years have
up
which, if carried out, will help
plan
now
proposed
may
soon
The Midland
given us a fuller measure of the
Steel Products
to hold the prices of these goods adequate stockpiles and safeguard
prove to be inadequate. We feel,
Co. of Cleveland and Detroit re¬
productivity of our resources when
from unduly rising and prevent production under the defense plan
however, that our analysis and
ports that its 1947 net income
bottlenecks and break¬ aggressively used. We were not
demoralization of productive oper¬ against
recommendations should be lim¬
downs.
Present and prospective staggering under the load of $11
was at an all-time high of $3,ations. The same prudent meas¬
ited strictly to the program as
billion for our protective forces
503,426, or $11.21 per common
shortages in food, textile, metal
ures' will
help to offset the in¬
announced and as evaluated by
and the rise in this item to $14
and fuel or power items already
share. This compares with a net
the business community. This in¬ flationary effect of the expedited referred to make it
of $1,552,889, or $2.90 per com¬
necessary tha+ or $15 billion will not swamp our
volves something of a psychologi¬ stockpiling program for which the allocation
and
related
control economy nor require us to pass
mon share, in
1946., A 15-year
President has requested $375 mil¬
cal factor but, as already stated,
from free enterprise to regimenta¬
financial record of the company
measures be promptly enacted and
lion.
r ■'
does not as yet, as we read the
tion. Some rather systematic and
is included in the annual report.
selectively applied.
One factor which has entered
signs, involve general speculative
This record shows that during
Some controls have already been vigorous discipline, however, must
the picture since the time of our
anticipation of future expansion
be exercised to redirect our eco¬
the
15-year period sales
in¬
found necessary during the forma¬
of the program.
foreign aid report is the addition
Everywhere in
creased seven-fold, working
tive stages of the European Re¬ nomic effort so as to meet the
the business world there are heard of about $5 b^lion to the purchas¬
new goal in an orderly and eco¬
capital doubled and in no year
covery Program. These should be
words of caution, but we recognize ing power of consumers through
did the company sustain a loss.
nomical manner.
-
and other industrial output. There¬
a
$240
completion of the extensive prep¬
are
defense
—
,
.
.
•
-
*
.
that "that condition
might change
reduction in taxes.
This adds
to
suddenly.
The
the
European
Recovery
Plan
inflationary; pressures an impoitant force and virtually elim¬
inates the one important weapon
and the defense plan need to be
considered Together because
they controlled by the government with
entail
similar economic " conse¬ which to combat inflation—a sub¬
with
articulated
the
defense
merged
into
system.
We
(2) Every citizen must recognize
voluntary effort
that further diversions of produc¬
believe also that
in
the
formulation
rials control
forcement
•
or
control
of
the
mate¬
plan and in its
should
be
utilized
en¬
to
tive effort to
military
uses
inevi¬
sacrifice
of
civilian types of consumption,
is our particular application
It
of
tably
involves
some
the fullest extent possible.
The
the :old alternative of "guns or
Yet authority to impose controls should
■ '*.
not be limited to establishing priv buttery
we believe that this untoward de¬
consumers without a
correspond¬
Our people had—and we believe
ority of use. That simply makes
ing
curtailment
of
purchasing velopment can also be neutralized the competition all the warmer quite properly—looked forward to
power in their hands.
if the other, features of the Presi¬ ion the, balance*, oi »the
supply.. a .postwar .period in . which larger.
quences.
drawal
of
Both will entail with¬
goods from American
stantial government
surplus.
„
■
V
**
*
:
Sales
and
*
*
Z1
■
earnings of Detroit-
Michigan Stove Co. for 1947 have
established another all-time high.
Net
sales
were
$20,693,376, as
against $14,955,408 in 1946, while
net profit from operations, after
provision
for
Federal
income
taxes
was
preferred
share
as
$2,445,858, equal after
dividends to $2.52 per
compared
with .$1,975,-
Volume 167
187,
or
in 1946.
$2.03
per
THE
compared
with
February
FINANCIAL
CHRONICLE
$3,324,000
Industry
(Continued from page 5)
will have to gage the long-term effects of a definite "no" to
a
wage
Taking the most optimistic viewpoint possible, there is
chance that the steel shortage will be eliminated this year.
In
month
a
it will
two
or
be
no
than' it' has been for two
worse
report
Seating
Rapids, reveals that
the
of
Co.,
Grand
with
Co.
the
in
long-term
Government
:
was
increased to $1,000,000 as com¬
pared with $760,000 outstanding
at
Dec.
rate
31,
The
increased
$125,000
with
*
1947.
reduced
was
The
annually,
July
15,
whole
is out.
payable
beginning
1951.
The
the
tional funds received were used
to increase working capital.
Current
assets
amounted
rent
to
at
Dec.
liabilities
to
from
will
strike,
life
new
that
per
$2.52
big
a
there
over
part of the
out of their hands before the
pass
and
the
is
the
dis¬
year
so
the
defense
talk
have
combined
to
again at $300
once
or
more
a
ton for
;;
been
the
point of turning back
means that they will
either need it themselves, or they will know they can find a home
for it, at a good price, "'The Iron Age" concludes.
on
share
in
1947
was
The
*
Clark
.♦$$*
$
E q u
Buchanan,
i
p
pared
e
t
n
total
day
sales
33.1
com¬
pre-
and
year
due
to
points,
strikes
in
the
of .steel
This
operating
ingots and
with 84.4%
compares
rate
castings
a
;
last week.
97.5%.
1,285.000
LOADINGS
DECLINE
CONTINUE
DUE
Loadings for the week ended April 3, 1948, totaled 661,807 cars,
to the Association of American Railroads. This was a
V; decrease of 2,568 cars, or 0.4% below the preceding week.
Carloadings not only in the corresponding weeks of 1946 and 1947 but
also in the week of April 3 and the preceding week this year were
;Hudson Motor; Car Co. re¬
all reduced because of labor difficulties in the mine fields.
It rep¬
ports consolidated net income
resented a decrease of 53,352 cars, or 7.5% below the corresponding
for the year 1947 of
$5,763,352,
Week in 1947 but an increase of 18,163 cars, or 2.8% above the
after all charges, including in¬
same week
in 1946.
'
:*
V .: '
V
terest, depreciation and Federal
State and foreign taxes. This is
ELECTRIC PRODUCTION SLIGHTLY BEL6W PRECEDING WEEK
.
according
Prices
in all foreign primary markets were reported on a firm,
Imports of apparel wools received at Boston, New York ancb
Philadelphia in the week ending March 26 represented 6,167,200 clean,
basis.
pounds, as compared with 6,769,400 in the previous week.
-
the
end
of
the
For
year.
The amount of electrical energy distributed by the electric light
industry for the week .ended April 10, 1948 was 5,032,879,000 kwh, according to the Edison Electric Institute.
This figure was
only 3,909,000 kwh. below the turnout in the preceding week, but ex¬
ceeded the output for the corresponding week of last year by 413,179,000 kwh., or 8.9%.
It was also the lowest figure since the week
ended Jan. 3, 1948, a holiday week, when production amounted to
4,868,011,000.
The corresponding week last year also showed a de¬
cline from the previous week, but two years ago an increase was re¬
ported for the same period.
s
to
$2,748,107, or $1.51 per share,
excluding a nonrecurring loss
on
sale of vacant land.
pA small plant, containing ap¬
proximately 200,000 square feet
of
floor
Harper
and
space
Avenue
quired
adjacent
pany's
body
plant.;,
<
-
the
AUTO
com¬
•
*
r
OUTPUT TURNS
CONSECUTIVE'
Production of
;
last
Friday Night Bond Club
representatives
of
hundred • New
comprises
York
houses,
banks, has
of the
for
Eastman,
Robert A.
Dillon
&
President^'Thomas
Bear,
Stearns
&
Co.;
sponding
Treasurer,
W.
Vice-
Guliana,
Treasurer,
William
Dunne,
Co.
Herdt,
Elected
R~
Lee,
Lauer
members
of
Arthur
Amott,
A.
Rauch,
New
&
the
William
are
Baker
j Co.;
Stock
Exchange; John F. Rooney, Foster
&
Adams;
Herbert
J.
Cullinan,
Asiel & Co.; and Raymond Rodri¬
guez,
to
year
and
date
is
Canada,
in the Gen¬
was
reported
at 1,504,805 vehicles
about 10 % above the corre¬
or
1947.
-
because
the
cf
coal-steel
Guaranty Trust Company of
decline
to
industrial
and
to the lowest level in
Inc.
for
the
failures
in
third
the
two and one-half
situation, "Ward's"
week, com¬
ending April 8 dipped
months, Dun & Bradstreet,
reports.
the
24
failing in 1946, casualties
in the
week
same
succumbed.
*
■
all
of
,
Nearly
of prewar
a
;
-
the
week's
Involving liabilities of $5,000
79
only one-fourth as numerous
a total of 313 businesses
were
1939 when
decline
or
*
'>
"
•
^
among
Despite
more.
:
failures
occurred
downturn from
a
week ago to 68, failures of this size group continued to pre-
>
>*;
of Dominick & Dominick
ident. 1' •''••:
as
I
demand
for
>
meats remained
fresh
large, there were
slight declines in meat prices. Dairy products and meat substitutes*
continued to be sought, and fish and poultry sold well,
Summer
furniture
favorable
attracted
attention
with consider¬
slipcovers and curtains. Seedlings and plant bulba
were requested along with garden implements and supplies.
Paintas
and housecleaning items were in large demand with increased inter¬
est in building materials and hardware.
/
in
attending wholesale centers rose sharply
retailers sought merchandise suitable for special;
The number of buyers
last week and many
There was a moderate increase in the total dollar
trade during the period ended on Wednesday
promotional sales.
of. wholesale
volume
Dollar volume remained near the high level of a,
year ago. Buyers continued to insist on good quality merchandise afe
moderate prices and deliveries, it was noted, were generally prompt.
of the
past week.
Department store Sales on a countrywide basis, as taken from the*
Reserve Board's index for the week ended April 3, 1948*
Federal
Of the 63 larger failures, 7 concerns incurred liabilities of more
than $100,006 each.4 Small concerns failing with losses under $5,000
preeeeding week. For the four weekaended April 3, 1948, sales increased by 4% and for the year to date
increased by 5%.
'
>■
;
~
Z
...;
v
and
1
10
veryjittle, numbering 11 against 12 in the previous week
last yearj
Casualties
most numerous in retailing where 34 businesses
probable loss to creditors. This trade also had the
sharpest rise in failures from a year ago; only 13 retail stores failed
in the same week of 1947.
The second largest number occurred in
manufacturing where failures at 22 were off slightly from both the
last
were
with
went out
week
and the 29 reported in the previous year.
Very few
5 and 4 respectively, failed in wholesale trade and con¬
struction.
•
»•
•
;•■
•;;
'
of.';-- "'.•••
■■■
;
The/largest nurpber of failures "continued to be concentrated in
the Pacific States.
r s—• ;
•
"
•
■
with
by 12% from the like period of last year.
-
This compared!
increase of 17% in the
an
,
.
■
'■
-
,
r'
■
•-
n
■
■
recovered from the
Retail trade in Now York the past week
-
,
M
the
decreased
•.
Pres¬
high level with a moderate decrease in the buying of
:J: dominate and remained above last year's 49. V
concerns,
.;
Mr. Eberle succeeds Fred Reiter
While
able interest
,
as
a
fancy foods and confectionery.
Concerns failing numbered 79, down from 91 in the
preceding week. Although considerably higher than the 59 occur¬
ring in the corresponding week a year ago and over three times
23
New York.
tained at
.■
consecutive
week
The dollar volume of food purchased by consumers was sus¬
;
automotive schedules and very likely those later
cut back
Continuing
fluctuated
&
York
units from last
103.520
moderately with consid¬
slackening of interest in millinery, jewelry and furs. Promo¬
tions of handbagsj blouses and gloves attracted favorable attention*
and cotton dresses and lingerie also sold well. There was a moderate
response to promotions of shoes with summer footwear emphasized],
Men's summer weight suits were in large demand, and some clear¬
ances of haberdashery stimulated buying.
erable
n
Stern,
Stern,
executive committee
estimated
BUSINESS FAILURES HOLD TO DOWNWARD TREND
Lauer & Co.; Assistant Secretary,
Carlisle
an
states.
Hegewald/ Vilas & Hickey; Sec¬
retary,; Daniel
the
period of
be
must
mercial
Ralph A. Berkowitz, Stern & Co.;
Assistant
slightly to
for the United States
serve
Eberle,
Co.;
F.
,
The demand for women's wear declined
and trucks in the United States and Canada
division.
truck
Compared to the post-Easter week of a year ago there were
:
'
relatively few clearance sales of apparel.
and
announced the election
year;
!
THIRD
"Ward's" said most of this week's decline
a
brokerage
firms,
following officers to
one
This compares
in 1941.
on
investment
FOR
according to "Ward's Automotive Reports."
with 97,393 units in the like week of" 1947 and 99,260
Next month's
than
more;
LOWER
total,
Output for
Bond Club,
which
of
105 132
eral Motors
Elects New Officers
membership
below that of the previous week.
While total dollar volume ,was*
slightly below that of the corresponding week a year ago, the change*
from a year ago reflects in part the occurrence of Easter last year ont
April 6, states Dun & Bradstreet., Inc., in its current review of trade.
Mild weather in many areas and the usual seasonal promotional and*
clearance sales helped to stimulate interest in some merchandise.
WEEK;
cars
declined
week
week's
Friday Night
post-Easter lull in consumer buying during the period endecb
Wednesday of last week reduced retail volume to a level slightly
on
'
PK
The
WHOLESALE DOLLAR VOLUME MODERATELY HIGHER
ac¬
sheet-metal
' '■
i
on
been
to
and
- •
located
has
:
The
and power
the
'
.
RETAIL TRADE AFFECTED BY POST-EASTER LULL-
;
at
1946, net income amounted
year
during the past week, and contracting for the new clip wool in
western States was said to be at a practical standstill.
5
;
,
on
spotty
Trading in domestic wools in the Boston market was
viding for preferred dividends.
equivalent to $3.17 per share
1,815,783 shares outstanding
making negotiations for more than 300,000 bales.
improvement also reflected
mill
of
sales.
It was
also equal
to
$8.21 per common share after
pro¬
was
a renewal of mill buying and!
price-fixing against textile sales, short covering and a better
ieeling resulting from final passage of the European Recovery Pro¬
gram legislation; A further influence was the increased activity that
featured the carded cotton gray goods market in the closing days of"
the week, accompanied by an improvement in the price tone. Sales*
were mostly for third and fourth quarter delivery
and totaled up¬
wards of 20,000,000 yards. Print cloths furnished the bulk of the ac¬
tivity with some sheetings and various drills and twills included.
;
The
tons
LABOR TROUBLES
TO
dollar
country
1
equivalent to
against 1,521.300 tons last week,
as
against sales of the staple to China, it being reported that that
A />
•
is
largely influenced by price-fixing
The continued uptrend was
"
decrease of
in 1940, the highest prewar year,
FREIGHT
$3,-
were
per
Mon¬
on
1947.
price movements in leading domestic markets were irreg¬
ular during the week but the trend was generally higher.
The New
York spot quotation advanced 88 points to close at 37.08 cents per
pound, following a rise of about 100 points the week before.
Cotton
1,757,400 tons a month ago, 1,653,700 tons, or 94.5% of the old
f capacity one year ago and 1,281,210 tons for the average week
com¬
as well as those of
its customers and
suppliers. Final
earnings for 1947
990,000, or 6 Scents
announced
of steel companies having
rate
week beginning April. 12, 1948,
15.1%.
or
week's
This
pany's plants
net
Steel Institute
and
month ago the indicated rate was
;
$54,878,000 for
the year 1945. It should be noted
that the decline in sales in 1946
was
Iron
of capacity for the
of
1947,
year
American
of this week the operating
again
Closing prices represented the lowest level
since early in January,
94% of the steel-making capacity of the industry will be 71.3%
Co..
$38,243,000 for the
to
ceeding
m
reports
$61,172,000 for the
I'■'
£
Hog supplies continued to exceed demand and values
-
moved down sharply.
the tight supply situation
against 55 cents in 1946.
as
/
offering stored wheat in increased volume due to the more fa¬
outlook for the new crop. Cash corn prices showed some,
improvement, influenced by a further sharp reduction in the visible
supply, and a pick-up in shipping demand from the East. Lard prices
continued to rise, aided by active commission house buying induced!
by strength in cottonseed oil and prospects for^large purchases of cash*
lard for shipment to Europe.
market and, states "The Iron Age,"
rapid in the past week that sales are
who had
customers
week ago.
a
Increased
;
to be
gray
been
with prices fluctuating irregu¬
which left final quotations little changed
vorable
ERP
into
has
of their steel,
some
Net
income
least
at
nervous
were
a narrow range
trading on the Chicago Board of Trade was largely
professional in character, as high margin requirements tended to dis¬
courage outside business. Wheat developed strength at times, bols¬
tered by government buying of both wheat and flour but the im¬
provement in prices was not sustained; Demand for wheat from cash*
interests and mills tended to lag. Farmers in the Southwest were said'
r
;
resurrection
To steel
cur¬
$2,014,515.
steel
picking up * and prices are
hard-to-get flatrolled steel.
31, 1947
$7,241,491, and
steel
have; convinced themselves
makers, after looking
but
scared
are
'
coal
breathe
addi-
of
;
The
officials
controls,
picture,
tribution
interest
is
for
need
a
3%% to V/%%
loan
larly in
.
connection
company's
loan under which the loan
Grain markets
were on hand at steel company plants before the strike.
The present steel supply picture looks bad for the regular domes¬
tic steel user.
So bad, "The Iron Age" observes, that it won't be
long before the trek to Washington for priorities will begin in a
big way,/;;;';; <•';* V; v1; -///;••:'
::'
1948 a modified agreement was
entered into with the Prudential
Insurance
show
stocks which
Feb. 25,
on
WEEK
daily wholesale commodity price index, compiled by Dun &
Bradstreet, Inc., went slightly lower last week, closing at 283.67 om
April 6. This compared with 283.52 a week earlier, and with 262.431
on the corresponding date of last year.
/•;'
The
In the next 30 to 60 days the full effects of the coal strike
up in finished steel shipments.
Cuts are already being
made in shipments because of the dissipation of semi-finished steel
will
.
COMMODITY PRICE INDEX SLIGHTLY LOWER FOR
years.
annual
V
■'
.
increase, this trade authority points out.
for 1# days due to the shortage
of gas.
The
/>:■
Interrupting a three-week rise, the wholesale food price index*
compiled by Dun & Bradstreet, Indiv fell 3 cents this week to stand
at $6.72 on April 6.
Up 4.8% over the $6.41 recorded a year agc^;
the current figure represents a rise of 1.7% over a month ago whei*
the year's low point of $6.61 was reached.
\.v
for
the Detroit plant was shut down
American
,Or'
FOOD PRICE INDEX REVERSES UPWARD TREND
period of 1947. During
of the current year
same
&
The State of Trade and
;•
Shipments for January and
February, 1948 were $3,736,009
the
COMMERCIAL
share
common
.V,". 'v.
.\
■„
•
Number 4690
sales offer¬
12% or more
after
post-Easter doldrums with brisk customer response to
ings.
Gains in department store sales approximated
over
the
1947
Easter.
.
week,
■"•;•;
which
,:;V;
v
was
; "
the period immediately
;
,
'
Federal .Reserve Board's index, department;
store sales in New York City for the weekly period to April 3, 1948,
decreased 10% below the same period last year. This compared with
an increase of 15% (revised)
in the preceding week.
For the four
According
the
April 3, 1948, sales increased by 2% and for
by 4%.
■ v
:
weeks ended
to date
to
the yea*>
'
paying for the $2.8 billion of
goods and services that we bought
jrom you. Since, as I have pointed
out, our overall position was in
balance, it follows that vis a vis
States.
Public support of the
program
the
reflected, I think it is fair to say;
a
mingling of altruism and selfThere
interest.
was on
Canadians
most
a
loans
had
sympathetic
immediate
an
million
In
a
country
that is traditionally
highly dependent on foreign trade
where
normal
in
even
ports are equivalent
age
times
is
it
measures
but
own
of
restoration
of
our
main
back
of
any
would
acted
Restrictions of Imports
As you know, the
proach
tion
a
of
this
to
has
Canadian ap¬
situa¬
emergency
involved
-combination
a
including the restric¬
world trading system in which tion of Canadian
spending on U. S.
multilateral
trade
would
once
goods and services through import
more
be possible—and
specifi¬ prohibitions and quotas, domestic
cally, in which sterling would taxation on goods having a high
once
more
become
convertible U. S. dollar
content, curbs on tour¬
measures
as
a
.
■
...[pj..
Hindsight now reveals a num¬
ber of miscalculations—which in-
ist travel in the U. S. dollar area,
plans for the expansion of exports
!
to that area,
But
the
export
that
positive side, efforts are
the
would have been of
debt'
the
total
monetary trends of the past year •
have been running in the right 5
direction. • '
;:::r
; i
a^
•
plants of
this is
But
concerns..
essentially
In
of
long-run
be
significant
advantage since the export indus¬
tries are in general operating at
no
and a bonus on addi¬
capacity and already enjoy a fa¬
cidentally, apart from their direct tional gold production. I- would vorable
competitive position on
significance, are perhaps an in-! ask* you to observe - that in the
the basis of prices and costs.
teresting commentary on the limi- | case of the prohibitions and re¬
The counter-arguments are first
tations
of "planning."
For one strictions, Canada has followed a
that no one can tell what a pre¬
thing, European recovery has not policy of non-discrimination. The
mium on U. S. dollars would do
proceeded as anticipated and in prohibitions,
applicable* to im¬
by way of checking imports until
consequence Canada's loans have ports in the case of a list of con¬
it is tried.
Secondly^?ond more
been
sumer goods which are clearly of
drawn
down much more
quickly than originally expected.! a non-essential nature or are al¬ important,, it is argued that the
official parity rate retards the at¬
By the end of 1947 only $437 mil¬ ready produced in Canada to sub¬
tainment of balance by acting as
lion of the original $1,845 million stantial degree, apply with equal
an undue and unnecessary deter¬
was
left
unused.
Secondly,
I force whether the goods formerly
capital invest¬
doubt if any of the people re¬ came from the United States or rent to external
ment in
Canada.
Such are the
sponsible, at the policy level, for from anywhere else. With respect
framing the export credit program to goods admitted on a restricted mainlines along .whichTopinion
envisaged the strength of purely basis, import quotas have, been set divides. Presumably'^apy signifi¬
Canadian demand for goods and at twice the value of average aiif cant change in the ^ relative level
of free
principles
the
on
of
the
with
mentation
purchases" by
will play at
part in easing our pres¬
States
least some
Taking a
difficulties.
dollar
ent
"
of Canada ?::
Bank
rate
The
issues.
„
Dominion
on
Canada
of
Bank
sub-
sequently again became a buyer
after long-term Dominion 3's had
"
•
dropped from around 104 to 102.
Then
February 27 the central
on
bank once more reduted
its sup¬
port. The result has been a fur¬
ther decline in Dominion issues
to
point where the longer ma¬
are trading just fraction^
a
turities
practical imple-1 ally above par. This represents
presumably
condition of somewhat less
ada that "off-shore
United
in
change
a
E.R.P.
of
-
to *
more
a
interest rate
higher
quoting daily prices
enter¬
imminent, there is a hope in Canthe
pic-
seems
allowing
policy came on Jan.
51 when
the
central
institu¬
tion discontinued the practice of
much to defend.
ment,
and
interest
We have much to preserve
At the mo¬
prise.
and
bank
central
sirable. The first overt indication
objective in the economic recov¬
ery and political stability of Eu¬
rope no less urgent than the war¬
time objective of military victory.
We have other areas of common
interest. We are each the other's
best customer.;^ And we are two
of the rather few countries left in
the world that place a high value
it
devaluation
Our
pattern to emerge, to the accom- ■>:'
paniment
of
reassurances
that t
nothing in the way of drasticallyhigher rates is necessary or de¬
common
a
j
:
American
and
-cautiously
flexible
measures
nations have
two
our
look at interest rates
marked similarities in
we
see
Canadian
tures.
diffi¬
culties would require, rather more
imaginative
also
the
program.
dollar
U^.S.
our
When
we
opinion a more speedy so¬
my
lution
on
side,
26.7%- of
ucts of Canadian branch
15% premium on the U. S.
dollar would have had any greater
On
guaranteed
to
outstanding in these categories, as y
American
from
maintained
and
amounted
products of Canadian industry* and particularly for; prod¬
or
effect?
by '
decreased
the
direct
negative route of import
dependent
on a high degree of international
cooperation. Like many other Ca¬
nadians I find my thinking these
curb the
Canadiaft^ppetite for days going back once more to the
U. S. goods so why, vitvtig .argqed,
principles of Hyde Park. It seems
should one assume th^jfewere to me that in this critical period
is
holdings
chartered
banking system's (cen-'
tral and chartered banks') hold¬
ings of Dominion and provincial
kets for
-
into U. S. dollars!
1947
being made to enlarge U. S. mar¬
the
United
States within the past 20 months;
A 47% increase int;Uv*S. prices
within this period did nofc;$5pem to
10%
the
$500 million. At the end of
some
that level
reach
by J
decreased
while
-
against 28.9% at the end of 1946.. 1
In all these respects therefore the ;
On
reejtg^on
curb
can
Fur¬
think, open to serious question.
I
conceivable.,, limits
have
we
1947.
quotas and prohibitions alone is,
Canadians dollar
the
ciation
banks1
satisfactory level.
a
the
by
side, it is argued thafrilo depre¬
within
to
whether
of
issues
million
$26
main, presumably until such time
as
our
exchange
reserves
get
On* the import
points.
importations
reali¬
and
S.
year's trading was a de¬
million in our official
reserves, of gold and U. S. funds.
interest in the
Europe
U.
own
our
cline of $743
to sustain exports shoyld
Government'sngase
The
two
narrow
of
natural .that
evidence of Canada's
exact—of this sur¬
be
to
provincial'
restrictions re¬
the
the end
at
ther, over the year, the central
bank's holdings of Dominion and
by the emergency measures.
Meanwhile
$17,349 mil¬
to $16,734
end of 1946
million
offered
temporary protection
the
was
from
lion at the
justified only on the grounds of
ill-timed, anjcLyyhether, in
the light of subsequent balance
of payment s developments a re¬
versal of the policy is now called
for, are questions on which Ca¬
nadian opinion is by no means
unanimous. Since the rate change
ity
After giving effect to various
capital transactions the net result
prominently in
postwar
plans designed to cushion the ex¬
pected
shock
of
reconversion.
Looking further ahead, the loans
zation of her
a
gap.
on
figure
were
had
for yours, similarly calculated.
<\ Whether the restoration to par¬
dollar
to
ex¬
the aver¬
to about 25% of the national
income,
we
against 205
as
declined
debt
perhaps point out also that our
government is taking special pains
to ensure that the
existence of
these restrictions does not permit
industrial expansion that can be
plus was on paper only, in that it- was brought about, not by the
represented trade financed by ex¬ automatic play of market forces
port credit loans.
Nevertheless, but by governmental decision ex¬
be it noted, trade with the sterling
change policy naturally tends to
area and other countries did pro¬
get into politics, with the gov¬
ernment of the day froot,,time to
duce for Canada no less than $652
million of U. S. funds which went time having to defend"its position.
well
as
appeal.
longer-range
a
world
the
trading
surplus
approximately
equivalent to our deficit with the
U.S.A.
But far too much~$563
the part of
understanding
of
the
postwar
plight of England and our Euro¬
pean
wartime allies.
From the
standpoint
of
self-interest, the
as
of
rest
stands at about 191
Thursday, April 15, 1948
CHRONICLE
FINANCIAL
Influencing Canadian Credit
Factors
(Continued from page 10)
gross national product tci some¬
thing like $32 billion for the
United
&
COMMERCIAL
THE
(1674)
34
a
easy
.
One
money.
call it
a
certainly
can
not
condition of tight money.
What has occurred is that the ad¬
justment has served to erase the
premiums-
issue
the
over
prices
also the hope
formerly enj oyed by the various"
found, on a
wartime issues;^
"
- ;
basis of mutual goodwill and mu¬
As a background to ; these de *•>*»
tual ; advantage; toV provide- for
velopments I can hardly do better :
Canada ? a broader- access to the
services in. the postwar period,: nuarirpports'for the three years of Canadian export -prices- that
than take a minute or two to •
would result in difficulty being United States market, to the end
(For that matter I doubt if many 1937-39.
Broadly speaking the
quote; you ^ verbatim the r press j
encountered by Canadian export¬ that trade between us may flow'
people in private industry either, effect of these quotas will be .to
statem ent issued'«by the Bank of-;:
more freely and more evenly!
ers on
foresaw the extent of the postwar
boom that has developed both in
the United States and in
reduce
Canada.); fied
The third element in what might
be called Canada's trinity of the
imports
commodities
hard
the
of
from
.
affected
speci¬
certain
countries
currency
to
about
50% of immediately pre¬
existing levels.
In the case of
other countries, whose economies
depletion of our U. S. dollar re- | have been disrupted by war and
serves.
Undoubtedly it was an-' which latterly have been unable to
ticipated
that
there would
be supply the Canadian market in
unforeseen
was
of course the rapid
reduction
some
in
"stock¬
our
prewar volume, the
auotas established will quite
anything like
price ground^
stantially
weaken
maintenance
such
moment
.
ways
,
f
Internal Influences on Canadian
,
likely, fit should
1 have dwelt at some length on
change Canada's external position because
in the value of sterling vis a. vis
I have felt that this is- probably
the U. S. dollar wouldrof; course
the aspect1 of the Canadian situ¬
present the Canadian authorities
ation uppermost in your minds at
with a new situation that might
present. Turning now to internal
possibly — but not necessarily — influences affecting Canadian in¬
call for an adjustment in the Cavestment trends, I think the pat¬
nadian-U. S. rate.
Fortunately
terns revealed are broadly speak¬
for me, the analysis of the likeli¬
ing not greatly unlike those now
hood,
otherwise, of devaluation
be mentioned also that, auy
in
present
market.
..
the
basis
of
recorded
dollar deficiency. By stimulating
domestic incomes the program has
increased the overall demand for
U. S. dollars, while
decreasing
our
potential supply of such dollars
by diverting to export credit mar¬
kets goods that otherwise could
have
been
Question of Devaluation
invest¬
expectations may be even
greater in 1948. At the same time
our
export credit program has
tended to
aggravate our U. S.
shipped to the U.S.A.
To:
The
in this list of
ures
to deal with
recorded
to
1947.
imports
slightly
of
results
for
the
In that year, our total
goods
than
more
and
services
balanced
our
total imports of goods and services.
In this sense therefore, Canada has
not been
But
at
to you,
living beyond her
the
same
time
means.
our
sales
of merchandise and serv¬
ices, at about; $1,7 billion, were
just about $1.1 billion short of
the devalua¬
July 5, 1946. I know that you will
exoect me to say something about
this.
Let
me
start
therefore
by
oointing out that in restoring the
Canadian dollar
taken
ence
extraordinary
course
its present official parity rate, to
which it had been restored on
illustrated
year
meas¬
tion of the Canadian dollar from
the
simply by refer¬
an
the
omission
extraordinary
situation, is of
pull this all - together, our
present exchange problem may be
very
conspicuous
one
to official
the Government made it
time
that
primarily
such
as
parity
clear, at
that
in
the
terms
of
Canadian
was
reasonably
deny.
Incidentally,
that proposition still holds good
our
a
1935-39 base,
index of wholesale
postwar
:
*
million by Dec. 17, 1047^Jjad risen
to $527
million by the-end'of
February, 1948.
While under
ex¬
isting conditions a reserve of this
size could hardly be considered
satisfactory, it is at least worth
noting that it is larger than: the
$404 million of similar foreign
sets
that
we
had
1939.
•"
the
end
as¬
of
■
Before
subject
at
leaving this aspect of the
I
think
it
prices now
ceive of
no
may
I
can con¬
danger of the present
emergency measures being con¬
tinued a moment longer .thaivnec¬
essary.
<
Their relaxation and.final
*
the time
its
of
ing
the last few months have
brought the yield on the longest- *
issues
dated
to
slightly lers than
3% per annum, the rate of inter-I
est at which Canadian Government 1
bonds were issued during the war '
years.
Interest rates
high-grade securities
risen and
to
other I
on
have
also
somewhat greater
a
degree: This has occurred during
"i
period of yery large capital in-
veslment
and
I:
correspondingly
specific—problems
of the public debt large demand for money which
giving rise, in Canada, has been borrowed in this connec-1
the same ^considerations tion.. The degree of the change in
be more
To
f
at
27, viz:
: "Changes in market prices for
Canadian Government bonds dur¬
a
a
of management
to rather
as
have been so much the centre
country. Like
of discussion in this
had an easy money policy
effective well before the war and
you, we
running into the post-war period.
And,:
in
as
a
United
the
inflationary
postwar
and
money
in
States,
pressures
decline in the rate of sav¬
policy
terms
>
may
have its costs
of unnecessary
desirable
additions to
and un¬
the money
supply. The record of the-past
year suggests, however, that in so
far as it is possible, under exist¬
conditions, to reconcile easy
and an anti-inflationary
policy, the reconciliation has been
accomplished in Canada primarily
by the application of a govern¬
mental cash surplus to the retire¬
ing
money
of
ment
debt.
bank-held
Thus,
despite rising bank loans, the year
1947
-
to be
seem
low^of: $46L ing, have combined to draw atten¬
tion
to
the
fact
that an easy
Canadian-U. S. border.
of
every bit as good a dollar as its
counterpart in the U.S.A.—a prop¬
osition that I think no one could
since in terms of
antk which -had
1945,
purchasing
measure
rising commodity
prices in the United States. It was
power,
a
dollar
was
defense aeainst
felt
to
fairly be
said that to the great majority of
Canadians there is something-un¬
natural
and even
repugnant: s in
the thought of a Chinese -Wall of
restriction and embargo along the
action
a
of
end
fallen
securities
qwn
your
reduc-
tion of market support on Febru-
Canada
ary
Investment Trends
/
;
'
on
be
not appear very
pile" of gold and U. S. dollars in same
the early
postwar period.
But properly give scope for an expan¬
with business activity, incomes sion of sales to Canada, from ex¬
and employment running at rec¬ isting abnormally low levels. The
or
ord levels, the consequent demand
urogram also includes a system of
for materials and supplies from
licensing of imports of capital of the pound does not come within
the United States, despite rising
goods with the administrative de¬ my contract here today.
prices, has certainly outrun all tails in this connection not having
Depletion of Gold Reserve-*;
previous expectations. Predomi¬ yet reached completion. As you
Checked--''.*
nant in the picture has been the know, these restrictions which I
Canadian demand for your indus¬ have outlined briefly have been
Meanwhile
it
is
encouraging
trial raw materials—coal, petro¬ supplemented
by the arrangement that, at latest report,
depletion
leum, cotton, steel and for mar- of a $300 million credit in U. S. of-Canada's reserves of gold and
from
the
chinery
and
component
Export-Import U. S. dollars has " already- been
parts. funds
Back of this has been a program Bank of which, up to the present, checked and reversed.
The Do¬
of expansion by Canadian private about
$50
million has
already minion's gold and U. S.'-dollar
industry which in 1947 reached been drawn. ; ^
holdings which, asr-T^havesalfeady
unprecedented levels and which,
indicated, were $1,508 million at
ment
may
for
contingehey does
a
that
%6uld sub¬
;^hp^fese
:parifiy^At the
of
longer view there is
saw
ward.
an
trend
end
in
to
.
the long up¬
the
supply
of
trend that had per¬
sisted since 1934, and for the past
12 months the money supply has
been held virtually level. As a
result of a surplus of cash re¬
money
—
a
removal will be greeted^, with a ceipts over cash disbursements,
profound sigh of relief.frown ifcfee the Dominion Government's out¬
Canadian public generally.^ may standing direct and guaranteed
interest rates does not appear
.
in-
/
appropriate in the circumstances. ;
On the other hand, the Bank of *
Canada does not regard the in-r
>
crease in rates of interest which 4$
taken
has
ing
as
one
of
the.-
v
general rise in price; levels.
a
The
place
important factors in combat-
most
is
Bank
drastic
would
which
situation
in
not
favor
of
*
a-
.
inrinterest rates-
increase
be
likely
that
to
[
create
hamper,
prevent essential -f.
forms of capital investment which" V
a
and might
might
even
Canada needs and which it is de-
sirabie should be proceeded
I
with.".
Canadian
L0
provinces have 'undergone some
interesting I ; changes - in - recent
.*
agreements - were
j
;The
years.
finances
In
1942
of
the
signed between the Dominion and
each of the provinces whereunder,
for,
a
five-year
,V
.
period, the Do-.,V
minion rented from the
provinces
the personal
corporation income tax fields
in exchange for a fixed, payment
according to a formula based on
provincial revenues in 1940-41.
As the result, the provinces during the wartime expansion of the;
economy
probably
receiveda
;
.I
the exclusive right to
and
rather smaller share of tax
nues
than
would
,
\
--
,
reve¬
otherwise have
~
;
Volume 167
been
*
the
Number 4690
.
case.
However, the
THE
iron
op-
COMMERCIAL
i
portunity for capital expenditures
manpower, drawing on
the rest of the world for raw ma¬
was'
restricted and total provincial
debt declined by more
than $200
flow of manufactured
*
.million
*1947
't
during, the
renewal
somewhat-;
much
..■*
inces
more
were
ized
>
terials
In
years.
agreements-
.
of
of
Ontario
and
Quebec. These two, however, have
though they have imposed
7%
a
to
an
absent
what
of
process
were
in
United
is
the
of
20th.
secular
States
of
after
the
course
ample
The
amazing
development
the
leadership
of
World
the
War
outstanding
shift
and
of
blame for its
ing
devised to
v
both
winch
recemly have been by and large
this shift in
than suff icient do
more
*
r
.
take
care
of ordinary
outlays plus such
capital expenditures as were made
V under wartime and pbst-war conv;
d itions.'Lcoking to the immediate
;;.y
future, however, it must be borne
in mind that "most provincial gov-
;
ernments
now
have
considerable
a
backlog of capital projects and it
'
j seems
.reasonable
to
expect in
v^most = cases some- beversar -o
f
trend 'S'pf f eady^debte: reduction
,
that
;
1941through 1946.
was
im evidence in the years
In the ease-, of
municipal fiM nance, the trehd -ol steady reduc'
?-tidncf oulstanding^debt that
goes
ash far;: as-,; 1933
continued
l without;
interruption to the; end
i back
of
1945.
In 1946
1
were small
*
;
gate
of
-0 ing,
f
and
1947- there
increases in the aggre-
municipal,debt outstand-
but
here
political
tend
And
it
.
from
is
economic
to
—*
accelerate
industrial, commercial
centers
not
is
of
gravity.
idle'rhetoric
mere
there
say
and
greatly
political
ana
to
in
nearest
your
neighbor to the north these days
something akin to; a sense of
destiny — a feeling that we are
inevitably
being
greater and
drawn,
to
a
economic and
political affairs.
is worthy of note that a
great many hard-headed Cana¬
dian businessmen are
doing much
And
it
than paying, lip service to
confidence in Canada's industrial
fu ure. They are
betting their own
money on bigger things.
more
*
:
taT projects
.
.
.Canada's
"vast
There
*
"
of in
thousands of
speeches
and
the
been
tried
phrase
adorned many brochures, tourist
folders and government publica¬
storehouse of developed; arid1
developed-
sume
interests rates
yields
Domin-.
on
cannot pay their debts.
It is
highly interesting,
however, that
varying
with all of these schemes
has
money
The
borrow
fact
a
been
that
the
does not mean
It
of the Old Testament tells
somewhat
vital
more
silver-as
have
we
money
records
Without
fundamental
that' it
serves
as
than
the
natural: development, some fanning out "of yield spreads with
basic factors of credit-worthiness
;
-
beginning to. play
*
in
part
'
a more
determination
levels.
/«•;
effective
of
market
Now
there
countries
land
a
them.
But
in
-
m\;;
.
.-■*'a
.
•
a;.-'.
.
:0\1 i/.V
*<0 It is difficult.to generalize about
the-market1 for Canadian1 corpora-tion issues. For. 10 years*to the
-
,end of- 19.46 these
in gradu-
in-
Canada
we
these:
with
advantages; coupled
already impressive' de¬
an
of progress
gree
the
towards
highly industrialized and
a
more
more
a
same
be devised
<
keep T
a
Can such
power?
ent
no
is
no
has
a
such
plan
a
individual commodities. Some
buy
some wholesale.
Some buy
finished goods, some partially fin¬
retail,
ished goods.
of
goods
tion*
The price and value
depend
purchasing
of
loca¬
purchasing power of
in one community may be
twice
or
Such
as*much
an
,
as
index
in
would
a
Is there any way to stabilize the
of money or would it be
value
ol
power
desirable?
to
consumers
Thfere
the
would
be
can
losses
of
no
ques¬
caused
by
but
prices,
fluctuate
even
if
business were' on a cash basis
without the use of credit. Credit
alone is not to blame for the fluc¬
tuation in prices. It is one factor
when abused that may cause great
losses to either borrowers or lend¬
and
many innocent bystand¬
It is hard to conceive of any
greater deterrent to the excessive
ers
ers.
rise of credit than the
of
possibility
sustaining such losses.
fluctuate
tions
mass
the
upon
The
money
one-half
because
and
of
the
Prices
law
supply 'and
of demand
and
of
varia¬
supply and
by so many factors wholly re¬
moved from either money or cred¬
tions, the development of scar¬
city/or oversupply from natural
production \has
mass
been
Inconvertible Paper Money
0
it.'
These
uncontrolled.
But
the
prices
most
rected
dangerous and certain to
bring on poverty and destruction
is that of inconvertible paper.
In
no important instance has incon¬
vertible paper money served very
long without losing a large part of
its purchasing power. A country
whose currency has become in¬
and
that
convertible
would attract much confidence;
paper
is
money
worthy of credit. Business
be? carried
Money and Price Fluctuations
such
a
not
cannot
on
successfully with
country because commit-:
be
may
abte
Of all the forms of money used
by Society in. the jrecordg of his¬
tory the one that seems to bef the
r
causes
inven¬
causes, wars, monopolies
and: a
whole myriad of events which are
;
di¬
versified economy. We have also,
I think it may be said, a- reason¬
Then people do not buy index
of averages of several
hundred commodities. People buy
numbers
demand
>
money
money
offered
the
likewise destroyed or subdued.
to the pres¬
up
rightly measure the fluc^
tuating purcnasiag power of mon¬
for
of
purchasing
st a n t
all v of
of their savings ; to
bills, anything that reJ
the
impossible,
that
number
buy, and when that ability to buy
is destroyed or
substantially reduced, the market
managed to
money
Certainly
there
one
or
c o n
cur¬
with their money
money that will keep
purchasing power for
generations?
are
now
have
we
re¬
still others with
capable of supporting
areas
have
Issues
with
larger population than
habit
other
course
the* world
there
sources;
of
are
in
•
Canadian Corporation
t£
-:"'V
>
•
a
index
an
It would be
not
ey.
ity of. the
other
power
make
if
would
this money must reduce the abil--
business
and
of
the
paycheck
duces
based upon gold is not sta¬
With the gold standard mon¬
sions
savings
of
In
ly
money
a
arty
purchasing
the
meet their
modities yet discovered.^
But
inflation
an
the people depend upon the week¬
combination of com¬
or
or
these days of industrial
civilization where two-thirds oi
scientific
and
difficult,
very
prices
lot of de-
a
when
fluctuation
ly.
-
as
If
monetary
*
see,
tool.
of the whole country in
the form of money and credit in¬
struments can be destroyed quick¬
gold
far back
as
of
ideal, but
examined carefully, it seems
about
rency,
of
use
sounds
perfect instrument < for
speculation in the value of credits.
people
the
records
credit.
scheme
create
Tool
dangerous
on-
the
history
ey/prices rise and fall/ depres¬
present
a
loaned
goods
wholly unworkable*
to
paid that
be
sold
or
tion
sion
commodity
future
also?
the gold and silver shekels were
the monies of those days. Ancient
ble.
and
is
were
when
tries,
cycles come
significance. Inexor¬
ion; provincial and municipal' is¬
ably, the' tendency' of industrial and go just the same as with other
sues tended to-crowd
in together
development in the latter part; of standards of money. The standard
} at5 a low * level. With the trend
the twentieth century
will, I think, of moneyTs no protection against
toward
somewhat 1 higher, .rates,
be to go where the resources are.
rising and falling prices. Should
we
are
beginning to
-
Useful but
businesses and5 individuals.
If excessive debt leads to
depres¬
that"
us
This
debts
with
misused, debt is the most power¬
ful force for bringing on business
collapse. It can impoverish coun¬
until about a hun¬
The first chapter
standard' better
on
a
Dangerous
that gold was not
used for money
dred years ago.
money
Credit is certainly a useful tool.
gold standard,
parted
another.
Credit
know it, has only been used
Tittle over a hundred years
thriving industrial
takes
are
to blame and not the money.
money
areas
corporations
they can pay,
or
than
more
the borrower and the creditor
we
for
reason
un¬
But these
reduced down to a,choice of gold.'
that
resources
If individuals
use.
tobacco; cattle and index num¬
bers, the processes of elimination
and choosing of the product that
as
power when
he
a
misfortunes certainly cannot be
blamed upon the
money, the gold
standard or any other money in
from the issue of currency against
land to the
use
of
Cotton and
served "best
to be
seem
well-intentioned borrowers
cause
con¬
money
This would
of
best, the records show that every
depression brings on a vast series
of
failures; swallowing up the
ravings of millions of people be¬
variety in
great deal of space.
a
of' forests/
minerals and water power in add ition
to
rich agricultural and
a
35
oney
so¬
But re¬
gardless of whose responsibility it
is to regulate the use of credit in
order that it may serve
society
tailif seems clear that the process
of experimentation and elimina¬
tion led to the choice of gold for
has
hak ' in-
low
of
would
as
transactions.
after-dinner
in those
very
lack
no
l
of business management.
monetary experiments. To list the
products and schemes that have
as
particularly
During the period of
is
e a
function of the bankers and also
Monetary * Experiments
re¬
highly spoken
the
creased noticeably as a result of
greater industrialization.
.
moxiey
the fault of the mone^?
money
and
natural*
sources" have been
where'- population
\ areas
serve a
a
.
present tions, not to mention prospectuses.
situation
is
characterized by a But under conditions-as they ex¬
considerable accumulation of capi- ist today the possession of a vast
again
be
dynamic indus¬
can
society with a constant pur¬
chasing power? Is the fluctuation
in
the
purchasing power of a
as
important part
more
,
in
(1675)
be devised to protect
against
these
abuses
credit?
trial
—
kinds has become
relatively much
* and
provincial ■* revenues
ciety
fluctuating purchas¬
and
power
I
conditions; of rising prices and a the old world to the new. I
sug¬
high level of business activity, the gest to you that we now
have a
"i burden
of
fixed
charges of all combination of circumstances
lighter,
money
ex¬
,
v
Id
it
(Continued from first page)
industrial
techniques
-
v
CHRONICLE
econ¬
increasing degree been
economic
refrained from
re-enterin?
the personal income tax field al¬
f tax* on corporation income. Uhder
a
to
goods,*
The basis for this
simple
specialization which
seemed
to
work in the nineteenth
century
far
so
subject
A
outward
an
decline.
heavily inaustrial- has
provinces
for
return
*
call-
omists
a
but
in
already
avorable to the provconcluded with all but
»the two most
*
war
similar; pattern,
*
'
FINANCIAL
and
i
:
&
to
,
limit
it
is
desir-
in
the research should be di¬
into1 the causes of^price
fluctuations.
The
monetary device
fluctuations.
of
if
fluctuations
abuse
of
the
price
may cause
But the maintenance
sound money such as a mon¬
convertible into gold can hard-"
ly be blamed for any important
disturbances such, as the extreme
rise and fall in prices or depres¬
a
ey
sions.
;
^
./I,
,■};
The
Gold
Standard
The gold standard is not a sta¬
intelligent and adaptable 0 Why do prices rise and fall? It ments for future payment cannol
is well known that prices rise and be made with confidence.
i^all^diaunishing^supply;^ retir ep population, With
Such
ble money. At times the supply of
origins predom¬
ments more than offset* new offall
with
supply and demand. currencies destroy trade between it may be too large or too small.
inantly Anglo-Saxon and Norman
;fetihgs madbw Last year there was
French—-both races which are not Money, as a factor in supply and countries and bring to a standstill It may be hoarded by speculators.
a
relatively isubstantiat increase
by nature* given' to - political ex¬ demand; may influence the rise production and distribution in the The use of if may be abused
by
'0% in the net total of corporate and
atidTalT of prices. But money is international markets. Perhaps no
cesses, and in. whom democratic
and'' protectionistic
other device can so quickly re¬ nationalistic
0* public* utility funded indebtedness traditions* are
deeply ingrained. only one factor' and prices rise
outstanding;-, with. prevailing mar- We have another asset in
and fall according to people's de¬
duce the standard of living of a policies and trade regulations. But
a
were
ably
,
1
-
great
kef?pebhdRionsv^pet^
and
,::y-security v«y similar to* your
>fx:
.Unless-
-
there
>
is
>
own.
marked
any
i^Cbangetinexistingnewcapitaliri-
■r-& vestment intentions
this year, one
: would expect to
see, should mar¬
ket
condtions
permit, - a
fair.
additional
.
•
firiaricing: in the5
and
next
with'interest
corporate
IZ months
rates
thereon
friendly neighbor to the south
of lis. ; Our association "with; that
neighbor
times
is
have
for all
close* that
so
,
reflecting?
demand ' for
-
money of this kind.
*;
,
greater
So much for a
t-
very
\ vey of what I think
•
mediate
•
influences
sketchy
are
sur-
the im¬
of major
sig-
nificance that have a bearing on
our investment picture. And now
;
difficulty paying him
would like to buy from
him.1 It is also so close that pe¬
riods of boom and recession in the
U.S.A.: exercise,,
inevitable
tuations
powerful
a
influence
of
on
business/in
and
the fluc¬
Canada.
To
speak frankly, in these two
respects, propinquity has at times
had
its
the
years
disadvantages,. But
over
these have been far
than outweighed by the ben¬
efits. And given wise and imagi¬
m ore
native statesmanship" on both sides
creditor;
Falling
impoverish^ the
and
debtor
at
the expense of the creditor. Would
prices rise and faH just the
if
we
abolished debts?
bev little; doubtf that
same
There
the
can
law/ of
point I
am trying to make is that
reasonably long-term view of
•
the Canadian situation must give
.
i
due
weight
to
;
-
the
to
discernible
[ trends. It
v
-
country's
rather unique position in relation
politico-economic
seems
to
me
before World War II it
clearly
apparent
that well
was
that
pretty
European
economies, which in the,T9th
tury
tions
attained
on
the
cen¬
predominant4 posi¬
basis
of
cheap coal,
up,
.
ada
ing life
are
anywhere
globe
and
many
at
else
free and satisfy¬
least
as
good
as
on} this troubled
better
than
in
very
countries." And it is the in¬
fluences that compel this conclu¬
sion
the
that
weir
a
Constant Purchas-
ing Power Based Upon
};
same
and
falling prices if debts did not
exist.
the
is
inrtheir values? with rising
It is undoubtedly true that
use
of
credit
is
abused
and
probably the most provocative
cause
of
extreme
fluctuations
in
so
constant
purchasing
ing
form
power
of
a
power
the
of
at the time the debts
serve
debts
now,
let
higher than in 1939
average.
money
were
made
this purpose. For ex¬
ample, prices are
100%
the
purchas¬
the equivalent of the
purchasing
would
for
index
an
us say,
on
the
If prices should fall 50%;
contracted
now
should
be
payable after this fall of prices at
just half the amount of the
ent
debt.
If
prices
should
pres¬
rise
100% above the present price lev-;
be
rising and falling prices. Certainly
el, the debtor should' pay twice
determining factors in shap¬
the abuse of credit is the cause of
as
bankruptcies.
the debt.
Then the creditor would
receive
the
ing the
may
course
prove
to
of the Dominion's
future development,
,
„v
* •'
erty
and
These lead to pov¬
unemployment.
Can
a
more
much
as
the present amount of
same
is
the
best
money
acceptable everywhere. It
fool-proof than
and
always
be high or low.
such as the gold
managed as to
some
just* the
is
commodities
money
a
it
the purpose of a dependable
money
Could
payments of debts in
affected
serve
.Index of Purchasing Power
oixlacash basis; Onithe other hand,
capital and inven¬
present
;
Same if all business could be done
be
the
to
instrument that has been found'to
*;■:
a
own
up
any
other
measures
the
price relationships between other
an
maintain
pric^s^WpuIdC;work just thre
goods who
a
Money with
power? It has been suggested that
•
tory would
the chances of
and even France and
to
today looks like
place where
Italy
Germany. *
supply and ^demand with' respect
I Think, to the fact that Can¬
a
Austria,
Greece,
be
I close'I should like to of the
border, the advantages of the; rising and falling of prices
} your attention to some
association and cooperation may would5 not' drive borrowers into
ylonger-term, and admittedly less
>
tangible but none. the less impor- yet be increased in years to edme* bankruptcy if there were no bor¬
} tant considerations. And here the : I All of these considerations add rowers, t But ; the producers of
I any
China,
standard
invite
•
of
prices make it
difficult to borrow and pay debts
;.
before
•
at
we
■
f
we
mands irrespective of the money.
people as that of a depreciating
Rising prices make it easier to paper money. Notorious examples
borrow andf pay debts and enrich at the present time are the worth¬
the debtor: at the expense of the less or almost worthless, monies
purchasing
whether
that
price
7
26
Thursday, April 15, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(1676)
individual
Germany had begun, and its progmarked by considerable so¬
cial unrest. German labor, as rep¬
resented by the Social-Democratic
would probably be difficult to re¬ agated by employees in the Fed¬
(Continued from page 12)
*
public Party, gained steadily increasing
less to find immediate means of tain thrift, ambition and industry eral service and on the
power,
and was able to bring
77' ;/
V.
support when technological ad- under a comprehensive system of payroll.
about many social reforms;
What justification can be found
; vances
throw him out of work. compulsion such as social secur¬
By 1907 the German economic
;
But as I see it, the mistake that ity.
Therefore, it is difficult to for the propaganda which has
see
the
how it can be argued that flooded
country,: especially system was working smoothly, the
:
we have made is that in seeking
German people were full of hope,
ways and
means
to compensate present facilities and opportuni¬ during the past decade, in support
and social demands soon dropped
ties are so inadequate as to call of compulsory sickness insurance.
for
such
conditions, we have
sharply,
It. was not until after
slavishly copied procedures that for an entirely new system hav¬ First of all, we are asked to ex¬
the close of World War I that, the
were not developed for our kind
ing, economic and political impli¬ change our freedom for the des¬
demand for greater amounts of
: of government.
\Vhen, we did gp cations which can destroy Amer¬ potism of bureaucracy. Secondly,
social
security
recurred
in
in for old-age pensions on a na¬ ica as a land of freedom and op¬ we are asked to adopt an old7'7:' V«.
r. > 7-••
world system of government med¬ strength.
tional
scale
11
portunity.
'
77-."y:
years
ago,
we
-*
Again these demands were, it
icine which is not known to have
adopted well-nigh lock, stock and
Pressure for Expansion
' 7 succeeded anywhere, but it never¬ would seem, the result of serious
barrel the centralized procedures
unemployment problems. They re¬
originally recommended by Bis¬
Neverthelss, the pressure for theless is loudly acclaimed by
sulted in the adoption,
in 1927,
marck two generations ago.
expansion in this country of our those who would gain power were
of a compulsory system of unem¬
'* vA
social security program has been such a system established in this
■>;
ployment compensation.
"
>. 7
The Legitimate Object of * ; going on since 1937. In the Fed¬ country. Thirdly, justification for
Then, suddenly, a new element
:
I *
v
Government
.
>r eral Congress we have had four this proposed idea is found in the e n t e r e d the
picture.
Hitler,,
misleading
research
(Bismarck's
"social'insurance compulsory sickness or socialized purposely
whether or not he saw clearly
medicine bills.
The new Wagner- documents which are disseminated
laws were socialized as the
"highthe weaknesses of the compulsory
water mark of German State So- Murray-Dingall bill is much like by governmental and non-govern¬
social security system, overcame
eialism" 60 years ago, but they its immediate predecessor intro¬ mental lobbies with a view to
increased
demands
by restoring
duced in November, 1945, in that shaping the opinions of Congress
were 7 laws
embracing
political
concentrates
on
the
medical and of the public in favor of a employment to normal through his
and economic devices rather than it
war preparations, and then, in the
phases of social security. Insured compulsory sickness system con¬
genuine 7 social
measures. : The
words of the editor of a prominent
point has been well made that persons would be entitled to med¬ trolled and financed by the Fed¬
West Coast weekly, "he used the
social insurance is neither social ical, dental, home nursing, hos¬ eral government.
How has such a situation come implement to put the German peo¬
nor insurance.
pital and auxiliary services.
T " '
ple in a strait-jacket and he used
7; 7' Lincoln ;is quoted as saying:
The proponents of the Wagner about? Is the politician to blame?
the receipts to rearm Germany/
A politician could not if he would
"The legitimate object of
govern- Bill (1947 variety) argue that the
This was economic management
write
rules and regulations for
ment is to do for a community of statistical sample
examined by
with a vengeance—socialism at its
/' people whatever they meed to draft boards was representative of administration of a comprehensive
have done but cannot do at all or the
national health program.
It" was peak.7?7-777'': 7-7 7.- 7:7.-7'; 77; 'SS'"?
country's young adult male
77; Hoffman Wickerson in his lat¬
cannot do so well for themselves
population. That is not quite true. not politicians who initiated the
est
book, "The ? New Slavery,'
iin their separate and
lobby
for
compulsory
sickness
In
Realistic View of Compulsory
'
..
Social Security
corporation—is the
which business
or
source
of funds on
draws
gress
for
development and
ex¬
pansion, therefore, to put it blunt¬
.
.
ly, the
lem
..
of the economic prob¬
expanded social security
crux
of
"can
business expand, become
productive if the funds .of
the general taxpayer are further
reduced by taxes to meet an in¬
is
more
heavy social security
top of his other com*
creasingly
burden-on
-
mitments.'77V .'>77 *7/•••'♦••.>:,
.
Is
There is
-v
Beneficial?
It
7 7
to doubt but
no reason
that many, labor leaders sincerely
,
believe
that
*
sive
comprehen¬
social insurance
more
a
compulsory
«
would be of great bene¬
program
fit to the rank and file of work¬
*
They seem to believe
ing people.
in
tnat
other way can the fu¬
no
.
security
ture
these
of
be
I do not
people
.
assured.
That, of
course,
.
believe
be
to
true,
I
and
hope
that, in the not too distant future,
,
other
than
mental
complsory
will
means
Meantime,
social
the first two years of the war,
the draft boards examined about
observation : that
the
makes
interests
in
government help
through
makes social se¬
seeking
in
egy
labor's
problems makes social se¬
a large issue. Labor's strat¬
curity
to force its social program
.
individual
govern¬
be
developed
through which needed protection
can be put within the reach of all.
.
the
legislature
curity
In Ger¬
dangerous issue.
a
thought it could
many, labor
con¬
trol its social program and
ended
up by. being controlled by ruthless
dictatorship.
'
7",
the
compensation.
It was not politi¬
Soviet slave masters are only.the
cians who drafted the Wagnerrejected 36%
advance guard of a servile ten¬
In Russia, labor thought it could
themselves the government ought of them.
But during that same Murray-Dingell bills. Instead there
dency present in most industrial control its own destiny and eded
not
to
interfere."
Let
us
see
period over 2xk million men en¬ was a small group of Federal of¬
districts of the modern world, and up in a
what the people of this
monopolistic economy. In
country listed voluntarily.
If these men ficials who made the plans, wrote
he says "our almost universal drift New
have done in
Zealand, the predominence
legislation, 7 supervised
the
protecting them¬ had gone through Selective Ser¬ the
toward serfdom started in Ger¬ of labor resulted in a socialistic
selves against the important haz- vice the over-all
rejection rate lobbies, issued the publicity, and
ards of life..
7^7-/^777:7 would have dropped automatically made elaborate studies of the rules many: with Bismarck, who took form of government and economy.
'the wrong turning' when he came In Great
Private enterprise has flowered from 36 to
and regulations in foreign coun¬
Britain, labor which is
'
28%.'
77
out for social insurance."
7.
over a period of
tries preparatory to drafting sim¬
chiefly responsible for the social
nearly 300 years.
Then there's another group that
In England the pressure for so¬
In those three centuries
ilar administrative regulations for
security program, may feel again
it con¬ draft
rejection
figures
do
not
tributed more to the advancement
the United
States.
Let us not cial security began with the rise that it will be able to retain po¬
cover.
Of the manpower that re¬
of labor influence in political af¬ litical control. And
of
civilization, to ever-increasing mained after
again, if his¬
forget that compulsory legislation
voluntary
enlist¬
coincident
with
the
pro¬ tory repeats itself, as it so often
standards of living and to the
has been enacted in foreign coun¬ fairs
ments, more than one-third re¬
general comfort of mankind, than
tries not because of popular de¬ longed depression beginning does, labor may see its ends de?ceived determents because of es¬
around 1876 and lasting through feated
had been attained in thousands of
mand or even with the consent of
by tjie trend 7 toward 7 a
sential, .occupation or dependency.
1887. Then followed a quiter pe¬
years of, struggle. '7^7/7
monopolistic form of government.
7777 v777;7 In other words, Selective Service the people?but as a result of the
riod
of
prosperity—during
the Such evidence, historically fact,
activities of small, well organized
7 [ ■ Voluntary enterprise, big busiexaminations were limited to these
late 1880's and most of the first should be
ness, call it what you
given serious conside¬
will, not young adult males who did not groups all of which are following
decade of the twentieth century. ration
.government bureaucrats or
the same international-blueprint.
poliby the people of this coun¬
capacities.
In all that the people
individually do'as
can
.
well
for
million
10
and
men
*
,
,
,
.
.
■
ticians,
•\
deserve
credit
for
the
most of the families in
the United States own a motorcar
fact that
and
v
,radio.
a
The increase
in.per
7 capita consumption in America, as
compared with conditions 25 years
*
ago
is not
and
an
achievement of laws
executive
orders.
accomplishment
who
enlarged
factories
;
It
is
an
of. businessmen
the
size * of
or built new
their
industry,'
an
the insurance
amazing web of
eco-
nomic Protection has been volunbuilt up by the
'•
Vtarilv
people of
.7
tV-
7 the United States.
According to
Insurance
./.
,
Private
a recent
protection
companies
study, life
in
force
exceeds
now
S™ billion» covering
in
more
than
/5,000,000 policyholders with total
of over $51 billion.
Ac¬
cording to the Health & Accident
Underwriters
Conference ,: more
assets
..
than
45,000,000
ere^ under
.
persons were
some
cov-
form of accident
and sickness insurance
at the end
of 1947 with a total annual
premium
of about
$800,000,000. To
*
this may be added many more miitlions for hospitalization
coverage
.
through /Blue Cross
and
tion by prepayment
,
protecmedical
f plans:; 7 ;7 , ;;.-7 '7 •.
j / Roughly, if we start with the
basis of protection built
}
up
over
period of more than 100 years
by private insurance companies
and organizations, and add to this
the savings established
through
savings banks, savings and loan
a
!
;
associations,:, real estate, investments and by the purchase of war
:
bonds
I
we
can
committed
to
total
the
up
resources
protection
of
people.- amounting to over
billion which, I submit to
you. is an amazing figure.
Of
cies,
etc.; 47%
7
;
.
With
these
opportunities
may
have fateful consequences.
It
rate
But
Here in these United States we
have
vocal
certain
of
the
conditions
intellectual and
trouble appeared
tivity
for 7 social
culminated
compulsory
a
In
teeth,
hearing,
breakdown
it
about
19%
could
have
medical
assume
have
of
otitia
—
etc.
is
From
apparent
draft
been
this
only
rejections
influenced
by
care,, and then we must
that the individual would
tsought medical1; attention,
that he would have accepted the
.
doctor's
recommendations,
that
treatment
,
been
the
100%
stance.
would
and
times
fifty
have
effective in every in¬
Any statement that
one-
half to two-thirds of such defects
are
preventable
or
remediable
is
utterly false and further/selective
services
statistics
have
no
place
whatsoever in any honest discus¬
sion of deficiencies in our medical
services or the need for compul¬
government
sory
pensation.
^
;
?
sickness
77
com¬
;7
the richest, most powerful, and
happiest nation on God's footstool,
or whether we are going to have
a totalitarian system such as those
which
have
brought
poverty,
wreck, ruin and chaos to every
people Who ever stupidly or cravenly sold their freedom for an
unredeemed promise of security.
We should hesitate to adopt any
more
State Legislations
7
mately 50 compulsory health, hos¬
pital or medical care bills were
introduced.
for
in
know
It is evident that the
follow
and
not
way
European
Last year 47 State
Legislatures
have met in session and
approxi¬
of thought and
to
the
ac¬
tion that lends to economic chaos.
the
recent
sessions
of
pressure
in
States for compulsory
health,
medical or hospital care.
It has
been stated that a great deal of
more
this pressure for compulsory sick¬
ness compensation in the various
States has been created and prop¬
one-hundred
seventy
Britain
'
In
in
times
years.-• >7;.;
more
a
less than
than
more
of
Now let
us
Social
twelve
777;/ y;77:'^ 7 ¥77377' 7'717
review
a
few pages
history:
Bismarck, the Iron Chancellor,
compulsory social se¬
curity in Germany, not as a social
introduced
measure,
but
as a means
by. which
he sought to stem the rising power
of
the
power
labor
'
in
Meantime,
,
over
short period of ten years.
^-
of
,
-
.
patriotism
.
/;••)
v
-
.
on
7 ■r'
moved ahead
7777:777/:/,/,';
it did while other
as
lands either stood still
in
influence
fathers
were
to
new
or
because
declined
our
fore¬
willing to take risks
frontiers. 7
it
our
social security
by compulsion would be so great
that it might require each gain¬
fully employed, person to work
ten weeks at forty hours each—
a
total
system of
of
four-hundred
hours
year, or more than 25%
of
annual work year—just to pay
the
British
estimated at 24%
This
the
will
give
importance
social
of
cost
a
an
for
The ultimate cost
system has been
social security.
of
of gross wages.
an
idea of
of the financial
security.
Without
exaggeration it
small
or
That
own
you
may
be stated that
as
isolated
as
contem¬
plated 7 originally.7 Invariably, it
becomev a snowball making
has
greater
cost,
higher grates,,
7 7 7 7 :
die
spirit must not be allowed
in
America.
If
and
when
does, .you will begin to see our
decline as the most powerful and
prosperous of nations.
7 Despite what has been said, one
need
be discouraged
about
security for the Amer¬
people.: We can have " and
not
economic
ican
maintain
a sound and
expanding
if we, individually, place
more
reliance upon the rewards
that come for a day's work well
economy
done and less upon the deadening
philosophy
should
be
of security. Security
the reward).for labors
well performed, not as
an
individual
to
the right of
insist
that
r
his
government owes him a living. I
believe that the progress /of our
nation
more
rests
and
upon
more
the
men
ability of
and women
becoming able to shoulder: full
re¬
sponsibility for the personal wellI will not attempt to draw any being of themselves and their de¬
final conclusions from the cost pendents. If that be the case, then
figures presented. My purpose is the pathway to economic security
only to draw your attention to for all lies in finding the means
the fact that cost is an important to assure everyone full opportune
consideration. It is important be¬ ity to gain a regular and sufficient
We shall: never * find
cause
the general, taxpayer al¬ -livelinood.
ready burdened with meeting the them in a program which halts
on
the
.
public » d.ebt—either: as;-:pn
•
•
Individual
Enterprise
.
and seek
,
.
vitality
degree that
a
This country of ours, envied by
of the nations of the earth,
hensive
In
party and to retain costs of the FederaTand state gov¬
conservative - hands. ernments, as well as- the interest
industrialization
■
;
so¬
all
country we find
that the ultimate cost of compre¬
...
wider coverage.
Security.;
;
forty
little over twenty-five
In New Zealand it doubled
a
such
t
,
with Hitler's ruthless lei
;
'
cope
p ••*•"
than
^;777-77::'-77
'
Canada
times in
to
Adverse Influence
Great
\
proud, nation lacked both
once
gions.
period of less than
a
,
for
History of
■
(Think back over the
compulsory health in¬ last 15 years in this country).
Congress has created
than
7)
the moral fiber and the
to
more
over
France
this
find the finan>-
security, because in the final anal¬
no system of social security in any
ysis the only lesson that Amer¬
has ever remained as
icans can learn from Europe is country
to
.
European theories of social
of
years.
In
.
a
us
we
by the distinguished
cial legislation sapped the
'
-
as
The enactment of too much
adoption of
insurance
7
,
well
as
leaders of labor. 7'
health
Germany,
creased
is not
political issue on which men di¬
vide along partisan lines.
It is
an
issue that transcends political
parties and comes down to the
fundamental proposition
of whether we are going to have
a free America such as has given
try
cial'Costro^
spiritual freedom;
This question of security
media,
the
in 1911.,
measure
preventable
correctable
and,
These
reforms.
with
preventable
and
again
its heels renewed political ac¬
on
of
advocates
—
drive
f «made it possible to accumulate so
7 large a reserve.
.Any tampering
not
heart
—
surance
greater ^significance is the unhampered
opportunities
which
did
a
program of continued freedom
or remedi¬
and liberty provided you do the
ailments, defective
vision, amputations; 3% were pos¬ "right" things, that is, the things
the advocates want done* 7 They
sibly preventable, such as T.B.;
show not only a total ignorance
11%
were
not
preventable but
of
the economic problems
in¬
correctable
tonsils,7k i d n e y
stones, varicose veins, hernia; 5% volved, but they lack the faculty
of logical thinking.
of the conditions were
not
were
$300
j
who
the so-called "middle way"—that
Inbreaking downthe"why" of
draft rejection, we find that 22% mythical type of government that
could
allegedly take over the
of the conditions were
beyond the
province of the medical profession planning of our economic affairs
and still preserve our
political,
---illiteracy and mental deficien¬
our
,
and
That's scarcely a true
cross-section.
•
able
ones.
; Through private enterprise, and
particularly through
volunteer
deferments.
our progress, narrows our oppor»*
tunities and restricts our freedom,
but, rather in one which encour*
.
Volume 167
THE
Number 4690
both individual initiative and
private
enterprise,
and
which
neither discourages the develop¬
ment of opportunities nor destroys
business of this country had
ance
ages
COMMERCIAL
the astounding energy to go out
and sell employers all over the
land to become
&
FINANCIAL
CHRONICLE
sources.
\
.
priations and the legislative con¬ ler, is staying in
Washington if ;
Republics no such Bank could; ditions of the moment. The Bank's only to see that
Latin "American
ever have been created at Bretton
connection with the private mar¬ interests are not
overlooked there
Woods.
ket is, in short, one of the great while most of the
rest of the Latin
The 19 American Republics had strengths of the Bank's structure. American
personnel
tour
the
can
v
ganizations
have
those demands; 7
responded; to ican free enterprise sets its mind
;77777] toward the; goal of,, greater ;■ eco¬
•
•f' There isinforce loday approxi¬ nomic security for all, it will be
mately $35 billion in; face value able to accomplish what it has
of life insurance under group pol¬ set out to do? That is the Amer¬
icies an average of : $2,000 per ican v/ay of doing things, a meth¬
worker and over $235 million in od not associated with any racial
annual premium
income under strain, but based wholly on a tra¬
group accident and sickness pol¬ dition of self-reliance inherited
icies., This Ineans that the insur¬ from pioneer ancestors.
p:r-
(Continued from page 19)
vancefrient
of 7 Latin
American
First
of
cal assistance the Bank itself
afford
economies.
all
let
me
emphasize
that the Bank is not in the busi¬
and
it
can
always
can
assist
those concerned to obtain compe¬
tent and independent experts who
37
If it had not been for the Ameri¬
parties to a plan
whereby, they would handle the
premiums, and often contribute as great or greater influence in
Success of Private Life Insurance
largely' to them, in order to help determining the charter powers of
It has been customary to think their employees win greater eco¬ the International Bank as all the
of insurance as the mainstay of nomic security. These sales have rest of the nations
put together,
economic security, and the sug¬ all been made within a quarter In very'large part it was you who
gestion that there is a lack of such ^century, most of them in the last wrote in the provisions which
security is often taken as indica¬ decade. Sales today have acquired were
designed
to
insure
the
tion that private insurance or¬ such a momentum and the cover¬ soundness and continuity of its
ganizations have not succeeded in age is becoming so popular, that operation. You furnished the man¬
meeting the needs of the people. the number of workers covered is agement of the Bank" with the
This is seems to me, is a grossly increasing by leaps and bounds. chart it was to follow. You created
unfair conclusion, first because it
a bank, not a general drawing ac¬
I sincerely belieVe
that there
has taken the work of untold
count or a political or relief in-,
are no more promising plkns than
thousands
of
insurance
It was provided "that
agents those
backed
by the dynamic strurhent.
loans
over a period of a century to con¬
should be productive as
energy of private enterprise. When
vince the people of this country, we look back at the amazing judged by an independent, objec¬
that personal insurance is an ad¬ achievements
of American busi¬ tive international staff on which
vantageous device.
Secondly; it nessmen and v/omen and when we you were to be represented; it
was determined that there-should
is only within a few years that Consider
the tremendous advance-;
be careful supervision of the ap¬
there has been any evidence of a
:meqf$ made in living standards in
demand for coverage which was this
country within the space of a plication ; of the proceeds, of the
not-,then available; and it is sur¬ few years-f-have we" not every loans so that the old abuses of
prising- how rapidly private or¬ reason to believe that as; Amer¬ wasteful or improper diversions
their,
(1677)
could be avoided. The Bank was
directed to make an equitable .dis¬
tribution of its funds as between
reconstruction
and
development
loans but in each case it was also
directed
to
assure
a
certainty of repayment
reasonable
so
•
The
staff
the Bank
of
stantly studying
activities. I
think
it
not
confine
ments;
or
its
properly applied so that you
rarely, if ever, will be called upon
to meet a guarantee. As President
of the Bank I act with the Direc¬
is
not
gen¬
loans
to
govern¬
to government agencies.
It encourages loans to private en¬
terprises. Its charter, however, re¬
quires in every case a government
guarantee
or
loan
any
made.
its equivalent, before
or
Thus
guaranties
far
the
be
can
Bank
has
made
only direct loans to' borrow¬
ers.
Its Articles, however, per¬
mit it to guarantee loans made by
private investors and to partici¬
pate in such loans. The Bank is
now giving careful consideration
to the possibility of extending its
operations into these fields. The
Bank is young, but well equipped
and flexible. I firmly Relieve it
can render important aid" in
the
achievement, of any sound de¬
velopment program "which can be
brought forward.' ! j
~
7:
Organization and Personnel of
that the
and
con¬
erally realized that the Bank does
Bank*
frustrations and ill-will which in¬
variably attend over-lending or
unwise lending could be avoided;
and above all, you, with the other.,
members
made
yourselves the
guarantors of the Bank's own ob¬
ligations so that while many of
you are interested in how funds
may be borrowed from the Bank,
every one of you as members, is
very much interested in seeing
that the moneys lent are soundly
is
and means
to increase the scope of the Bank's
ways
May
give
I
familiar
with
-you
the
7'/';777!'■: t
who.
Bank
are
a
,
not
brief
description of its organization and
Loan
Department
which is
now
headed. byMr^WilUamHifffformerly an official of theBritish
Treasury, He has with him among
other?, Mr. Victor Urquidi,
Mexico, an accomplished econo¬
many
mist
to
who
the
wafc
formerly attached
National Bank of Mexico,
We also have
*
;
Missions have been sent
by, the
Bank at the request of the mem¬
,
ber countries involved to
Bolivia,
Chile, Mexico and Peru.
Brazil,
We
are
making arrangements to
mission to Ecuador
shortly,
and there are others in prospect.
send
a
Now
have
I
talked
?
Latin"
of
America and the Bank in relation
to Latin America, but both Latin'
America and the Bank
bf
a
world
are
a
part*
community. There
was
time when the old world looked
to the hew for the means to en¬
rich itself. The quickest and the.
a
easiest method of drawing wealth
from the Western Hemisphere was
the only consideration;There have
been
many
developments since'
then4, settlement, the introduction;
of new
capital goods and methods,
today the Western Hemi¬
sphere has becorpe instead of a'
mere adjunct bf an older
economy/!
the very , means by which hope in
until
the
older
economy may be re¬
It is at this stage of his-!
tory : that the
Latin
American
vived;
countries
are
coming
into
their
economic maturity. The world has.
need of the best their genius and
capacity
of its personnel. We have a
some
of
world.
can
If there
anywhere
to/a
pent
produce.
is any disposition left'
to reduce this Conti-!
condition of
colonial servitude
cated
it.
so-called!
I have
It would be
not lo¬
an*
incon¬
gruity in. the light of the needs
of
no
the
rest
other
of
reason.
the
world
if
for
The Latin Amer¬
ican countries have become
an
in¬
competent Re¬ tegral part of the world economy
search Department headed by. Mr, and
they are an integral part o£
Leonard Rist, of France, which the International Bank.
;
assists the Loan Department by
May I
add
just
one
mors
assembling and analyzing eco¬
thought and then I am really fin¬
nomic data relating to loan appli¬
ished:
cations under consideration by the
The world is in need riot only
Bank. The Research Department
of the developed
aiso^assembles and analyzes gen
economy of the
a
as the manager of your en¬
terprise, as the trustee of your in¬
Requirements of the Bank
terests, and my only concern is
the achievement of your objec¬
So much for any general plans.
ment. If the Bank is requested to
tives as they have been outlined
assist in any development plan it Before financing any particular
to me in your mandate, With your
Pan American arek.
It ha^'iieed,
is interested to see that such plan project the
Bank will require
eral
economic
data
relating to
support I am perfectly confident
and great need, at this very' mo¬
is generally sound and within rea¬ specifications which support the
conditions prevailing in the ter¬
of the results.
sonable reach of the available re¬ proposal. The survey should in¬
ritories of its members. The office ment of the example of tolerance,
sources of the country
involved. clude more than the conclusion
Role of Private International
of the Treasurer, Mr. Crena de
goodwill and intelligent consider¬
■There is no single formula which that a certain plant should be
Investment
Iongh, formerly the President of ation of
joint problems which
can
be
followed
in" evaluating erected, for example, to produce
the Netherlands Trading Society
There is another aspect of the
marks the conduct of these meet¬
such a plan but it should have a given product. It is necessary
and an officer of the Netherlands
Bank I should like to stress. Our
balance and be in keeping with that it cover the question of the
Ministry of Finance, supervises ings, as it has marked similar
ultimate mission,
again as you
the practical possibilities.
supply of adequate raw materials,
the application of the proceeds of meetings of the American Repub¬
specified at Bretton Woods, is to
the Bank's loans and gathers the
All of us, I suppose, carry some¬ labor, power, transportation, mar¬
lics in the past.
blaze the trail for private inter¬
where in our minds a personal kets, costs, what quantities of lo¬
national investment. I personally reports of the effect of its loans.
cal and foreign: exchange will be
conception of what the ideal eco¬
The staff of the Bank is cosmo¬
would
stress
the
necessity
of
nomic development should be. For needed; how they are to be fi¬
It com¬
stimulating private equity invest¬ politan and objective.
!
'
'
North
Americans, > thinking
in nanced, and so forth.
ment, and thus open up develop¬ bines an unusual degree of ex¬
If either the general plan or the
terms with which they are fa¬
ment possibilities far greater than perience and talent in the field of
miliar, that picture is likely to' be specific one is to be successful it could be financed by any govern¬ development, banking and eco¬
a
synthesis of the most striking must be carried out in conjunction mental lending agency. To accom¬ nomics. The Board of Directors is
Halsey, Stuart & Co. Inc. 021
and glamorous aspects of the au¬ with the country's own measures
plish this mission we, I am con¬ particularly impressive by reason April 14 publicly offered $2,000,tomobile assembly lines in De¬ to establish and maintain a sound
of the variety and character of its 000 Texas Power &
vinced, must apply our resources
Light Co. first
troit, the blast furnaces and roll¬ monetary system and to induce where they can most effectively experience a n d training.
The mortgage bonds, 3% series due
ing mills of Pittsburgh and the financial stability. I do not need contribute to the economic sta¬ more I am exposed to this busi¬
April 1, 1978, at 101.75% and ac¬
Tennessee Valley development. It to stress to this audience the im¬
international
financing crued interest.
The
firm
was
bility of the borrowing country.
: ness 7 of
is all to easy to forget that these portance of this aspect of develop¬
the more impressed I am with the awarded the bonds on a bid of
The
Bank's charter provides
giant organisms are only a small ment. Without it all the benefits
need for greater knowledge con¬
101.2699.
that at best no more than 20% of
V
part of the United States economy, of an otherwise healthy program
cerning it.
It is not a simple
the
Net
capital subscription of the
proceeds,
together with
are
seriously
impaired if not
that! they are integrally woven
thing to lend money effectively those from
members can ever be used for
the sale of $7,000,00©
into
a
very
complex economic wholly frustrated.
but in the staff and directors of
in new sinking fund debentures
lending purposes.
This involves
fabric. They would be valueless
All these factors lead up to the
the International Bank I feel we
our raising money in the capital
and with necessary cash from.the
apart from the myriad small fac¬ fundamental principle that the
have a singularly able and experi¬
markets of the world and we have
company's general funds, will be
tories,
farms
and
distribution Bank must take into consideration the
enced body of men and women
guaranties of the member na¬
applied toward financing its con¬
units, the mines and forests, and all the main factors which deter¬
who can be of the greatest assist¬
tions to assist us in the sale of
struction program.
v
the close network of transporta¬ mine
the soundness of a loan.
ance in finding and applying the
our
securities. We cannot lend
The bonds will be redeemable
tion and power lines which make There may be and most
likely will unless we can borrow and we can¬ necessary skills and methods to
at general prices ranging from
up that fabric.
'
be
other
considerations
the solution of our development
which
not borrow unless our loans over
104.75% to 100%, and at special
:
and reconstruction problems. :
There is no reason to believe have to be taken into account in the
long run appeal to those whose
prices scaled from ; 101.76% to
that developmnt in Latin America particular loans but all points to confidence we seek as being pro¬
Mr. Louis Machado, who is with
100%.
7^;' !;'>■ ■;
7
same: objective—to
will or should necessarily follow the
make
ductive, sound and realistic. It is me on "this trip, is on the Board of
Prior to, or concurrently with,
sound loans and to apply the re¬
a pattern precisely similar to that
Directors. He represents, as you
in this connection with the sources
the issue and delivery of new
'of the United States. The shape of sources of the Bank to the most
of private capital that the Bank know, Cuba, the Dominican Re¬
bonds and
new
debentures, the
th& United States economy was productive benefit of its members derives much of its strength and
public, Ecuador, El Salvador, Hon¬
company will sell 100,000 shares of
as a whole.
'
formed by a combination" of cli¬
duras, Mexico, Nicaragua, Peru,
potential influence. We are apt to
its common stock to one of its
mate,; resources, population and
There are many aspects of the think that the amounts which are and Uruguay. Mr. Victor Moller of
parents, Texas Utilities Co., for a
technical "capacity different from Bank I would very much like to
who represents - Bolivia,
being appropriated for the Eco¬ Chile,
consideration of $1,000,000, with
that existing anywhere else in the take up with you but time runs nomic
Recovery
Program
of Brazil, Chile, Costa Rica, Guate¬ the
proceeds to be applied to the
'world. Similarly, development in and I see among those before me
Europe by the United States Con¬ mala, Panama, Paraguay, and the payment of serial notes.
eacti»»* Latin • American
country many faces whose owners know
Philippine Republic, is to join us
The company is a public utility
gress are very large but if the
must -be 'adapted to its own pe¬ all about the Bank.
\
!
culiar Combination of these fac¬
Bank
can
exert
influence
by in Santiago and go the rest of the company operating wholly within
There are only a few further
tor^, but whatever its pattern if thoughts I want to leave with you. which the flow of private capital way with us. Mr. Joaquin Meyer the State of Texas and is engaged
in the generation, purchase, trans-;
it is to succeed it should be bal¬
My emphasis on the necessity of for development purposes can be of Cuba, alternate Director to Mr. mission and distribution of elec¬
anced and integrated.
At this
making sound loans is. not some¬ maintained and stimulated the Machado, is to be here during at
tricity, It sells electricity to resi¬
stage, if the applying member so
thing which the management of
least a part of this Conference dential, commercial, farm,- indus¬
wishes, the Bank is prepared to the Bank has developed as a available resources will in the
trial and government and munici¬
and Mr. Lopez-Herrarte of Guate¬
review any general development
thing apart from, the concept of long run be much larger and more
pal customers and buys from, and
plans which are in contemplation,
mala, from the staff, is with 'me
those who created the Bank. This effective than will ever be pos¬
sells electric power and energy to, ;
or is prepared to consult with any
on our trip as well. Mr. Fernando
other public utility companies and!
.member country on any phase of isryour Bank-r-it is not something sible under any program which is
r
I
such plan; Certain limited techni¬ detached or remote from interest. dependent upon political appro¬ Illanes, the alternate to Mr. Mol¬ governmental agencies. ;
ness
of dictating how or at what
pace any of its member
shall proceed-with their
could be of further
countries
develop¬
help.
tors
-
Halsey, Stuart Offers:
Texas Pwr. & Lt. Bonds
.
:
^
*"
,
CHRONICLE
FINANCIAL
COMMERCIAL &
THE
(1678)
38
Thursday, April 15, 1948
to its technical action is aware
that
Tomorrow's
Markets
Walter
news
Whyte
■S—
WHYTE
lows
sig
tend to
cancel each other resulting in
Presence of down and up
market
may
dullness.
writ¬
The situation at this
swal
and
commentators'interpre¬
The, rest of this
article will be
given over to
If
on
the basis of
confiscation, which
As
made
example,
an.
Mortgage
bonds
Island
Rock
1
thd: 'tiew
the
of
Pacific
&
~
out¬
For the past
two weeks cer¬
tain signs appeared, indicat¬
ing at the same time a reac¬
tion and a resumption, of a
rally. At this date these signs
been translated
should have
One
into action.
or
the other
this
(Monday p.m.)
writing
neither has been seen,
leaves
with
on
a
confiscatory basis,
* 5
*
-
///•//,
theory: When a
gives two signals,
both indicating different per¬
formances, the chances .are
one
market
one
will cancel the other. This
has worked
will
the
past and
probably work in the fu¬
But I don't bank
ture.
too
in
on
it
heavily. At best it's a the¬
around in a
ory to be kicked
conversation.
•/</.•/- .Purchase
T
CO
is:
now
o
Avco
5
Stop
-
Bethlehem
30
-31
;31
Caterpillar
54
-55
>52
Douglas
50
-52
-54
12
-13
12
21
-22
22
-16
16
13
i-15
,15
23
-24
23
Vultee
Cons.
Dresser
G.
:
25
L. Martin
Lockheed
United Aircraft.
_
•
proximately one-third of the total
mileage in the United States have!
been
put
through the .wringer!
within the last 15 years, and there,
transportation industry
any
good, and in which he pointed out
a
fundamental .truths
few
the relative costs of moving
as
to
freight
by train and by plane.
I will not
on
this question now,
as
it is not worth spending time
elaborate
future
the
In
over.
of freight
amount
certain
a
be flown
may
is nothing left to wring/The Com-;
has approved the capi¬
mission
talization
roads
large
a
it
is
of.
number
logical>to
only
that the Commission mustr
assume
feel
of
and
responsibility with
re¬
spect to these capitalizations.
No
some
longer
the
can
else
anyone
with
the
fixed
Commission, nor.
that the trouble,
say
railroads
concerned.
fact,
charges.
I do not
If any
of you have any doubts on
point I will be glad to let
you borrow r my copy of Mr. Pat¬
terson's speech. * •
•
<,
/'
ever
was
this
their heavy?
is
the
railroads
as a
whole
are
As
,
believe
the
real
of
,matter
:a
that
this,
trouble
with
railroads, with a lew excep-!
tions,; but at any ra e it is cer-;
lainly not the case now. The Rocki
You will notice that I have said
Island's fixed charges have been
problem of scaled down to 1% of gross rev-,
competition for passenger traffic. enues, the Northwestern to 1.2%,*
Passenger traffic is a relatively the St. Paul's to 1.6% and the;
unimportant item in the case/ of Seaboard's to 1.7%, to /cite only*
the
about
nothing
most railroads under normal con¬
a
few examples. As
they say about
musical cpmv'
position of the railroads with re¬ edy "Oklahoma!", "They've gone;
spect to freight traffic much more about as fur as they c'n go."'
clearly than with respect to pas¬
I have tried briefly to point out
senger
traffic.
However, I am why some railroad' bonds cannot'
hopeful that they will be able to be considered sound investments
make some money out of the pas¬ but
why many can. I would like
ditions.
I
the competitive
can see
Kansas City hii the
an
now
to
how
to
separate the
tee goats.
cerned, I do not think ,it is suf¬
The essential thing in selecting
lpng^teym- railrpad /bonds
:/
d
fully.
on
to v discuss
important
ficiently
least
at
business,
:
it
believe, and is. now.
unregulated and truck driv¬
about
sheep from
course that has beenjhe
object of the1 various statutes antf
a
In the middle 1930's trucks
words
roads., Of
other
vThe
In the pasi
had merce Commission.
lot less six months I have been very much
in the middle encouraged by the attitude of .the
some
few
a
.
.
people would have
as
say
vestments is to avoid the marginal
.
Question of ^Freight Rates
-
question regarding
freight rates, besides the economic
for the last 15 or 20 years.-. ,/The ceiling, is the ceiling which may be
competition was never as serious imposed by the Interstate Com¬
1930's.
32
3H/2-321/2
4
i41/2 mm
Anaconda
' 0
,
senger
were
•
Price
1
» •'
4
out-of-pocket basis, and as far as
the roads -as * a whole are con¬
serious than it was
have
" 1
(
I think
us
;
* " V;
this continues, ad¬
keep holding.
The list you
.' .1
erally
•
as
vice is to
in it.
•'
news.
which
me holding a large bag
nothing but theories
Here's
by
Lines
a
the Road should certainly be by plane, but the amount thus
thrown away and no more money transported in the foreseeable fu¬
spent on maintaining it
If the ture will be too small to merit
government should take over the serious consideration as far as the
it is fair to say that gen¬
speaking, the rate which
would stop traffic from moving is
so far above present rates thait this
Now; having hopelessly con¬ is not a serious ceiling. ,As for
fused you I'll go into the list driving tral'lic to other forms of
transportation, this threat has, I
of stocks we still hold. Action
believe, been veryv much over¬
of each stock is still good, emphasized in the past. .(. .Truck
though nothing to brag about. competition has been, a bugaboo
Up to So long
should have occurred.
dominant, and
are
fed
Air
gage
,
are
Patterson
United
'
<
.
the air
Chicago,
are
Mr.
that
-
of
1'
,
inadequate rates can be offset by
putting
railroads
' through /the,
wringer." Railroads operating ap¬
speech in which he said
that the loose talk was not doing
First
,
fears that
extreme
so
President
piece of news is inter¬ then institutions would have a lot
a
lot-of pot-pourri, which I
preted by the public as bull¬ to worry about in addition to their
doubt will make any sense or ish; say tor oils, the oils will investment in railroad bonds.
But I see
add to your knowledge.
absolutely no basis
go up despite all the warnings
for believing that the railroads
♦
%
-t
issued by the more cautious.
cannot charge rates sufficient to
More erudite writers than I This means that any' single
support themselves under private
(or is it me) have pointed out stock is worth what it is sell¬ ownership, if tjiey are permitted
that markets seldom speak all ing for, no more, no less. If to do so. -Economically, there are
two things
which would put a
the time. They (the markets the
public wants it badly
ceiling on freight rates. One is
—not the writers) often spend enough it will hid it up. If it a rate which would
stop traffic
weeks wallowing fin troughs doesn't want it, it will sell moving and-the other is a rate
which would drive the traffic to
and anybody who
tries to and the price will decline.
other forms of transportation: ; I
make anything out of that has The question of value is com¬
cannot give into every product
his job cut out for him.
pletely ignored. Its hopes and which the railroads transport, but
these
up.-.'Some of the statements were
-
is contrary to the law of the land.
railroads
a
,
.
(Continued from page 16)
standing at less than 10% of the
tations, will take the news. investment in the property. As
That is something for a psy¬ a matter of fact, they are out¬
chologist to ponder on. The standing in an amount less i than
the money which has'been spent
public laboring under its cu¬ on the property in the last few
mulative hopes and fears sets
years.
If the Rock Island is not
its own standards and any¬ worth the amount of this mort¬
ing remains status quo, which
body who fights it has reason
means that if you have some¬
to regret it.
thing better to do, this is the
time to do it.
as
know it sel¬
headlines
reads
nals in
we
Teal or blasting
effect on the price structure.
The anticipation of the news
is what usually matters the
most. The few exceptions to
that is how the public, which
>
By WALTER
as
dom has any
Commission.. The interim increase
of
October, and
granted in
10%
increase
interim
the -second
as
of savings
menls
banks and trus-*
tees which have existed lor many-
in nearly all the states.
years
Un-;
fortunately, the test which is (Still
in
in many of the states is a
use
fixed
yardstick.
quircmenU-is
earned
usual..re-'
The
that
road has
charges one and*
its fixed
of
to -be
w
regulations governing the invest-,
a:;
unorganized•% and paid
one-half times, or twice, or some,
relatively low wages.y Now inter- 10% granted in December, clearly fixed amount, during the year
city trucks .are under; the regula¬ indicate to my mind that the In¬ proceding :' investment .and for a
Commission
tion of the Interstate^ Commerce terstate * Commerce
period of years prior to that time.:
Commission and truck employees realized that higher costs must be
Now, / unfortunately, y, experience:
and .that shows that* this1
are receiving much, higher, pay ..It offset by i higher rates,
type' p£; yardstick'
may interest you to know that of the lag between the increases in does
not separate the good bonds
the total traffic moved /by rail¬ costs and* the increases in rates
ers
.were
from
roads
and
intercity trucks, the
about ,.90 %/and
trucks
about. 10%, and yet the
trucks employ more men than the
railroads
move
cannot Hbe /
permitted
lengthy as it has been at times
the
The interim increases so
past.
the
do this
in perity
poor
in periods of depression.:
years of prosperity;
or
After
It.does not'
ones.
either in periods of pros¬
few
a
within a month the
bonds of many essentially.
More next Thursday.
railroads. Trucks have taken from or six weeks of the increases- in
weak
roads
qualify under this
the railroads a certain amount of wage costs which they were de¬
fixed
—Walter Whyte
yardstick.
On
the
other;
short-haul LCL traffic, but I think signed to offset.
As you know,
[The
views
expressed
in
this
that
of
many
the
railroads s are
far granted were
not yet been
the final decision has
hand, after
sion
the
few years of depres¬
a
bonds
of
.sound,
many
find it ex¬ roads do
glad to be rid of that traffic
necessarily at any
not qualify;-^he result
time coincide with those of the and would not mind" getting rid tremely
encouraging
that * the
Assuming this theory does Chronicle. They are presented as of some more of it. The eastern Commission granted the interim is i tha t the investor/who is cprp-,
pelled to depend on/.a fixed .or;
hold the outlook is for dull¬ those of the author only.]
railroads have asked for increases increases rather than keep the
rigid yardstick of this kind is free'
in rates on LCL traffic and have roads waiting while they made a
ness punctured by news here
to buy almpst any railroad bond
stated that on a substantial part final decision.
and there.
in good times, when bond prices
article
do
not
down, and I
handed
now
.
Halsey, Stuart Offers
I
make
news
in
reference
this
kind
a
of
to
aside.
Everybody who has been in
the market for a long time
and has given some thought
Securities
on
Pacific Coast Exchanges
Members
,
GOrtlandt
New York 5, N. Y.
7-4150
Private Wires
Teletype NY 1-928
to
San Francisco
Monterey
,
—
—
Principal Offices
Santa Barbara
Oakland
—
losing
There
are
several
for
reasons
They wish either to get a this apparent change in the atti¬
tude of the Interstate Commerce
The
war
brought
compensatory, or else drive it to Commission.
money.
Mral of Pa.
Equips.
home
the trucks.
Halsey, Stuart & Co. Inc. was
awarded on April 13 an issue of
$1,395,000
Central RR.
Co. of
Pennsylvania Equipment Trust of
1948, series A, 2%% serial equip¬
ment trust certificates, maturing
to
|he Commission, .as
it
competition did. to everybody else,, the impor¬
one formerly heard a great
tant part the railroads have in
deal about is coastwise shipping. the defense of the country. This
the October
As in the case of the trucks, the short extract from
shoe is now on the other foot and decision brings out the point:
''It is clear to us
the coastwise shipping companies
that /the
of
form
Another
which
.
.
.
public vitally needs an efficient
transportation service, and im¬
peratively demands a transporta¬
tion system that is adequate for
the national defense in xmy emer¬
gency."
high, arid, is not permitted/to-,
buy many .sound railroad bonds,
in times of depression when bond\
prices are low and the return ex-'
are
ceedingly
what
is
bonds
of
in
roads
attractive.
is
needed
standard
which
Obviously,,
will/exclude
the; weak
when
.
,
,
roads in times of depression./,
I believe that this can be
compiished by the
ible
standard
tunately
',
even
these roads .seem to be prosperous,
and will admit bonds of the strong
a
or
very
of
ac-"
a
.flex- '
yardstick.
-For-;
is
use
simple i
l A
namely /the
Then there is the change in the available,
performance of all the
competitive position of the rail¬
,
of.
the.
marginal
or
times,
good
sort
some
one
/average;
Class
I
roads. If we restrict purchases of.
the labor costs of the roads and other means of trans¬
railroad bonds toy obligations of
a
wholly - owned subsidiary of shipping companies increased very portation which I have already
roads which have equalled or bet¬
The Central RR. Co. of New Jer¬ much --more
than the labor costs discussed. It is significant that the
tered the average of all the Class;I
sey, debtor.
Since Aug. 5, 1946, of the railroads.
■..,//■ - v . • ' Interstate
Commerce '< Commis¬ road<?
as
to
the company has operated under
coverage
for fixed!
.Another
form
of competition
sion's decisions of the 1930's were charges and as to the percentage,
lease from the trustee of The Cen¬
^bout which there was a great
tral RR. Co. of New Jersey about deal
ballyhoo during the war was full of discussions as to truck and of -gross remaining after .paying
230 miles of railroad extending
fixed <charges, ,we obviously .are-,
airplane competition- for ' freight. other competition, and that the
Railroad
Co.
of
Pa.
is
ing the
war
A
New York Stock Exchange
York.1 Curb ,Exchange <Associate)
Sgn Francisco Stock Exchange
Chicago Board of Trade ■
,14 Wall Street
are
rate which would make the traffic
Central
Schwabacher & Co.
.N&d
they
$93,000 annually April 15, 1949 to want the railroads to
charge higher
1963, inclusive.
The certificates, rates so that
they, will be able to
issued
under
the
Philadelphia
remain in business, ■'? One of the
plan, were immediately re-offered, oldest
companies, the Merchants
subject to Interstate Commerce &
Miners, decided not to resume
Commission
authorization,
at
operations after the war because
prices to yield
from 1.50% to
they did not feel that they could
2.90%, according to maturity.
compete with the railroads./Dur¬
Pacific Coast
Orders Executed
traffic
this
of
Sacramento
.Fresno
from
J
the
Scranton
State
line
at
Easton
to
by way of Wilkes-Barre.
This mileage is all, or substan¬
tially all, of the lines formerly
operated by .The Central Railroad
Co. of New Jersey in Pennsyl¬
vania.
To
hear
would
some
have
people/talk,
thought
that
; one
in /the
postwar period everything would
be
moved
by plane and-that the
railroads might
as
well
be
torn
recent decisions have hardly men¬
confining ourselves to the stronger
tioned competition.
units
.And then there
is still.another
consideration, litis
sible
lor
anyone
no
to
longer pos¬
believe
that
in the
history.1 We will .be'
automatically excluding the weak-,'
er
roads,
perity.
even
;jn
times of
.
pros-.'
In such times-their cover—:
Volume
,
for
167 '• Number 4690
fixed
charges and per¬
centage of gross remaining after
payment
of fixed charges may
look
quite r impressive, but .the
showing of the stranger roads will
age
THE
because
certain
'railroad
COMMERCIAL
Because of the substantial
ber of defaults which took
in
railroad
bonds
certain investors
line of
the;1930's,
following the
investments
road field.
day with
place
in
are
least resistance
ing all
num¬
in
by avoid¬
the
rail¬
I had lunch the other
of my savings bank
friends in New York and he told
one
that his investment committee
me
was
unalterably opposed to the
purchase of-any railroad bonds
•whatever.
Qn the other hand, he
•admitted that they were
placing
substantial amounts in real estate
mortgages.
to
be
Now,"!
expert
an
do
ollect
ade
that
during
number
a
claim
real
on
mortgages but I do
not
seem
estate
to
rec¬
the 1930 dec¬
savings banks
of
§nd ether investors had
some
very
■unfortunate experiences with real
estate mortgages. ?'It
to
seems
me
thoroughly
buy
illogical to refuse to
railroad bonds, whatever
any
bends
give
FINANCIAL CHRONICLE
bonds
mated $4 billion, remains exces¬
invests sive in relation to total product.
■
to unsatisfactory
ments, and yet to continue to put
money into real estate mortgages/
•.•• While in some cases a
policy of
be even mote
impressive, and the avoiding railroad bonds may be
weak
sisters will still be below justified for special
reasons, gen-;
the average, and consequently ex¬ erally speaking I have no
sym¬
cluded from"our
pathy /with it.
Sound
railroad
investments./;./
proved
&
Public
holdings
of
cash
cash
or
equivalent available for spending
are
nearly as large as last fall—
$256 billion compared with $254
billions
and
—
continue
broadly distributed
Commercial
ers.
to
hold¬
among
banks,
be
though
be
purchased now to obliged to sell some securities to
considerably better rate of offset shrinking deposits, still hold
can
a
return than can be obtained in
other types of corporate bonds of
$66 billion of Government securi¬
comparable quality. I am sure that
at
will
ties, which
the
on
its investments consistent with
loss
of
stock
as
be
re¬
be built. To the
monetary
increased
and
are
more
created.
gold
Govern¬
sold
to
the
reserves
These
tionary six-to-one
bank credit.
On
would
additional
re¬
could also support an infla¬
serves
the
basis
of
expansion
of
the
monetary
situation alone, there would still
be a dangerous
inflationary po¬
tential, even if no further impetus
I am not
advocating that a bank
fake undue risks for the sake of
a
higher rate of return.
given to inflationary pres¬
by other forces. However,
upward
pressures : are
now
in
field open to investment—includ¬
prospect as a result of several im¬
ing the railroad field. v/;/.;/'/;'
portant new factors. One of these
What I
am
minded
advocating is
consideration
sures
every
is the tax reduction bill. This bill
will
Eccles Again Presents Federal
Heseive Views on Credit Curbs
year..
bank
reserves
through
billion to the
of the public
like amount from
$5
power
The international financial
accepted
to
add
which'
we
have
now
another factor likely
are
billions to Govern¬
ment expenditures in the future.
The expanding program of mili¬
tary preparedness will further in¬
effectively -further monetary ex- | ly with expectations held at that
pansion. / The commercial bank- time. Fiscal and monetary opera ing system held nearly $70 billion >tions together effectively offset
of Government securities, which factors
increasing bank reserves
being converted into addi-
about
obligations
(Continued from page 3)
tional
many
crease-the budget burden for next
year/ and
during the period, such as the inflow of gold, return of currency
more
.
future
billions.
years
by still
Stemming
from
sales to the Federal Reserve. In from circulation and
these developments, on top of ex¬
purchase by
addition, the System was provid- the Federal Reserve of Govern¬ isting inflationary conditions, is a
ing reserves to banks by purchas---hient'securities from hon-barikiri- rapidly -changing public psychol¬
ing Government securities sold by vestors. During the four-month ogy with respect to the inflation¬
non-bank investors. Finally, bank period, December
through March, ary outlook. "■;■■/":;■
reserves were being
substantially the Federal Reserve purchased •y Businesses and consumers will
augmented by a heavy inflow of $8.6 billion of Government securi- be more disposed*to tisd existing
gold.
;
ties, largely bonds, and sold in the liquid resources- and to expand
their borrowings to finance cur¬
In brief, the banks at that time market $6.3 billion of
securities,
rent expenditures. The prospect
•were in a position to
supply un- chiefly bills and certificates. The
is
that
the
demand
for
new
limited
amounts / of
additional Government retired $3.9 billion
credit, and in the. face of strong dollars of its securities held by financing, aside from Government
demands
for
additional
will
exceed
the
credit the Reserve System. The net re- requirements,
from
all sources
further; rapid suit of these operations was to re-, supply of.available savings.' This
„
„
.
would
monetary expansion was occur-/duce Federal Reserve holdings by
ring, intensifying existing infla- $1.6 billion and thus to keep the
tionary pressures. This situation bank
reserve
positions
under
was potentially explosive because
pressure during this period,
production and employment were
close to the maximum then pos¬
sible.
Changes Since November
Last
November
expected
inflationary
pressures in the first quarter of
this year.
Such a situation doveloped.
It was recognized that
abatement
some
.
we
of
there would be a large volume of
funds drawn from the banks by
business and individuals in order
■to
■
in
pay
a
taxes which would result
large cash surplus available
to reduce the public
also recognized that
debt. lt
was
the existing
contemplated
program
of
monetary and credit policy would
and
have
some
program,
included-
restrictive
which
the
was
effect.
The
carried out,
statement
by
the
-bank
supervisory agencies, urging
more
restrictive,
lowering of Federal Reserve
support levels for Government
the banks to be
the
securities
late
in
December,'
a
slight* rise in
rediscount
rates
early in January, and some in¬
in
crease
reserve
requirements for
The
combined
supply
effect
of
of
of
the
a
usual
seasonal
/demand
slack
in
during
portant >. anti ^inflationary
influ¬
During the last three quar¬
ters of the year, it is estimated
that the budgetary deficit may ex¬
ceed $3 billion.
(In view of large
tax receipts in the fir^st quarter of
1949, however, there may be a
small budgetary surplus for the
12-month period beginning with
April 1 of this year.) It is also es¬
timated that/continued sales of
savings/bonds and other public
debt receipts will approximately
cover
voluntary redemptions of
public-debt by holders of matur¬
ing issues.
The
current1 deficit
ence.^
business
the v first -
quarter.
Concurrently with these devel¬
opments, Uhe; world; crop outlook
has become more promising and
prices of farm products and foods
have
declined.
In
ductive-activity
held
close
to
addition, pro¬
generally
has
maximum
levels.
These developments have exerted
an
anti-inflationary influence.
Prospective Monetary and Credit
Situation
banks in New York
will heed to be financed by draw¬
;
and Chicago
Notwithstanding these salutary
banking frater-'
nity; recognizing the dangers in developments, it cannot be said
rapidly /expanding
bank credit thatinflationary dangers have
'«■ and the
need for restraint, under¬
been
removed.
Farm
prices,
took la" nationwide
educational though lower than they were, still
continue
;program to bring about restric¬
firm, even though at
tion by voluntary means. Finally,
present
levels
they
are
much
-there
was
a
widespread belief higher relatively than prices of
that the supply of goods in
most other commodities. Current
many
fields was gradually catching up and backlog demands for many
in February. The
ing
deferred
favorable
demands
crop
and
that
'developments
would combine to lessen inflation¬
ary pressures
year.
:
by the spring of this
-
Monetary
developments
since
goods continue to be very strong.
Prices
of
industrial
products,
wages,
some
rents,
other
transportation
services
are
vancing.1 The
money
though contracted by
still
and
ad¬
supply,
esti¬
an, ?
on
have
■
;with
budgetary deficit which would
bankers'' eliminate the only remaining im¬
program
of voluntary re¬
straint, and partly reflecting the
-
plan
un¬
could
commercial banks.
A detailed de¬
analysis « of
the
or optional reserve
scription
and
Board's special
tc
proposal
was
submitted
House Committee on
to
.
governmen
Under these conditions
the Federal Reserve would find iv
to
sell
government
order
to
absorb
without
seriously
market
for
such
securities
bank
Treasury
deposits
which
in
in
upsetting
the
Reserve
in
purchases of
maintaining
market
for
Banks
icit
thus
this
would
still
mean
expansion
effect
be
of
curities
the
immobilizing these
that
so
used to obtain
bank
new
Reserve would have to take action
to absorb any excessive volume of
should
financing, it would
short-term securities.
Application of the optional re¬
serve requirement would have the
supply. To restrain such
potential expansion, the Federal
types of
adopted: (1)
such
banks only
be
money
Two
In
be advisable to make available to
more
of
case of large-scale def¬
financing, it would be essen¬
tial.
bank
a position to
expand loans and
investments for private purposes
inflationary
be¬
necessary to rely upon the
And in the
secur¬
in
*and
it may
operations, the optional
requirement would be an
especially
valuable
instrument.
orderly
Treasury
would
.
extent that
nancing
bonds will further increase
reserves.
"Bulle¬
V
'
reserve
an
long-term
the
Reserve
-
banks for any new government fi¬
Prospects are, therefore, that in
future gold inflow and Fed¬
ities
Federal
'
come
tht
securities.
the
eral
the
To
reserves
they
se¬
could not be
to
reserves
pyramid
them on a
assets upon
six-to-one ratio.
In
other words,
securities issued in new Treasury
financing through banks would be
measures
tied
Interest
the
to
deposits
short-term Treasury se¬
curities and discount rates should
created by
ready, market
for short-term governments would
be
be
rates
their
on
permitted to rise to the extent
possible without raising rates on
long-term bonds; and (2) To the
quately
restrictive,
the
purchase.' A
assured
would
be
and
the
helped
in
Treasury
successfully
carrying out both its refunding
operations and its deficit financ¬
ing. At the same time, the Fed¬
extent that this action is not ade¬
Federal
Reserve should have the power to
increase
reserve
requirements
eral Reserve would be enabled to
substantially to
money
exercise
cover at least any
growth in the total supply of
re¬
The
serves.
The
first
which
of
could
thes£
be
measures
adopted
by
would
the
be7 designed
induce
to
banks to purchase short-term gov¬
ernment securities and to discour¬
extension of credit to private
Policies
during the
past year have moved in that di¬
rection about as fast as is feasible
age
borrowers.
some restraint upon the
market fpr private credit.
dominance
of
public
generally
powers
unusable
s
restraining further in¬
flationary credit expansion.; The
Reserve Board is not pow seek¬
ing additional power beyond what
it formerly possessed; it is merely
pointing but that the System has
little or no authority to deal with
the credit situation
exists and
as
to such
functions for which it
probably cannot
be raised much
without unsettling the 2lk%
more
for
rate
long
-
term
Treasury
•.
,.
it currently
likely to develop.
seems
If the
Short-term rates
for
purposes of
without unduly upsetting the mar¬
ket.
There are limits, however,
a course..
debt
in the present credit situation has
rendered the System's traditional
Federal Reserve and the Treasury
without
any
n e w
legislation,
a
endar year 1948 are likely to show
own
loan
such
ations for the balance of the cal¬
monetary
developments,
partly
reflecting
the
effectiveness / of
warnings by banking supervisors
success
additional
•
expansion was sharply cur¬
tailed, partly reflecting fiscal and
the
banks may be called upon
bonds.
Moreover, it is doubtful
situation, can only how niiich any rate that is feasadd to the inflationary pressures. ! j.ble will deter banks from making
Moreover, these pressures would loans to private borrowers or pur¬
be aggravated if the demands of chasing higher rate securities.
'*'• •*,'
the defense and foreign aid pro¬ *-'.I'm r-'iv•• •**'' ' '■'■."■■ **'■
Need for Additional Powers
grams for goods which are al¬
ready in short supply further re¬
Accordingly, the Board believes
duces the quantities available to that the System should be given
the public.?
authority to increase the reserve
The Government's fiscal oper¬ requirements
of all commercial
under
loan
and
many in need
financing will turn to the banks
credit. A growth in the total
volume of bank credit and money,
the
on
that
mean
for
Treasury and
Federal Reserve
operations, which
were
only made possible by the
large
budgetary
surplus,
was
strongly anti-inflationary.
The
money supply was contracted by
nearly$4 billion/Commercial bank
money
and
reserves.
and take away a
Federal revenues in the next fiscal
then and still is unable to restrain^ November have accorded
general-
were
add
purchasing
improve,
government deficits may continue
and
even
increase substantially,
were
an open-
of
uses.
These last
two factors may operate for a
long
time in the future.
If the inter¬
national outlook does not
this
properly be
limited to 25% of
aggregate de*
mand deposits and 10% of
time
deposits, v To
be
effective
and
equitable, it should apply to all
funds *£or other
Federal Reserve by non-bank in¬
due to a de¬
I wish to make it clear that
obtaining
securities
vestors, still
loss of income
a
fault.
is
ment
income
requirement
der
tin,"
and deposits can
extent
that the
The
Re¬
of government
holders wanting
difficult, and perhaps impossible
into
Upon these reserves a sixexpansion of bank credit
to
investments.
from
Banking and
Currency and has been published
to-one
resulting from the avoidance, be¬
cause of unreasoned
prejudice, of
a field
offering sound investment
possibilities, is just as real a loss
purchases
securities.
serves.
safety and sound investment prac¬
tice, as it is to avoid losses on its
serve
purchase
it is just as
that
possibly by further Federal
securities
specified cash assets or in shortterm government
securities.
|
The maximum
readily convertible
the duty of a savings bank
obtain the maximum income
agree
will
also continue
to
be
aug¬
mented by the inflow of gold and
39
discretion
are
banks'
much
you
(1679)
Congress wants the Federal
Reserve
lished,
System
the
substitute
to
perform
System
or
was
must
at least
a
the
estab¬
have
a
partial sub¬
stitute for those powers that have
become unusable. The Board feels
that it would be remiss if it failed
to bring this matter to the atten¬
tion of Congress.
There is no simple way of hold¬
ing in check bank credit expan¬
sion in excess of essential public
and private need.
The problem
should be met in
a
ways—by general
and
combination of
credit controls
in
particular areas by selec¬
present this au¬ tive controls, such, for example, as
thority should make it possible for reimposition of consumer instal¬
the System to require all commer¬ ment crelit
regulation, and the
cial banks to maintain primary continuation of
existing margin
reserves with the Reserve System
requirements
on
stock
market
amounting ,to 10% of aggregate credit.
demand deposits and 4% of time
Other Anti-Inflationary Actions
deposits in addition to present re¬
banks.1
the
For
quirements.
This
the Reserve
crease
bank
gregate by
$12 billion.
absorb
give to
to in¬
The Congress is currently con¬
sidering continuance of easy mort¬
the
gage
credit for housing.
Easy
mortgage credit is one of the most
power
reserves
in
/ag¬
maximum of about
An authority of this
a
amount would
to
would
System
the
enable
the
reserves
System
that
are
likely to arise from gold acquisi¬
tions or from necessary System
purchases of government secur¬
ities sold by non-bank investors
over
the
next few
years.
.
.
In case banks should persist¬
ently follow the practice of sell¬
ing government securities to the
been -built up by tax re¬
ceipts during recent weeks, or by Federal Reserve in order to ex¬
borrowing in the market. Under pand
private
credits,
notwith¬
these circumstances, there can be
standing higher short-term inter¬
no net retirement of
government est rates and increased primary
securities held by the Federal Re¬
reserve
requirements, then the
serve System.
To the extent that
System should be granted/sup¬
the Treasury may need to borrow
plementary authority to impose a
new money, it probably will have
special reserve requirement along
to be obtained largely from the
the lines proposed by the Board
banking system.
last November. This type of au¬
During the next few months thority may be described as an
Treasury use of accumulated bal¬ optional reserve requirement be¬
ances with Federal Reserve Banks cause it could be held, at the
op¬
will add to bank reserves, which tion of the individual
bank, in
inflationary
factors
in
the
do¬
mestic credit picture.
At the very
most government mortgage credit
programs at this time should be
limited
to : relatively
low cost
housing, particularly for rental
housing,., and should be accom¬
panied by some /restrictions on
other less essential types of hous¬
ing. The housing shortage cannot
be overcome by increasing the
competitive pressures on scarce
supplies of materials and man¬
power. They are the limiting fact¬
ors
It
on
is
the volume of construction.
one
thing to
provide
easy
credit facilities to encourage spe¬
cial types of residential construc¬
tion
activity
allocations
under a system
permits.
It
and
of
is
another thing to provide
such
encouragement in a free
market already characterized by
heavy accumulated demands.and
quite
rnnntinned
on
naae
40)
.
4#
THE
(1680)
COMMERCIAL
have
Iccles Again Presents Federal
Reserve Views on Credit Curbs
&
FINANCIAL
effective checks
no
on
CHRONICLE
the
free play of economic forces. This
is the certain road,, if followed
long enough, to
tion.
Thursday, April 15, 1948
the purchasing power of
savings will be protected..
these
and material
.resources
needed to
that peace. If necessary to
assure
So far as the monetary and protect our economy at home so
ruinous infla¬ credit field is concerned, we have that we shall not lose by inflation
one would seri¬ tried to make clear that action on what we seek most of all to save,
a
Surely /no
ously contend that we can gp these fronts alone cannot guaran¬ we should be willing and pre¬
on adding more and more pres¬ tee stability. Nevertheless, we be¬
pared to reimpose to whatever ex¬
(Continued from page 3.9)
sure
In
the boiler of inflation lieve that the Reserve System tent the situation demands a har¬
by strategic shortages in supply of the fighting, however, we seem
should be armed with requisite ness of controls, including higher
without an
ultimate
explosion.
ithat are likely to be intensified to be farther away from these
Those who view- us with a hostile powers, first, to increase basic re¬ levels of taxation. Nobody wants
by the defense and world aid pro¬ goals than ever. Our national debt
serve
requirements of all com¬ such regimentation but in the
still exceeds $250 billions, or more eye no doubt hope that we will
grams.
wreck our economy on the shoals mercial banks and, later on, if the hard choices before us it is in¬
In restraining inflationary pres¬ than five times the prewar total.
of inflation. It would be a cheap situation requires it, to provide finitely
preferable to economic
sures under present and prospect¬ Federal budgets have never fallen
that all such banks hold an addi¬ chaos and possible collapse of our
way to defeat us.
7,V.
ive
conditions,
monetary
and under $37 billions a year and we
Both of system, to which all free men look
Secondly, the country could be tional special reserve.
credit policies must be combined are confronted now with the pros¬
these would be protective meas¬ for deliverance from the evils1 of
with fiscal
and
other- govern¬ pect of an expanding debt and subjected to a full harness of di¬
The first could be used to war and misery that feed on eco¬
rect economic controls—for ex¬ ures.
mental policies. The public should budgets. During the war we ex¬
allocations, construction offset gold acquisitions and pur- nomic distress.
>be given every possible assurance pected the peace to bring an end ample,
cases of Government securities by
permits, rationing, price and wage
We are aware that the ques¬
that the government will protect to these enormous drains on our
controls, as well as taxation at the Federal Reserve, and thereby tions of policy designed to achieve
the purchasing power of the dol¬ resources.
restrict continued expansion of
wartime levels.
Without such a
the <cardinal purpose of assuring
lar so that the public would be
Today, there is no end point in
harness, amounting to a regimen¬ our already excessive money sup¬ an enduring world 'peace are out¬
more willing to defer the satis¬
sight. Threatening as /the infla¬ tation of the
ply. The second would be essential side the domain of those charged
economy in peace¬
faction of wants, particularly for tionary
potential was at the end
time, there is no sure protection in case banks embark upon an with responsibilities in the mone¬
^houses and durable goods.
of the war, it is worse today.
against inflationary dangers that infaltionary .credit expansion tary:
and. credit field, but: we feel
Wherever, possible, government When we embarked Upon- the de¬
may lie ahead.
They cannot be through the sale of Government that such responsibilities have/do
expenditures that will add to fense program in 1940 we had a successfully
combated
by
any securities to the Federal Reserve be exercised in the light of the
slack in the labor
pressures on the labor and cap¬ tremendous
single means or on any single or to assist the Government in burdens which the economy must
ital goods markets should be de¬ force, with nearly 12 million few¬ front. There is
no power that the case of large-scale deficit financ¬
bear. The earliest attainable set¬
ferred, and State and local gov¬ er employed then than now. We Board now possesses or that the ing.' ' v
';y^v\: >
>.■: tlement of the issues that now
ernments
should
be
requested had surpluses of most raw ma¬ Congress could give us in the
We believe it is the part of pru¬
stand in the way of lasting peace
likewise to
defer
non-essential terials, of unused industrial ca¬
monetary and credit field that dence to recognize clearly that the offers the, best hope for the pres¬
^expenditures of this type.. There pacity, of housing, of foodstuffs, would be adequately effective by
underlying cause of the continu¬ ervation of our institutions and
should be early action to close and of countless other things. The itself.
/•:.:• y ■ ;// ■
■
.'/Y: •//.;. ing / inflationary dangers arises our freedoms.., Meanwhile, they
loopholes in our tax laws and to impact of our heavy armament / Beyond that, we must ask our¬ from the
disappointment of our must not be
jeopardized either by
strengthen the tax collection ma¬ expenditures was not inflationary selves whether the public would
great hopes for the early estab¬
uncontrolled inflation or. long conchinery. If the stage is reached at so long as the total demand on be willing in peacetime to submit
lishment of world peace./ Surely
which government expenditures our resources did not exceed ca¬ to the sacrifices and
rigid re¬ we must summon all our human tinued regimentation at home.
again threaten to create large pacity. It rapidly became infla¬ straints of a wartime economy. If
as
civilian
purchasing our preparedness program calls
^budgetary deficits, then a reim- tionary
positon of wartime levels of taxa¬ power created by the expendi¬ for a military draft upon our
tion and direct economic controls tures began to exceed the avail¬
young men, should it not call also
.along the lines proposed by Mr. able supplies of goods and services. for control of the profits arising
We held the excess purchasing
Baruch, for example, should be
(Continued from page 9)
from that program?
undertaken. If young men are to power fairly well in check while
over
We may well ask for how many the government paid off its bonds
$100 billion of Government
We have now
*be drafted into the military forces, the war was on.
years must we maintain enormous the bank deposits and money sup¬ debt. ■■;/•,./.://,■ //>::':W v'/. -r
then a way sliould be found; to seen the cbnsequences of prema¬
and probably expanding military ply would come down.
In the late 20's we saw what '
keep men at work in essential in- ture removal of the harness of
The reason this has not hap¬ was then considered a great in¬
expenditures.
The question is
lustries, and thus prevent the seri¬ wartime controls. Even the one
how long, to what end. and at pened is, first, because of gold crease in our money supply due
ous
inflationary effects brought remaining anti-inflationary force,
what consequences to our econ¬ purchases by the Treasury, which to the expansion of bank deoosits
about by strikes.
that is, a Targe budgetary surplus
T
omy? We do not have the inex¬ increase bank., deposits and the created to make loans to individ¬
used to reduce our money sup¬
haustible supplies of manpower excess reserves of the banks, al¬ uals and corporations borrowing
Situation Now and in 1940
:
ply, is no longer in prospect.
and resources to support indefi¬ lowing a mushrooming of bank principally for speculative pur¬
The Board believes that any
nitely, with no end point in sight, credit; and second, because of poses. In 1929, our bank deoosits
Over-All Policy Alternatives
.realistic appraisal of the economic
loans
and
programs of the magnitude which bank
purchases
by and money in,circulation totalled
outlook from the standpoint of
On Jthe basis, of,,present trends,
we now are shouldering
or con¬ banks of government and other
nearly $55 billion. £ When the
believe
that
the
monetary and credit policy must we
country,
take account of the. underlying sooner or later, has to choose be¬ templating. We cannot go on vear bonds on the market, purchases Stock Market broke, bank loans
after year bearing these crushing made in most instances out of re¬ were called, foreclosed or other¬
facts of the international situation. tween three broad alternatives.
costs without jeopardizing what serves obtained from the Federal wise
liquidated, wiping out the
During the war there was no
First, we can continue on the we seek to
save.
If we were con¬ Reserve Banks by the sale to the bank deposits which they had cre¬
doubt about the ultimate victory. present course of providing essen¬
fident of the early establishment Federal Reserve of governmenl ated and decreasing the money
The country looked forward con¬ tial foreign aid and of carrying
of
peace,
we
could
tolerate a bonds
This rapid decrease of
previously
held
by
the supply.
fidently to an era of stability and out a military program on a scale
tightly controlled economy. We banks. This latter process is main¬ money, esoecially of bank depos¬
peace
following the hostilities. of, as yet, undetermined size and
believe that the time element is tained
by a rule of the Federal its. propelled and augmented the
Nearly three years after the end cost, while at the same time we
the very essence of this grave Reserve Board made
during the deflation which was the beginning
problem.
..
of the depression of the 30's.
war and still continued which re¬
.
,
.
Sound Money Is
Good Politics
,
„
The
Our nation
sought neither ter¬ quires the local Federal Reserve
ritory nor reparations in either Banks to buy from member banks
World War. We seek neither now. any government bond offered by
We ask only for the earliest pos¬ the banks, without question as to
sible establishment of the founda¬
tions for enduring peace. To that
end,
our
choose
a
best
may be to
combination of alterna¬
course
tives; that is to
such controls
as may become nec¬
to prevent inflation at, horn e
while abroad we lay at the earli¬
est possible moment the founda¬
Mail your Annual Report to the
them
of the
for
information
tions
Investment
on
your
company.
■v r
We have a metal stencil
graph
,
Department
for
in
our
Addresso-
maintain
investment,
every
alphabetically
s
States
by
Cities, and Within the Cities by firm
,
our
stitutions in
banking and brokerage firm in the country,
..'V,' arranged,
Surely
peace.
an
in¬
burdensome controls and
taxation if convinced they are es¬
sential to safeguard our economy
against a ruinous inflation, and
that there is an early end point
in sight which will enable us to
accept
Addressoyraph Service
.
for
formed public would be ready to
Investors look to
Country.
a
system and our in¬
peaceful world.
To sum up the situation
and,.
Board
sees
it,
we
are
as
the
faced with
the
This list is revised daily and offers you the
possibility that still further
upward pressures will be added to
the tremendous inflationary po¬
most
tential generated by war financ¬
up-to-the-minute
service
names.
available.
ing and intensified by subseauent
Our
developments.
charge for addressing envelopes for the
complete list (United States
$5.00
per
thousand,
or
r
;
should do
everything possible within the
Canada) is
,v;i
We
isting
authority of
ex¬
the
govern¬
ment to moderate and counteract
:
these
forces. Federal, state and
local governments should practice
the strictest economy and defer
All addressing completed within 24 hours.
We
ean
also supply the list
labels at
on
gummed roll
all public
works and similar ex¬
penditures that can be postponed
small additional charge.
a
until there is
power
the
Herbert D. Seibert & Co., Inc.
Publishers of t'Security Dealers
25 Park Place
'of Ndrth America'? >
REctor 2-9570
New York 7
and
a
surplus of
materials
shortages
that
man¬
instead of
exist.
now
Every effort should be made not
be
to
use
made
eral Reserve
the
of
This
be remedied
should
say, acceptance of
essary
Houses
the
ceed? of such sales.
pro¬
can
and
by the Fed¬
is
"enough"
an
money
or
when
we
"excessive" money sup¬
to
preach
for
more
defnitely come for
the time has
a
halt, the money supply continues
by the same meth¬
by the New Deal
with times of depression
developed
ods
to
cope
and war.
.
,
,
,
?
'
,
is
It
interesting to note that
.even in 1932 the Democratic Plat¬
form declared, "We* advocate a
own purposes.
There have been
sound currency to be preserved at
times, notably just prior to the
1896 Campaign, when a shortage all hazards"; and the Republicans
in the money supply in this coun¬ paralled that statement to the ef¬
fect that they would "continue to
try was the foundation for po¬
litical demands voiced principally uphold the gold standard and will
oppose any measure which will
by the Populists for free coinage
undermine the government's cred of silver or other means of putting
it or impair the* integrity of our
additional money into circulation.
national currency/'
There were
The sudden increase in produc¬
fine generalities. They were fol¬
tion of gold around 1900 added to
lowed s quickly with devaluation
the/money supply, and justified
of. the dollar, confiscation of all
the sound money advocates.
A
gold and abandonment of con¬
ply. The individual, of course, al¬
ways would like "more" for his
little
later
we
had
panic in 1907 which
so
to
much
to
a
lack
the
was
of
money
due not
money
alleged cornering
then existing supply.
an
of
as
the
The
1913
Federal
was
Reserve
intended
to
Act
make
of
our
money supply flexible so that it
would respond to the needs of the
people
rowing
money
version of paper money
that
At
into gold.
the President
time
that
clared
our
paper
de¬
currency
would be managed so that its sta¬
bility for
Purpose of Federal Reserve Act
a
generation would be
Perhaps it is significant
that there was no money plank in
the Democratic Platform of 1940
assured.
or
of 1944.
The time has come when it will
not be the bankers or wealthy
indicated by their bor¬
interests who will be demanding
from the banks.
Our
as
supply expands under
sound
money,
ipan.
Even
an
increase in business activity mani¬
fested by borrowing, and it con¬
tracts with decreased activity and
but to practice
the. repayment
of
bank
loans.
economy and savings at this /time.
However, 'nobody ever contem¬
The need still is urgent to. spend
plated the huge borrowings of the
less
only
was
The New Deal made the
brilliant discovery that it could
add to the money supply without
printing greenbacks. Now, when
to be increased
Board.
It is not easy to determine what
have
then
cry
money.
Liberal
could
this
or
not
but the average
the most extreme
Leftist Administration
satisfy
the
people
of
country in the years, to come
it provided a sound cur¬
rency.
It is" up to someone to
and save more—to invest in
devise and put into execution
Federal Government during the
Government Savings Bonds. Every
ways and means of accomplishing
assurance "Should
be given-that late "war? -and '"bank "holdings- of that res</ ""1
~1
'5
unless
Volume 167
Number 4690
The
THE
following statistical tabulations
shown in first column
are
COMMERCIAL
cover
Indicated steel
operations
Week
(percent of capacity)
Equivalent to—
Steel
ingots and castings produced
(net
AMERICAN PETROLEUM
INSTITUTE:
Crude
oil
Crude
pp ";
runs to
42
5,388,700
—Apr.
15.850,000
Apr.
2,484,000
„Apr.
—Apr.
Stocks at refineries, at bulk
terminals, in transit and in pipe lines—
:
Finished and unfinished
gasoline (bbls.) at:
'
1
—Apr.
Kerooine (bbls.) .at—I—.
Apr.
Gas oil and distillate fuel oil
(bbls!) at_
oil
and
(bbls.)
1
(bbls.)
,
———
distillate fuel oil output
Residual fuel oil output
.
■
(bbls.)
(bbls.)
ASSOCIATION
OF
Revenue freight
5,352,900
RECORD:
(number
Total
U.
2,821,000
S.
V
9,084,000
8,854,000
8,700,000
8,149,000
113,530,000
112,991,000
10,930,000
32,180,000
111,474,000
9,843,000
of
cars)_
48,114,000
661,807
593,504
(number of cars).
664,375
792,571
722,851
Month
freight
DEBITS
THE
49,336,000
30,254,000
68,849,000
"7
82,058,000
54,965,000
•V;
:
50,792,000
31,266,000
OF
270
reporting
(tons)
transported
BOARD
—
,.*270
270
2,282,134
—....
*2,332,971
2,080,30k
GOVERNORS
OF
RESERVE
'>
SYSTEM—
IN
OF
OF, LABOR
$425,00^,000
60,139,000
22,086,000
residential
non-residential
—
residential
New
$269,OOO.OOD
*233,000,000
*177,000.000
132,000,000
87,000,000
48,000,000
250,000,000
125,000,000
77,000,000
48,000,000
19,000,000
S
of
•
building construction—————
New
*$480,000,000
208,000,000
,152,000,000
64,000,000
U.
Month
•'
'•
- •
THE
—
$90,266,000
VALU¬
PERMIT
AREAS
URBAN
DEPT.
2,120,000
1-856,000
13,035,000
3,998,000
804,OOC
145,000,000
64.000,000
-
residential
1,176,000
126,300
47.30C
266
31£
New non-residential
Additions,
»
INDEX
COAL
AVERAGE=100_
alterations,
EXPORTS
Month
of
J
etc._i.
(BUREAU
MINES)—
OF
7,000,000 /
7,000,000
1,000,000!
output
FAILURES
(in
000
(COMMERCIAL
STREET,
5,032,879
AND
f
!';r
5,036,788
5,284,641
To
i
4,619(701
)
INDUSTRIAL)—DUN
3t
INC..
BRAD-
To
Pig iron
gross
'«•
3.23940c ::
ton)—
<•
prices
(e,
v
! $40.25
a m. 3.
Electrolytic copper— J
Domestic refinery at
;
Export refinery at—
'"Straits tin (New York)
■i(; Lead (New York) at
•
2.86354<
Lead
(St,
*
(East St.
S.
Apr.
Apr.
at
21.200c,
21.200c
"21.425c.
-21.575c
21.200c
,
21.225c
21.425c
.
94.000c
94.000c
94.000c
7
17.500c
15.000c ;-7
15.000c
Apr.
7
17.300c
14.800c
14.800ct
7
.12.000c
12.000c
10.500c
:
;
■;
12.000c
pricesdaily
averages;
"vjVf f'fy,
^'.*>7
i,
Apr. 13
corporate
" ■;
100.87
15.000c
DEPARTMENT
!
i
Baa.
Group.
Group
Industrials Group
Public
—Month
112.00
117.20
115.63
111.62
m
104.66
r
;
r
MOODY'S
MOTOR
110.34
105.69
112.37
113.70
113.50
113.12
11532
115.24
i
corporate.
^
.-v:
*
Aaa
Apr. 13
VIAa
118.80
Group
I
Utilities. Group
Public
..
Industrials
ITY
|
3.13
'i.
3.53
3:41
2-98
3.00
2.89
ASSOCIATION—WHOLESALE
414.9
Fats
Apr. 10
Apr. 10
.
*
commodities
.Apr. 13
Building materials..
Chemicals and drugs..
Apr. 10
.Apr. 10
'
materials
_Apr. 10
Fertilizers..
_Ap*. 10
Apr. 10
.Apr. 10
machinery....
groups
combined
220.8
1206
vfA'f
TREASURY
—
(000's omitted)—!
SALES
FACTORY
S.
(AUTOMOBILE
$28,110,578^ $28,303,507
$28,018,806 1
FROM
S
MANU- >;
Month of
—
'""i1;.;■'i, ■"
383,011
*405,651
*305,081
107,054
*99,200
;
vehicles.
1,110
*1,370
7,873
11,000
of
trucks—
motor
Number of motor coaches.
BUSINESS
Stocks
INCORPORATIONS—DUN
CEMENT
of
373,360
267,0*0
105,043
1,303
&
!
1
9,111
••
)«*•:'"" "
£11,200,000
>.
£4,390,000
1'
.
!
:
(514,486,000
J';.
i
(BUREAU OF MINES)—
January: V
end
•
•■yi*'.
-,
;.
„■!.'
...
:tr
13,406,00#
8,395,000
-
*12,379,000
9,205,000
15,311,000
(bbls.)
of month)
*16,123,000
14,541,000
.
(at
*
••::S
s
15,931,000
*9,975,000
7i 'fa
$41,297,149
$80,021,828
19,089,249
34,076,437
114,098,265
5,964,991
108,133,274
71,006,443
10,794,216
66%
79%
**.
■T 170.3
172.8
158.6
211.3
i
,
Miscellaneous
163.5
148.3
P
232.8
203.4
1 Depreciation
-
137.2
;
'
138.8
t
2X6.7
'
.
"
-
.%'•
143.7
'
138.8
157.0
137.6"""
!
143.0
;
137.7
,
143.7
_133.7
158.4
•
i
,
j
22,292,126
3,584,665'
18,707,461
Net income
& structures
(way
Dividend appropriations:|v- On common stock.!-
3,274,537
*
71,561,304
;
34,700,030
2,937,100
60,212,227
31,762,930
28,886,2^1
1,368,598
1,420,543
23,863,324
(
16,336,981
74,835,841
29,650,647
30,111,771,
& equip.)_r
$58,498,800
i
24,032,367
,
1,366,(KT(
23,944,533
,;
126.3
214.8
3,845,208
56,541,190
income^-.
Amortization of defense projects—
Federal income taxes_—_
(
127.6
138.1
215.4
from
l Olher deductions
163.5
■
deductions
]: Income available for fixed charges.
(Income after fixed charges.;
% 230.4 V. Jj& k. 230.4
156.7 •<
150.8
:
60,386,398
Total income
j
216.S
'
'
| Other income
235.6
220.8
Commission)
Commerce
January:
operating income.
y Net raiyway
258.3
241.6
(Interstate
—Month of
327.8
264.6
212.0
.
"
!
•'
319.7
i
RYS.
222.6
317.8
v; 247.6
220.8 :
175.0 :-x:;
•
212.6
163.5
>r
251.2
235.1
-
173.8
.Apr. 10
Apr. 10
().?•' Metals
226.2
242.1
I
337.9
268.4
233.5
-
•
yv
4
250.3
271.8
'
229.2
228.1
;
'
Apr. 10
Textiles
All
r
254.5'
.Apr. 10
Livestock
Farm
231.5
'269.8
Apr. 10
Grains
Fertilizer
*236
SELECTED INCOME ITEMS OF U. S. CLASS I
Cotton
(Miscellaneous
29
4; Capacity used"
Apr. 10
_Apr. 10
„...
27n
283
285
♦
(bbls.)
Shipments from mills (bbls.).
415.3
COMMOD¬
products
V," Fuels
Feb.
U.
IN
number
Month
GROUPS—1035-30=160:
oils
and
of
Production
t
>
405.7
285
.
f-;.;. r-
■.
VEHICLE
PORTLAND
2.59
419.7
".V;'
;
Midland Bank, Ltd.—Month of Marph-w»!
•;h •'} .-"r '.i';:''' '-"k''':.n *-hV.
2.71
2.86
Jx
..Apr, 13
4
3.04
2.97
2.85
i
y
NEW CAPITAL ISSUES IN GREAT BRITAIN—
3.15
v:/'v;-3.35'"
.
f4. BRADSTREET, INC.—Month of Feb.——!
2.81
3.49
3.34
>
274,847
NEW
Foods
Farm
BY
3.10
'
'
FERTILIZER
INDEX
2.63
:
Apr. 13'
,
'v!.'1
2.53
2:90
716,037
"U
Number of passenger cars_
Total
2.78
2.83
2:87
'3.47
Apr. J.3
'MOODY'X COMMODITY INDEX
RATIONAL
3.10
2.79
3.08
.
y
FACTURERS' ASSOCIATION)
;
2.i9
2.87
Apr. 13
Group
2.45
2.78
..Apr, 13 f?
Apr. 13
Baa
Railroad
2.44
.3.06
528,510
911,859
Number of
3.05
13:•.
A.
»■:*
;!)February: '
121.25
2.44
.
-
Apr. 13
1
"
5,128,300
807,478 r !
/
adjustment--y-—'
CIRCULATION
IN
PLANTS
4
:
.^Apr. 13
Average
Marchn
of
seasonal
DEPT.—As
110.80
103.64
;
116.02
(pet tons)
'
120.43
,
,110.70
7?. 7
•
MONEY f
117.40
BOND
K>;u. S. Govt. Bonds
,
5,657,810
5,864,906
*606,181
538,863
(FEDERAL RE-
SALES
; 122.50
H5.04
111.25 i
104.31
i- 106.74
106.92
./104.66
111.25
116.41
u
,
..
Utilities
100.72
y
115.63
STORE
;* "
■:
fi
*6,471,087
5,512,838
—
for seasonal variation———
*
■
.
6.051,701
tons).
SYSTEM —.1985-39 Averagc=l66)
" SERVE
'"(Without
100.79
112.19
y
Apr. 13 k
Apr. 13,;
Apr. 13 £
——Apr. 13
Apr. 13
-Railroad
''*•,(
4,967,000
595,200
1
tons)(net
80.000c
,
fj
117.40
.Apr. 13
Apr. 13 i
i
*538,900
(net tons)
coke
Adjusted
Apr. 13
V
55,455,000
•4,675,000
294,000
Oven coke stocks at end of month
14.800c
Apr.
at.
.A
T
48,390,000
4,928,000
OF MINES)—Month of Feb.:
(net
coke
:'-Beehive
22.750c
«
7
at_
Louis)
7
7
,
Apr.
Aaa.'
•
6,721
.
34,016,000
(net
(BUREAU
Oven
..Apr.
Aa
!•;■
.
(BUREAU OF MINES)—Month
coke
Production
Govt. Bonds
Average
.
5.7
97,836
94,825
10,260
r
March
COKE
<
—
Louis)
'Moody's .bond
V"
i
54
(net tons).
.(Beehive
.
U.
.
$33.If
>,
-■'i.
50
154,038
(net tons).
(net tons)';
$35.42
$40.37
$39.75
:
of
'iv
395,8*77
291,277
395,984,
301,105
345,617
tons)
tons)_.
j Bituminous coal and lignite (net tons)
s
Pennsylvania anthracite "(net tons)!,.——
quotations);
\
-
Zinc
3.23940C
>■
(net
,-a't
metal
;
v
$40.29
;■ Scrap steel (per gross ton)
v
Asia,
COAL OUTPUT
(per lb.)_
(per
America
To Africa,
5i
iron age composite prices:
Finished steel
South
To Europe
...
■
■
(ner
^To North and Central America
(
'
2,000,000
„
509,965
kwh.).
7,000,000
10,000,000
*
'
*
Pennsylvania anthracite (het
February:
U. S. exports of
EDISON ELECTRIC INSTITUTE: "
Electric
68,000,000
*27,000,000
3,000,000
22,000,000
2,000,000
15,000,000
—
"
'
692,000
,
9,600
•
"13,400
331
y
New
*230,000,000
155,000,000
201,000,000
.
Additions, alterations, etc.—!
Federal—all building construction
2,135,000
68,000,000
*453,000,000
'
410,000,000
non-residential
*—y
$93,308,000
$107,621,000
,," Additions, alterations, etc.——
Non-Federal—all'building construction-—
82,225,000
j
thousands)
CONSTRUCTION
S.
New
;
42,973,000
19,082,000
(in
New
$125,198,000
<.
March
?f • Jknuatyj:"
MINES):
(tons)
SALES
?
'
^
BUREAU
227,75).
.
carriers
FEDERAL
of
ATION
All
construction.
STORE
February:
motor
BUILDING
,
46,660,000
TEM—15).'(5-39
ASSOCIATION—
,
'
*
$95,996,000
DEPARTMENT
of
of
of
BANK
693,619
136,726,000
coke
therms)'.——JL—
(M
TRUCKING
Volume
715,159
612,014
$218,784,000
Beehive
184,99c
—U.
Bituminous coal and lignite
(tons)
Pennsylvania anthracite (tons)
/
169,028
,—
,
Federal
■a
2,538,40?)
177,353
(M therms)
sales
sales
gas
Month
(M therms)
gas
Number
31,098,000
43,446,000
24,951,000
S.
2,769,608
266,000
For
—
50,045
Not. avail..
.
sales
gas
AMERICAN
9,556,000
32,749,000
48,334,000
.i
$93,800,000
(U.
2,951,100
268,647
Mixed
construction
OUTPUT
3,204,636
2,896,284
■
(M therms)—...
Manufactured
105,330,000
10,459,000
30,717,000
47,959,000
State and municipal
COAL
3,342,284
....
ASSOCIATION
sales
gas
Natural
5,558,000
13,884,000
>
r—;—
GAS
of February:
2,138,000
7,354,000
construction
Private
Public
15,549
Total
CONSTRUCTION,
"
.
47,589
10,484
Month
loaded
'
48,767
V
4,732,000
14,342,000
7,586,000
Ago
Stocks of aluminum— short tons (end of Jan.)
4,891,600
5,311,000
Year
Month
MINES)
OF
(BUREAU
Production of primary aluminum in the U. S.
(in short tons)—Month of January
OF
AMERICAN RAILROADS:
ENGINEERING
94.5
15,451,000
Apr.
at_
Revenue freight rec'd from
connections
CIVIL
ALUMINUM
Previous
Month
15,783,000
2,647,000
7,682,000
——Apr.
„_
(bbls.)
'
1,653,700
_
Residual fuel oil
,
Latest
Ago
1,757,400
5,377,250
5,324,000
month available (dates
are as of that date) :
or
of quotations,
Year
1
97.5
1,521,300
5,475,000
—
(1681)'
cases
AMERICAN
gallons each)
Apr,
Gas
Ago
84.4
in
or,
'/;•
_
—Apr.
Gasoline output
-Kerosine output
Month
Week
1,285,200
that date,
on
Previous
'
71.3
tons)
output—daily average (bbls. of
stills—daily average (bbls.)
month ended
or
Latest'
"
CHRONICLE
production and other figures for the latest week
either for the week
AMERICAN IRON AND STEEL INSTITUTE:
&' FINANCIAL
•
199.5
On
:
U.
S.
"3,158,609!'
2,325,748
preferred stock——.
Ratio
income
of
to
fixed
2,902,62'/
20,496,866
9,105,346
4
v
2.91
1.65
charges.
2,582,260
a
1.94
NATIONAL PAPERBOARD ASSOCIATION:
Orders
,
iV
received
Production
(tons).
233,919
-
activity—.-—.
OK,
5
•
PAINT
AND : DRUG
1.".^
*
228,306
193,205
181,064
y
...—
98
104
464,683
REPORTER
AVERAGE—IOO
>r.. *,-r
255,552
193,650
-,f:
Unfilled orders "(tons) at*-,*..
,*;•
176,395
186,484
(tons)
(.-Percentage of
419,845
:
104
•: 102
480,791
597,373
PRICE
...
INDEX—1926-36 i
at
^
Apr.
i
146.2
"i f
"
146.4
;
—^
160.1
products.^.^J.—1
Fuel jind .lighting materials.
7
and
allied
A-JtfouseJumishings'j Miscellaneous
186.2
145.1
!
'
5
'160.4
■%„ 187.1
-
■!';!■%
145.2
192.5
135.1
<144.3
144.3
"•<
143.6
120.8
.'■!
ii9.4
121.0- 5
+
v:'.
Special
•
materials
.1
i
'•
v
\
obligations not owned by
252,989,915
y
——.
-
'
•
$275,000,000
i "
•
.
259,123,934
254,604,511
the
78,154 %.:■
'
r'
;, '.
,
,
,
i
M
$253,068,069
-
gations not subject to debt limitation-^—
j
i
164.4
Grand
'
|
103.9
,
140.3
!
.
182,384
78,841
■■
,
,
*
'
&i-r-
134.5
j
-
total outstanding—:—
843,292
;
.903,280
$253,840,059 *"$258,403,03®
$252;230,819
!
Balance face amount of obligations issuable
under above
authority-i..;
*
$22,769,180
i
$21,159,940
$16,596,960
$253,068,069
•
$254,683,352
$259,306,310
5,352,9301
4,318,356
6,909,412
$250,364^996
$252,396,907
2.170%
2.078%
W
115.7
UNITED 8TATE8 GROSS DEBT DIRECT AND
t
126.7
r
:
j
Manufactured
"
*'
-
All commoaities
farm products and
'J
'
-*'■
154.1
145.6
155.9
154.3
142.8
154.8
foods..„
176.5
152.9
154.9
than farm products..
otherthari
'Revised figure,
175.9
1I>2.9
articles
products——
All commodities other
155.5
154.4
141.7
147.7
147.4
147.3
132.3
|
164.0
March 31——
GUARANTEED—AS of
1000's omitted)
fund
*■»' :■'"*%•
•
i
i
balance—
Net debt —1,——^
Computed annual interest rate
WINTER
•
'
,
$2^4,683,352 $259,306,3HI
837,250!
177.8
174.8
SemirmaUufactured
"
■/'
{'■;
i
groups—
'Raw
■
$275,000,000
$275,000,000
time--
Total
General
.
one
may be outstanding
:139.3
131.7
..136.6
-
181.2
.
192.1
135.5
goods—
155.7
t
*.
•
174.3
r.V. 145.9..
•
131.7
156.0
193.2
commodities.
:W
omitted):
31
gross public debt and guaranteed'-obligations >1—A—L——^
] Deduct—Other outstanding public debt obli;
148.8
■
Q.-i'** M 187.9
156.6
products!
,:
'MS "...
172.2
T31.7
Metal and metal products.
.71 "Building materials'..—
V" Chemicals
174.8
186.0
Textile-
v
..!
186.2
172.4
7-r Hides and leather products
,
161.1.
!183.9
]_ Farm • productsLFoods^____—.
>«
.
ry
All' cbixunodit les
v,
LIMITA-
(000's
Treasury
154.0
WHOLSALE PRICES—^U.- S. DEPT; OF
LABOR—1926=160:
*
any
Guaranteed
.
*146.1
DEBT
March
Total gross public debt—+.
•
.!•••»'*$■$■?■
STATUTORY
of
•■'.■■j Outstanding—:
hi:
.
GOVT.
TION—As
,
| Total face amount that
WHEAT
PRODUCTION
$247,715,139
%
CROP
PORTING BOARD—U. S. DEPT. QF
CULTURE—As
*Revised
of
figure.
April
AGRI-
f' (bushejs)'-——
••*"''
'*.•
2.168%
i
RE¬
,s
860,521,000
1,0^970^W)0
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(1682)
42
nese, and also had to supply de¬
ficiencies created by lagging Brit¬
Business Situation and Outlook
This last trend
(Continued from page 8)
brought about
was
gradual but steady, but
since that time it has been influ¬
in in¬
decline
in hours of work, which led to
greater efficiency. The past eight
years have been characterized by
sharply rising unit labor cost and
hence rising prices.
measure
by
Chart 4 shows several measures
factors,
to
of the unit output of the national
by
output.
total
increased
in
suited
a
Prior to 1916 this de¬
since 1897.
cline
in manufacturing
substantial decline
hours
weekly
have shown
was
substantial
in
enced
and
monetary
credit
substantial
a
stalled
As the lower line shows, average
The
the
1947
duction
only very slightly
long-term downward
was
above
the
trend.
'
,
■'■>
because
they
the
by
enced
is
particularly
also
i
rising gradually as capacity
produce peacetime goods is ex¬
panded, and it is only slightly
above the long-term trend.
is
it
The
a measure
but
production,
not only of industrial output,
!
rru„
agricultural
ajg0
distribution
therefore
This
stable
of
It is thus
price index.
influ-
~
interesting.
period
a
upward.
to
period 1921 to 1929 of stable prices
was
be
and,
than
services,
and
broader measure
a
dustrial Production just
slightly declining unit labor cost.
cited. The
CHART III
A
['•'fj
Another
of
ard
':
measure
*•'.
•
for
index.
tom
the
basis
This
leisure
and
dustrial
eral
publishing, auto¬
petroleum^ and motion
would
be - Very much
S—v
$«'■
•
t\;ri
••;
•
than
''
; va'
-
of the
living of the popu¬
manufacturing, dis¬
tribution and ^services show sub¬
stantial growth
during the last
The
shows
that
5
was
line
upper
in
trend.
show
that
The
'
-
f
1
7
Hi ■;
1 4DEX
•
/'V
'
|
4
'. I-*
main
main
1935-19 39
*
markets
that these export
assume
will
continue
we
already
have
and
relative
this
to
'
>.:>£
'
./
.i >•.
/':i
J
j
'
'pj' I. ]
r
i
I
i
1900
i
i
i
1,1
1906
,L
11
1
r.i
i
i
•■
i
l
i
1
1
l
,.i
n
i
uo.
j.i J
i
i
i
ii
i
■
•
'
1935
1910
TIIE ECONOMETRIC
INSTITUTE, INC.
purchasing
to
there
it,
power,
exist
in
minor
related
are
to
plements,
machine
tools, - other
machinery, trucks, railroad equip¬
ment.
ete.lriVCaoital goods show
the
the
goods
cycle
is
tend- to
perishable
added consumers' semjr
(textiles, clothing
products,
paper).
This
shows a long-term behavior
goods
o
f
i n o n
consumers'
of
fluctuations
in the production of
capital goods, however, their be¬
havior has followed
sistent pattern.
v- .The
outnut
forms
rather con-*
a
;
;
■
negligible fraction of cap-
a
material
,
of '
war
ital goods during peace time, but<
is directly
sible
for
indirectly respon¬
and
tremendous
the
sion of the
expan¬
capital goods segment1
show
Fuels
some
trend
Consumers'* durable goods
(au¬
tomobiles,^ furniture,,
radios, re¬
show an out-
to+
it is
response
the business cycle, although
ciearlv eyidenj; that $bev
a.whole.
goods^ Ki
production
are
less c
production as
t_.
Chart, 7 •' eiyw/c production/ of
consumers' perishable goods (food,
*
tobacco, beverages, gasoline, etc.),
consumers'
semi-durable
goods
;
v
...
(textiles.-? leather ;good£,
durable
-
per
activity
combat
as
Tremendous
for
require¬
war■}>depleted
waging
at
Of low
to
led
l
measured by
The
cyclical pattern of automo¬
typical
the
more or
l.esr
for other
goods is ex¬
of the
^Production of
demand
consuiperri ppfr
*
jshable
shown,
a verv substantial.unw^r/i
trepd oyer«thg drears. The;
however, was interrunted in 4920,
1930-32
•
pf
vpars
The
deflation.
in
trend
ward
the
1938.
a^d
credit
bank
bile demand which is
greater-than-normal
as
business-activity and low
consumers' income,
levels from
all
up¬
capita produc¬
per
tion of these goods has been due
to
(11
an
increased stature
or.
consumers' durable
physical size of the individual *
plained in "Dynamics of Automo¬ comprising the population. (2): a
In 1947 when stocks in ' trade bile Demand," a study made by tendency
food and beverage items produced
and in consumers!.^channels were the Institute's staff.
out of the home and in the faer
Construction material comprise?
approaching normal levels, export
tory, and (3) a more active popu¬
demand > increased
substantially. a comparatively small group in lation, ije.. nne tb»t eninys leisure.
Per capita production of semi-,
American
textile- manufacturers the total index. It is interesting
per-capita trend.'
,
heir
the
to
to note that the
Latin-
prewar
deviates
of the Japa-
markets
cyclical behavior
somewhat
that of
from
durable goods
trend
ward,
A.'
\
1 rs <
TOTAL
J.-ty;
»
*••■>.'
'93
irk
«•
O TURING"
1!
u
too
/
INDUSTRIAL PRODUCTION
i-'.v/-
"'::y
1;
f—
production
able:.
and
'y
?•.
►
.
of consumers? perish¬
semi-durable
goods
that
sumers'
>,>•':;>
semi-durable
characterized by
more irreg"1ari+v. which seems to
be d"p to the changing inventory
policies of retailers. The stability
around trend shown by ner capita
been
has
means
vi>
However, per cap¬
{production* of
ita
-Jure.
.
has shown an up-,
similar4 to that
production of per-:
very
capita
per
ishable goods.
CHART V
200
(1935-1939■ 100)
they
group
group
Manufacturing Production Durable" and' Non-Durable Industries
INDEX OF
with
goods,,
which is mainly
responsible
for
the
occasional
manic-depressive behavior of our ;■
economy.
In spite of the violent
this
is
of
Time
CAPITA
>
trade
the
follow the changes in the
sensitive than total
Intftx
BOARD
of
Although,
leather
period' of destruction
a
waste
;
American
In4n
PER
crucial.
production
it
goods
RESERVE
downs
regard to temporal sequence,
consumers'
are
durable
population
Production and Real Income per Capita and Growth of Workers'
FEDERAL
and
ups
itself during the war. >
To
unit of most of these goods
make it possible and necessary
for. consumers to postpone pur¬
chases of these products in time
fell
CHART IV
Free
for instance elec¬
as
,
<!■
i«"«*
I
of
The durability and tbf bigh ;br»/»r
This
w
l
consisting
the early days the mili¬
In
100
'
it
tary! stockpiled^ camps > and* then
depots throughout the world; Then
ments
MAh UFACTUI UN6
production,
trical equipment.- agricultural im¬
etc.)7 and
consumers'
durable t
frigerators, books)
snoken^ cyclical behayior^^icb« goods (automobiles, furn :+ure. and *
goods has been stimulated by the overshadow any long-term trends appliances) on per capita bases.
Production
increased.
p-;:;
,
in
duction.
indicate
the >1951
to
.
-
prising capital goods (goods used
the ups and downs in total pro-
mar-
■pi
'
a
index, com-5*
and of total industrial
indefinitely.
seen
capita
addition
population and produc¬
production
''
of
fluctuations which
the consumer to the manufacturer.
IN
COSTS
portion
manufactured foods).
reason
export
new
civilian stocks
LABOR
/
per
the
goods. A major part of
l^st increase, of course, rep¬
war.
i
•
W:$
UNIT
C^art.
on
This group
changes only slowly from year to
year, reflecting mainly population
increase and gradual increases in
and
7
band
(he production of con¬
sumers'Er perishable
goods
(the
why
total production was above the
long-term trend was the substan¬
tial rise in production of non¬
followed
i
lowest
will increase in line with the long-, similar to the preceding group bui
term trend and a short calcula? reflects somewhat clearer the
cyction shows that the present pro¬ Reab fluctuations. •*
>,
"
-
!."■
•
f
The
•
lower lines
two
.
represents
1947
production
only slightly above the long-
term
core
Even
goods.
Chart
on
and it is
uo,
forecasting problem.
•
lation,-total
50 years.
pointed
are
glance at the chart shows
that these variable components
are
capital
goods,
construction
materials, and consumers' durable
in standards of
value.
/\:i
by the
casual
a
in population and a growth
crease
corresponds
.■
classified
but
thus shown wherein lies .the
;-V-4
•i
Industrial
of
designates
our
absolutely > a n d
relatively 7 the
particular form the highly greatest cyclical amplitudes of any
Variable segments.,pf industrial of these
categories. Their role in
in¬
an
duction level of non-durable
■
Index
band
In this
clpthes.
Chart 5. Both because of
tion
■
0
►RICE
United
at the women's
'•
1935: g 39*100
the
activity
that both
'
CONS JMERS'
Reserve
Production,
At the same time,, the data which,
1935-19,19'100
in
-
ple, the men had no time to look
to
IN DEX
P UCE
activity
next
major segment of
in¬
Index Number Institute, Inc., into
economically homogeneous groups.
today*
Even
the
clothing industry would be, or*a
much smaller scale if, for exam¬
kets
WHOL ESALE
.
The
The
■
.
States,#as measured by - the Fed-
newspaper
smaller
;
-
6 shows the volume of
■■■.
radio, magazine
as
downward
Activity
consump¬
tion of a variety of products. ~ If
it were no greater than in 1897^
such industries
a.
by
from the level of 1935—
year-to-year changes,
however, bear out a clear simi-l
larity . with the short-term fluc¬
tuation of general business.
j
1939.
is
Industrial
increased
of
time
expecting
not
adjustment to the trend.... f
the worker, shown in the bot¬
of
admittedly, it would be precarious j
•.'
high level of activity
building during the
terially
relief, would be sufficient cause
of the stand-*
*
i:
relatively
enjoyed
later twenties while total produc¬
tion per capita did not differ ma¬
likely maintenance of the ex¬
markets for the next three
years, i.e., the period of European
living is the leisure time
resents
Tj^V-
.
-VJv-V
of
the
'
The Hours of Work
this
Prices and Unit Labor Costs
Production
tobacco, and drugs.. Consequently,
durable
the Federal Reserve Index of In¬
to
business.
Europe needed all kinds of foods,
close to
about on
all-time peak was
long-term .trend.
Al¬
sharply
been
has
factors.
same
will
It
The second or middle line, real
cost rose
wholesale disposable income, is the dispos¬
prices; in able. income in dollar figures of
three de¬ Chart 1 divided by the consumers'
were
t
capita.
per
Pro¬
though the present level of pro¬
duction is below the wartime peak,
price index or cost
living, and unit labor cost in
manufacturing. It is no accident
that the trends of all three are
similar.
In the periods of great
clined
Industrial
the
mobiles,
of
,
of
Moreover,
production.
general
construction .material reflects the
port
the
pictures
•
the consumers'
unit labor
sharply, as did also
prices and consumers'
periods of deflation, all
is
ish textile
1947 level which was very
observed that the long-term trend
Chart 3 shows wholesale prices
inflation,
capita basis.
the Federal
per
index
upper
Reserve Index
40-hour week which was in vogue
in
a
on
economy
made.
enough,
a
,
which reference has already been
Interestingly
increase
horsepower and
Thursday, April 15, 1948
of
production
nerishable
.
con-,
and
goods
semi-durablegQpds
>
be forecast, eyep, by a poyjee
with ; relatively
good, -accuracy
..
consnmers'
;
can
>il|:
:
V
•'i".
from
T-
population data and growth^,
in
consumption relative to this •
population.
j-yi .*,'■/\■ *"- p
■ft The y forecasting of production
yyM'
i.
"
.
•
/'-■
P 10DUCH DN OF
Dollar*
■!;:>
REAL
DISPOSABLE
PER
of
■*
INCOME
■
D URABLE
I
»
i
193 5-1939* too
the durable
nf
Chart
Yet,
..A'
if
6
py
X:
,
per
consumers'
•
■
worked in
OF
NON -DURAB LES
•:
/
tinued..
an
„
1920
1925
1930
1935
1940
1945
1,1.
1
1
1
1900
1
1
1
I
JI..I
I
'.Ml,
.1910
1905
»
'
1
'
!
.Mil
*1915.^ 1920
■
I..L
>1925
I.I
.i.i.t
1930
\
ECONOMETRIC INSTITUTE, INC.
-
THE ECONOMETRIC
1111
1935
*
THE
Volume
the 1930r
.
'
Two
INSTITUTE, INC. !
1_1JL_L-
1940
upward
which
ward
trends
long-term
to .be
seem
There
dence.
1915
of
depression
and,, of
course,
again during the war noriod when
production was
largely discon¬
nonetheless
1910
r
has
32
/
1900
19515-1939* too
1905
goods
suffered substantially in
PRO SUCTION
1900
durable
been nrincinally cvclical.
INDEX
Difference between current working hours
and hours
capita production
*
.f'
20
means easy.
1
The
Number ot hours
no
was,
trend
in
evi¬
Jor
example,
in- 1918-1929,
roughlv paralleled the up¬
trend from 1932-1941.
duction
in
#
to. make a.useful.
of
national income, he must forecast
them.
i •
TIME
is
forecast of total production and
CAPITA
f
LEISURE
goods components,
is bv.
one
1947
was
very
Pror.
much
Volume
167
Number 4690
b^low the last trend said
1
THE
also
was
below the average trend from 1919
•
through
'
n
1941.
Demand for Durable Goods
Demand for consumers' durable
'
depends upon disposable
income
(personal 'income after
goods
-
taxes), the relation of the prices
goods to this income and
Ho the cost of living, and the age
-of these
condition of consumers' stocks.
or
Disposable income today is at
•a new high and as a result of the
-tax-cut just enacted the trend is
still upward.
Moreover^, for many
,,
consumers'
_
sumers'
gtocks
are
goods, con¬
still depleted
families per year.
M
and
Thus, for the consumers' dur¬
able goods component of
produc¬
tion the outlook is, on the
whole,
quite good. In brief, production of
In
Production
of
in poor condition
as
a
wartime
stoppage
of
production, and prices are .: low
relative to disposable income and
the cost of living. Conditions are
.
-
'
such that
continue
v
•
come
of
re¬
The
:•
voutlook
<
age.
which
last
presidential
building, the principal component
their present relationship.-.On the of the construction materials
seg¬
other hand, if income should con-.
ment, can be forecast from the
"*t; tinue at: present, levels and prices difference between the
number of
.
reasonable forecast
Opacity- operations.:
is
one
of
fact
ca^
This
capacity,
be limited; by. the
of course, may
supply of materials and labor.
'
For
•
some
•
manufacturers
whose
s e
names
ot: nom-
.
family .Mjajfs
no
shoddy mer¬
appetite for un¬
known dishes. On the other hand,
same public has not satisfied
its demand for well-known brands
but
still
confis¬
catory personal tax rates, rising
interest; rates; and the low return
on
competitive
existing rental
property.
wartime
this
of
present ...lowered
Oi
the buying public is
moving freely. A public still
suffering from indigestion as - a
has
number
seasonable habitable
-am
not
chandise
the
-
t; unknown to
of
-.
by three or four hundred thousand
units, the prospects for residential
demand: building are not good under the
supply already exceeds
quality, m e r c h a n d i
result
exceeds
number; pfJempies
electrical appliances
Even
\
that the
One saving factor for residential
building is the
absence
control in certain
of
rent
Building
areas.
is
going ahead in thege areas. As
stand today, areas with
tight rent control will experience
matters
goadl 'quality;, fairly
priced
total, however,: little residential building activity
supply and demand are about in and hence little growth in
popu¬
balance at'current price and dislation. The uncontrolled or decon¬
posable income levels. The; tax trolled areas will
enjoy the growth
cut will, of course, lead to
greater inasmuch as new factories, ware¬
disposable income and so greater houses,^; 0 ptc4\ - will - gravitate
to
demand
for > appliances via-*, the them because of
present adequate
.
i merchandise.: In
*
7
summer
Another
tax
support
.
•
and
a
fall
cut
further
of
in
this
1949
upward
year.
would
housing
supply, and
in
will
jobs
lead
this
to
growth
additional
housing. The new rent control
ment in that year. Demand wi'l
law,
which
permits
leases f at
increase still further when v the
higher;, rentals fand also provides
] housing supply becomes more ade- for more rapid decontrol of rental
move
-
quate-and families once more begin to- move around, for a different- homeor- apartment
:-;i.
-
•
frequently
■
;
.?
;
means a new
The supply
caused
and demand for^cw
same-
some
of the
con¬
When all is said and
areas.
trols will be found
to
con¬
have been
;borne.loeally,
High production costs
by the:
recommendation of local
on
boards, will help
appliance., done, the cost of tight rent
furniture in total
; are today about
-in- balance.
areas
trolled
I ndu st r ial f
construction^ f wtuch
shortages of comprises
a
^maoppwer viand; - ^tepalsrvibat; cpn^ruction
have produced high building.costs
of
have?/resulted in- prices, too, high
Industrial
large segment -of. the
materials
the- Federal
eompojnent
Reserve
Index
of
'
^foil tlie
oyer, the
•
•
,
not
forecast by
demand for furniture is
quite a? high
as
the
number
of families and income and
prices
suggest. Qpe million families .have
Production,
a
can
be
^
formula involving
corporate f profits,
the
yield
,
on
k-The
of
industrial
pro¬
1931.
value
of
In
all
this
plant
1933 marked the bot¬
an
sion,
employed. By the end of 1935
there, .were still 10 million unem¬
ployed. In the
unemployment
good many
capital
which
is
goods
the
most
component,
variable
index, may
directly from the level
be forecast
economy
further
expansion,
between
durable
for
equipment so deflated and a
com¬
posite of several variable? six
months
previous. The
agreement
expendi¬
tures and the forecasting variable
between
is
the
close
as
domestic
as
finds
one
in
war
sciences, except in the
years when we know that the
War
Production
Board
purpose¬
fully held down equipment ac¬
tivity by licensing. The calculated
level or forecasting line involves
present values of (1) corporate
profits, (2) interest rates, and (3)
the ratio of
the Bureau of Labor
statistics index
of
prices of
yield
this
on
one
combat
of
would add production
materiel
of
and
production
capital goods for export.
A
better
forecast
be
can
ob¬
tained by forecasting the dollar
figures representing domestic
producers' durable equipment ex¬
penditures; converting these dol¬
lar
figures to unit volume by
dividing by an index of prices of
machinery and machinery prod¬
ucts
of
and
then
combat
port.
prices of metals and metal prod¬
long term AAA bonds. To
Chart
and
shows
8
for
the
y
The
tremendous
the actual and
ditures
for
equipment
period suggests
shortages
still
exist and hence that profits will
remain high in- relation to pre¬
during the war
equipment
levels
war
for
could
(Continued
CHART
PER
CAPITA
years
in
level
be
turned
on page
44)
VII
(1919-1947)
PRODUCTION OF
PERISHABLE
6000S
which
jpf
the
1935-1939'IOO
existing
had to be
divided among the employed and
•
unemployed
work
by
decreasing
the
number of working hours, and an
in which economic se¬
curity played a very large part in
the thinking of the rank and file
of the people. They were reluctant
to buy anything but the bare es¬
economy
sentials of living.
an
It
PER
CAPITA
PRODUCTION OF
SEMI-DURABLE
GOODS
1935-1939'IOO
in short
was
economy of stagnation. In con¬
by 1940 the value of
plant less than 10 years-old was
only $15.9 billion or about onesequence
half
the
was
the
level
of
1931.
However
PER CAPITA
depreciated value of all plants
still $65.9 billion or almost
CONSUMER
1931 peak.
Then followed
time
PRODUCTION OF
DURABLE
1935-1939
at the
a
period of
'
GOODS
IOO
war¬
building. Yet at the end of
1945'the> value
of
all
plant
ex¬
cluding1 wartime
additions
to
shipyards, airplane factories, and
munition plants was only $57.8
billion in terms of 1935-1939 costs.
Thus, during the
war a huge de^
ferred demand for industrial plant
construction* developed. A very
1920
1925
large demand for public works
has been created
by an increase in
'
'
;
1930
population, geographical shifts in
.streets,
hospitals and
buildings
are
dollars
billion
or
sewers,
necessary
schools,
.public
1940
.»
CHART VHI
New Private Construction
this population and lack of public
construction during the war. High¬
ways,
1935
THE ECONOMETRIC INSTITUTE, INC. ' \
Production of Producers' Durable Equipment and
;;
flllions of dellor*
'
10
budgeted at $60 bil¬
during the next 10
average
Calculated-
of about $6
per year. The
budget rises
an
VOLUME
OF
V
PRODUCERS' DURABLE EQUIPMENT
IN 1935. -1939 DOLLARS
Industrial Production: Eeonamic Groups
Actual
VOLUME
IN
OF
NEW
PRIVATE CONSTRUCTION
19}5-1939 DOLLARS
Bill iont of dollort
8
1900
TIIE ECONOMETRIC
f
INSTITUTE, INC.
•
1910
1905
'
1915
1920
1925
1930
1935
'
...
,
THE ECONOMETRIC
to
Suggestions for the Future
Profits
ex¬
Per Capita Production of Consumers' Goods
incapable
of
in which
some
Consequently the pressure
buying new equipment will
remain high.
come.
for
close
one
gap between
calculated expen¬
durable
that
adding production
materiel
believed additional capital
was not needed because the
plant
of the country was adequate, an
economy
com¬
ucts.
materials, the
ratio of this expected production
capacity to produce, and the
was
low
the
physical
to
was
mature
exists
modities other than farm products
to the same
Bureau's index of
1936-1940
never
less
was
that
expenditures
of production of consumers'
goods
and
construction
1 ipMMpM CHART
Federal Reserve Index of
seg¬
ment of the production
unemploy¬
accompanied
by
a
national
psychology which
ex¬
pressed itself in such ideas as a
it
years.
The private domestic portion of
the
than (6.4 million. This
ment
a
relationship
these
period
,
years
ratio
years
unprecedented depres¬
with 12 to 15 million un¬
lion
-
until
the
year
tom of
AAA:b(mds, pricea of non-faim
the
or
lasted
year
products, the cost of construction,
and
$51.9 bil¬
was
Our Economy Is Not Static
should advance by 20%^this in¬
families, and the number of exist¬
dustry would become highly com-. ing-housing units, present-average
| petitive. Once more salesmen ,and rents on existing rent
properties,
extensive - advertising
would >be. interest rates, construction costs,
needed.
Such; a change^ is> not and disposable income
</{income
likely and consequently, the only after personal 4a xes). Despiteihe
*
of industrial plant ex¬
using 50 year depreciation was
$67.5 billion, of plant less than 30
years of age $64.9 billion and of
plant less than 10 years of age
$33.6 billion.
:
:
Housing?
for
costs
.
of
A building boom developed
*
About
1935-1939
..
,
which $50,9 billion
less than 30 years of age and
was
rising and will be
favorably affected by increasing
housing supply,
a
and prices should remain in
will
,
$20.6 billion less than 10
main steady to
How
sellers' market might
for several years if in-
furniture
of
cluding equipment
H
..
terms
are
of
of
.
result
i
-
ratio
stocks
:
•
:-i
the
production to
plant capacity is more favorable
than at any time during the past
30 years.
'
'
'
' \
lion in 1919
case
levels for
current
new
pliances will decline slightly but
only until income freed by the
tax cut finds its way into markets.
the
CHRONICLE
duction to plant capacity, under 30 tq about $10 billion per
year, if
years
of age. 'These factors, as projects "Hike the St. Lawrence
presently constituted, indicate new Waterway, another Panama Canal,
they would be able and willing to highs for; industrial construction the
Missouri Valley Authority etc.,
furnish.
Nonetheless, the furni¬ during 1948. Corporate profits are are added.
ture
industry will generally be at record high levels, bond yields
In summary, the needs for resi¬
fully occupied during 1948. In are not far from their record lows,
dential, industrial and public con¬
subsequent years it will be filling prices of non-farm products have struction are
sufficiently great to
some
war-time, deferred, demand advanced less than the cost of insure that the
highly variable
and, in addition, taking care of construction but not enough -less construction
materials segment of
ordinary wear and tear and the to offset the favorable effects of the
production index will remain
requirements of at least 700,000 high profits and low interest costs, at or above
automobiles, demand still exceeds production by
a considerable margin. Consumers'
in poor condition.
are
FINANCIAL
been forced to
double up. and
others have not been able to move
into the permanent
quarters which
the value
In
•
&
automobiles and heavy appliances
will rise. Production of
light ap¬
or
?
durable
COMMERCIAL
INSTITUTE, INC.
down
COMMERCIAL '&
THE
(1684)
44
all
includes
Business Situation
hold
And Outlook
and
near
present high
(Continued from page 43)
■
(1)
too
would yield
Treasury surpluses so large that
excessive debt retirement would
leave
purchasing power inade¬
quate;^) a Federal Reserve Board
„
which
taxes
heavy
by
only
substantially
(3) ; substantially increased im¬
ports of finished goods. The tax
reduction act just passed by Con¬
of the 1935-1939 average.
Budget indicate that fears with
respect to (1) above can be laid
aside at least for the next 12
months. In the meantime oppor¬
will
tunity
another
tax
arise
cut.
force
to
business
Board action last winter has
money
will
be
durable
pre-war
levels and by production
well
above
of combat materiel. Consequently,
production of capital goods which
will
issue
its
that
three
levels ' or
of
by
projected
the
Gas
Co.
stock
looks
Ou
States
Gulf
is
The
agement
Light
This
week
proved
a
for 450,000
compara¬
of
ing
new
shares of capital stock
to
Edison
of
Detroit
of
Co.
being sold
indicated
are
giving underwriters and their dis¬
now
tributing affiliates an opportunity
ing here.
■;
///- -
y. •
Class
A
the
on
:
stock
of
day
of
The
&
seek
'•.
r
Power ;/•y
company
has
expan-1
an
calling for
an
out- $
in the next
three years and it is now indi¬
cated that it may be seeking as
lay
$56,000,000
of
much
$47,000,000
as
to
money
Several
in
.
new
through
carry
'/•//;//
plans.
,
101%
offering
Electric
sion program
seek
the
groups to
'
y
up
off bank loans and finance
construction, is reported making
preparations for a new foray into
the money market.
shares
of
setting
Virginia Electric & Power Co.,
recently
marketed
$21,753,800 of bonds and debentures
Wyandotte
bids
four of the
largest
underwriting busi¬
the
to pay
Corp.
reported
./'
which
man¬
provide funds for the purchase
Dealers
in the mak¬
as
the
?
new
pur-:
V
'
Virginia
:
price of $100
a
of
construction
the issue.
cumulative
company,
marketed at
Chemicals
under divestment order. Two bids
securities,
corporate
were
discus- r
reported engaged in the
are
of
the
A closed-end investment
& Traction Co. will look over bids
tively quiet period in the market¬
ness
task
attraction.
bids indicated.
day American
same
of
///;/
Corp.
Y*"'
Already
providing for exchange for Allied
Chemical & Dye Corp. common
which probably proved ah added
$12,000,000
25-year first mortgage bonds
for new money and here too it
looks as though competition will
keen with five
v>
$25,000,006■'
houses in
newly formed
Solvay American Corp. sent that
quickly to a premium upon
its
offering
on
Tuesday.
The
shares
carry
certain
provisions
of
be
^American
Jit for
The company is said to be con¬
templating the sale of
around
$25,000,000
of new
debentures,
probably about June 1.
issue
slated to open bids for
Reporter's
HI Report §
the basis of market
Demand for the 4%
preferred
It
Co.
on
Solvay
one.
Utilities
poses.
-
notes
company
come
for
money;
,
though five groups
will be after this
pre-emptive
rate, and conversion basis
be determined at the time of
issues and
Consolidated
to
provide
subsidiaries.
of
as
the
not
.
around
-
probably !
conditions then prevailing*.1
debentures
20-year
„
ding since things like price, divi¬
prospects is the $30,000,000 of¬
fering
Latest to
holders
offerings such as this one are
for competitive bid¬
must
;
plea
is
the. reported plan of
Union'Electric. Co. of Missouri;
looking toward the raising of y
feasible
dend
far, of the three-
by
Largest,
accorded
it
siony is
dilution of
they
positions
be
In
Tuesday.
in¬
be
Natural
/•
■
temporary ■' bank
>
its:
■;1 v
I
,
may^
it
hence
months
i
financing
pending the opportunity to place
financing on a per¬
such necessary
with
/./
manent basis.
4
...
■-<••••••
.w
Ampal-American Palestine Trading Corp., N.
•
new
pro¬
subscription "rights.''
not
Y.
ISSUE
PREVIOUS
SINCE
ADDITIONS
INDICATES
#
Registration
in
Now
Securities
.
their
good-sized
undertakings coming up for sale
through competitive bidding on
now
present. Such a level will be aug¬
exports
with
protect junior
to
against involuntary
week, however, promises
what
a
thin
ahead than usual in their prepa¬
rations for new issues.
■
exemption from
bidding for
Ahead
Far
business
running out a
surprising to
find bankers looking a bit farther
little
cumulative convertible
a new
rally
•
marked revival in the
field
at a
of
the
by
to
Next
tional
private pro¬
mented
Co.,
a
equipment
two-thirrfs
about
level
"
Power;
occupy their
*
has asked
series of preferred stock. Natu-;
deben-j
issues,
;
in¬
may
small
Light
time.
years
volume of domestic
Co.,
the investbanking world had only
funds for the purchase of addi-,:
rates and the other factors
such as to yield a unit
ducers'
&
:
wage
of
Paper
two
the
Looking
With
months
many
jected offering of 890,000 shares/
St.
of
stock fi¬
new
back to
100%-100%:
through the Securities
Exchange Commission mill.
competitive
and
Corp.,
Motors
300,000 shares
largest
market later settling
the
V"'
Edison
its way
It
account
the
for
the
nancing projects in
tures and bonds of Texas
creased.
to come.
Consequently,
profits must be
forecast at high levels. Nonethe¬
less, competition will increase and
the level of profits will not re¬
main
as
high.;; as currently.
A
reasonable estimate is that profits,
for
unlikely
other
Regis
higher. Consequently advertising
budgets should generally be in¬
tempered its zeal to tighten money
conditions.
Substantial
imports
are
the
of 185%
sales
current
at
forecast
agricultural commodity
prices following the Federal Re¬
serve
without
Even
creases
stock
General
of
.
a
creases.
still
of
one
of Greyhound Corp.
shares
common
production if organized labor con¬
The recent col¬
offerings.
and
400
15%
to
10
tinues to demand annual wage
in
lapse
only
of
So. ■' California
This big Coast utility has started
big secondary sales, one of 344,-
production level implies
a
correspondingly high level of
personal incomes. However, the
income level will rise more than
Such
proposed Federal
the
and
range
recent
some
Thursday, April 15, 1948
;v
■"
.
on
dustrial Production will fluctuate / ment
a
•
.
municipal undertaking and two
reasonable to ex¬
around its current level
»
,
Aside from Philadelphia's big
pect that during the next 10 years
the Federal Reserve Index of In¬
in
gress
from
over
cyclical fluctuations as the pro¬
duction components already dis¬
cussed. They will, however, show
some
relative
growth.
Conse¬
policy of tight money which would
force inventory liquidations; and
'
apply themselves to the task of
out bits and pieces left
supplies will show the same
quently,-it is
i
i
moving
level.
chemicals
fuels,
of
Production
.
to
three is expected to
its
FINANCIAL CHRONICLE
'
'
Boston Corp.; Halsey, Stuart & Co.Tnc; Morgan Stan¬
ley & Co, Proceeds—To be added to general funds for
purchase of additional capital stock in the company's
of stock by the company itself will be used to supple¬
working capital. "Underwriter—To be named in an
! April-7 filed $10,000,000 10-vear 3% sinking fund debentares.
Underwriter—Name to be filed by amendment,
ment
amendment.
;
Proceeds —: $5,000,000 in mortgage loans
for construction of housing in Palestine; $2,500,000 in
Joans to transportation and industrial cooperatives, and 'j
$2,200,00 in loan to SolelBoneh, Ltd., for, public works...
: Business—Palestine development.
!
—I
Mining
Idilylly,
.
iff!any is used;
/
i
Atlantic Coast Fisheries
Boston,
Co.,
Mass. )'
;Feb. 2 filed $556,500 4%% general mortgage and col*
trust convertible
lateral
166,950
and
bonds
shares
i each'
par
share
common
The
stock
will
be
reserved
gram
Proceeds—For
der; Peabody & Co.).
will
j
March
31
(letter
of
notification)
17,600
.
shares
($10
Price—$16.to stockholders with sub¬
scription rights and $16.75 to others.' For working cap¬
Clinton
March
underwriting. ;
(Iowa)
26 filed
Underwriters
•
Boulder
Belle
Mining Co., Inc., Helena, Mont.
April 9 (letter of notification) 150,000 shares (50 par)
i common stock.
Price—100 each. For tunnels and shafts.
; No underwriting.
•
1 :
'
!
j
Inc., Enumclaw, Wash,
April 5 (letter of notification) 200,000 shares of non¬
assessable common stock.
Price—25 cents.
For explora-'
tion, development and equipment.
/ v/y'Cal-Creek Placers,
•
i
Carolina
Casualty Insurance Co.;
North Carolina
•
trust.
j
(letter of notification) 100,000 shares of class
B common stock, to be offered by the company at $2;.
also, 40,000 shares of class B stock, to be sold at $2 by
Baylor's Insurance Service,; Inc.,; and 4,000 by R. S.
Dickson Co.,.The latter firm will also sell 500 shares of
Carobnn Casualty class A stock.
Proceeds from the sale
:
,
■;
«!■
>
;
15 filed
PACIFIC COAST!
Wires
Private
Dean Witter & Co.
MEMBERS
New'York Stock Exchange
San Ffancisco Stock Exchange
Los Angeles Stock
Honolulu Stock Exchange
|
Boston
j
Pittsburgh
.
Chicago
14
r
i
Principal Cities' '■
'
-
_
'■1
'
i
-
Light Co.
Power &
Utilities
Co.
(parent)
Detroit Edison Co.,
•
t
Detroit, Mich.
y
•
Pro¬
y
(4/21)
shares of capital stock ($20 par).
being sold by American Light & Traction Co. in
March 25 filed 450,000
Stock
accordance with SEC divestment order.
to
Probable
be
Underwriters—
through competitive bidding.
include:
Spencer Trask & Co. and
determined
bidders
Coffin & Burr
<
will acquire 62,292 shares.
ceeds—Construction program.
(jointly); The First Boston Corp.
Bids—-
.American Light & Traction Co. will receive bids for the
sale of the stock up to
11
a.m.
(EST) April 21 at Room
1730, 165 Broadway, New York.
.
,
Direct
Private Wires to Offices in'other
,
(Texas)
hr-t'. Domestic Credit Corp.,/ Chicago .fy ""//y
$30,000,000 of debentures, due 1968. Int. I
/ Dec. 29 filed 150,000 shares ($1 par) Class A Common.
rate and price by amendment. Underwriters—To be de¬
Underwriters—None. Offering—To be offered to em¬
termined through competitive bidding. Probable bidders
ployees, executives and management personnel, Price—include: White, Weld & Co. and Paine, Webber, Jackson
$3.49 a share.! Proceeds—For working capital.//
& Curtis (jointly);'; Dillion, Read & Co.
Inc.;1 The First
March
HAWAIIAN SECURITIES
rJi:
V
shares of common (no par). Offering
stockholders on basis of
share for each four held at $60 per share. Texas
Names
Mo.
AND
N^WjYork
'
Consolidated Natural Gas Co.. (4/20)
1
^
,
^
—Stock will be offered present
mortgage deed ofr
a
' <;
one new
Postal Building Corp., Clayton,
Bank, Clayton, to modify
No salt is contemplated, y -r,
*
Feb. 26 filed 68,250
$7,000,000 15-year debentures, due 1963. ;;
Smith, Barney & Co., New York and
National
Burlington,
;
Dallas
April 5 (letter of notification) $37,000 4%% first mort¬
gage bonds to be deposited with the St. Louis County
March 30
s
capital.
—
Collinwood
'.;
.
Newhard, Cook & Co., St. Louis, Mo.
Proceeds—To re¬
pay a $1,500,000 bank loan to J. P. Morgan & Co., Incor- /
porated and purchase outstanding stock of American •
Partition Corp. and its sales affiliate.
Business—Manu¬
facture corn products.
"i'V
,
_
\
,jVl
'
$600,000 first mortgage 5%% sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
($1 par) common stock. Underwriter—P. W; Brooks &
Co., Inez, New York. Proceeds—To retire secured in¬
debtedness, finance inventories and supplement working
Feb. 5 filed
(4/21)
Industries, Inc.
Corp.,'Baltimore,/Md. l
Crampton Manufacturing Co.
construction pro¬
a
Gauge
^
Chesapeake Skipper, Inc., Baltimore, Md.
April 7 (letter of notification) 300 shares of 6% preferred stock
($50 par). Price—Par. To improve the
magazine, add photographic section. No underwriters. V
par) capital stock.
ital and general corporate purposes,: No
•
and repair of flood damages. .,*r."
/Continental
April 12 (letter of notification) 5,700 shares of 5% cum¬
ulative preferred stock ($5 par) and 5,700 shares ($1
par) common stock. Price of both, par. For machinery
and equipment.
\
Z
•
i
Blue Ridge Insurance Co., Shelby, N. C.
;
•
Rutland, Vt.
March 30 filed $1,500,000 Series E first mortgage bonds
and 360,000 shares (no par) common stock. Underwriters
—Names to be furnished by amendment ^probably Kid¬
conversion of the bonds. Unsubscribed bonds
be publicly offered' by underwriter.
Proceeds —
j General corporate purposes.
2^at>R(?cm'3^'30 Roclrefeller Plaza/ New York.;
(
.j Central Vermont Public Service -Corpu^;
in the ratio of $1.50 of bonds for
held.
bentures will be received
of notification) 150,000 shares of class A >
($1.50 par) and 34,125 shares ($1 par
common) stock. Price—Par for each class. Underwriter
—Carter H. Corbrey Co., Chicago. ; For mine develop¬
ment and working capital.
($1
Bids—Bids for purchase of de¬
up to 11:30 a.m. (EST) April
operating subsidiaries.
Central
//'"
stock
common
Against
!
.
March 25 (letter
common stock.
Underwriter—-Doolittle & Co..
Buffalo.
Offering-r-Bonds are offered to stockholders of
April 14 at
Development Corp.,
/'/{ y.| City, Colo. '
par)
record
Central
"
•
vv
,1':
SAN FRANCISCO
WALL STREET,
Exchange
NEW YORK
Telephone BArclay 7-4300
/
*
LOS ANGELES
'
honolulu
Volume
Number 4690
167
THE
Georgia-Pacific
Plywood
Common
March
1948
Consolidated Natural Gas Co.
(EST)-w_-_
a.m.
&
Lumber
11
filed
Co.
common
Debentures
30 changed
...Common
Moore-Handley Hardware Co-
Co., Inc.).
from Georgia
name
Stockholders
on
March
Hardwood Lumber Co.
Detroit Edison
Co., 11
Debentures
(EST)_______-iiStock
a.m.
April 22,
1948
stock
Florida Power Corp._i._—
M & M Wood
Gold
March
—l__Common
$1)... Underwriters—Stein
mines.; / ;;
•iApril 26,
h Illinois Central RR.,
noon
1948
Value),
i^ Ohio Rll/,
are
$$$ April
"
(J<
'
are
y"
"•
•*'''»
of
''/Vy".,;..
Underwriting—None.
beipg offered
pro
basis of
on
f-i/'-ilv % ^ y
,r
''
\
Peninsular Telephone Co.—
'
u
\ ZZ'
^
'*
f'p
Common
one
Sandy Hill Iron & Brass Works———.Preferred
™.
Sierra Pacific''Power, Co.--———--—-Bonds;
-y
Wisconsin Michigan Power Co.—
-
May
4,
_iB<mds
/
loans
;.7\ / /v/y/Z. %:/Z
Bros. & Hutzler; Merrill Lynch,
Pierce, Fenner & Beane
White, Weld & Co. (jointly); Lehman Brothers.
Proceeds—To finance construction.
Bids—Bids for
•
7
Smith^Polianj
-
.
March 17 (letter of notification) 1,500 shares of common
(par $100).
Price—Par.
Underwriting—None.
Offering—Stockholders of record April 7 will be given
the right to subscribe for one new share for each four
shares held.
Rights expire May 7 and subscriptions are
payable at First Camden National Bank & Trust Co. ;
For working capital.
par), ^
new
Co.
April 6
common
are
Offering—Common
stockholders
one
new
held.
share.
FfotiJI
April
21.
Price—$13
per
f
pre¬
;
9
stock.
pay
'7:/':
•
pre¬
claims.
No
underwriting.
...
■
Inc.,
650,000 shares (50 par)
To develop mining
- :/
i, :...
J'; 'Genuine Parts Co., Atlanta, Ga<>,r-V7~-';
March
30
filed
150,000 shares
($5 par)
comnrion
stock,
of which 50,000 are being offered by company and 100,000
•
Palmer Stendel Oil
Corp., Santa Barbara, CalitL /
| April 5 (letter of notification)
non-assessable
rate of
one
stock.
To
176,320 shares
be offered
present
X$1 par)
holders at
£ach.%
share for each 10 held, at 20 cents
new
| Underwriter—Burnham
/
of
corporate "purposes." V
& Co., New York,For
y,('
^
-,
* \;7
/
„
/.
.v
general
•
R. I.
Offering—Stock offered for subscription
by holders
April 15 at the rate of one for five.
Rights
expire April 29. Proceeds—General corporate purposes*
notification)
of record
Pennsylvania Southern Gas Co., Westfield, N. J.
-
March 29 (letter of notification) $76,000 first lien and
collateral trust bonds, series C, and 1.900 shares of cum-
.
26
filed
Working Co.
293,076
shares
($5
Feb. 13 filed 20.000,000 shares common (lc
par).- Price—
$1 per share. Not more than 100,000 shares will be oi-
(4/22)
par)
capital
stock.
/■
Price Z
Proceeds—To purchase 75% of the stock
Richardson Co., holder of timberlands in
Oregon, /
indebtedness, and add to general corporate funds.
common
:
(par $1) to be offered on behalf of Eugene Daniel
//
Price—Market (7/s to $1.50).
Powers.
Auchincloss, Parker & Redpath.
Underwriter—/
'
?
;
'
•
-
fered to employees and officers at 87% cents per share.
Underwriter—Tellier & Co., New York. Proceeds—For
capital equipment and working funds. .;v
Z7/':/'5
Powers
Oil
&
Drilling,
Inc.,
Casper,
Wyo.
March 23 (letter of notification) 200,000 shares (250 par)
common
stock.
Underwriter — John G. Perry & Co.,
/
stock
' ; /
•
Metalube Corp., Newark, N. J.
Z
April 12 (letter of notification) 448,051 shares of capital
stock (par 25£).
Price—500 per share. Underwriting—
None up to present time, but it is
expected that an
Boise,
each.
,
(letler
Maguire Industries Inc., New York :
April 1 (letter of notification) 8,000 shares of
Temporarily postponed.
Price—12 %0
Southern California Gas Co. and Southern
Counties Gas
Co. of California. \
.
by amendment.
Denver, Colo.
•
Red
Rock
For
a
drilling
program.
/
Ccla
Bottling Co. of Conn., Hartford
April 8 (letter of notification) 372,077 shares (100 par)
common
For
stock.
To
working capital.
be
offered
at
par
to
No underwriting.•
stockholders.
*
*•
•
/
'.
underwriter
,fv/~:?\:/Z Idaho
common
7
Long Island Airlines, inc.; Southampton, L« I.
of F.
Hopwood, Minneapolis. Price and number of shares
byf amendment.
Proceeds—To reduce short-term bank
April 8 (letter of notification)
Pacific Ughting Corp,, San Francisco
.(5/3//
26 filed 321,726 shares
(no par) common stock.
subsidiaries,
Calif., Sheboygan,
Underwriter—Kidder, Peabody & Co., New York.
&
Mines,
/
7/
March
/»
.
v.■■.■//v;.:///
stock.
29
March
Pierce. Fenner &. Beane, New York, and Piper, Jaffray
Consolidated
underwriting.
snares 6%
,
ferred .^toek, convertible prior to July 31, 1958. Under¬
writer^-Goldman, Sachs & Co. and Merrill Lynch,
States
,
and 600
15
IV! and M Wood
are
Gem
,
,
Mar^h 30 filed 120,000 shares ($50 par) cumulative
•
stock
April 8 (letter of notification) $150,000 4% convertible / ulative preferred stock (par $100). Price—Par for each
issue.; Underwriter—Bioren & Co., Philadelphia. Pro¬
notes, dated May 1, 1948, due May 8, 1958.
Price—Par.
ceeds—Payment of corporate obligations and general
/ Underwriting—None. Offered for subscription by stock;
corporate purposes.
holders on or before May 1.
Liquidate indebtedness,
7
working capital, etc.
Playboy Motor Car Corp., Tonawanda, N. Y.l j. /
/
v
/; »<• x
/ '
('
Co.; Detroit, Mich.
io^ns totaling $13,850,000.
'*
2,250 shares of $5.50
(no par). Price—$100 each,
Underwiiters~;Cities Securities Corp. and Kiser, Cohn &
Shumaker, Inc., Indianapolis. To make small instalment
loans.
100,000 shares
Gamble-Skogmo, Inc., Minneapolis
'
,
cumulative preferred stock
being sold by 14 stockholders who will re¬
proceeds. Registration statement effective Jan. 16.
ceive
Broadcasting Co.
(letter of notification) 400 shares
No
Indianapolis, Ind.
($1 par) common.
Under¬
writers Li Campbell, McCarty & Co., and Keane & Co..
both Detroit.
Price—$5.25 per share.
Proceeds—The
shared
April 5
($100 par)
preferred stock ($100
/ par)./ Price—Par. / To build and operate station WNOR.
?
-
of
260,000 preferred shares and 250,000
company 125,000 preferred shares
Price—$1 each.
For working capital.
Fraser Products
Oct. 21 filed
(Ohio)
//; Pay Rock Oil, Inc., Tulsa, Okla. •
March 29 (letter of
Co., Milwaukee. Offering—To be offered
notification) 500,000 shares (10 cent
7 par) common stock Price—30 cents each. Underwrite*
stockholders at the rate of one new; for each
2% shares now held. Proceeds—Construction program.
-^Security Royalties, Inc.; Tulsa. To drill oil wells and
•
develop leases.
'
1
'
Lientz (E. C.) & Co., Inc.,
Fillmore, Calif.
Peninsular Telephone Co. (4/30)
April 9 (letter of notification) 30,000 shares of capital
1...
March 26 filed 35,374 shares (no
stock. Price-^-500. To provide funds for medical research.
par) common stock.
No underwriting.
Underwriters—Morgan Stanley & Co. and Coggeshall &
Hicks, New York, and G. H. Walker & Co., Providence,
Lincoln Loan Corp.>
shares and
common stock.
No underwriting.
Norwood
common
—
sell
.
•
The Wisconsin
March
385,000 shares of 60 cent convertible
$5,500,000 and approved an issue of 35,000 shares of
preferred stock.]
(////m';,/
/'
,
($1
Lake Superior District Power Co.,
Ashland, Wis;
30 filed 52,800 shares of 5% convertible second
preferred stock, cumulative ($20 par).
Underwriter-^--
(par $1). Underwriter — Floyd D. Cerf Co., Chicago.
Price—preferred $10; common $6.
Proceeds
Stock¬
common
common
March
ferred stock (par $5) and 325,000 shares of common stock
holders will
to
Denver,
March 22 filed 1,500,000 shares ($1 par) common stock.
Underwriter—Heronymus & Co., Sheboygan, Wis. Pro¬
ceeds—To open and equip bottling plants in California
cities.
Price—$1 per share.
Products, Inc., Stockton, Calif.
March 6 filed
(jointlyy* Blyth & Co., Inc. and Smith, Barney &;
(jointly). Proceeds will be used toward construction.
[April 8 New York PS Commission reduced bond issue"
Angeles.
Proceeds—Construction expenditures.
Rights expire
/ ■;//•
J^^as
common
Kool-Aid Bottling Co., Inc. of
Wisconsin
share for each 10
shares
,
Expected;
program.
Co.
underwriting.
.
construction
a
Underwriter—Blyth & Co., Inc., New York. Price—$40. ,
Manufacturing: Co., Lansing, Mich.
(letter of notification) 50,000 shares ($1 par) ' / Offering—Holders of common stock of record April 15;
/ are given the right to subscribe on
Price—$2 each, To be sold by H. Barkor before
April 30
at the rate of one new share for
ley Johnson and James J. McQuaid, both of Los An¬
each five held.
Proceeds
—Expansion program for company and
geles. Underwriter~-Buckley Brothers, Los
given the right to subscribe for the
stock in ratio of
Inc.,
continue
Kold-Hold
March
Florida.Power Corp, * (4/22):: r; > •
March 2 filed. 110,000 shares < $7.50. par) common stock.
Underwriters—Kidder- Peabody & Co., Merrill Lynch,
Pierce, Fenner & Beane; Bear, Stearns & Co.; Goldman,,
Sachs & Co.; A, M. Kidder & Co.; W. C. Langley & Co.;
Wertheim & Co.; White, Weld & Co.; Hailgarten & Co.;
Hornblower & Weeks; Laurence M. Marks & Co.; L. F.
Rothschild & Co.; Shields & Co.; Milhous, Martin & Co.,
&
1///-
Co.
Underwriter—^.lisop ;^r^CQ.,''lD^troit.:'''/•'
common
March 29 filed 175,000 shares of capital stock (par $5).,
Underwriters—Paul HZ Davis & Co. and Crosby Corp.
Proceeds—For investment.
Reed
No
//to selling stockholders.
Fidelity Fund, Inc.
record
Industries,
March 5 (letter of notification) 14,618 shares
stock
•
Electric
Corp.
/
"
April 7 filed $10,500,000 first mortgage bonds due 1978. /
Underwriters-—Names to be determined under
competi- Z
tive bidding.
Probable bidders include: Halsey, Stuart *
& Co.
Inc.; The First Boston Corp.; Harriman, Rip-/
ley & / Co.; Hemphill, Noyes / & Co. and Drexel
&>
(EST)
Kingston Products Corp., Kokomo, Ind.
✓
Esterbrook Pen Co., Camden, N. J.
and
/
Colo.
April 9 (letter of notification) 200 shares (no par) com¬
mon stock.
Price—$100 each; To build inventories and
Inc^'
-
,
Jay Goodwin
advertise.
,
named, but xna^ be
a.m
and
New York State
,
1978.
April 20 at offiee of Central Hanover Bank & Trust Co.,
70 Broadway, New York./.
;•
'V
' ' '
* 4
7%Z./7-7■;i-7Z/7"777?
Omaha, Neb.
filed
chase of the bonds will be received up to 11
Bonds
Empire Chemical Corp., Seattle, Wash,
March 24 (letter of notification) 60,000 shares of common
voting capital stock. Price—$5 each. Business costs. No
underwriter
19
pur¬
Southern California G&s Co.-—-—-——
>
bonds:, !•
1978.; Underwriter—To be determined'under com-]
petitive
bidding. Probable bidders include:
Halsey,;
Stuart & Co. Inc.;. The First Boston
Corp.; Kidder, Pea-
/early in May. "•^
(4/20)
first mortgage
and
1948
t
Graybar Electric Co.,. New York7^-//^.
9 filed voting trust certificates for 13,750 shares
($20 par) common stock, offered by A. II. Nicoll, G. F.v body & Co. and Stone &
Webster Securities Corp. (joint- /
Hessler, G. T. Marchmont, H. L. Harper and G. J. Cossz/ly); White, Weld & Co.; Lehman Brothers and Goldman:
mann, as trustees under a voting trust agreement - of
Sachs & Co. (jointly).
Proceeds—To reduce short-terms
$12,000,000
bonds, due
Underwriters—Names to be determined by com¬
petitive bidding.
Probable bidders: Stone & Webster
/Securities Corp.; Halsey, Stuart & Co. Inc.; Salomon
r
Telegraph Co. owns 73.35%
outstanding stock. Proceeds—To repay advances from
Telephone & Telegraph Co.
\
due
|Jan. 15,. 1948.
___—____Common
Telephone & Telegraph Qo.
Narragansett Electric Co., Providence, R.
March 30 filed $10,000,000 Series B first
mortgage
held, ats$10Q per share; 85% shares;
being offered at net asset value at $110.61 per share, v
March
Lighting Corp—
•
States
^
Gulf States Utilities Co.
Pacific
•'.••/:/'..
Music Center, Inc.,
Boise, Idaho
^
April 5 (letter oif notification) 150 shares of commoii'
stock, to be sold to employees only at $100 each.
To'
purchase additional stock.
No underwriting..
\
,
Offering—11,571% shares
rata to stockholders
1
1
9
April
1
^
American
•
28,. 1948
Debentures.
rlry
Boyce,.
share for each three
noon_ ^-Equip, Trust Ctfs.
Swift
;
&
March 11 filed 11,657 shares stock
($50 minimum stated
(CDST)—Eqp. Trust Ctfs. /:
April 27,
Baltimore
Bros.
V'/--/...viS-vJw
Graham-Newman;Corp., New .York, N. Y.
s
and
March 5 filed 191,881 shares of
capital stock ($100 par)."
Stock offered stockholders of record
March 24 at $100
per share on a one-for-three basis.
Rights expire April ;
26. American Telephone &
Inc., New York
(letter of notification) 5,000 shares of capital
(par
construction
/
Co., Washington, D. C. Price by amendment. :
are being sold
by Equitable Securities '
Nashville, Tenn.; Union Securities Corp., New
Tri-Continental Corp.-and Selected Industries,'
Mountain
Baltimore, and Filor, Bullard & Smyth, New York. Price
—$3 per share. Working capital—development of gold
Working Cb.______— -Capital Stock
Underwriter—Ed¬
For
Johnston,/
Corp. /;
Ridge,
16
Z
'
Proceeds—Shares
Corp.,
York;
tion of expenditures for permanent improvements.
Pennsylvania RR., noon (EST)__Equip. Trust Ctfs.
Co., St. Louis.
Lemon &
Glen-Gery Shale Brick Corp., Wyomissing, Pa.
(letter of notification) $300,000 general mort¬
gage, series A, 6% income bonds, due Dec. 1, 1957. Price
—Par.
Underwriter—Warren W. York & Co., Inc., Allentown, Pa. Proceeds—To reimburse treasury for por¬
April 21, 1948
&
Moore-Handley Hardware Co. (4/20-26) 7
Mai. 29 filed 350,000 shares ($1
par) common stock. Undenvriters—Paul H. Davis & Co.^
Chicago and
March 31
Clinton Industries, Inc.___-._-__—
Jones
D.
improvements.
—
Clement A. Evans &
Bonds
a.m.
stock.; Price—$12.50 each.
ward
Underwriter—Reynolds & Co. Price
Proceeds
To selling stockholders—
(Equitable Securities Corp., A. C. Allyn & Co., Inc., and
>
"
69,500 shares $1 convertible cumulative
(no par) and 10,425 shares of common
($1 par).
by amendment.
45;
common stockholders in units of one
preferred, share and iy2 common stock
rights for $10:7
Underwriter—For unsubscribed units,
Gardner F. Dalton & Co., Milwaukee. To
buy production machinery.
•
Missouri Utilities Co., Cape
Girardeau, Mo.
April 7 (letter of notification) 22,750 shares
($1 par,)
stock
-------
Co., 11
Plywood
(1685)
issued pro rata to
V:,"-:. (4/19-2G):
Pref. and
preferred stock
11:30
CHRONICLE
,
Georgia-Pacific
&
Lumber Co.___.
Gulf States Utilities
FINANCIAL
sale of the 50,000 shares.
/ $400,000 of bank indebtedness
will be retired and balance for working capital.
*
1948
April 20,
&
by five stockholders. Underwriter—Courts & Co., At¬
lanta, Ga. Price by amendment. Proceeds—From the
NEW ISSUE CALENDAR
April 19,
COMMERCIAL
•
Reiter-Foster Oil Corp., New York
Jan. 16 (letter of notification) 180,000 shares (50c
par);
common
stock.
Price—80 cents. • Underwriter—Fn
tal and
W. Bennett & Co.
or dealers will be
employed. Working capi-,
enlargement of facilities.
•
Midland Co., South Milwaukee, Wis. 1
April 12 (letter of notification) 20,000 shares of 6%
cumulative preferred stock ($10 par). Rights to the pur¬
chase of 30,000 shares ($2.50
par) common stock. To be
•
For working capital.*
7 *
Ross
Riveters, Inc., Reno, Nev.
/
7 April 5 (letter of notification) 30,000 shares ($10 parj
preferred stock and 30,000 shares ($10 par) common
7
' (Continued on page 46)
: 1 j"
.
'
<
46
COMMERCIAL
THE
(1686).
(Continued from page 45)
;•
FINANCIAL
&
CHRONICLE
Price—$1,000 each.
Each share is to be accompanied by
"production warrant" permitting the holder, to buy a
proportionate share of the company's output.
Under*;
writing—None.
Proceeds—To prpvide capital for the
a
I*tice—$10
stock.
a-
Common is to be issued as
unit.
per
bonus at the fate of
one
share for each pre¬
common
ferred share purchased.
To build a manufacturing plant
to make Ross Expand-O-Matic riveters.
No underwrit¬
ing.
y."'..
'y.
"" ,«'.■■•' »: r
•
purchase and operation Of
rayon
York
(5/3)
k
April 12 (letter of notification) 59,000 shares class A
$4). Price—$5 per
share.
Underwriter—John L. Nolan, Inc., Glens Falls,
N. Y. Working capital.■*./■,
;;/•';■'
participating preferred
stock
(par
-
Sanitary Products Corp., Taneytown, Md.
11,250 shares of common
stock (no par).
Price—$20 per share. UnderwriterJackson & Co., Boston.
For equipment and working
capital.
'
Feb. 26 (letter of notification)
100
shares held.
Proceeds—For
Sierra
Pacific
South
Carolina
Insurance
Corp.:
Utilities
Loeb
Co. "and
&
Lehman
Brothers.
'
March
16
Proceeds—To
made
to
-
<
for
Expected
properties/
around May 4.
cumulative convert-;
ible preferred stock ($25 par) and 80,000 shares ($1 par)
common stock, to be reserved for conversion of
preferred.
r
Underwriters—Equitable
Securities
Corp.,
Nashville,
Tenn., and Clement A. Evans & Co., Inc., Atlanta, Ga.
Proceeds—Corporate
:
s
purposes and
'
•
■
Southwestern Bell Telephone Co., St.
Louis, Mo. f
April 2 filed $100,000,000 35-year unsecured debentures,"
due 1983.
Underwriters—Names to be determined by
competitive bidding. Probable bidders: Halsey, Stuart;
& Co.
inc.; Morgan Stanley & Co. Proceeds—$95,000,000
will be used to
repay advances from American Telephone & Telegraph Co. (parent), and balance will be
used for
•
State Exploration Co.,
Fresno, Calif.
April 6 (letter of notification) 215,000 shares
common
vately offered.
No
stock.
Price,
par.
($1 par)
To be pri¬
capital and cash
reserve.
(F.
C.)
Hardware,
Inc.,
Hot Springs,/
Arkansas
26
(letter of notification) 2,000 shares of 6%
cumulative preferred stock ($100
par). Price—Par. Un¬
derwriter—Southern Securities Corp., Little
Rock, Ark.
To retire $65,000 of loans and
for general working
purposes.
*
Suburban
Gas
*
Service,
Inc.,
Ontario, Calif.
$500,000 12-year 6% series sinking fund
March 22 filed
debentures, due March 1, 1960, with purchase
attached for the purchase of 50 shares of
stock
($1 par).
Underwriters—Lester & Co. and Wagenseller
Durst, Inc., Los Angeles.
Proceeds—To purchase the
California Butane Co.
Sunray Oil Corp.
April 14 filed 600,000 shares of cumulative convertible
preferred stock, series B (par $25).
Underwriter:—East¬
man, Dillon & Co., New York. Proceeds—Will
be added
to general funds.
'
;
,,
f
,
*
«
H
.
>
-
Telohio, Inc., Toledo, Ohio
mon
stock.
before
notification) £,000 shares (no par) class
3,000 shares (no par) class B
Price—$50 each.
the
Federal
To pursue
Communications
underwriting.
•
Tonn
(Arthur E.),
com¬
an
application
Commission.
No
1,500
gas
shares
($100 par)
property and leases.
Refining Corp., South
Milwaukee, Wis.
filed
850,000 shares
($1 par)
common
Underwriter—Distribution by
Proceeds—To build and
equip
Ui_nl£d *ayo" CorPv
29
"4m
March
filed
9,950
be
1.
company.
machinery.
(no
par)
sought not later than May i8 and the
Proceeds
Probable
would
bidders
be
used
to
finance
con-"i
include:
Pennsylvania
Power
Co.
„
sell
to
|
bonds,'
t
,
!^^4nn«yji«hfii";RlS^
'
/
Company Will receive Dids
first
Co.
office
Geo.
of
H.
tii'M 'Reading* Co.
<5/3)
Prospective Offerings
before the end of April, with an offering for between t
$7,000,000 and $8,000,000 of equip, trust certificrateS. Prob-'
able bidders: Halsey, Stuart & Co. Ine;; -Salomon Bros. •
& Hutzler; The First Boston Corp.; Kuhn; Loeb & Ctf.l
and Blyth & Co., Inc, (jointly); Hatriihan
Ripley
and -Lehjman Brothers»(jointly).
•
?
*
,
•
Slick Airways,
The company will require between $6,000,000 and
$7,000,000 of new financing if the company is certified
;
by thev
carrier, according to W. F. Rogers, s
x Vice-Presidents Company- has
been: Recommended fOt *
CAB
'
22
as
air freight
an
-
certification
•
v.y'r
by
time in the future.
proposed
of
cumulative
underwriters:
;
(4/27)
purchase of $4,500,000 equipment trust certifi¬
.
common
Salomon
•
Bros.
through competitive bidding 200,000 shares of pre*
ferred stodt bf
a series to bear dividends at a rate
not
$5 per annum. Probable bidders: Harriman.
Ripley & Co. and The First Boston Corp. (jointly); Mor¬
gan Stanley & Co.; White, Weld & Co. and Shields &
to
•
(jointly).
Gulf Oil
Corp.
April 13 reported company arranging with Metropolitan
Insurance
•
Co.
for
a
•
Lighting &
Power
Central
as
instalments
of
and
to
be
secured
$20,399,847, the depreciated - 'book
April 1, 1948, was $18,884,469. All
401, 135 East 11th Place,
before
bidders include:
•
Kuhn, Loeb & Co. and Blyth & Co., Inc.
The First Boston Corp.; Salomon Bros. &
Indiana &
•"
■
■..
....
on
.
increasing bonded irr-
Corp.; Halsey, Stuart & Co, Inc.; Dillon,
Inc.; Lehman Brothers; Kuhn, Lofeb & Co.
•
increase from 2,500,000 to
5,000,000 shares the authorised
common stock.
W. A. Patterson expressed the belief the
company should be in a position to raise additional capi¬
tal in 1948 if market and other conditions
permit. Tra¬
"V:.
Michigan Electric Co.
^
r
>
April 9 reported company has under consideration plans
$40,000,000 new bonds. Expectations are, that
offering will be ready for sale at competitive bidding
by late summer or early fall. It will be designed to pro-
r*,
Virginia Electric & Power Co.'
April 14 reported company contemplates new financing
in the aggregate of $47,000,000 to complete its
expansion
f •
,
Probable
bidders
include:
Union
Securities
Corp. and Kuhn, Loeb & Co. (jointly); Stone & Webster
Securities Corp.; Halsey, Stuart &
Co.-Inc.';. Salomon
Bros. &
Hutzler; Merrill Lynch, Pierce, Fenner & Beane
(jointly); Glore, Porgah. & Co. and
Langley & Co. (jointly); White, Weld & Co./',.
and Hallgarten & Co.
by
noon (CDST) April 26. Probable
Halsey, Stuart & Co. Inc.; Harris, Hall
& Co. (Inc.); L. F. Rothschild & Co. and
Gregory & Son,
Inc.; Harriman Ripley & Co., Inc. and Lehman Brothers
on or
Harris, Hall.
United Air Lines, Inc.
April 13 stockholders voted to increase authorized cumu¬
lative preferred stock from 94,968 to
300,000 shares, fchd
RRJ (4/26)
costing
value of which
series,
Probable
The company,
Read & Co.
,
semi-annual
new
The First Boston
•
Company is inviting bids for the purchase of 14,000,000
equipment trust certificates, seris Z, to mature in 20
equipment
Boston Corp. and
Union ElectncCo. of Missouri
program.
equal
a
stock.
ditional underwriter, Harriman Ripley & Co., Inc.
Co.
1
Illinois
preference
it is said, plans to sell $25,000,000 debentures to finance expansion. Probable bid¬
ders:
White, Weld & Co. and Shields & Co. (jointly);
long-term loan of $85,000,000
April 7 reported company, in connection with its
expan¬
sion program, plans the sale of
$15,000,000 bonds later
this year.
tts Cqnmis*- *
bidding
SouthernNaturalGas '* Co.
debtedness.
Outstanding bank loans of like amount.
Houston
First
May 7 stockholders will vote
exceed
Co.
.
.
-
issue of 800,000 shares of
convertible
The
will be refunded.
&
Consumers Power Co.
The company has asked SEC permission to issue
and
sell
.
April 12 construction program of company for 1948, gStimated at $9,200,000, will be financed
through the ig§&*
ahce Of long-term bonds. A part of
outstarldihg notes
Hutzler; Harris, Hall &
Co. (Inc.); Harriman
Ripley & Co., Inc.; Halsey, Stuart :
& Co, Inc.; The First Boston
Corp.
for sale of
stock.
•
,
cates, series Y, will be received up to noon April 27, at
company's office, 2 Wall Street, New York. Certificates
will mature $450,000
annually May 1, 1945-1953.
Probidders:
-
Edison-Co.
& Co. (Inc.).
Baltimore & Ohio RR.
able
of ithe *
sion application for exemption fronr competitive
to issue and
150,000 common shares (par $5)••at such price as
directors may fix from time to time but at not
less than
'
nature
'
Southern^California
a
share.
The
financing has not been decided upon, but there iS-t
on
per
CAB^* examiner.
April 13 Company filed with" California
stockholders approved proposal
sell
•
a
probability company; will offer stock to the public- at:
some
American Casualty Co.
March
!■£
April 5 Reported road will tie'in the -markfet, probably
mortgage
h
Hutzler.
stock.
New York City
shares
j
company]
3% series due 1978, at 99W,and interest.
;
(jointly);
(jointly);
Trans-Marine Oil
19
•
new
Chicago 5,
Laporte, Ind.
underwriting.
March
Power
bids must be received at Room
April 9 (letter of
notification)
stock. Price—Par. For oil
and
No
■-<' <
w
•
Power
•
of
authorized
The company has requested SEC permission to
institutional investors?$1,000-000^ first mortgage
,
$14,000,000
Electric
to pay off
($10,000,000 of
10-year serials, and $25,000,000 due
1973). Selling
Agents—Salomon Bros. &
Hutzler, New York. Interest
rates by amendment.
Proceeds—For necessary plant re¬
habilitation.
April 5 (letter
a
Co., will be used to redeem
$12,500,000 of 3%% of first mortgage bonds at 102y4%
and to repay the Central Hanover Bank &
Trust Co. and
Marshall & Ilsley Bank
$200,000 in bank loams!/ 'Expected
about May 3.
•
to
A common stock and
J
.
Halsey, Stuart .& |
Co. Inc. (bonds only); The First Boston Corp.;
Harriman, f
Ripley & Co.; Hemphill, Noyes & Co. and Drexel & Co. I
(jointly); Blyth & Co., Ine. and Sriiith, Barney & Co. 1
(jointly).* *,".'/. j
'
•
^
i
at
Michigan
filed
Wisconsin
Life
Swift & Co.,
Chicago (4/28)
April 5 filed $35,000,000 of debentures
•
struction.
bonds, due
1978.
Underwriters—Names to be determined through
competitive bidding.Probable bidders: Halsey, Stuart
& Co. Inc.; Lehman Brothers and
Goldman, Sachs & Co.
(jointly); Drexel & Co. and Hemphill, Noyes & Co.;
The First Boston Corp.; Dillon, Read & Co. Inc.
Pro¬
ceeds—Proceeds
together with $1,000,000 from bank;
loans and $1,000,000 from the sale of common stock to
warrants
common
&
one
22
Bids for
March
•
March
•
underwriting.
Stearns
to
are
June
$12.50
For working
.
' / 'v
up to noon (EST) April 21 r
Pabst, Jr., Vice-President, Room |
Feb. 25 filed 32,93? shares of bohrmo'n stock (parv
1811, Broad Street Statioh, Philadelphia, for the sale of
$10).
Underwriters—None.
Offering—Offered for subscrip- f/ $9,600,000 equipment trust certificates, series T, -dated \
tion by stockholders of record March 24 in ratio of
May 1, 1948 and due $640,000 annually May 1> 1949-1963.1
one new share for each eight shares held.
Probable bidders: Halsey, Stuart & Co., Inc.; Salomon i
Rights will ex¬
Bros. & Hutzler; Kuhn, Loeb & Go.'* and Blyth & Co.,I
pire April 30.
Price—$12 per share.
Proceeds—Plant ;
Inc. (jointly); Harriman Ripley & Co., Ind. and Lehman !
additions and purchase of securities and assets of other
Bros, (jointly); The First Boston Corp.
companies.
'
I
Construction.
non-assessable
stock
Fund, Inc.
Wisconsin
Price by amendment.
debt
payment.
-
Hayden, Stone & Co.; Halsey, Stuart j
.
ask for
bonds
'
•
v
Southern States Iron Roofing Co., Savannah, Ga.%
March 23 filed 40,000 shares of 5%
,v-
-
(5/4)
reimburse treasury
expand
Proceeds—For
•„
public bids on $5,500,000 30-year first rnort- ;
gage bonds and $3,500,000 of preferred stock.
Bids for
•
investment.
$15,000/W0 3y4% first mortgage bonds,
due 1978. Underwriters—Names by competitive bidding.
Probable bidders;
Halsey, Stuart & Co. Inc.; Blyth & >;
Co., Inc.; Harris, Hall & Co. (Inc.); Merrill Lynch, Pierce,/
expenditures
•
April 8 New York PS Commission
50,000 shares of capital stock (par $1).
Underwriter—Broad i Street Sales' Corp. Proceeds—For
filed
Fenner & Beane.
f
i
New York State Electric & Gas
Corp.
to
March 22 filed
_
Califottyja Gas Co.
•
'
r
Wilson-Jones Co.
Southern
& Co. Inc.
Co., Abilenfe, Texas
construction program. /
No
common!
New York Dock
able underwriters:
Probable bidders include: The First Boston
Harriman Ripley & Co. and Blyth & Co., Inc.
Whitehall
capital and the remainder for surplus.
:j
■
pany's $10,985,000 first mortgage 4% bonds mature) a
first mortgage, the initial series to be limited to :
$12,000,000 at an interest rate not to exceed 4%. Prob-(
(jointly);.Halsey, Stuart & Co.*Inc.; W. C. Langley & Co.;'
Kidder, Peabody & Co.; Stone & Webster Securities
Corp.; Merrill Lynch, Pierce, Fenner and Beane; Kuhn,
underwriters.
■
new
Ranch, Inc., Garrison, N. Y.
March 29 filed $5,000,000 Series B first mortgage bonds,
1978.
Underwriter—To be determined by competi¬
Columbia, S. C.
W:
April 27 stockholders will vote on approving the exdcu-'
tlon at any time on or before Aug.
1, 1951 (when com- |
due
April 1 (letter of notification) 10,000 shares of common
stock. Price—$17.50 each. Of the proceeds, $100,000 will
be used for
Walter
✓
Co.,
4
tive bidding.
000 to National Shawmut Bank of Boston for construc¬
Expected about May 3.
Syndicate, Inc., New York
'
'
April 9 (letter of notification) 35,000 shares of common
stock (total not to exceed $100,000). Price—Market (ap¬
proximately $3y4 per share). To be sold on New York
Curb Exchange by Moore, Leonard & Lynch. Proceeds
to selling stockholder.
;
/• :'::%
Venezuela
re¬
1978.
bid¬
ding. Probable bidders include: Malsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; Stone & Webster Securities Corp.
Proceeds—Construction costs and the payment of $650,-
"• *.v
•
,
•
West Texas
March 26 filed $3,500,000 first mortgage bonds, due
Underwriters—To be determined by competitive
tion notes.
Co.,
April 7 (letter of notification) 1,000 shares of preferred
stock (par $10) and 5,000 shares of common stock (par,
$10). Price—$10 per share. Underwriting—None. Work¬
ing capital, purchase of equipment, etc.;
"
(5/3)
Power Co.
'
'
Textron Inc. proposes to issue to its
Stockholders, warrants evidencing rights to purchase one
shafe of common stock of Lonsdale Co.
(organized April
.
payment of two notes and general corporate purposes.
13
Seattle, Wash: -14, 1948) for each share of Textron common held on
March 17 (letter of notification) 300,000 shares ($1 par)
effective date of registration statement to be filed in
common capital stock.
near future.
Price—par.
For industrial and>
Blair & Co., Inc. will underwrite unsub-;
chemical research work to improve manufacturing.
scribed shares;
*
:
•
Segal Lock & Hardware Co., Inc., New York
March 24 filed $2,000,000 15-year 6% convertible sink¬
ing fund debentures, due 1963. Underwriter—Floyd D.
Cerf Co., Inc.
Price by amendment. Offering—To be
offered initially to stockholders on basis of one $100
debenture for each
Sheetwood
States
Lonsdale Co.
April
filament
and 8,000,000 pounds of viscose staple fiber* ; > v
United
Vide the company with funds for new
construction and?
other purposes. Probable bidders include:
Halsey, Stuart +
& Co. Inc.; The First Boston
Corp. '
' ;
•A
plant with aij annual pro¬
ductive capacity of 4,000,000 pounds of viscose
Sandy Hill Iron & Brass Works, Hudson Falls,
New
a
"
Thursday, April 15, 1948
W. C.
•
A
j
Western
April
10
sideration
Maryland
-
Railway
annual report
to
non-callable
the
first
stated company is giving con¬
maturity on Oct. 1, 1952, of its 4%
mortgage bonds and is. accumulating
cash for the reduction of the debt. About
$2,000,000 set
aside for the debt reduction has been invested in
gov¬
ernment securities and
$2,032,000 of the bonds have been
purchased in the
open market, reducing the amount out¬
standing in the hands of the public to $44,601,000. ft is
possible that prior to maturity the bondholders may be
given the privilege of exchanging h portioh Of the out¬
standing bonds for new general first mortgage boftds.
Kuhn, Loeb & Co. a'nd Halsey, Stuart & Co. Inc. are
pos¬
sible bidders for the
new
issue.
*
>
•
Number 4690
Volume 167
THE
COMMERCIAL' &
FINANCIAL
CHRONICLE
(1687)
47
-
and to the housewife and the per¬
living
son
'*
I'll
(Continued from'page 6)
.•
v
pools from 10%-to 20%, arid we
shall tax bookmakers at the dog
according to
scale of so
/much a night/ varying from r£6
to £ 48, according to the enclos¬
ure m which the particular bookraces,
a
tell
now
deal
about.
yott
the
with
Let
us
purchase tax first.
and for the second four
it much easier to
understand, and
simplified it
we
three
of
rates
Let
me
what
of
give you a few examples
this
will
If
mean.
you
ate
a
single person, then you
future, won't reach the maximum rate of
in
tax
and 100%.
The tax
which will be seven and
»maker
carries,';; on .his. business'/ exempt classes of goods remain two pence and not seven and six
/That will bring another £11,000,-/; practically as they were, with one pence as now —w until you earn
or
two special exceptions.
The eight pounds, 17
f 000 a year from" betting.'[r;/_'•
shillings a week.
reductions come about by bring¬ If
you are a married man with¬
/ Increase From Brinks/ Tobacco v ing down the present 50% tax to out
children, you won't reach the
7
; /
- i;'- And Betting7-v/WvvVv 331/3% on a very wide range of seven and two
.pence rate until
.All of it, drinks, tobacco and goods such as hats, haberdashery, you earn ten guineas. And if you
of
increase
of
;
•;
*
very
circumstances of this year.
rect
contribution
tax
I who
afford
best
can
,
capital.
invested
It
:
to
of
a
2,000
The
on.
reductions
the
in
,
those with
or
£
cases,
chase tax amount in all to
000 000
Helped
a
the full
get
a
The increase
a
Above those limits therb
will be a graduated contribution
r
i
7
have
£5,000
over
a year.
In
v
tribution isi takerf from people
1
other words,
.
w
f
*
a
ments.
a-
six
lih*
of special difficulty to make
contribution to
once-for-all
solving
I
-
over
Altogether^
*
hope
We
being sold
With
ask
you
workers
and
to
to
help
—
from
"this
raise
special
•
Si
:Onee-for-all contribution; not all
; of it will actually; come in
of
the
three
has
this
I hope that every one who
::tP
and all
its evil consequences.
Now I
3%% bonds, due
We
us.
is
an
Europe.
,
encouragement
challenge to
a
every
drive
must
This
to
our
way
free democracies.
our
budget is part of
our
re¬
this challenge. But the
will be given by
sponse to
final
of
one
forward
improve
the
standards
of
people and to strengthen the
answer
what all
of us do in the homes,
the factories, the fields, the mines
and the offices of this our be¬
loved
country.
~
of
'■
•
*
*
I
*
earned
will
also
from
•;
Life
loan due June 1, 1965. The
ceeds
are
"•
" '
;.
..
George
Stern
K.
&
Co.
&,
Kansas
laus &
City,
and
Stifel,
*
.
*
;./■
three retail stores, and
Nico-
Co., Inc. of St. Louis
*
,
$250,000
vide additional working capital.
The
company
now
operates
and
both of
Co.,
in¬
The net proceeds are to be used
to pay for expansion and to pro¬
*
Baum
Brothers
and
Dec, 1, 1962 of Wm. A. Straub,
Inc. (Mo.) at/100 and interest.
pro¬
•
*
*
loans
working capital.
5% sinking fund debentures due
to be used for capital
expenditures.
bank
to be used
dents of Missouri only
Insur¬
3\i% sinking fund
on a
Blosser
&
are
& Co., St.
Louis, recently offered to resi¬
additional $750,000
an
Metropolitan
Co.
ance
is
sales
for
the
fourth
a
expected to be
soon
Net
on
opened.
ended
year
April 1 participated in the pub¬
lic offering of an issue of $40,-
Aug. 31, 1947
000,000
ended Nov. 30, 1947 to
Ohio
Power
Co.
amounted to $1,859,295 and for the three months
first
mortgage bonds, 3% series due
1978, at 100.99 and interest.
while
net
$491,173,
after income
profits
taxes totaled $20,094 for the fis¬
'
.'
An
issue
of
"l
100,000 shares of
cal year and $5,608 for the quar¬
ter ended Nov. 30.
Parkview Drugs, Inc. (of Kansas
re¬
City)
the
get
Straus
111., and associates.
Dempsey-Tegeler
;
with Goldman, Sachs & Co. it has
borrowed
retire
crease
rangements made in conjunction
of
income
by
Chicago,
to
Stix, Baer and Fuller Co., St.
Louis, announces that under ar¬
} - counted as
do the invest¬
so
share
of
the
allowance
10)
page
The net proceeds
preferential
participating
the lower tax rate,
carrying
to
come
reliefs/
America
and
per
an
cumulative
stock,
par
DIVIDEND NOTICES
$4.50,
annual dividend of
the big income including the six
shillings for 200
35 cents per share, was offered
object is to re¬ pounds of their income as against
publicly on March 16 at $5.25
duce the top rate of tax the only 75 now. In
addition, I pro¬
The rest of the taxes will reworker will formally have to pay. pose to increase the
exemption
I main practically the Same as last The first
thing we have done to limit below which all incomes
DIVIDEND NOTICES
$ year, except for the relief which bring about this reduction,is to are
completely free of tax.:;/ujlr/'k
increase the earned income- al¬
All this will pass over £100,lowance. At present we are al¬
HELP WANTED
000,000 a year, and when you add
lowed free of tax one sixth of
that to the
£480,000,000 of in¬
everything we earn. This means come tax relief
already given by
that for every pound you earn
my predecessor, and the
£ 400 £
;77:>''y7 The Board of Directors of the
the most you can he asked to pay
000,000 a year in subsidies oh
SECURITIES TRADER
in tax is nine shillings
less" a food which
STANDARD OIL COMPANY
wa are going to con¬
sixth/that's seven and six pence.
Long established over - the - counter
v
(Incorporated in New Jersey)
tinue, you'll see that a lot's been
house with substantial capital seeks
We are now going to increase that
done to encourage and help the lias this day declared the following dividends
an
experienced Trader with estab¬
allowance.
tax
Reduction of Purchase Tax
-fcV.'
income;
helping
are
of
terest,
ment incomes up to £500 of per¬
sons over 65.
They will therefore
to help this price reduction too,
get the extra
to that would meanja big saving;
lief, and they
counter the mflationaty pressure
Big Income Tax Reliefs to Worker full benefit of
/ how much they
western
magnificent
promise
of
help which is now being made by
the people of the United States
March 1, 1978 at 100.485 and in¬
pension?' tfre
earned
retailtrs carry/ out their promise
contribute will appreciate
to
income
earned
cause
of
The
(Continued from
first mortgage
shillings. one-fifth; ./That will be a very
purchase great relief to their joint incomes.
12
in
housewife in he*'Chopping/ espe¬
cially if the manufacturers and
-
year.
retail at
reduction
in
•
v;r
v. ^
the
new
of
Missouri Brevities
does not
woman
benefit
shillings, and the benefit
pur
shillings, it is now
all — pro¬
housewives
this fight
against inflation. Save, and don't
spend except when it's absolutely
essential.
And I hope you will
support the government policy for
tax, the new retail price will be l; There is another class of people
11 shillings, which represents a with
whom; T know, we have all
saving of a shilling to the pur
great sympathy,
the pensioner
chaser, or at the rate of one and and the old people with modest
eight pence in the pound. That, incomes to live on. These reliefs
1 hope, will be a real help to the
will'be of "great help to them be¬
t
to
shillings, and the present
high standard
a
our
our
of life of
problems.
our
want
ducers,
allowances goes straight on to the
maximum rate for the rest of her
mentioned
those who
on
invested cap¬
They will be asked for this
year
£50,- shillings and six shillings■- steps
should of income tax because if the hus-
less neces¬
have
chase tax three
invest-
front
year
-
£ 105,000 000
7
is
incOme
Con-
year and they have more
£250
than
'
total
theif
Ibss
hi2000
no special
the
The rest of
kinds.
considerable
ital.
amounts ' to
£26,000,000, which earnings. • In future, she will get
gives us a net decrease of £24,- the benefit of her lower rated
000,000. The way this should work steps on her earnings, just as if
for an article, let's say a pair of she Werd a single woman.
That
knitted gloves, is like this: the means that the husband and wife
tax is being reduced from 50% to can each get 50 pounds at three
33%%. If the wholesale price is shillings' and?- 200 pounds at six
two shillings on: ^ the
pound on investment income be¬
tween £ 250 and £ 500 up to ten
shillings in the pound on invest¬
*
on
I
goods
sary
from
up
ment incomes
&[
£250
year.
,
•
less than
to
production, We'll
way out of our present
difficulties, cooperating with our
household
and
the burden will fall
'
is
investments
down
formidable special allow¬
very
ance, the married
pur¬
clothing
utensils of all
year,/and this
quickly in the price, hand has already had the benefit
and I hope you will watch to see of these
steps at the lower rate,
that they are.
the wife after all her tax-free
whose income from
a year
Wives
we
tle
the efficiency in
essential for the family
so
food,
as
be reflected
income of over
an
Then
wireless sets, trunks and
bags, clocks and watches, and so
perhaps
in
most
\ cases, be paid out. of capital. •'It
won't affect any one with an in¬
come of less than
£2,000 a year
:
many
are
ments,
fight the
will in
ana
pressure
These-
Working
class goes up
the less es¬
present 50%
66%%;
particularly want to
sential goods like non-utility fur¬
help married couples where the
niture
and
furnishings,
photo¬ wife goes out to work. At present,
graphic
goods,
musical
instru¬ although husband and wife get
it,
really
is
special levy to help to
inflationary
pay
sums
to
with large
is those
that
of the
those
from
not
alike
The rest
number of others.
a
liquor,
them,- but because those things countries
and
special
So we
special once-for-all di-
propose a
ize
are
tooth
which is
revenue,
/not enough for the
ironing
and
drink
smokers, those who bet and, to
some extent, by way of purehase
tak oh less necessary goods.
Not friends in the Dominions and Col¬
because anybody wants to penal¬ onies and with the democratic
carpet are married and have two chil¬
boards, dren, then not till your
earnings
brushes, toilet soap, sta¬ reach 12 pounds
eight shillings a
tionery, toys, games and sports, week.
coverings,
floor
sweepers
only about £76,000 000 by way
in¬
down
personal incomes
and encouraging price reductions.
If you'll do that and we can set¬
work
this
carpets,
/betting, the whole lot, will give
us
66%%,
small fixed
a
who
those
on
having only
by
.
331/3%,
and ten
pence;
We rearranged that so as to make
on
come, all of whom really deserve
itw The extra cost of this will fall
keeping
NATIONAL
Our
CONTAINER
CORPORATION
A
regular
quarterly
dividend
of
$0.296875
was
declared on
the 4%%
Cumulative Convertible Preferred Stock
of
National
payable
of
Container
May
record
3,
1948
April
19,
Corporation,
stockholders
to
i
1948.
HARRY GINSBERG, Treasurer
£sso.
i
■i,
An
owner
ment
tax
•.
same
who
can
profitably
rate
Box
G
415,
nancial
\
annual
Commercial &
The
Chronicle,
New York 8,
Park
29
Fi¬
Place,
N. Y.
to
earned
£400
on
the
six
income
of
;
IS PROFITABLE
earned
services
of
oughly familiar with the mutual
lfnnd /
business *now
available..
Analytical back ground. In
(years
has been Sales Promotion
Manager for
a
fund sponsor.
Would like
firm
tion
fund
recent,
with
to
leading
join
large retail organiza¬
develop sales in mutual
field.
percentage
Willing
basis.
to
work
,»Box
Commercial & Financial
S
on
48,
Chron¬
icle, 25 Park Place, New York 7.
in
income of
for
as
well spent
money
the i future
of
country.
our
dividend payable
A
govern¬
;
in capital stock of
(5) shares of such
stock foreacii two hundred (200) shares
of $25.00 par value outstanding.
Such dividends will be payable June 10, 1948
to stockholders of record at the close of busi¬
ness
3
P.M.
on
May 3, 1948.
shares will be issued.
Manufacturing
Company
;
has
declared
twelve
,
share..-./
this Company of five
No fractional
and
dividend
a
one
-
increase
to
record
ness
share
per
common
the
at
close
50
Checks
be mailed.
will
Scrip certificates will lie
JOHN E. McDERMOTT,
You in the future
and
come
reliefs,
to
are
V'
the social services
as
fight
DIVIDEND NOTICES
nine
Now
the
to
budget
and
give
producer
propose
in
the
pound.
shillings
200
pounds
in¬
Colonial Mills, Inc.
benture Stock will be paid May 1,1948,
498 Seventh Avenue
to
stockholders of record April 26, 1948.
MON : A
Meeting Notice
per
quarterly dividend of 20 cents
share on the "A" Common and Vot¬
'
NORFOLK
AND
WESTERN
ing Common Stocks will be paid May
RAILWAY
-a...company
.
15,
Roanoke, Virginia, April 2, 1948.
NOTICE OF ANNUAL MEETING
r-.V
to keep the first
lings, but to make the next step
DEBENTURE: The regular quarterly
dividend of $2.00 per share on the De¬
NEW YORK
-
The
to
and
stockholders of record
April 26,1948.
OF STOCKHOLDERS
A. B. Newhall, Treasurer
Annual
Meeting of Stockholders of Nor¬
Railway
Company will
b"
held, pursuant to the By-laws, at the principal
office of the Company in Roanoke.
Virginia, on
Thursday, May 13, 1948, at 10 o'clock A.M.:
•
1) to elect three Directors for a term of
folk
1948,
The Board of Directors of this
Corporation has declared
25 cents per
ital
Western
SWmdOtt
of 75.
If you take into ac¬
Framingham, Mass.
stock
able
count the tax-free earned income
allowance
I
have
already
men¬
tioned/you actually only pay for
the first step two
and five pence
Board
act
of
upon
a
Directors
stockholders
to
issue
recommendation
to
rescind
8100
of
the
authoritv
Common
share
on
the cap¬
outstanding,
April
stockholders
three vears,
(2) to
a
regular quarterly dividend of
'
stead
18, N.Y.
"A-COMMON and VOTING COM¬
shillings, and the test
shillings
we
six
inflation
to, the encouragement
step of 50 pounds at three shil¬
at
^
our
pounds is taxed at three
shillings, and then 75 pounds is
at
Secretary.
•
.
allowances
taxed at six
busi¬
of
May 1, 1948.
fhe
in
help
present, after you've expand.
had' the' benefit of the tax-free
So die keynotes of
next
of
half cents
on the out¬
stock of the
Company, payable on May
21, 1948, to stockholders of
(I2V2C)
standing
issued in lieu thereof.
know that at
mutual
to
going to do all
are
economize
'
capital stock:
A Cash dividend of $1.00 per
of Directors of
Board
cost £408,000,000
Checks, stock artd scrip certificates will be
limit ."is
pensions, insurance, and al¬ mailed.
-i
technicians,
A. C. MINION, Secretary
lowances,*: and so on, including
men and managerial
April 12, 1948.'/V/;/;' - / ■
staffs.
We' feel they need some the new-health service. That's a
encouragement* in v the hard job figureiwhfeh'^will no doubt grow
This
personal
thor¬
man
a
we
to
can
This year they
whatever they may
The
we
£1,500 gard them
that they are" doing today;1
SELLING MUTUAL FUNDS
Though
top
and
„
ment; expenditures
an
particularly
professional
r-V.'-;
seven
£2,000.::3y'/;|v/:'
:
:
SITUATION WANTED
reduces
from
the
on
the
also, we are
and two. We are
not going to tamper with the so¬
also increasing the maximum tax
cial services in any way. We re¬
free allowance from £250 on ah
Replies will he held In strictest con¬
«
this
tax
one-fifth, workers in these difficult times.
before
was
pence to seven
pur offer specially attractive.
fidence,
of
it
as
And
war.
use
capital and our complete trad¬
ing and research facilities should find
more
7;.Vrr- ■
to
,
partfflfiY of ah Invest¬
or
firm
free
the1
lished clientele,
The
Wentworth
27,
pay¬
1948 to
of record
April
16,1948.
bv
Stock
COLONIAL MILLS, Inc.
Stockholders of record at the close of business
EDWARD A. WERNER, Treasurer
and
bonds
par
convertible into such stock.
April 23,. 1948, will be entitled to vote at 6uch
meeting.
By order of the Board of Dfrectors.
L.
W.
COX, Secretary.
April 5, 1948
"
& FINANCIAL CHRONICLE
COMMERCIAL
THE
(1688)
48
Thursday, April 15, 1948
to increase required legal
of banks, shows that Mr.
power
BUSINESS BUZZ
reserves
Eccles
is
taking
seriously the
promise he got from Mr. Truman
on...
when the President demoted him
to
Vice
(rem the Nation's Capital
President Truman and Senator
targets of the
ice this year so far
not-
Taft appear to have been the
concerned.
of John L. Lewis in first
maneuvers
.tJt
Lewis
what
to
as
•
targets.
ceived •
If
Senator Taft retains the curse,
he
for
passed
was
for
over
Bridges.
conjunction with the accepted in¬
terpretation of affairs of all gov¬
hottest battles
.
of the present
ernment
proaching
minimum,
an
a
Taft^Hart- l
could prove the
He
vi
ley Act
dud
was a
House
country
sally
pansion
,
rials.
Af the
.
he I
time
same
boss
first
challenging'
broadly what he called "the in-:
iquitous Taft-Hartley law." No¬
body dared put him in jail for;
labor
*
two
sailed,
would
coal
he
units',
become
it
than
was
rival
Lewis,
This
leaders
labor
it
V
Monday. Second, although hat¬
ing
1
until
up
is
splitting
it
*
issue
which
open
the
tion
:0fM
•
considerations
such
fine and the
a
Federal
sure
of
mere
trifles.
a
:
ing, and the House leaders
were
erally
backing
the
33'
'
'
■
,
: ffi
3,
Employment Agency?
I said 'send me a clerk'not jerk!"
•'"-T,
Republicans in control of Con¬
been
handy law.)
any
influential members in the
move
'
are
leaders to
business.
bus
ing out of specific controls
the
to
rule
of
law—unless
Had
sands.
much
the
strike
longer*
Congress
On the
would
law authorizing the Adagain to take over
a
ministration
the coal mines.
This would have
{ permitted
the
Lewis to wring from
Truman Administration the
33
■j concessions he wanted.
at
.
it
.
■
■...
■
As it worked out, Mr. Lewis
;
seemed to make monkeys of just
about everybody.
He made the
Truman Administration and the/
White
House
look
silly,
by-
;
keeping
I
despite
the
coal
their
strike
frantic
going?
efforts
to?
stop it. He made the Republican
majority look futile by defying5
their Taft-Hartley labor law.
Mr. Lewis, however, by
f
propriate selection, removed the
monkey
.
from the Repub¬
Congressional
organiza-^
lican
curse
tion. He allowed Speaker Marf"
tin to make the decisive Tntervention
which,
made
possible
the later reopening of the mines,
t
Martin picked Senator
1
another leading Republican, to
make
the
Bridges,
settlement.
Only
one
hand the House has
avoided
giving public housing any
aid and comfort, even to denying
such a proposition the forum of
committee hearings. On the other
hand the Senate has worked so
hard for public
housing that last
it reported out the TaftEllender-Wagner bill after only a
couple of days of perfunctory
hearings.
This year the Senate
Banking Committee reported out
the Flanders bill, largely written
by Truman's Housing and Home
Finance ; Agency, with only two
days of hearings, devoted to tes¬
timony from proponents of the
bill..
year
'
*
'
•
In
"
•
*
>"•:
;
Stood for
3
"M,
'
(
1
Victory
and not
1'
V;
)''
ord
from the
are
ma¬
cred¬
ited with being almost decisive.;
Taft generally
has opposed in-;
mortgage
features.;
flationary
Others favored sueh features but
opposed public housing. HHFA
was amiable to all.
It not only
"assisted" with writing the Flan-i
ders amendments to the T-E-W
bill, it helped everybody else to
write
his
thing
housing-like.
amendments
All
been
have
omnibus bill.
to
tent
one
any¬
Senate
Veto
so
of
vehicle; intended to
*
The
it
3
'''"''y
immediate climax
the Senate.
settled
Then the next
,
,
Senator
will
decision
and
all, assuming Senate
his bill.
That
will
passage
the
bill
House,
FHA's Title VI for
Saving
technical
of
life
one
year.
;f
123 South Broad St.,
Philadelphia 9, Pa.
Cteer thru—Montgomery, Scott & Co.
?>
Mew York A Philadelphia
new
.
much explanation of
parliamentary
proce¬
II, Eccles
H.A. 2-8780
:
/
v
S
Ralston Steel Car
Oregon Portland Cement
it '
y
/■■',-
Riverside Cement A & B
Spokane Portland Cement
-
LERNER & CO.
{■« yt;. V,'
the fact that Mr
Eccles went to the Joint Economic
Committee
f
.//
Security Dealers Ass'n
VI,
type which
'•
^
Y.
Trading Markets:
guar¬
Title
N.
Exchange Pl.t N. Y. 5
Teletype N. Y. 1-1397
Incidentally,
of
J /'/;,,V
;///,'^?.■.'/ 'y:/•'/
today."
bill to
the
the
40
the
FHA's
ESTABLISHED 1919
v
Membert
state¬
periodic
offering
already passed by
extending
war.
M.S.WlEN& Co.
would be appro¬
priate for combating a serious
deflation, and are the opposite
of those appropriate in an infla¬
tionary situation such as we face
a
whether
be
to attach the big housing
a
as
:3:':®-;;'"Soya Corp.
"These three proposals are of
j
of
make
Tucker Corp.
V
'
V.-
changes in Title
wrote::y';
the
have
to
matters
preparation for
Tidelands Oil
shot at the omni¬
negotiated after
under
antees
question is what
Taft
a
saying
-mortgages,
is
the opposition will do about it.
touchiest
control like, for in¬
little
Dorset Fabrics
government
should fight inflation. Referring
to proposed provisions of the
omnibus bill setting up a sec¬
ondary market for guaranteed
tomorrow.
or
eco¬
which
over
Remington Arms
figure
can
'v'-
'=
issue
to
ments
This issue may
today
or
means
contingent
Memphis Natural Gas
s
pains by that part of
doesn't
much
have
^ whether the big housing bill will
be
force
could
the Administration which
position in certain House quarters.
p
no
which
inflation;
to
talk
the
need
for
i
,
Investment Securities
10 Post Office
W.j
Square, Boston 9, Mass.
Telephone Hubbard
1990
<•
Teletype BS 69
legislation authorizing a stand-by
the
from HHFA, as ablfc diplomats.
Of
course
there
were
other
Teletype—NY 1-971
HAnover 2-0050
working
Firm
Trading Markets
';
Empire Steel Corp.
■
Susquehanna MiHs
FOREIGN SECURITIES
for the omnibus bill.
:
(Note: / Under
HHFA
the
law
lobby
registration
one runs a
act.
But
are
r*ARL MARKS & r.O. Inc.
•
:
'
r
:v/
controls and public
housing, he can be sure of get¬
nice fresh indictment from
FOREIGN SECURITIES
/:
SPECIALISTS
50 Broad Street
Hill, Thompson & Co., Inc.
T
:
devoted
to fighting
a
V
if
trade association, part
.of whose activities
ting
.
the
do all sorts of lobbyr
can
ing without running afoul of the
Herbert H. Blizzard I Co.
own
Solvay Amer. Corp. 4% Pfd.
bus housing bill
aid Senator Taft, just for that rea¬
son will the bill run into stiff op¬
•■V"
,f
*
Board, took
...
he might want to hire some boys
also
restriction of
i';"
/ •'
As if to add to the diversion,
.
libera], "assistance"
a
re-"
legisla¬
neatly
for
If State Secretary
lobbies
a
Marriner S. Eccles, Vice Chair¬
man * of ; the
Federal Reserve
.
And, because the T-E-W bill as
by
Senator
Flanders
is
'
'''
-■
modified
HHFA,
every
such
some/smarter way to duck it.
public hous¬
ing. Even if the Senator did have
any
unconscious lukewarmness,
the housing boys have maneuvered
him into a position where he must
the
it
less the House leaders
lukewarmness toward
with
r
coal strike
Marshall studied this politicking,
powerful
a
development
stance,
despite the fact that
All Issues
:
offsetting
public housing had not been re¬
ported by committee; that is, un¬
Senator to indicate- any
work for his program.
Also
vote
House
bill, but only to make a rec¬
for it.
Yet there is nothing
pass
procuring the political
gathered into
v
*
teriel for this impending offen¬
proponents
Wasn't it encouraging when
over
•;>3
sive, HHFA's activities
ap-[
i
industry.
this
continued
have been forced, in order to re-r
solve the immediate crisis, to have
passed
the building
wishes of the House
"pigeon hole" the whole
the
spite
developing scrap. The omni¬
public housing bill is Taft's
principal bid for support from the
Left.
Some say they doubt that
Mr. Taft actually wanted to push
has been the greatest single Con¬
labor
»
fancy provisions of the Senate bill.
Such a vote could be forced de¬
this
gressional influence for the wip¬
in
public housing and all the other
b-y'
it
widely suspected that there
GOP Presidential politics in
to end government controls, and
the coal shortage progressed so far
as to endanger the lives of thou-
•'
'
i
would be to force a House vote on
1
::
,
It is
election year to have passed puni¬
tive
legislation
all
subjecting
■!
,
v^
The lat¬
most
does
Eccles,
for
operations of their
they have
gen¬
the
of
one
like
demand
credit.
nomic
the effect of such a move
dure,
Department of Justice under
the
'
has
CEA,
the
they must also be made the
opposition
leadership of Wolcott.
ter
■.
it
was
would contribute toward
'
<
of
44Acme
gress would not have dared in this
:
r:~
<
to the fray behind public hous¬
cen¬
court
in
this,
•V". Thus it appears that banks are
not only responsible for checking
>1
*•»/
.*
.
any
swM1
'
<
;.i.
Taft throwing his influence in¬
Against
•
i'r
,
I'<■'''/r\
with
his aid."
the risk of
;j
i
is
leadership
exi
the
to be whipped but for
authorizing
bank
,S
f
GOP
Congress,
an
wide
would have been forced to go to
...
newed
-I
■:
acknowledge
Then
.i
appropriations for slum clearance,
"yield insurance" for rental
properties.
33' '
„•//"
'
remote
;
the coal strike, the tax cut, and
the new preparedness program.
rental
for
restricted
intimate that inflation
glorious secondary
more
.*
•
credit: through the
voluntary anti-inflation program
itly
and
more
even
a
sup¬
of
fair way
market for home .mortgage loans,
was¬
prospect of getting
the
~
if
First,
reasons.
amortization
erated
the
is
Association took the leadership.
While the CEA does not explic¬
industry with subsidiaries, infla¬
tionary credit devices, and the
like.
These include special accel¬
would stand out in front as the;
that
in which the American Bankers
/
for' public
against, the shut-off of one of its . lions
housing, and
most fundamental
raw
mate-; otherwise wet-nurse the housing
*
will get
you
role
new
believed that banks have
successfully
will vote hundreds of mil¬
gress
a
Outside of CEA it is univer¬
The issue is whether the Con¬
instru- i
as an
ment for protecting the
Banking Committee*
of
banking system
posed to play.
-;
Chairman Jesse P. Wolcott of the
Lewis was on top of the world,
economists,
Idea
nation's
..
*
:
,
read
you
Council of Economic Advisers in
One of the really
Industrial production resevere set-back.
With
a
coal stocks reduced to a
Congress is
as
carefully the last
quarterly report of the President's
"
Congress is now ap¬
preliminary climax.
On the one side are ranged the
j(&r. Lewis is .from his viewpoint
new
dealers, including the big
now in a beautiful position to ar-r
gue—with the
operators again guns of the Truman Administra¬
Republicans, and
whenever his whim urges him to tion, "liberal"
3\(3 3'3"
/
do so, say any time in the next Senator Taft.
On the other side are ranged
month or so.
/.
.: - v
the
economy-minded and con¬
As
everybody, saw
It, Mr.' servative Congressmen, led by
,
handle
However, Senator Taft
Economic Committee.
"shooting®
was
closing down the mines,
other than to hit at the operators
and
the
country. There
is no
doubt that the latter two were
in
promise
does not propose to leave the new
Chairman on ice, but will ask him
to
state his views * to the Joint
closing down the bituminous coal mines and then reopening them or
making a pass at reopening them.
>
,
:'
Until the beginning of the week, this town was speculating wildly
at"
That
should
Eccles
legislative matters relating to con¬
trol of inflation for the present
session of Congress.
Thomas B.
McCabe, the new Chairman, ap¬
parently is going to be kept on
BeVmd-the.Scene Interpretation!
so^ineidental
Chairman.
that
was
/;
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
Markets
,,
and Situations for Dealer* 3
120 Broadway, New York 5
Tel. REctor 2-202GF
„
3
Tele. NY 1-2660
@FedFRASER