Full text of Commercial and Financial Chronicle : April 18, 1946, Vol. 163, No. 4482, Section 1

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19 1946

APR

Final Edition

ESTABLISHED OVER

Sections-Section 1

In 2

YEARS

■

VtUT."

*,<,t
ml

■SI
■vi

Reg. U. S. Pat. Office

New

Number 4482

Volume 163

York, N. .Y, Thursday, April 18, 1946

Political Issues
By A. WILFRED MAY

By MELCHIOR PALYI

points out that an inflationary boom is slowly rising due
increase in money supply, "its increased velocity through spend¬

Dr. Palyi
to

Security Council functions as sounding-board for propaganda and as tool of
power politics.
Widening of rift between Big Three revealed in controversies
over Iran and Franco.
Proposed intervention in Spain motivated by Communist

and the shortages of certain commodities. Holds rising prices
scarce
goods affect similarly prices of non-scarce goods
through substitutions, and that natural bottlenecks are intensified
by artificial bottlenecks such as Government controls.
Predicts,
however, that prices cannot rise in astronomical fashion, though a
much higher price level is in store.
ing
of

inflationary boom is rising

The

fiscal

(♦together

tually

down

Needed: Reconveision in

yeajr

—

paid-

By EMIL SCHRAM*

national

flowing

President of the New York Stock Exchange

income,

Noting that

ap¬

proximately at
the
highest

year,

cur¬

military

of
ex¬

penditure's,
strikes

and

shortageshave
Dr. Melchior Paly!
brought the
physical volume of industrial pro¬
duction

down by one-quarter or
but civilian spending took

more;

notice,

to speak, of this vio¬
lent change which normally would

have reversed the cycle. Nor has
the reduction of the national debt

few billions any appreciable
Practically
month
for
month, department store sales top
by

effecC

by 5% or

psychology is still on, Mr. Schram calls for
as well as in material production.
Sees

war

thought

problem in management of National debt. Attacks
low interest rate policy, and monetizing of debt
through large bank holdings of Treasury bonds.
Holds best inflation weapon is getting public to
absorb war bonds, but holds it can be done only

el. Within half
tailment

version

war-time lev¬

their records of the

previous year (furniture sales by

30%). Instead of the officially pre¬
dicted 6 and 8

(Continued

millions, the
on page

events—domestic

production is in the process of

2096)

address

St. Louis,

Schram

Mr.

Teletype NY 1-210

Cleveland

London

(Representative)

Chamber of Commerce,

Index of Regular Features
on

page

2131.

Stale and

Municipal

Common

Inc.

Mnll FUNDAMENTAL

Established
INVESTMENT

Woonsocket

for Banks, Brokers

Bond Department

and Dealers
MAY

PROSPECTUS

from

30 Broad St.

INCV*rO«ATE»

634 SO. SPRING ST

WALL STREET

NATIONAL BANK

Exchange
Curb Exchange

Members New York Stock
Members New York

HUGH W. LONG and COMPANY
48

THE CHASE

Hardy&Co.

DEALERS

AUTHORIZED
or

FROM

OBTAINED

1927

Washington, D. C.

Springfield

Bonds

Service

INVESTORS INC'

SECURITIES

64 Wall Street, New York 5
BOSTON
PHILADELPHIA
Troy
Albany
Buffalo
Syracuse
Pittsburgh
Dallas
Wilkes Barre
Baltimore

Bond Brokerage

Stock

R. H. Johnson & Co.

and other Exchanges

25 Broad St., New York 4, N. Y.

to Spain's allegedly crucial threat to the world's peace.
Lange's plea largely professed to -be based on Franco's war¬
time sympathies with, and on her help to, the Axis powers.
He
demonstrated his argument by quoting from numerous chummy
(Continued on page 2131)
attention

Dr.

of mass

St. Louis

before the

Pratt's Fresh

Members New York Stock Exchange

HAnover 2-0600

;

reconversion—too slowly in some parts

Prospectus on Request

HIRSCH, LILIENTHAL & CO.

Atlantic.

After yesterday afternoon's interlude called to permit the dele¬
gates to attend the baseball game, they today got around to giving

(Continued on page 2100)

request

Successors to

Tel. DIgby 4-7800

New York 4

BOND

FINANCE

LOS ANGELES 14

NEW YORK 5

Acme Aluminum Alloys, Inc. s
p^pommon & Con v. Preferred

BROKERS

MEMBERS

INCORPORATED

NEW YORK STOCK EXCHANGE

Members N.

i4 wall
st., new york 5, n. y.
.

TELEPHONE-

RECTOR 2-6300

Security Dealers Ass'n

45 Nassau Street
TeL

RBctor 2-3600

Philadelphia Telephone

New York 5
Teletype N. Y. 1-676

Enterprise 6016

$6 Preferred

Conv. Preferred

Dealt in

^Raytheon Manufacturing Co.
$2.40 Conv.
*

Preferred

*Prospectus on

request

HART SMITH & CO:
-

Reynolds Stock Exchange
& Co.

Members New York

New York 5, IT. Y. •
Telephone; REctor 2-8600
•¥$.

ISO Broadway,

Teletype

1-685

Analysis

Universal Winding Co. Com.

Bell

Spring

Brook Water Co.

VTSoIar Aircraft Company

MARKETS

Kobbe, Gearhart & Co.

Scranton

|^ l|etroit Harvester Co. Com
90c

SECONDARY

THE CITY OF NEW YORK

Tele. NY 1-733

CORPORATE

Bull, holden & C9

Mo., April 12, 1946.

Frozen Foods,

Hirsch & Co.

"•*";

trying adroitly to utilize the UN for her own interests

to the shores of the

gratifyingly rapid in others—the minds that direct
that machine are too often out of step with the times.
While we reconvert our machine tools, our lathes, stamping
proofs and machines that they may produce, not swords, but plow-

Nil-Enamel
on

our economy,

Aerovox Corp.4

Prospectus

President

Moscow

Emil Schram

machine

May

fin extending both her political power and her ideology westward

something still distant
from us. True, the clerks in our retail stores may
no
longer say, "Don't you know there's a war
on?"; but the psychology reflected in that odious
expression still seems to be with us, in many
mighty

A. Wilfred

Truman's remark that the anti-Franco agitation by
Communist Poland has a political motivation, highlights the exist¬
ence of that impression among many observers here. They feel that

world, as though it were

respects at least.
While America's

unreliable..,

I V-

foreign—it is difficult to

and

San Francisco Mines

Geneva

seating was accompanied by a
technique in performance, in that the two

{reported exercise of Moscow duress on the Teheran
.
,
.
{government, which has made the Iranians' behavior here ostensibly

correct perspective on the current historyin-the-making of which we are a part.
We find ourselves talking of the postwar
keep

of
num-

Gaumont British

Chicago

the right end.

protagonists of the Spanish question, Britain
Russia,
were
heard exclusively through
mouthpieces in the persons of Mr. Stettinius
and Dr. Lange of Poland.
Sir Alexander Cado¬
gan uttered not a word, and Mr. Gromyko was
entirely mute during the session excepting for
recon¬
the rather pointed question as to why the Council
urgent could not meet on Good Friday,
i
The sharply widening rift between the Big
Three is being constantly more keenly evidenced
not only in the openly-aired diplomatic squabbles
about Iran and Spain, but in "behind the curtain"
maneuverings.
An example of the latter is the

by affording higher yields. Urges more equity
financing and decries regulations that tend to re¬
duce liquidity of security holdings.
Swept along as we are today in an onrush of ;

■

new

Thought and Action

months of the

o u

left, with the "U. S.¬

extreme

real

three

first

at the

This changed

the

reflecting the lineup in the

British team" of Stettinius and Cadogan holding

is ac¬
bal¬

budget

N. Y., April 17—Coincidentally

of power politics being ever more intensively played here is the change in the
seating arrangement at the Council table put into effect today. As a result of the rota¬
slowly but surely.
In spite of
tion in the Presidency, Messrs. Gromyko of Russia and Lange of Poland are seated
year the deficit is slashed by

tlxe

—

anced

current

HUNTER COLLEGE,

game

bil¬

$25-odd
lions

the

that in

the fact

ideological and political aggression.

New
52

York

WILLIAM

Members

Security

•'

Dealers

ST., N. Y. 5

Bell Teletype NY

*■

request

ira haupt & co.
Members
and

;

Curb Exchange

New

York

Stock

other Principal

Exchange
Exchanges

Assn.

HAnover 2-8980
1-396

111

Broadway

New

York

REctor

2-3100

10 Post Office Sq.
Boston 9
Hancock 3780

Tele. NY 1-1920

arew York

Montreal

Toronto

Direct Private Wire t# Boston

■

Commercial

the

2070

& financial chronicle

Thursday, April 18,

1945

trading Market» in:

Stand. Gas & Elec. Com.

Greater

Universal Camera

KING & KING
1920

BO#EN^

P. R. MALLORY

Economist, Irving Trust Company, New York CJity

4 CO., IRC.

Dr. Bowen divides the economic future into three

U. S. Sugar

Established

lidlYARD

Inv. A
N. Y. Indust.

British Type

periods, viz: (1) Transition period ending in 1946;
(2) the catching-up period .ending in 194&-49 and (3) the longer run period, extending beyond 1950.
Fofr the first peridd he predicts a gross national product near the capacity rate of $170 billions; for the
second period (1946-50) h£ forecasts a slight rise followed by a declitfd of national product to $145L-ll*
iL':i
«y- ;L«
on/I hJfrWiontc " and thsif
there
$165 billions. Cautions that conclusions are "in the realm* 01 opinions and judgments,
are Unpredictable factors which may alter deductions.

Bought

Sold

—

Quoted

—

Members

York

New

Nat'l Ass'n
40

Security

Dealers Ass'n

of Securities Dealers, Inc.
HA 2-2772

Exchange PI., JfT.V. 5

BELL TELETYPE NY 1-423

Today America expects, and is
preparing

for,

chasing

ample

By Henry

impa tiently
for the
ised

Member, Editorial

prom-

clamoring for
our
goods.
Bus i

Stock

Baltimore

120

Exchange

nf i d

One

Howard

Bowen

outstanding
American

200 shares

which

s m

has

FOR SALE

been

characteristic

the

W. & J. Sloane

people. Even the tem¬
of serious unemploy¬

which,

follow the end of the

was

has not materialized.

unemployment

Company

has

predicted,
Up to

not

war

now,

reached

three millions.

has

Common

been

teristic
Even

the

outstanding charac¬

the

American

temporary

people.

wave

York

predicted, would follow the end of

Curb

Exchange

Nassau Street, New York 5
.Telephone COrtlandt 7-4070
Bell System Teletype NY 1-1548

^ew York, New York City, April

10, 1946.

(Continued

page 2104)

Byrndun Corporation
Common

Campbell

A. S.

Common

Central States Electric

Lincoln Bldg
Capital Stock

maKe

relation¬

shall

princi¬

thought to be deter¬
all costs of production,

were

determined by prices.

REctor

Such

short

picture. than will

The

afford to

ary

pay
can

ABITIBI

Hood Chemical Co.

enor¬

POWER &

for

MINNESOTA
STEEP

Common & Preferred

producers

are

what

Security DealersAissn.'

derived

1127

PAPER

the

the picture sells for

the

For

inc., Com.

are

value

worthy

Consolidation Coal

Western

China

5s/2000

Minneapolis & St. Louis R.R.

not

Wage

are

low

niggardly

Prospectus

Common

Gude, Winmill & Co.
Members New York Stock Exchange

waft St, Ne#York 5. N. Y.
Teletype NY 1-955

DIgby 4-7060

This

not

the

Chinese
or

generous.

in China

policy"

Issues

Amer¬
Wages

because the

"follows
higher

Dixie Home Stores
Macfadden Pub. Inc.
Pfd.

Com.

Southern Textile Issues

low-

the

United States because the Ameri¬
can

Teletype NY

employer

"follows

higher

*An address by Mr. Hazlitt
fore the

be¬

Academy of Political Sci¬

1-672

ence.

M ARLIN-ROCKWELL

April

11.

1946.
on

C E.de Willers & Co.
Members New York Security Dealers

120 Broadway, N. Y. 5,
RFctor 2-7630

Common
on

Curb and Unlisted

Request

Teletype NY

Western Union Leased Line Stocki
International Ocean

BOUGHT

MICHAEL
—

SOLD

—

QUOTED

Prospectus Available

Troster,Curries Summers
Members N. Y. Security Dealers Ass'n
74

Trinity Place, N. Y. 6
...

1-2361

Jefferson-Travis Corp.

Pacific & Atlantic

Trading Markets

Bought-—Sold-—Quoted

Ass*

N. Y.

page 2098)

Securities

ion, Inc.

"'District Theatres Corp.

All

the

are

high

because

employers

5s/46

Colonial Stores
and

States

Pacific

Chicago, Mil., St. Paul & Pac.

with

other words, wages

Chinese employer

CORPORATION

Common

Tele. NY 1-2908

Buckeye Incubator
Consolidated Film Ind.

Banks, Brokers <fi: Dealers

Avon Allied Products

Harrisburg Steel Corp.

HAnover 2-9470

and the meaning

doqtrine

(Continued

St., Now York 4, N. Y.

Members New York Curb Exchange
WALL ST.
NEW YORK 6

productivity.

ican

RtiCK IRON MINES

Telephone BArclay 7-0100

Member* New York Stock Exchange

ready. to "advance'

from

employers

ONTARIO

Request

Teletype NY 1-1140

it that the

all other • salaries and wages. The
valtie of the workers' services is

United

Members JV. Y. Stock Exchange and Other
Principal Exchanges
115 BROADWAY
NEW YORK 6, N. Y.

Hanover 2-4850

pay

Tt:is so/in the last analysis,

low

Goodbody & Co.

Simons, Linburii & Co.

Prospectus

Frank C.Masterson & Co.
^.

X this

Canadian Securities Dep't.

HAnover 2-0600

can afford to.
pa,y: more for
picture because they, know
that a larger public will pay to
see
if. It is because they know
(or believe) that the public is

PAPER, Common & Preferred

BULOLO GOLD DREDGING

United Piece Dye...

25 Broad

they

turn

BROWN COMPANY, Common & Preferred

Northern New England Co.

X his high sal¬
sell its picture

products they help to create.

We Maintain Active Markets in U. S. FUNDS

Mills

see

company

exhibitors;

Wilson Brothers Com.

the

mously oversimplify the problem;

American. Molasses

Bowser

pay

producing

because it

for

Hotel, Inc.
'

More people
to see him

Concept

statements-

2-7815

(Va.)

Common Stock

money

that determines what X is
Endorses "Austrian"

Teletypes—NY 1-1126

appeal."

(

BROADWAY, NEW YORK

1-1919

Central States Elec.

the biggest

has

pay

can

Members^.,

Tel.

Bell

because

Henry Hazlitt

ples for granted, .without present¬
ing the arguments for them. And
though they are quite traditional
principles, it may be helpful if I

York stock Exchange
New York Curb Exchange

Teletype NY

take, for ex¬

will

basic

"box-office

certain

New

120

St., N. Y. 5

free economy and

obliged, to be¬
gin with, for
take

Broadway WHitehall 4-8120

Bell System

only $50,000, and Z, an extra, gets
only $5,000? Most people recog¬
nize immediately in this case that

prices.
I

salary of $200,000 a year, while Y,
who plays supporting roles, gets

ship of wages
to

StocH Exchange
Members New York Curb
Exchange

case is

involved

Members New York

likely to be clearest if we assume

problems

Edward A. Pureed & Co.

ample, the salaries of motion pic¬
ture actors.
Why does X draw a

the

% Preferred

Publicker

Belf Teletype. NY 1-1843

Members N. Y.

The

the product.

tne

arbitrarily to
only a few of

were

Telephone: WHitehall 3-1223

S7 Wall

that

20 Pine Street, New York S

Colonial

elements

tne

salary, on the same prin¬
but
costs
of
production
were
ciple that a publisher "advances"
thought of as consisting ultimately- a promising auth'Of. part of his
of costs of labor. The "Austrian" expected royalties. X's
salary, in
school, reversed this view, it held short, depends. upbri, and is de¬
that prices were determined by rived from, what he
contributes
marginal^ utility and : that wages to the total value of the prodtict

H. C. BRUNS & CO.

<,<

kind, I aria

mined by

Bought—Sold—Quoted

determines

pioduct

prices

Guaranty Co.

Common

ihe

value

compelled

indicate here that

may

begin by at least confessing what
they are. In the view of Kicardo
arid his disciples,' prices were de¬
termined by Wag&s. More broadly, ultimately going f6

Home

example,
s:'An address by Dr. Bowen beeore Savings Bank Bond Men of

confine myself

of se¬

Vanderhoef & Robinson

talk

the

rious unemployment, which, it was

New

this

porary wave

would

Electrol
Central States Pr. &
Lt.

analysis is based on the socalled "Austrian" view. The value

short

branch offices

our

Americatri Potash B

own

whole

but

well

book.

ment

tfembera

La.-Birmingham, Ala.

Anderson Pritchard

down on this program as
broad, and has so many

subject is so

That

be the subject

opti-

buoyant

Prices."
that

could

N Y

1-1557*

Tennessee Gas & Trans.

and

aspects,

wages are

The subject of my address has been set

"Wages

of that

return

upholds "Austrian" view that

price ceilings.

e n c e

sense

can

1-1227

esses,

prevails.

Broadway, N. Y. 5
WOrth 2-42.30

Bell Teletype N.

anticipating a
lush market,
are
rapidly
preparing for
large - scale
p r o d u ction.

II
Members

"Times"

of New York

Board

New Orleans,

determined by
prices.- Asserts current Federal wage-price policy will wipe out
profits of marginal firm§, disorganize production and create unem¬
ployment. Terms it a delusion to imagine wages cain be raised by
some ovefafl percentage Without affecting prices.
Contends our
monetary inflation combined withj goods shortages makes wageprice spiral possible and that hehce inflation must be combated
by dealing with the monetary cause—and not through wage and

products.
Foreigners' are

Common & Preferred

Hazlitt*

Exchange

St., New York 4.

HAnover 2-0700

Direct wires to

Economist

war

GOAL

25 Broad

abun¬

dance' of post¬

ELK HORN

Members New Ydrk Stock

Wages Gild Prices

pur-

waiting

are

power

Steiner, Rouse & Co.

in¬

Con¬

activity.
with

armed

sumers,

period

business

tense

Teletype NY

HA 2-2400

•

WALTER KANE, Asst.
Mgr.

Telegraph Co.
Telegraph go.
Co-

Southern & Atlantic Teleg.

Empire'& Bay States Teleg. Co.
bought

J-G-White & Company

sold

quoted

INCORPORATED

37 WALL STREET

1-376-377

Private Wires to Cleveland
Detroit
Pittsburgh - St
Louis

HEANEY, Mgr.

NEW YORK 5

ESTABLISHED 1890

Tel. HAnover 2-9300

Tele. NY 1-1815

Members New York Curb Exchange

Arnhold and S.

Chicago Stock Exchange

39 Broadway
Digrby 4-3122

New York 6
Teletype NY 1-1610

INC.

30 Broad St.
WHuenali

3-9200

New
Teletype

York 4
NY

1-5*-

163

Volume

THE COMMERCIAL & FINANCIAL CHRONICLE

Number- 4482

New Issues

or
B. S.

proposed rule to prohibit "insiders" in dealer firms from i
participating in new stock flotations would hinder sale securities ;
of big corporations and close capital markets to small ones.
SEC's

The contention

In Continental

European wartime price controls generally were
successful, but owing to production difficulties, monetary problems

thereof, in certain instances, the gen¬
eral public is unable to secure as many shares of these issues
at the original offering price as would otherwise be the case.
But it does not follow that it is wise for the Commission to
do anything about it. In fact it seems quite obvious that the
SEC's suggested remedy will be worse than the ailment
look at the entire subject of new issues and the

current wave of under writings

from

realistic and practical

viewpoint, here are some important factors that must be
considered. The main reason that, many of the larger, and
most of the smaller issues of lesser-known companies, have

^successfully marketed during recent months is that a
favorable public attitude regarding STOCK SPECULATION
has once again reasserted itself.
The emphasis is now on
been

speculation, NOT INVESTMENT. As a matter of fact, some
companies that have gone to the public for funds in the
recent past have little or no record of past performance and
their future is in the laps of the Gods.
Any security dealer
who offered newly created stocks in this and other cate¬
gories to his customers in the last six months would have to
admit (if he were honest about it) that in many instances
he could have selected any number of old, seasoned stocks
that offered! better speculative opportunities.
Why, then, were the new issues successful? " As we*
said, the public is in a highly speculative frame of mind

have

far

acute on

Continent than in U. S.

have laid
may

stock

obsolete

That

Dr.

Klopstock de¬
scribes the currency-reduction and freezing methods pursued in
Belgium, Yugoslavia, Denmark, Norway, Holland* Czechoslovakia,
Austria and Finland. Declares German monetary situation has
deteriorated alarmingly** and Hungary and Rumania are suffering
hyper-inflation. Concludes monetary reconstruction in Balkan coun¬
tries will depend largely on rebuilding plant and equipment* trans¬
portation and other non-monetary elements.
are

itself.
we

THE EGG
AND I.O.U.

Economist holds

It is also a fact

that as a consequence

and company

Economist—Foreign Research Division, federal Reserve Bank of N. Y.

insiders profit by their partici¬

fast-moving new issues is valid.

Europe

By DR. FRED H. KLOPSTOCK*

of the Securities and Exchange Com¬

mission that in many cases

pation in

2071

and

egg,

may

yours

any

dividends

I. O. U.'s—but We

have been

won't be hard-boiled about

buying it!

Obsolete Securities Dept.

STREET, NEW YORK

WALL

Telephone WHitehall 4-6551

Hotel

Commodore

One of the most

encouraging features of economic rehabilitation
Europe is the large measure of success achieved by a number of

nations

their fight

conditions

against

tion.

Several

andNorth-

Europe, by
employing
ern

novel counter-

inflation tech¬

niques

have-

attained

high degree of
monetary sta-

bility,

*The

actually

been

able

Fred H.

Klopstock

views

statements

contained

L.J.
Members New York Security Dealers Assn.

30 Broadway
New York

institution

6, N. Y.

HAnover 2-8970

Teletype NY 1-1203

represent

the

Dye Works

Broadway

the per¬
sonal opinions of the writer and
do
not
necessarily reflect
the

nations

have

the

conform

.-this* article

and

some

not

PlecO

Huron Holding Co.

spring of 1946
any uniform
pattern. Certain nations, partic¬
ularly in Southeastern Europe,
have
traveled
a
long distance
along the road to monetary dis¬
integration and show little prom¬
ise in checking runaway prices.
One country, Hungary, has only
recently been overtaken by mon¬
etary chaos with the pengoe drop¬
ping to an infinitesimal fraction

infla¬

countries; not¬
ably in West¬
ern

United

Clyde Porcelain Steel

with

which he is connected.

bring about a price decline. But
European monetary and financial

(Continued

on page

2120)

(Continued on page 2122)

Reilly & Co., inc.
Members

SEC Wonld Prohibit Allotments

40 Exch. PL, N.

Trading Load

to "Insiders"
Characterizes

contrary to

of underwriters and dealers

Commission

new

rule

Thiokol

Miller

"It has been observed that

many

recently

number of common-

curities Act of 1933 have sold

Se¬

same

Billings & Spencer

Hi A lb & & lo.m
Members New York Security Dealers Assn.

170

Teletype NY 1-84

System

stock, with no different security behind it, being of¬

fered at twice the

price of the initial sales.
(Continued

on page

almost immediately'

Tile Commis¬
sion caused its staff to make a study of the distribution
practices followed in these offerings to ascertain the facts
■and re&s&ns bringing about this situation,

WOrth 2-0300

Broadway

millions Of dollars more than the first, and found the

substantially above the offer¬

ing price' specified in the prospectus5

Mfg. Co.

Doyle Mfg. Com. & Pfd.

Bell

(X-15C2-3) follows:

Corp.

Mfg. Co.

Axelson

primary offering in two instalments of the same

[

Wilcox-Gay Corp.

proposed security, the last of which, due to public demand, grossed

stock issues registered with this Commission under the

1-2733-34-35
to

TRADING MARKETS

The

was

The text of the Commission's release and the

Wires

control

spreads and profits opposed. Lack of regulatory uniformity decried.
Uniform laws prohibiting control of spreads and profits advocated.
Non-interference with freedom in selection of portfolio suggested.

controversy centering around the application to
Issued a release in which it calls attention to dealers' dis¬ register shares of the Benguet Consolidated Mining Com¬
tributing practices in new issues, which results in such issues pany in Ohio has again alerted the securities field.
Within a short interim two similar yet contrasting offerselling substantially above the offering price specified in
the prospectus.
To curb such practices, the Trading and' | ings have served to emphasize the pitfalls inherent in any
Exchange Division of the SEC proposes a new rule to place attempt to control spreads and profits.
such practices in the category of "fraudulent, deceptive and1
One of these was the Kaiser-Fraser transaction, which

manipulative acts."

Teletype,

Private

Registration requirements increasingly onerous. Attempts to

April 16

System

By JOHN HOWARD

IIA 2-4785
Chicago

Benguet Ohio offering and withdrawal emphasizes trading load.

em¬

ployees and of retaining shares for firm's investment account. Pro¬
poses a new rule to put such practices within the scope of "fraudu¬
lent* deceptive and; manipulative acts."
The Securities and Exchange

Bell

Y. 5

S. La Salle St.,

Boston, Cleveland, Chicago & Los Angeles

accepted business ethics, practice

allotting shares to partners and key

York Security Dealers Assn.

Sew

Haytian Corporation

2122)

Punta Alegre Sugar

after the commencement of 'the distribution.

Eastern Sugar Assoc.

are

interested in offerings of

Lea Fabrics

High Grade

IT. S.

Sugar

"The

study to date discloses the following: (1) On the
public offering date certain underwriters and selling
members have placed a substantial number of shares

initial

grotip

Public Utility

and Industrial

PREFERRED STOCKS

General Aviation

Equip.

Pressurelube, Inc.

(Continued on page 2130)

Nationwide

Give to the

Spencer Trask & Co,

MARKETING FACILITIES

25 Broad Street, New York

for;

RED CROSS

Blocks of

Teletype NY 1-5

Telephone HAnover 2-4300

Members New York Stock Exchange

Members New York Security Dealers Assn.
25 Broad

St., New York 4; N. Y.

WHitehall 3-0272—Teletype NY 1-956

Private

Wire

Boston

UNLISTED
TITLE COMPANY

CERTIFICATES
Bond & Mtge. Guar. Co.

SECURITIES
Inquiries invited from dealers,<
estates, corporations, banks, in¬
stitutions and individual holders

Parks Aircraft

Flamingo Air Service, Inc.

Lawyers Title & Guar. Co.
N. Y. Title & Mtge. Co.

Prudence Co.

Members

40 Wall

New

York

St, N.Y. 5

stock Exchange

WHitehall 4-6330

Bel! Teletype NY 1-2033

•

"Rights"

Bought—Sold—Quoted

STRAUSS BROS.
Members

Dlgby 4-8640
teletype NY 1-832. 834

Direct
New-

Board of Trade Bldgi.
CHICAGO 4
Harrison 2075
Teletype CO 12#

Wire Service

York——Chicago——St. Louis
City—Los Angeles

Kansas

Prospectus upon request

Security Dealers Assn

Broadway

NEW YORK 4

Newburger, Loeb & Co.

Service, Inc.

Stromberg-Carlsoit

Capital Stock

Lawyers Mortgage Co^

Sales &

C. E. Unterberg & Co.

Established 1914

Trinity Place, New York 6, N. Y.

Telephone:

BOwling Green 9-7400

Teletypes:

NY 1-375 & NY 1-2751

Members N. Y. Security Dealers

61 Broadway,

Ass'n

New York 6, N. Y.

Telephone BOwling Greett 9-3568
Teletype NY 1-1666

^Thursday, April

THE COMMERCIAL & FINANCIAL: CHRONICLE

2072

ls, < 1946

W
"V

By DONALD R. RICHBERG*

Peace

Richberg criticizes lawmakers for "cowering before labor

Mr.

bullies/' and for making unions "the spoiled children of our
national household.'7
Denying an absolute right to strike, urges

By WILLIAM L. CLAYTON*
Assistant Secretary of State for Economic Affairs

legal definition of legitimate union objectives. Terming monopoly
more menacing in labor than in business, recommends that former
likewise be regulated for benefit of interstate commerce.
The American Government has been

Air Cargo

Transport

American Bantam Car
Anderson Pritchardf

Armstrong Rubber
Com.

Pfd.

S. F. Bowser

privileges and immunities
granted to the rest of the
people, to encourage them to or¬
ganize for self-help, and to endow
their organizations with excep¬

son

for having

government
is, in the lan¬
guage of the
Constitution,

Dayton Malleable Iron*
District Theatres!

Douglas Shoe*
General Machinery
Gt Amer. Industries*

come

Kaiser-Frazerf
Maxson Food Systemf
Conv. Pfd.

Michigan Chemical
Missouri Pac. Old Pfd.
Mohawk Rubber*

and

good
A gov¬

ernment is no

longer

Richberg

political fingers while organized
mobs intimidate and oppress its
Our lawmakers and en¬

citizens.

before labor
threaten to deprive

and when they cower

cities, States, and even the nation
of the necessities of life, disre¬

rises

for politicians
high!

The Historical Background

economic
lations of

liarly

and

helpless

United

by Mr.

Richberg

Mr.

Richberg is

of the law firm

berg,

Beebe,

11,

member

of Davies, Rich¬

Busich

Richard¬

(Continued

particularly

on page

very

problem

closely

presses so

new

the

heels of its predecessor that there
is little space between for reflec¬
tion.

Nevertheless, day to day deci¬
sions must fit into

believe, first, that foreign eco¬
policies which give effect
principle of equal treatment

nomic
to the

for all nations will tend to
elimi¬
nate some of the important
causes

international

will

AIM Investment Trust 4V2S, 67 Central Public Utility
*Bliss

-Secondly,

Bought

Sold

115

want

but

know where

good idea of how

nomic policy

must have

world

trade and prosperity, and
prosperity itself is a direct

that

bulwark of peace.

Third, and most important,
believe that

Let

The

eco¬

in terms of its bear¬
peace

and

^Princess

Puget S'nd P. & L. Com.

^Electronic

*M.

Standard Gas Elec.

upon

Shops

forms.

tariff

Special Letter

York

Security Dealers

Wall Street

Sons

'ft

■

The

Publishers
25 Park Place, New York 8

Security Dealers Assn.

REctor 2-9570 to 9576

Herbert

William Dana Seibert. President

Thursday, April

**B0WSER, INC.

Published

*DU MONT ELECTRIC

every

*GL0BE UNION
*L. E. CARPENTER

5, N. Y.

Prospectus
*Circular

tlPSON edtoPANY

EiMNiifcRINifc

tation

request

Request

Members

HAnover 2-2100

York Security Dealers Assn.

40 Exch. PI., N. Y. 5
39 S.
Bell
_

J. F. Reilly & Co., inc.

Members New York Security^Dealers Assodiation * I!
.VI

records,

banking,

corporation,

Other Offices:
135 S. La Salle St.,
Chicago 3, 111.
(Telephone: State 0613'•
1 Drapers' Gardens, London, E. C., England, c/o Edwards & Smith-

1942,

Y„

HA 2-4785

La Salle St., Chicago

System Teletype, NY

1-2733-34-35

Private WJres to

Beaton*, Cleveland, Chicago & Los Angeles

Canada,

$27.50

Feb¬

post office

the

under

at New

Act of

Marcn

the

States

Subscriptions in United
Possessions, $26.00 per year;

Incorporated'

•

advertising Issue)

(complete statistical issue—market quo-

Request

CO.

Seligman, Lu bet kin & Co.
Street*; New York 4

news and

and every Monday

ruary 25,
York, N.
3. 1879.

New

Broad

week

Thursday

clearings, state and city news, etc.)

TENNESSEE PRODUCTS

twice

Manager

1946

18,

Association

Seibert,

William D. Riggs, Business

Motorola Radios)

Circulars

Editor and Publisher

Bought—Sold—Quoted

Descriptive

Patent Office

William B. Dana Company

REctor 2-4500—120 Broadway
Bell System Teletype N. Y. 1-714

GALVIN MANUFACTURING CO.

WELLMM

and

COMMERCIAL

request

UNIVERSAL CAMERA

Politi¬

FINANCIAL CHRONICLE

Teletype NY 1-2425

11, 1946.
(Continued oh page 2094)

j.K.Rice,Jr.&Co!!

request

(Makers

multitude

favoritism in the

Reg. U. 8.

Request

New York

Tel. HAnover 2-8080

this

include preferential

systems,

(general
Neio

take
can

cal Science, April

fLe Roi Company
or

structure

Discrimination
can

*An address by Secretary Clay¬

^Simplicity Pattern

Corp.

Members

Circular

Lowenstein

*Prospectus

FIRST COLONY CORPORATION

United Public Util.

frame-

the

weaken

105 West Adams St., Chicago

Corp.*District Theatres Corp.

tStatistical Study

Spec. Part.

Great American Industries

*Prospectus and Special Letter Available

Southeastern Corp.

^Bulletin

analytical

Venezuela Syndicate

Members N.

"fProspectus Upon Request

rough

Established 1908

New England P. S. Com.

policies
can
undermine
relations between states

friendly

allocation of import quotas, or the

Derby Gas
Iowa Pub. Ser. Com.

of Discrimination

The first of these is the propo¬
that
discriminatory eco¬

^District Theatres Corp.

Cent. States Elec., Com.
*Dumont Electric

Evils

sition

sense

least

take up these prop¬

now

peace.

men.

nomic

framework. Perhaps such

is safest

peace

the hands of free

ton before the Academy of

Teletype NY 1-672

wise economic pol¬

icy will contribute to prosperity,
that prosperity is the most con¬
genial economic atmosphere for
the growth and spread of democ¬
racy and the institutions of free¬

intend to get

the maintenance of

request.

Telephone BArclay 7-0100

the

adoption of wise and far-sighted
economic policies will stimulate

there.

Exchange and Other Principal Exchanges

Broadway, New York

that

believe

ositions in order.

Goodbody & Co.
Members N. Y. Stock

ill-

tend

peace.

Not only must

Quoted

Prospectus available

and

thus

dom, and that the

United Printers & Pub. Com.

Aspinook Corp.

American Gas & Pow.

Oxford Paper Com. &

Bowser Inc.

Alabama MiUs*
Textron Wrnts. & Pfd.

5V&.52
Pfd.
(E.W.) Co.$2.25 Conv. Pfd. Sunray Oil 4%% Conv. Pfd.

Art Metals Construction

friction

will

and

cannot proceed far in the absence

Syivania Industrial
Taca Airways
Upson Corp.
U. S. Air Conditioning

Policy

We in the Department of
State

a broad
policy
pattern and must contribute to the
attainment of our ultimate purpose.

ing

Old Pfd.

propositions.

The Bases of Our Economic

problems.

Clearly, the evaluation of
2095)

the

States
a

Each

Washington, D. .Q,

son,

re¬

wide range of
William L. Clayton

earners

New York City, April

ence,
1946.

cover

In that era the conviction

address

foreign

before Academy of Political Sci¬

industrial wage earners as a pecu¬

N. Y. New Hav. & Hart.

host

measure

could obtain the
power to improve their own con¬
ditions, and to keep labor free
from both private oppression and
governmental paternalism.
The bargaining powers of the
labor
unions were steadily inwage

*An

Coddling

Labor

For many years it has been

in three

strengthen the

The

reasonable standard of social

any

Old Pfd.

Pfds.

not

spread that, through labor unions
and
collective
bargaining,
the

Missouri Pac.

Old

did

peace.

working

adequate constitutional powers to
protect the health, safety and gen¬
eral welfare of their communities;

the
vaguely defined policy of the Fed¬
eral Government, and of a major¬
ity of State governments, to regard

Chicago R. 1. & Pac.

of living, the wages and
conditions offered to a

workers

the safeguarding of the

low standard

justice.

who

contribution to

numbers of immi¬
grants were pouring into indus¬
trial centers, seeking employment
huge

consumma¬

The

success

•

forcers have been entrusted with

bullies

the United

States.

was

and accustomed to

idly by, twiddling its

sits

which

record

National Fireproofing

Donald

ectable

spect

Moxie

re-

of free

food, goods,

importance of international economic
is at the same time an examination of the
foreign eco-^
nomic
policy work can be outlined very briefly

When

civilization

peace

prosperity

Any examination of the

industrial

our

policy

relations to world peace

unfolding, with
its manifold blessings and evils.

the decades when

extension of

our

particularly for
Anglo-American financial agreement.

policy will, in
the last analy¬
sis, be meas¬
ured by our

and of

commerce

and credits to distressed nations; and
tion of the

children of our
;•

Pleads for

war.

cation for this coddling policy in

b 1 y

to pre¬

order.

institutions to end

failure of that

was

economic

and (3) worldwide promotion

historical justifi¬

There

pre-

serve

Hartford-Empire Co.
Higgins, lnc.f

means:

the spoiled

national household.

quillity
which

direct bulwark of peace;

as a

Labor unions have now be¬

ests.

foreign

our

restrictions that "hobbled" world trade, and the

powers of aggression and
defense against conflicting inter¬

tran¬

the bases of

affirmative stimulation of international

tional

mestic

Cinecolor

of the pre-war

not

A major rea¬

"to insure do¬
..

brayed in a mortar by labor

with

it!

Clayton cites

(1) equal treatment for all nations, with free access to raw
materials, to eliminate international political friction; (2) abolition

organizations ever since V-J Day. but, to complete the biblical meta¬
phor, its fool¬
deserving class of citizens. It has
ishness has not
seemed necesary to favor them
departed from

Automatic Instrument

Mr.

per

in Dominion

year:

South ana

America.
Spain,
Mexico, ana
$29.50
peryear:
Great Bn^!^
Continental Europe (except Spain), Asia>
Australia and Africa. $31.00 per year.
Central

Cuba,

Other Publications

Bank and Quotation

Record—Mth.$25 F-

Monthly Earnings Record—Mth..
NOTE—On account of the
In the rate of exchange,

Toreigri subscriptions and
must

made

-$25 F*

fluctuations

remittances1 1

New York

fundi.

)

Number.4482

Volume:

THE COMMERCIAL & FINANCIAL CHRONICLE

2073

Controls Cripple Production
By ROBERT A. SEIDEL*
Vice-President and Comptroller, W. T. Grant Co.

By CHESTER BOWLES*

Office of Economic

Director,

Contending that

Stabilization

cheapening quality
withholding of goods, Mr. Seidel asserts "our Government is
doing a grand job of promoting inflation.1' Refutes OPA statement
that it is not hampering production and is speedily handling pricing
problems and says when consumers are forced into abnormally
high price ranges, retailers' profits increase. Cites examples of
price increases and quality deterioration in wearing apparel and
other products. Lists suggested amendments to OPA powers.
and

Bowles, asserting that in a choice between continued price
control and abandonment of control, nation stands at one of
Mr.

Cites data showing

crossroads in its history.

greatest

control policy and

contends that continuation of

success

because

is needed
current demand for civilian goods far exceeds current

supply.

Answers arguments of NAM urging decontrol, and holds
mark

will

inflation

discontinuance

price

program

because,

control

is~-

per year.

For

with inflation such

caused

450,-

and security.

takes on

will

course

our

for

economy

to come.

years

cannot

affect

also

the
tions

world

Speculators

the
Bowles

Chester

econ¬

for four

pressure

omy.

Our

people

whether

watching to see

are

not their Government

really means business in holding
down the cost of living.
Our

three

million

six

thousands

farmers

million

weary,

difficult

stand

today at one of the
great crossroads of our country's

On the

history.

one

are

watching to see if we are to in¬
dulge in another post-war gamble

"Statement

H. V. Britton
H.

Opens

conducting

335

Street,

Seventy-sixth

West

New York City.

branches

industry,

practi¬

r o m

every

of the

section

country.
mony

unassailable,

point
trial

of these

documented
established

beyond

doubt—OPA

testi¬

The

Robert A. Seidel

well

and
one

question of
throttling indus¬
throughout
the

still well

all-out

Y.—Harry

investment business.

cheapening

quality,

much higher than those in
buy.
Regulations become more and
more complicated as time goes on.
Now we have another unworkable

ranges

Bank of Montreal

which they would normally

Bank of Nova Scotia
Bank of Toronto

Canadian Bank of Commerce

prize package, "The Wage-Price
Program," containing devious and
more
complicated
methods
of
curtailing production, squeezing

Dominion Bank

Imperial Bank of Canada
Royal Bank of Canada

by Mr. Seidel be¬
Spring Confer¬
of the Controllers Institute

jammed

production

up,

address

"An

the

fore
ence

country.
road

opened offices at 9 Ni¬

Street, from which he will

conduct

any

activity

The

Burr has

compelling them to purchase sub¬
stitute deteriorated goods in price

cally

witnesses,

Harry Burr in Buffalo
BUFFALO,

Eastern

April 15, 1946.
(Continued on page 2110)

of America,

and it is

Andian National Corp.
Assoc. Tel. & Tel. $6 &

7% Pfd.

Atlas Steel
Brown

hand is the

Company Com. & Pfd.

Bulolo Gold Dredging

by Mr. Bowles be¬

Canadian Pacific Rwy.

Direct Private Wire Service

Canadian Western Lumber

Banking and Cur¬
rency Committee on the extension
of the stabilization laws, April 16,

coast-to

coast

Electrolux
Famous Players

1946.
on page

Britton

&
■

securities business from offices at

fore the Senate

(Continued

Riley
! "

Edgerton,

severely penalizing consumers by

war-torn years.

Walter.

businessmen

watching to see if a weakened
price control act will further in¬
crease their costs of production!
are

Our

the

watching for the first signs of
legislative weakness on a program
which
Congress has steadfastly
maintained
against
tremendous

na¬

and

of white

are

economy

other

In the past he was an

well & Co.
officer

disappearance of goods, thus

witnesses

comes.

fail

or more

Searl-Merrick

forced

been

representing

people living
pn fixed incomes are watching to
see
if they
are
to be squeezed
again between rising rents and
prices and relatively stable in¬

domestic

and

workers and

collar

whole

the

creases,

Our 12 million

affect

ment

has

result

from hundreds

are

abandoned.

judg¬

Douglass

Nelson

and the end
price in¬

worked in REVERSE,

compla ints

watching to see if the
present balance between wages
and prices is to be maintained or
ers

Con¬

with

agara

Practically every important reg¬
ulation that has been issued has

tee listened to

Our 17 million industrial work¬

action

Commit¬

this

War I.

bill

seven

long weeks

000 farm foreclosures after World

this

of the

'<*>-

of inter-?

formerly
&
Co.,
Company and Las-

South Broadway. He was

and in¬

Administra¬

nationalpeace.

gress

obvious that the stupidity

tion.

the Government's presentation on this bill with the sense
involved can be compared, in magnitude and urgency,

with

The

ac¬

competence of the Office of Price
Administration is costing Ameri¬
can consumers
billions of dollars

that the issues

which

the

tivities

Office of Price

I open

Chronicle)

CALIF.—Rob¬
ert E. Keane has become associ¬
ated with Paul D. Speer & Co., 610
LOS ANGELES,

Congress re-«»strict

strikes.

sues

Currency Committee of
why it is necessary that

The recent hearings of the Banking and
the House of Representatives clearly indicate

(1) potential increase in production not enough to convince public
prices will not rise; (2) rising prices, by increasing costs will
cripple production; (3) expected rising prices will lead to with¬
holding of materials and parts, and (4) rising prices will lead to

only

important price regulation has worked in

every

and resulted in forced price increases,

reverse

KeaneWith Paul Speer
((Special to The Financial
'

New York

2117)

Chicago

St. Louis

Kansas City

Los Angeles

Canadian Corp.

International Utilities
Jack Waite Mining

Galvin

STRAUSS BROS.

Manufacturing

National Gas & Electric

Philadelphia

Sun Life Assurance

Teck Hughes

HART SMITH & CO.

Pledger & Company, Inc.
LOS ANGELES

Chicago

San

HAnover 2-OWO

ST., N. Y. 5

53 WILLIAM

Bell

Teletype NY 1-490
-

Mipes

KANSAS CITY

Incorporated

Boston

Steep Rock Iron Mines

Baum, Bernheimer Co.

ST. LOUIS

Street, New York 5, N. Y.

Tel. WHitehall 4-4860

Sherritt Gordon Mines

Harrison 2075
Teletype CG 129

White & Company

E. H. Rollins & Sons
40 Wall

YORK 4

DIgby 4-8640
Teletype NY 1-832-834

Wilson Brothers

Pend Oreille Mines

Board of Trade Bldg.
CHICAGO 4

Broadway

NEW

Co.

Noranda Mines

Members New York Security Dealers Ass'n

General Panel

-u

Minnesota & Ontario Paper

Teletype NY 1-395

Montreal

New York

Toronto

Francisco

MARKETS:
I

Harvill Corp.

Hood Chemical Co., Inc.

Jeff. Lake Sulphur Com. & Pfd.

Chicago and

Lane Cotton

Southern Airlines, Inc.

Mills Corp.

Rademaker Chemical

Airlines, Inc.

Bought

—

Sold

—

SOYA CORP.

United Piece Dye Works

HoiiRsse&Trqster

United Stove

ESTABLISHED

BURNHAM & COMPANY
members New Yotk Stock Exchange

N,Y.CurbExchange

T. J. FEIBLEMAN & CO.

15 Broad

Street, New York 5, N. Y.
telephone: HAnover 2-6388

New Orleans 13, La.
Carondelet Bldg.

39 Broadway,

Bo. 9-4433

Getchell

Mines

Railroad, Common

Chicago, Rock Island

Master Tire &

American Insulator

United Public Utility

New

Rubber

St. Louis & San Francisco,

and pfd.

Punta

old common and preferred
f

Quotations

Bought—Sold—Quoted

32
'•

Broadway,ftew Yortt4,tt. Y.

WHitehall 4-6430

Tele. NY 1-2500

FREDERIC Hr HATCH & CO., INC.
r

Established

64 Wall St., New .York 5

Phone HAnover 2-7872

Upon

Request

-FARR& CO.

Preferred

k
.

Tele. NY 1-621

MEMBERS N. Y. SECURITY

Watt: Street, New York 5, N.

Alegre Sugar

; ><

Bought—Sold—Quoted

Common

American Beverage

Common

^and preferred

York, New Haven & Hartford, old common
«'[

Eastern Sugar Associatesj

&*Pacific,,f$>ld com. & pfd.

Missouri Pacific, old common

Carbon Monoxide
Eliminator

peter barken

DIgby 4-3370

N.Y. 0

Teletype NY 1-1943

Old Colony

Common

siegel & co.

NY 1-375 & NY 1-2751

BOwling Green 9-7400

Bell Tel.—NY-1-493

Baker Raulang

1914

Trinity Place, New York 6, N. Y.
Telephone:
Teletypes:
74

Members New Orleans Stock Exchange
New York 4, N. Y.
41 Broad St.

Preferred

Quoted

Stand. Fruit & S/S Com. & Pfd.

All American Aviation

associate members

DI-NOC CO.

Common Stock

Hold Hold Co.

Continental

ISMWiV-ft"-*:

DEALERS' ASSOCIATION
Bell Teletype NY 1-697

-Meiiibtrs

•''New
-

York

NewrYork Stock Exchange:
Curb Exch.

New' York, Coffee

Assoc.

Member i

& Sugar Exchange

ILjtQfiWALLiSt^ J»EW ^YORK;
TEL. HANOVER 2-96X2

THE COMMERCIAL & FINANCIAL CHRONICLE

2074

Thursday, April 18,

Lanston Asks
Correction Be Made

The Interest Rate Dilemma
By JOHN D. SMALL*

need for raising rediscount
inflation check. Sees lifting Government

Dr. L. Albert Hahn urges
rates as

Civilian Production Administrator

yields advisable secondary step.

bond

Editor,"Commercial and Financial Chronicle
the inflationary character of our economy becomes
apparent. Inflation means that the quantity of money
going to mar-fo
kets increases
the public the necessary amounts

As time goes on
more

and

Discount

policy

checking

natural
inflation

render

the with¬

obvious

The

method

ing the budget

therefore

—has

drawal of money

been

considered

classical

the

method

infla¬

combat
tion.

Correctly

so.

For

the

expansion of
the
purchas¬
ing power in

most

and

from the Federal

Reserve System more difficult and
more

number
of experts and especially the Sec¬
retary of the Treasury seem to
consider the application of the
classical

policy

traditional

and

discount

quite out of the ques¬

tion.
In

article

published

in the

"Commercial and Financial Chron¬

form it occurs,

Dr. L. Albert

whatever

icle," Dec. 7, 1945 I have tried to

is
Rubten

economy,

Photo: H. ft.

dependent

show

the money-

vanced

Hahn

»ssi»»ng

agen¬

the

why

arguments

in defense of

ad¬

continued

policy do not seem
(Continued on page 2130)

easy

cies delivering to the banks and

terested

money

glad to be able to talk to
you

are

in the

various

trols

agencies are fully aware
of this kind of interrelation; they
know

how

—

one

shall

CPA's
the

policy

with

fullest

same

going to

cooperate

and

industry

problem.

Boiling it down,
that the CPA

operates,
am

might

you

say

concerned, in a

was

general way, with helping indus¬

going to try to
tell you what
which

today I

are

with all agencies interested in the

Administra¬

the outlook

doing.
remarks I

agencies
in the

speak primarily from the point of
CPA, emphasizing that

Civilian

tion

make

view of the

how

and then I

other

Nevertheless,

affect
your business.
I am going to
try to give you
a general pic¬
the

can

without reference

agency

what

may

problem

isolated and considered solely by

long they are
likely to last,
and how they

ture

that

the

magazine

fields

and

try get back quickly to full

Small

with

pro¬

duction
and
full
employment.
Looking at the immediate picture,
that there

know

Present-day problems are
steadily growing more complex.

simply isn't
enough of everything for every¬
body.
So, for the time being, in
the case of a relatively few things
which are most urgently needed

Seldom

problem

for the health and welfare of the

clearly and completely
province of a single
government agency; usually the
difficulties will cut across our

greatest number of persons, CPA
has to see to it that first things do

borders and involve several agen¬
cies. The production problem, in

not

distributors

Eisemann

request

that

HARDY & HARDY

which

Broadway, New York 4, N. Y.

have

the

Civilian

Administration
Teletype NY 1-960

WHitehall

3-4490

within

con¬

cerned.

Corporation

*Circular

newspaper

especially

are

cerned, is often

Production

primarily

very

con¬

directly

re¬

lated to the price problem, which
is the Office of Price Administra-

Coast

Distributors

Indepen¬

Association,

New York City, April

(Continued

11, 1946.
page 2115)

page
of the "Chron¬

icle"

11,

April

stated

was

the

editorial

sum¬

the

mary that

author "advo¬

that

cates

mmercial

c o

banks

should

required to
invest a part
of deposits in
special non-

rketable

m a

Treasury

is¬
that

sues

reserve

re¬

increased

secured

and

ANGELES

which

have

other

been

quarters

advanced

Standard Gas

letter

the

Blair F.
Members

will find that I classified spe¬

you

cific

remedies

then

and

three

into

classified

able.

themselves

situation

short

the

Cedar

Washington Properties

Common

Brokers
In

George A. Rogers & Co., Inc.
1

Montgomery St., Jersey City, N. J.
Broadway, New York, N. Y.

Jenkins Bros.

Co., Ltd.

H. D. KNOX & CO.

Dealers

Investment

62 William St.

Established

NY 1-1026

1926

Teletype
NY

Hudson St.,

1-2613

Office

Jersey City,

N. J.

Philippine Mining Stocks

IExpresso Aereo
Kinney

Benguet Cons. Mines

Common Stock

Coastal Oil

Linn Coach &
Truck Corp.

Mindanao Mother Lode

Circular

Bought

request

—

Sold

—

Quoted

Balatoc

JAMES M. TOOLAN & CO.
67 Wall

Street, New York

Telephone

HAnover

Teletype NY

2-933S

J-2630

R.G.ILSLEY& COMPANY
Member of National Association
of Securities

5
64

Wall

Dealers, Inc.

Street, New York 5

HAnover 2-1140

Mining

Big Wedge Gold

Quotations

information

and

Furnished

8950

Tele. BS 169

Securities

4-2422

Branch

113

Tel. Capitol

Dlgby 4-1388

Tele. NY 1-86

New York 5, N. Y.

Telephone
WHitehall

27 State St., Boston

Broadway, N. Y. 4

Tel.

Atok
*

BROADWAY, NEW YORK 6, N. Y.

Hotel

Rhodes

Venezuela Syndicate

MAHER & HULSE80SCH

Equity Oil

Security Dealers Ass'n

Works

American Vitrified Products

Clayton Silver Mines

Utah Southern Oil

HOLLER & COv Inc.

which

claimed I did

Victoria Gypsum

Can. Western Lumber

W. & J. Sloane

Producing Company

PROSPECTUS ON REQUEST

unten¬

Tennessee Products

V. T. C.

Philadelphia Stock Exchange

Beach

living

things

summary

Richmond

Sleep Rock Iron Mines, Ltd.

out

which

advocate."

paid March 1, 1946.

SEMINOLE OIL & GAS CORP.

BArclay 7-0570

results

I definitely do NOT advo¬
either

Bought—Sold—Quoted

111

groups

and

ways

devote

with

Teletypes:

Book $50-$60

Claybaugh & Co.

Members N. Y.

the

specifically
stated shortly thereafter that the
specific suggestions either fail to

Market between $25-$30

72 WALL ST., NEW YORK
5, N. Y.
WHITEHALL 3-0550
Tele. NY 1-2178

fol¬

"If you will turn to page
["Chronicle" of April 111

Earned about $7.30 share

whiskies & spirits

Harrisburg-Pitlsburgh-Syracuse-Miami

"Chronicle"

marks, Mr. Lanston states
lows:

NY 1-375 & NY 1-2751

Equipment

30,737 & 62/100 shares

PRICE $28.50 PER SHARE
cents,

for

calling attention to the erroneous
interpretation placed on his re¬

cate

Common

No Preferred

Dividend, 50

remedies

solving the public debt problem.

COMMON STOCK

Latest

short-

Treasury securities."
Ac¬
tually, Mr. Lanston merely cited
these proposals as among those

Trinity Place, New York 6, N. Y.

Telephone:
BOwIing Green 9-7400

HONOLULU

MERCHANTS DISTILLING

"Southern Comfort"

Lanston

term

Commodore

Producers of

quirements be

ESTABLISHED 1914

Telephone BArclay 7-4300

No Bonds

Manage

Corporation,
appearing

by Mr. Small be¬

Atlantic

"Debt

Controlled Interest

the first

HorRsseSTrsster

SAN FRANCISCO STOCK EXCHANGE
LOS ANGELES STOCK EXCHANGE

LOS

the

Bought—Sold—Quoted

Wires

WALL STREET, NEW YORK

SAN FRANCISCO

dent

by short-term

Rate,"
by Aubrey G. Lanston
Vice-President of the First
Boston'

1959

address

the

goal

our

the

and

your

MEMBERS

:;:An

fore

that

Capital Stock

Dean Witter & Co.
HONOLULU STOCK EXCHANGE

emphasize that

believe

article

ment

HAWAIIAN SECURITIES

NEW YORK STOCK EXCHANGE

Let

Fuller Houses, Inc.

AND

Private

first.

come

non-

securities and
requirements be in¬

adequately consider the problem

PACIFIC COAST

Direct

Treasury

reserve

allocation con¬

required

Treasury securities.

tion's bailiwick, or to the wage
problem.
The officials of the

priority and

"Chronicle"

deposits

creased and secured

is the question

Pr oduction

Sports Products, Inc.*

that

problems that confront our country

many

One of
problems

the

invest part of

today because I know how in¬

you

that

out

marketable

today.
the

expensive.

In spite of this a large

applications. Points to newsprint industry, trucks, and tires as
examples of removing controls when the objective of getting pro¬
duction into high gear has been attained, and reiterates the value
of controls as a means of avoiding disastrous inflation.

of paper money.

be¬

—

balanc¬

sides

Points

erred in stating that he
advocated
that commercial banks be

"Ravenous Purchasing Public" as a reason for maintaining
civilian controls, Mr. Small contends that only about $2 billions
worth of commercial building has been cut out and that no rigid
criteria or arbitrary yardstick is adhered to in judging building

Citing

1946

Request

JOHN J. O'KANE JR. &
Established

Members N. Y. Security

Dealers Ass'n

42 Broadway, New
Dlgby 4-6320

CO.

1922

York
1-152£

Teletype NY

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

2075

the supply of available commodi¬

Some Trends in Ait of
Estate Planning
By MAYO A.

The Search for

ual but also for the protection of
the economy as a whole. Through

SHATTUCK*

Hausserman, Davison & Shattuck, Boston

Professor of Finance, New York University

Shattuck describes defects of old "boiler plate" days of estate
planning as (1) the lack of discretionary rights to use, apply or
expend principal for any beneficiary; (2) the division of trust into
fixed shares; (3) passing of the share of a deceased son of the

through their
increased

neglect to divide duties
Holds these defects

materially. Says problems yet to be solved are (1) pro¬
of people and (2) prevention of large-scale and

among a

are

curve seems to be

rising

economic

vidual

c a

protect

the

self

end, weare

age or

apt to observe
that the trend

you

s u

who has

one

doesn't

knowthe
at

score

For

good

been

many

I have

years

described

was

rude

some

persons

was

those

days

hack work." It never
really was quite that bad but
it
certainly
didn't
have
the

these

days.

much

For

too

one

boiler plate

things which

some

enumerate

might well have

I should

been

contained

but

who loves his

man

has

children,"

"Standard will

for

who

man

ard will for

to take

this

briefly

modern

ested

confused

client

was

Not

on page

only do

•"An

address by

insurance

compa-

never

used

day.

the

fore

the

New

York

Chapter of
American
Society of Chartered
Life
Underwriters,
New
York
City, April 12, 1946.

This

2112)

MARKETS

had

counsel organizations

months has been the

It is
as

Hartman Tobacco

St.

Louis-San

Duluth, So. Shore & Atlantic

St.

Louis

it did in February (20 points—largely in 5

sessions) the tune is quickly changed. Then, there is going to
be no inflation! Mr. Bowles is a demon! The price line is to hold

profits to all but vanish!

prices and profits
Unbridled

reverse

Francisco

Southwestern

average. as

some

100 points

predicting?

are

the
the

quite

no one can provide a mathematical answer to this
disturbing question. It is not that simple. With a view to arriving
.

Admittedly,

Seaboard Air Line

at the most

N. Y., New Haven & Hartford

Western Pacific

qnd formulating what

Wisconsin Central

investment procedure for the investor of substantial wealth who

Y., Ontario & Western

likely possibilites in our.present controlled

is primarily
of

70 Pine Street, New York 5, N.
WHitehall 4-4970

interested in preserving it, the American Institute

Finance—with

to the inflation

characteristic

5-page

Teletype NY 1-609

studied

penetration—has

with especial consideration

conclusions

just issued to

survey

and

care

scene

threat.

Institute's

The

economy

in the circumstances to be sound

seems

freshly surveyed the economic

G. A- Saxton & Co., Inc.

our

embodied

are

new

investment management clients

throughout the U. S. whose investments aggregate

many

millions

of dollars.

Not of Interest to
SPECIALIZING
BROKERS

bargain stocks such as
endlessly provided by the tipster services, will prove of scant
interest to those intent upon scalping profits regardless of the

SERVICE TO

DEALERS

AND

Speculator

This survey does not contain lists of

market's

level—nor

answers

COAST SECURITIES

PACIFIC

but the last

board-room

one.

oracles

We would

who

know

all

the

prefer that they not send

for it.
QUOTATIONS
HANDLED

EXECUTIONS

AND

OVER

OUR

DIRECT

PROMPTLY

PRIVATE

But to banks, insurance companies, investment trusts, endowed
institutions, corporations and individual investors with a mini¬

WIRE

mum

Kaiser & Co.
new

PINE

NEW

STREET

YORK

york stock
york

curb

the

exchange
exchange

san francisco stock exchange

1 5 □ □

SAN

capital of $50,000 interested in safeguarding their funds
of one of the longest bull markets on record

in the late stages

members

RUS5

0 U I LDI N Q

FRANCISCO

Institute's

latest

study

perhaps be worth weighing

may

against the welter of confused, superficial and constantly changing opinion.
Institute's Inflation

Survey

—

Such surveys are ordinarily issued only to clients whose in¬
vestment accounts are under our supervision or subscribers to

STATE AND MUNICIPAL BONDS

CORPORATE

Special Letter Service

annually). Copies of
able at

our

(issued about

inflation

once

survey are

month—$250

being made avail¬

nominal charge of $3.00 to cover the cost of

and to discourage

BONDS

handling—

purely curiosity requests.

If you

LOCAL STOCKS

Thiokol Corp.

desire

copy

of Survey, clip advertisement

and attach check

•

AMERICAN INSTITUTE OF FINANCE

Co.

The Robinson-Humphrey Company
Established

Security Dealers Ass'n
Telephone
Whitehall 3-7830
NY

to falLin line with the inflationists

very easy

the stock market is rising. But when the market has

Missouri Pacific

Higgins

Teletype

sharp break

our

Ben

during recent

stock market

dread of inflation and what it may do to

inflation—spiralling profits—another 50

al¬

Benguet Cons. Mines

Vail Street
v York ft

apparently

long

Dow-Jones

Railroad

Denver & Rio Grande We$t.

You al¬

by Mr. Shattuck
before the N. Y. Chapter of the
American Society of Chartered
Life Underwriters, April 12, 1946.

N. Y.

behind the

impetus

for the balance of this year and looking into 1947?

Rutland

suitably

address

Afembers

broad

The

one-

modern

•

Outlook for Prices and Profits

Chi., Rock Island & Pacific

lively fear of the pit-

S. Weinberg

by one of the
conservative investment

What is the cold, unemotional outlook for

Old Colony Railroad

new

::An

inflation

near-term

of substantial wealth

men

Chi., Milw., St. Paul & Pac.

terable, amendable and revocable
living trust, of course, because
you

one's money.

Preferreds & Commons

(Continued on page 2114)

country's oldest and most
•

Dr. Nadler be¬

between

mony and called it
most

risks for

"OLD"

description of the
per
stirpes
and per
capita, dragged in three
witnesses to complete the cere¬

difference

States, the principal capi-

United

searching discussion of the

and

horse shay, hooked it up to the
adjective clauses that provide the
motive power, took
pains to see
that the

pep

nation^.

Even in the

all-embracing.

came

exceedingly great and exceeds

problem of economic
than Life Underwriters.

specifications you simply went to

to it

in the

security

you

TRADING

any

out the

the

when

of the various

Personal liberties were destroyed
and the powers of the state be¬

At
purchasing

in the hands of the people

power

inter¬

who things he
but doesn't intend

legal stable, pulled

litical body

are

present

group,
there¬
fore, could be

Dr. Marcus Nadler

after¬

techniques.

(Continued

chances and has one
maiden aunt, one devoted nephew
and a great love for Dartmouth
College." When confronted by a
gentleman who
indicated those
the

control over the economic and

but

has always been their motto.

other

man

his wife

loves

—

cause

doubtful whether he loves his wife
and has two children," or "Stand¬

death

—

indi¬

in that file a form entitled "Stand¬

wife

by way of comparison with

noon
our

material showed

thing it

standardized.

boiler plate file. There

ard will for

they

accident.

days it was part of the
equipment of every law office to
a

life

by illness and

few odds and

those

maintain

the

w a n

inheritance taxes, mostly
the local basis.
A look at the

ends
on

imaginative quality and fire which
characterizes the estate planning
was

Unscrupulous, leaders
advantage of. this yearning
for economic security and seized
Europe,

took

the greatest savings
institutions in the country. Thrift

also

the

family against

little

"legal

——

hazards

depression

severe

early 1930's left a deep impression
on all countries.- On the Continent

vidual and his

drop in the bucket
insurance therb

property taxes and

the game now
euphemistically described as
estate planning.
In the old days
it was known as drawing wills
playing

and trusts.

The

given point.

any

tect

tightly riveted togeth¬
er that you couldn't do much with
it if you wanted to. As for taxes-—
there just weren't any substantial
taxes except real estate and local

in which he is

the

Other
of life

types

what

and

traveling even
if

was

direction

the

after

gone.

to more than

natiori,

pronounced is this de¬

insurance pro¬

because
it
was
only
dog's age that anybody
had enough insurance to amount

about

theory

near

winner

once

scholar

protect

bread¬

fangled instruments to

new

1 d

insurance

not

him

void

supply a form that anybody could
rely upon. You didn't worry about

gentleman.

those

the mark of a

scholar

testamentary significance;
were justifiably afraid that
would end up with a voidable

testamentary transaction.
Besides, there weren't enough of

attitude,
b m i t, is

This

industrialization

the

him- nies offer protection to individuals
against and their families against the

you

is what counts.

ity is world-wide, and the greater

established primarily to increase
security of individuals.
Through insurance an indi¬

want

entire eco¬

system.

the

Life insurance companies were

falls of

to an

would

which
our

sire.

afternoon
comes

millions

The desire for economic secur¬

Introduction

the

many,

inflation

nomic

prevent it.

Favors life insurance in estate planning.
the third, and the

ages

greatly undermine

When my partner and I are beaten two sets out of three in tennis
but manage to win

merely to help

achieve economic security but also
to protect them against the rav¬

prolonged unemployment.
Says danger of inflation is greater than
generally believed and recommends end of deficit financing and a
retention of high taxes.
Sees also danger of large unemployment
after "catch up" period unless necessary measures are taken to

board or among several
being remedied in the art of
designing estate planning instruments, which have in view elas¬
ticity and liberality, and that chief aim in creating trusts is no longer
tax avoidance but provision of dollars from which taxes must be

paid.

that partly through legislation and partly
efforts, economic security of the people has

own

tection of savings

surviving issue; (4) restriction of management
of trustees; (5) lack of provision for successor trustees;

trustees.

not

Dr. Nadler points out

grantor to his
and (6)

advocating thrift and by inducing
people to hold spending at a min¬
imum, the life insurance compa¬
nies can contribute a.great deal

By MARCUS NABLER*

Mr.

powers

ties thrift is necessary not merely
for the protection of the individ¬

1-2763

1894

137
Investment

Conservative

RHODES-HAVERTY

BLDG.

Teletype AT 288

ATLANTA

GEORGIA

Long Distance 108

Newbury Street, Boston 16, Massachusetts

Supervision

•

Financial Management

accounts—ranging
supervised

from

managed

•

Individuals

$50,000
on

fixed

•

several
fee

Institutions
million

basis.

•

Estates

dollarsc-F

Robt.

Doyle

Rochester

ROCHESTER, N. Y.~Robert

Doyle has resumed the investment
business under the

of Doyle
offices in the Wil¬
name

Utility Depreciation

Company, from
der Building.
In the past he did
business

as an

E. Arnold

individual dealer in

Sunstrom, Comptroller of TVA, disputes conclusions in
paper, "Original Cost Techniques Threaten
Utility
Equities" by W. Truslow Hyde, Jr. Mr. Hyde Rebuts.

Rochester.

Assoc.

Development Corp.

Associated Development & Re¬
search

the

Corporation is engaging in

securities

fices at 150

business

from

Broadway, New

of¬

York

City.

1946, issue of your paper in an
article written by a Mr. W. Trus¬
low Hyde, Jr., Public

& Southern

qualified

every

system
aims

Emerson Drug
Common

from

recover

Monumental
Life Insurance

accountant

the

worn

out in

group of assets) in a system¬
atic and rational manner. It is a
process of

allocation, not of val¬

providing service."

allocated

STEIN BROS. & BOYCE
Members New York

Exchanges
6

rences

intended to

Baltimore Stock

and

other
leading: exchanges
CALVERT ST.,
BALTIMORE 2
Bell
Teletype BA 398
New York
Telephone Hector 2-3337

accountants,

regulatory commissions, and pri¬
vate
accountants, is known as de¬
preciation accounting. The Amer¬
ican Institute of Accountants de¬
fines depreciation

accounting

follows:

BOSTON

ffrey

goods of medium

cotton
to coarse
yarns

(better known as
drill),
ings, twills and

narrow

chafers; also

sold

output is

for export.

dividend of 50c
per
share was
ordered by the
directors payable
May
15, 1946 to stockholders
of

May 1st.

record

PHILADELPHIA

the rate of 25c

such

American Phenolic

Price

Reda

Memos

approach
were

the

the sole pur¬

if the asset

were

not

ment

asset

has been

the

period

It is the

profit
periods in¬

accounting for

tionship

between

depreciation

and

replacements is purely coin¬
cidental—most assets are re¬
placed at the time of retire¬

Request

Pont, Homsey Co.
MILK

STREET

BOSTON 9, MASS.
HANcock 8200
N. Y.

BUCKLEY BROTHERS

1529 Walnut

Teletype BS 424
Telephone CAnal 6-8100

The point

Members New York,
Philadelphia and
Los Angeles Stock
Exchanges

rare

Street, Philadelphia 2

New York

page

2090)

Central Iron & Steel

Food Co.

Empire Stec! Corp.

Common

Federal Street, Boston
10

Warner Co.

was

portfolio

de¬

high

some

stocks.
Consumers would split its
present

values

stock 2-for-l and sell
shares of additional

rising markets and in¬

price

earnings

ratios)

management preserved a middle^
of-the-road attitude so far as port¬
folio values

were

SEC estimates
ation

expert,

stockholders'

shares of

"new money" stock.

far below the

leading valu¬
strong common

common

stock

the

and

would

did

D. 51

lent

tute the

Three stocks would then consti¬

job of publicizing the claims

the

stock.

common

dentally

otherwise, the

man¬

agement and the SEC eventually

sales.

agreed with Mr. Snyder that the
old plan was outmoded.

tribute

The

Commonwealth

ment then offered

the

1943

modification

proposing that
stockholders be
given

common

five years in which to
acquire the
new common

which

stock (to be

preferred

trusteed)

stockholders

It is then

enough

(using prevailing quotations
for valuation) to the

ferred

stockholders

off, either at

common

holding

could

"buy out" the preferred

obtain

the

benefits

the

higher portfolio value. Apparently
the Commission felt this
plan was

unnecessarily

complicated
and
slow, and it invited all interested
parties to submit new plans. This
has

resulted

the

filing of a
new
management plan and three
others.
new

management plan

rec¬

over

assets

the

S. C.

„

southern

company, and dissolve.

The management
plan also pro¬
vided for an optional pro-rata ex¬

change method by which holders
of

both

preferred

and

common

could

exchange substantial unit
holdings (consisting of 250 shares
of

commbrfj'qhtf
of 1

portfolio
appears

cated

and

some

preferred

stocks.

stock)

This

provision
compli¬

somewhat

perhaps needs clarifi¬

The Snyder
group also

(Continued

page

proposed
2109)

BOENNING & CO.
Phone

COrtiandt

MOHAWK VALLEY
INVESTING COMPANY

PH 30
to

QUOTED

& Curtis

1879

Midland Realization Common

INQUIRIES INVITED

—

Midland Utilities Common

Utica & Mohawk

New Stock When
Issued

Philadelphia

SOLD

v;§mm

Cotton Mills, Inc

338 Gene.ee

7-1202
.

-J

Sf£ Utica 2, N.Y.

l;Te];:4-3i95-6-Sli«Tele.
1
' '

UT 16
" '

Northern New England Common
Portland Electric Power 6s/1950

Gilbert J. Postley

INC.

N. Y. C.

BROADWAY, NEW

Co.

YORK 6. N. Y.

Direct Wire to
Chicago
'

for

cation.

Paine,Webber, Jackson

Preferred

left¬

any

new

Oneida Ltd.
Common

Private
184

Common¬

over

UTICA. N.Y.

Preferreds

1606 Walnut
St.,
Pennypacker 8200

—

(the

arrears

Common

BOUGHT

them

arrears

stockholders;

ferred redemption value and ac¬
dividends.
Thus the com¬

and

pay

latter only if
necessary).
The re¬
would
then go to the

wealth would turn

mon

pre¬

mainder

would receive under the old
plan,
the price
being equivalent to pre¬

crued

and

par

redemption price and

ESTABLISHED

Tele. PH 73

EOUITABLE BUILDING
DES MOINES 9. IOWA

proposed to dis¬
of the portfolio

basis

manage¬

plan,

Commonwealth portfolio

and all three would have a
market
value resulting from the "token"

Coinci-

Delaware Power & Light

Teletype SPBG 17

and South Carolina
subsidiaries.

1892)

SPARTANBURG,
L.

Memo qn request

Common

make

Common

COMMON STOCK

Preferred

Sioux City Gas & Electric
Co.

subsidi¬

also

give Mr. Snyder official sup¬
port, he nevertheless did an excel¬

not

A. M. LAW & COMPANY

Byllesby & Company

sub-

be set up

southern

Public Service of Indiana

Grinnell Corp.

Iowa Power &
Light Co.

United Light &
Railways Co.

new

public offering of $10,000,000 "new
money" stock, passing the funds
along to the Alabama, Georgia

organized by Mr. Snyder of Phila¬
delphia.
While large corporate
holders of the

control

aries

finally

was

holding company would

group

$20,000,-

for addi¬
tions and betterments.
Ohio Edi¬
son
would sell 204,153

concerned, and

were

figures reached by

400-800,000

stock—enough

to yield a net amount of
000 which would be used

made their appearance. While the

Federal Water & Gas

common

Phone Rittenhouse 3717

INCORPORATED

estimates

Properties

(Established

H. M.

WHEELOCK & CUMMINS

Bell Tele. DM

age" vbf cash and stocks
(rather
cash) the company
pro¬
posed "token" sales of Ohio
Edi¬
son and Consumers
Power
than all

ognizes the necessity of
disposing
of subsidi-

Stock Exchange
Bldg. Phila. 2

meanwhile

com.

PHILADELPHIA OFFICE

DES MOINES

„

But this

layed and

Sterling Motor Truck

REctor 2-5035

;

fied to 85-15%.

Vinco Corp.

Dayton flaigney & Company
75

Phone 4-7159

and

pressure

Common

Pittsburgh Railways

Submarine Signal

;

for¬

AND

& A

80-20%

a new common

holders; under

Textile Securities

com.

Botany Worsted Mills pfd.

Private New York
Telephone

•

exchange
preferred, however)

for

Southern

New England Lime
Common
New Haven RR.

and

Dealer Inquiries Invited

Whitney

Common

Preferred

dividing

of the Northern
group

Common

...

In order to establish
market values
for the remainder of the
portfolio
and to make it feasible
to pay off
preferred stockholders in a
"pack¬

organized group of pre¬
ferred stockholders this was modi¬

The

SPARTANBURG

Boston Edison

Megowan-Educator

It is much more

Angeles

TRADING MARKETS

event.

(Continued

Los Angeles

Pittsburgh, Pa.
Hagerstown, Md.
N. Y.
Telephone—WHitehall 3-7253

Private Wire System
between
Philadelphia, New York and Los

Hollingsworth

also be made

may

that literal replacement in kind

;

tenders

company

re¬

duced to scrap value at the
time
of its retirement from
service in
order to arrive at the net

the
an

from

ment.

;

past expenditure, not a provi¬
sion for a future one.
The rela¬

Pump Company

Revised

If it

Merchants Distilling

Approximately 341/%

the

the necessity of
taking into ac¬
count the fact that the
invest¬

for

Request

volved.

Descriptive Analysis

Accounting Asso¬
following:

that

with

between the preferred

creased
mono¬

replaced.
The problem
depreciation arises because

Floor, Kentucky Home Life Bldg.

stock

out

(based

LOUISVILLE 2, KENTUCKY
Long Distance 238-9
Bell Tele. LS 186

Previous quarterly
dividends

have been disbursed
per share.

occur¬

depreciation account¬
ing to provide for the replace¬
ment of
assets, logically there
would
be
no
depreciation to

Incorporated
1st

all such

ciation wrote the

pose

™! BANKERS BOND £1

abrasives,

pyroxylin-coated fabrics.
substantial amount of the Normally

it is not

measurement

graph approved for publication in
1937 by the executive committee

record

various

year,

Perry Mason in his

for

sheet¬

fabrics for industrial
purposes used in
automobile tires and
for
and

Mr.

subject.

Winn & Lovett
Grocery

Company manufactures

occur¬

replacement
doctrine of questionable
validi¬
ty, but there is no logical basis

Louisville Gas Pref.

recalled

common

may prop¬

account

during the

plications

Girdler Corporation

Common Stock

ydarP Al¬

rences."

American Turf Ass'n

1841

into

of the effect of

American Air Filter

Merchants Distilling Co.

The

system that

No logical connection between
depreciation and replacements—
Not only are the financial im¬

LOUISVILLE

Dwight Mfg. Co.

take

of the American

"Depreciation accounting is

Incorporated

erly

advocat¬

the

though the allocation

ed by certified
public

plant,

mula for

charge under such

holding*8*

plans, Commonwealth's ®ries». e*ther by sale or distributhrough a series of evo¬ tion, for geographic reasons. How¬
lutionary changes, depending on ever, it would limit public sales
to
the trend of the Stock market and the two smaller
companies, the
the pressure brought to bear by Indiana and Illinois
subsidiaries
interested security holders. It will (they might be used for
started

Depreciation for the
is the portion of the total

Commonwealth

andjconsummated.

company
has gone

year

plan is approved

number of other

uation.

The process of
recouping the dol¬
lars invested in

Noxzema Chemical

tangible
less salvage (if

assets,

sufficient to replace that
part of the company's plant which

value

American

which

distribute the cost

basic

capital

amount

Monumental Radio

accounting

any), over the estimated useful
life of the unit (which
may be

will

consumer

other

view with alarm and almost with
what might be described as hor¬
ror is
Mr. Hyde's statement that
"the function of
depreciation is to

Bay way Terminal

sustaining the constitu¬

tionality of the Utility Holding Company Act (in the case
of
North
Company—three other cases remain to be
disposed of)
may expedite holding company integration plans to some
extent, it
seems probable that some time
may elapse before the

The statement in his article that

BALTIMORE

While the recent Supreme Court decision

Editor "Commercial and Financial
Chronicle":
Every so often a so-called security analyst wanders off his beaten
path and crosses over into a field in which he is a
novice at the best.
Such is the case in the March
21,*

Utility Ana¬
lyst, Josephthal & Co.

...

Commonwealth & Southern

"Chronicle"

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

2077

: Roy E. Nelson Forming
Own Investment Firm
TYLER, TEX.—John G. George
SPOKANE, WASH. — Roy E.
has formed John G. George In¬ Nelson has
formed R., E. Nelson
vestment Securities with offices
& Co. to conduct a securities busi¬
in the Peoples Bank Building. Mr.
George has recently been with the ness from offices at 4304 North
U
S. Treasury Department.
In Lincoln Street. Mr. Nelson prior
the oast he was manager of the
to
serving in the Army was a
securities department for Sabine

John George

Forms Firm

Own Inv. Business
Roger S. Palmer has formed
Roger S. Palmer Co. with offices
By DR. ROBERT STRAUSZ-HUPE*

ing

J. F.

department, of Pennaluna &

Reilly & Co., Inc., 40 Ex¬

change

Place, New York City, and

Irwin

South La Salle Street, Chicago,

111., announce the installation of a
direct wire to Cayne & Co., Union

Richard K. Kaufmann, Alsberg

Cleveland,

Building,

Commerce

the Cleveland

Ohio, members of
Stock Exchange.

Guttag Joins Staff
Kaufmann, Alsberg Co.

Co., 120 Broadway, New York

City, members of the New York

Wall Street,

Company, Inc., 37

New York City, an¬

La Salle

Exchanges,

Lieutenant USNR, is

with

now as¬

Mr.

them.

formerly

was

Guttag

charge

Street, Chicago 4, 111.

the

Bond Department of Henry

Company, Inc., 209 So.

an¬

that Irwin Guttag, former¬

sociated

the installation of a pri¬
vate wire to the office of Sills,

Curb

and

nounce

nounces

Minton &

Palmer

Gut¬

created

This

should

tag.

American

alone

policy

foreign

New York

cause

This is

tioned

critics

NOTE—From time to time, in this space,
there will

and
not

Americans, This is number 122 of a series.

SCHENLEY DISTILLERS CORP.

Unfair, Unfair!

Charter
also

the

statement of purpose re¬

that UN will evolve into

only upon the
flaws

By MARK MERIT

work¬

ing world government.
Robert

but

Criticism Justified

upon

The

difficulties

recent

afforded its critics the opportunity
to demonstrate on the hand of

going to risk if, however, because
there's ample justification for tak¬
ing issue with a series of cartoons,
sponsored by a dry orgaitizatioto;
disseminating palpably erroneous

what they had

concrete evidence

are-pleased :to
1

•

announce

League of-Nations.
This
fact might have been ' accepted
more calmly by the general public
had not several influential groups;

that

Mr. Frank iL. Sherman

encouraged

has become associated with

endeavored

us as

League
the

Mr. Wm. R.

multitudes

Assistant to the President

official

silence,

the

new

^publicity-conscious
Government

World.

"sell"

obviously

It is a voluntary as¬
soveregin nations. It
is ostensibly based on the prin¬
such thing.

Daley

sociation of

of the equality of nations.
principle, however, is quali¬
fied by the special privileges ac¬
corded
to
the
five
permanent
members of the Security Council.
ciple

This

OTIS & CO.

*An

New York

Chicago

address

Denver

New York

Dr.

Strausz-

information. We have
a

constitu¬

cartoon

Believe", published by the dry prop¬

say,

aganda organization, "American

world

Business Men's Research Founda-

and
global sovereignty stfeerior to all
national sovereignties. There are
several schools of thought as re¬
gards the method for attaining
this goal and the degree of power
the proposed world government
is to possess.
They are agreed,
however, that mankind is con¬
fronted by an ineluctable deci¬

tion" It depicts millions of pounds

should

The

Charter, they

amended and

government

set

up,

new

sion: shall there be One World

None? Their arguments are rein¬
forced by the evidence submitted

of atomic energy

"The

weapon.

the

used
only

problem

(Continued

the

as a

military

solution

Bomb,"

on page

2123)

Mr.

of grain

the installation of

tunneled into
.

SILLS, MINTON & COMPANY

direct wire to

Incorporated

CAYNE & CO.
Members

Cleveland Stock

Chicago, Illinois

Exchange

Cleveland, Ohio

J. F.
Members:

J-G-White & Company

Reilly & Co., Inc.
New

York

Security Dealers

the cartoon,

in big, bold face type

"Help Us In Our Fight For Local
Option For Indiana".
Now this is
faced

one

of the most bare¬

misrepresentations

ever come across.

all during

the

have

In the first place,

war,

the production

facilities of the beverage distilling

converted, for three
making vi¬
tally needed alcohol for war pur¬
poses. Since the end of the war, the
beverage distilling industry has
been permitted to use only enough
grain for a few days' operation, per
industry

was

and one-half years, to

It must be remembered

too, that the grain used during this

part-time distilling, is not of a grade

37 WALL

Chicago 3, HI.

N. Y.
New York

Boston

Cleveland

Chicago

STREET

NEW YORK 5

•

ESTABLISHED

Now, how about sugar? We
peat: Not

re¬

single pound of sugar is

employed by the beverage distilling
industry, in making whiskey! Some¬
time ago, we incorporated in one of
our pieces, a joint statement to
this effect, by the War Food Ad¬
ministration, the Office of Price
duction Board.
Those who

1890

Teletype: NY1-1815

Telephone: HAnover 2-9300

Administration and the War Pro¬

INCORPORATED

Association

39 So. LaSalle Street

Exchange Place

Private Wires:

commercial alcohol

making of excellent beverage spirits.

The installation of

distillery. And directly underneath

food, although perfectly fit for the

Announcing:

New York 5,

a whis¬

ordinarily used for processing into

private wire to the office of

being tunneled into

key distillery, and tons of sugar

month.
announce

desk

tional convention, should be called

City, April 12, 1946.

on our

captioned, "It's Hard to

forthwith.

Columbus

Toledo

Cincinnati

Hupe before the New York Chap¬
ter of the American Society Of
Chartered
Life
Underwriters,

CLEVELAND

Terminal Tower

concerning the vast potentialities

Established 1899

2000

Our critics insist that

hard, sometimes, to keep

anything of a controversial nature,
out of this towerlet of type. We're

been hoping to demonstrate all
Usually, political compromise
begets imperfect institutions. The along: the Great Powers are not
Charter of San Francisco is not ready to merge their independence
in
a
supreme
world authority.
vastly superior to the Covenant
the

Strausz^Hupe

the
miraculous
compromise
wrung
from a uniquely favorable mo¬
ment
in human history,
which
fathered the new League.

appear an advertisement which
hope will be of interest to our fellow

flecting the faith in the perfectability of UN of the President and
the American public.
It is hoped

reflect

St.,

City.

SCHENLEY DISTILLERS CORPORATION

hence¬

inten-

pause

Capital Corp.

forth will operate mainly through
the United Nations Organization.

well

Gran-

from offices at 130 West 42nd

President Truman declared that

circum¬

stance

with

was

engaging in the securities business

States, the Soviet Union,
Great Britain, China and France.

now.

and

The Wek Capital Corporation is

United

—could not be

Co.

Wek

against

com¬
enemies

formerly

was

& Co.

machinery for the enforcement of
sanctions against aggressors can¬
not be set in motion against the

collaboration

Palmer

bery, Safford & Co. and Estabrook

abundantly clear from the arid climate of world poli¬
tics that the United Nations Organization—had it not been formed
during a peri<S>od
of
The veto power insures that the
loyal
Power

Street, New York City,
in the securities busi¬

Mr.

with Reynolds & Co. Prior thereto
he
did
business
as " Roger
S.

It should be

Great

engage

ness.

mon

Stock

White Wire to Sills Minton
J. G. White &

Asserting the United Nations' Charter is not vastly superior to that
of League of Nations, Dr. Strausz-Hupe contends there is no guar¬
antee that the UN will evolve into a world government.
Holds
nationalism has been strengthened, not weakened by the world wars
and that economic equilibrium is less stable today than 35 years
ago.
Urges solution of our domestic problems as best means of
meeting our obligation of international leadership.

Co., Wallace, Idaho.

Reilly Has Wire to Cayne

at 43 Cedar

University of Pennsylvania

partner, and manager of the trad¬

Royalty Corp.

Roger S. Palmer Opens

.',7 ■

Chronicle)

(Special to The Financial

Los Angeles

are

trying

hard to

bring back prohibition have short
memories, indeed. They should
take time out to visit mentally the
"chamber of horrors" built up dur¬
ing the prohibition era. Judging by

widely published accounts of cur¬
should
also visit the three "dry'* states.

rent conditions there, they
WE

ARE

PLEASED

ANNOUNCE

THAT

are

pleased to

announce

that

That would

MR, H. ROLAND

HOWARD E. PHILLIPS

give them a relatively
mild picture of what^ould happen*

SWIFT

•

P.pp
IS

NOW

■

ASSOCIATED

WITH

again, if so-called 'national prohi¬

has become associated with

Sales

EDWARD

P; FIELD 8c

MEMBERS NEW YORK

WALL

STOCK EXCHANGE

STREET

NEW YORK 5,

Manager'of

1946

bition returned.

will, is of the same opinion

'still".

R. L. DAY & CO.
Members New

FREE—Send

York Stock Exchange

Boston 9,

Mass.

14 Wall

postcard to MARK MERIT

OP SCHENLEY DISTILLERS

N. Y.
WHITEHALL 4-8560

But.. ."A man convinced against

New York Office

his

111 Devonshire Street
APRIL 15,

our

us as

Street

New York 5, N. Y.

CORP., Dept.

ISA, 350 Fifth Avenue, N. Y. 1, N. Y.t and
you

will

prints

jects

receive

this

booklet

articles

series.

containing re¬

various

sub¬

.THE COMMERCIAL & FINANCIAL CHRONICLE

2078

New

.Thursday, April 18,1945

Jersey

Worsted

Mills;

Mo¬

hawk Rubber.

Trading Market

Co.

Gas

Fuel

from

Associates

—Analysis—Stern

Co.,

Established

1922

CHICAGO 3
Tel.

Tele. CG 271

Randolph 6960

CARTER H. CORBREY &C0.
Member, National Association

of Securities Dealers

Boston

Middle West

—

Pacific Coast

For

conditions—Hirsch

UNDERWRITERS

Also

and

Chemical

analysis

135USaSeSL

Young, Larson &
Tornga, Grand Rapids National
Bank Building, Grand Rapids 2,

Michigan 4181
LA 255

comment and

review

contain¬

ing brief analyses of Philip Carey
Manufacturing Co.; Sargent & Co.;
Company;

Upson

Lawrence

1529

Also

Co.;

Members Principal Stock Exchanges

So. LA SALLE ST., CHICAGO 4

Distilling.

1 Wall

the

Searching discussion of

near-term

Industries, Inc., Pfd.
Co., Common

Snap-On Tools Corp., Com.
^Prospectus Available

Established 1916

interested

ipWliHflWlWliHliijit!lt)BtHW;i)lliiaiiii!iJI[)IHIlilltlil(lliiiIiiI!li;nillllllIIIHillltll|y

elsewhere

id with check

this

de¬

partment C-F, American Institute
of

Finance, 137 Newbury Street,

C. €.

Wages

FINANCIAL

ADVERTISING
Its

Branches

Prepared—Conference

Albert Frank

Invited

Shore

Revised

South

bulletin

—

Leading Banks and Trust Com¬
panies

secutive
New

New

York—56th

quarterly

York

Con¬

comparison

Consolidated
The

Chicago

New

York

stocks

for

City Bank
and

the

Stocks—

Gas

Utilities

and

Ricks & Price, 231 South La Salle

7'5060

Boston Chicago Philadelphia San
Francisco

Also available is

orandum

Cunningham

Analysis—H.

Drug

Hentz

Stores

Trust, Ltd."—Booklet—Mod¬
el, Roland & Stone, 76 Beaver
Street, New York 5, N. Y.

Equity

Stocks—

Analyses of situations considered
especially attractive at this time,
including Brunswick
Site
Co.;

Co., 60
Beaver Street, New York 4, N. Y.
Also available is

leaflet of

re¬

Mission Corp.

Darling

Co.—One

com¬

four

growth fields —
Analysis for dealers only—Moreland

Detroit

Co., Penobscot Building.
26, Mich.

Dayton

Malleable

Iron

Co.—

Study of outlook and speculative
possibilities for appreciation for
this

company—Ward

Co.,

available

Shoe;

Salle

Co.

Co.,

Street,

Manufacturing

Water

Simplex Paper Co.—Descriptive

analysis discussion potential post-

Chicago

wop

benefits to the
company from

the

Haskelite

Brook

—

12C

automobile,

frozen

Corp.

—Study firm pioneering in devel¬
opment of plywood and its uses—

food

building,

and

industries—Raymond

Co., 148 State Street, Boston 9,

Mass.

Amott, Baker. & Co.. Inc.. 15C
Broadway, New York 7, N. Y.

Southern Natural Gas Company

Kinney-Coastal Oil Company—

—Comments following a study of
the
Company's annual report-

Analysis—James M. Toolan & Co.,
67 Wall Street, New York 5, N. Y.

Graham, Parsons.& Co., 14 Wall
Street, New York 5, N. Y.

Roi

lative

Company

stock

purchase

—

Study

sound

First

Spokane

Suburban

RR.—Circular—

Landreth

Roll way

late memoranda on:
American
Industries;

are

Great

Mills,
inc.;
Dougia^
General Tin; Upson Co.:

Post

Office

Propane

Gas

Corp.

—Reprint of letter to stockhold¬
ers—Bcherck, Richter 'Company,

McLaughlin, Reuss & Co., 1 Wall
Street, New York 5. N. Y.
Lipe

Co.,

Cement-

developments—

Sports Products, Inc.—Circular
—Hardy & Hardy, 11 Broadway,
New York 4, N. Y.

Pattern.

Valley

recent

Square, Boston 9 Mass.

Princess Shops; Electronic Corp.
District Theatres Corp.; and Sim¬

Lehigh

Lerner

Colon}

Corporation, 70 Pine Street. Nev
York 5, N. Y. Special letters avail¬
able on Dumont Electric Corp.

plicity

Portland

Bulletin

specu¬

Building,

Louis 2,

St.

Mo.

Corp.—Circular

—Herrick, Waddell & Co., Inc., 55
Liberty Street, New York 5, N. Y.

Universal
—

Zonolite Insulation-

Caswell

South La Salle

Longview Bridge Class "A"
Memorandum on interesting low-

Co.,

Inc.,

Hoge

Building,

Seattle

Walt Disney Productions—Spe¬

Wash.

cial

Merchants

report-—Maxwell, Marshall &

Co., 647 South Spring Street, Los
Distilling—Full

de¬

Angeles 14, Calif.

on
producer of the popular
"Southern Comfort" whiskies anc

spirits

available

from

Blair

Weil & Go. Opens NX
Branch Under Young

Claybaugh & Co., 72 Wall Street
New York

Miller

5, N. Y.

Manufacturing Co.—An¬
current

situation

Weil

and

for 1946—Comstpck &
Co., 231 South La Salle Street.
Chicago 4, 111.

vestment

prospects

branch

Co.,

New

firm,

office

New York City,
agement of Cecil

Orleans

Members

^Board of Trade

National Gas & Electric

Corporation Common Stock
Write
A

For

under the man¬

Mr.

P. Young.

'i^ulpr

Manufacturing Co., makers

of the

Motorola Radios and
Phonographs
—Seligman, Lubetkin & Co., 41
Broau street, New York
4, N. Y.

CHICAGO 4, ILLINOIS

Direct Private Wire to New
York
?

F. L. JACOBS

COMPANY Com. & Pfd.

Young
ident
and
an

was

previously Vice-Pres¬

the

First

Colony

Corp.

prior thereto did business as

individual dealer.

Prospectus Available

The Gabriel

(Par Value $10per Share)
a y

Bell System CG 637

H. M.

Byllesby and Company

Incorporated
135 So. La Salle
Street, Chicago 3
Telephone State 8711

Philadelphia

Pittsburgh

-■

UIK

i!i

SILLS, MINTON & COMPANY
INCORPORATED
Members Chicago Stock

Teletype CG 273

New York

Company

5% Cumulative Convertible Preferred Stock

MOUNTAIN STATES POWER CO. Pfd.

discussion of this
company.

Telephone Randolph 4068
i

INTERSTATE BAKERIES CORP. Pfd. &
Com.

N-l,

208 SOUTH LA SALLE ST.
~

—We Maintain Active Markets In—

Chicago Stock Exchange
Chicago?

Minneapolis

in¬

opened a
52 Wall Street.
has

tm
-

120

Street, Chicago 3,

111.

priced speculation—Grande & Co.

120

Broadway, New York 5, N. Y. Also

Corp.;

Co.;

Instrument

Spring

Middle West Corp.

3, 111.

alysis

Alabama

Statler

^cranton

Co.—Analysis—Ira Haupt & Co
111 Broadway, New York
6, N. Y.'
Also available is a
study of the

tails
L.

Commodore Hotel; Hotel
Lexing¬
ton, Inc.; Hotel Waldorf Astoria

Hotels

—

search comment

Selec¬

Well-

Memorandum

Fifth

Analysis

and Hammermill Paper Co.

tion

Estate

recent mem¬

of Rhodesian

—

Merii, in care of
Corporation
Avenue, New York i*

Distillers

N. Y.

—

pany

Analysis

"Outlook for World Copper and

350

The Muter Co.

1946—Laird, Bissell & Meeds, 120
Broadway, New York 5, N. Y.

quarter

analysis
first

Mark

Schenley

Corp.—Circulars-

—

Hanseatic

Corp., 120
Broadway, New York 5, N. Y.

Real

New York 6, N. Y.

Telephone GOrtlandt

—

Rail

Guenther Law

Incorporated
131 Cedar Street

RR.

111.

Measures Rise

Summary of report —
Hickey, 49 Wall Street,
New York 5, N. Y.
Vilas

Chicago South
Bend

Doyle, O'Connor & Co., Inc., 135
South La Salle Street, Chicago 3.

Boston 16, Mass.

Corp.

Hammond

common

Street, New York 5, N. Y.

issue and

Place!

Comparison

Plans

Inc.—Analytical study
F. Reilly & Co., 40 Exchange
Place, New York 5, N. Y.

Street, Chicago 4, 111.

Chicago 3

Teletype CG 405
Indianapolis, lad.
Rockford, 111.
Cleveland, Ohio

All

Bowser,

Central
Paper — Descriptive
circular—Adams & Peck, 63 Wall

Exchanges

TeL Franklin 8622

III

Street, New York 5, N. Y.

Troster, 74 Trinity

they have
running in the Chronicle-

write

Upson

Products;

Analysis—Caswell

stock—Amos Treat & Co., 40 Wall

safe¬

Chicago Board of Trode

16 So. La Sidle St.,

common

guarding their funds — Copy of
five-year survey — $3.00 — Clip

Paal H.Davis &Go.

Maine—Suggestion of

for

Request.

Members Principal Stock

risks

of substantial wealth, banks,

corporations

Camden Forge

inflation

companies, investment
trusts, endowed institutions, and

*Wells-Gardner & Co., Com.

ing, San Francisco 4, Calif.

Hoit

—

Schenley Distillers Corporation

—Boenning & Co., 1606 Walnut
Street, Philadelphia 3, Pa.

—

insurance

St.

Francisco—Analytical re¬
port—Kaiser & Co., Russ Build¬

Cola—Circular

possibilities

New York 6, N. Y.

Inc.

San

Boston &

"How Much More Inflation this

Tennessee

South

Anglo California National Bank
of

Company—De¬

memorandum—Ward & Co"
Broadway, New York 5, N. Y

Rose &

Engineering Co.; Kendall Co.

Grinneil

American Service Co.—Circulai

interest to holders of the

men

Randolph 5686—CG 972

Alegre Sugar
Corporation
of

Broadway, New York 4, N. Y.

Year?"

Chicago Board of Trade

*Woodall

Reda Pump Co. and Merchants

Punta

Haytian

America; Latrobe Electric Steel
Co.; Ray-O-Vac Company; Fort
Pitt
Bridge Works and Welch
Grape Juice Co.—Strauss Bros., 32

HICKS 6- PRICE

memoranda

—Adams & Co., 231 South La Salle

Corp.;

Request

New York Office

are

Street, Chicago 4, 111.

niture

Chicago Corp.

The-Muter-Co.

231

available

Ohio Leather Co.; American Fur¬

Utilities Corp.

Co.;
mail

Company

—Brochure of articles

Also detailed circulars

Street, Philadelphia

Appliance Co.; Pettibone Mulliken
Corp.;
Armstrong
Rubber
Co.;

Consolidated Gas

Walnut

aile

Exploration

been

Revised

—

La Salle

10, Mass.

Panama Coca

Co.—Descriptive Circu¬
lar—Seligman, Lubetkin & Co..
41 Broad Street, New York 4, N. Y.

2, Pa.

Portland Cement Co.; The Parker

Circular

Phenolic

Service,

Air

Co., 208 South

interesting

Galvin

Mich.

American

Geared to the News—Brochure
of

The

120

N, Y.

memorandum—Buckley Brothers,

650 S. Spring St.

CG 99

American Forging and Socket—
Circular—De

available.

LOS ANGELES 14

CHICAGO 3

Oil

—Circular—Hoit, Rose & Troster.
74 Trinity Place, New
York 6.

Electric Power & Light Corp. are

DISTRIBUTION

State 6502

review of the

Industry
MARKET

Flamingo

reviews of business and financial

Co.,
25
Broad Street, New York 4, N. Y.

„

SECONDARY

Condi¬

covering

report

possibilities

developments—Fred

tailed

Dorn Iron Works.

Financial

tions—Pamphlet

stork

Descriptive
circular
-Dayto^
Haigney & Co., 75 Federal Street

—

Business and

Wholesale Distributors

speculative

oil

New England Lime

Banks—1946—Survey
examin¬ Hotel Statler Co.; Roosevelt Hotel
ing/ future possibilities of these NY; Savoy Plaza; and 870 Seventh
Electromaster
Inc.
Receni
stocks, including banking trends Ave. Corp.—Ask for list C21—
report — Mercier,
McDowell &
for
Amott, Baker & Co
w
150
1946; data on
150 leading
Dolphyn, Buhl Building, Detror
banks;
prospects
for
increased Broadway, New York 7, N. Y.
26, Mich.
bank business; favorable and un¬
Also
available
a
report
oi
favorable aspects for the banking
American Bantam Car—Special Sheller Manufacturing Corp.
industry as. a whole—available on report—Amos Treat & Co., 40
request
from
Department
"T," Wall Street, New York 5, N. Y.
Engineers Public Service Com¬
Merrill Lynch, Pierce, Fenner &
Also available are reports on pany—Memorandum—Seasongood
Beane, 70 Pine Street, New York Automatic Signal Corp.; North¬ &
Haas, 63 Wall Street, New York
5. N. Y.
ern Engineering Works; and Van
5, N. Y.

Street, Chicago 4, 111.

Street

120

Broadway, New York 5, N. Y.

120 South La Salle

Electric Corn

ex¬

cellent

Fairman &
Eastern

COMMON

C. L Schmidt & Co.

Gas &

memorandum

offering combination of
improving
utility income, together with

—

Descriptive
analysis—au
Pont.
Homsey .Co.,
31
Milk
Street,
Boston 9, Mass.

It is understood that the firms mentioned will he pleased
to send interested parties the following literature:

PREFERRED

Manufacturing

Dwight

Recommendations and Literature

Sun-Kraft Inc.

National
—Late

Dealer-Broker Investment

Exchange

209 SO. LA SALLE ST.. CHICAGO 4. ILL.
r.lonHnno Dw*rWn

1421
■

■1

■■■

■

>—i

Teletype CG

ij.

■
.

864

163

Volume

THE

Number 4482

COMMERCIAL & FINANCIAL CHRONICLE

2079

publication

of a picture-roster Year
Book, the
double that of last year due to the value to the
mind that the edition itself will be
bers of our entire membership.

income

should

advertisers, bearing in

permanent record for all

mem¬

Very truly

yours,

Chairman,

National Advertising Committee.
ALFRED W. TRYDER, Vice-Chairman

NSTA CONVENTION SEPT 17-19

bers

the

Canadian and American Credits

of-the Association:
I have recently returned from Seattle where I conferred with
officers and directors of the Bond Traders Club of Seattle in
.

While it is too early

To Britain
Financial Editor, London

to give you the detailed Convention Pro¬

A com¬

plete program will be arranged for the ladies.
Ample time will be allowed for play and sightseeing. There will
be a Salmon Fishing Tournament, also a Field Day and other interest¬
ing

entertainment.

adherence of all members of sterling

Arrangements have been made for a special train leaving Chicago
Saturday morning, Sept.
14, arriving in
Seattle, Monday,

Sept. 16. Following the convention, the "special" will return via
Portland, San Francisco and Los Angeles where the Traders Clubs
have

made plans for our entertainment.

Angeles for Chicago

Los

The "special"
Friday, Sept. 27.

will leave

Britain

was

obtain

repre¬

minimum

There will be various type's of pullman accommodations
.available and the cost will depend upon the kind of space desired.
Reservations for the "special" may now be made with me and ttfe

Britain's

"special" should make

the

post¬
I

that

less

why
ings

wor¬

Association.

nancial

reas¬

Britain

were

Canadian

for

this

ization and should acquaint the members with our entire member¬

ship.

"We
order to

• j

must

have

the

same

"Mr. Herbert D. Seibert,

publisher and editor of 'The Commer¬
cial and Financial'Chronicle,' has been securing for the past several
months rosters of all the various affiliates as well as pictures, and

committee would appreciate'your immediate response to any
correspondence you might receive from him direct, as well as a cour¬
teous interview to his photographers.
This cooperation is necessary
and we hope that our publication will be 100% complete.
Your com¬
mittee has been greatly enlarged this year and we are most pleased
to name below the various regional chairmen:
your

Atlanta—J. F. Settle, J. Hi Hilsman .& Co., Inc.
Baltimore—R. Emmet Bradley, Mackubin, Legg & Co.

Portland—Donald Sloan, Sloan & Wilcox.

& Co,, Inc.
Brush, Slocum & Co.
- •
Seattle—Howard *W. Jones, Harris, Lamoreux & Norris, Inc.

r -

•

National Advertising Committee produced ap¬
NSTA treasury. This year with the

for your

area

are

COMMON^

REALIZATION COMMON

TENNESSEE GAS & TRANSMISSION
CENTRAL PUBLIC UTILITY 5 '/2 s

*Prospectus available upon

request.

case

she

$3 Preferred, Class A
and Common Stocks

Nor is

the

new

Circular

It provides that the

the

cancels

debt of $425
Britain in respect

the

Training
showed

Scheme,
to

which

one

the

with

the

been
upon

Agreement.

from

Canada's

what

She

ada's.

ready to find a sum equal to

main

It is
we

ADAMS & CO.
231

generosity

that

what

TELETYPE CG

ters in such

the

size

United States in either

will be of
food

population

use

Company
Howard

and

kinds,

raw

crease

materials

including

grain,

a way as

in Britain's dollar needs.

Miller

Puget Sound Power
Bretton Woods Inaugural Meet in?

many

Meanwhile the inaugural meet¬

ing of those responsible for -the
(Continued on page 2123)

COMSTOCK & CO.
CHICAGO 4

*Anderson-Prichard Oil I Corporation

Foote Brothers Gear and Machine
Gisholt Machine

231

So. La Salle St.

Dearborn

1501

Teletype CG 955

Corporation

Company

*MacWhyte Company i

Macfadden Publications

_.rv

Rath

Packing Company

^Standard

Gisholt Machine

Milling Company

;

All Wisconsin Issues

*Uarco, Inc.
United Printers and

Publishers, Inc.

Company

Prospectus available

upon

HOLtEY, DAYTON &GERN0N
Member—Chicago

request

105 So. La Salle

AjOAIIYN«®COMESNY

CHICAGO 3, ILLINOIS

262

Eau Clture

Incorporated

Chicago

New York

Boston

Milwaukee

Minneapolis'

Omaha

Stock

Exchange

St., Chicago 3, 111.
,♦

Central 0780

Offices in Wisconsin

•

Light Co.

Trailmobile Company

minerals

INCORPORATED

Teletype: CG 1200

Manufacturing Co.

•

DOYLE, O'CONNOR & CO
Telephone: Dearborn 6161

Inc.

Kropp Forge Co.

to take cog¬

buy

can

Industries,

Hydraulic Press Mfg. Co.

too

to Britain in many

With them Britain

ways.

PHONE STATE 0101

361

Canada

of the

Canadian dollars

STREET

ILLINOIS

Appleton Manufacturing

nizance of th$ consequent vast in¬

one-third

'Agreement
breaks
down.
wiU wish to reopen mat-;

can

SALLE

Aeronca Aircraft Corp.

really meant is that if the Ameri¬

CHICAGO

fair inference from

SOUTH

in Britain know of Can¬

one-third
of what the
United States is offering, in spite
of the fact that Canada is nothing

wealth.

Request

events

deliberately made contingent
the ratification by Congress
Anglo-American Agree¬

ment.

great

nearly,

☆

the

STREET

SERVICE CO.

gave

of the British Commonwealth Air

So, too,

*Waltham Watch

135 SOUTH LA SALLE

that

Britain's fi¬

dollars.

lacking

millions due by

to be found

Hart Carter

MIDLAND

1941

^Consolidated Grocers Corporation

City—William Lau, Frank & Belden.

MIDLAND UTILITIES

AMERICAN

time

INDUSTRIAL COMMON STOCKS

St. Louis—Bert H. Horning, Stifel, Nicolaus
San Francisco—Ernest Blum,

first

of interest for another, five years

and

This bare recital of detail does

is
.

your

cases

same.

financial relations

detract

Tele. CG 28

new

1,000 million
dollars, and followed
year later with a tem¬

generosity

from

gesture, in making the loan.
.

the

riot

Denver—Philip J. Clark, Amos C. Sudler & Co.
Deroit—Don W. Miller, McDonald-Moore & Co.
Florida—George M. McCleary, Florida Securities Co,
Houston—Edward Rotan, George V. Rotan & Co.
Kansas City—Arthur I. Webster, E. W. Price & Co.
•
Los Angeles—Donald E. Summerell, Wagenseller & Durst, Inc.
Louisville—J. Hugh Miller, J. J.-B. Hilliard & Sons.
'
Memphis—F. D. Schas, Bullington-Schas & Co.
New Orleans—Jackson A. Hawley, Equitable Securities Corp.
New York—T. G. Horsfield, Wm. J. Mericka & Co.
Philadelphia—Alfred W. Tryder, W. H. Newbold's Son & Co.

$7,000

both

in the American Loan

Connecticut—George Dpckham, Hincks Bros., Inc.
Dallas-^William R. Newsom, Jr., Sanders & Newsom

that

Chicago 3, III.
Tel. STAte 4950

exag¬

period of fifty years be¬ causes of Britain's Air victories
ginning in 1951, during which All claims in respect to goods de¬
both interest and principal are to livered
by Canada to Britain since
be repaid.
On the other hand, as yj-Day are settled for a payment
far a^ I am aware, there are no of $150 millions.
such stipulations regarding Brit¬
The Canadian Agreement has

„

Last year,

credit

2%, and in each

waiver clause is the

Chicago—Paul Yarrow, Clement, Curtis & Co.

proximately

the

to be at

sterling

Cincinnati-—Clair Hall, Clair S. Hall & Co.
Cleveland—Richard Gottron, Gottron, Russell & Co.

Twin

Interest

ain's

Boston—Harold Madary, Geyer & Co.

sterling

grant of

agreement.

in many respects the
those of the American

credit.

come

aid.

million Canadian

are

135 South La Salle Street

between

last-named loan is to remain free

terms

Canada

exists

KITCHEN & CO.

porarily interest-free loan of 750

Ottawa, Canada- is to lend Britsum of 1,250 million Cana¬

The

cooperation of the individual members

discussions

dian dollars.

complete this gigantic undertaking.

result

the

not

Canada has

ian the

vital part of your trading organ¬

feel¬

Norman Crump

Common Stock

Generous Terms
This

justified,

the Advertising Committee of the NSTA, will
publish at the September convention in Seattle a Year Book con¬
taining -the entire roster and pictures of the members of our National
we,

Henry C. Lytton & Co.

areas.

surance

Security Traders Association by the National Advertising Committee:

say

Hub,

Canadian credit provides a bridge
between the sterling and dollar

know

now

The.following letter is being .sent to all members of the National

This should become

ried than most

NSTA ADVERTISING COMMITTEE

It is not much of

geration

re¬

at that time I
was

countries

area.

people were. I

"This year,

The

dollars

the United States and the

transition

member

through Jack E. Jones, Hart¬
Be sure to tell him the exact date

"Dear Fellow-Member:

American

two

period.

and firm.

Mahony is engaging in the

Trading Market

for

arrival, the type of rooms desired, and your correct address

of .your

and

not

war

their Seattle hotel reservations at once

ley Rogers & Co.j Seattle, Wash.

Chronicle)

111 West Seventh Street.

completely inter¬
changeable, there is no such ex¬
change stringency between the

re¬

Financial

Even though

quirements

definite cost and schedule will be announced shortly.
the

products.

Canadian
may

The

to the Bretton Woods

area

and wood

the

sented

Angeles."

securities business from offices at1

which<$

money

$275 Vnd $300 per person from Chicago to Seattle, returning via Los

cent C.

When the terms of the American Loan Agreement became known

"special" will be operated on an all-expense basis which
will include rail, pullman, all hotels, also meals on the train and
transfers between trains and hotels. The cost will be approximately

was

ANGELES, CALIF.—Vin¬

last December, it was clear that the amount of $3,750 millions of new

The

Those who do not intend to travel

(Special

LOS

Monetary Fund and holds that having received ample CanadianAmerican long term credit, Britain will then be able to make full
use of
stabilizing resources of the Fund.

•

New York
active as

the

Mahony in Los Angeles

proposed Canadian credit
to Britain of $1,250 millions which is
contingent on U. S. loan of
$3,750 millions. Contends this combined credit will enable Britain
to get back above her "dead center" and that Canadian
grant will
act as a bridge between the dollar and the
sterling area. Looks for

Provisions have been made for several well-known speakers and

Exchange and

individual floor broker.

"Sunday Times"

British financial commentator recounts

I can assure you that you cannot afford to miss the first con¬
vention of the NSTA that has been held since 1941.
number of forums and other meetings have been planned.

membership
Stock
an

By NORMAN CRUMP

gram,

Schuyler. Jackson will
engage in the securities business
from offices at 92 Liberty Street,
New York City.
He was formerly
a
partner in Jackson & Wreszin,
C. H. Murphey & Co., and J. W.
Sparks & Co. At one time he held

regard to the convention of the NSTA which will be held September
17-18-19, 1946, at the Hotel Olympic, Seattle, Wash.

Edward

HAROLD B. SMITH,

Edward - H. Welch, Sincere & Co., Chicago,. Chairman. of the
NSTA Convention Committee, has sent the following letter to mem¬

jEdwariSiidacksoiiio|
Open Offices in N. Y.

Pond du Lac

"Wodi^on

-•

La Crosse

Wausau

Michigan Brevities
Exchange took a sharp drop
Last month's total was 342,592. as

March sales on the Detroit Stock
from the two

preceding months.

against 644,728 in February and 956,984 in January.
Michigan Die Casting Company has been changed

to Gerity-

Kroger Grocery & Baking Com¬
The Kroger Company, in the listings on the Detroit Stock

Exchange.

sued

headed

Products Co.
a

share.

of Detroit, at

group

having

of present

The

about

represents

of American Metal

value,

outstanding,

stockholders.

000 shares of common
par

purchased by the under¬

writers from

offering of 150,stock, S2

a group

and

been

Watting, Lerchen & Company

Security Traders Association of New York Phillips Trading Mgr.
Special Issue of "STANY" on 10th Anniversary For Edw. P. Field Co.
Security Traders Association of New York, Inc., is publishing

The

special 40-page edition of "STANY," the organization's magazine,

Michigan Die Casting Company, and
pany

Thursday, April 18, 1946

THE COMMERCIAL & FINANCIAL CHRONICLE

2080

commemorating the Tenth Anniversary Dinner to be held April 26
Copies of this number will be mailed early the week of the din¬
ner to all members of the Nation-11
Security Traders Association, of
which STANY is an affiliate, anc^
—
~
to

New
Additional copies of

partners

York firms.

many

offering

35%

the

piled by Elmer Meyers, B. W. Pizzini & Co., and B. Leslie Barbier,
G. A. Saxton & Co., a special fea¬
"West

ture

the Hudson"

total amount of stock outstand¬

taining

ing.

$15

All of the stock is is-

McDonald-Moore

Co.

pur¬

District

No.

bonds.

out-of-town

Douglas Quack has been elected

UNLISTEDS

Savings

First

the

Loan

and

Federal

Gehrke,
President
an¬
nounced. Mr. Quack was with the

Wm.C.Roney&Co.

Home

Loan

ministration for
*

Goebel

BUILDING

812 BUHL

chased

DETROIT 26, MICH.

Cherry

DE 167

6700

son,

has

pur¬

Willers

Wm.

ranging

inclusive.

0.61%

from

have

stock

shares, $4

approved

for

one

stock

split
The

shares,

bal¬

will

re¬

A.
Michael

the

DETROIT, MICH.—The broker¬
firm of Chapin & Co., Penob¬
scot Building, has been admitted
"o
membership on the Detroit
Stock Exchange, governors of the
Exchange announced. Roy F. Cha¬
pin, founder of the company, has

Tele. DE 507

T. G. Horsfield

Heaney

magazine, of which Alfred
Fitzgerald & Co. is Editor,
T. Geoffrey Horsfield of Wm.

J. Mericka &

Chapin & Co. Detroit
Stock Exchange Members

Detroit 26

been

Griswold Street for

the

past 25 years.

and

Co., Associate Editor,

manager

and

Edwin

Reynolds & Co.
issue

past he

was

will

included

are

the

Philadelphia
admit

Aeronca Aircraft
Conv. Preferred

traders
are

with

chosen

manager

Stock

the

members.

Ralph T. Dimpel of Edward

Purcell

C. Single, Dominion Securi¬
Corp.; Frank Davis, Chas. E.
Quincey & Co.; Benjamin Gold,
Gold Brothers; Fred Eisele, Free¬
&

E <le Willers,

Secre¬

tary of the Association.
Two

mit

interesting technical arti¬

Buying

Stock

Margin Equivalent

Purchase

Warrants"

Richard D. Donchian of Shearson,
Hammill & Co.
Leslie Blasius of
the

New

York

Telephone Com¬
contributed a special article
"Communications

In
umn

addition

for

Officers of STANY

Sheaffer

the

past

Co., President; William A. Titus,

Jr., F. J. Young & Co., Inc., First

Vice-President;

Hea¬

Joseph McManus & Co., Sec¬

ond

Vice-President; T.

the regular col¬
and news "From

Geoffrey

Secretary; and Howard

Treasurer.

River"

com-

R. L.

lips,

Edward

York

Field

Phil¬

Day & Co., Members New

Stock

Exchange,

announces

that H. Roland Swift has become
associated
with
them
as
sales
manager of their New York office,
14 Wall Street.
In the past Mr.

Swift

was

with

Spencer Trask &

Co.

To Be Leo

Ryan Co.

Effective May 1; the firm name
of James J. McLean & Co., 11
Broadway, New York City, will
be

Michael

ney,

these securities.

Members Detroit Stock Exchange

changed to Leo V. Ryan & Co.
change is in name only, part¬

The

ners
remaining the same—Leo V.
Ryan and Alice G. Ryan, Mr. Mc¬

Lean having retired from the firm
in 1942 upon induction into the

Army.

Co.,

Leo V. Ryan & Co. is successor
to the prior firm.

offer to sell

nor

solicitation of any offer to
buy

The offering is made
only by the prospectus.

148,448 shares

Teletype GR 184

Kingston Products Corporation
L. A. DARLING CO.

Common Stock, $1.00 Par
:

Plastics

Price $8.50

Precision Castings

Grey Iron Castings

; *.

Analysis For Dealers Only On Request

;

Moreland & Co.
MEMBER

1051

DETROIT STOCK

Creek

the Prospectus
,

PENOBSCOT BUILDING

—

Bay City

Mii

Muskegon

April .1.7,-1940

I i

may be obtained from the undersigned.

'•

■

—

"'■

Detroit, Michigan

—

Lansing

per

alison & company

EXCHANGE

DETROIT 4C
Battle

Company in Four Growth Fields

Display Fixtures

was

Mgr.
Day in N. Y.

For R, L,

GRAND RAPIDS 2
MICH. TRUST BLDG.

One

was

R. R, Swifl Sales

white, noble & co.

GRAND RAPIDS, MICH.

Phone 94336

May 1.

with Hornblower & Weeks.

Chester

are:

C. E. de Willers

the

humor

Churchyard

man

erts &

Horsfield, Wm. J. Mericka & Co.,

Inquiries Invited

jeYoung, Larson & Tornga

and

Exchanges,

partnership in the firm

man

ties

This advertisement is neither

Request.

Street',

York

Common

Phone 98261

In
the

PA.—Wurts,

New

& Socket Co.

GR 84

by lot—in the

"Insurance
Stock"
by
George
Geyer of Geyer & Co.; and "Per¬

who is also

New America."

& Co

Building.

Theodore Sheaffer to

"STANY"

sketches

cles will be included in the issue:

Horsfield

entitled

Circular

City office.

Dulles & Co., 1416 Chestnut

Co.; Fred W. Opitz, Rob¬
Co.; Robert Mackie, Luckhurst & Co.; Robert J. Sullivan,
Coburn & Middlebrook; and Rich¬
ard F. Abbe, Van Tuyl & Abbe.

be obtained upon request to

Mr.

pany

American Forging

Phillips

&
Co.; Murray L.
Barysh, P. F. Fox & Co.; Edwin J.
Markham, Wertheim & Co.; Nor¬

Tisch of

age

Buhl Bldg.,

with

vice-pres¬

partner in Yarnall & Co. and

ed of

may

Cadillac 5752

His

current issue sketches are includ¬

April 15.

& Dolphyn

New York

Mr.

Names

main in the company's treasury.
The
split
became
effective

Members Detroit Stock Exchange

Willers,

each

town

par

600,000

ance,

Mercier, McDowell

resident

order to acquaint local and out-of-

authorized
from
100,000

present stockholders.

Reports furnished on request

their

Cooley & Co.

and

was

of members of the Association in

value, to 1,000,000 shares, SI par value and a
four

Co.

capital

Becker of

basis

increasing

DE 206

Manufacturing Corp.

ident

members

Stockholders of Wayne Screw

Shelter

Geo. R.

years.

connection

PHILADELPHIA,
Howard

ma¬

thumbnail
V

Electromaster, Inc.

twenty-five

recent

Theodore Sheaffer

0.91%.

proposal
Telephone

Bonds

yield

Products

Randolph 5625

Wurts Dulles Admits

Corporation

turing in 1947 carry a 1%% cou¬
pon, the balance of the issue 1%.
They were reoffered at prices

Teletype

pe¬

riod

Michigan

1947-1951

DETROIT 26, MICH.

Mr. Phillips' experience in
the
investment business covers a

haus & Co.

Titus, Jr.

Township School District
No. 9 (Allen Park) iy4 and 1%
bonds,
maturing
from
serially

639 Penobscot Building

de¬

over-the-

Municipal Department for George
V. Rotan Co., and was with
Neu-

Brewing

Ecorse

Michigan Markets

nership in R. N. Eddleman

has purchased an issue of $120,000

Members Detroit Stock Exchange

distribution

counter securities.

the

Co.
Rapids

Established 1919

the

President announced.

First

Charles A. Parcells & Co.

trading

partment, where he will specialize
in

First National Bank

decade.

Co. for $275,000, Edwin J. Ander¬

Phone

Teletype

Brewing

Grand

their newly organized

HOUSTON,
TEX.—Lewis
W
Pollok has been admitted to
part¬

Ad¬

Bank

nearly
%

Members New York Stock Exchange

manager of

In R, N. Eddleman Co.

Association,

Walter

Federal

Lewis Pollok Partner

dition.

Treasurer

Exchange

appointment

Phillips

school ad¬

will be used for

MICHIGAN

the

Howard E.

most

J. Wechsler, L. J.
Co.; Ray Kenney,

by Arnold

Goldwater

Proceeds

new

items

Poetry in the issue is contribut¬

$15,000 Southfield Town¬
Oakland
County,
School

ship,

Call Us On Any

con¬

traders will also appear.

chased

of the New York Stock
announce

at the Waldorf-Astoria.

also

Edward

P. Field &
Co., 37 Wall
Street, New York City, members

' ?

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

2081

crease

Connecticut Brevities
the year ended Dec. 31, 1945, the New York, New Haven &

For

Hartford RR. had total operating revenue of $173,196,985 as compared

A net profit, after taxes, of $343,308 (71% cents per share out¬
standing) is shown on sale of $14,481,000 by Century Electric Co. of
St. Louis, Mo.
Dividends of 450 per share were distributed to 657

$182,394,331 in 1944.* Freight revenue of $82,985,889 showed a
The balance of
decline of 10.5% whereas passenger traffic of $76,577,206 increased shareholders during the year, aggregating $214,394.
Of the total gross income for the year
1%. Net income for 1945 was $3,596,689 against $14,071,121 the pre¬ $128,913 was added to surplus.
ceding year.
Fixed charges were covered 1.30 times against 2.16 47% was paid for payroll items; 47.6% was paid for materials used
and sundry expense items;
times in 1944.
3.1%^with

and

River

Connecticut

The

Power

the year ended Dec. 31,
1945, had operating revenue total¬
for

Co.

equipment and amortization
of emergency facilities, $139,372.70

was

for

which

Federal

State

and

taxes, and

$40,000 addition to Reserve for

Postwar

and

War

allocated to taxes; 2.3% was
for stockholders' interest, of

left

and

dividends

paid

was

2.19

and

times

times,

War Contingencies as of Dec. 31,

the end of the first quarter

1946, the Phoenix State Bank
Trust Co. of Hartford had a

of
&

value

book

share of $319.64

per

compared to $297.12 at the close of
1945.

Illuminating

United

The

was

erations.

duced

$2,678,610,

was

earnings of $2.15
the

$2.14

the

Meriden

May 13

bank

the

by paying $65
all outstanding stock.

share for

For

the

ended

American

Total

income

riods

Dec.

31,

for these

year.

same

pe¬

$571,902 and $3,253,731,

was

respectively.
Net income (after
extraordinary adjustments includ¬
ing refund of prior years income
taxes and carry backs,

prior

rebate

renegotiations

years

other

and

tax

adjustments for prior
accelerated
amortization,

years,

and

provision for reconversion,
renegotiation and contingencies)
was $602,008 against
$759,733. On
a
per share basis, earnings were
$1.23 against $1.55 in 1944.
At

the

ended Dec.

year

242

May 15, the stockholders of

stockholders

the

common

stock

dividend;

issue

preferred
of

The

one

four
new

173,932

given

stockholders

common

every

held.
no

the

proposed

basis

for

averaged $3,602,731.

stock

and

at
*

892.94

Corp.

reported

profit of $14,855,280, or $4.35

with

the

net of

the

for

Sales

exchange for
share

for

preferred,

new

cash

adjustment.

tric

will

Union
all

redeem

past

the

bids

taining
ferred

and

net

in¬

of $532,008, or earnings of

per

for

the

year

ended Dec. 31, 1945, while oper¬

ations of the preceding year re¬
sulted in
S18.59
the

loss of $3,661,691, or

Sales volume for

share.

past

$30,206,927

was

year

the

for

old

ob¬
pre¬

purchase

against $49,719,627 in 1944.

:'ti

re¬

Wilson, President of St.
Public Service Co., in his
to

stockholders

the

for

is in excellent condition.
on Dec. 31, 1945,

company

Our funded debt

the

was

the

lowest

history of

the company.

This means that our

fixed

are

charges

amount

est

pleased to

say

measures

been
nue

reduced to low¬
history of the

the

Going into 1946 we are

company.

that,

result of

as a

which have already

undertaken our

for the months of January and

PA.—Jenks,

^PHILADELPHIA;

New

the

York

and

will

admit

to limited

partnership

would

Stromberg-Carlson Co.

*Mid-Continent Airlines

Wilcox-Gay Corp.

Telephone

Bell

June

its

refunding

outstanding first

3V2%

mortgage

due Dec. 1, 1964.
The bonds will be payable at of¬

^Pickering Lumber Corp.

office of
Guaranty Trust Co., New York.
St.

Mo.,

Louis,

Information

Statistical

Request

The

income

net

the

Kansas

Co. for the

Power & Light

year

1945 was $3,136,965 as com¬

pared with $2,982,569 in 1944. This
represents an increase of $154,396.
The operating revenues amounted
to $23,615,333 for the year 1945
compared with $22,679,189 dur¬
ing 1944, which is an increase of
$936,144, or 4.13%. The provisions

White & Company
Members St. Louis

Stock Exchange

Mississippi Valley Trust

ST. LOUIS 1,

Bldg.

Bell System

MO.

Teletype—SL 477

for Federal and state income taxes

and

Federal

for

the

excess

profits

taxes

1945 amounted to
$4,271,720,
representing an in¬
crease
of $96,220 or 2.30% over
1944.
Taxes of all kinds, as dis¬
closed

year

the

amounted

income

arc

interested in

statement,

$6,457,936

com¬

Anderson-Pricbard

pared with $6,290,052 during 1944
of

increase

These

$167,884

amounted

taxes

2.67%

Common

27.35%

of total

operating revenues.
Expenditures for maintenance

amounted to

$1,157,1,19, an in-

Metropolitan St. Louis
COMPANY
718

Locust Street

1, Mo.

Saint Louis

Central 8250

St. L. 499

L. D. 208

Tennessee Gas & Transmission

May 1st.

Rudolph Wurlitzer
Suburban Propane Gas

Tifft Brothers
Members New York

and Boston Stock

Kansas City

Public Service, Preferred and Common
Consolidated Dearborn

Exchanges
Associate Members New York

Curb

Colonial Mills

Southwest Gas Producers

Primary Markets in

Southwest Natural Gas

Hartford and

Old Ben Coal, Common

Connecticut Securities

Upson
Bowser

Southern Union Gas

Exchange

Universal Match

be a

Hartford

the

Billings &
year ended

the

7-3191

Leland Electric

SCHEUCK, RICHTER COMPANY

New York:

after

depreciation

$156,r

Landreth Building

BOwling Green 9-2211
Bell Teletype
Bell

System Teletype: HF 365

Louis 2,

ST. LOUIS 2, M0.
Garfield 0225

Mo.

Teletype—SL 486 &■.'

Markets—Statistical

Pickering Lumber Corp.

Paper Mills

Long-Bell Lumber Co.
Lucky Tiger Gold Mining

Information

Western Lt. & Tel. Co.

•j:

CHAS. W. SCRANTON & CO.
Members New York Stock

Exchange

Shenandoah Dives Mining

BAUHI, Bbrnheihr G©»
1016 Baltimore Avenue,
Bell Teletype

—

New Haven 6-0171
New York Canal 6-3662

Hartford 5-2410

L.D.240

Stix & Co.
INVESTMENT

.^SECURITIES

509 OLIVE

2-4301

L. D. 123

SL 456

Mosinee

London

[|
t

TRADING MARKETS:

Connecticut Securities
Primary

St.

BUILDING

LANDRETH

plant

Fifty-fifth Year of Dealing in

New

Corp.

Luscombe Airplane

Television

Majestic Radio &
Corp.

1010 Pine St.,

fice of the company

Preferred and Common
Chicago, Wilmington & Franklin Coal
Chicago & Southern Air Lines

Cummins Catherwood

*Ampco Metal, Inc.

Berkshire Fine Spinning, $5.00

Exchanges,

Stock

markets

Chestnut St.,

Marheta

Insurance Stocks

about

employs

company

Southwestern

reve¬

gross

31,

1945 states: "Financially, our

year

the

Jenks Kirkland to Admit

preferred not

new

John L.

remarks

$2.70

Bank &

of the board of directors.

City

services

for

exchanges

Primary

an¬

Co. has called for redemption on

The company will ask compe¬
titive

Dec.

Smith
elected

Smith was

Mr.

quired to effect the exchanges.

$743,527,683

showed

per

with the

compared
reserve

re¬

were

year

Colt's Patent Fire Arms Man¬

come

unex¬

and accrued dividends.

Louis

Co.

Elec¬

shares of

1944.

ufacturing

basis, with

year.

against

$484,310,503

compared

common

$15,562,335,-or $5.37

share earned the

$103,872.70

for

also

firm,

series of pre¬

new

increase of $1,-

1944.

2,000 persons.

through

stock

changed old preferred at the

31, 1945, resulted in net in¬

come

preferred

$249,431

and

$51.25 thereafter.

Operations of
Spencer Co. for
Dec.

corporation,
Corp.

outstanding 130,000 shares

31, 1945,

Dec.

$25,824,086

were

nounced the formation of a new

man

company

demption price of $110

preferred
callable at $52.50 for the first five
years

designing

and

plant and non-

plant at

president of
engineering

refinery

local

bonds Series B,

preferred share
shares common

cumulative

par

all its

the

to exchange or redeem

preferred stock issue to

distributed

the

April 23. The

of utility

tion

$7,000,000.

Arthur J. Smith,

The

Mis¬

transaction said to involve

about

for the

The reserves for deprecia-,

year.

ment firm, will remain as chair¬

the

program

Co.

recommendation of the directors

Electric

Union

total operating revenues

combined

offered the privilege to

Philadelphia

refinancing

the Electric Boat Co. will vote

proposed

equal to 14.53% of

690,471

mainte¬

for

expenses

were

purchased by the Smith Engin¬
eering Co., of Kansas City, Mo.,

will be

members

to create

Exchange

consider

will

erating
nance

of oil field equipment, has been

and

$38.47, respectively.

Securities and

the Black,

This sum

1944.

over

respectively,

Holders of old preferred

Kirkland & Co., 1421

$51,007

president and general manager.
A. H. Black, Kansas City, one of
the four founders of the equip¬

12 noon, CST.

•

and the amount included in op¬

Siva lis & Bryson Corp., makers

the issue of

$12,618,204 a year
Equity per share was $39.03
*

The

Service

The capital stock of

ferred.

Aircraft

1944£

over

gregated $2,273,414, an increase

utility

$13^462,-

against

and

Co.,

31,

1945, the balance sheet showed
net working capital of

ago.

1945

year

provision for taxes and all
charges, amounted to $3,049,634, or $2.91 a share compared
with $2,093,676, or $2 a share in
1944. This compares with adjusted
net income for the five-year pe¬
riod
1941-1945, inclusive, which

United

Hardware

preceding

the

Corp. reported operating income
of $406,389 which compared with
$3,167,007

for

office

Power

up to

Commission

Manufacturing

year

the

received

Light

Cor,' Chicago,

souri

Scovill

net

1945,

United

and
Bids

100

purposes.

other

ford-Connecticut Trust Co. to pur¬
chase

was

corresponding period of

after

offer of the Hart¬

reserve

1945,

income

Net
of

National

Bank has been called for

consider

will

proposes

per

31,

special meeting of the stock¬
of

net

$120,315.77.

share in 1944.

per

construction

gov¬

the

use

redemption price of

for

facilities for the

Dec.

and

the

1944, and

prior to 1945. The

1976

re¬

was

$27,985.15, the
renegotiation of

emergency

years

against $2,664,401,

common

holders

reserve

ernment business for

1945, compared to $14,-

income

Net

by
of

effect

555,917 for the preceding year.

The

series of

proceeds to redeem $3,635,000 of
its 4%% first mortgage bonds at

taking accelerated amortization

Co.

operating profit
$14,973,357 for the year ended

Dec. 31,

$134,590.26. To this
added $40,000 from 1945 op¬
was

bonds

by $26,289.34, the net effect of

reported total

1944,

'
*

The Reserve for Postwar and

increase

1945."

mortgage

re¬

the

over

% left in the business.

Contingencies.

$4,383,034 against $4,427,756 This compares with net income of
The St. Joseph Light & Power
the preceding year. Net income of
$106,438.33 for 1944. Earnings per Co., a subsidiary of Continental
$1,297,884 compared with $1,401,- share for the year were 56C com¬ Gas & Electric
Corp., will sell at
004 in 1944. Fixed charges and
pared with 57£ for the preceding competiitve bidding April 22 $3,preferred dividends were covered year.
750,000 of new first
2.25

February, 1946, shows

ing

spectively.

$120,267

Provisions for depreciation ag¬

Teletype NH 194

Danbury 5600

Strauss Bros.
New York and

Chicago

St.Louis 1,Mo.

Phones-Harrison 6432

KC 472-3
Private

Waterbury 3-3166

Kansas City 6, Mo.

STREET

Wire Connections

White A Company
St. Louis

To:
r

Members St. Louis Stock

Pledger & Company
Los

Angeles

Exchange

THE

2082

COMMERCIAL & FINANCIAL CHRONICLE

Glenn

Degner Opens

New Low Interest Rates

May Change Complexion

of surprise to many investors and even
sional dealers who have been accustomed to the
a

source

officer

profes¬

OP A.

ping up in their
About
in

the

even

property

mercan¬

REAL ESTATE

tization

supposed benefits the Unit-

Montgomery Scott

will

and in

for

term

some

instances

est and

the opinion

Co.,

Montgomery,

123

announces

South
that

Broad

the

Theodore

tain

blocks

lected

of America
rate of 3%%.

se¬

unlisted

ners

securities.

estate

last

and

rec¬

for

this

Robert Huncilman Is

general

(Special

watched

formerly

forerun¬

are

reduction

40 EXCHANGE PL., N Y.

Dfgby 4-4950

low

interest

rates

fixed

Many

these

issues

have

intrinsic value far in
value

Offerings Wanted

excess

the

indicated

price, but

are

Take

Pike's

known

Stocks & Roods

Broadway

These bonds
pay

the

are

issue

term

Barclay. has

fixed at 2%

CO!

Members New York Security Dealers
Assn.

HA—wr 2-8970

June

Teletype NY 1-1203

Current

market

value

$3,600,000.

Beacon Hotel 2-4/58

This puts

based

59%

been

Kansas

with

State

Commis¬

was

The

Financial

has

National

with

cash in¬

become

Bank

who

recently

the

rank

Broadway 4V2/58

with Angland

Co.

SPECIALISTS

Westinghonse B!dg. 4/48

Real Estate Securities

J. S, Strauss & Co.
155

Montgomery St., San Francisco

Tele.

SP 61

Since

REAL

Incorporated
—

ESTATE

Members New

York Security Dealers Association

Broad Street, New York 4

Income 5/60

Alms
La

Hotel

"B" 4/47

Madison Hotel

REAL

ESTATE

the

quoted,
tions

to the price

receive

for

it.

According

testimony
previously
study of market condi¬

made.

was

•

"The committee is of the
opin¬
that altogether too little
ef¬
fort and attention was devoted
to

ion

developing

the

facts

the

and

condition of

nature

concerning
our

surpluses and their market value
(Continued on page 2116)

HAnover 2-2100

EQUITY

each

side

well

silver has

over

Looks

users.

organized,

been

going

silver

Treasury

The

rider

ounce

equivalent

71.11

for industrial

uses.

to raise the price in
stages, reaching in the end
$1.29. Whereas heretofore the in¬
dustrial users have firmly refused
to consider any

the

Green

outlook

Act,

here and

abroad,

and

in¬
industrial

consumption in Mexico, and strike
tie-ups in American smelters and
refineries, the fabricators state,
and the miners do not
deny, that
some industrial users of silver are

For

proposal

two

approximate

coinage

the

Now, with reduced mine

closing

Senator Mc.
Carran of Nevada is the author of

which expired in December. Since
then industrial fabricators have
had great difficulty in

creased

and $1.29—say $1.03.

for lack of metal.

months

the

Silver

for

some

com-

] promise.
Industrial
of

costs

recognize

consumers

that there has been

increase in

silver

mining and refin¬
ing. Moreover, most of them, it is
said, could operate profitably with
silver

at
a
much higher
price,
especially where their own prod¬
ucts are not subject to a price
ceiling.
During the April 16 ses¬

sion

the

committee,

Mining

price increase, the

now

Appropriations Sub¬
Green and

Senators

Murdock had

pointed and some-

Bloc, which is very strong in the j what warm discussion of a willSenate,
has
been
reported
as
| ingness to compromise, and it is
willing to withdraw its objection i not unlikely that the industrial in¬
to
the
resumption of Treasury i terests may offer to settle for a
sales of silver, as provided in the
j limited period of a year or two on
above-mentioned rider, on condi\ a basis along the lines of the retion that the price of
newly-mined j cent industrial wage settlements,
domestic silver be increased. The j
namely an 18% increase in the
present 71.11 cents subsidy price Green Act
price. This would mean
was fixed in 1939 as an
extension, i for Treasury Silver sales as well
at a higher level, of the
program I as newly-mined purchases someLat-

buying price

newly-mined

domestic

raised to $1.29

for

an ounce.

silver

But there
have been persistent
reports that
the Silver Bloc would be
to compromise with the industrial

for the present at least,

price

somewhere

between

thing like 84 cents
instead

ounce,

85 cents an

71.11

cents.

Whether the mining interests, be¬
ing offered this "drop of blood'
would

settle

Tuesday's

Tydings
have

again

77c

for

remains to

that

seen.

vote at

once.

Aoril

(Continued

Senator
sought to

meeting

Maryland
18.

He will try

Senator
2121)

But

on page

STOCKS

suggest

special consideration at this time of Real
Estate Equity Stocks.
Among those we believe to be par¬
ticularly interesting are the following:
Commodore
Hotel

Hotel, Inc.

Lexington,

Hotels Statler Co.

Com.

Inc. Com.

Hotel Waldorf Astoria
Corp.

Chicago

House of Rep¬

sale
cents

users,

Brunswick Site Co. Com.

Salle

contains

authorizing the

Hotel Sherman

Chicago Stadium

measure

resentatives rider

willing

SECURITIES
5/57 W. S.

considering the Treasury Department
Appropriation Bill.
That

Treasury's

the Senate Subcommittee which is

terly, Silver Senators have been
making renewed efforts to get the

EXbrook 1285

SPECIALISTS

judgment

should

17.—With

wrestling match

initiated in December 1933.

1929

Seligman, Lubetkin & Co.
—

Mr.

been

lieutenant-col¬

was

WASHINGTON, April
little publicized

production
R.

associated

Building.

has

onel, in the past

$1,500,000.

fair

present price of 71.11 cents an ounce for industrial
for compromise price at around $1.03.

obtaining

discharged from the U. S. Army

stated

Washington correspondent recounts efforts of silver bloc to have
official silver price advanced to $1.29 an
ounce, compared with

silver.

Chronicle)

MINN. —John

Broadway Motors 4-6/48
165

Irving J. Rice & Co., First

Werges

the property cost them over

vestment

PAUL,

Werges

the

owners

$8,000,000, of which their

Broadway Barclay 2/56

expiring June 5, 1948.

(Special

the property of about

reorganization, the
that

effective

Mr. McEntire has been
the remainder of the

for

ST.

for

outstanding issue of $6,169,900.
Firm Markets:

resignation,

Werges With Rice Co.

larger interest payment is

hoped for.

an¬

will

additional interest, if earned.

the bonds is about 59%.

Broadway

New York 6, N. Y.

Ross

McEntire

Mr.

sioner of Corporations.

and

Last year they paid 2.4% and this

LJ. GOLDWATER &

Press

Republican vacancy cre¬
ated by the resignation of Sumner

named

instance

House

Charles
that

April 30.
for

White

the

afforded.

REAL ESTATE

that

fill

security

committee

that no adequate ap¬
praisal of the property was made
by anyone upon which to base a

Silver Munich Ahead?

15 President Truman

Securities
Exchange Commission. Asso¬
ciated Press
Washington advices

nounced

influenced by yield

way

recovering something from the
supplies being disposed of abroad.
The report, which deals with the

and

Secretary

of the

was

materials
one

"the

principal of McNurlen

On April

stated

ganization.

sent to the Senate the
nomination
of Edward B. McEntire of
Kansas
to be a member of the

reor¬

BeHTehtypo NY 1-953

cal

Herbert M. Bratter

Chbonicxe)

McEntire Named to SEC

large discount due to

Financial

Concerning the surplus property

& Huncilman for
many years.

those that have been

are

The

Corp..

Issues that should be especially

selling at

M. Huncilman has become associ¬
ated with City Securities

ties will go to much higher levels.

Members New York Stock Excboogo
Members Now York Curb Exchange

City Securities

gic and criti¬

INDIANAPOLIS, IND.—Robert

interest

country

stockpiling of
foreign strate¬

With

mortgage rates on real estate in
New York, it may very well be
that prices of real estate securi¬

SHASKAN & CO.

United

year

Circle Tower. Mr. Huncilman

If these situations

real

surplus
set¬

Kingdom

being redeemed with

pany

so little

has been made in the
j solution of the problem of dollar

tlement with

was

are

j tee's disappointment that
j progress

settlement

firm

ated with them.

the proceeds of a mortgage placed
with the Sun Life Insurance Com¬

prevailing of¬
fering prices for cer¬

members during overseas
itineraries, expresses the commit-

property

Street,

and accrfied interest. These
bonds have been paying 6% inter¬

com¬

mittee

lend-lease* scarcity abroad.

Roosevelt HI has become associ¬

——.

findings of various of the

and

Scott

at par

above

the

Exchange

given last week that
the bonds of the Tyler
Building
were
being redeemed this week

above

pay

ob-

States

tained

ommends

Notice

prevailing bid prices

illusory the

years.

WANTED

describes

PA. — The
New York and Philadelphia Stock

The mortgage amounted to
$135,000 at 2% interest and amor¬

disap¬

Pro- 9-

Defense

PHILADELPHIA,

feet.

expresses

WASHINGTON, April 17—In Part 5 of its Report No. 110, just

Washington.

With

The

rate.

national defense

distributed, the Senate Special Committee Investigating the National

Theodore Roosevelt III

building at the northeast cor¬
ner of Crosby and Grand Streets,
occupying a plot of 12,500 square

SECURITIES

offi¬

tile

BLOCKS OF

was

gram

announce¬

six-story

was a

Until 1941 he

crop¬

back yard!
there appeared

lower

USNR and prior
price analyst for the

Smith, Burris & Co. Mrs.
Degner has been practicing law

long-term realty .mort¬

now

the

was a

own

newspapers

ment of

gage

are

week ago.

Senate committee investigating

pointment at progress in solving dollar scarcity problem abroad
and criticizes lend-lease valuations in negotiating settlements with
Britain. Committee advocates strategic stockpiling.

cer

—

interest rates

thereto

Settlements

By HERBERT M. BRATTER

partnership wTith M. F. Degner
deal in investment securities.
Mr. Degner has been
serving as an

high yields offered
by real estate securitiesTheir surprise has now turned to amazement because these same
#low

Lend Lease

Chhomcle)

underwriting of the Southern Pacific Rail¬
the low rate of 23,4%, and the United States Rubber Co. at

was

Fix ax oil

The recent successful
way at

The

OWATONNA, MINN.—Glenn J.
Degner has formed Degner & Co.

of Real Estate Bond Market

2Vz%,

18, 1946

Mead Committee and

Finn in Minnesota
(Special

Thursday, April

Hotel

Statler

Co.

Com.

Boosevelt Hotel NY Com.

Com.

FOR

Com.

HELP WANTED

•

POSITIONS WANTED

Savoy Plaza Class "A"

870 Seventh Ave. Corp. Com.

Transportation Bldg., Chgo.

Copies of

our statistical

(V. T. C. and Land Trust Units)

FIRST LA SALLE CO.
11

So. La Salle St.,

Tel. Central 4424

Ask

will be sent

request.

OTHER CLASSIFIED ADS

Amott, Baker & Co.

Chicago 3, 111.
Tele. CG 660

memos

for List C21

Incorporated
150
Tel.

Broadway
BArclay 7-2360

New York 7, N. Y.

Teletype NY

SEE INSIDE BACK COVER

1-588

==J

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

Arguments Against the

Chicago Bond Traders U. S. Trade
Appoint Three Directors
Announcement

appointment of

By HON. HENRY A. WALLACE*

members

Secretary of Commerce

tors of

would

way

open

for railroad conspiracies.

Says basic defect of

present freight rate levels are
this

which

issue

The

before

opoly

of m o n

the
11

sideration

re¬
1

that

strictions

opoly

practices

practices
already
exist

our

That

rally

they

might expand
such

very

free

our

e n

e r

Henry A. Wallace

prise

system is

our

for

full production and full em¬
ployment, all our efforts to create

favorable

climate

and growth

between

not

carriers

agencies and those which

give

each carrier

oppor¬

termination reached through joint

procedure.

continually guard.
All
hopes for achieving our goals

the

birth

by-laws, the

Looks for increasing trade between

U. S. and China, but says its pattern
U. S. imports Chinese products

and

Holds China will

Committee Chairmen

are as

fol¬

U. S. imports

Strong,

A- C. Allyn & Co., Inc.

,Publicity—Leonard J. Wolf, A.

G. Becker & Co., Inc.

replace Japan in supplying U; S. with low cost
can

Chinese products and

practice is so
thorough that

Co., Inc., and will open offices

attempt
e s enta-

any
p r

either

to Rate

Agreements
should

noted

(Continued

that

2102)

any

between

China

United

firm, and Thom¬

Kraig, Secretary and Treas¬
Philip

urer.

Manager

the

Mr. Stone

was

Meyer
Trading

will

Depart¬

for

Winslow, Douglas & Mc-

Evoy, and has recently been

serv¬

trading

ssary

the
year

your

Pratt

in the university

fore, be confined to
sentation of

there¬

remarks will,

some

brief

of the

less

than

one

its

independence was
the
first
American

pre¬

sa¬

August, 1784.

From that time

American traders carried

profitable

adventure

exchanging

*An address by Mr. Ren before
the

Foreign Trade Club of New
University School of Com¬
merce, April 5, 1946.

York

(Continued

lient facts which have taken place

ing in the U. S. Army.

after

establishment
In

New York and arrived at Canton

public libraries will supply the

the

ship, the "Empress of China," left

Ren

and

material already

latter.

after

Republic.

recognized,

others will provide for the former
and the stocks full of excellent

formerly statisti-

States

immedi¬

these

along

Dr.

and

States

some

direct

ately

eminent pro¬
fessors such as

new

United

with China began almost

I f

securities. Mr. Stone will be Pres¬
ident of the

the

and

possible de¬
velopments affecting that trade
which may take place during the
coming 10 or 15 years.

guidance

nece

lines,

direct bearing, to a
degree, on the trade

su¬

perfluous.
is

can

on page

becomes

having

more or lesser

Street, New York
City, about May 1.
He will deal
in bank stocks and other unlisted

Broad

ment.

Removes Restrictions

Louis Stone is forming L. Stone

China's industrialization,

before and during the World War

philosophical
speculation or

Investment Firm in N.Y.
20

furnish China with former

addressing the Foreign Trade Club of New York University I
I am facing an audience whose knowledge of foreign trade
theory and

Louis Stone Forms

extent that

believe

tion

China's industrialization*

Membership—Ernest A. Mayer,
Holley, Dayton & Gernon.
Program—Dominic C. Cronin,

will depend
on

with U. S. technical and financial aid.

First

National Bank of Chicago.

conditions of

leading role in China's trade, displacing

Britain, Germany and Japan.

statist ical

danger against which

must

States has opportunity

new

Japanese domination the United

demonstration

tunity to act contrary to the de¬

existence

crippling effects of the early treaties

China, and points out that under

China's equality and absence of

carriers

not even be necessary for

the

threaten

commission. Apparently, it would

different

reached by such

thus relieved from the

agreements

de-

gree

decisions jointly

needed.

service

and

forced upon

freight forwarders to file such
subsequent agreements with the
commission for public inspection.
The only safeguards to the public
are the provisions prohibiting the
commission from approving

economy

gene

alarm¬

extent

ing

the

anti-trust laws without having to
have
specific
approval
by
the

such

rate

Chinese industrialist recalls

lows:

Subsequent joint acts

groups are

n -

evitably en¬
gender.
That

matters.

Direc¬

Traders Club of

import necessities, and that U. S.

Admits

places

By S. D. REN*

Manager, Universal Trading Company

ficers.

essentially is whether our economic system can afford an extension
and

According

Finance—O.

(H. R. 2536)

following

Board

Opportunities in China

dent, and three new members ap¬
pointed by the newly elected of¬

relatively low.

legislation

the Bond

General

the

Board of Directors consists of the
four officers, the retiring Presi¬

Holds that even
though ICC's power over rates is complete, it is inadequate as
substitute for competition. Claims bill will extend domination of
small carriers by larger ones, and advocates Congress await out¬
of pending court cases against rating organizations.

the

Sons, Inc.

impairing competition in rates and services.

come

made

Lawrence N. Marr, E. H. Rollins &

bill is removing safeguards against collusive practices by carriers,
thus

Chicago:. William A. Anderson,
Hickey & Co., Inc.; William H.
Cooley,
Alfred
O'Gara
&
Co.;

Wallace contends that passage of the Bulwinkle Bill re¬
lieving rail rating organizations from the operation of the AntiTrust Acts would impose a tax on all industry and consumers and
Secretary

2083

on page

2107)

of small business are

dependent upon the maintenance
of

healthy competitive conditions,

with free scope for firms wishing
to
compete and
expand rather

This is under
an

than to restrict in the interest of

protecting

circumstances to be construed

as an
offering of these Debentures for sale, Or
solicitation of an offer to buy, any of such Debentures.
offer is made only by means of the Prospectus.

or as a

The

fixed market.

This need

offer to buy,

given full recog¬
nition by President Truman in his
was

Budget Message.

entitled

Business

"Small

the

section

$125,000,000

and

Competition" he proposed a coor¬
dinated
anti-monopoly program,
describing the need for such ac¬
tion in terms which I recommend
as

worthy of review by the

mittee.

The Bulwinkle Bill

directly counter to this

com¬
runs

program.

Twenty-Five Year 2'/Wo Debentures

In the transportation industries,
monopoly action touches not just
industrial

one

tically

nomic life.

Dated.

segment but prac¬

aspect

every

our

April 1, 1946

Due

April 1, 1971

eco¬

Almost all production

Interest

dependent to some extent, di¬
rectly or indirectly, upon trans¬
port services.

payable April 1 and October 1 in New York City.

Efficient transpor¬

tation at reasonable cost may spell
the
difference
between
success
and

failure for

many

of the new

and it directly affects the
possibility of opening up under¬
developed or depressed areas for
urgently needed industrial growth.
Unnecessarily high charges for

101V2%and Accrued Interest

Price

ventures undertaken by returning
veterans and other small business¬
men,

the

materials

finished
costs

products

increase

passage
tax

this

all

our

the

for

means to
escape

will

MORGAN STANLEY & CO.

impose

industry and
benefit

con¬

KERN, LOEB & CO.

those

directives proposed in the Bul¬

LEE HIGGINSON CORPORATION

mission's approval only of the
charter of organization of execu¬

DOMINICK & DOMINICK

mon

associations, rate bureaus,,and
established

carriers

^ tor the

BLYTH & CO., INC.

LEHMAN BROTHERS

LAZARD FRERES & CO.

GOLDMAN, SACHS & CO «»:•
,

KIDDER, PEABODY & CO.

bill, exemption from the
anti-trust laws requires the com¬

conferences

HARRIMAN RIPLEY & CO.
Incorporated

THE FIRST BOSTON CORPORATION

winkle

tive

SMITH, BARNEY & CO.

the last legal de-

to their

conspiracies.
>,
Under the legislative standards

and

i.ii

In other words,
bill

potential monopolists in the trans¬
portation industries who seek this

torrent

offer

the

sumers,

be obtained from only such of the undersigned as may legally
compliance with the securities laws of the respective States.

may

these Debentures in

production and distribu¬

tion everywhere.
a

Copies of the Prospectus

and

movement

HAYDEN, STONE & CO.

DREXEL & CO.

F. S. MOSELEY &

CO.

EASTMAN, DILLON & CO.
STONE &

GLORE, FORGAN & CO.

WEBSTER SECURITIES CORPORATION

com¬

freight forwardUNION SECURITIES CORPORATION

purpose of joint con-

WHITE, WELD & CO.

Statement
ace

of Secretary
Walbefore the Senate Committee

April 17, 1946.

194glterstate Commerce, April 10,

THE COMMERCIAL &

2084

MURRAY

JU. S. Senator from Montana

tolerance and eradicating prejudice, Senator

Murray condemns "a growing spirit of intolerance toward Russia."

Urges Americans achieve a deeper understanding of Russian ideals
on ground that chief world problem is whether
Communist Russia and capitalist America can live peacefully side
by side.
Holds we need new orientation of foreign policy and

by Paul H. Davis & Co.,
Forgan & Co. and the
Union Securities Corp. in a pub¬

headed

and achievements

lists

There is

tracks, turned

growing awareness that
we here in America, we who were
fortunate enough to have escaped

the

war

ma¬

its

chine

tide

battle
started

horrors

and'shores,
t h

that

| measure
those

the

with

have

failed

food to

and

whose

food

of America

supplies were
wiped out by the recent conflict.

and

help

Britain,
finally* result¬

struggling
that obligation.
are

But

ed in the cap¬

that

story. I believe

and

alize

the

com¬

plete defeat of
Hitlers
ies.

arm¬

When

think of Stal¬
Jas.

Murray

ingrad, let
rememb

that

thousands

dren of

orphans,

and women who died

men

in the smoking ruins of that once
thriving city, are now being set¬

tled in
less

Birobidjan. To these home¬

boys

and

girls,

Birobidjan

represents an opportunity to build
a new life amid
happier surround¬

ings.

also must

effective

program

ing to resettle Jewish children—
victims of the
The

war.

where

arising the

see

which

Europe

are

in this rich and fertile

harbored

the

such

conflicts and

same

spirit with

which

July

far-flung

Jewish

orphans

from

other war-devastated countries of

there have been
criticisms of Soviet Russia.

many

Today,

But it

hear

about

considerable

international

been

many

ex¬

the

country

Murray
Birobidjan

anti-Semitism

which

formerly the

was

The

14, 1946.

term

"dictatorship"

(Continued

page

refunding

mortgage

announcement
The

offering
or

neither

made

dealers

offer to sell,

only by
in

the

securities

nc.r

Prospectus.
who

are

since

completion of the

1935.

This is

licensed

of offers

published

pres¬

$48,180,000,

period will

30%.

registered

buy,

any

of these securities.

behalf of only those brokers

timistic picture beyond all expec¬
tations.
The
Chancellor's audi¬
ence

in the House of Commons

April 9
a

Dalton

the

several

States.

the

Prospectus

securities

mny
are

obtained

licensed

from

some

doubts may arise whether, in face
the
spectacular
increase
of

social

service

charges during the
coming
year,
this
contention
could
be
upheld, especially as
was

also estimated rath¬

optimistically.

try has
Britain's

heard

But the

that

coun¬

much

"bankruptcy"
"hopelessness" of her

about

and the
financial

seized

eagerly
the arguments of optimism,

Dr.

Dalton

had

conse¬

reasonably good Press.
Disillusionment, if it should come,
may not come for some time, and

Dr. Dalton's optimism
makes for a boom.

he gave

more con¬

reasons for most
people to
pleased with his Budget.
By
sacrificing
a
relatively
small

aged

only

registered

such

the

revenue, he has man¬

give

the

relief

some

possible number of tax¬
payers.
In particular taxpayers
brokers

dealers in

States.

with

this

unjusti¬

be pleased

relief owing to the

Chancellor's

decision

tax

troduce

idends.

The

ment

removal

welcome

not

in¬

surplus
of

its

div¬

Excess

replace¬

another kind

also

without

Tax

Profit

tax

feature

the

Budget from the point of view of
business

The relief felt

men.

this account is

admittedly some¬
what mitigated by the fact that
the greater part of the relief ob¬
tained through
the removal of
the

Profits

Excess

Tax

taken

in Income Tax or in Profits
(which is the new name for

away

Tax

old National Defense

the

Even

so,

and they have

worse,

Contri¬

most business

something

expected

men

much

reason to

pleased.
In addition to

lem

solving the prob¬
relief without

providing

spending much on it, Dr. Dalton
has also solved the problem of

producing a "Boom Budget" with¬
thereby
jeopardizing
the

out

the

chances of the ratification of

Had
he yielded to pressure by some of
his colleagues in the Cabinet by
materially reducing taxation, it
might have antagonized Congress,

loan

agreement by Congress.

since

for

loan

been quoted

it would have

indicating that Brit¬

evidence

the proceeds of

use

the

relaxing rather than in¬

tensifying

efforts

her

struction.

The

recon¬

must

Chancellor

by the

have also been influenced

possible effect on Congress of his
Budget when he refrained from
introducing any new radical tax¬
ation

be,

the increase of

apart from

However this may

Death Duties.

his

even

critics

must

recog¬

producing
a reasonably good Budget in face
of great difficulties. This achieve¬
nize his extreme skill in

ment

has

mce

certainly contributed
increasing
Dr.

towards

Dalton's
and

prestige

in the country

in Parliament
than anything
charge

he has done since he took

of the Exchequer.

Now Bell Farrell & Stebbins
(Special

income-groups have

been exempted from Income Tax
and death duties.
About a mil¬
lion
taxpayers will have. their

The

Financial

Chronicle)

Farrell

MADISON, WIS.—Bell.
& Stebbins, Inc., has been
with offices at
nue

Ave¬

119 Monona

to continue the

iness of Bell

formed

securities bus¬

& Farrell.

Officers

are

Vern S. Bell,

ter

Wal¬

W. Stebbins, Harris G.

the

largest

several

good reason
his' Budget.

breathe

meanwhile

crete

per

1950

of the lowest
Of

device of

are

from

amount

Copies

the

resort

In any case,

Share)

have
with

ain would

that

Common Stock
per

until

come

appears

In any case, even the Chan¬
cellor's Conservative opponents

accounts

quence

National Automotive Fibres, Inc.

criticism

and

178,000 Shares

likely

normal items on both sides of the

upon

Price $19,875

fully prepared to face
gloomy picture. It expected Dr.
was

outlook

(Par Value $1.00

op¬

The net reduction in

total debt for the same

has

2120)

solicitation

harder

the

——

fied.

bution).

This end has been achieved by

mainte¬

of high taxation.

revenue
'1 his

the

examination

land of Tsarism and the
"pogrom."

Committee, Newark, N. J., April

interest

spite

disregarded,
and
year onward
it
financing, Nickel Plate will will depend entirely on the Gov¬
have reduced its non-equipment ernment's
policy
whether
the
debt outstanding in the hands of Budget should have a deficit or a
surplus.
the public by $54,757,000, or 35%,
On
closer
With

long years

istence

relief.

ury's point of view, was against

ent

since anyone has reported the

*An address by Senator
the American

before

has

and ac¬
$41,796,000
out¬

tions and $70,029,329 capital stock.

In recent
years,

Europe.
talk

minority grouos is
throughout the Soviet

Criticism of Soviet Russia

the

Treas¬

appealing to the public to work
and
spend less, by im¬
Outstanding
capitalization
of pressing it with the gravity of the
outlook.
Instead, he painted his
the company after giving effect to
picture with quite unexpectedly
the present financing will consist
rosy colors.
He claimed that the
of $99,500,000 total mortgage debt, Budget will be virtually balanced
$14,895,000 of equipment obliga¬ this year, if non-recurrent ab¬

publics.

soon

haven for 30,000 addi¬

treasury

1975.

re¬

the

3^4% bonds, series D, due Jan.

re¬

gions and all of its constituent

tional

1946. at 105V2%

standing

the

future, if the highly
commendable plans of the Ameri¬

provide

sale

with

together

crued

Union—in all of its

the

from

funds, will be used to redeem

can

are

the

representing

presenting to the country

bonds,

oroblem

Birobidjan Committee
successful, Birobidjan will

the

era

nance

Proceeds

handled

region.

near

maintaining
austerity.

war-time

Dalton,

far as possible
discouraging

cost

spelled

already

the

awarded the bonds in
competitive bidding, offering

often give birth to war,

entire

encouraging an increase
production or to reduce the

group was

jan extends far beyond the Soviet Birobidjan is one area where there
Union. Already, more than
3,500 are no racial or religious conflicts
Jewish orphans
from the other or clashes. Birobidjan symbolizes
countries of

102.36% and accrued interest. The

clashes between nationalities

But the significance of Birobid¬

the

for

public offering April 16 of $41.- giving away too much revenue.
refunding mortgage 3% At the same time he has suc¬
bonds, series F, due April 1, 1986, ceeded in elaborating a formula
of the New York, Chicago & St with the aid of which the atmos¬
Louis
RR.
(Nickel
Plate)
at phere of austerity could be di¬

anti-Semitism.
world

conces¬

101.529% for the issue.

safe haven where there is
In

major

tax

Einzi?

500.000

Birobidjan,

suffering from prejudice and in¬
tolerance, the Jewish autonomous
region of Birobidjan provides a
as

importance

to my mind, transcends even the
problem of relief. In a world still

thing

w a s

make
Paul

production

banking group headed by
Halsey, Stuart & Co., Inc., made

budget

For, although
fit he question1 they resent the increase of Death
i
whether
t o Duties
on
large fortunes, they

budgetry deficit

For
the

vilivided

even

Nickel Plate Issue

war
relief can be complete
without practical plans for help¬

J" weeks
§| Cabinet

sions

Halsey, Stuart Offer

re¬

for

chil¬

that

that end.,

sake

complete

revenue

facilities.

meet

amount

automotive

the

not

ture of Berlin

now

company's

the

equipment,
household appliances, a v i a t i o n
equipment, agricultural machin¬
ery
parts and other industrial
products.
During the last five
years
the company spent about
$15,599,526 for additions to plant
and equipment, of which about
$7,862,354 was for war production

humane

ones

is in¬
lower costs

program

manufacturing

lines

own

our

unfortunate

homes

our

in supplying

obligations

fensive which,

fully to

counter of¬

war

expansion

tended to bring about

might y&

Nazi

Sen.

The

accom¬

—

to|succeeded in winning the ap¬
sti m u late proval of a very large section of
the public.
business
a cConservative critics denounced
tivity,
with¬
out having to this bid for popular approval as
sacrifice
any a vote-catching device, but since
substan t i a 1 the next general election is not

dividends.

accrued

have

cal-3>

culated

offering of 200,000 shares of
($100 par) cumulative pre¬
ferred stock at $103 a share plus

thoughtful American can ever forget the heroic struggle
of the Russian people when, at the gates of Stalingrad, they stopped

appears

He has succeeded in producing

which

lic

Dalton

ENGLAND.—Dr.

LONDON,

plished the impossible.

3*2%

foreign affairs.

tne

widespread satisfaction with Labor Cabinet's
are expressed that Chancellor of Ex¬
chequer is over-optimistic regarding balancing expenditure and
revenue in face of spectacular increase of social service
charges.
budget, though doubts

new

Glore,

points which should guide Senate in conduct of our

seven

London observer notes

Financing intended to furnish
Borg-Warner Corp. with $20,035,875 to expand and modernize
its system of manufacturing plants
was undertaken April 17 by a syn¬
dicate of 59 investment bankers
the

Asserting the Soviets deserve fair recognition for war achievements
and for promoting

1946

Bofg-Warner Preferred British "Boom -Budget"
By PAUL EINZIG
Sleek Offered al$ 103

Let's Understand Russia
By HON. JA3IES E.

Thursday, April 18,

FINANCIAL CHRONICLE

President;

and James C. McCord,

Allen
Vice-Presi¬

dents, and Carl W. Farrell,

tary-Treasurer.

Secre¬

Mr. Bell, Mr.

len and Mr. Farrell were

Al¬

partners

b
■>P

"postwar
their

Hemphill, Noyes & Co.

Laurence M. Marks & Co.
A. C. Allyn and
Incorporated

April 18, 1946

part

was

re¬

as a

there

had

whether

beeniv much;

the

debt.

Company

Now

doubt

Government

really intended

(that

forced loan during the
war) refunded. This fact cheered
millions of otheit)^taxpayers, for

Reynolds & Co.
Schwabacher & Co.

credit"

Income Tax which

tained

ever

that

had

to repay this

beginning has

been made with the
repayment of
a
small fraction of the amount

held

everybody

holding, such

claim knows that his
is

bound

cost

come.

small

her turn

Thus, at the

sacrifice he

has

the

predecessor

firm

which the others were also

with
con¬

nected.

McCreery Resumes

Duties

Ingen & Co.
Ingen & Co., Inc., 57

At B. J. Van
B. J. Van

William

Street,

announces

New York

that W.

Captain; USNK, has been
from active duty

City,

A. McCreery,

and has

released
resumed

his activities with the firm.

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

presenting and of the loca¬
they are recommending.*

are

Railroad Outlook

Improved Mortgage Lending

tion

By ROGER W. BABSON

By A. E. MacDOUGALL*

bers

that the railroads, faced with probable

Babson points out

Mr.

increases

both

Mr.

MacDougall points out need of apartment house construction
as a means of
solving housing shortage and proposes a mortgage
plan for this construction, providing for 15-year loans at 4%%
with amortization provisions. Urges removal of Federal shackles
from building business by (1) repeal of restriction of building
materials for use in veteran homes only; (2) elimination of rent
control on all new construction; and (3) increase in ceiling prices
of building material to encourage production.
Calls apartment
mortgages a high-yield investment for institutions.

be maintained. Holds probability of both higher
but contends that railroad securities
comparatively high.

and large traffic is good,

now

are

The decline in traffic
which had persisted since the 30's ceased. Volume of

War came

earnings

pnd

to the rescue of the railroads.
traffic and netS>—
income reach-

operating

income is to be

peaks.
However, the
new

worth

rail

securities
be

must

judged, not on
past, but on
future,

activity

ness

real

per¬

crease

level

1941

Whether

addition.
mood

well

remain

must

in¬
in rates will be needed in

the

above

If railroad net
maintained, busi¬

expenses.

and

the

public is

accept such is any

reader's guess.
The railroads

Since

field,

are

much

°t i

stronger position now than in pre¬

Long

Several things

war

since they have used
$2,500,000,000 of their war earn¬
ings to decrease their debt. Con¬
sequently,
their
fixed
charges
have perhaps declined $200,000,000

t m
buildings

must

nsi dered

making

when
a

decision

railroad

ing

earn¬

power

volume

bond interest

—

traffic, oper¬
ating
expen¬
se s,
taxes,

Babson

Roger

freight traffic varies

(trucks, automobiles, pipe lines,
shipping and airplanes) had cut

railroads' revenues. How¬

the war helped the railroads
other carriers. The

and hurt the

time
to adjust themselves to peacetime
operations. A pent-up demand for
goods, with the greatest cash re¬

v a

two

stories

height
o ii

net

higher
expanded volume of

If the next several years

favor both these factors,
net

railroad

remain fairly

should

income

However, is it smart to bet
on the possibility of both higher
rates and a high volume of traffic
good.

made

with
A.

should in¬

in many years,

business activity and
thus a large volume of freight.
Passenger traffic should also be
good for awhile in spite of auto
and air competition.
The
Federal Reserve
Board's
good

sure

interesting when we note
for our Gross
National Product was $195,000,000,000. Thus we can get a 5% increase
in railroad earnings even with a
cially

that the 1944 figure

$45,000,000,000 in total

decline of

national

income.

Predictions,

therefore, point to a greater vol¬
ume of railway traffic during the
next few years than in the peak
peacetime year of 1941.

must,

remember

however,

that there has been

20% increase

since 1941 which will
$300,000,000 in 1947.
A
price rise in items essential to the

wages

absorb

railroads, such as lumber, steel
and coal, will add to the increased
costs due to wages.

great operating' efficiency
during the war carried

The

attained

into

over

peacetime

economy
help overcome the wage
increases granted' between 1941

should

must ask
much

creased

ourgdve^Ow^ver, how
wages

will

in¬

during the next year or

two.

QPA

find

that

the

$500,000,000

net income of 1941 with the wage
and

price increases which will
have occurred since that date will
be

highly inadequate to meet 1947

right to

centrate

first

should
rapidly as
effort should be

the

at the end

prepay

service

they

could con¬
appraisal and
loans in specific

amounts based on real estate ele¬

Federal

Gov-

sirable features of the

de¬

and

points the
be of real
develop his business
can

financial interests become con¬

for

loan based on the
plan and location
rather than trading on rates.
By and large, I believe mort-

higher

merit

the

*Address

Mr.

MacDougall

the

before

Long
Island
Real
Eastate Board Mortgage Confer¬

ence,

ments they know, such as the

various

broker

vinced that the broker is fighting

The

Garden City, L. I., April 10,

1946.

(Continued on page 2109)

plan they

an offer to sell or a solicitation of an offer to buy these securities.
offering is made only by the Offering Circular.

Apparel Control

The

conducted

series

the

eeighth

forums

$41,500,000

O.P.A. problems being
under the auspices of

The New

the O.P.A. Committee of the Fed¬
eral Bar Association of New
New

York,

York, Chicago and St. Louis

Jersey

vision,

Railroad

To be dated

April

The issuance and sale of

these Bonds

are

April

1986

subject to authorization by the

Interstate Commerce Commission

In the

opinion of Counsel, the Bonds will be legal investments for savings banks organized under the
laws of the States of California, Maine, Massachusetts, New Hampshire, New Jersey,
New York, Ohio, Rhode Island and Vermont, and for savings banks

organized under the general laws of Pennsylvania.

Price

At the conclusion of the lectures

To be due

1946

OPA,

there will

Company

Refunding Mortgage 3% Bonds, Series F

will preside.

I02.y6% and accrued interest

opportunity for

questions.
Tickets of admission,

there will be

The Offering Circular may be obtained in any State in which this announcement is circulatedfrom
only such of the undersigned and other dealers as may lawfully offer these securities in such State.

for which
may be

charge,

self-adPhilip
Woolfson, 67 Wall Street, Room
506, New York City.

obtained
dressed

by sending
envelope to:

HALSEY, STUART So CO. INC.

L. F. ROTHSCHILD So CO.

LADENBURG, THALMANN & CO.

FRANCISCO,
CALIF.—
Chas. E. Moore, senior partner of
Moore Machinery Co., San Fran¬
cisco and Los Angeles, has been

DICK So MERLE-SMITH

BLAIR & CO., INC.

BEAR, STEARNS So CO.

In Dean Witter & Co.
SAN

admitted

Montgomery

Witter & Co..

(INCORPORATED)

R. W. PRESSPRICH So CO.

and San Fran¬

Mr. Moore, former

IRA HAUPT & CO.

KEAN, TAYLOR & CO.

PUTNAM So CO.

INCORPORATED

President of

COOLEY So COMPANY

GRAHAM, PARSONS So CO.

R. L. DAY So CO.

Hendy Iron Works, is re¬

gional Vice-President of the Navy

GRANBERY, MARACHE So LORD

Industrial Association and Presi-

dent of the San Francisco Post of
Army Ordnance Association.
A director of the

MULLANEY, ROSS So COMPANY

National As¬

GREGORY ^SON
incorporated

THE MILWAUKEE COMPANY

Mr.

turned from

Moore
a

recently

WHITING, WEEKS So STUBBS

re¬

40-day Army spon¬

Pacific bases
where he discussed job opportun¬
ities with future veterans. He also
sored tour of South

served with the Harriman

RITER So CO.

E. M. NEWTON So COMPANY

F. S. YANTIS So CO.
INCORPORATED

sociation of Manufacturers for two

BURR So COMPANY, INC.

A. C. ALLYN AND COMPANY
INCORPORATED

COFFIN & BURR

cisco Stock Exchange.
Joshua

HARRIS, HALL So COMPANY

HALLGARTEN So CO.

WERTHEIM So CO.

Street, members

the New York

SCHOELLKOPF, HUTTON So POMEROY, INC.

SALOMON BROS. So HUTZLER

partnership

limited

in the firm of Dean

years,

Fixed Charges Lower

these

This announcement is not

Chas. Moore, Ltd., Partner

Higher Costs Inevitable

facilities and ac¬
transportation lines.

On this plan brokers

house

Bar Ass'n to Discuss

Washington, D. C.;
and Joseph Forer, Director, Ap¬
000 net in 1941.
and Industrial Materials,
The Department of Commerce parel
Enforcement Division,
Washing¬
estimates a "Gross National Prod¬
uct" of $150,000,000,000 for 1947. ton, D. C.
The
Honorable
J.
Vincent
This could produce an increase
Keogh, United States Attorney for
in railroad
gross earnings over
the Eastern District of New York,
1941 of 5% for 1947.
This is espe¬
them $500,000,-

cess

comparatively high?

and Connecticut, of
Index
of
Industrial
Production which A. Philip Woolfson, for¬
shows
an
increase from
110 in merly with the O.P.A. in Wash¬
1929 to 171 in 1941.
In line with ington, D.C., is chairman, will take
these
increases, railway freight place on Tuesday, April 30, 1946,
traffic jumped to a new prewar at 9 P.M., in the United States
peak in 1941 with an increase of Court House, Foley Square, New
25 billion ton-miles carried over York City.
The speakers will be Jerome S.
those of 1929.
It certainly seems
that the railroads could count up¬ Lieberman, Junior Price Execu¬
on
at least their
prewar
gross tive, Consumer Goods, Price Di¬
traffic which gave

the

of ten years.

MacDougall

small

have

railroads, moreover, need no

serves

recommending

advanced

for

and 2% for the third five
non-constant basis, and

years,

construction.

possible and

to community

years, on a

mortgage

effect.

same

given zone, a particular
location may affect rent values by
several
dollars
per
room.
The
builder doesn't always guess right

out

five years; 3% for the second five

seek-

seems

amortization

re¬

ly and more
economically than
It

have the

applying
to
new
provide for 15-year
loans, with interest at 4%%, and

advantageous¬

both

it af¬
construction, I
a general plan

may

securities are now

when railroad

selling

see

buildings to

new

homes

traffic.

like to

worked

quirements of
i

railroad

that

evident

will
i

recognize the apartment
mode of living
follow
its
present

apartment

Ample garden
materially
help
in
stabilizing higher rents over a
period of years as against con¬
gested building. A limited num¬
ber of balconies if properly placed
may affect the rent value, and a
garage of the right capacity may
plan.

poorer

areas

than

would

help solve the
s

the

On the mortgage angle, as

six

the rent¬

incorporate new ideas of
tenant appeal and favors

sound

satisfactory

fects

general

who

the small house field.

-on

particular plan.
scheme of so much
a

loan per room in a given area pe¬
nalizes the owner and architect

policy of concentrating entirely on

e n t
o

rather

Island

persons

Conclusion

rates and an

proportion to business activity.
their competitors

ever,

000,000,000 in 1946.

earnings will hinge on both

Before the war,

into the

year.

and rate charges.

Traffic Outlook
Volume of

They have also increased
their net working capital from a
1941 level of $600,000,000 to $2,-

formances.

years,

ernment

certain

The

largely to the small house
particularly to the apartment house

familiar.

many

the

able features of

will be devoted
more

sounder loans based

with

nroblem

which

the meeting

remarks will refer

are

brokers, mem¬
Long Island Board,
who can analyze plans and assist
mortgage institutions in making

President, The Queensboro Corporation

wage

and with more competition for traffic, will have to depend
higher rates and expanded volume of traffic, if their net

earnings are to
rates

There

offered when, as and If issued and subject to acceptance by
withdrawal, cancellation or modification of the offer without notice,

The Bonds are
to

the Purchasers, to approval of counsel, to prior sale,
and to authorization by the Interstate Commerce
be available for delivery on or about
New York 5, N. Y.

Commission of their issuance and sale, ft is expected that Bonds in temporary form will
May 1, 1946, at the office of Halsey, Stuart & Co. Inc., 35 Wall Street,

April 17, 1946.

Mission

England in 1941.

I
Q-fStrJt
t

r n rrn..^.

2086

THE COMMERCIAL & FINANCIAL CHRONICLE

quarterly operating statements,

Net

Bank and Insurance Stocks

•

Is; Quarter

TAN

1st Quarter

Cia.se
*

This Week

Bank Stocks

—

the

earnings of New York City banks are
Compared with the first quarter of last

record.

results achieved were in most cases favorable and

pectations, though quarterly 'indicated earnings"
conclusive nor strictly comparable.

came

year,

ex¬

necessarily

The following table gives indicated earnings, of seventeen leading
City banks for the first quarter of 1946 and of 1915, also

New York

book values per

share as of March 31 in each

year.

Earning?

(It

-53

JBB

26.43

30.65

65©

421.67

433.20

(2>

&
B.

48.22

15#

1S5..4S

113.23

~B£'

3951

41.46

Tr
k

3JB2

45-72

40.58

L®8

JSC

..5#

..41

24.77

22.94

1.1®

133

5149

54 07

25S4

1397-S®

1339-73

32S45

34955

.32

Manufacturers

(4)

National

Publ'c
U.

(1)

22.25

55.46

41.44

45-47

33fe

33.76

102.38

National
,

22.79
323S

124

12S

City

Trust

Trust.

Trssi

132

:64

IJBIi

<3»

York

55.39

5.€S

—

Guaranty Trust
Irving Trust

New

5251

2EJB

Exchange
National

4535

USS

Bk.

Nat.

Continental

Corn

JS©

L5®

—

National

Chemical

111

TLSFI

...

Bank

York.

New

Three

revised

viz:

year,

and

banks
their

47 32

3)32

49.59

7S425

768.21

Chemical,

Continental

Manufacturers.

In the

case

stock dividend

25%

Manufacturers Trust
stock

redeemed

in July,

1945

paid last No¬
vember, increasing the number of
shares outstanding from 2,000,000
to 2,500,000.
On the basis of the
higher capitalization, first quarter

basis

indicated

ported "net operating"; earning:
shown for a!' ofho** b?mks 'n
table are "indicated," as calculat¬

in 1945

earnings and book value

are

equivalent to $0.70 and

$36.50, respectively.
Continental

also

paid a 25%
stock
dividend.
Adjusting
for
this, 1945 first quarter indicated

discounts

and

$4,698,427,000 tc

from

25%

present

larger,

value

for

common,

earnings

1945

first

and

now

book

quarter

3 31

The

following tabulation gives
changes
between
the
two

Change

580.4*3

218.856

977.181

826,253

New

York

Bankers Trust
Central
Chase

1.085.505

Hanover—

National

Cfeem cai

605.489

Ommprriai

160.915

177.936

Continental B. k T.
First

National

779 3€8

537.251

2.159.912

2,060.897

722.086

1.421.350

2,723.436

2.732.843

427.912

421.964

253.269

300,500

104.005

90,318
$15,235,455

City

York

Public
S.

Trust

National

Trust

395,604

606,915

are

ed from

the balance sheets.
Four other banks, in addition tc

also

the

yet

nine

larger holdings than
loans

50.2%

greater

and

year

than

ago.

Chemical leads the group with an
expansion of 102%, while Com-

335,554

1.315,612

+ 53.7

462.367

+102.0

553,234

...

of 82.1%
„

only

acf

6.9

still
.

otal assets in loans and discounts,

Comparison and Analysis

!ompared with the group average

NEW JERSEY

24.0%.

BANK STOCKS

year

Corn's

ago

oans

4.d,c

represented

total

insets and the group average was

17.5

/c.

Bank Stocks

earnings and its quotations on
the
market rather than
by anv
margin of profit or loss to

open

the

You, in
judgment,

the

place

the matter of the
margin of profit
to the seller ahead of

Holtzmann

con¬

was

pointed out in

disputed selling
merely an esti¬

mate of the maximum of
the like¬

35,251

35.543

0.8

54,826

69.387

26.6

ly offering price and

32.492

59,150

82.1

78.301

ed to be used

119,893

53,1

4.4

691.164

29.9

397.934

3.7

214.495

244,471

23.1

340,327

527.435

771,351

1.291,484

67.4

1.4

185,407

218,494

14.0

101,580

145,508

probably

24.032

37,348

-30.4

0.9

S4.698.427

$7,058,050

—

50.2

until

C«ll CIaaL im RLIa

I 0 oSli dtOCK til UilaO
®

r«

Ak.

™'en

...

®
Ohio Secantiei
5 UommissHmer of witiiarawal of apj plica Hon to register Benguet Coa-

h°"^. i?. subsequent to

j Securities Division of the Ohio
| Department of Commerce, (see
I t£kr°n*cie<1'
11 > 1946> P
1939), Jacob J. Holtzmann,

ney

1943

vestment

for ^ilen

some

price

will not be determined
until then
The stock of the
Benguet Con¬
solidated Mining Co. of

-43.2

—13.2

intend¬

not
become
effective for
days and the actual offering

-17.8

18.6

was

merely for calculat¬
ing the filing fee.
He said the
SEC
registration will

55.0

0.3

—

exercise

appear

18.0

I hearing held at Columbus, O., beits fore
Ernest Cornell, Chief of the
..

mined by its intrinsic
value, man¬
past
and
prospective

price of $4

Mir, C»- «tock, bui

with

that the
offering
stock should be
deter¬

his letter that the

64.9

percentage increase greater than j
prejudice to future applica¬
average are: Bankers Trust, I tion. Awaits
SEC registration for
Central Hanover, Chase, Chemij determination of future selling mice
:al,
Corn, First.
Manufacturers 1 nf _Larps
5H
rnd National City.
or snares.

believe

10.6

Corn's expansion

"We

price Of

Mr.

ble

published

since

Cornell, the
attorney for Allen & Co. stated

53.4

228.917

are

year

Mr.

siderations."

36.4

855,787

ago.;

discounts

letter to

other

33.5

& j Withdraws Application

Total

19 New York

6.5

declined nearly
of the 17 banks report

group

eaves

1st Quarter 1946

Change

17.8

785.356

1.154.034

...

83.649

—

$15,420,806

National
New

Trust

—31.1

74,925
602.425

Trust

339.716

61.319

—

registration

before

-15.4

64-995

509.747

Mirs.

292 020

Exchange

Irving

5.5

Cora

Guaranty

—18.2

2.960.277

736,401

—15.5

888,347

2.779,461
T._

Natl..

5.6

—

Commission

the

pending

your

($000>

550.299"
232,280

($000*
Bank of Manhattan.

equivalent to $1 and $41.88. Earn¬
ings shown for this bank are re¬

Manufacturers,

Exchange

effective

March 15.

seller.

II
Loans St Discounts

Mining

agement,

and increased its common. On the

was

loans

It will be observed that whereas—

its preferred

Chemical,

have risen

Bank

Total

in the above list 1 earnings
and
book
value
are
last equivalent I© $0.40 and $19.78.

capitalization

hand,

and

now

On the

$7,058,050,000.

Bankers

3 31 45

2,000,000 sbucC I&4R, 2JW39 Kh&Tfff
Sb'% siacik davadand.
400,000 shares, 2M&, £E©®68 shares suiter 25'%- stock
CGiraferdL
1945, 1,949,922 shares; IMi 2,,©SX5>M) qlriRTf.'i- M'-iiES'
ireflmigKben of preferred.
Includes City Back Farmers Ttehl

(4)

other

March 31, 1946.

U. S. Governments

1945,

(3)

de¬

dates for each of the 17 banks.

1945,

<2>

actually

the

£-•08

Hanover

455,000

the first quarter of 1946
1945, with the exception

than in

have

banks

clined slightly, from $15,420,806,CC0 on March 31, 1945, tc $15,285,-

City Bank Farmers Trust.

1946

York

New

Cesamercial

First

1945

Manhattan

Central

Chase

294£

Trust

boils years.

Thus it appears that all banks
in the list made better earnings

during

the

TABLE

ft
of

scares

March 31

1345

.80

Book Value

First Qaareer

Bankers

3L5GOJOQ

Total Governments for

tional.

Intikmsee

Ba-k

osz

ities

makes

that has taken
between loans and Gov¬

ernments.

5.47 '

.68

Benguet Consolidated

Co. stock in Ohio had
been with¬

drawn, but without prejudice
to
the concern's right to a
renewal
of the application after
the Secur

the relative change

.31 '

Trust, Commercial and First Na¬

TABLE I

BarJ:

'Based

3-99

City—

the

are not

part

now

place

.64

...

.80

Guaranty

First quarter

.61

Chemical

*xXatio©a:

1946

DEUSEXi

total

Operating Earnings
per Share

1945

Compared with a year ago the
earning assets of these 17
oanks are greater by $2,389,181,900 equivalent to 11.31%. But of
more
significance than this is

follows:

Thursday, April 18,1946

attor-

Co., New Yorl

security dealers, announced tha
the application to sell
50,000 shares

was

Manila,
closely held in¬
by Judge John

owned

Haussermann,

President

and

founder of the
company; his wife
and five family trusts.
When the
Japanese overran the mines and
the mining stock was

regarded

too

depreciable

trusts

for

trusts, and
the

offer

equity for
Judge Haus-

minors,

decided

sermann

1943

Allen

liquidate the
they accepted

Co. to buy
1,110.000 shares at $1.05 a share.
1945 the underwriters bought

stock

at $1.80

months

two

$2.10

ago

a
share, and
third block at

share, their purchases to¬

taling 2,200,000 shares.
the
&

It is from

last-bought block that Allen
Co.

registered

702,000

with the Securities

ana

Commission

various

and

Exchange
state

agencies for public offering.

At Goldman, Sachs in Bost.

•

Circular

BOSTON,

request

Sachs

J. S.

Laird, Bissell & Meeds
Heater* Sew Y«fc Stock Excfcaage
OS BROADWAY, NEW YORK ft, N. f.

Rippe! & Co.

Established

Telephone: BArday 7-350#
L. A.

office,

MArket 3-343#
X.

that

—

Goldman,

Federal

Edward

Street,

Mar¬

shall, formerly of their New York

18 Clinton St. Newark
2, N. Jt

Oibfae, Manager Trading Department)

MASS.

Co.,

announce

1891

BeQ Teletype—NY 1-124E-49

now

associated

with

them in Boston.

Phone—REctor 2-4383

Royal Bank of Scotland
Incorporated by Royal Charter 1727

Leading
Banks and Trust

HEAD

Companies

of New York

Available

Will the

QUARTERLY COMPARISON

new

current

stocks

interest in

continue?

request

Our

120

•

Burlington Gardens, W. /

BROADWAY, NEW YORK 5, N. Y.

Data

•

Telephone: BArclay 7-5660

Teletype:

1-584

TOTAL ASSETS

£115,681,681

Banking trends for 1946.

•

150

leading banks.

Favorable and
for the

unfavorable

banking industry

as a

•w

Insurance & Bank Stocks
Bought
ANALYZED

Sold

—■

—

Quoted

REVIEWED

COMPARED
Special Bulletin and Booklet
Service to Dealers & Brokers
Trading daily 7 a. m. to 5 p. m.
(P, C. T.)
Inquiries invited.
Orders solicited.

BUTLER-HUFF
OF

& CO.

you own

in the

near

bank stocks

future, you'll

Cfaieag®

TELETYPE

San Francisco
279

of this plain-speak¬

request

without

cost

280

Seattle

of INDIA, LIMITED
Head

Uptown Office: 730

fifth avenue

the Government in

Office:

26, Bishopsgate.
London, E. C.

in India, Burma. Ceylon. Ken**
Colony
Aden and Zanzibar

Branches

Subscribed Capital

Paid-Up Capita!
Reserve

NEW YORK 5,

Kenya Colony and Uganda

Merrill Lynch, Pierce, Fenner & Beane

70 PINE STREET

Ltd.

NATIONAL BANK
Bankers

Brokers in Commodities and Securities

St., Los Angeles

Bank,

whole.

obligation. Addjess Department "T."

PRIVATE WIRES

Deacon's

Glyn Mills A Co.

aspects

contemplate their purchase

want a copy

ing booklet. It will be mailed
or

Williams

Underwriters and Distributors of bivestment Securities

CALIFORNIA

210 West 7th
New York

Associated Banks:

Prospects for increased bank business.

•

Smithfield, E. C I

Charing Cross, S.W.I

64 New Bond Street, W. I

possibili¬

ties of these stocks. Includes:

New York Hanseatic
Corporation

Bishopsgate, E. C. 2

8 West

"BANKS—1946"

survey,

examines the future
on

throughout Scotland

LONDON OFFICES:

bank
56th CONSECUTIVE

OFFICE—Edinburgh

Branches

N. Y.

The

Bank

conducts

£4,000,000
£2,000.000
£2.200,000

Fund
every

description

banking and exchange business

Trusteeships and Executorships
also undertaken

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4481!

163

Volume

The Road Ahead lor America }

50% Higher Standard of Living

By VIRGIL JORDAN*

Possible: W. H. Davis
War Labor Board Chairman declares this

President, National Industrial Conference Board

Dr. Jordan calls attention to

growth in power of Government over
work, which in this country, he says, is being ab¬
sorbed from "the dead hand of Europe." Holds background, basis
and significance of Government price control and labor policy lies
in its political aspect, and unless combated, individual freedom
and private enterprise will give way to permanent economic plan¬
ning by Government and destruction of democracy.

be attained only by radical
rise in earnings of lower income groups.
Urges settling industrial disputes by
effective grievance procedure. Lauds Ob jectives Sought by President Truman.
Former

can

be raised at least 50% and
national economy stabilized
that high level, according to

ing can
our
on

men's life and

American standard of liv-<S

The

William

Developments

Davis, former¬

World

Bank and Fund

ly chairman of

Direc¬

former

tor of the Of¬

fice

Econ-

nomic

Stabi¬

WASHINGTON, D. C., April 17—The Economic and Social Coun¬

Bank

World

and

Fund to

for Social Re¬

World

search,

complete arrangements for liaison
with it by May 25.
Since the
executive directors of the twin

66 W.

Twelfth St., on
the

evening of
April 11.
Such

•

week

second

the

until

vene

do not con¬

institutions

financial

in-

man.

line

are

some

proportion, there may

William

Davis

Department

Mr. Davis
the

"on

production

consumer

distribution

and

goods and services, and that re¬
quires a 50% increase in the av¬
erage income of the lower income

who after all, are the mass

groups,
of

our

consumers."

The national economy,

cannot

however,
Mr. Davis

stabilized,

stated, unless we face squarely the
difficult problems of management
and labor relations.

and

relations

labor

that

"Strikes must

the

made

jieally

something

will

which

Pointing out that labor relations
in America have been very great¬

ly disturbed by what went on dur¬
ing the war, Mr. Davis said that
raothing is more destructive of the
orderly growth of the values of

bargaining than a Gov¬
exercising com¬

can

spokesman on each financial

Treasury.

which is

Several

of the
Secre¬
coordinator

the Secretary
At Savannah

tary Vinson was more
than coordinated.

been

have

Washingtonians

for some

many

positions

attractive

Fund

and

offer.

The top research post,

=:<

$17,000

after taxes.

choice

all the

the Fund and Bank,

positions in

of course, will

Americans.
International
courtesy dictates that the honors
to

and

honoraria

spread around.

the

Fund very

the Bank almost:
be

American dollars, a good case

cans

This is the

$25,000 before taxes for a

married

largely and of

exclusively will

it is

equivalent in this country of about

recaptured

kind

they

the

country

ple recover their spiritual integ¬

in,

rity and sovereignty, and reassert

giving Ameri¬

the inside track.
i{S

their

kind

people they

Dr.

Jordan

Virgil

We should begin to

that war, militarism and

which

have
as

recent

come

years

many

support

progressive and desirable. In¬

economic

ing and Currency

free?

This
we

decade,

decide

and

(Continued

on page

matters

economic warfare, class and
all forms of collec¬
tivism, national and international

"planning"
these

are

and

inflation

—

all

merely other manifes¬

of un-

little-noticed
connection with
the McMahon bill, without real¬
izing that we are here concerned
the

with

the

controversy

most

crucial of all for

Excerpts from an address by
Dr.
Jordan before
the Eastern

Spring

Conference

trollers Institute of

of the Con¬
America, New

not

ernment

unlimited

with

powers.

start at
the grass roots," Mr. Davis urged
that industrial disputes be settled
without resort to strikes, "lock-outs
and other interruptions to normal
operations, through the universal
adoption of an effective grievance
procedure with arbitration as its
Recommfertding "that

This advertisement is not, and is under no

offer

buy,

or as a

solicitation of

circumstances to be construed as, an offering of

offer to buy,

any

this Stock for sale, or as an

of such Stock. The offering is made only by the Prospectus.

178,364 Shares

final step.

"Nothing could be more helpful
America than

to labor relations in

the universal

adoption of such a

procedure," Mr. Davis declared.
"The possibilities that lie in it are

Common Shares

truly tremendous. The best instru¬
ments that anyone can

hands of
er

put in the

($4 Par Value)

responsible labor lead¬

responsible management is

effective

grievance procedure

Of the above mentioned 178,364 shares,

by which these grievances can be
settled in

orderly way without

interruption

11,518

Shareholders of the Corporation, or their assigns.
be purchased from the Corporation by the Under¬
of the Underwriting Agreement summarized in the Prospectus:

unsubscribed shares

writers, subject to the terms

are to

grievance machin¬

ery is built up on

is an

The

production.

confidence in

166,846 shares were subscribed for at the subscription

price of $54 per share by the Common

both sides there

accompanying growth of real

Price

respect for the contract and appre¬

$62% Per Share

ciation of its real value."

Reviewing the steps taken by
the

Administration

substantial

effect

improvement

artict-

Copies of the Prospectus may be obtained in any State" only front such dealers par
State.
fating in this issue as may legally offer this stock under the securities laws of such Si

our

standard of living Mr. Davis declared that every policy decision
made by President Truman, every
speech and every general or spe¬
cial
message to the Congress, re¬

lating

the

national

policy has reflected
and

farsighted

Merrill

er^nnmic

courageous

determination

carry out this policy and to attain
the

objective.

April 16, 1946

Lynch, Pierce, Fenner & Beane

and
en-

on page

to force

gradually with patience and un¬

Gov¬

atomic

agency

derstanding.

our

supreme

the

power

(Continued

City, April 15, 1946.

world—whether

should arm

emergency

resort

it day by

meet

labor conflict,

York

2116)

issue that
the coming

ultimate

the

must

the future of the

Committee on

age,

tations of this same process

the House Bank¬

Board report to

here

the dead hand of Eu¬

day at every milepost of the road.
We meet it in seemingly small

ternational conspiracy and espion¬

expected Federal Reserve

moral power

from the spell and the su¬
perstition of unlimited govern¬
ment
and
political absolutism?
Can America repel the invasion
of the
Old World, and remain

The

and

themselves

liberate

Under the war
the Government had to
and the problems
thus created can be corrected only

pulsory

reabsorbed

and

rope,

could be made for

namely

everything

the dry bones of
techniques — has

by the spirit and pattern of the,
Europe from which it separated
itself a century and a half ago.
Can and will the American peo¬

understand
imperial¬
ism, which we profess to fear and
hate, are all only the expression
of the growth in the power of the
state over men's life and work,

directorship,

productive

been

home from

rumored, will pay as much as the
executive

its

that

about

will be.

parts
drafting the BW program and
selling it to the country and Con¬

will

Bank

the

it except

both have played important

However, since the stock-in-trade

putting out lines

the

about

the

Not

and institutions almost

they decide to

and

the Na¬

headed

Upon what

home

live

gress.

tional Advisory Council,

dec¬

American

the

will

body, the Fund and Bank, under
enabling act
must be "coordinated" by

well as abroad.

ade,

Luxford, legal assist¬
ant to the Secretary of the Treas¬
ury.
Both are very able men and

the terms of the BW

which

services into achievement.

ernment

succeeds

watched with interest. The Ameri¬

abundance of consumer

collective

ECSOC

well

coordinating the Fund and Bank

resort"

last

improved

turn the promise of
goods and

may

How

basis

Bernstein, Treasury

monetary economist,

and Ansel F.

said,

increase in

50%

than

system—its
unique
structure
and
pattern,
its economics,
its business sys¬
tem, its ideas, attitudes, instincts

but

those of E. M.

difficult to meet.

time.

our

little

Within

of the
Government,

plums.
Two names al¬
ready mentioned in print in con¬
nection with the new jobs are

for these

the world in

ex¬

and

problem will
depend not
only the peace
of the world,

be ef f ected,

the

down

behind-the-scenes rivalry

May, this request is going .to be
*

salaries

the

crease can only

Jm. *SH vHHH

which

power

cil, known by its initials ECSOC (pronounced ek-sock by the globureaucrats), has been pressing the<$

School

the

governmental expansion
evident everywhere in

limited

can
con-

pansion

Fund and Bank.

lization, who
spoke at the
New

limit and
r o

problem of our time with which the American people
grips is not peace or war on the road ahead, but

and

how they
t

come

whether

Correspondent notes interest in Washington regarding choice posi¬
tions in World Bank and World Fund.
Comment regarding addi¬
tional credit control.
New appointments of representatives in

and

The central
must

the War Labor

Board,

2087

2091)

"f--

?r'

THE COMMERCIAL & FINANCIAL

,r->

}

'Arj:' r;:!4lv3

TAmAwr

' fi
*

!U";n;'4

CHRONICLE

individual market moves the ve¬

Other
capital
appreciation rather than income

locity factor is not reliable.

things being equal, where

there is
likely to be an advantage in hold¬
ing stocks whose records for some
time show that they usually move
more
rapidly than the market

Freedom From

Worry

In its

April 1 Portfolio folder entitled "Design for Peace of Mind,"
The George Putnam Fund refers to a letter received from one of its
beneficiaries. The letter reads in part: "The freedom from worry that
have received from

during these troublesome times."
Trustees point out that it is the purpose of the Putnam Fund

satisfying to
The

take

worry
or's

investment in the Putnam Fund is very

our

some

the

off the individual
The

shoulders.

invest-

Fund

our

dreams

other security.

feeling

financial

comforting one.
We have all seen—and possibly
experienced—the worry and the
curity is

very

Items

rent

calls

attention

defensive powers of

the

selection in¬

herent in National Investors Corp.

when

and Broad Street Investing Corp.

things go wrong. If this Fund can

The market performance of these
two funds is compared with that

troubles

the

that

can

arise

helping people
achieve a greater degree of finan¬
cial security and a larger meas¬
ure of 'investment peace of mind,'
means

the

stocks

Industrial

Dow-Jones

the

during

the

comprising

February

Average

break

this

half,

for

this

Broad

the

Street

latter

Investors recovered 105.2%

ered

101.8%.

of the

Street

They

recov¬

were

Broad

and

decline

and

portfolios. In
comparison National

Investors

second

and
of

YOUR INVESTMENT DEALER OR

Distributors

63 Wall Street

Group, Incorporated
•

New York 5, N. Y.

third, respectively, in record
performance.

The Velocity Factor in
Stock Selection

ment

One

of the

Timing
velocity

market

NATIONAL
Securities Series
*

Research

current Invest¬

stocks in relation to
as

sentative

whole

market

moves

repre¬

average.

stocks,

continues the

useful,
particularly at times like the pres¬
ent when both the long-term and
report,

can

appear

Shares
Priced at Market

Prospectus upon request from
your investment dealer or

be extremely

The real

RESEARCH CORPORATION
120 BROADWAY

Now York 5, N. Y,

place of William H. Duff who
had served the Company as di¬
untimely death on Feb. 4, 1946, in
an
airplane
accident.
Mr.
Stathas is senior partner
(since
Mr. Duff's death) in the firm of
Duff

and

Phelps, utility analysts

and counsellors.

ner

income

has

Fund

The

Standard

Business

showing six years
dollar averaging with Affili¬
memo

Fund.

Selected

...

Co.—Investment

Selected

tant."

Poor's Preferred

Net

Portfolio
Shares

American

New

York

cussing

12%

in Quarter
asset value of Investors Mu¬

industry

George

Invest¬

Hugh W. Long & Co.—

folder

for Standard &
Poor's A-l Bonds.
Assets

Invest-

31, 1946; current issue
of "These Things Seemed Impor¬

and 2.6%

Stocks

Putnam

Portfolio

News.

Group—P

o r

t f

Distributors

1 i

folders

Shares and General Bond Shares;

Securities'

Railroad

Investment

current

News

Bond

discus¬

sing the long-term outlook for

high rate of business activity.
Ltd.—Folders

Hare's

a
.

discussing

"Timing" as applied to the various
of
Institutional
Shares,

Ltd.

best

measure

Branch in Puerto Rico
Lawrence Turnure &

of 1946 was the

Blyth

business quarter in the

new

history of Investors Syndicate of

change, announced the opening of

ors

Invest¬

Puerto

Syndicate of America in the

United

the

States

over

the

same

ing,

than doubled

this

months

three

first

made
Dr.

the

Theo¬

Lord-Abbett

the

time
in

This marks

since

Puerto

transaction of
;

dore O. Yntema has become asso¬

with

management
1927

that

exchange firm has opened

office

Consulting Economist

ciated

the

Rico

for the

general securities

and
i !

first

stock

by more than $4 million.

Abstracts that

under

the

period last year and

Announcement

office
in
San
Juan,
Rico, in the Ochoa Build¬

Generoso Marchena.

year

surpassed the best previous quar¬
ter in the history of the Company

current

branch

Certificates of

Company,

Bonner, 50 Broadway,
City, one of the oldest

firms of the New York Stock Ex¬

companies.
of

New York

America and the affiliated "Fund"

Sales

Group of Investing Companies as

114th

anniversary.

Turnure
in

ner

name

1851
was

Lawrence

admitted

was

and

1889

changed

part¬

the firm

Lawrence

Consulting Economist.

Policy in the School of Business

Administration of that university.
In connection with the war effort,

when it elected to go solely into
the brokerage business,
following
the enactment of the Banking Act

that

may

well be

one

considered

Turnure & Co.

Among his other activities, Doc¬
has been

the fac¬

ulty of the University of Chicago
1923

since
fessor

and

presently Pro¬

Business

and

Economic

the firm

In its early

days

active in the financ¬

was

ing of foreign trade, particularly
with
and

the

West

owned

sels.

Indies

and

Cuba,

large fleet of

ves¬

was

Chief Statistician of the Division

1,
1942, Lawrence
Company merged with
Blyth & Bonner and the present
firm name adopted.
Partners in

fense

Yntema

first

served

Commission

and

later

Special Consultant with the War

Funds

the

funda¬

June

Turnure &

the

firm

now

are:

engineer

Enterprises

Consolidated, Inc., and its Cana¬
dian
a r

subsidi-

Patican

Co.,

Ltd.,

been

has

nounced.

It is

expected

that

Mr. M
will

lton

o u

pro¬

posed for elec-»*<i
tion to the
board

di¬

and its sub¬

sidiary at the,
annualmeet-.'
ings

May "

1946. Mr.
Moulton, a na¬
28,

tive
is

Idaho,

wide 1 y

loiown

Col. H. G. Moulton

the

engineering field, chiefly in the
mining and smelting and' railroad
In the course of his career. Mr.

Moulton

member of the

was a

en¬

gineering staff of Eugene Meyer,
Jr„ & Co., which prior to World
War I was prominently identified
with the financing and develop¬
ment of many new copper

ciation

Mr.

mining

Moulton's

asso¬

with

Eugene Meyer, now
of the Washington. D. C.,

owner

"Post," continued after dissolution
the

Meyer firm in 1917, when
Moulton and Meyer

Messrs.

Mr. Moulton's

engineering serv¬
preparation of
many reports on mining, railroad
and industrial developments.
Some of the companies covered in
such reports were Anaconda Cop¬
per Mining Co., Phelps, Dodge &
Co., Inspiration Copper, Tennes¬
see Copper, Bunker Hill & Sulli¬
ices

included

van

and

prises.

the

Mines

Patino

He has served

Enter¬

*«.

,''

••1 ■
ah expert for

various banks or protective com¬
mittees in the reorganization pro¬

ceedings involving a number of
railroads, including Rock Island,
New Haven, Chicago & North¬
western, and Chicago, Milwaukee,

Colonel,

Mr.
Moulton
joined
Blyth & Co., Inc., as a Vice-Presi¬
dent

March

which

1946,

connection he will continue.

Mr. Moulton is

past President

of the American Institute of Min¬

ing

served

Metallurgy
terms

and

also

Vice-President

and director of the institute.

Seminole Oil Common

Lawrence

tion of these

lan

for the Diversification,

Supervision and Safe-keeping

economic factors to
the

various

folios.

and

son

the

late

The

of Investments

Hare's, Ltd., national

your

proval of their management's pro¬
posal to "time" its investments

KNICKERBOCKER SHARES

iNa.r;.;r^ >'■>.

Prospectus
from

General Distributors

your

The

20 Exchange Place
New York 5, N. Y.

may

he obtained

localf investment'dealer or

Keystone Company
of Boston

-50

Congress Street, Boston 9, Mass.

firm

also

maintains

two

other branch offices at 160 Varick
distribu¬

tors for Institutional Shares, Ltd.,
has announced shareholders' ap¬

William T. Veit, H. Thurston W.

Huntting, Gerald L. Pears, George
port¬
R. Payne, and Ralph H. Hubbard.

Timing Investments

cor Aviation Group Shares, Bank

Street, New York, and in Perth
Amboy, New Jersey.

The company was

and

developer

Ware & Keelips to Admit

•

City, members of the

New

Stock

admit Charles A. Hurst and Paul

New Director for Selected

B. Ware to partnership on May 1.

Tomlin

Annual

Meeting
of
Stockholders held April 3, direct¬

Norman

from the firm

(Special

Exchange, will

McLeod will

retire

April 30th.

,producer
con¬

"""Taj

Edwin A. Tomlin & Co.

New York
York

acreage,

lines,: principally in Ok"

>iL

Group Shares which has
previously enjoyed this benefit.

the

necting oil and gas production to
the pipe

Street,

organized in

December, 1945, and is

lahoma and T&ihas.

Ware & Keelips, 2 Wall

indebted¬

for machinery, equip¬

to increase
production, and the balance will
be added to working capital f°r
future drilling operations and de¬
velopment.

April 8 by F.

ment and pumps used

Group Shares and Insurance
Group Shares, in addition to Stock
Bond

made

ness, to pay

firm

ing, John R. Marshall, John Kerr,

securities

was

H. Kollsr & Co., Inc.
The price
$3 a share net. Proceeds will

be used to retire present

the

meet

regularly with the manage¬
applica¬

common

was

Turnure, grandson of the founder
George Turnure; Robert L. Hard¬

ment staff to discuss the

Offering of 95,000 shares of
Seminole Oil & Gas Corp ($1 par)

mental economic trends and will

Fund

advise the

committee

Lord-Abbett

ystome

Mines

of 1934.

of Industrial Materials in the De¬

Knickerbocker

Teletype*NT-1-2439

consulting

Patino

reorganized,

Doctor

Doctor Yntema will

'*•"

Engineer

1935 Lawrence Turnure

Company

their purchase or retention. There
is a definite tendency for high

Shipping Administration.

Prospectus may be obtained from

commodity business.
The firm, founded originally by, St. Paul & Pacific.
Moses Taylor under his own name
After three years of Army serv¬
in 1832, celebrated last month its ice as a Lieutenant Colonel and

profits, of course, is not the num¬
ber of points that an issue rises,
but the per cent gain in value. A
5-point profit on a stock bought
at 50 shows a profit of 10%; at
25, 20%; and at 5, 100%.
Conclusion:
"The
velocity

tor Yntema

-JW*

entered Government service.

Lawrence Turnure Has

«!•

Smith, Jr., Vice President
and
General
Sales Manager of
Investors Syndicate reported that
the first quarter

The appointment of Herbert
G
Moulton

both

among

»[»

'V,

To Patino Mines

enterprises.
.

groups

all
American
open-end investment funds.
position

Group

from $77,748,453 on
Dec. 31, 1945, to $86,850,503 as of
Mar. 31, 1946, which places In¬
vestors Mutual in fourth largest

-1-

branches.

investing.

tual, Inc., increased approximate¬

grew

Consultant

Fund—Current
.

dis¬

Stocks

ly 12% during the quarter ended
March 31, 1946, according to Earl
E. Crabb, Chairman of the Board
and President of the Fund.
Net
assets

-MSvUll'

tinoMines

Mutual Fund Literature

dated Mar.

3.8%
Common Stocks, 3.5%

rectors of Pa-

yield of 4.8% compared with
for

in investment matters.

ments

re¬

current

held

and

esteem regarding His
reputation and ability

high

very

He had been for

associate and part¬

Duff

Mr.

character,

ated

providing for its shareholders

turn.

investment

Herbert G. Moulton

elected

was

velocity to go with low price and
for low velocity to go with high
price, but for individual stocks in

The

Stathas

characteristic of securities

NATIONAL SECURITIES &

investment dealer

Mr.

managed with the prime objective
of

New

to be upward.

Percentage in profit (or loss) is
caused by velocity, and frequently
the importance of percentage in
relation
to
price movements is
overlooked.

Rubin.

Shares;

intermediate trends of the market

BOND SERIES

Anan

BnUetuHqn, American

of the

knowledge of the velocity charac¬
teristics

Baar,

R. L.

a discussion of
characteristics
or
price habits of stocks. Velocity
may be defined as the degree of
price
movement
of
individual

the

Arnold

Adler,

Copland, J. Victor Loewi,
Raymond and Edward P.

David

Lord-Abbett—Current

portfolio consists of over 55 dif¬
bonds, pre¬
and is

sj»

National Securities &

Corp. devotes its

years
Rob¬

some

ferent issues including

performance was
surpassed by
only one of the 30 stocks used in
the comparison. Broad Street de¬
clined only 9.8% and only 4 of the
30 stocks outperformed it.

lected

follows:

ferred and common stocks

for Moody's

National

ert

for

capacity

reelected

many years an

income-minded in¬
vestors have purchased more than
$8,000,000 of its shares.
Diversified Investment
Fund's
and

better-than-average

Comparable figures on the sub¬
sequent recovery (from Feb. 26 to
Mar. 29)
demonstrate the recu¬
perative powers of the stocks se¬

A PROSPECTUS ON REQUEST FROM

Investment

the Fund has
less than a year

Although

been in existence

In this period of sharply
declining markets, National In¬
vestors declined only 8.9% and its
year.

MERCHANDISING

released by
Co. presents
investors of

Diversified

Fund.

Street Sales Corp.'s cur¬

Broad

se¬

Selection

&
to

W. Long
advantages

Hugh

owning
Defensive Powers

folder just

new

that

were

rector since 1941 and who met an

Generous Income

the

"way of investing"—not just an¬
"The

ment,
true."

it will have justified
and our hopes."

in a downward move¬
however, the converse is

average;

and*'

care

objective,

main

the

who have served

of Selected

ors

Thursday, April 18, 1946

.•

Thk

Financial

Chronicle)

LOS ANGELES,CALIF.—Edwi n
Tomlin
&

has formed

Co.

Edwin A.

engage

in the

securities business from offices
417 South Hill Street

2089

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

Volume 163

3BT

ciated Press

Trainees in New Loewi Program

stated
went

MILWAUKEE, WIS.—-Nine ex-servicemen, ranging in rank from

dispatch'from Chicago
April 16, which further

The

workers, together
200,000 members of
operating brotherhoods,
granted rises of 16 cents an

Army to Lieutenant Commander in the Navy, are taking
intensive course in economics and securities .at Loewi & Co., 225
E. Mason Street, to prepare themselves for various positions with the
securities firm. They are shown above in a conference room of the
firm studying one of their case problems.
Clockwise, they are Donald
Smith, Fred Woodhead, William Minkle, Bernard Brannigan, J. Victor
Loewi, President of the firm and one of the instructors in the course;

private in the

about

Washintgon,
D.
C. — paper—50
(10% discount for orders in ex*
cess of $1.00).
j:

with
three

were

First

hour

boards.

asked

The

the

difference

the

represents

between

original

—to new

30 cents and the 16 cents awarded

have termed

The

inadequate.

Shipping, Inc., 2660

American

N. W., Washing¬
ton, D. C.—paper; also the Brief
in Support of Request for the Re¬
Woodley Road,

Administrative

moval

President Truman this week. The

straints

remaining three, the firemen and
engineers; conductors, and switch¬

and Air Service

originally

men,

boost of

$2.50

asked

For

pay

They have
announced whether they will

not

seek

the

any

day.

awarded two

weeks

of Loewi & Co. is indicative of the new
inaugurated, now that some of the troublesome

The program
has been

behind

policy that
times seem

us.

Instead of taking in new men

and putting them to work without

firm's President, insists that they go
the job training, a course of "after hours"

training, J. Victor Loewi, the

through, in addition to on
instruction that lasts from anywhere between
The

courses

6 to 18 months.

held three afternoons a week from

are

J to 5 p.m.

recently hired employees are currently in attendance and two
will join the class shortly.
Speakers at these sessions include
Milo Snyder, a Northwestern University graduate in banking and

Nine

of the firm, and other officers of the

finance, and Vice-President
Loewi

BROOKLYN, N. Y.—Security
Adjustment Corp., 16 Court Street,

the

course

new

employees face is not simple is reflected

by a review of the subjects offered.
There are 46, rangjng
lecture on the place of investment banking in the economy to
In

from a
"Finan¬
called for.
Marquette
and banks, business organization

Company Comparison." Trips to plants are also
addition, outside training at either Wisconsin or

cial Ratios;

accounting,

University

money

subjects is required.

and other related

18, N. Y.—cloth—$2.00

additions to its

They

Lloyd

are:

management

Office

Library of

Industrial

Relations Executive—Selected list

specific

Eyman,

teed rail

specialists in

securities; John L. Price,

just returned from United States

Army

service

theatre

operations.

He will study for

Inc.

Bishop's

with

formerly

European

the

was

Service,

the

references

genreal

works;

personnel problems and
programs; trade unions and col¬
lective bargaining; labor legisla¬
tion
and
administration;
social
insurances;
etc.—Industrial
Re¬
lations
Section,
Department of
Economics and Social Institutions,
Princeton University,
Princeton,
N. J.—paper—500

guaran¬

secur¬

the

Job

Training

Price

Program;

Insulators

Corp.,

Long

Control

—Analysis of the

Ralph Traube, formerly with Na¬
tional

CHICAGO, ILL.—At the Bond
of Chicago Luncheon held

Club

April 12, 1946, guest speaker was
Y. Frank Freeman, Vice President
and Director of Paramount Pic¬
tures, Inc.
Guests

urer,

Lee

were:

the

Meet

Higher Wages

tionary

Is¬

pressure

gestions for

land City.

This announcement is neither

The Bond Club of Chicago;
L. Buchanan, Vice Presi¬

James

dent, The First National Bank of

Chicago; J. H. McNabb, President,
Bell & Howell

Co.; John

Balabarf,

Secretary and Treasurer, Balaban
&

Katz

Corporation;

Y." Frank

Freeman, Vice President and Di^

Paramount Pictures, Inc.;

John

Bond

Club

President,

Loomis,
of

Chicago;

—

Fares to Be Unchanged

Porter, Vice President, The First
National Bank of Chicago;
P.

eral
G.

Joseph

Binns, Vice President and Gen¬
Manager, Palmer House;

son, Topeka & Santa Fe

Company;

Railway

Julien H. Collins, Ju-

lien H. Collins & Co., Vice

offer to sell

Decontrol?

causes

of infla¬

containing

sug¬

Edward

according to an Associated Press dis¬
patch from Washington, D. C.
The carriers at the same time also
fares first

ordered in 1942.

Executive

Flynn,

nor a

solicitation of offers to buy any of these

securities.

Inc.

rates

Passenger

due^—

are

now

months

level six
after the legal termination

of hostilities.

railroads

the

critical,"

become

now

the

situation

"The

has

35,000 Shares

permanent, the 10% higher passenger

4% Cumulative Preferred Stock

gate whether they are justified,
asserting: "Increased rates cannot
be
made
retroactive,
whereas

Par Value

shippers can be amply protected
by awards of reparation."
of

Association

petition said, "as the result of an

The

extraordinary combination of war

Railway

and postwar

conditions, and more
particularly the result of three
factors of recent development:
"1. The
increase in
wages of

per

$51 Per Share

(plus accrued dividends from April 1, 1946)

Western

statement

railroad

Price

$50

after World War I.

determined

hour

per

employees

cents

under

the

procedures of the Railway Labor
Act

April, 1946, retroactive to

Jan. 1, 1946.
"2. Large

^prospective, in the prices
of railway materials and supplies.
"3. A sharp decline in volume
railway

greater

traffic

decline

and

railway

even
rev¬

enue."

Wage Rise Cited

,1946 ;

higher

prices

expenses

and
not

add

will

that
less

$167,000,000.

for 1946, on
the basis of 1945 rate levels, will
be
the

revenues

than

operating

The

$2,000,000,000 under
in 1945."

proposed

rate

increases

The carriers asked the ICC to
low them to make the new rates

effective

May

Common Stock

Following the action of the Rail¬
road

awarding

Board

Labor

railroad

increase,
freight
rates an average of 33% over the
entire country, the statement said.
a

year

Commission

the

While

the

pay

Price $19

raised

carriers

for

asked

because

advances

Per Share

general 25% increase, the aver¬
age would be below that figure,
said,

Without Par Value

1920,
workers
a
July,

All of the above Common Stock and 14,800 shares of

the Preferred Stock are being sold

by certain stockholders of the Company, as more fully set forth in the Prospectus.

to avoid undue

disruption of

com¬

petitive relations and commercial
conditions.
These

Copies of the Prospectus

lesser

increases

would

may

be obtained frorp only such of the undersigned as are

qualified to act

dealers in securities in this State.
r~

cotton, fruits and vegetables, lum¬
ber - and
woodpulp,
petroleum

Hemphill, Noyes

products in tank cars and to iron
and steel.

Co.
■

'i >

reygoues

would, yield $625,000,000 in addi¬
tional revenue this year, the pe¬
tition stated.
a

100,000 Shares

control

apply, the railroads said, to sugar,

"Moreover," the petition added,

"operatirig

the ICC found necessary

certain commodities would be less

increase will add about $619,000,-

than

at the end of Government

they

The railroads said that the wage
000

great

Executives
said
in
a
that the proposed ad¬
were
not
relatively
as

$650,000,000

increases, both pres¬

ent arid

vances

15 and then investi¬

New Wage

Increase Asked

increase of
1,050,000 rail¬
road workers employed on 130 of
the nation's carriers was asked on
An additional wage

14 cents an hour for

April 15 in notices filed by 15 nonoperating brotherhoods, an Asso¬

Moseley & Co.

Vice

Quincy Railroad Company; Hugo

number of crucial Sonnenschein, Attorney.

The dispatch further added:

to revert to their prewar

Presi¬

President, Chicago, Burlington &

freight rates, effective May 15,

asked the Commission to make

Gurley, President, The Atchi¬

Avon Allied Products,

American Railroads on April 15 asked the
Interstate Commerce Commission to grant a general 25% advance in

The

Irvin L.

Freight Rate Increase to

Association of

The

table

speakers'

Ostrander,' Treas¬

The offering is made only by the Prospectus.

Railroads Ask 25%

dent, The Bond Club of Chicago;

ity business under the "Veterans
on

345 Hudson

Bond Club Luncheon

rector,

Souville, formerly with Clucas &
Co., members of the New York
Stock Exchange, and Clark, Kohl

organization.

That the

force.

plan
of
the
Lincoln
Electric
Company—Mc¬
Graw-Hill Book Company, Inc.,
330 West 42nd Street, New York
the

Adds Three to Staff

sales

Lincoln—report

—James

Security Adjustment Corp.

announces several

—

System

Incentive

Lincoln's

Snyder, Vice-President and also an instructor; Roland Neumann,
Robert Veenendaal, Dale C. Knight, Douglas W. Schantz and Howard
Weldon.
The courses vary in length from 6 to 18 months.

Congress

Pamphlet No. 116—Public
Affairs Commitee, Inc., 30 Rocke¬
feller Plaza, New York 20, N. Y.
—paper—100

ago.

Milo

(paper)

fairs

increases in addition to

cents

Re¬

the Integration of Sea

Stronger

Corp.,

Guests at Chisago

S. Broughton—Public Af¬

Philip

Poor's

Street, New York 14, N. Y.

Com-

Federation

the National

mitee

operating brother¬
hoods.
Two, the Locomotive En¬
gineers and the Trainmen, have
their wage and rule case before
a
Presidential fact-finding board
which is scheduled to report to

Burns—Sea-Air

Arthur

volve the five

Transportation—

Sea-Air

gated

Inte-

Advantages

Economic

proceedings do not in¬

new

ard

by the board which union spokes¬
men

long-

plus three issues of The Outlook
readers only $ 1.00—Stand¬

demand

for

program of successful in^
vesting—special
study
entitled
"How Long Will the Boom Last?"

rise

new

Stocks

Step

term

April 3 by Government arbi¬

tration

America^

the United States of

to say:

Commeftte

policies—Chamber

H. F. Boynton 8b Co., Inc.

pril 16, 1946.

«.r

,'Mr>«'

2090

THE COMMERCIAL & FINANCIAL CHRONICLE
free

funds

unchanged

were

lat

9 3/16%.

Canadian Securities
By
In this

BRUCE

WILLIAMS

market

almost immediate
repercussions.
This applies in particular to financial
developments and more especially when the countries
involved are
cause

the

international

tinuance

position

been

$500,000

in
a

the

CANADA

there

change in the basic

has

borrowing at low
phasis is

Canadian Currency only

now

the

inflationary

Port

herent

the

New

York

Thomas

the

place

John

long

Buffalo,

Toronto and Montreal

Dominion Securities

Loan

issue

increased

Orpoeatioti
40 Exchange Place, New York 5, N.Y.

from

enormously

and

What

roads:

ing results

due

torical

If
Sloan

Colt

velop

are

appointed

Agency

has

from

New

the

Jersey,

Mr.
his

interests,
business

through

ing of rates, will look with

Loan and Trust

some

market correction that

the

controls

have

been

both

unable

CANADIAN BONDS
GOVERNMENT

PROVINCIAL

CORPORATION

CANADIAN STOCKS

ent

pres¬

reactionary

comes

doubt

that

trend

here

definite there is little
it

will

extend

Canadian market.

A. E. AMES & CO.
INCORPORATED

be¬

the

High grade externals moved
with¬
TWO WALL
STREET

very

narrow

katchewan
RECTOR 2-7231

range

only actvity of note

NEW YORK
5, N. Y.

NY-1-1045

slightly.
market

played

which

was

the
Sas¬

improved

change in price.

for
a

and

Albertas continued dull

with little

1929

National

internals

minimum of

also

Excessive

debt

securities

rather

than

was

President of the New York State
Bankers Association in 1935.
Mr.

Colt

American

director

Bank

the

Note

historical costs, which, in
effective as

public

utilities, had not one
significance in the finan¬

cial difficulties of

railroads, and I

believe

cannot

that

qualified

Wall

Street, New York

WHitehall

railroad

rector

and

mutes

Bank

member

the

New

five

Federal

di¬

com¬

Reserve

York, and

direc¬

tor and member of the
Executive

of the

3-1874

overlook

the

entirely outweigh

Company, General Foods Corpo¬

which he advances:
1.
The original cost

Company.
member

of the

tee of the

Airways

trustee

and

Finance Commit¬

Mutual Life Insurance

Company, and
Finance

Advisory

member

Board

the

Royal Exchange Assurance (Unit¬
ed

States

surance

Agency), the State

As¬

Company, Ltd., and the

Car and General
Insurance Com¬

dis¬

pany

Ltd.

(United

Agency).

Sold

com¬

following

any

deliberation

com¬

lates

that

"stockhold¬

unaware

the successful attacks being made

deprive them of their property
due
processes
of law

without
.

and

also

"if

predicated

were

during

period

depreciation
original cost
replace¬
high¬

when

ment costs were 50 to 100%

the company would not collect

er,

revenues to provide for
depreciation, and its plant would

enough

gradually given to the consum¬
through insufficient rates."

The

statements

above

are

not

only fallacious but reflect on the
various

Federal

and

state

missions which

com¬

trying to do an

are

job in dealing fairly with
as
well as the

stockholders

customers.

The utilities with hon¬

capable managements and
their stockholders need not have
est and

any

me,

fear of such

erroneous

state¬

decided
by the Supreme Court as far back
as 1886, the Court said, "it is not
ments, because in

argument

copcept re¬

case

be inferred that this power

only to acquisitions which
minor portion of
public util¬
ity property accounts.
2.
Its introduction has
resulted
in the elimination of

without limitation.

and

oi.

lent of confiscation."

limitation

are a

write-ups

property account.
3.

greatly simplified rate
making as it does away with the
necessity of years of appraisal
work and

States

litigation

to values.

discourages speculation

proper¬

the

years,
been

the

has

State
been

utilities

hlave

release

articles

the

in this

one

well

misleading

case.

SUNSTROM.

ARNOLD

Comptroller,
VALLEY
authority.

tennessee

always

and

This power

It is fny recommendation to se¬
curity analysts, such as Mr. Hyde,
that, in the future, when they try
to deal with accounting questions,
they at least check with their in¬
dependent accountants before they

for

regulated.

is itself

a power

California

practiced

financially strong

regulation

to destroy,
limitation is not the equiva¬

regulate is not
and

a
great
number
of
other
items which had no
place in any

buying and selling utility

4% Perpetual Debenture Stock

—

back

points in its favor, which, to

Committee of the General Electric

Canadian Pacific
Railway Company

Bought

find
to

man

original cost concept

pletely

al¬

Many utili¬

(of utilities are)

him

where

out
ers

honest

stocks

common

Hyde has stated
loosely and definitely with¬

the

He is

the

Justice—Mr.
very

Original Cost Concept for Pub¬
lic Utilities—Mr.
Hyde's criticisms

to the Bank¬

investment

said of many other industries.

ties.

Company.

invest¬

throughout the recent
depression period which cannot be

Company, in addition
Trust

stock

and the Provident Fire Insurance
ers

the

gilt-edge class.

up in this statement.
Rail¬
roads, such as the Santa Fe, which
followed sound depreciation meth¬
ods, never had any such difficul¬

Company,
Company, the
Discount Corporation of New York
American Can

ties paid dividends on their

iota

1931.

com¬

Taylor, deale
Company

with

stock.

mon

return

company

puts

most

basis

unjusti¬

financing

ties.

as a

was never made

The

actiivty and

fact,

Director since

the

de¬

fiable dividends.

City

continued

ration and Pan American

During the past week the mar¬
ket in general
was almost
totally
devoid of
activity and interest.

otherwise

used

ance

the

Instead therefore of an
ultimate
2% rate
ceiling here and 2V2% in
Canada there are
growing indica¬
tions that the
recent low
yield
levels established in
the two coun¬
tries might
very well prove to be
the extreme
limits of this waremergency movement. If the

was

declaring

and

almost

for

of the

when

position which

Farmers'

and

the

for

well-managed utilities into

and structures,
false surplus

way

building

and

cheap supply
long bonds,

consequence of any
important

1925,

provide

went with the Bankers Trust Com¬

the rcently issued

liquidation.

MUNICIPAL

thus

pany as Vice-President and Direc¬
tor.
He has been its President

undue
market
movements
the upside it would
help to cor¬
rect this basic
weakness in the
position of the central
banks if
they could acquire a

Competition
from
other
means of transportation.
My own feeling is that the reli¬

Bank

as a

with

to be

property
ever

made by the stockholders certain¬

Vice-President until 1930 when he

countries

recently

stem

merged

Failure

preciation

Company in 1914.

became Vice-President

Company

will

precipitate the liquidation of
speculative positions. Morover as

the

difficulties

fair

mon

Colt, who is well known for

many

financial

investment

prudently made, and the en¬
forcement of a depreciation
policy
by which the customers pay back

follows:

for

terms of six years and serve with¬
out compensation.

the

tees

apparent that

railroads, which I believe

bi-State

Governors

the

higher than

ment

attempting to de¬
thesis, I am sure that he

strange state¬
when

Proper regulation of utilities by
using the original!
cost concepts
practically guaran¬

would have stated the real reasons

six

authorities in both
countries, now
that it is no
longer of vital im¬
portance to prevent any harden¬
a

period

commissions

was

for

and

civic and philanthropic
entered
the
banking

not

were

Hyde

of com¬

individ¬

are

all-time lows.

actual

ty Commisisoners, six from New

Bank of Canada has no
longer any
direct control of the
market.
It
is conceivable therefore

favor

Mr.

Authori¬

rather

a
a

are

returns

value."

twelve

values

increased among

than

capitalization

Purchasers

stocks, however,

ment

regarding rail¬

rather

but they
stocks which are
on
of the

ill afford.

This

Rail¬

York

that, the

Boll Syalem Teletype NY 1-702-3

costs

equity to
income and

principal,

purchasing power."

little doubt that

were

avid

cush¬

uals who are
willing to take these
additional risks, but in
return ex¬
pect and deserve that their divi¬
dend income will have a
stable

the railroads by the false
security
from relying upon his¬

expired
July 1,1950.

Port

the

are

common

mon

obtained

would

The

"There is

continuity

bottom

can

period of its

are

pile and entail business risks
they

receiverships and near receiver¬
ships with the unfortunate attend¬

have
on

the

Hyde made the fol¬

lowing statement

Pulleyn's

term

Happened

roads?—Mr.

health.

ill

shun

au¬

chosen field, I also wish

my own

2.55%.

assure

repayment of

to take exception to several other
observations made by Mr. Hyde.

resigned

Mr.

Victory

Similarly, speculative interest

and

by the above

and

with

liabilities

buyers of bonds whjch
with a sufficient

At the risk of wandering out of

18 years of
as

indicated

dollar

ioned

use.

March

nadian Government bond
market
has been influenced
by the trend

Direct Private Wires

Authority by

Pul-

service

debt

in this
country to such an extent
that the external demand has
been
almost wholly
responsible for the
fall in the yield of the last

mathematical

securities

Institutions

stocks.

common

fixed

ty but to allocate cost of deprecia¬

leyn, who aft¬
er

correspondingly affected.
As already mentioned the
Ca¬

logical consistency

ble property over the

Commission¬

for replace¬

tion

er,

accounting

dollars for replacement of proper¬

Colt will take

in¬

As a result short term
have already hardened and
lgoical to suppose that the
term interest level will be

wide gulf between the
purchaser
fixed
income

thorities, the function of deprecia¬
accounting is not to provide

and

Trust

Mr.

rates

(United States Dollars)

Bankers

Commissioner of The

structure.

Price 95.50 and interest

President

the

Dewey.

elimination

tremendous

It lacks

well

Governor

em¬

tendencies

exactly

ment, then, is decidedly defec¬
tive.

Authority

Colt,

appointed

proceeded

cost and the

kind of asset.

not pure

The conception of the purpose

Company of New York, has been

movement towards lower rates in
order to permit
huge government

Payable in

Sloan

Director

longer is it of para¬
importance to force the

mount

purchase

same

Appointed

Port of N. Y.

apace.

Due Feb. 1, 1962/59

debt

Stockholdere-Mr. Hyde
state,
"stockholders, however am
investors, and as any Se
the curity salesman
knows, there is a
that

better service than

economic valdity.

to peace-time conditions
be of considerable extent.

the

this

Commissioner of

has

war

down

situ¬

Instead, the reversing process of
balancing the budget and cutting

3r Bonds
7c

equivalent

financial provision

longest bond. How¬
meantime

trend

readily

reaction.

S. Sloan Colt

erroneously antici¬
pated that the period of transition
would

about

could

of depreciation

had been

from

downward

rates

likely to involve the purchase
of a unit which will perform the

has

ation.

Dominion of

the

(Continued from page 2076)

any
con¬

grade section would
be especially vulnerable.

yield

basis for

For

concerning the

interest

bring

been created and
every effort has
been made to discount a
2%
ever

peak.

the

event the low

considerable

bullish

its

present high prices and

During the past few months the movement towards a lower level
of interest rates in the Government bond
market here has been some¬
what exaggerated. A

now

time buyers have balked at

basic doubts

the United States and Canada.

'speculative

neighborhood
some

shrinking world national events

Cotroversy Over
Utility Depreciation

With regard to future prospects
there is increasing evidence that
the

Thursday, April 18,
i946

Knoxville, Tenn.
April 5, 1946.

REBUTTAL BY MR. HYDE
—

Quoted

Editor, "Commercial

and Financial
Chronicle":
beg to reply herewith to Mr.
Sunsirorn's letter to the "Com¬
mercial & Financial
Chronicle" commenting on the address I made
on
the
affect
of
original cost^—
—
theories before the New
York So¬ greater
faith
in
his
sincerity.
ciety of Security Analysts. Had he
I

CANADIAN
SECURITIES
Government

Municipal

Provincial

Corporate

Wood, Gundy & Co.
Incorporated
14 Wall

Street, New York

Direct Private Wires

Toronto & Montreal

—

confined his remarks to the
merits
the issue rather than

to prove his
point
my

attempt
by questioning

qualifications, I

would

have

There appears to have developed
the last 14 years a school oi

over

thought

among

that

one

public

officials

supporting the op¬
posing side of a controversy is an
any

that mere
exponents
are
sufficient to refute all evi¬
dence to the contrary. Neverthe¬
less, I appreciate his reply as in¬
facto imbecile and
Quotations of revered
iDSo

the interest in this sub¬
ject which I believe should be
better understood by investors,
but I
regret that his remarks
merely presented his opinion and
contributed little, if anything, to
the affect of original cost theories
on public utility stocks which was
the topic under discussion.
dicative of

that I stated the

I feel

While

original cost doc¬

objections

address, I would like
exception to a few re¬
marks made in his letter. In the
first place, he apparently ignores
the fact that there is more than
one opinion as to the purpose of
depreciation, and even the defini¬
tion of the American Institute of
Accountants which he quoted to
trines in my

take

support his opinion does not limit
its applicability to original
cost

the words

pointedly inserts

but

Another def¬
inition which I have close at hand,
and which I believe is similar to
the Federal Power Commission's
definition in its Uniform System
of Accounts is contained on page
"other basic value."

40 of the June

Order

and

with

connection
of the

24, 1944, "Findings
the Arkansas De¬

of Public Utilities"

partment

investigation

operations of the Arkansas
& Light Company. Please

Power

this

which

sheet,
showed

de¬

loss in service

value not restored

com¬

stock three times its present

mon

market
I

take

must

direct

issue

correspondent's

your

that "the

lates

with

statement

original cost concept re¬
to acquisitions which

only

minor portion of public util¬
ity property accounts." In recent
years the trend of regulatory au¬
are a

thorities has been to require com¬

panies to

original cost of all

use

properties

rate base, thereby

as a

depriving stockholders of the in¬
cremental value of their property
due
to
increasing
replacement

To be true, it simplifies rate

costs.

making,

but that is

justifica¬
inequitable and undesir¬

tion for
able

results.

stocks

common

utilities

His

that

well-managed

almost

are

contention

gilt-edge

may

true

appear

dustry

today when the in¬
in
a
strong
upward

growth trend, but who is to

guar¬

antee continuity of good manage¬

freedom

ment,
from
will

reduce

plants,
ice

the

tion

value

might

migration

serv¬

impaired

natural resource.

many

present

popula¬

loss of economic value of

some

that the particular

area

through

competition

from

future invention which

some

others,

These, and

the risks which

are

investors cannot afford to take but
assumed by

are

lulled

their

the

into

securities

are

"almost

gilt-edge."
Regulation
only the right to
fair earnings and not the earnings
can

guarantee

by current maintenance . . ." If
the commission had meant "orig¬

themselves.

inal

impression,

cost," would it not have used
those limiting words, and is it not
a fair assumption
that the words
"service value"
were
purposely
used

that the meaning could not

original

interpreted solely as

cost?

Mr.
Sunstrom
is
correct in his assumption that the
financial
roads

due

were

debt

cessive

the

difficulties

rail¬

primarily to ex¬

financing and

com¬

petition, but my point is that the
debt financing was excessive only
because competition reduced earn¬

Mr
was

that

deliberation

Sunstrom's
with definite

that

stated

equity

capital
the

successful

the

made

being
their

deprive

attacks

them

property without due process

law."

The Road Ahead for America

fully

utility

com¬

to con¬
will be

necessary

which

plants

required to meet the growing de¬
mand

for

utility

statement is not

cious,"
various

state

missions

he says

and

which

have

It is

ment

com¬

to do
tribute to

made

utilities in

the

trying

sonal, political, social
headway

"falla¬

of those who for per¬

success

reasons

This

Federal

are

honest job."

the

service."

does it "reflect

nor

economic

such

placing

great

public

the

position that govern¬

ownership will be inescap¬

able.

are

a warning to those
buying utility stocks at

two to three times their book val¬

with

ues

values

the

belief

rather

that

present

than

original
will be used for rate-making

cost
pur¬

poses.
,

(Continued from page 2087)
in order to prevent
other governments from doing so.

It is unfortunate that many con¬

scientious

individuals

have

been

made

unwitting partners in this
operation. They have been taught
that certain theories of accounting
indisputable facts whereas, in
reality, they represent a narrow
application of a broad economic

are

field.

question in apparently momen¬
tous economic issues, like that of
American

was

different

control program, like that
labor policy, is essentially
political.
It is fundamentally a
matter of maintaining and ex¬
panding governmental power and
operation. We are faced with po¬
litical inflation primarily, not any
Other kind. As a strictly economic
the fight against inflation
phoney, a political fraud, a
device to justify further expan¬
sion or to prevent deflation in

law, to which Dean
replied,

said to have

and
they find that out for themselves."

"No, we just teach them law

Jr.

City,

April 15, 1946.

I also

stated, with defi¬
nite deliberation, the balance of
that sentence which he neglected
to quote and which I repeat, "it
is still possible to sell common

ANGELES,
CALIF. —
Harold P. Ullman is conducting a

stocks

unsuspecting

unsophisticated
public;

but,

and

when

its

Hutchins

W. T. HYDE,

Government's

the

price

School students how little senators

New York

sig¬

The background, basis and

a leading senator
have remarked pa¬
ternally that he supposed Dean
Hutchins
taught the Yale Law

reasons.

nificance

of 30,

about

for very

June 30 of that year, but

is supopsed to

Hutchins

must,

they

price and wage control will defi¬
nitely not end in 1947, or ever—
not because supply and demand
will not come precisely into bal¬
ance
at
the stroke of midnight

Dean of the Yale Law School

at the age

think

decision

application of the diametri¬

When Mr.

Unless
the
people make the kind
OPA.

extending

cally opposite theory illustrated in
a
story attributed to President
Robert Hutchins of the University
Chicago.

pansion, since there is no record
of one without the other.

The truth is that

We meet the same fundament¬

This has resulted from prac¬

tical

even

ergy,

It also is

who

"stockholders (of utilities are) un¬
aware

are more

panies will be unable to raise the

knew

Contrary

Obviously,

regulatory policies
recognized, public

stockholders who

never

that

the effects of the current trend of

struct

price, is misleading?

belief

applied to

Dec.

that

balance
31, 1944,

strong

book value for the

should

think

not

company's

value" in the following quotation:

preciable electric plant, means the

Does

spotty.

note the use of the words "service

"Depreciation,

2091

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

issue
is

government—and in that sense a
substitute for the war as an emer¬

excusing continuation and

gency

extension

The plain fact is

that the Amer-

ean

dollar is today, and has been

for

the

years,

stable—in

most

and

soundest

fact,

the

There is po

world.

people can

will control inflation un¬

til they can

control their govern¬

ment.

There

are

three political conse¬

quences of a governmentally con¬
trolled economy which are cer¬
tain and clear in the whole record
of

experience.

One is that it is

impossible for government to fix
prices, wages or interest rates, or
give subsidies or loans to private
business without taking part in its

operation, its management—and
ultimately its ownership.
A sec¬
ond is that it is impossible to op¬
erate a governmentally controlled
planned economy on a demo¬
basis, or through any sort

cratic

legislature or parliament of
freely elected representatives. It
must
be done by" dictation.
A
third certainty is that a state con¬
trolled economy cannot be oper¬
ated
with
individual
freedom,
of

which depends upon private pros¬
perity, private business and pri¬
vate labor.

All these are inevita¬

bly destroyed by any form oJP
governmental economic planning"
—and that, much more than the
immediate economic effects, is the
fundamental and final issue to be

fought out in this question of con¬
tinued political price and wage
fixing.

the

sign, here, or

the world, of any
flight from the American dollar.
The real reason may be merely
because
most
people here and
in

anywhere

ever

only

sound and stable—currency in

abroad who have dollars thus far

Maloney & Meyer, Inc.,
Is Formed in L. A.
LOS
Charles

CALIF.—-

ANGELES,
F,

Meyer

and

Major

have formed
Meyer, Inc., with of¬
get ready to spend their dollars, Maloney
fices at 650 South Spring Street.
the things they want to buy with
them will be there to buy.
The Mr, Meyer is President and Treas¬
urer
of the firm and Major Ma¬
only thing that can break this

assume

and expect

confidence

Ullman to Be Dealer

and

authority

state

activity.

that when they

the

dollar

gov¬

Currency depre¬
ciation is not due to an excessive
ernment

itself.

Charles

Maloney

loney, VicC-President

and Secre¬

tary.

securities business from offices at

supply of money, but to an exces¬
sive supply of government.
In¬
deed, it maj'- be said that infla¬

Major Maloney was formerly
proprietor of Maloney & Co. and
prior thereto was with H. R. Ba¬
ker & Co. and Hartley Rogers &

608 South Hill Street.

tion

Co.

(Special

to The Financial

Chronicle)

LOS

simply

governmental

ex¬

ing power and that on the basis
their
balance
sheets, which

maintained

were

the

basis

original cost, their properties ap¬
peared to give ample protection to
their debt. Original cost theories
most definitely gave a false sense
of security
to railroad security

This advertisement is not, and is under
securities

for sale

or as a

circumstances to be

The offering is

construed

as, an

offering of the foUou)tnfr

offer to buy any of such securities•
made only by the Prospectus.

solicitation of

holders

and, while many railroad
receiverships were inevitable re¬
gardless of accounting methods,
the

large book values of common

stocks

been

should discredit the
Whether

cost.

built

have

which

railroads

receivership
use

railroads

not

200,000 Shares

for years
of original

false surpluses through
failure to provide adequate depre¬
ciation on way and structure is
also a controversial point as the

-Warner

Corporation

railroads claim that these proper¬
ties

maintained

are

full value.

at. practical

depreciation together with obso¬
lescence is there any clearcut ar¬
gument that there

ciable

Preferred

3H% Cumulative

Only if you consider

($100 Par Value)

was any appre¬

underdepreciation

railroads, and then

the

run

against the question whether
purpose of depreciation is to

the

you

Price

re¬
flect obsolescence due to economic
or

$103

per

Share
*

(Plus accrued dividends from

April 1, 194$)

scientific developments.
With

to the railroads,
Mr.. Sunstrom's high

respect

however,

esteem for the Santa Fe

can hard¬
ly be due solely to its depreciation
policy as these charges, except in

recent

Copies of the Prospectus

represent only a
small
percentage
of
operating
revenues and could hardly mean
war

years,

the

difference

and

are

may

be obtained only from such of

the undersigned 49

registered dealers in securities in this State.

receivership. Ite will remem¬

between

solvency

ber, however, that this road
forced to defer interest

justment
1938 at

bonds

was

its ad¬

recently

Paul H. Davis & Co.

time when its debt rep¬

resented only 30%

of its balance
caPitalization. Furthermore,

With

common

stock

equity

jrm°st 60%, the dividend record
the

preferred

stock

has

been

April 17, 1946

Glore, Forgan & Co.

Union Securities Corporation

2092

THE COMMERCIAL & FINANCIAL CHRONICLE

Great

joyed

Northern

than

has long en¬
favorable traffic trends

whole,

railroads

the

have

other

roads

operating
territory. One
important factor has been the
heavy dependence on iron ore
tonnage from the Minnesota range.
or

in the northwestern

Great

Northern

preferred

stock

(the

road's

stake

not

industrial

common

traffic

Ardcn Farms

the

most

the

should

well

present

able

the

Post-war

rate.
stock

the

greater than on many of the
bonds and by the
very nature of

The

Great
was

trade

Common

York

manage¬
of the first in the

Exchange and other
leading Security and Commodity Exchs.

120

Broadway, New York5,N.Y.

231

So. LaSalle St.,

Chicago 4, 111.

the

restored.

last

ten

years

Magazine Repeating Razor Co.
Universal Match Corp.
Dixie Home Stores

Missouri Pac. RR. Serial
5%*
Tennessee Gas & Trans.

the

there

Moreover,

should

in normal times

average
few

are

railroads

of the Pocahontas coal

it has

outside

properties

proportion of gross through to net
operating income as Great North¬

reorganization.

ern.

which

one

through judicial
Naturally,
this

are

able to carry as large a

An important

factor in this

has been augmented by
generally low interest rates which,

showing is to be found in the iron
ore tonnage which,
moving in full

conjunction with the progres¬
sive improvement in the
road's

train loads direct from the mines
to ore docks on the Great

credit standing, has allowed Great
Northern recently to put

has

Lakes,

through

of the lowest interest cost

this

most

recent

indicated

that

re-

fixed charges

$7,690,000.

charges
per

are

Back

were

refunding it

Great

view

1935

important

the

wide

factor

increases

for

amortization charges in

the

present fixed charges and

annum.

eral

income

tax

rate

38%,

On April 5, Governor Edge of New
Jersey

railroad

that

HA 2-6622

law

amended

from

ture

its

the

law

ties,

Manager of the Standard
Envelope Mfg. Co. until his affili¬
ation with Otis & Co.

States.
The

object

the

Philip

new

Jersey savings

only the
stronger railroads, and to permit
them to purchase such bonds not
only in periods of prosperity when
prices are high, but also in periods
of depression when prices are low.

the

measure

individual

fixed

only

used

Under

laws.

railroad

purchased

the per¬
railroads

yardsticks

previous
act

accomplished by
yardstick

variable

bonds

the

in
the

may

coverage

for fixed charges of the three
pre¬

ceding

years

pflugfelder, bampt0n

RAILROAD

Members

SECURITIES

New

York

Stock

Broadway

Telephone—DIgby

& rust

Exchange

gross

New York 6

4-4933

Bell

Selected Situations at all Times

in the United States. The law also

requires

Teletype—NY 1-310

remain

For Banks and Brokers
I

«/6|lid*

CUABAHTEEP KA1LR0AD STOCKS-BONDS
25 Broad Street

Company*

Prospectus

Telephone

BOwling Green S-6400
Teletype NY 1-1063

7% Cumulative Preferred

Bought

—

Sold

—

Company (Del.)
Quoted

that

the

good earnings

law

some

was

Members New York Stock
Exchange
120
BROADWAY, NEW YORK 5, N. Y.

bonds of

many

quality
could
investments
for

whereas

become

savings

during

depression

many

temporarily

poor

railroad bonds,

(Continued

Club.
Mr. Sherman attended

UNITED PUBLIC UTILITIES

Frank L. Jr., age 14.

son

Philadephia Exchange
Elects New Officers
PHILADELPHIA,

earnings. The

including, perhaps,
on

page

2109)

PA.

din

elected

was

Philadelphia
its annual

John

Co.;

Tele. NY 1-724

President of the

Exchange, at

Stock

Huhn, Jr., John S. P.
Penington,

Frank

Colket

Newberger.

Montgomery, Scott & Co.; David
S.

Soliday" Hopper, Solidav & Co.;

Edward J.

Tague,

Weeks & Co.,
Board
year

Jr., Turton &

Tague,

and

Henry

BoitoQ

;

Philadelphia

Hartford

Governors

for

Spencer D. Wright, Jr., Wright,
Wood

for

nor

Co.,

one

elected Gover¬

was

year.

ONE WALL STREET
52 wall

street

HAnover 2-9072

y. c. 5

Tele. NY 1-1293

TEL.

three-

terms.

■

>d 1

Members New York Stock
Exchange

Member of National Association
of Securities Dealers, Inc

Weeks,

elected to the

were

Mclaughlin, reuss & co.
co.

&
Jr.,

Newburger & Hano; Edgar Scott,

UNITED PUBLIC SERVICE
1. h. rothchild &

Frank

& Har¬

election.

Makiver,

•

BOwilng Green 9-8120

—

E. Baker of Baker, Weeks

General and Consolidated
4s-4%$-5s, 2003

63 Wall Street, New York 5

They

live at 2555 Charney Road.

Circular Upon Request

Adams & Peck

the Uni¬

versity of Michigan and Western
Reserve University, belonging to
Alpha Delta Phi.
He married
Magdalen Hogg.
They have a
daughter Mary Lynn, age 17, and

Lehigh Valley Railroad

GETCHELL MINE, INC.

af¬

Club, the Sales Exec¬

Prior Preferred

Bought—Sold—Quoted

the

Commerce, Division "A" of the
Community Fund, the Executive
Board of the Heights Y. M. C. A.,
and the Shaker Heights Country

resultant tendency was that
many

Tplenhnnp KErfor 2-7340

utive Club, The 40 Club. Chamber

pe¬

intrin¬

sically high grade bonds would be
forced off the legal list because
of

active

im¬

law

old

inferior

legal
riod

SUTRO BROS. & CO.

Railroad

the

nature of railroad earnings.
Under the old law, after a period

6% Cumulative Preferred

—

ing

banks,

Boston & Maine

provisions

advisable because of the fluctuat¬

Request

Northern States Power

percentage

substantially unchanged.

provement

$2.25 Convertible Preferred

New York 4, N. Y.

the

It had been felt

E. W. Bliss

A r E D

that

other

been

the Rotary

revenues

remaining after
the payment of fixed
charges shall
be greater than the
corresponding
figure for Class I roads as a whole.
The

has

fairs of the Cleveland Advertising
Club for the past sixteen years,

shall have been bet¬

ter than the average coverage for
the period of all Class I railroads

Specialists in

Reitinger

banks to purchase bonds of

new

Sherman has been General

Sales

United

most

promotional activi¬
includes much work

which

Mr.

in¬

stitutions in
the

Assistant

civic affairs.

ment of funds

thrift

relations and

the

invest¬

President.

brings with
him twenty years of wide
experi¬
ence and contacts in
sales, public

ably the most

the

appointment

Frank L. Sherman

and it is prob¬

advanced

the

announces

predecessor

covering

act which

controlling the

CLEVELAND, OHIO-Wm. R.
Daley, President of Otis & Co.,

radical depar¬

for

NY 1-1499

signed

Daley of Otis & Go.

State.

The

formance

Railroad Bonds and Stocks

Sherman to Assist

bonds by sav¬
ings banks of

against which to

Teletype

out¬

standing stock.

had been passed by the Legislature amending the law
investment in
•

This objective is

72 WALL STREET

Telephone

the

that

the wage increases will
amount to
less than $2.50 a share
on the

making investments

substituting

and

estimated

sound issues.

fed¬

Van Tuyl & Abbe
YORK

1945, and

applying the resultant income

$19,000,000

efficiency

Asserting that amended N. J. Savings Bank Law is probably most
advanced legislation relating to investments in rails
yet enacted,
Mr. Reitinger points out its advantages in
substituting a flexible
for a fixed standard for savings banks in

law is to permit New

elimination

National Maliison Fabrics

NEW

wage rates in the war years.

Adjusting

last

inherent

properties.

Savings Bank
Chairman, Investment Committee, N. J. Savings Banks'
Association

Northern's

very low expense ratio. This

particularly

down to around

above

basically economic operation is

fundings in railroad history. With
-

East

of the most
outstanding
jobs in this connection of any rail¬
road not going

one

TRADING MARKETS

Far

the

roads

most

factor

the

By T. PHILIP REITINGER

the

Great Northern is essentially an
property to operate.

program

Stock

and

economical

done

MEMBERS

Northwest

with

necessity for reducing debt and
charges during periods of good
earnings if railroad credit was
during

Ernst&Co.

All of these

ings.

ever

been

President of Montclair

rail field to recognize the absolute

Pacific Airmotive

to connect

be an important factor in Great
Northern's future traffic and earn¬

Northern

one

lines

of large new areas to
farming through irrigation proj¬
ects.
Anticipated expansion of

the securities the stock has the
greater price enhancement
possi¬
bilities.

ment

Pacific

they

Pacific

opening

re¬

Railroad Bond Purchase Law

should be aug¬
mented by new traffic generated
from greater industrialization of

that

1946

from

the

eliminate

than

not

considerations.

permanent

Figured

Similarly, while

year.

sults will almost
certainly fall off
pro forma 1945 figures
the
decline should be
cushioned bv
the relatively low labor

the

New Jersey Amends Savings Banks'

are

sup-

dividend

return

Western

thus

and

area

with Great Northern.

be able to cover their
income bond interest Great North¬
ern

coastal

in northern California

reorganized

roads will

Common & Preferred

New

outside

tension

The income

basis

subject to diversion to the Panama
Canal route.
Finally, the road
benefited trafficwise by the ex¬

J port the

5s, 1975 & 5s, 2000

originates

pointed out that under conditions

Chicago, Milwaukee
& St. Paul

largely

it is being used, as an
from income bonds and
second grade bonds of the
type of
New York Central juniors.
It is

j where

have

would

$12.50.

18, 1946

production

in the western rails.

Also, the road's important lumber

In fact, in many

instances

results

around

basis

ter

naturally not been
highway competi¬
It also gives Great Northern

tion.

j exchange
'

1944

similar

this
important
distortions of extraordinary amor¬
tization charges, Great Northern's
basic earning power held up bet¬

•

Chieago Railways
Cons. "A" 5s, 192*7

share.

vulnerable

between the year's high and low.
Affording a return of better than
5% on the recent dividend rate of S3, and with the
opinion in many
quarters that there is an excellent chance of an increase in this rate
in time, the stock is viewed by
many rail men as being one of the
® .iost attractive
equity situations
in the rail field.

give Great Northern pro
earnings of around $10.50

forma

This traffic has

only

outstanding
markets about mid-way

stock issue) has been rather static in recent

would

Thursday, Aprti

NEW YORK 5

HANOVER 2-1355

Philadelphia Telephone

TELETYPE NY
—

Lombard 9008

1-2155

163

Number 4482

THE COMMERCIAL & FINANCIAL CHRONICLE

2093
■

Answers

questions about

Chesapeake
Highlights from the 1945 Report to
Q. What did C & O do in the final

year

of war?

Ohio

our

82,794 stockholders

sidiaries, Nickel Plate and Pere Marquette,
refinanced all of their mortgage debt in 1945

A. With the end of the German and
wars,

Japanese

tremendous assignment was success¬

fully completed by the C & 0. Although our

peak

actually done before 1945,
coal hauled was a near
merchandise freight, much of it

job

war

was

still the tonnage of
record. And
war

material,

at lower interest

Nickel Plate interest

rates.

charges have been

cut

$3,820,000

from

$7,500,000 in 1936. Pere Marquette has scaled
its

interest

charges to $1,840,000 from

$3,270,000 in 1936.

Q. How is C & O modernizing to meet

close to the record years of

was

1943 and 1944.

A. In 1945,

C & O ordered equipment from

the Edward G. Budd Manufacturing

Q. What

for

earnings in 1945?

were

streamlined

finest

the

These trains will

com¬

petition?

trains

between

run

Company

ever

built.

Washington and

203 million dollars,

Cincinnati. Revolutionary new features—de¬

6% less than in 1944. In October and Decem¬

veloped exclusively by C & O's personnel and

ber, 1945, C & 0 charged to operating expenses

consulting experts

Operating

revenues were

about 40 million dollars, which was the un¬

approximately 64

of the

balance

amortized

million dollars for which Certificates of Neces¬

sity had been issued by governmental author¬

amortizable "cost of rolling stock,

ities covering

picture theatre,

Q. What

arc

A. In
at

1946, coal movement should continue

high rate. Construction and enlargement

constructed from 1941 to 1945. Reflecting this

nent increase in the

accelerated write-off of capital investment, net

by C

income for the year was

decline

$2.14

share. No charges for depreciation or

amortization

these charged-off facilities will

plants along the line should mean a perma¬
output of industries served

O. Although

now

that

passenger

troop

operating

expenses

in future

years.

Newport News have ended, freight traffic vol¬
should continue well above any pre-war

ume

year.

Still, everything the road must buy costs
than before the

war.

for

the

care

and

aisles

curved

amenities, and
inate

were

C & O's

A. For the four

of $3.50

average

war

C & 0 earned

years,

Two wage increases

share compared tp $4 a share

averaged during the four preceding years. When
the heavy war traffic began

utilizing

was

already

proportion of its carrying

high

C & 0

demanded. Freight rates are the
were

with the

even

before the war while taxes,

profits tax removed, re¬

excess

main far above pre-war

levels. We believe rate-

will

making authorities

children,

decorative

unusual

dining system that will elim¬

Among other forward-looking steps, the C & O
with the Nickel Plate
to-coast

sleeping

recognize these in¬

pro¬

of rebuilding and modernizing certain

gram

passenger

stations is well under

The

way.

man¬

of Chesapeake and Ohio welcomes
as one

of its prime obliga¬

tions the constant readjustment of the railroad
to meet the

changing needs of its territory and

customers' markets. We look forward to 1946
and the years

and

creased costs.

sponsored through coastservice. A long-term

car

change and regards

they

same as

other

passenger

waiting for meals.

agement

moving

special facilities

entertainment

and

third is being

earnings?

exhibits, telephone for

while train is in motion,

aggregating 28% have been absorbed and a

Q. What

include

traffic will

movements through

be made to

will

ticker, distinguished art

use

equipment, and improvements purchased or

16 million dollars, or

and industrial

1946?

prospects for

—

news

ahead

as a

period of difficulty

challenge, but also of opportunity.

capacity. When high taxes were imposed, C & O
was

of the first roads to be subject to

one

excess

profits taxes and

found it

one

SOURCES AND DISPOSITION OF INCOME

of the few which

advantageous to compute its

than

on an

while the

volume,

on an

invested

war

gross

earnings base rather

was one

of record traffic

for railroads

$118,095,390
66,781,322
23,506,847
8,152,689
6,117,586

$ 8,995,649-D

958,665
853,485

989,141
978,224

30,476-D
124,739-D

$213,004,081

$224,621,199

$U,617,118-D

$ 81,382,963
29,762,512
11,656,482

$ 80,618,715
27,668,892
12,316,760

10,220,633

5,830,716

4,802,409
7,003,784
15,473

4,552,104
7,053,857
4,910
20,396,060

250,305-1
50,073-D
10,563-1
40,237,317-1

$205,477,633

$158,442,014

$47,035,619-1'

$ 66,179,185

38,838,190

$58,652,737-D
47,691,589—D

$ 16,379,847

...

iou

$109,099,741
63,636,420
22,891,428
7,704,558
7,859,784

$ 27,340,995

$10,961,148-D

Dividends from stocks owned

period of high net

Other income from non-railroad

generally.

operations

Total

Where

our

Materials, supplies, and fuel
:
Railway tax accruals, other than federal income and excess profits taxes
Payments to contractors, associations, other companies, and individuals
for services and expenses

Rentals and expenses paid for facilities
amounts received from others
Interest

used jointly with others, less

Funded Debt

Other interest

60,633,377

Depreciation, amortization, and retirements
Total
Net Income before federal income

Federal income and excess

and

excess

profits taxes

ture and

reducing its debt?

A. Last year

years

3,144,902-D
615,419-D
448,131-D

1,742,198-1

764,248-1
2,093,620-1
660,278-D

4,389,917-1

(lid with net income and surplus

Appropriations for Sinking and Other Reserve
Dividends paid on Common Stock

Funds

488,144
26,239,869

501,715
26,800,739

13,571-D
560,870-D

C & O reduced its outstanding

debt by $9,387,000.

eight

What

7,526,448

8,853,399CR

profits taxes

Net Income

Q. How is C & O simplifying its corporate struc¬

Decrease

income went

Wages.

•

191*5

hauling coal and coke freight
Revenues from hauling other freight
Revenues from carrying passengers
Other transportation revenues
Rent from equipment used by others, less amounts paid to others

earnings, and tax payments for

was

our income came from

Revenues from

capital base. Consequently,

period

the C & O, it was not a

income

Where

Increase

profits tax

excess

The reduction in the last

has been $32,934,000.

Its sub¬

CHESAPEAKE & OHIO RAILWAY, Terminal Tower, Cleveland 1, Ohio

THE COMMERCIAL

2094

FINANCIAL CHRONICLE
&
stantial

importance of Economic Relations to World Peace!
(Continued from page 2972)
of

ure

exchange controls to the {a complex of factors
of certain foreign i lead directly to war.

which

disadvantage

include the de-

countries.

jriai

can

Let

turn

the second

now

sovereign of
to the trade or

proposition.
We have said that
equality of access
the adoption
of wise and farraw
materials of its colonies.
It
sighted economic policies is capamay be overt or concealed; there j kje
Gf
stimulating world trade
ere many ways of achieving disand prosperity, and that prospercriminatory purposes i« reguia- j j?v itself is a bulwark of peace.!
tiom or legislation which appear ^ soon
ag the proposition is slattheir face to be of general ap-

j ed„ however, it becomes apparent
jjflicability.
on
simple historical grounds that
Even though the economic ef- j prosperity
alone camiot
assure
feet of a particular act of dis- j permanent
peace.
Within
the
cn

crimination be slight, the

^ct may

limits

Acts

economic

discrimination

provoke reactions in terms
of national pride and honor, espe¬

times.
But economic well-being,
rising standards cf living, expand¬
ing opportunities for work and

cially when nationalistic feelings

trade, do tend to create

often

have

a psycho¬
logical atmosphere in which ag¬
gressive impulses are less likely

previously been aroused by

ether causes.
A colonial

its

sovereign which

political

right

to the trade and

access

rials

the

dependent areas may do
injury to the economy of
its neighbors.
The economic ef¬
fects of imperialism may not be
inherently incompatible with the
interests of peace; but imoerial-

ism

when

the

trade

peace

and

structs

sovereign

incited

either

the Nazi

rela¬

country

one

sal

desirg
If

tion.

Universal Free Access to

channels

and trade to
are

in which the terms

customarily used, no nation is
a "have" nation, as opposed
"have-not"

obstructs
to its

access

markets and

likewise,

nation

"have-not" nation,

really

liS

territory

be of

im- I

portant natural resources, unless
it is denied the right of access, on
a

basis

and

equality, to the trade
materials of other areas

raw

which

This

are

access may

eral ways.

sential

If nations rich in
materials

raw

tariffs

richly endowed.
be denied in sev¬
raise

es¬

their

imports unreasonably,
the purchase of such raw mate¬
rials

tries

which must

for

have

coun¬

them.

is not inevitable, or even natural,

that nations richly endowed with
raw
materials
should
be
rich,
while
nations
poorly
endowed
with

such

should

resources

Nature often prov'das

poor.

pensations

for

such

com¬

differences.

Such compensations may take the
form of special skills of thu roealied "have-not" peonies.
When
a

so-called "have-not" nation

joys

equal

terms
with

they
forts

rights

sources,

rich

has

reasonable

economic

area

en¬

intercourse

natural

little

re¬

further

gain in the

n,ay

their

ambitions

violent

clude

for

expansion

productive

sovereignty,

international

fric¬

tion, would largely disappear.
The

Political

This,

believe, is

lessen

Whether

for

discrimination

major impact
culable
the

nation

becomes

showed

are

popular,

underprivileged

When such views
there are always

leaders who will

for military
action to obtain justice, and there
cry

are
always followers who will
listen.
It may be doubted if the

denial of equality of treatment in
international
economic
matters

could in itself j^yer. lead directly
to

the

war;

but it

creation

climate

can

which is

contribute to
international

they

obstacles

con¬

their

advancement

they

may

congenial

If economic

tor

the

defense

their

distress arises from unfriendly ex¬
ternal
acts,
their
passions may
take them down the road

tary adventure and
The third

regard

to mili¬

most

important,

closely related to the second.

well-being is

the

defense

does

relate to the preservation o*

peace?
reach

extends

believe that wise economic policy
contribute to prosperity, that

economic

atmosphere

the

most

congenial

growth and spread of democracy
the

and

institutions

freedom,

mid

that the peace is safest in the
hands of free men.

tion.

This

especially true of
democracies, where the in¬
in

solid

not

are

im¬

foundation

century. Democracies, by their
not

and

only less able to
launch aggressive

they

are

but

war.

fectively, there must be an atmos¬
phere of mutual restraint, a dis¬
position
to
compromise
differ¬
and

victs

willingness to toler¬

deep

arouse

bitterness,

the

and

emotions

and

inclination

compromise in order to

preserve

democratic

Is Denendent

vague
in our

choice

civil

rights,

fall

living

must

apart

the

and

other

many

liberties

promise

the

hypothesis. All of u^ wjth¬
lifetimes, have Seen de¬

mocracies

than

own

under

pressure of economic crisis.

made

and'
one

democratic
and

standard

economic security

hand, there

the

When

between

hand,

decent

are

government of

could

state

force

More important, however, is the
fact that

common

large, abhor
within

the

man

sonably

certain

wins
of

the

probably

When

fertilizers; without farm
machinery and fertilizers, farmers
canrot produce food.
If
we
were
to
ignore these
problems,

man

the

the
of
on

always

peril.

our

prosperity

will

man

gener¬

cards,

inflation.

and

ersatz
as

not the government the

ment and

people,

shall not be misled if

the

trust

people

choose

peace.

the

words

"to

make

Beveridge,
safe
the

ful

the

nor

thinks he has any¬

common

man

then, is a bulwark
both as a direct deter¬

rent to war, and as an

from

and

this

turn

can

now

stimulate

prosperity here and abroad.
Stimulation

Our problems

Prosperity

are

of two kinds.

problems,
relating principally to the tasks of
good

the

material

There

war.

achieve

are

rav¬

longerthe or¬

the

maximum outmd
of goods and services and the ele¬
vation
two
ent

are

living standards.

each

The

indeoend-

means

other.

should

bungle the job of solving the eco¬
nomic problems of the transition
from

tainly
lose,
the

to peace,

war

delay,

the

and

shall

we
we

help,

the

main

President Truman,

his Army

Truman's

Pledge

for

International Help
"The United States," he said, "k
:n a

ing

position to help;

help¬

we are

help.

and we shall continue tc
We shall help because we

know

that

enjoy

prosperity

now

ourselves

may

cer¬

even

economy for

help because economic distress,
anywhere in the world, is a fer¬
tile

breeding ground for politica1
upheaval.
And we shall help be¬
cause we feel it is simple humani¬
tarian ism

lend

hand

friends and allies who

are

our

conva¬

lescing from wounds inflicted by
our comrron enemy."

prosperity.

ing the President's pledge is the
a larger tonnage of suoolies

now

oort<;

each

leaves

Atlant'r

our

month

than

wa:

shipped in the peak month of the
war.
The products of America'
factories

and

are

moving

abroad through many channels tr
aid the sick and the hungry, tc

plant

the

cities,

land

and

wheels

and

rebuild

Start

the

again

production

and

the

trade

They are movme through the
chinery of UNRRA. through

under

ma¬

di¬

here bv foreigr

procurement

roof

over

their heads

who will choose the latter, >today, the construction of

sub¬

United

effort

nership with us in this high
terprise provided we can assist

and

importers,

reconstruction

sion

from

end.

cial

agreement

loans

and

made

Development,

whose treasury the United

State-

Long-Term
turn

now

employing foreign economic pol¬
icy to expand trade and oromotr
o'o^peritv.
Prosperity abroad is
to

the state

much

foreign
degree

greater

than many of us realize. For
many

thriving foreign trade
prosperity
and
stagnan'
international trade means severr

means

distress.

Several

mally derive
of

their

total

countries
than

nor¬

quarter

national

income

from their foreign trade.
Some
countries derive more than half of
their income from

foreign trade

The figures

all the way up tc
67%, which is the figure for Nor¬

is not an exaggeration
that economic well-beinp
and political
stability abroad wif
depend largely, in the years to
to

say

come, on the state of

international

trade.

Our

United
now

Congress for approval
key to our en¬
tire foreign economic
policy
if
that policy is to have a fair
chance
We consider it the

success

Congress

essential

that the
this agreement.

approve

Instruments of Economic
Nat'onalism Must Be Abandoned
If

world

trade

highway of peace,

peace-loving
the

swear

turned

into

other
fore¬

of the tactics
of
nationalism
which

use

the

international economy
jungle in the period be¬

the two

tween

become
and

must

nations

economic

We must not

wars.

again permit trade to be strangled
in a web of excessive
tas,

embargoes,

tariffs,

quo¬

preferences, sub¬

sidies, licenses, exchange controls
clearing agreements, barter deals,
and

discriminations

The

all

kinds.

Hawley-Smoot Tariff of 1930,
highest in our history, was

passed in sublime disregard of its
effect on foreign countries.
This
tariff act caused serious
injury to
foreign economics, and brought

heavy reprisals

numerous

and

re¬

taliations.
The

trade

vailed

practices which pre¬
1930's have been

the

aptly described as
neighbor" policies.

"beggar-my-

tried

own

the

Each

improve its

The

net

was

nation

position

its

neighbors.
practices
living standards,

expense

effect

depress

these

to
engender ill-w'll among na¬
tions. and to contribute to the po¬

litical and economic instability of
the decade.

International
tribute

will

trade

con¬

prosoerity and wellbe:ng to the extent that it is or¬
ganized
which

within
will

framework

advance

interna¬

the

tional division of labor and mini¬
mize trade discriminations. A plan
to

establish

contained

such

Expansion

framework

S. Must Take the

our'"ProDOsals for

World

and

Trade

Employment," whjch were worked
in

out

preparation for the forth¬

coming

World

Trade
believe

realistic

Conference

Employment.
The
represent what we
be an
effective and

and

"Proposals"

framework

for

restrictions

con¬

international attack

the

discriminations

and

which hobbled world trade before
he

They would achieve m
of
international trade

war.

field

what

the

Fretton

Agree¬

Woods

monetary and exchange

field
prob¬

designed to dovetail with and to
suoplement
the
Bretton
Woods
Agreements.
The
"Proposals

International Trade Organiza¬

tion,

which

would

the

Economic and Social Council,

and

United

Nations

the adherence by all
a

detailed

establish

rules

members to

which

would

trading

policy

charter,
of

and conduct.

These

the

are

principal lines

action

which

interests of

the

should

prosperity

peoples everywhere.
of

responsibility

which
in

The

and

world

demands

pursue

position
occupies
that

unparalleled economic
strength and our position in world

chances
dure.

that

will

achieve¬
They are not

the

only good in themselves,
realization

and
all

leadership

the United Stales

the

followed

rising standards of living for

ment of these ends.

International
Economic Health

into

tied

through

the

Lead

Restoring

contemplate the establishment

vigorously
U.

the

This agreement is

run

way.

this

finan¬

lems; in fact, the "Proposals" are

Problems
to the longer-

problems, to the problems

run

with

before the

peace.

ments should achieve in the

largest contributor.

Let

war

have negotiated

Kingdom.

the

;s the

her

four-year period of reconver¬

certed

and

-n

throughout the next critical
three

by
the
Export-Import
Bank
Goods will begin to move befor'
long under credits extended by
the International Bank for Recon¬

In the eyes of people

who lack

the
in

fulfill¬

are

fact that

The

enduring

the

the trade of the world
back
on
a
healthy basis.
Great Brit¬
ain, leader of the greatest
inter I

canno'

in a world of
stagnation.
We
shall

opportunity to organize

world

lead

the

President

countries,

immediate

are

other countries in

dependent

Here and Abroad

There

mo-

been devastated by war.

trade

Our

economic

Day speech last Saturday, set the
keynote of our policy:

frame¬

questions of policy—to the ques¬
tion of what we should do and
what

are

ally of de¬

of
us

the

long

world

of hope to the areas which

The

work of ideas, let

all

position

mocracy.
presence

that

take

to put

struction

for

Prosperity,

the

governments

world

democracy does increase
chances of its being, a peace¬

peace,

secure

postwar disorganization.
Ass'stance from the United States,

William

the

thing to gain by war."
of

nor

-ass

rect

Sir

for

world,

can

submerged

farms

long

of public information
and opinion are free, and so long
as the people control the
govern¬
organs

peace

areas

great

Neither

As evidence that

nationa'

ration

reaos

mud,

markets

common

and

ruler'-

demand

States

underestimate

their importance, we should do so

prestige.

anr]

When

wiP

terms

conscription,

said

the

common

death.

food,

man

that

war.

r»fMirer

riches,

rea¬

aggression

be
he

may

The

common

peace.

think

ally

of the

power

never

prize

Wherever it is

war.

decide,

choose

people, by and.

can¬

and

economic

gression do not mix.

dig

cannot

factories

produce agricultural machin¬

its

subverting
the
people's
rights.
Simply from the point of view of
the technical aspects of military
preparations, democracy and ag¬

dangerous¬

miners

coal

without coal,

into a silent, united, and
obedient
phalanx
without
first

food,

fertilizers

and

Many
countries
are
vicious c rcle: With¬

scarce.

out

control

problems, involving
ganization of the world economy

prosperity can contribute
strengthening of the demo¬

cratic order is much

the

run

Prosperity

That
to the

degree

materials to

raw

factories

caught in

people

ages

oil

war,

making

free government is weakened.

Democracy

less likely to
virtually im¬

exercising

desired

democracy to function ef¬

memory

the tragic years of

opinion and information which is
utterly
incompatible
with
the
spirit of democracy.
Even if it

habit and tradition.
For

have

stitutions of freedom

withir

whose

anyone

across

neither has

Democracy is in many ways a
fragile form of political organiza¬

Europe

war.

to restore the land are

source

the

for

of democ¬

evidence

The

can

prosperity

a fac¬
importance ir
democracy, ther

racy

the

war.

proposition, which

the

how

and

bet'eve

that

to j

paramount

pursue

thev

many

the

not

If,

believe

Asia,

ery

led

ravages

Against War

however,

ing

Democracy the Best Antidote

strife.
are

trade

part¬

coal;

reward

discriminated against
little more likely to re¬
as

correlation

striking

free,

still

were

German unemployment figures,

their objectives in ways that lead
to internal unrest or even to civil

the standard of living,

itself

gard

its

and oppressed.

conduct

opposing views.
In tiires of
economic
crisis, internal cleav¬
ages
are
widened, political con¬

impor¬
policy.
has

and

internal,

are

ences,

values as incal¬
national pride or as

concrete

economic

ef-

ate

Dangers

in Economic Oppression

tant

the

that

bedded

universally practiced, the appetite

their

sort.

improvement

principle of equality of

lot, they
and o£ten do seek outlets for

young

access,

devote

If, however, the

imorove

way of economic ad¬
vantages by forcing the area un¬
der its political control.
If the

reasonable terms, to the trade and
raw materials of the world were

are

cultivation

the

thwarted

are

becomes difficult

they
otherwise

their

economic environment is such that

matter how

may

living,

the arts of peace.

„

Ijarren

production

for themselves

secure

than

themselves

materials,

raw

likely

nation, unless it
by other nations

improvement

mode

really
to

gradual

condi¬

able through the

are

elections

ruthlessness

from

their

better

they

peaceful

Raw Materials
sense

another

Each j

ghastly war.

disease, and the still-spread¬

without

age to another in the univer¬

one

j
cruel;

the

now

the!

use

ger,

possible to prepare for aggression

People do not differ much from

for

1946

day brings fresh reports of suf- |
fering
and
misery
over
wide | national trading area in the world
areas,
new
accounts
of
hun- ■ is prepared to assume full

run

Party at tve polls when j

German

desire

ery come to hold life cheap¬
ly and stand ready to gamble
upon the use of force."

generally between the de¬
pendent areas and other nations.

aftermath of

tinents. fuel and

the surrender of freedom. It was
no accident that the successes of

organize

But peo¬

world

The

the fore in periods of j and

come to

war,

dwelling

future will have to wait.

millions of peo¬
economic
crisis
to
barga'n
the; ple are right now on the verge of
starvation. Throughout these con¬
promise of economic security for!

will

nature,

easily

]
who j

there are always demagogues

our

internal

international strife.

tions

In the

was

ples living in want and mis¬

ob¬

economic

employed

are

and prosperous are not

be used to undermine the

can

than

better

"Peoples that

.serious

could

by Cordell Hull in 1937:

put

mate¬

raw

One

dominant.

hardly put it

deny to
of equal

powers

nations

other

become

uses

as small
In every democracy,

consolation.

of modern history7, wars
in good times and
has been preserved in bad

peace

rights of free

citizenship are regarded

fiave consequences entirely out of ! have occurred

proportion to its real significance.

When stem- ]

j less of the former.
! achs are empty, the

colonial

clearly entail the 1

to war, and it can become one of although it may

Thursday, April 18,

but

improve

this peace

their
the

will en¬

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

A National

Labor Policy

(Continued from page 2072)

the assumption that
peaceful negotiations
without striking they would be
able to obtain satisfactory agree¬
ments covering wages and work¬
ing conditions.
But the original
design for peace has faded rapidly
as labor leaders have learned how
easily their power of collective
bargaining can be transformed
creased

then

into
cion.

being called old-fashioned, or
being denounced again by the
vituperative triumverate of Green,
Murray and Lewis, I contend that
the Brandeis doctrine is good law,

the force of collective coer¬
So now we have the grow¬

labor organizations

ing menace of
which possess

THE TEXAS and PACIFIC RAILWAY COMPANY

should

and

for

stone

serve

Lewis,
Reuther and Thomas, for example,
have
all criticized one another
more severely than this, but they
Murray,

Green,

language too strong for me

use

quote!

Responsibility

The Need for Legal

The fundamental need today in

position upon national labor or¬
ganizations of a legal responsibility
to exercise their powers through

peaceful means, with due regard
public. In

for the interests of the

there

policy,

formulating

such

should be

backward step to re¬

establish

unrestrained

the

power

employers to fix wages and
conditions without re¬

working

immediate interests
of their employees and the ulti¬
mate interests of all the people.
gard for the

The

left free

must

workers

by con¬

to advance their interests

certed efforts. But

the

must rectify

made when labor unions

error

endowed with

•were

legal right

of col¬

disregard those limits

lective action which have always

been found necessary, and which

maintained, in order to
prevent the mobilizing of any pri¬
be

must

vate force able to

right of

any

labor organization

advance

the

interests

members there rises
to

refrain

from

its

public duty

using

organized

for

The development
in labor

moment to pay

right" of workers to strike,

about the wickedness of any

(effort

compel workers by law

behave like

of such

has

power.
a power

organizations is compara¬

But in many ways,
labor monopolies are more men¬
tively recent.

acing to the general welfare than
most of the earlier
business

good citizens.

Union

Legitimate

Objectives

be applied to

not

from

workers

anti-trust

the

course

should

laws

prevent

organizing to pro¬

interests by concerted

mote their

injurious to others. But

action not

license, originally granted to

the

their legit¬
imate objects by lawful methods,
has been transformed into a privi¬

labor unions to pursue

lege of using force and intimida¬
tion for the accomplishment
of

practically
labor

harmful
ests

any

union,

objective

to the

its

define
and limit by law the legitimate
objects of a labor union and the
lawful
methods by which such
objects can be attained.
Recently
the
Supreme Court
pointed out that the monopoly
established by the electrical work¬

that, although a labor
could not conspire with a

substance,
union

employers

ducted.

confers

Court

•

conclusion:

"This, it is

argued, brings about a wholly un¬
desirable result—one which leaves
labor unions free to engage in
conduct which restrains trade. But

con¬

Neither the comon law

Amendment

right

absolute

the

unhappy

Fourteenth

the

nor

by one, which would pro¬
exactly the same result. So
reached the following

ers, one

however orderly
it

the desirability of such an exemp¬

strike."

tion of labor unions is a

Conduct

Good

Obligatory

All Citizens

Second, I will point out that the
preservation of individual liberty
and

orderly society is pos¬

sible only when Government lays
down rules of good conduct for all

determination

the

for

question
of

Con¬

gress."
It is frequently argued that there
is no need for Federal labor legis¬
the misuse of
labor power through economic co¬
ercion and physical force. Surely,
lation

prevent

earner

howe^r, no one will contend that
the monopolistic powers of labor

superior virtue, nor any
other valid claim, to be exempt

organizations, which arise out of
a specific Federal exemption from

citizens
to

and

The wage

obey them.

lias

citizens

all

compels

from the obligations and compul¬
sions of good behavior as defined
and enforced

another

Brandeis

denied

opinion,

dustrial

the

there

that

"any constitutional
tion"

In
Justice

by Government.

famous

moral sanc¬

claimed

combatants

right of in¬
fight out

labor disputes regardless of

injury.

Then he

was

stated

public
funda¬

mental principle in these words:
"All rights are derived from

the
which
they exist; above all rights rises
•duty to the community."

Purposes of the society in

That

ioned

may sound like old-fash¬
law to the Ned-Marxian

lawyers

and

cate industrial

anarchy

democratic alterntive
socialism

guiding

us.

who

teachers

into

But,

Federal laws, can be
any way

they

are

at the risk

corrected in

except by a .Federal law.

Per Cent

57.25

$18,414,668

$ 6,155,859

$ 9,003,541*

2.10

2.69

3.34

$ 2,154,025

$ 1,572,700

$ 3,840,294

$ 3,821,791

$ 1,572,700

Times Fixed

Charges Earned.
(Preferred and Com¬

Dividends

mon)
Dividends per
Taxes per

2.50

1.00

Common Share.

Common Share

47.52

64.40

50.86

1.00
22.19

Revenue Net Ton Miles

3,272,242

3,901,107

4,728,294

4,486,549

(Thousands)

1
■

One

Mile
992,335

1,131,514

1,064,564

554,162

1.141

1.102

1.127

1.104

1.942

1.863

1.897

2.032

$26,732,766

$26,781,787

$22,085,914

$19,049,352

10,305

10,497

9,851

8,729

Net Ton Mile

(Cents)
Revenue

per

Passenger Mile

(Cents)
Wages
Average Number of Employes

Average Annual Wage
ploye

per

Em¬
$

2,594

2,551

2,242

2,182

Condensed General Balance Sheet December Cist
Decrease

Increase

1944

1945

ASSETS

Investment

less

property

transportation
recorded depre-

*
$165,677,096.09

ciation and amortization

less recorded

Investments

physical property
depreciation

affiliated

2,539,771.41

60,302.71

6,898,914.76

129,189.52

449,964.06

18,153.82

com¬

panies
Other investments

Reserve for

38,291.99
407,000.00

431,810.24

5,833,000.00

2,479,468.70

253,890.63

6,769,725.24

Miscellaneous

funds.

292,182.62
6,240,000.00

reserve

Maintenance funds

adjustment of invest¬
(Cr)

in securities

630,955.60

301,517.52

329,438.08

42,365,845.57

Current assets

48,063,985.19

5,698,139.62

Deferred assets

379,107.97

Assets

753,706.87

1,132,814.84

2,187,422.13

Unadjusted de'bits
Total

$616,951.70

616,951.70

Sinking funds
Capital and other

ment

$1,073,572.87

$166,750,668.96

1,536,749.43

650,672.70
$6,349,587.10

$233,158,241.76

$226,808,654.66

LIABILITIES

Capital stock—
$ 38,755,000.00 $ 38,755,000.00

Common

23,703,000.00

Funded

Equipment obligations
Amounts

payable

66,670,000.00

$2,876,000.00

1,485,000.00

debt unmatured

23,703,000,00

63,794,000.00

Preferred

1,659,000.00

174,000.00

affiliated

38,347.07

48,847.C6

10,500.79

25,187,008.55

32,180,637.18

6,993,628.63

companies
Current liabilities

10,004,472.34

85,624.38

surplus

Earned

surplus—Appropriated

30,129,984.45

29,800,824.30

liberally construed by the

surplus—Unappropriated

32,970,739.58

31,344,56p.08

But we can as¬
sume
that
the
public
opinion
which is still opposed to what was
once called
"court-packing," will

Supreme Court.

with the present opinion of
Justices—that the way
to change the law announced by
the Court is through an amend¬
ment
of statutory law and not
through a change in the personnel

agree

the present

of the

Court!

Total

Liabilities

Now I

shall turn tp the

REDUCTION

FUNDED

•

$6,349,587.10

DEBT

$3,186,000.

1, 1943, the Company has reduced

funded debt outstanding

public $12,183,000 or 15.8%, and annual interest charges $1,017,982 or

General and Refunding Mortgage Bonds by the retire¬
ment of $40,956,000 of outstanding 5% bonds and issuance of $39,000,000 of 3%% bonds.
This reduction
of $1,956,000, coupled with purchases of $781,000 First Mortgage 5% bonds, of $121,000 General and Re¬
funding 5% bonds prior to refinancing, and of $18,000 Second Mortgage 5% bonds, together with
deposit with Mortgage Trustee of funds for the payment of principal end interest to maturity of the
remaining $136,000 outstanding Second .Mortgage 5% bonds (in consideration of which release of the
Mortgage was executed) and the discharge of $174,000 of equipment obligations, brought the total re¬
Since January

flabby

that lawlessness
(Continued on page 2096)

argument

$226,808,654.66 $233,158,241.76

During the year the Company refinanced its

duction during 1945 to

Federal Labor
Legislation

The Need for

597,242.80

1,115,585.12
36,382.75
329,160.15
1.626,171.50

8,888,887.22

122,007.13

Unadjusted credits
Unearned

21,852.74 $

619,095.54

Deferred liabilities

Earned

been

►|

$ 8,600,036

$ 3,652,467

3.06

Income

$19,712,172

$ 3,482,288

$ 7,361,808

Charges

$24,957,935'

$ 3,578,128

Taxes

Net

57.75

57.40

58.38

Revenues

Fixed

Operating Expenses to

Many persons may feel that the
Federal exemption need not have

the only

to the state

which
even

advo¬

$29,633,298

accom¬

which

purpose,

manner

Operating Expenses

$51,764,233

$40,812,687

public welfare. This

duce

the

$70,667,645

$45,921,334

friend of

$80,002,746

$44,085,849

regardless of how
other private inter¬

plish such a result, a union could
force an agreement from employ¬

strike may be illegal because

$75,518,581

makes it necessary now to

group

labor, Justice Brandies:

I
A.

Operating Revenues

Revenue per

Should Be Legally Defined

First, I will quote from a unani¬
mous
opinion
of the Supreme
Court
written
by that notable
"A

1942

1943

'||

Passengers Carried
(Thousands)

monopolies.

equipment in New York City, if
legalized, would "empower inter¬
ested business groups to shift our
society from a competitive to a
monopolistic economy."
Nevertheless, the Court held, in

disrespects to those who rant
and roar about an imaginary "ab¬
and

freedom

monopoly

individual

our

ray

solute

been

ers' union in the sale of electrical

liberties.
Permit

economic

always

destroy our eco¬

nomic freedom and

'k
!4

1944

1945

icy. To those who accept this doc¬

national labor policy is the im¬

trine it should be clear that above

mies

conspicuously absent.

Messrs.

Highlights Compared With Three Previous Years

foundation

ANNUAL REPORT 1945

—

national labor pol¬

our

such great powers force and coercion to deny to
others the personal
liberty and
of economic and political coercion,
economic
freedom that are the
unrestrained by public obligations,
that the
welfare of the entire birthright of all Americans.
country becomes more and more
The Emergence of Monopoly
*
dependent upon the wisdom and
In Labor's Power
moderation of labor leaders and
One of the most persistent ene¬
their followers which are all too
often

2095-

in the hands of the

26.8%'.
W., G. VOLLMER,

President

THE COMMERCIAL & FINANCIAL

2094

CHRONICLE
stantial

(Continued from page 2072)
exchange controls to the
disadvantage of certain foreign
of

countries.

include the de¬

can

by a colonial sovereign of
equality of access to the trade or

nial

materials

raw

may
ere

colonies.

its

be overt or concealed; there
many ways of achieving dis¬

criminatory purposes in regula¬
tion^ or legislation which appear
their face to be of general ap¬

©n

plicability.
Even

the economic ef¬
particular act of dis¬
crimination be slight, the
^ct may

fect

though

have consequences entirely out of

proportion to its real significance.
Acts

economic

discrimination

often

provoke reactions in terms
of national pride, and honor, espe¬
cially when nationalistic feelings
have previously been aroused by
other

causes.

A colonial

its

sovereign which

political

the

to the trade and

access

rials

to deny to
right of equal

powers

nations

other

uses

dependent

areas

Let

limits
have

when

the

trade

and

structs

tions

generally

pendent

areas

sovereign
economic

rela¬

In the

sense

in which the terms

customarily used, no nation is
really a "have" nation, as opposed
to

"have-not"

obstructs

nation, unless it
by other nations

access

to its markets and

Likewise,

materials.

raw

nation

really

*'have-not" nation, no matter how
t>arren its territory may be of im¬

portant

natural

unless

resources,

it is denied the right of access, on
basis of equality, to the trade
and raw materials of other areas

which

This

are

access may

eral ways.

richly endowed.
be denied in sev¬

If nations rich in

sential

raw

tariffs

es¬

materials

raise

their

rials

becomes

tries

difficult

which must

is not

inevitable,

for

have

coun¬

them.

natural,
that nations richly endowed with
even

materials

should

nations

raw

poorly

while

incited

either

with

such

resources

endowed
should
be

Nature often provides

poor.

com¬

pensations for such differences.
Such compensations may take the
form

special skills of the

ro-

was

country

one

sal

desire

from

they

their

better

condi¬

able through the

are

channels

gradual

another

production

for themselves

secure

improvement of
living, they are

mode

likely

than

otherwise

themselves

their
more

devote

cultivation

the

the arts of peace.

If, however, the

economic environment is such that

they

thwarted

are

forts
may

their

ef¬

improve their lot, they
and often do seek outlets for
to

their

ambitions

violent

clude

that

conduct

sort.

the

obstacles

improvement
are
internal,

they

con¬

their

and

advancement

they

may

believe

that

their

distress arises from unfriendly ex¬

their

acts,

passions

may

take them down the road to mili¬

tary adventure and
The third

regard

war.

proposition, which

the

most

important, is
closely related to the second. We
as

terms
with

economic

rich

area

intercourse

natural

believe that wise economic

policy
contribute to prosperity, that
prosperity is the most congenial
economic
atmosphere
for
the

it has little further to
gain in the way of economic ad¬
vantages by forcing the area un¬
der its political control.
If the

principle of equality of

access,

reasonable terms, to the trade and
raw materials of the world
were

universally practiced, the appetite
for

expansion of sovereignty, so
productive of international fric¬

tion, would largely disappear.
The

Political

This,

Whether

for

economic

discrimination

its

major impact on values as incal¬
culable as national pride or as
concrete

the

nation

popular,

When such views

there

leaders who will

are

always

for military
action to obtain justice, and there

are

cry

always

listen.

followers who will
It may be doubted if the

denial of

equality of treatment in

international

economic

to
the

war;

but it

creation

can

climate which is

stitutions of freedom
bedded

not

are

im¬

foundation

solid

For

democracy to function ef¬

atmos¬

phere of mutual restraint, a dis¬
position
to
compromise
differ¬

flicts

arouse

bitterness,

deep

and

emotions

the

and

inclination

compromise in order to

preserve

Denendent

vague
in our

choice

civil

fall

apart
be

must

liberties

promise

under

and

made

and'

decent

economic
there

the

When

between

democratic

the one hand,

the other hand,
many

hypothesis. All of us, with¬
lifetimes, have seen de¬

pressure of economic crisis.
a

than

own

mocracies

and

the

standard

security

are

could

state

force

always

who will choose the latter,

economic

mo¬

countries in

have been devastated

by war.
President Truman, in his Army
Day speech last Saturday, set the

keynote of

policy:

our

President

Truman's

Pledge

for

International Help

its

"The United States," he
In a position to

ing

and

now.

enjoy

gression do not mix.

said, "is

help;

we are help¬
shall continue tr

economic

help.

large, abhor
within
to

man

war.

the power

decide,

sonably
choose

The

peace.

wins

think

and

npwer

the

probably

riches,

When

said

the

common

olies

the

people

the

words

"to

make

safe

for

ful

world,

of its

common

man

is a bulwark
direct deter¬

rent to war, and as an

than

wa;

moving

are

Start

production

again
and

the

trade
ma¬

di¬

procurement here by foreigr
and

importers,

reconstruction

loans

and

made

Devetooment.

whose treasury the United State's the largest contributor.

Let

this frame¬
now

United

Congress for

now

approval

key to our en¬
foreign economic policy
if
policy is to have a fair chance
it

success

Congress

essential

that the
this agreement.

approve

Instruments of Economic
alism Must Be

Nation¬

Abandoned

world

trade

become

highway

of peace, we and
peace-loving nations must
the

swear

the

turned,

into

international
in

the two

tween

fore¬

of the
tactics of
nationalism
which

jungle

economy

the

period be¬
We must not

wars.

again permit trade to be strangled
in a web of excessive

tariffs,

quo¬

embargoes, preferences'

tas,

sub¬

sidies, licenses,

exchange

controls

clearing agreements, barter deals'
and

discriminations

kinds*

all

The Hawley-Smoot Tariff of
1930,
the highest in our history, was

passed in sublime disregard of its
effect on foreign countries.
This
tariff act caused serious
injury to

foreign

economics, and brought
heavy reprisals and re¬

numerous

taliations.
The

trade

vailed

practices which

the

1930's

pre¬

have

been

described as "beggar-myneighbor" policies.
Each nation
tried to improve its own position
aptly

the

net

was

its

expense

The

effect

depress

neighbors.

these

practices

living standards,

ill-wdl

engender

among na¬
tions. and to contribute to the po¬

litical and economic instability of

International
tribute
be1 ng

trade

will

con¬

prosperity and wellto the extent that it is or¬

ganized
which

within

framework

advance

will

interna¬

the

tional division of labor and mini¬
mize trade discriminations. A plan

establish

contained

Expansion

coming

Long-Term
turn

problems,

run

Problems

to the longer-

now

to the problems o'

such

World

Trade

framework

our' "Proposals

and

Trade

Conference

Employment.
The
"Proposals" represent what we
believe to be an effective and
and

realistic

framework

for

restrictions

con¬

international attack

the

discriminations

and

which hobbled world trade before
'he

They wtould achieve m

war.

field

what

trade

international

the

ments should

Agree¬

Woods

Pretton.

achieve in the

and exchange

monetary

field
prob¬

lems; in fact, the "Proposals" are
designed to dovetail with and to

supplement

Woods
"Proposals

Bretton

the

Agreements.

tion of what we should do and
what
we
can
do
to
stimulate

icy to expand

contemplate the establishment

prosperity here and abroad.

dependent

ques¬

rrocperitv.
trade

Our

Stimulation

Prosperity

Our problems

are

means

problems,

good
war.

the material rav¬
There are longer-

achieve

the

maximum

output

trade

Several

their

total

degree

realize. For many

thriving

mallv derive
of

greater

prosperity

distress.
:

the state of foreign

much

international

relating principally to the tasks of
of

countries,

of two kinds.

immediate

are

Prosperity abroad is

than many of

Here and Abroad

There

economic pol¬
trade and promotr

foreign

and

trade

stagnan'

means

severe

countries
than

national

nor-

quarter
income

foreign trade

of goods and services and the ele¬

The figures

vation

The

67%, which is the figure for Nor¬

indeeend-

is not an exagPeraUor
that economic well-beirm
and political
stability abroad wil1
depend largely, in the years to
come, on the state of international

two
ent

are

living standards.

each

means

other.

should

bungle the job of solving the eco¬
nomic problems of the transition
from

war

peace,

shall

cer¬

tainly delay, and we may even
lose, the opportunity to organize
the

world

economy

for enduring

prosperity.

In the eyes of people

who lack

roof

over

their heads

today, the construction of

sub¬

all the way up tc

way.
to

run

say

trade.
The
in

tion,

Must Take the Lead

Restoring

International

Economic HeaRh
Our unparalleled economic
strength and our position in world

which

would

tied

into

through

the

Economic and Social Council,

and

the

United

Nations

the adherence
a

detailed

establish

by all members

rules

which

would

trading

policy

charter,
of

and conduct.

These
action

the

are

which

principal lines

should

in the interests of

prosperity

peoples everywhere.
of

responsibility

which
in

the United

the

world

The

and

followed

rising standards of living for

and
all

position

leadership

Stales

demands

occupies
that we

achieve¬
ment of these ends.
They are not
only good in themselves, but then
realization
will '
improve
the
vigorously

The

International Trade Organiza¬

from

their foreign trade.
Some
countries derive more than half o*
their income from

is
for

employing foreign

questions of policy—to the

other

use

economic

ally of de¬

work of ideas, let us turn

the

We consider it the

the

and

The
presence

with

this

finan¬

This agreement is

certed

mocracy.

the

To
a

before the

struction

the

peace.

Kingdom.

by
the
Export-Import
Bank
Goods will begin to move befom
long under credits extended by
the International Bank for Recon¬

thinks he has any¬

and

under

peace¬

nor

both

peace,

factories

and

wheels

thing to gain by war."
of

Atlanta

our

month

governments

being a

then,

agreement

war

have negotiated

fulfill¬

are

They are moving through the
chinery of UNRRA, through

world

for

Prosperity,

cial

Employment," whjch were worked
out in preparation for the forth¬

William

the

from

rect

Sir

sion
end.

the decade.

leaves

«n

cities,

democracy does increase

the chances

each

farms

peace.

Beveridge,

high

terprise provided we can assist
her
throughout the next critical
three
or
four-year period of reconver¬

abroad through many channels tr
aid the sick and the hungry, tc
plant the land and rebuild the

choose

shipped in the peak month of the
war.
The products of America*

gener¬

shall not be misled if

trust

conva¬

enemy."

now

oorts

and

the people control the govern¬
not the government the

people,

are

our

ing the President's pledge is the
a larger tonnage of suo-

ment and

fact that

ally reaos
ration
cards,
ersatz
food, and inflation.
So long as
the organs of public information
and opinion are free, and so long
as

hand

As evidence that

national

man

lend

corhmon

our

mud,

markets

simple humani-

lescing from wounds inflicted

will

man

it is

friends and allies who

rulers

conscription,

death.

tarianism

wil1

in terms
prestige,

common

man

When

war.

aggression

"otinnai

rea¬

that

United

national trading area in the
world
is prepared to assume full
part¬
nership with us in this

cannot

is a fer¬
tile breeding ground for political
upheaval.
And we shall help be¬
cause we feel

be
he

may

ourselves

prosperity in a world of
stagnation.
We
shall
because economic distress,

help

common

certain

never

prize

of the

that

anywhere in the world,

people, by and
Wherever it is

common

We shall help because

know

More important, however, is the
fact that

problems, involving the or¬
ganization of the world economy

prosperity can contribute
strengthening of the demo¬

cratic order is much

run

Prosperity

That
to the

Even

the

are

help,
is
the
main
of hope to the areas which

source

government of

world

subverting
the
people's
rights.
Simply from the point of view of
the technical aspects of military
preparations, democracy and ag¬

ages

position

control

the

nor

long

be secure so

can

areas

from all other

and

into a silent, united, and
obedient
phalanx
without
first

making

free government is weakened.
Democracy

the

peace

postwar disorganization.
Assistance from the United States,

people

fectively, there must be

rights,

congenial

democratic

habit and tradition.

directly

international

ways

democracies, where the in¬

young

contribute to living

many

fragile form of political organiza¬
tion.
This is especially true of

matters

could in itself ever lead

men.

degree

Neither

rass

aggressive

democracy.

war,

neither has

discriminated

and oppressed.

freedom,

is safest in the

Democracy is in

the standard of living,

against
becomes a little more
likely to re¬
gard
itself
as
underprivileged
are

hands of free

a willingness to toler¬
opposing views.
In times of
economic
crisis, internal cleav¬
ages
are
widened, political con¬

impor¬
policy.
has

institutions

ate

Dangers

believe, is

lessen

the

ences, and

in Economic Oppression

tant

and

re¬

sources,

can

mid that the peace

reasonable

and

ternal

prepare

exercising

desired

If,

joys

spirit

led

thev

great

submerged

less likely to
virtually im¬
for aggression

are

peril.

our

opinion and information which is
utterly
incompatible
with
the

believe

they

war.

ignore these
underestimate

prosperity

memory

less able

only

launch

and

but

strife.

the tragic years of

not

are

were

their importance, we should do so

within

produce food.

problems,

century. Democracies, by their

reward

however,

democ¬

whose

anyone

across

pursue

growth and spread of democracy

rights

extends

their objectives in ways that lead
to internal unrest or even to civil

are

evidence

The

reach

ruthlessness

age to another in the univer¬

one

peace?

and

carrot

relate to the preservation o^

without

People do not differ much from

defense

does

racy

possible to

the use of force."

upon

the

how

desire

ples living in want and mis¬
ery come to hold life cheap¬
ly and stand ready to gamble

fac¬

paramount importance ir
defense of democracy, ther

war,

But peo¬

fertilizers; without farm
machinery and fertilizers, farmers

the

can¬

produce agricultural machin¬

the
in

an
effort
put the trade of the world
back
on
a
healthy basis.
Great Brit
ain, leader of the greatest inter¬

without coal, factories

not

that

the lead

1945

that

coal;

take

tire

ery

dangerous¬

scarce.

Against War
If economic well-being

fertilizers

and

demand

Many
countries
are
caught in a vicious circle: With¬
out food, coal miners cannot dig
ly

Democracy the Best Antidote

tor

factories

the

materials to

raw

1o restore the land are

correlation to
figures.

striking

organize

called "have-not" peoples.
When
a so-called "have-not" nation en¬

equal

showed

nature,

German unemployment

our

internal

international strife.

rich,

employed
not easily

are

and prosperous are

imports unreasonably,
the purchase of such raw mate¬

than

better

"Peoples that

and trade to
are

could

successes

brings

run

Party at the polls when
German elections we;e still free,

in bad

One

the

cruel

the

now

tinents, fuel and

It. was

the Nazi

wars

put by Cordell Hull in 1937:

peaceful

Raw Materials

dominant.

hardly put

tion. If

Universal Free Access to

history,

that

accident

good times and

has been preserved

become

ob¬

between the de¬
and other nations.

But economic well-being,
rising standards of living, expand¬
ing opportunities for work and
trade, do tend to create a psycho¬
logical atmosphere in which ag¬
gressive impulses are less likely

be used to undermine the

can

modern

promise of economic security for

times.

injury to the economy of
its neighbors.
The economic ef¬
fects of imperialism may not be
inherently incompatible with the
interests of peace; but imperial¬

peace

citizenship are regarded as small
consolation.
In every democracy,
there are always demagogues who
will come to the fore in periods of
economic
crisis
to
barga'n the
the surrender of freedom.

trade

States

the

use

a ghastly war.
Each
fresh reports of suf¬
fering
and
misery
over
wide
areas,
new
accounts
of
hun¬
ger, disease, and the still-spread¬
ing ravages of war.
In Europe
and Asia, many millions of peo¬
ple are right now on the verge of
starvation. Throughout these con¬

day

empty, the rights of free

are

for

aftermath of

of although it may clearly entail the
loss of the former.
When stom¬

second

world

The

achs
the

now

occurred

peace

.serious

ism

turn

one

which

proposition.
We have said that
adoption of wise and farsighted economic policies is capa¬
ble
of
stimulating world trade
and prosperity, and that prosper¬
ity itself is a bulwark of peace.
As soon as the proposition is stat¬
ed, however, it becomes apparent
on
simple historical grounds that
prosperity
alone
cannot
assure
permanent
peace.
Within
the

may

become

can

the

mate¬

raw

and it

war,

complex of factors
lead directly to war.

dwelling

future will have to wait.

importance of Economic Relations to World Peace
u?:e

Thursday, April 18,

chances
dure.

pursue

that

this

the

peace

will en¬

THE COMMERCIAL & FINANCIAL CHRONICLE

163 • Number 4482

Volume

A National

Labor Policy

(Continued from
on the assumption that
by
peaceful negotiations

creased
then

209S

page

2072)

THE TEXAS and PACIFIC RAILWAY COMPANY

being called old-fashioned, or
of being denounced again by the
vituperative triumverate of Green,
Murray and Lewis, I contend that

ANNUAL REPORT 1945 —
striking they would be
obtain satisfactory agree¬
the Brandeis doctrine is good law,
ments covering wages and work¬
Highlights Compared With Three Previous Years
and should serve as a foundation
ing conditions.
But the original
stone for our national labor pol¬
design for peace has faded rapidly
icy. To those who accept this doc¬
1945
1944
1943
as labor leaders have learned how
trine it should be clear that above
easily their power of collective
$75,518,581
Operating Revenues
$80,002,746
$70,667,645
any right of a labor organization
bargaining can be transformed
to
advance the
interests of its
into the force of collective coer¬
$44,085,849
$45,921,334
Operating Expenses ...$40,812,687
cion.
So now we have the grow¬ members there rises a public duty
Per Cent
to refrain from using organized
Operating Expenses to
ing menace of labor organizations
without

able to

such great powers
economic and political coercion,
unrestrained by public obligations,
that the
welfare of the entire
which possess

becomes more and more

country

dependent upon the wisdom and
moderation of labor leaders and
their followers which are all too
often conspicuously absent.
Lewis,
Reuther and Thomas, for example,
have
all criticized one another
more severely than this, but they
use language too strong for me to
quote!
Murray,

Green,

Messrs.

Legal Responsibility

The Need for

The fundamental need today

force

position upon national labor or¬
ganizations of a legal responsibility
to exercise their powers through
peaceful means, with due regard
public. In
formulating such a policy, there

for the interests of the

should be

establish

the

backward step to re¬
unrestrained power

fix wages and
working conditions without re¬
gard for the immediate interests
of their employees and the ulti¬
mate interests of all the people.
of

employers

workers

The

free

left

must

coercion

personal

liberty

the

economic

deny

that

freedom

Revenues

and
the

are

The Emergence

Fixed

of Monopoly

In Labor's Power

been

monopoly

power.

The development of such a power
in labor organizations is compara¬

But in many ways,

tively recent.
labor

monopolies

are

men¬

acing to the general welfare than
business

earlier

the

most

Legitimate

Objectives

Union

the

course

should

anti-trust

laws

not

applied to prevent
workers from organizing to pro¬
mote their interests by concerted

others. But

action not injurious to
the

license, originally granted to
their legit¬

labor unions to pursue

imate

57.25

$ 8,600,036

$ 3,482,288

$ 3,652,467

$ 3,840,294

$ 3,821,791

$ 6,155,859

$ 9,003,541*

3.06

2.10

2.69

$ 2,154,025

$ 1,572,700

2.50

1.00

47.52

64.40

50.86

22.19

Charges Earned.
(Preferred and Com¬

Dividends

mon)
Dividends per
Taxes per

Common Share.

Common Share

3.34

Revenue Net Ton Miles

(Thousands)

4,486,549

4,728,294

3,901,107

3,272,242

992,335

1,131,514

1,064,564

554,162

1.141

One

1.102

1.127

1.104

Mile

Net Ton Mile

(Cents)
Revenue

per

Passenger Mile
1.942

1.863

1.897

2.032

$26,732,766

$26,781,787

$22,085,914

$19,049,352

10,305

10,497

9,851

8,729

(Cents)
Wages

Average Number of Employes

objects by lawful methods,
has been transformed into a privi¬

Average Annual Wage
ploye
and intimida¬

lege of using force
tion for the accomplishment

57.75

$19,712,172

$ 7,361,808

Revenue per

Should Be Legally Defined

$29,633,298

$ 3,578,128

Charges

Net Income

Passengers Carried
(Thousands)

monopolies.

57.40

1942

$51,764,233

$24,957,935'

$18,414,668

Times Fixed

One of the most persistent ene¬
mies
of
economic freedom has

always

58.38

Taxes

birthright of all Americans.

national labor policy is the im¬

and

others

—

per

Em¬
$

2,594

2,551

2,242

2,182

practically any objective of a
labor
union, regardless of how
harmful to other private inter¬

to advance their interests

ests

certed efforts. But

Condensed General Balance Sheet December 31st

makes it necessary now to define

the

by con¬
rectify
made when labor unions

error

endowed with

were

must

legal right

disregard those limits of col¬

lective action which have always

and

to the

public welfare. This
the legitimate

labor union and the
methods by which such

property

limit

objects of
lawful

law

prevent the mobilizing of any pri¬

attained.
Recently the
Supreme Court
pointed out that the monopoly
established by the electrical work¬

vate force able to

destroy our eco¬
nomic freedom and our individual

ers' union in the sale of electrical

liberties.

legalized, would "empower inter¬
ested business groups to shift our

/been found
be

must

and which

necessary,

maintained, in order to

Permit

for

moment to pay

disrespects to those who rant
and roar about an imaginary "ab¬
solute right" of workers to strike,
my

about the wickedness of any

and

effort

compel workers by law
citizens.

behave like good

First, I will quote from a unani¬
opinion of the Supreme
Court
written
by that notable

mous

friend of labor,

Justice Brandies:

strike may be illegal because

its

the

ducted.

society from a competitive to a
monopolistic economy."
Nevertheless, the Court held, in
substance, that, although a labor
union could not conspire with a
to

employers

plish such a result, a union could
force an agreement from employ¬
ers, one by one, which would pro¬
duce exactly the same result.
So
the Court reached the following
•

it is

argued, brings about a wholly un¬

law

Amendment

right

labor

unions

free

engage

the desirability of such an exemp¬
Conduct

Obligatory
All Citizens

for

determination

the

Con¬

preservation of individual liberty

gress."
It is frequently argued that there
is no need for Federal labor legis¬

and

lation

Second, I will point out that the
an

orderly society is pos¬

sible only when Government lays
down rules of good conduct for all

citizens
to

and

citizens

all

compels

them.

obey

has

The wage earner

superior virtue, nor any
other valid claim, to be exempt
no

from the obligations

and compul¬

sions of good behavior as

defined
and enforced by Government.
In
another famous opinion, Justice
Brandeis

denied

there

that

"any constitutional
the

dustrial

combatants

claimed

was

moral sanc¬

tion" to

right of in¬
to fight out

labor disputes regardless

of public

injury.

Then he

stated

funda¬

mental principle in these words:
"All rights

are

derived from the

Purposes of the society in

which
they exist; above all rights rises
duty to the community."
.

That

ioned

may

law

lawyers
cate

and

sound like old-fash¬
to the Ned-Marxian
who

teachers

industrial anarchy

democratic alterntive
socialism

guiding

into

us.

Decrease

•

$165,677,096.09

Sinking funds

$166,750,668.96

$1,073,572.87

$616,951.70

616,951.70

Capital and other

funds.

292,182.62

Miscellaneous
less recorded

Investments

affiliated

407,000.00

2,479,468.70

2,539,771.41

60,302.71

6,898,914.76

129,189.52

431,810.24

physical property
depreciation

38,291.99

5,833,000.00

6,769,725.24

253,890.63

6,240,000.00

reserve

Maintenance funds

449,964.06

18,153.82

com¬

panies
Other investments
Reserve for
ment

Current

adjustment of invest¬
securities (Cr)

Deferred assets

630,955.60

301,517.52

329,438.08

42,365,845.57

assets

48,063,985.19

5,698,139.62

379,107.97

753,706.87

1,132,814.84

2,187,422.13

Unadjusted debits

But,

advo¬

the only

to the state

which
even

they

are

at the risk

the misuse of
labor power through economic co¬
ercion and physical force. Surely,
to

prevent

howe^r, no one will contend that
the monopolistic powers of labor
organizations, which arise out of
a specific Federal exemption from
Federal laws, can be
any way

corrected in

except by a .Federal law.

feel that the
Federal exemption need not have
been so liberally construed by the
Supreme Court. But we can as¬
sume
that
the
public
opinion
which is still opposed to what was
once called "court-packing," will
Many persons may

with the present opinion of
the present Justices—that the way
to change the law announced by
the Court is through an amend¬
ment of statutory law and
not
agree

through

change in the personnel

of the Court!

The Need for Federal

Labor

Legislation
Now I shall turn

1,536,749.43

650,672.70

$226,808,654.66

$6,349,587.10

$233,158,241.76

LIABILITIES

Capital stock—
Common

$ 38,755,000.00 $ 38,755,000.00

Preferred

23,703,000.00

payable
companies

1,659,000:00

174,000.00

38,347.07

32,180,637.18

10,004,472.34

8,888,887.22

597,242.80

1,115,585.12

122,007.13

85,624.38

36,382.75

30,129,984.45

29,800,824.30

329,160.15

32,970,739.58

31,344,56?.08

1.626,171.50

surplus

Earned

surplus—Appropriated

Earned

surplus—Unappropriated
Liabilities

6,993,628.63

•

21,852.74 $

619,095.54

Unadjusted credits

10,500.79

48,847X6

25,187,008.55

Deferred liabilities

Total

$2,876,000.00

affiliated

Current liabilities

Unearned

66,670,000.00

1,485,000.00

Equipment obligations
Amounts

23,703,000.00

63,794,000.00

Funded debt unmatured

$6,349,587.10

$226,808,654.66 $233,158,241.76
REDUCTION

FUNDED

DEBT

During the year the Company refinanced its General and Refunding Mortgage Bonds by the retire¬
ment of $40,956,000 of outstanding 5% bonds and issuance of $39,000,000 of 37/s% bonds.
This reduction
Of $1,956,000, coupled with purchases of $781,000 First Mortgage 5% bonds, of $12.1 ;000 General and Re¬
funding 5% bonds prior to refinancing, and of $18,000 Second Mortgage 5% bonds, together with
deposit with Mortgage Trustee of funds for the payment of principal end interest to maturity of the
remaining $136,000 outstanding Second .Mortgage 5% bonds (in consideration of which release of the
Mortgage was executed) and the discharge of $174,000 of equipment obligations, brought the total re¬
duction during 1945 to $3,186,000.
Since January 1, 1943, the Company has reduced funded debt outstanding in the hands of the

public $12,183,000 or 15.8%, and annual interest charges $1,017,982 or 26.8%'.

tp the flabby

argument that lawlessness
(Continued on page 2096)

Total Assets

conduct which restrains trade. But

tion of labor unions is a question

Increase

1944

desirable result—one which leaves

comon

conclusion:

"This,

unhappy

con¬

strike."
Good

transportation
less recorded depre-

ciation and amortization

accom¬

absolute

the

orderly

Fourteenth

the

nor

confers

equipment in New York City,

1945

however

Neither the

can

which

purpose,

manner

objects

group

ASSETS
Investment

VOLLMER, President;,

THE COMMERCIAL & FINANCIAL CHRONICLE

2096

the

A National Labor
and

(Continued from page 2095)
strikes

and

lence and

panies
dealt

the

by local

and not by Federal

business men,

accom¬

picketing should be

mass

with

tion.

of such vio¬

use

intimidation

ever

will

Define

functions

labor legisla¬

law the separate

been

special privileges, exemptions and
powers.
These monstrosities or¬
ganize and carry on strikes of
national

effect, and strikes
in
which, commonly, the intimidation

tatives of
to

the

police
of local government.
definitely the job of the

powers
-

override

mobs

Federal Government to cut down
the

and privileges which

powers

members

of the full rewards
of peaceful cooperation,
and by
despoiling the enterprises which
support them.
Forgive me if I am too simple
and blunt in my analysis of what

represen¬

wage

kind of organization

one

participate in,

otherwise to

attempt to control, the function¬
ing of the other kind of organiza¬
tion.

and inevitable violence of organ¬

ized

There

minor

are

host of major and

problems

tional

would

that

commonly regarded as a com¬
plicated problem which should be
handled as cautiously as an atomic

na¬

labor

policy which I have
tried to express in tabloid form.
Every item of that policy has been
the subject of Federal or State
dicial

bomb.

But, it

legislation, administratioriyor .ju¬

der the protections of Federal law.

earners

by the adoption of the

solved

have been granted by Federal law
and which have been abused un¬

definitely

Federal

the

not the

condensed

and

that

hensive
ized

there

What

would

enact

Federal

all the

nomic

one

novel

information

util¬

and

ex¬

of all

and

elements

the

freedom

society.

our

National Labor

establishing a legal machinery for
the peaceful settlement of all la¬
bor disputes of National concern.
2. Make it the legal duty of em¬
ployers and employees to follow
the legal program and to strive in
good faith to adjust differences
peacefuly before taking any ag¬
gressive
action
against
each
the public against
prolonged deprivation
of the necessities of life, such as
public utility services, because of
an
unsettled labor dispute.
Re¬
quire employers and employees,
in such a case, to defer any ag¬
gressive action against each other
until an emergency commission
can
make a quick investigation
and report. Then, if this impar¬
tial judgment is not accepted, the
Protect
or

Government should be authorized
would

war

temporarily
time.

When

the

stoppage of supplies and services,
essential to the health and safety
of communities, is
threatened, the
Government has the same duty
"to provide for the common de¬
fense"

when

we are

foreign foe.

Protect

wage

the

earners

freedom

the

ciations
tect

democratically
organ¬
controlled.
Also, pro¬
the right to work by making
and

it unlawful for any

union to ex¬
ercise exclusive bargaining power,
or to maintain a closed
shop un¬
less membership in the union is
equal terms to all wage
earners
affected, and the mem¬
bership controls the union.

open on

5. Define by law the

objects of

legitimate

labor union and the
methods
of
advancing

lawful

those objects. Then make illegal
any strike or other union activity
which

carried

We Now Have

Hodge Podge of

Uncoordinated

idleness,

by violence
other unlawful

means, or to
lawful object.

accomplish

Prohibit

straint

un¬

conspiracies in

trade

backwash

the

strikes. In the face of substantial¬

ly higher wages than in 1929, and
rising ones at that, people on pay¬
rolls
number
(before the coal
strike) some 52 millions, the high¬

There is

have today a hodge podge of un¬

coordinated,
inconsistent
laws,
which, instead of establishing a
of

rule

reason

economic

con¬

establish a rule of force.
they
grant
special
priv¬
ileges to organized labor to use
such brutal and destructive force,
with such complete irresponsibil¬
ity, that vast injuries to countless
persons and to the general wel¬
And

have

must

been

inevitable

become

soon

peace-time figure in all Amer¬
ican history.

Laws

In place of that sort of law we

—

and

intolerable.

The Legal Remedy

The remedy for this evil situa¬
tion is simply for the Govern¬
ment to enact laws based

elementary principles of
and

peace

have

been

good

that

universally utilized in

the lawmaking of every land and
time from the Code of Hammurabi

generally
nothing of a

was

say
de¬
Nor are the symptoms
consistent with the picture of any
cyclical phase as drawn in the

textbooks

and

ers.

ern

and to protect the

constituent elements.

re¬

competition,

and

value of life
ernment

policies

bonds

This acceleration in money dis¬
bursements

has exactly

effect

rise

the same

the

monetary

volume. Statistically, it

expresses

itself

of bank
deposits) com¬
pared to those of the same period
a
year earlier: 9.1% rise in 1945
debits

higher

(to

figures

total

and

9.3%

are

indicative

in January, 1946,
the
direction.

So, indirectly, is the fact that re¬
demptions came within $-30 mil¬

mechanism

the

sustain

Looking at it

over

period of

months rather than of weeks, the

monetary volume is still
increase, even though at

on
a

the
sub¬

stantially reduced rate. In the first
of the year, money

circulation

declined

has

natural

tendency to ac¬
a self-inflaming

celerate itself in

fashion—even if the budget should
be balanced for good, and bank
credit expansion should be strict¬

ernment to enact them and to try
enforce
them.
Otherwise
a

other "travelers,"

accumulate;

government will die, like

tity, and
already.

The

slightly

banks, largely

merely changes

the form of money, not its quan¬
seems

to have

subsided

At any rate, it is more
compensated* by the con¬
tinually mounting volume of bank
deposits.
Total
(adjusted)
de¬
than

Railway
peace

Labor Act has
the railroads

for 20 years, not because of ex¬
ceptional conditions in that indus¬

posits

try, but because it embodies the
indispensable requirements of any

law to preserve domestic peace.
The proposed Federal Industrial

Relations Act, introduced by Sen¬
ators

abusive misrepresentation can ob¬
scure the fundamental soundness
of that

proposed Act

for such

the need

law.

After the last labor obstruction¬
ist has made his final plea for the

perpetuation
and

must

special privilege
force, such a labor

lawless

law

written

before

shall attain industrial peace.
After the last confused social-

scientist has protested against try¬
ing to compel men to be good, such
a

labor

order
live

law

must

written

compel labor bullies to

under

the

same

laws

prohibit other brutal-minded

that
per¬

from extorting money by vio¬
lence and intimidation.

sons

course

stop crime.
amount

criminal

laws

don't

But they do limit the

are

rising still, or again, at
rate: by $2 billions

substantial

January alone, plus 11.6 billions
the previous three months. In
part, it is the "coming home" of
currency that swells the checking
and savings accounts.
The rever¬
in

sal

the

war-time

billions early

last December, the

gold

stock is on the up-grade
again at the monthly rate of $100
millions.

But the chief

source

the

decline

from

the

liquid savings
a
quarterly

average of some 30% last year to
a
current 20% of the spendable
national

income.

tions

the decline of-corporate

are

Other

indica¬

liquid holdings and its counter¬
part, the noticeable urge to hoard
inventories, stimulated by the ex¬
pectation of shortages and higher
prices.
The March issue of the
Federal
Reserve
Bulletin
ex¬
it conservatively by stat¬
ing that the current "heavy buy¬
ing" has been "to some extent of a
presses

protective nature.
Business pur¬
chasers have sought to protect
their

sources

supply and

to protect themselves

also

against fur¬

ther increases in prices."

Commodity

prices

are

losing.

The official indices, which showed
an
enviable stability throughout

deposit-creation is the unrelenting
credit expansion: in the second
half of 1945, the banks added $7V2

the

billions to their investments, and
$2V2 billions to loans, the latter
mostly also to finance the holding

beginning
to
reflect
serious
changes. As to the short-run out¬

of Federal securities.

January,

the total portfolio of
weekly re¬
porting member banks again has
risen by $300 billions. Since
then,

has

due
the

declined

$2.8

billions,

to the partial redemption of
Federal debt, but no equiva¬

lent decline of deposits occurred.

Monetary Velocity

However, the center of infla¬
tionary gravity
has
begun
to

spills

over

the

dam.

reconversion

period,

other

measure

the trend with the
accuracy of a
broken watch.
But even

they

are

look, the direction of which calls
for scarcely any
comment, there
was
a
great deal of argument
along the Potomac about forecast¬
ing the range of prices for 1946,
Administration spokemen willing
to admit

Board

10% rise, and Reserve

and

betting

Congressional
20

25%

present level).
Very
sides will be proven

of
crime, and prevent shift: the falling rate of
growth
highway robbery from being a re¬ in the size of the
dollar-downpour
spectable profession—even when is matched
by a rising rate at
practiced by judicially protected which the
accumulated "water"

teamsters.

price

in¬

concealed

through

paid to producers
industrial

of
as

the

been

extent

price

processors

price rises have been
by taking part of the

mitigated

burden out of
It

intermediary

may

but

the
both

one

prof¬

temporarily
trend

and

all

horizontally

vertically: covering all

many

subsidies

com¬

countries

thus
the
in

the

areas,

physical and
psychological inhibitions to work
and the vastly enhanced
demand'
all

affected

deeply by the world¬

wide inflation

cal

well

by politi¬

demoralization.

International Trend
To

the longer

guage

run

price

prospects, beyond the cur¬
rent year, the international
trend
may be considered first. Some of
its constituent factors mav not be
operative for long; in Europe, last
year's drought need not repeat it¬

self,

the

and

should

transportation jam
gradually eliminated.

Progressive return to peace, in¬
cluding some measure of fuller

demobilization, plus the provision
more
machinery, fertilizer, etc.,

should

help to raise output. As

matter of fact, its volume
already
is at least 60% of the
pre-war in

France, and even closer to normal
England and Belgium. But the
ending of near-famine situations
in

(also in India and the Far East),
is as yet by no means as¬

which

rate at which fresh

preserved

metals,

have

creases

the

foodstuffs

sured, will not mark the begin¬
ning
of
falling
world
market

symptom

orders.

buoyancy of the markets and the

due to the return of soldiers and

human
being, from neglected internal dis¬

1939, while
trebled.

procession

spectacularhave doubled

cotton

upward pressure on prices.
The
process still is in its infancy, but

($800 millions=2.8%); this back-

the

are

and

(especially

level

flow of cash to the

coffee

being

enforced; but it is the duty, in¬
deed the necessity, of any gov¬
or

against

semi-finished
products

leading

ngures

and

priCP

the sector

materials

Some

its.

farm

wheat

insurance

the

portfolios—are
for purchases.

ly restrained, two rather doubtful
assumptions. Another
important

are

building
lumber)

some

tho

the Gov¬

companies'
used

disturbing

occurs

with

gooas,

well

the

cover

reflecting the devastations of
war,
the reduced production

of the vast amount

materials and

raw

modities

savings—$225 billions at
the end of December, not includ¬
ing
either
the
cash
surrender

new

Monetary Volume

three months

good conduct
not always well administered

most

development
of

sun

going to jail.

The

and

words,
more

situation, due

involved

obscured,
sweeping

ting,
debt-reduction,
and
pro¬
duction-shrinkage coincided with lions of the sale of savings bonds
peak, if not rising, civilian income (565 vs. 622 millions, respectively)
and spending.
The main reason in February, and outdid the latter
is, of course, that the huge flood by $75 millions in the first 25
of money puts the economic dy¬ days of March.
These are some of
the symptoms of the money-dis¬
namo out of gear and distorts the
cyclical interrelation between its gorging process that provide a

used

by forecast¬
Never before, under mod¬
conditions, have deficit-cut¬

down to the Charter of the United
Laws

ex¬

pression.

those

order

immediate post-war

recession,
pected, to

preserv¬

ing

intimidation,

unemployed lingers at 'the

outward
Hatch, Burton and Ball, June
movement of gold is another fac¬
20, 1945, is based on the same
tor: after a loss of some $2 bil¬
principles
and
methods.
No
threatened
lions, with the "low" of $20,029
amount
of
honest
criticism
or

organize and
bargain through self-chosen rep¬
resentatives ' hnd voluntary asso¬
ized

Nations.

other.

take control

givil liberties of all the people.

est

Policy

economy,

preserve

(Continued from first page)

compre¬

which

law

interests

Outlaw industrial warfare by

free

order,

Price Trends

nothing

perience which are available and
was designed to protect the eco¬

fare

sudden

good

flicts,

this

practical and workable National

domestic peace

maintain

and

of liquid

statement

ment

of the Govern¬

lions, as in 1929, against 9 millions
in 1939, most of them in voluntary

Labor Policy;

Objectives of

obvious duty

but

osition.

commerce

place to discuss the details
a Federal law. But, here is

of such

the

time

not

for

reason

bare "normal" of less than 3 mil¬

enor¬

vision of Federal labor law.

That is

calling attention to the neglected,

the monetary velocity of
circulation is gaining momentum;

perience in labor disputes and a
professional knowledge of State
and Federal law, that the perma¬
nent improvement of labor rela¬
tions, the preservation of indus¬
trial peace, and the fulfillment of
their
public
responsibilites
by
both employers and
employees,
wait upon a comprehensive re¬
There

vious evil.

ber

plain, to anyone
long practical ex¬

this enlightened

obvious remedy for an

which is essentially novel, untried
or theoretical in any single prop¬

regulate an

too

to
an

has

commerce.

all

sent
such

extent

organised labor,
to complete the job by regulating
organized labor for the benefit of

who has had

such

to me, to use

for venturing to pre¬
audience
ob¬

reason

That is

the

for the benefit of

interstate

consideration,

seems

preserve

which

field of interstate

mous

it
individualistic
far

how

and

assistance,

duty

Government,

undertaken

controls

freedom and self-reliance.

with

endowed

and

socialistic

direction

will

profit by fomenting in¬
dustrial warfare, by depriving the

risk of

ization and

not

to how
government should go in the
issues

obscure

many

the

lawful for

have

situation

premium

investigation of the obscure."
for avoiding

should

effect

prevent every tough labor
ever swinging a club.

from

ply-demand

That is my reason

But, it will make certain that in
the long run the troublemakers

labor organization, in
prevailing forms of private
enterprise; and then make it un¬

have

far

boss

management organ¬

where, by Federal law, labor or¬
ganizations national in size and

Here

vent

either separately

jointly.

governments

law will not pre¬
every hard employer from
bulldozing his employees; nor

than

A labor peace

monopolies of employment,
whether promoted by labor unions

need

obvious,

the

education

time

this

"At

18, 1946

late Justice higher than warranted by the

language of the

Holmes:

Policy

Thursday, April

increase

50%.

legalization
black

(from the

likely, both

might reach

That

about

the

market

would

circles

wrong;
as

high

what

the
as

the

prosperous
mean—not

counting the 300% rise in Persian
rugs—with the proviso that its
prices are as a rule somewhat

prices

for

agricultural

nothing

say

products,
manufactured

goods.
For

one

number

sugar)

thing, low

reserves

products
the

and

(especially
needed

time

restore production on plantations,
will
take
care
of
maintaining

prices

on high levels.
Lumber is
supposed to stay "scarce" for five
to ten years because not enough

manpower

abroad to

available

make

here

for the defi¬

ciencies and produce the addition¬
al volume required by a demand
fantastic volume. The outlook
for non-ferrous metals, in which
of

inventories existed

excess

as
a

late

1944, is similar, if only for

shorter period ahead. As to the
run of farm products, the

general
effects

the

war

upheavals will
time

the

and

post-war

impede for some

return

normal

cir¬

cumstances. The Russian obstacles
in

the

of political ond eco¬
in
Europe, Com¬

way

nomic

peace

munist

trouble

in the East

in China, unrest
Indies, etc., all add up

to lower output on the farms
to the necessity of supplying

shortage

and
vast
Inflation, that is

areas.

rampant in most countries, mag¬
nifies

the

trouble

uprooting

the regular channels' of exchange
and

demoralizing

Moreover,
somewhat

the producers.
in countries under

even

normalized

conditions,

the

shortage of equipment, and
especially of labor, militate against
higher output.
Basic

Bottlenecks

* us
to the core of
the long-run price problem.
The

That

closely

brings

integrated

modern

national
or
has
the conse¬

super-national,
quence

character

economy,

that

major shortage

point
reverberates
throughout the entire structure, it
raises prices even in surplus areas,
and
of non-scarce
commodities.
any

one

reasons
should be obvious.
One thing is a substitute for the

The

other, if only in

remote fashion,

only

the second enters directly and price structure against inflation.
Subsidies of about $2 billions will
indirectly into the cost of produc¬
be extended, with another $600
ing the first. Above all, all things
or

the economic equilibrium at home
and
abroad,
extremely, drastic

interrupted

temporarily

monetization of the debt,

with no

steps (such

put in the way of an
increasing monetary velocity, pro¬

face.

its

course

and manpower into
the export
industries, but the decline in the
number of coal miners and the

avalanche of upgradings

lagging reconstruction in apparel
and capital goods for home con¬
sumption may more than offset
the gain.
The examples could be
multiplied ad libitum.
In this country, durable goods
constitute the biggest visible bot¬

black-marketeer to the front and

cannot

impedes production.
The course
of "moderate inflation," starting
with 76 official price increases in
the
last 6 weeks,
plus a large

But even the semidura-

tleneck.

problem child. With all
working and all machines

unloosen

would

How

the evil day, but brings the

number
OPA

price

hands

raises

items

the

unbalances

raise

and
disregarding
the
foreign demands, it would take
1V?. years to satisfy the conser¬
vatively estimated pent-up de¬

astronomical

'30s, but
indicate that

times larger now,
an

volume

al" bottlenecks

deeper

reversal

of U.

sonable

pact of shortages in capital goods
will become visible when the con¬

fundamental

sumers' hope for early

prospect,

policies in rea¬
and with the
socialistic spirit in saddle almost

everywhere,
have

forces

the

point out only a few outstanding

inflationary

scarcely

begun

satisfaction

disappointed—to

will be definitely

much

the

expectation

the

for

reasons

operate. * The
money-hoarding
propensity of the Roosevelt era is
gradually giving way to the op¬

ten

gap

nor

the

cally powerful groups) calls for
correction, and there is little doubt
as to
the direction. The full im¬

bigger things ahead. With neither
early solution for the "natur¬

and in view of

immeasurably

seem

distortion

(in favor of politi¬

wage structure

the

this has been only the prelude for

to come—unless a thorough¬

cash

signs

manpower of this
received pay raises;

has

intolerable

the

against the

scarcely one-fifth of

employed

country

prices have

rise

accumulated

structure and makes more
compulsory. The continued

the

matter of fact,

So far,

rate.

control.

just about doubled
depression low of

go?

process

going deflation should put on the
breaks, as was done after the
previous war. However, with an

the

off

taken

this

all

years

list, overlooks that each in¬

dividual

bles are a

will

Inasmuch as the monetary base,
popularly called the printing press,
not
is
expanding wildly, prices

and still

higher wages; regimentation post¬
pones

far

as a

otherwise

effective

fashion. But rise they do, and they
are
bound to stay high, too, for

(in money, not in vol¬

the

necks.

market take

let the

the

ume) by attracting raw materials

of exports

posite attitude: disbursing savings
and hoarding goods. Cheap Money
has penetrated the economic sys¬
tem
to the point where future
values tend to be capitalized on
the basis of a near-zero interest

sharp capital levy
self-perpetuat¬
ing liquid wealth, or a system of
"freezing") would be needed to
bring the monetary velocity under

obstacles

by virtually the millions in store for housing, not
vides
the
inflationary stimulus
same resources;
their concentra¬ counting the State and municipal
that is responsible for the never
tion along one line depletes the disbursements, all of which will
available supply for others.
The bolster the inflated demand. As to ending labor trouble and the con¬
British
proudly announce that price regulations, an insoluble sequent lengthening or intensi¬
fication of the prevailing bottle¬
they have reached the prewar size dilemma stares the Government in
produced

are

2097

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

Volume 163

price

higher

that

level than

present one is apparently in

store, for

period of years at that.

running,

of inflationary

outburst

THE COLUMBIA SYSTEM in 1945

that

mand for clothing—assuming

buy¬

ing occurs—and probably 10 years
for housing, However, the latter

From The Annual

has to contend also with the con¬

and

wants

struction

public nature, and
will

other

have

Practically all

etc.

years,

alone; the auto¬
figures on five

industry

manu¬

factured goods
need

of any "size" will
for replenishing the

years

machine

Even

larders.

liveries

Corporation (The Parent Company)
engaged in production, trans¬
mission and distribution of natural gas and electric
energy. The System serves nearly 1,750,000 cus¬
tomers in 1",746 communities in Indiana, Kentucky,

and

concentration

"post¬

poned." The bicycle trade expects
whole year's full production for
motive

Gas & Electric

•During 1945, the Columbia System passed from
on
providing fuel for the furnaces of
war to
operations involved in the economy of peace.
This changeover is being accomplished with little
effect on operations or the gross revenue of the
System.
The Columbia System is comprised of Columbia

the

one or

the home market

Report of Columbia Gas & Electric Corporation

commercial

subsidiaries

Maryland, New York, Ohio, Pennsylvania, Virginia
and West Virginia.

de¬

tool

far behind schedules,

are

MILLIONS OF CUBIC FEET

spite of the unheard-of capacity

4,000,000

expansion during the war.
The

they

and
the

from

of the situation

cruxes

many,

fundamental

same

THE

are

NATURAL GAS
INDUSTRY

derived

all

are

GROWTH

flict between supply and

con¬

demand:

(A) Consumers are bound to com¬
pete with one another, thus rais¬

of living, and
(B) Producers
wages
and
raw
material
prices by competing for those re¬
sources.
(C)
In the process of
wage
raising, frictions are un¬
avoidable, with the consequence
of interrupting production and in¬
tensifying
the
shortages.
(D)
Shortages here create excessive
demand
there:
a
family which
prices,

ing

therefore

cost

wages.

raise

find

cannot

limited

the

home,

pressing

trailer,

bids

bia

than 179 billion cubic feet

depends heavily
trial customers,

gas.

000 kilowatt

Columbia

served 1,182,601 homes.

dependent

famine
that

steel

causes

and

rollers

bearings

stops many other

lines, etc.
(F) Most important: there is not
enough skilled labor available to
go
around in all occupations—
remember the gold mines, service

shut down during
the war—and the resulting hiatus
at one end weakens the produc¬
tion effort at the other.
(G) The
stations,

etc.,

labor force is

COMPANIES
$

Gross

Revenues:

Railway

and Bus .•••■*

Total Gross

'Electricity, Oil, GMolinc, etc. .

Profi* T»es ; • • ;; ;

r sr&t

inherent

are

the
foreign demand, effec¬
urgent, mentioned be¬

greatly

enormous

tive

and

fore.

What

tioned

aggravated

has

not

been

men¬

are

foreign shortages

reduce the exports to this country
which might have relieved the

they

are

factor,

on
a

our

markets;

and

through

the

medium

of
to

Goyernment policies complete

the

picture. Wage raising helps to

overcome

;• ; ; |

•fc

-V

6,874

5,966

YTnf,129

$
$

19,742,066

17,685,761

...
,

C07

2,<156,305

979

MBcclla— Revenue

•34

mmm liii

3,976,036
reserves. The Columbia System last
withdrew only 4.6% of its estimated
proven and unproven gas reserves. Avail¬
able to the System from its own wells and

Gas
Interest

and Other Fixed Charges . •
Consolidated Net Income

year

•
6,453,640
"9014,062

Preferred

Ba,anCC
n«

Consolidated Earnings per

-1—74I

Dividends Paid •
Share

of Common

Stock

7,256,085
W

is#:'#:-

from the
serves

Outstanding . . •
,ax

ounx>ses

of costs

applicable

vast

Southwestern fields

—assurance

are

re¬

4,500 billion cubic feet
of service to the public for

estimated

many years to come.

powerful psychological

international
price
trends,
stimulate higher prices at home.
•

71,120

2,450,012

2,220,011

(which

bound to last for years): they

pressure

. ■ • •

RESERVES
SYSTEM

FEE$

3,112,049

101,834

Deductions . .
Applicable to Corral."

OF COLUMBIA

MILLIONS OF

3,107,712

•

COLUMBIA

•

fect

•

Total Income

yet is the additional ef¬

(Note a)

Balance

ESTIMATED GAS

25,239,881

2,481,274

SSSSJStt » Minority Interests

plus the human
reactions accentuating them. They

12,070,606

Special Charge in

the

$U23SM16

•

;::;:::::

economy,

10,224,935
8,450,795

CUBIC

Income

full-employ¬

ctor194

(Note a)

Deductions
Special Charge

7,304,529

15,549,271

"$109363^924

comes

through 2,400 miles of
pipelines owned by others. This supply aug¬
ments production from Columbia's 9,603
wells in the Appalachian area. In the last 10
years, to maintain the efficiency of Colum¬
bia's service, $176,600,000 has been spent
on
the construction and improvement of
properties.

59,236,279

9,898,160
7,991,596
6,896,958

;;;::

excessive

7,251,320
13,078,903

«***•(N°""
Income

Gas

Columbia System

13,065,876
9,411,624

13,818,339
9,452,059

..•••••',

Operation

jests

purchasing power, re¬
duced inventories, shortage of la¬
ment

^64^46^987
Total

volume of
bor

• • •

•

from the Southwest

18,100,744
14,241,316
4,416,719

22,771,686
14,054,478
4,150,425

Sr"Afevc:Cu,o„,» ACCO^S -

this combination

demand,

$138,076,296

Revenues

Operating Expenses.
Operation—

bottlenecks

"natural"

246,421

194,344

"§137^888,653

;

Artificial Bottlenecks

pent-up

6,174,286
1,791,957

. .•

paid.

must arise from

42,754,527
2,086,895
6,536,095
1,536,754

actually overworked and under¬

Vicious

84,915,604

87,967,813
41,760,253

(Page 42)
Electric (Page

Gas

disgruntled, aroused

of the unions; in Europe, it

power

in 1945.

1944

SUBSIDIARY

by rising living costs, and its ap¬
petite whetted by the political
is

138 millions

millions in 1936 to

shortage

try.

favored fuel,

resources

bottleneck of the radio indus¬

one

of natural gas, the

produced by the entire natural gas industry.
Reflecting this growth, Columbia System's
gross revenues, 64% of which come from
gas sales, have risen from approximately 95

Page 29

use

steadily increased. Last year, it is esti¬
mated that 3,700 billion cubic feet were
has

production.

that

item

The

upon

(E) A single
missing, small as it
may
be, holds
up
production;
scarcity of lumber for cabinefs is
its

for

Industry,

electric power,
used more than 1,442,000,000 kwh, while
390,098 homes were supplied with nearly
444,000,000 kwh for light and power.
heavily

this efficient fuel. Indus¬
3,179 of them, used more

than 58 billion cubic feet in 1945.

hours of electric energy over

16,529 miles of circuit lines.

Industry

against

turn

supply

for

Electricity served to 447,139 customers,
providing them with more than 2,628,000,-

through 32,629 miles of held, trans¬
pipelines. Colum¬
served 1,278,213 customers with more

Gas

mission and distribution

the

■,

resistance

the

asfjSEEtSZZm

i -"""

The information

..connection with
of

offer

buy

set

any

forth here is not given in

sale, offer

securities.

•

solicitation

THE COMMERCIAL & FINANCIAL CHRONICLE

2093

ported to favor a 15 to 20%

Wages and Prices
v*a&co

policy.

Middleman

The Employer a

put

middleman

Present

pay

which

lanor

ror

labor

the

excessively
excessively
governmental or

curbed, either

union,

witnout

action,

discourag¬

ing either the ultimate consumer
the employing middleman and

thus endangering employment.
It

difficult

not

reconcile

really

expect

made,

thus

made,

affects
there

price

future
is

present

supply;

constant

thus

and

marginal
to
equal

cost

duction

each

because

one

other,
directly

not

pro¬

prepared
practical

the

way,

are

discuss some of the
problems that arise in

the

relationship of wages and
prices at the present moment.
The

Practical

Aspects of the

Wage-Price Relationship
We are now in an inflationary
period. Pressure for higher prices
is caused
in
part by continued
wartime
shortages of consumer
goods and by accumulated con¬
sumer

demands.

the monetary

forces

money

and

bring

line,

Yet

describe
as

our

present

one

tion
mit

the

and prices, assuming

act

without

discrimina¬

favoritism, and, if we per¬
rise, permit both wages and

or
a

prices

rise by approximately
percentage?

same

It will be found

quences

order

mously

conse¬

of price control, however,
to emphasize the enor¬
complicated

lems raised when

interrelationships

prob¬

consider the

and
prices as well as of wages to each
other and of prices to each other.

From

late.

Office

the

War

Mobilization

and

there

out

leaked

Reconversion
few

months

ago

"afford"

could

At the

24%.

partment

raise

wages

time

same

the

De¬

put

Commerce

report,

out

concerned

with the

interrelation¬

ship of prices considered
with

But this is
at

the

with.
the

considered

wages

later

looking

relationship of each price to
Further,

have

interrelationship

that a basic wage in¬
possible without raising
prices"; and that the automobile
industry in particular could grant
15%

post-war year

1947."

further increase of 10%

Official

Sta¬

analyze the figures which
should

broader

rather

question

worthy
with

the

affects

this

pur¬

the

trust¬

this

sort

all—especially

limited

very

raise

whether

calculations

possible

are

data

that

bureaus

Government

are

likely to have.

I do not think, in
over-all estimates of

that
type

worthy

can

either

useful.

trust¬

Prices

and

in the first place, are al¬
specific; they do not consist

relations between supply and
demand for particular products.

wages,

And

take

hold the price line while

prices

wages

riod—of

our

base

the

wages of some past pe¬

January, 1941, for

exam-

ways

"levels"

averages

proximately

course,

calculated

stracted from them.

invalid

Over-all

averages.

can,

ap¬

ab¬

But it is quite

such

use

increase

could

50%;

1,500%
and prices only
and labor would always
off both relative¬

out better

come

say,

wages,

only

prices

and

150%

unfortunately, as
make the figures large

clear,
we

soon as

that the proposition re¬
mathematical ab¬

enough,

duces itself to a

For the last fifteen years
"labor" has consumed, it has
been estimated, about 75% of the
national product. But if labor is
now
consuming 75 out of every
100 units of production, then with
surdity.

so,

150%

30%

increase
187

out

units—which,

could

130

every

would

Euclid

wages

prices

increase

consume

The fallacy

this

which gives rise to

that

belief

could

increase

wage

imposed

safely

greater
than the accompanying price in¬
crease
is that of looking only at
the direct wage costs of a specific
In the automobile industry,

trade.
for

example, the direct wage costs

the assembly plant may be less
than a third of the total costs; and

conclusion
that
a
wage
increase
of 30%
would require to offset it a price
increase of, say, only 10%.
But
the falsity of this is apparent as
soon
as
it is recognized that the
other costs of production of the
automobile industry—the costs of
raw
materials, of rent, of trans¬
portation,
of
s e 11 i n g—"break
lead

may

the

down" in turn

largely into wages
And a

paid by other industries.

general wage increase would raise
indirect

industry

labor

well

costs

each

its direct labor

averages,

turn, to try to calculate what a
specific wage or price should be.
The problem of the level of a
par¬

wnen

consider

coun¬

try

represents approximately 70
to 75% of the total income of the
country,

has

estimated,

frequently

then

been

increase

30% in wages, it might more rea¬
sonably be deduced, should ulti¬
mately reflect itself in an increase
of 20 to 22%
over-all

better,
this

in prices.

mathematics

this

duced

the

other

kind of calculation

Existing

conditions,

discussing, it ignores the specific
realities

might

the

make

situation.

the

abstract

One

objec¬

tion, for

one thing, that if the rel¬
purchasing power of profits

ative

down

cut

were

in this

way

mar¬

should

is not

caused,

often supposed, by an
up¬

ward

"wage-price
causation, in fact,

spiral."

Tne

is the other
round. It is the monetary in¬
flation and a shortage of
goods
way

the

make

that

wage-price

spiral

possible. We could not, for ex¬
ample, have had an upward wageprice spiral in
1932. If we had
it

should

only have in¬

creased unemployment.

cisely because

It is pre¬

did try artifi¬
about an upward

bring
wage-price spiral in 1933 and 1934
through the NRA that we pro¬
longed our unemployment and
depression. At the present junc¬
ture, it is true, governmental en¬
cially to

couragement of a wage
act politically as

would

increase
infla¬

factor, b.y bringing later
pressure for a sufficient price rise

tionary

monetary inflation to make it

this

But

work.

does

wage-price

not

mean

spiral

the

basic economic cause for inflation.
The Basis of Inflation Is

basic

The

be looked for

Monetary

for inflation is

cause

the monetary

Government price and wage
controls tend to prevent produc¬

side.

tion from

sumer

going into the channels

there

where

the

demand.

greatest

con¬

They reduce pro¬

duction, if not always in terms of
tonnages, at least in terms of util¬

ity

consumers.

inflation

combat

are

cannot do

to
so

through wage and price ceilings
but only by dealing with the fun¬
damental monetary causes of in¬
flation.

Summary
To

Conclusions

and

the main proposals
and theories now prevailing with
sum

up,

regard to wages and prices are the
of political expediency
rather than of scientific study. If

product

try to hold down prices while

permitting wages to go wherever
collective bargain¬

ing sends them,

must eventu¬

disorganize production and
create unemployment. Even if we

ally

try to hold the line
and

both wages

prices by direct Government

ceilings,

must still distort the

structure

production and cre¬
shortages. It is a delusion to
suppose
that all wages can be
ate

raised

given percentage

some

ing them only to

have been

clear tnat inflation

without affecting

over-all

re¬

extent that Government stat¬
isticians calculate. But even under

very

that
calculation is

dete¬

the

even

do not think

sort

useful.

While the
of

quality

black mantels, and
production—not quite

competition

If the labor income of the

are

rioration,

this

These levels

by
governmental controls, although—

the

substantially

economy

present exist.

kept down to a certain extent

that

is impossible.

say,

tried

ly and absolutely.

costs.

portedly led to these conclusions.
1

that

problems would be

our

so,

these
of

tistics Doubted

ships

were

again.

even

enormously
simplified;
for
il
such a fixed relationship existed,

Now it is not my intention here

fact,

relationships affects

"without adverse

first

Trustworthiness

For each of these relation¬

Each

the

for

other.

these

and

even

increase

results

thousands of prices with each
other, and the interrelationship of
thousands of wage rates with each

production.

that

crease

unit.

problem we have to deal
We really have to consider

each wage rate.
to consider the

declared

unit

as a

false way of

out

come

wages

This brings us to another prob¬
lem that has been much discussed

examination,
however, that this is posing the
problem as if it were primarily

eco¬

allowing
to remain practically free

general nature of the

industry

am¬

trying to

the

not

present

the

policy

this point, I should get into
the general question of price con¬
trol, which is beyond our present
subject. I am bound to mention
upon

wages

contradictions, it would not be
to

about

to elaborate

one

nomic

bringing

were

that

biguous; but in spite of apparent
fair

thus
If I

encourage

discourage

both

are

un¬

and

retracted, which
"present cost-price
relationships are such throughout

least by putting ceilings on prices.
The
Executive
Orders
under
which
we
now
operate
are
in

conflicting and

tend

production,
shortages.

would

market

ernment ceilings?
Or, to put the
question in another way, is it not
at least possible to control directly

trying to "combat inflation," not
primarily by dealing with these
causes, but by putting legal ceil¬
ings on wages and prices—or at

many respects

them

consumption

that we cannot
and hold the price

at least possible
conditions, it may
be asked, to hold the line on both
wages and prices by direct Gov¬

deposits has

volume of credit.

under

more
than tripled since 1939.
A
policy of artificially low interest
rates, combined with a continuing
budget deficit, keeps increasing

the

free

wages

The volume

bank

boost

by
policies that tend to bring about a
of

are

figures, never officially sanc¬
tioned, purporting to show with
some
qualifications that industry

medium and

still further increase.

inevitably

ceilings that

Granting

huge increase

itself

Price

lem.

S'ore important¬

ly, it is caused by
in

control

this.

one-tiftn or one-sixtn of
of
production or of sales
prices, and that a 15% increase
in wages would require only a 3%
increase in prices for everything
costs

300%,

tually disorganize production and
lead to unemployment.
This brings us to a wider prob¬

With this very brief theoretical
out

based

notion that wages

only

held below the level to which the

allow net

may

interrelationships

Price
does

ried sufficently far, it must even¬

determines the other.

outline

costs, and it

the

them must distort and disrupt

The Stimulation of Shortages

profits to remain high even with
unchanged or higher unit costs.
But
if
the
policy
of boosting
wages and holding prices is car¬

demand

tendency for

and

though

unit

how much of it will

It follows

based on
constitute

seemed

culation
some

wages

production usually tends to reduce

it will

not

But
condi¬

year.

the 1946 structure of production.

relationship in the

whether

determine

and

exist.

longer

rify
on

tneoiy that pos¬

month

that any effort to preserve or pet¬

short, if the policy is carried far
enough, must be both to reduce
long run between prices and costs production and to create unem¬
of production.
It is not true that ployment. This result may be de¬
costs of production directly deter¬ layed or disguised for a while in
mine prices.
What a commodity an inflationary period like the
one.
Greater
demand
has cost to produce does not de¬ present
termine
its
market
value,
but tends to bring greater volume of
what it will cost to produce may production;
greater
volume
of
this view with

tulates

de¬

were

supply and demand

tions

the line" on prices while
permitting wages to go wherever
competition or collective bargain¬
ing sends them?
Obviously, the
result of such a policy, if persisted
in, must be to wipe out altogether
the profits of marginal firms, or
the profits on particular items, so
that those items will go out of
production and those firms will
go out if business. The result, in

cannot
be
boosted,
or
profits
wages

those

"hold

And

enters.

can

same

individual

and wages which

particular

Unemployment
Now

the

interrelation¬

termined by tne particular supply
and
demand
conditions of tnat

Underproduction and

ing

between

over

thousands of

prices

Price-Wage Policy Lead¬

What he

consumer.

determined
by what the consumer is willing
to pay lor the imai product into
can

ships

than 3%. This cal¬

increased more

complex

in¬

provided prices were not

crease,

take

tne

nme

hour.

another
a sort of

is
oroker

and

worker

pie—we

employer

tne

way,

matter

ine

The Federal Gov¬

even

encouraged, if
it
nas
not
virtually ordered, a
general
wage
increase
in
the
neighborhood of I8V2 cents an

hign because Of tne marginal pro¬
ductivity ol the worker.

has

ernment

low or

-re

controls.

from

(Continued from page 2070)
wage

Thursday, April 18, 1946

prices, or affect¬

negligible

some

We cannot

extent.

inflation

cure

trying directly to prevent a
wage-price spiral, but only by
dealing with the causes of infla¬
tion, which are basically mone¬
tary. If we deal with those causes,
then

and

leave

safely

can

prices to

ginal producers would desert the

which the forces of

ranks

wages

levels to

the

seek

free market

send them.

employers

and

entre¬

and would join the ranks
employed labor. But the real
objection to this method of meas¬
preneurs

Finally,

do most to clar¬
ideas not by

we can

ticular wage or a particular
price,
or of its
relationship to thousands

ify

uring wage-price relationships is

"just" wages, but by
maintaining the modern concept
of functional prices and functional
wages.
The best prices are not
the highest prices, but the prices

other wages

affects

and

and prices

which

always

not

answered

which

affect

specific problem.
in

it,

terms

can¬

the

of another nature.

Over-All Calculation Fallacious
If

general

discuss the problem

price "levels" or wage
"levels"; it cannot be answered in

realistically, this type of over-all

terms j of

calculation is

seen

averages.

* These

mass

over-all

—

mwm.11

calculations
completely
ignore the problems of specific in¬
dustries and specific firms.
The
folly of the Government's encour¬
aging, recommending or ordering

■—

umM &
INVESTMENT

BANKERS

Members New York Stock
Exchange and
Other

Private Wires

•

STOCKS, COMMODITIES

Home Office: Atlanta

•

Phone LD-159

powerful
above
main

the

added—particu¬
time

pretends to be

line"

"only

on
prices, or
bulge, and not

the Gov¬

"holding
allowing
a

break¬

through"—ought

to be too obvious
to require serious
analysis.
This attempt to treat wages and
ages

has

clusions.

led
A

to
few

some

Secretary of Commerce

prices

the

corre¬

the

main

the

immediate

advance
the
of

result

may

Even if

unem¬

price rise is

result,

restricts

the

price

market

for

product, restricts the volume
reduces production and

sales,

therefore reduces employment.
At the moment
unusual

economic

volume

have

con¬

ago

the

was

re¬

credit

situation.

tain

that

higher

would

and

doubtless

sus¬

prices than

that stimulate the largest

volume

lead to the
largest volume of sales. The best
wages are not the highest wages,
of

production

and

the wages that lead to full
emDloyment and the largest pos¬

but

sible

pavrolls.

profits
oersons

that

ornfits

encourage

thought

gether.

Only

^•hieved

the best

iv»em

th°

nqn

fullest.

when

among
fimotion at
to force one

balance

trv

these ^lemmit.s out of
to

duce

production

the

one—and

others,

and

sometimes

relation must re¬

hurt

everv-

most-

of all

the very groups we are

help.

of to¬
have

ecommv

■'bio

most
and
wages and
the

employers

jobs. Prices,

must

profits
the

profits, but

to become

to provide

host

The

not the lowest

are

very

money

wages and

returning to medieval concepts

"just" prices

of
a

aver¬

queer

months

some

forced

level

not be

have

prices in terms of over-all

group

product which that union makes.

that

same

otherwise

wage

may

rise

ployment.

increase

equilibrium

result

sponding

to be extreme¬

the

union

the

The

ernment

UNDERWRITERS AND DISTRIBUTORS OF
INVESTMENT SECURITIES

hour

market

in each wage, regardless of the
particular existing wage to which

larly at the

Leading Exchanges

BROKERS OF BONDS,

increase of 18V2 cents

dubious.

free

economic

our

most eaget

THE COMMERCIAL &

Number 4482

163

Volume

distinguished

Jtesnd SEG Me m
War Cost Disclosures

services

the

United

Civil

States.

the first scheduled airlines in

Regulation S-X designed to
provide for special disclosure of
war
costs, losses, and expenses
currently being recognized.
The
amendments adds a new sub-para¬
graph (d) to Caption 16 of Rule
5-03 of the Commission's Regula¬
tion S-X which governs the form
and
content of
most financial
statements required to be filed
under the Securities Act of 1933
or the Securities Exchange Act of

United

Aeronautics, the

tions.

States
In

the

that

same year

went

into

ealy "20's"

the

opera¬

won

his rating as a Naval Aviation Ob¬

miral

Land

Bureau

pair.

Chief

became

Construction

other

the

addition

included.

propriate

(d)

stantial amounts of war items in¬
cluded

the

statement.

income

If exact amounts cannot be

given,

the rule

plain

a company

circumstances

the

with

estimate of the amounts involved.

Finally,
the

atives of the

fying particular items as attribut¬
able to conditions arising out of

elected

represent¬

place

mnm
■■■■■

...

together, they represent
...

broad, solid investment background

cross-section of experience from all over the country.

Wouldn't their advice

our

the world's greatest free market. And

invaluable if you could get
You

Board of Governors

get

can

would you

it. In

of investment be

course

it?

answer

give to the

sound

to the question, "What advice

average

investor?" here is

a summary

its termination.

war or

"The

are

establish the rules for the conduct of this

men

national market

pnncinple followed in classi¬

the

they

general public.

Together, these

statement is required of

York and some are from
Philadelphia, St. Louis,

Richmond,

cities—Hartford,

are

Chicago, Detroit, San Francisco. Two of these Governors are

to ex¬

permits

Some

from all parts of the country.

men

new

requires ap¬
disclosure of any sub¬

sub-paragraph

the Board of

Exchange.

not in the securities business...

effect should be

of their tax

Stock Exchange

brief explana¬

for tax purposes, a

tion

Aviation."

Civil

meeting in the big " Governors'

partners in Exchange firms in New

you

deductible

were

could walk into

the sixth floor of the New York

the

manner.

items

you
on

You would meet

and treatment of
in

appropriate

throughout the

ternational

Governors of this

Mr.

of their

proposed amendments
as a result of a staff

joint opinion:

drafted

were

of the practices being fol¬

survey

lowed in the creation and utiliza¬

tion of so-called
of

the

and

war reserves

which

items

character

considered by various com¬

were

panies to

attributable to

:*>&x-xgx:";

Ivt'XvXyXyXvv^y.vXf.vIvXvX^^XvXvvXv

/x&w1 s

.vX:.W

mm®

con¬

ditions

arising out of the war or
its termination.
It appeared from
the studies made that during the
last

five

years

many

business corporations had set aside
substantial
amounts
as
reserves

against anticipated, though usually
indeterminate, costs- and
losses
broadly characterized as attribut¬
operations during the war
period.
In most instances such
reserves were set up by means of

able to

charges

reflected

income.

net

reserves

annual

the

either

before

determination

the

after

statements

income

other

Don't let anyone

ing

them.

talk

you

They

into cash¬

instances

identical with Series "E"

War Bonds and both

of "get-rich-

wary

U. S. Savings Bonds.

are

the world's

quick" schemes. Extravagant prom¬

best investments... backed

ises

full

are

poor

substitute for the

apparently similar
had
been
set
up
by

character

2. Buy

1. Hold Your U. S. War Bonds.

by the

of the United States

resources

safety and guaranteed return of your

Government...

returning $4 at

War Bonds.

turity for

every

you

ma¬

3. Get the Facts
ity before

available. Every company whose
securities
has

are

listed

this Exchange

agreed to make available

tial information which
to make

invest.

about any secur-

act. Facts are

you

essen¬

you can use

informed decisions.

charges against earned surplus.
Finally, it appeared from collat¬
eral disclosures made in

statements

that

financial

companies,

some

although recognizing the possibil¬
ity of such costs and losses, had
set up no reserves but

:x'x:x:::x::>:x.'xx:;x:x;:;x:x;::'xs:<::;:fe^

xvXviWS

had instead

regarded earned surplus

avail¬

able to absorb any such charges."

Admiral Land

Address

This

Vice-Admiral
S.

Emory

retired), President of
Air Transportation Association of
America, will be guest of honor
and

4. Beware of

Impulses.

Tips, Rumors,

There is

NO quick

speaker at the second annual
International
Civil
Aviation

way

luncheon to be held at the Hotel

change

Roosevelt,

May 2, it was an¬
15 by John F. Budd,
Chairman Aviation Section, New

for

York Board

say." Ask yourself.. ."Even if there

nounced April

Trade,

Inc.

One

and

to wealth, either on this Ex¬
or

the country's leading aviation
figures, though he did not qualify
for pilot until he was 50
years of
sge, Admiral Land, while better

anywhere else. Watch out

so-called

"inside information"

predictions starting with "They

were

'inside,' why should I be

asked in? And who
rious

are

these myste¬

5. Avoid Unnecessary Risk by
getting facts on which to base your
judgment. Otherwise you should
stay out of

present
curities
.

the market. Risk is always

in
or

buying

any

but facts

risk.

selling

se¬

other form of property

can

eliminate needless

President of this
markets

are

first

Aviation

International
was

held

or are un¬

Rogue, then

these
risks

values,

was

with

Section's

the

Award

Aviation

presented
first

Merit, in recognition of

cannot afford the

involved, should stay out of

this market. Instead

they should put

their available money

ings Bonds."

'they'?"

Jan.

Chairman of the Civil

Aeronautics Board,

unable

willing to obtain the facts to judge

Civil

r*, 1945, at which time L. Welch

they

are

judge intrinsic values,

the

luncheon

not be abused. Those who

leading aviation enthusiasts.

The)

to all,

Administrator
and
world's
largest
shipping fleet, continues to be one
of the

should be, but access to them should

Shipping
of

Board

Exchange: "Free

open

known for his recent job as War

builder

the

Exchange is underscored by the

Land

advice

Governors of the New York Stock

Civil Aviation Luncheon
(U.

Budd

His subject

15.

April

building and talk with the 25 men who form

excluded items is to be shown
excluded

activity,"

Maritime

chiefly will be new phases of "In¬

Room"

accounts,

integration of Civil Aviation and

period

of supervis¬

means

plans

operation and

stated

Suppose

account and car¬

nature, amount

this

during

chief

country.

1937, at his retirement

ried directly to surplus or reserve

the new rule calls for
the net aggregate amount so ex¬
cluded to be set forth following
the net income for the period. The

his

for the harmonious

struction going on

He flew wherever his duties

called.

airplane

will bring to life many new

Constant use of

ing the widely scattered ship con¬

Re¬

and

"Where war items are excluded
from the income

the
was

enormous

the

luncheon

Aviation

International

ship

winning the war.

the

"Admiral Land's presence at

and

Re¬

Aeronautics,

the

announcements
Commission says in part:
its

nushod forward the

turning to the Navy in 1930, Ad¬

Navy, he became head

Maritime Commission

construction which contributed to

learned to fly while in office.

the

2099

the
and

for

Second Chief of the Naval Bureau

Commission announced on March
adoption of an amendment

Foundation

Promotion

29 the

1934.

Guggenheim

Daniel

the

from

he served

1928,

Vice-President

Twenty
years
ago,
it
was
Admiral Land became a

During

server.

learned,

Exchange

and

Securities

The

Aviation

FINANCIAL CHRONICLE

New York Stock Exchange

in U. S. Sav¬

2100

THE COMMERCIAL & FINANCIAL CHRONICLE

Non-financial corporations during the Victory Drive
bought
$1 811,000,000 of the 21/;>s due Dec. 15, 1967/72, and $947,000,000 of
2%s due Dec. 15, 1959/62.
Individuals purchased $2,813,000,000

i Results of

Treasury
Bill Offering

Our

Reporter

Dec.

By JOHN T. CHIPPENDALE, JR.

April 15 that the
tenders for $1,300,000,000 or there¬
on

about of 91-day Treasury bills to
be dated

April 18 and to mature

July

18, which were offered on
April 12, were opened at the Fed¬
eral Reserve Banks on April 15.
Total applied for. $1,989,724,000.

are

not

just about
that rates will turn up.

mean

leveling off

rates,

believed,

stabilization at

have

near

quite

its

run

the down¬

course.

Intermediate-term

fixed price basis of 99.905 and ac¬

What is expected is

definitely

seen

obligations

conditions,

new

present yields.

with

Average price, 99.905 -f; equiv¬

probably continue to adjust to
settling expected just slightly under

and

soon

High, 99.907, equivalent rate of
approximately. 0.368%

to stabilization at

0.376%

decline

per annum.

small

maturity of a sim¬
on April
18 in

from

bills

here

levels),

who for 13
Assistant Secretary of

March

when

ment

Mr.

Chapman's

March

22.

Long-term rates
from 2.18% to

levels

may

the

say,

This could

mean

increase in the

the

most

risky that non-bank investors have yet

fluctuations,

stabilization

make

the

—some

genius

of ] lower interest rates would stimu¬
late borrowings and, therefore, in¬

American craftsmanship,the brains
of
American
management,
the

American gov¬
ernment still seem strangely at¬
tuned to a bygone day—to the era
that ended with V-J day.
While
statesmanship

make

think

plowshares,

still

swords.

investing

conversion—and it

which will take place
during the
long-term interest rates (near present
for appreciation, or more specifically,

is just as im¬

production.

can

And, in that re¬
thinking, there
call to duty for every
of

conversion

clear

one

our

us.

appoint¬

long-term obligation would have

coupon

Assistant

debt burden.

favorable effect

the

For
that

men

longer go down

bypaths

the abortive at¬

is a definite change taking place in the
money markets
country moves into the conversion period.
For the first
since 1934, the commercial banks will no
longer be buyers of
balance.

During 1946, the holdings of

Government obligations by these institutions will decrease.

EQUIPMENT

will

not

mean

but

TRUST

that

only that the creation of deposits has been

there

will

decline

deposits.

banks which, until very
recently, provided
to anyone who wanted
it, are no longer

The

This

stopped

commercial

deal

great

doing it.

CERTIFICATES

capital

the
that

meaningless phrases

"ability to pay"
books''

"a look at the

"wage increases but

price increases."
that

the

men

management

shall not have blind ad¬

herence

they

other institutional investors.

gods of things as
blocking the way to
on the paths of things as
to be.

were,

progress

the

savings banks, insurance companies and

they

are

INDIVIDUAL BUYING ON WANE
on

practically all issues.

gain
of

expected that individuals will be very important
pur¬
Treasury obligations, now that the element of speculative
to have been

seems

the

which

largely dissipated.
improved and will

will

continued

mean

limits

that

The fiscal position
continue to improve,

Government has

within

not

and

probably larger debt retirement,

disturb

the

equilibrium of the money
market.
New financing by the
Treasury will be done only to
reduce deposits and
purchasing power, and this will not take place
unless a way is found to
prevent the sale of eligible issues.

Weekly List

upon

request.

It is

evident that the
than ample to take

Treasury.

Despite

investors will be
of any new money needs of the

tion.

Complete dollar appraisal
issued each June 30 and

elimination

seems

deposit

to be

institutions

nothing in the

from

further

money markets

Debt
will

management, under the influence of peacetime
conditions,
changes in the methods of handling the money
markets,
Reserve System once again one of the
important

the Federal

Debt retirement is also another
element
of control in the
money markets and by
preventing war loan deposits
from becoming individual
deposits the Treasury in a somewhat
roundabout way is cutting down the
potential inflation.
Despite
all that has taken
place, and is likely to take place in the
money
market under the new
.

Our experience and facil¬
ities at your

developments, the

definite is

disposal.

It will

one

increase in the debt burden.
be

interesting to

thing that

seems

quite

PHILADELPHIA

long-term

vancing prices.
It is

the

NEW YORK CITY

well

interest

rates

believed to be moving
stabilization at or near these

Teletype—PIILA

..j

York

296 &

297

into

controlled

be
I

released

whether it

with

contend that

disastrous
we

need

spect to this entire question.
There are several ways of look¬
ing at the strange phenomenon of
inflationary tendencies and almost
daily new high prices for long-

and

corporate
The

borrower's

first

government
to

attitude

adopt the

and

emi¬

nently well satisfied at the ability
to obtain funds at the lowest rates

languishing

time when long-

governments were on almost
basis. The basic assump¬
appeared to be reasonable.
of the policy, never¬

tions
The

success

theless, is still open to some ques¬
At any rate, the recovery in

holding period is over, which will be
after May 15.
The
fact that the amount of appreciation
in the Victory Loan
bonds,
from here on,
seems to be limited
by the rounding off of longterm interest
rates, will probably
bring more selling into the
market than would be the
case if
Victory Loan bondholders felt
that much higher
prices would be likely in the
future.
.

take

the

creditor's

contemplate the
which the

means

position

loss

in¬

shrinking of in¬

that there

are no

off¬

the

institutions

fixed

income

se¬

...

period

easy

policy began with our en¬
into the war.
In Decem¬

trance

should be recalled,
taxable governments
yielded 2.47%? and high-grade corporates 2.68%.
The authorities
immediately determined that the
vast war expenditures and gov¬
ernment borrowings should not
entail higher costs of financing.
In this policy they have been suc¬
cessful. But the war and post-war
economy have created inflation¬
ary pressures which are of even
greater concern than the cost of
funds to either government or pri¬
it

1941,

ber,

long-term

industry.

Bank Holdings

of Government

Debt

the war and its
have followed a
policy of monetizing the public
debt through the purchase of gov¬
ernment securities by the banks.
Between the end of 1939 and 1945
To

pay

for

aftermath,

banks bought
$22,000,000,000 of govern¬
ment obligations and the commer¬
cial banks increased their hold¬

the Federal Reserve
about

ings by approximately $74,000,000,000. Efforts to combat infla¬
tion by price restrictions and kin¬
dred measures simply ignore the

getting these holdings out
banking system and into

need of

the

of the
increased from
$53,000,000,000 in 1939 to $135,000,000,000 at the end of 1945. For
hands

the

holders

the

liquid assets which

There

is, finally, a fourth ap¬
proach which is the broadest and
and credits
at

objectively and arrive

conclusion

economic

and

have to be

balance.

social

The

implications

considered,

well

the pure dollars and cents
aspects.

The

easy

when there
ment

and

sources.

I have excluded
liquid assets United States
government securities. The liquid
our

policy began
large unemploy¬
productive re¬

was

contended

included consist

demand and time
Personal / holdings of

and

deposits.
liquid assets, so defined, at the
end of 1945, were $90,000,000,000.
Everybody agrees that these huge
sums
ous

represent the most danger¬
to monetary stability.

threat

move

the banks'

of
securities
holders of

substantial part

government

the hands of the

liquid assets would be the most
important single weapon against

inflationary tendencies. However,
the negligible returns on shortterm

securities and the very

returns

even

ernments,
sold

viting.

money
was

unused

purposes,

currency

into

curities.

second

The

assets that are

decline in income, as
legal restrictions confine the pos¬
sible investment outlets of such

Drive, are
interested in selling these bonds when
the six months

appointing.

sets

financing representing new capi¬
tal in the late thirties were dis¬

from

often

volume

the

and

construction

in economic history.
The second
is to view with alarm the tempta¬
tion to abuse the ease with which
funds may be obtained. The third

which seeks to examine the debits

holders

known

that certain non-institutional
restricted 214s and
2*4s offered in the Victory

very much

REctor 2-6528-29

to be

tionalizing of credit and savings

plateau, which will mean
levels, the
question is raised as to whether
there will be another rush
among
non-bank investors to
acquire the outstanding obligations at ad¬

INCORPORATED

terest rates involves. The institu¬

ANOTHER BULL MARKET?
With

whether the
dangerous
inflationary potential which exists

come

see

...

Philadelphia, New

na¬

termine

and

how the monetary authorities
exercise their controls over the
money markets to decrease de¬
posits and cut down commercial bank
holdings of Government
bonds, now that the pressure of war
financing has been lifted.

STROUD & COMPANY

our

debt.
Its great urgency is
emphasized by the fact that the
policies which we pursue will de¬

bonds.

factors in this situation.

Monthly or Special
Appraisal

management

tional

term

mean

with

the

reconversion of thinking with re¬

the

FEDERAL SEEN TAKING HOLD

December 31.

Two private wires—

3.5%.

vate

urgent problem con¬

fronting the nation today is that

effect.

that forecasts
anything but continued low money rates, despite the
opinion that interest rates are
moving toward levels of stabiliza¬

Valuation and Appraisal

most

funds of non-bank
care

The

...

Treasury financing there

Semi-Annual

National Debt Management

not

chasers of

Pennypacker 7330

period

and

money

furnished

ties

in¬

Spain.
of labor

men

with such

For

means that
the capital markets will now rest much
the savings of the people to absorb
the obligations that
will be offered.
The principal buyers of Government
issues
in the future will be the

direct

again shall not have visionary at¬
tempts to link needed increases in
the
wages
of the workingman

This

Offerings Wanted

For the

the

Government securities

Argentine,

ternal affairs of

There
as

government—

may

such

the

Gladly

long-term projects.
The theory
developed in the early thir¬

was

tion.

the

tempt to influence an election in

COMMERCIAL BANK HOLDINGS TO DECLINE

time

bids

theory

the interest factor is important in

term

reconversion of Amen-

harden

The

fit, especially, the capital goods
industries and construction, where

sion of American thinking as that
have

and

that easy money would bene¬

was

trade

employment
prices.

crease

commodity

portant that we have a reconver¬

...

over.

firm

long-

...

tion of Harold L. Ickes until J. A.

Immediate

take

obligations

become

The time is here for all-out re¬

or leveling oft of long-term rates will not mean
increased cost to the Treasury of the debt burden.
It would
result in decreased debt charges if
long-term rates should settle at
the lowest expected
limits, namely, 2.00%.
A 2Va% or lower

Secretary he was acting head of
the Department after the
resigna¬
Krug took

these

any

by Associate Justice
Wiley Rutledge. The Senate con¬
firmed

month.

doubt

issued

Thought and Action

The stabilization

was

most recently

(Continued from first page)

close to present levels.

the Interior, became Under-Secre¬

Needed: Reconversion in

speculative buying of the restricted obligations more difficult....
There is no longer in the restricted obligation the assured
profit
that was there in the past.

Oscar L. Chapman,

term holdings next

...

Market
eventual

substantial proportions, after they

assume

amount* from

tried to make.

Chapman Sworn in as
Under-Secretary of Interior

the

will

floating supply has been absorbed,

price of the longest-term restricted issue from 105-15/32nds to about
108%.... The price appreciation would be fairly substantial from cur¬
rent levels, but it must be remembered that the
price betterment

the amount of $1,312,142,000.

sworn

lowest anticipated of 2.00%

(61% of the amount bid for at
the low price was accepted.)

tary

the

in the process of

are

Low, 99.905; equivalent rate of

was

changes

bonds

Long-term obligations, especially the restricted issues, seemingly
making their final adjustments, which will lead

per annum.

years

should

restricted

other

the

LONG RESTRICTEDS MAY ADVANCE

discount

it is believed that the middle-term maturities will stabilize near
current yields.

bids:

was a

Nevertheless the amount that could be sold
is

...

stantial

if price

place

will

Whether there will be further Elinor price declines in these
securities will depend upon the reserve position of the member
banks.
Price changes from existing levels will hot be sub¬

alent rate of discount approxi¬
mately 0.375% per annum.
Range of accepted competitive

Selling

It is indicated that non-bank holders will continue
out of the intermediate-term bank
eligible obligations.
.

move

outstanding for many Government bond issues.

•

substantial.
This is very evident when one considers
that the holdings of individuals and non-financial corporations
alone,
in the 2V2S due Dec. 15, 1967/72, were in excess of the total amounts

Short-term
their lows, with

present levels.

There

1967/72, and $836,000,000 of the 2V4s due
How many of these securities have already
will come into the market in the near future
15,

still quite

This

stabilization looked for between the
ranges of 0.82% and 0.88%.

cepted in full).

ilar issue

due Dec.

15, 1959/62. .
liquidated or

been

of the opinion that

now

trend in interest rates has

does

the

approximately

21/zs

cannot be forecast.

Money market experts
ward

Total
accepted,
$1,310,259,000
(includes $47,202,000 entered on a

discount

the

The Secretary of the Treasury
announced

Thursday, April 18, 1946

that -take

whi<% the other
2.11%

basis, are

without the

fervor.

low

long-term gov¬

The appeals to

are now

war

day

unin¬

patriotism

benefit of the

would

probably

higher rates to induce a

sig-

163

Volume

Number 4482

THE COMMERCIAL & FINANCIAL
CHRONICLE

nificant volume of liquid funds to
Hp converted into government se¬

credit

matter of
credit

curities.

against

run

Here

the

avowed intention of the Treasury

threatened.

was

fact, comparatively little

was

being employea xor tne

of securities.

carrying

time

and

than

under

market

therefore,
stantially.

money

Tne

stocx

investor

genuine

has,

elsewhere

present

conditions.

market's

Judging by the circumstances
the

higher return
available

public

grown

sub¬

very

by what was indi¬
department to keep interest rates
cated, we had to assume that the
With tnis growth in investor in¬
down to their present levels, ana
Board's purpose was to reduce the terest there comes to the
regula¬
the implication th&t even a lower
volume of trading in
securities tory authorities and to those in
j ate
structure would not be un¬
and
possibly to
restrain
price the securities business a new re¬
welcome. I am not unsympathetic
movements.
Aside from the fact sponsibility far more sacred than
io
the viewpoint that low rates
that a power was being exercised that involved in the
type of ex¬
peep down taxes or to Secretary
Vinson's observations that low in¬ contrary to the intent of Con¬ cited speculative interest which
made possible the ill-fated boom
gress, here was the grossest dis¬
terest rates may be helpful when
crimination
against a
form
of of the 1920s. We are now dealing
business activity runs off. I urge,
however, that if the inflationary property that is owned by mil¬ primarily with investors.

pressures' break out," the savings
embodied in the low-

taxpayers

policy will be nullified many

rate

contention that to fos¬
ter easy, money at this time tends
to undermine the other efforts of
both government and business to
maintain the integrity of the dol¬
lar.
I would also point out that
when we think of the possible
value of easy money in arresting
a
decline in business, it is one
thing to conclude that a reduction
It is my

than 4% level such

American

New York Stock

have

prevailed for-high-grade pub¬
lic utility bonds in 1934 will be
effective, and another thing to
believe that a shaving of the pres¬
as

citizens.

Reserve

Board

The

Exchange would

approved the action

Federal

times over.

from

lions

the

had,

stretch of the imagination,

day

experience

the

benefit to

economy.

our

Committee

Public Debt Policy

Committee

The

Public

Debt

Policy recently formed through a
gift of the Falk Foundation, and
which

Mr.

Randolph Bur¬
gess is to be Chairman, promises
a thorough
and competent study.
The
Committee
will
explore,
of

other things, the implica¬

among

tions of the

debt to

prices, to the

purchasing

power

savings,

effects
and the

its

incentives;
interest

and

money

economic
policy as to
floating debt and

rates,

debt retirement

will

receive

spe¬

cial attention.

This is

structive step;

but in our democ¬

racy

most con¬

of the opinion that the

which

complicated

seem

functions

and

the

every¬

first

difficult,

business

represent

really are amazingly
simple. The men and women who

public interest.

work in the investment and brok¬

any

My surmise is that the Federal
Reserve
action

Board

when

thinking
in the past. It

years

this

took

haunted

was

by memories of 1929.

ing to sacrifice

of the

cious
to

some

liquidity of

deprive

their

least

was

will¬

was

pre¬

market and

our

millions of people of
rights.
Why?

fundamental

I, frankly, do not know why. In
any event, it did make a record

houses,

erage

mechanism which

useful

most

economic

management
two
for

that

fact

its

action

authority in an
our

was

its
attempt to hobble
using

empty gesture,

securities market.

is, of course, the suspi¬
cion with respect to this action of
the Federal Reserve Board and
that is that it

sought to create the

impression that it
attack

realistic
must say,

making a

was

the

Chairman

indicated

that

under

illusions

effect

The

the

not

available

for

the

public's

invest¬

complicated economy.

doing all we should, as
we should, to
bring cap¬

well

ital

and

that

ing

the

management
two

jointly

tinue

taining

provide

Are
can

do¬

we
we

good job, in

liquid

together

may

for

society?
good job, and

the

Board

that

was
score.

Board's action,

market

con¬

main¬

for

Provide Better

Security Markets

The answers, in my

opinion,

entirely satisfactory.

do better.

many

allow

people to believe that here was a
courageous attempt to deal with
the
problem of inflation.
And.

anism

ing public interest in the problem

most

able

of the consequences

of lower and
is that many

distracting attention from the re¬
alities of the situation, delay the
application of genuine remedies.
As events demonstrated, the ac¬

eye.

lower

tion

can

The government should

ly have.

'•reation
sional

official

committee

Congres¬

along

similar

lines would have great influence.
One of the difficulties in

interest rates

confused

are

arous¬

apparent di¬
The insurance

versity of interest.
policy-holder may also be
borrower.

busi¬

nevertheless,

was

unfortunately,

had

visible

lead

may,

consequence

improve

provide

our

better

mech¬

nearly

they

They

liquid and service¬
look to the naked

geared

mainly to
trend.
They are ill-prepared for periods
of liquidation which we frequent¬
the

needs

are

upward

bond-holder

except to advertise the fact that
the Federal Reserve Board recog¬

many

nized the

led to think it can, must

stockholder of another corpora¬
tion
who has just read of the

forces.

benefits to be derived from

other aspect

The

who finds his bond

re¬

funding operation. The findings of
a

joint

committee

which

the

Treasury, the Federal Reserve
Board, bankers, businessmen and

going to allude to an¬
of government regu¬
lation, which I think our people
should be thinking about
quite
seriously. Too many well-mean¬

ment

translated

into

ing but uninformed people think
of the New York Stock Exchange

chance

being

lions of dollars of

Now I

economists would have represen¬
tation
would
have
a
greater
of

advance of inflationary

existing merely for the
of

few hundred

legislation

people who have

ment.

ulate.

and policy, in my judg¬
Such
a
committee, too,

could
balance the various con¬
flicts of interests and arrive at a

Industry, if it is to provide as
jobs as the public has been

Too

place where

many

to accumulate

may

is in the securities markets.

Industry
raise

all

has

the

and the needs

period

had time to
it requires,
very great in a

not

are

prices

when

must

liquidity

venture

ment

abroad.

areas

the

The "Auction Market"

capital
If

for invest¬

the

devastated

objective of the "auction
market," such as is maintained on
the floor

of the

Exchange,

with

vestor

may

into

match

conditions

abroad

—and there

inevitably in the long
a
levelling one way
the other if this planet is to be
blessed
with
peace — American
must

run

capital

must

invested

for¬

People will not readily assume
entrepreneurial risks of pro¬

the

prietorship if they do not know

learned,

mitment

development is not through loans
but through equity investments.
The financing of foreign invest¬

the

task

capital markets.
not be

slow

private

our

The task should

performed by cumbersome,
and

inelastic

government

short notice.

Liquidi¬
major incentive in
inducing people to invest.

ty,

the

turn his securities

short

able cash into securities.

the proper way to finance foreign

thus, is

Most

economists

and

little

too

Trading
The
our

need

reconversion

thinking is apparent

other

fronts.

which I

the

closest,

on many

business

have

machinery.
Britain, the most successful of
all foreign
investors, always has

employed the equity method.

ceivership. Anything that encour¬
ages investment in common stocks
rather than investment in bonds,
therefore, tends to be a stabilizing
influence
in
the
economy.
In
short, a liquid market for stocks

will

well

profit from her
example and show the world that
the best way to obtain prosperity
and plenty is the American way
of

free

and

aggressive enterprise

for profits.
investors

are

provide the

money, they must be attracted by
opportunities for profit. Further¬
more,
there must
be
the
ma¬

chinery of modern securities
kets

that

order

risks

mar¬

may

widely distributed and that huge
amounts of capital may be raised
quickly.
Here is
a
completely
frontier for investment.

new

anyone

what

has

let him
the

done

the

Stock

business

all

the world—shares represent¬
ing not hundreds but thousands of

over

corporations with foreign proper¬
ties.

can

do the

same

corporation

must

sons,

sit¬

uation which
strikingly illustrates
what I have in mind. Not so

long

ago

the

Federal

Reserve

Board

decreed that the members of the
New York Stock
Exchange could
extend

credit for the

carrying

of the
securities on our list. When
you
analyze it, this is a very seri¬
ous

matter.
hoard has

the

federal law

to prevent the exces¬

sive

The Federal Reserve

authority

use of credit. Now, when the

federal Reserve
m

under

Board

declared,

effect, that the securities

New York
Stock

Exchange, which

nelude many of the

choicest in-

estments which exist today,
..

ueless for collateral

j°ses, wasmade
it
an

^redit f°r the
even
s

the

were

loan pur-

no pretense that
excessive

use

carrying of securi-

that any excessive use

values.

The

and-out

speculators
are

thing, but

not

what

broad

you

economic

and

securities

the

legislation enacted
1934, it really was in¬
spired by just one thing—the vio¬
lent decline in quoted values in
the 1929-1932 period. What Con¬
gress really sought to do in the

in 1933 and

Securities Act and

British, must have

ties

^Exchange Act

late

years

to prevent

actual pro-

math.

business enterprises, and we must

In
the last analysis, too.
the
public will judge this legislation

share in management as well as in

and

dividends.

Securities and Exchange Commis¬

orietorship

interest

There is

foreign

other way

this

job, in our modern
economy,vexcept through the Brit¬
ish pattern, and the only way to
follow the British pattern is to
employ the New York Stock Ex¬
change as the British have em¬
ployed
the
change.
I

would

London

about

the

Stock

say

something

function

security markets:

Ex¬

the

its

sion

administration

the

results

under

attained

offer to sell

that is
Reserve

the

SEC

and

the

Federal

Board, thus far have been

markets from becoming disorgan¬
on
the up side.
Practically

ized
all

the regulation of the me(Continued on page 21091

solicitation of any offer to

buy securities.

Prospectus.

„

120,000 Shares Capital Stock
(Par Value $5 Per Share)
Of these shares 39,000 are of new issue and 81,000 are

will show. This
because of reduced opportunity
corporation

proprietorship investment in
understand¬
ing of the nature of common
stocks, more widely diffused and
more dependable information
about
companies, vanishing re¬
turns from other sources and the
necessity for dependent people
who live on capital to obtain a

presently outstanding.

Price $23 Per Share

A copy of the Prospectus may be obtained within any State ftom such of the
Underwriters as may regularly distribute the Prospectus
with,in such State.

for

small business, better

Goldman, Sachs & Co.
April 16, 1946,

interested primarily in preventing

To maintain the

nor a

the

preventing a recurrence of dis¬
organized markets on the down
side.
The Government agencies,

there has been a

big increase in the distribution of
stocks among small inyestors, as
the shareholders'
list of almost
any

in the Securi¬
was

of 1929 and its after¬

recurrence

Globe-Union Inc.

inthe

market

may about the
justifications for

be used

merely

re¬

Securities Market Regulation

Say

The offering is made only by the

camp-followers.
They do, it is
true, perform a useful function in
helping to create better markets—
markets in which stocks may be
morely easily bought and sold at
smaller variations in prices.
In

into

prices fluctuate too rapidly
periods of investor pessimism.
If buyers are not present to bid
for stocks when they are offered
in volume, quotations may melt
away rapidly.

quick profits.

traders

can't do it successfully through
the medium of loans. We, like the
we

This announcement is neither

terms-of dividends and long-term

debt

corporation

which

investors, who think in

are

much

caused

repre¬

enterprises

Too

has

contributes directly to the sta¬
bility of the whole economy.
But the market in stocks, for
psychological and confidence rea¬

past,

Exchange.

traded

are

1930s.

past

after

look at the official list of

London

There

evidence

wants

been

the

Most Exchange Trading Done

who

our econ¬

Too much debt, debt of all
kinds, caused the great depression
omy.

amuse¬

Actually, by far the greater part
of the trading on the New York
Stock Exchange is done by people

investment in

stocks has been bad for

By Investors
The Prohibition of Margin

that in

agree

too much investment

past

debt

considered conclusion without be¬

ing charged with special pleading.

in¬

that they can retire from a com¬

As the British long ago

ment

the

notice, and at
prices not too far away from the
most recent sale; and his in vest-

eign countries.

cash

provide

facilities through

which he

living are to be raised all
the world instead of lowered

New York Stock

ards of

invest¬

complicated economy.

over

here

public's

great enterprises of

ex¬

to be restored, if stand¬

are

ments in the
a

The

raise

money

rising

and

thousand

desire to spec¬
regard it as a

money

have bil¬

capital, and
the place to raise venture capital
new

con¬

Equally important is the need

holdings sub¬
ject to periodic calls may also be

ness

costs

war-time.

mar¬

Our markets at present are

kets.

not

inven¬

high, when
are
inflated,

they did in

senting
are

when

up,

when many businesses
tend more credit than

the

public's
investments
in
goodsproducing and service-providing
enterprises?

not

struction

the great enterprises of

in all fairness, however,

publicly

that

inflation.

that

The second is to maintain liquid

benefits

There

pur¬

society.

Are

than

social

together

would

body, although well aware of the

where

and

jointly may provide benefits
people—benefits which other¬

ments

tion

highly

serves

The first is to bring capital and

discouraging situa¬
you
have a public

in¬

poses:

markets

This is

agencies

formation, and in the stock ex¬
changes themselves are a part of

the basis of which it is in a
position to say, in the event of a
market setback, that it had done
to do.

the

which disseminate investment

wise

upon

must go
must

been dictated by considerations of

all that the law allowed it

ent attenuated structure will be of

things in

many

wages
tories

THE COMMERCIAL & FINANCIAL

2102

Thursday, April 18, 1946

CHRONICLE

and

speed

Needed: Reconversion

Arguments Against the Bulwinkle Bill
(Continued from page 2083)
253o

(Continued from page 2101)

not restrict the

aoes

self-enforcing

oppor¬

have tended to remove
supporting influences which for¬

tunity of common carriers and
freight forwarders to the making
and carrying out of agreements
with respect to rates, tariffs, and
rules
and
regulations
relating
thereto, in fact, except for merg¬
ers and acquisition of control, no

merly were present when liquida¬
appeared.
The result has

chanics of the

market

(note that

talking now about market
mechanics and not
any
of the
other many phases of SEC regu¬
am

lation)

tion

been

and

the

make

I would

market

voice

warders
of

street.

a one-way

like to raise

limitation is placed upon the type
matter which carriers or for¬

against thin markets and all
regulations and restrictions which
reduce

liquidity.
present situation, as I see it,
be likened to
has

only

may

automobile which

speed forward and

one

reverse

The

Thus,

1934,

things

many

have

practices which formerly were re¬
garded as recognized elements of
mechanism

transactions.

have

ures

stock

market

Some of these

contributed

meas¬

less

liquid market on the New York
Stock Exchange and in the other
American

securities

markets.

would like to stress

that, in each

the objective has been laud¬

case,

able.

I would not

that

all

admit, however,
the

cases,

measures

to say

one

"wilder" and higher

turn

clock

the

without these

certainly

would

not
and

Furthermore, I know that nei¬

collectively agree to raise
at competitive levels to

levels

the

long

prove

agencies,

the

nor

the Con¬

nor

the public would

ap¬

national policy di¬

any

rected toward the abandonment of

strict regulation.

What I say to¬

night is said with
tion

of the

fact

tion

which

full apprecia¬

that

concerned

than

anyone

possibility of

period in

else

that

the

over

of the

recurrence

freight

could
not

make
private
improve freight or passen¬

services

ger

the late 1920s.

Stock

ernment

regulation.

first glance,

the prohibition
approval of agreements be¬

upon

tween carriers of different modes
of transport would seem effective
to prevent restraints upon inter¬

secur¬

Exchange

the

efficient

between

and

pos¬

great

usefulness

need

which

up,

velopment
of

let

that I

say

this

mind

through

dangerous

inflation

looks

de¬

season

the

for¬
we

price

structure in this country over the

coming
we

years,

cise

the

independent

right of

approved
agreement and restoration of the
But if these

anti-trust laws.

riers had been prevented

car¬

from fil¬

ing lower rates, the same forces
of private coercion
most likely
also

would

them

restrain

from

with the com¬
mission.
Even if they did com¬
plain, the commission might find
complaints

filing

termination

drastic

too

ment

entire

the

agree¬

penalty and
thus be powerless to aid the in¬
jured carrier.
a

Moreover, in the railroad field

particularly, the process of get¬
carriers into line is ac¬
complished more by persuasion
than by coercion.
Isolation and
from

the

group

Obviously, complaints would
not be effective in cases involving
this type of pressure.
Thus, with
the fear of anti-trust law prosecu¬
tion removed and no close sur¬

throw doubt ppon such a conclu¬
sion.
Experience has shown that

veillance by the commission pro¬

and

upon

curtailing

railroads have

once

agreed upon

what rates to file, it will be easy
for motor carriers, acting jointly
among themselves, to agree upon
the same basis of rates. To achieve

that result, no agreement between
railroads and motor carriers ordi¬

narily is

if the motor
carrier
organizations
have
the
power to hold their membership
in line.

Under the Motor Carrier

But

much

now

motor

With

laws,

effectively

relief

the

carriers

from

hand

the

organized

majority would be so
strengthened that it would seldom
be necessary to resort to the min¬
imum rate power to coerce truck¬
to limit

ers

would

place

competitive reductions

their

rates

the

rail

multiply and that competi¬

tion

would

rates

further

Basic Defect of Bill

it will be because

have not faced up to our prob¬

this connection, I may cite
experience of the Department
Agriculture when under my

leadership

endeavored

tain lower rates to

bumper

1938-39

help

ob¬

the
citrus

move

crop

fruits

by inducing greater con¬
sumption from lower prices. Even
before I dispatched my letter of
Oct. 29,
ciations

1938, to the freight
in

the

citrus

asso¬

fruit

pro¬

ducing areas, but after I had
nounced
to

American

an¬

the radio my intention

Vice-President of

the

so,

Traffic

the

Association

Railroads

written

had

to the traffic officers of the

bureaus

directly involved, asking
them not to consider my request,
if filed, separately by origin car¬
rier groups.
On Nov. 26 of that

petition in rates and services. No
carrier

shipper

passage

favoring

group

2536

has

con¬

doned

that the railroads could

To my knowledge,
by the Government
agency responsible for the welfare
of agriculture was not referred to
this

request

met the
our

the

have

not

wisely

problems that arise out of

huge national debt.

A sound

Federal tax and fiscal
policy, with
economies

cornerstone,

government

will

safeguard

the

credit of the nation, preserve the

integrity of

our money

and instill

confidence among our people.

That should
tive of all of

be
us

the broad objec¬
as

look ahead

interline

traffic

great period of expansion and

progress.

unrouted

shippers, rate reductions*

whol¬

commission
the

rates.

for

examination

reasonableness

Since

the

lower

individual

might have been inter¬
ested in quoting lower rates did
not act independently, the only
recourse open to the
Department
was

ing to act independently, and

would have required undertaking
the burden of proving existing

cellation of participation
tariffs and concurrences.

can¬

in joint

the

make

rates to be
cult task.

procedures for enforcing the right
of independent action, it is im¬
portant to note that provisions in

that

establishing

the

articles

reaus

organization

to protect

dividual

regulatory

procedures
carriers

rate
not

formal

value.

has

Although
strong

formal

this

complaint

This

unreasonable,

course

diffi¬
The time requirements
procedure
recourse

Had

carriers

were

such

not

was

carrier

been

prohibit the commission from
giving approval to agreements be¬
to

carriers

tween

different types

transportation, except with re¬

commission

assure

equitable distribution of cars and
to regulate service with respect to
adequacy and safety, it does not

est to users.

Even

with

the

where

respect

commission's

rates,
powers

complete, regulation is an in¬
substitute for competi¬

are

adequate
tion

from

practical standpoint.

depend

the complaints

upon

its

and

investiga¬

own

tions to make sure that the thou¬

freight

sands

rates

under

its

jurisdiction were not at exoessive
Commissioner

levels.

behalf

the

Aitchison,

commission,

re¬

spect

to joint rates and through
routes which, of course, cannot be

ported to the House committee
that-only about 40% of the tariffs

arranged without concurrences of
the carriers directly involved in

filed

interline traffic.

the past.

The

requested

also

league

amendment, not inserted by the
House Committee, to give shippers
the right to complain to the com¬
mission against any action taken
an approved agreement and
authorizing the commission to de¬

termine

and

quire

such

would

withdrawal

action

that

whether

harmful

re¬

relief from

the anti-trust laws. These requests

what

that

shippers really
want to preserve is the conference
method of negotiating rates, not
show

the

and such

of rate bureaus

use

organizations as devices to elimi¬
nate competition in transportation.

have been

checked

Moreover,
final

the

consumer

ices

interest

paramount,

given almost

the

has been

but

consideration in

the issues involved in rate bureau

practices.
tween

seems

that

assumed

when

to have been

disputes

be¬

shippers and carriers have

been settled by resort to

the com¬
mission, the problem is solved so
far as the public interest is con¬
cerned.

effectiveness

the

limit

re¬

such

control.
the first

place, the standard

of reasonableness in the Interstate

Act has

Commerce

maximum

shipper,

as to
small

the

to some large shippers,
of
competitive

For example, in a typi¬
I. C. C. 412), the

pressures.
cal

value

absence

the

possibilities

rate

little

minimum and

between

broad

demon¬

been

to involve a band or zone

strated

(156

case

commission prescribed

70 cents

refined

rail

maximum

reasonable

from
points to Ari¬
points. Under the influence
for-hire and private truck com¬

Los

of transport serv¬

Aside from the admin¬

istrative difficulties that make

rates

Paramount

specifically
reasonableness

viewing of all rates impractical,
other
considerations
exist
that

under

Angeles

products

group

zona

petition, actual rates had fallen by
1936 to lows ranging from 18 to
56 cents depending upon the Ari¬
zona
destination.
These
rates
by

supported

were

the railroads

fully compensatory, and were
by the ICC to be "reason¬

found

compensatory" and not be¬
minimum rates

ably

reasonable

low

However, the emphasis
placed by shippers upon the rela¬
tionships among rates frequently
leads them to protest rate reduc¬
tions proposed by one or more
carriers to assist other shippers
develop a market.
Hence, to the

(218 I. C. C. 345). There are many
cases where such a wide zone of.
reasonableness exists, and in all

resistance of other carriers to rate

Difficulties

reductions is

added

that

rate

the commodities supplied at lower
rates and prices is ignored.
Like

the small shipper, consumers must
still depend upon competition for

lower freight rates.

Likewise,
look

the

must

stimulate

carriers to install improved
equip¬
ment and to offer more attractive
service.

Only recently have the
railroads offered through sleeping
service

car

transcontinental

although no technical obsta¬
cles existed previously that do not
apply today.
Competition in the
runs,

form
one

of appeals to the

public by
forward-looking group of car¬

riers acted
to this

travelers.

It is costly for
shippers to make
formal complaints and to

ground
the

the immediate spur

long-neglected convenience

tated.

transcontinental

and

other

No doubt, in the back¬

lay

airlines

the
in

rapid

strides

increasing

the

shipper must

the

instances

voluntary action of the
carriers for the benefits of compe¬
look

tition.

Standards of Rate

Reasonableness

Dfificulties

also

arise from the

standards used to test the reason¬

test
rates

A principal

ableness of rates.
has been

comparison with

The difficulty

already in effect.

existing condi¬
tions is that the rates usually se¬
of this test under

lected

yardstick

themselves

are
have
That is

rates

likely

most

been administered

rates.

rates in issue are like¬
ly to be tested against rates whicn
to say, the

prevl~

upon in
actions of rate bureaus.

have been agreed
ous

consumer

competition

such

ship¬

pers

bu¬

the

powers

cheaper
can pro¬

shippers

and

been

vide.

the House Committee on In¬
terstate and Foreign Commerce,

ed by

free to act, the decrease
sought might have been precipi¬

this right of in¬
have

commission.

In view of the bill's lack of
pro¬
visions

the stimulus to better and

In the absence of effective compe¬
tition, the commission would have

rail¬

ly unrelated traffic which is im¬
portant to the carrier endeavor¬

rules
to

by the

the consumer's interest in having

com¬

after ascertaining that the
of
a
competing water
carrier would be similar, he ad¬

year,

regulatory

Thus, the National In¬
dustrial Traffic League requested
an amendment, which was insert¬

bumper crop.

impair

cing by the Federal government
we

has been recognized

riers

shippers.

not quote lower rates to move the

and

because
broaden

through deficit finan¬

because

the costs of the most efficient car¬

warders that would

transportation

each

that

power

vised

within

roads that

credit base

competition is
stimulate efficient
operations, improved services, and
rates which more nearly reflect
That the spur of

necessary

against
coercive
and
collusive
practices by such carriers and for¬

form

carriers

the fact

overlook

have direct control of many other

attitude

common

anti-trust laws

plete protection from the restric¬
practices of
rate
bureaus

tive

aspects of service of great inter¬

Spur of Competition

The

forwarders, without es¬
tablishing
adequate
safeguards

the

rate bureaus of economic coercion
in the form of threats of diversion

continued

■

seeking to protect existing
advantages.
As
a
result,
parity relationships between dif¬
ferently located shippers is often
established on a
high level of
rates.
Although existing market
relationships
among
differently
situated shippers are
protected,

kle bill is that it grants broad im¬

munity from

the

courageously;

have

riers Witnin each agency.

In
of

Those

who argue that
regula¬
tion provides the public with com¬

the

coercive
practices.
The
proponents have ignored, how¬
ever,
the frequent exercise by

lems

competition, not only be¬
tween agencies but between car¬
active

Interest of Final Consumer

origi¬
nating carriers, and had sent cop¬
ies of this letter to the four rate

basis.

plaint concerning rates is a poor
alternative to the advantages of

Cites Case of Citrus Fruit Rates

From Rate

Bureaus' Practices

services that competition

curtailed.

necessary

carriers.

are

vided, it could reasonably be an¬
ticipated that the coercive and
suasive
practices
of
the
past

Not Protected

ly do not enjoy such facilities. To
them, the right of filing a com¬

ting all

ostracism

Public

incomplete as well as
inherently incapable of providing

freight

country

which

ward instead of backward.

have

another

and

The basic defect of the Bulwin¬
sum

Of course, carriers denied exer¬

long dis¬

present a case before the
commission, small shippers usual¬
and

vided.

adroit methods
competition
will

lie

intensely interested in the

state

that

complained of are unreasonably
high. At the time the Department
of Agriculture was seeking lower
citrus rates, it was not equipped
to
undertake a complaint case.
While the larger shippers do have
traffic and legal staffs to organize

pro¬

cur.

competition, but reflection
the interrelations between
competition within one agency

ahead.
To

asso¬

committees is

and

upon

years

of the acts of rate bureaus,

ciations,

is a
penalty that many carriers and
their representatives dislike to in¬

tor

of the securities market

mechanism be

great

agree on

minimum rate power to obtain a
uniform price policy among mo¬

ities industry, are anxious that the

and

penalty under the anti-trust laws

organized.

sible

levels of rate and service compe¬
tition.
All with broad relief from

anti-trust

rest

They could

provements.

country's investors and the

the

facilities,

and

retard the installation of such im¬

dent that everyone, especially the

York

They
agreements

passengers.

Act, it required the commission's

On the other hand, I am confi¬

New

different

regrettable

presumed that such
practices will continue in the fu¬
ture unless effective surveillance
be

may

seek termination of the

economic life which

our

refer to

institu¬

government

any

experiences

the

represent

agency

carriers

past,

agencies. They could agree to uni¬
form time schedules for delivery

agency

nor

threats of
such actions, against the carrier
which will not accept the will of
the majority or that of the domi¬
nant carriers in the rate bureau.
actions,

coercive

action by coercion might complain
of this fact to the commission and

the agreements made did

include

not

the

rates

been numerous

have

there
instances of
Yet,

services.

and

reasonable

found

maximum

the

gress,

the

now

and

industry,

or car¬

filing

ever

rates

respect

with

independently

matter with the commission. They

ther the investors of America, nor

regulatory

without

charges,

vidual

agency

backward

eliminate all of them.

securities

shipper's

rier's proposal for lower rates or

that the market might have been

reforms.

would

reject

agree to

organizations have generally
provisions giving indi¬
carriers the right to act

lar

carriers or for¬
be permitted to

simi¬

included

and without direct and close Gov¬

have been necessary or wise.
I would be the first

common

warders

could

gear.

been done to purge the market of

the

private agreements with relief

rates

Since

subject

from the anti-trust laws.

now

tend

the

make

could

The

past.

the

charters of rate bureaus and

fares

comparable
lower than for rail service.

proof that the rates

the burden of

comfort

travel

tance

Sucn

of course, may fall witnin
the wide zone between maximum
rates,

minimum
ther
that tn
standard rates themselves reilec ed the free operation of compe itive forces and the application o
reasonable

rates

reasonable rates.
can

the

rate

and

However,

assurance

comparison
stancia
to result in Pe "

therefore tends

monopolistic rates.
standar ,
which has been increasingly icsorted to in recent years, is a
defective.
The art of finding
petuation of
The

cost
not

cost-of-service

transportation

highly developed

minations

are

very

serv*,Cf:0and ctet

controvei

nlomprit?

•
COSl

Number 4482

Volume 163

THE COMMERCIAL & FINANCIAL CHRONICLE

cannot logically be divided or al¬
located to individual items of
traffic, although most cost formu¬

nevertheless make arbitrary
allocations. The result is that the
costs used as standards are not
necessarily economic costs—they
tend to be padded and to reflect
low ratios of utilization.

infractions

cost

the

services

necessarily reflect effi¬
services when rates and

not

does

cient

services are agreed upon by ma¬

jority action through rate confer¬
ences or bureaus.
Although there
are many individual carriers, such
agreement makes it possible for
operate

them to

though

mo¬

anti-trust laws

Congress Should Delay Action

lae

Moreover,

of the

by those particular proponents.

In view of these facts, the Con¬
would be well advised to

gress

await

the

outcome

proceedings
Nebraska
decision

the

would

afford

court

and

This

commission uses a cost stand¬
ard, that standard, too, tends to
perpetuate monopolistic costs and
to restrict services and

rates and

The only solution to

utilization.
this problem

is to free the forces

competition

making

inde¬

pendent action by competing
riers

meaningful

rather

render

taking such action more
difficult through granting rate bu¬
broad relief from

reaus

the anti¬

The impression has been creat¬
ed

the testimony of certain
that everyone would gain

groups
from

since

bill,

the

passage

Bulwinkle

carriers

various

types, shippers, and Government
regulatory agencies have support¬
ed the bill.

legalization

be granted that

can

well-established

conference procedures for negoti¬

changes

ating

seminating

rates

dis¬

and

information

among

carriers and

shippers with respect
to such changes would be a bene¬
ficial step.
However, it is one
thing to take action to preserve
such
organized
procedures
for

considering rate changes and joint
rates and another thing to pass
legislation permitting additional
private

restraints

service

competition

rate

upon

and

granting

relief from the anti-trust laws.
The Heart of the Controversy

It cannot be reiterated too often
the
exemption
requested

that

from the anti-trust laws is wanted
not merely to enable carriers and

shippers
and

discuss

disseminate

rate

changes

technical

in¬

are

legitimate

services.
real

Here is the heart of the

controversy, and it is to the

probable effects of greater private
control of freight rates and trans¬
portation services that the Con¬
gress must look for

guidance as to
the wisdom of the proposed
legis¬

lation.

extend

the

legislation would

domination

small carriers

constitute

and

other

similar

car¬

initiate lower rates to attract
traffic and to reflect their supe¬
where

many

small-scale

in¬
sin¬

gle-line operation
develops the
lowest costs.
The opportunity of
veterans
and
others
entering

trucking

would

restricted.

thus

further

private enterprise
in
transport is to survive, it will
be
°f

necessary to protect the right
newly established carriers to

compete, not to destroy it.
It is
apparent

2536

would

broad

laws,

relief

from

it contains

tection

that while H. R.

give

the

carriers
anti-trust

the

teeth for pro¬

public

interest

coercive
practices
and
other restraints
upon competition

cant

Moreover,
one

signifi-

group of proponents was de¬

signed to interfere with
cases now
in the
courts dealing with alleged

responsible for the total

and employment lev¬
industries can contribute
them.
The
contributions
of

all

transportation

agencies
can
be
considerable if services are
improved and rates are kept to as
levels

are

consistent with

Another

important problem to
which freight rates relate is in¬
dustrialization

underdeveloped

industries to develop in such
or for expansion of
existing
industries to occur there, it is of¬
ten essential for freight rate ad¬

justments to be obtained.

Commerce Act

whole is

con¬

ously, there

basic

con¬

law

pol¬

anti-trust

between

For

new

regulation by the regula¬
tory bodies.
When the Interstate

sidered, there exists

may

Previ¬

have been little

traffic in the materials to be

utilized at

given point

in the

icy and transport regulatory pol¬
icy as provided in the statutes en¬
acted by the Congress. To obtain

products to be made at that point.
The existing rates are "paper"
rates, often class rates, and obvi¬

the

full

ously high.

der

our

vate

measure

system

operation

of economy

un¬

of regulated pri¬
of transportation

In such

cases,

it is of

crucial importance to obtain low¬
er

freight rates, but such adjust¬

agencies, continued anti-trust law
surveillance is necessary to main¬

ments will not be

tain open

the products of our farms and in¬
dustry. Distribution provides the
key to these wider markets, and is
the vital factor in

area

initiation of rates, and services
where regulation is po\yerless to

prevent

carriers

adopting

From

the

experience

the

1930's and during the recent war
period, it is evident that the car¬
riers,
especially
the
railroads,
cannot

reasonably expect to earn
normal profits unless large vol¬
umes
of
freight and passenger

our

stantly increasing living standards
for all our people.

To summarize, enactment of the
Bulwinkle bill would be inter¬

preted

the

restrictive

as giving
Congress to

The

distributive

services, in¬
transportation, will find
no
difficulty in adjusting them¬
selves to competition in a growing
economy.
I recognize the need
to

trans¬

other lines of industry, can profit

production, and have

restrictions

stifle

ress.

that

will

mass

need for
prog¬

growing America, there
no place for
monopoly. The
Government's fight against mo¬
nopoly is a fight for freedom.
can

Limitations

of that

are

upon

fight

the

effectiveness

in reality attacks
our competitive free enter¬

prise system and

the rising
future which that system implies.
I sincerely hope that the Congress
will not entertain such attacks.
More specifically, I hope you will

disapprove the legislation

be¬

now

fore you.

Thomas J. Cullen Dead

of different agencies and those not

providing for independent action
con¬

ditions that would exist with the
anti-trust laws no longer appli¬

20.

Mr.

Cullen

20 years

for

served

nearly
in the Insurance Depart¬

ment of the State of New York. He

joined

the Insurance Department
April 1, 1927, when he was ap¬
pointed Assistant Registrar.
On
on

Jan. 1,

proved service to the public that

Pink, Mr. Cullen served

Act¬

high

passenger fares, re¬
Official Territory until

1936, when the commission order¬
ed

reduction, also restricted the

volume of service and contributed
to low load factors in coaches and

sleeping cars and high operating
costs per unit of traffic. Although
the lower passenger fares initiat¬

voluntarily by the carriers in

the

Southern

and

Western

dis¬

exist would not be fully realized.
As a result, the transportation in¬

ing

dustries would fail to make their
The

pounds, a decline of 3% from
1944, states the "Rayon Organon,"
published by the Textile Eco¬
nomics Bureau,
Inc.
This 1945
total

during

the

full contribution to high

1943 to

Sept. 23, 1943, ably carry¬

ing

Efficiency in distribution is a
primary requisite for successfully
coping with our economic prob¬

inflationary
parts of the

pressures

Insurance

period

Feb.

until

the

Superintendent

connection

was

Insurance

from

Department

appointment

work, he

various

have been
worked off by several years of
peak production.
From that time
economy

Superintendent

Dineen.

lems in the period after the large
deferred demands now producing

Bureau

the

crease

state:

also

with

active in the

his

coun¬

figure near its record consump¬
"Cotton consumption amounted

4,508,200,000 pounds, a decline
a figure 20%

of 6% from 1944 and

the

below

and

the

ever,

1945 cotton consumption was
well

above

Silk

vailed since 1942.

"By

percentage

war

receivership or trusteeship, be¬
quite profitable without ma¬
terial increases in either freight
rates or passenger fares and in
spite of higher wages and mate¬
rials costs.
Because the general
price level has advanced much

13.0%,

and wool, 10.9%.
This
percentage was a new high
figure and wool's participation in
the total was the largest since
1935. But cotton's percentage was
the lowest on record.
By com¬
parison, the pre-war figures for
1940 were cotton, 81.0%; rayon,
9.9%; wool, 8.4%, and silk, 0.7%.

"Consumption

of
manufacture

cellulose

wood

pulp and 103,000 tons of

fined cotton linters.

figures represent new high fig¬
but wood pulp consumption
has

increased by only 6% since
1942, while cotton linters' useage

has

than doubled.

"Domestic

deliveries

than

rail

levels

are

rate

The

fact

The Bonds
and

greatly

profitable future for the rail¬
and other carriers requires

roads

present high levels of
traffic be sustained.
During the
the

decline

the

fewer

days.

entirely due to

was

number

February

composed

were

rayon

pounds of filament

while the
the
limits of its production capacity to
furnish the
goods and services
necessary to make up for wartime
consumption deficits and to re¬
store

with

"Total

stocks

rayon

13,900,000

pounds

days' supply. Filament

stocks

were

Feb. 28th."

facilities

abroad,

States.

offering is made by the twelve Federal Land Banks through their Fiscal Agent,
the assistance of a Nationwide Selling Group of recognized dealers in securities.

April 16, 1946.

Street, New York 5, N. Y.

continued

yarn

stocks

9,900,000 pounds and staple

joint and several obligations of the twelve Federal Land Banks

31 Nassau

held by

nominal, amounting to but a six

issued under the authority of the Federal Farm Loan Act'as amended.

Charles R. Dunn, Fiscal Agent

and 13,-

producers at the end of February

100% and accrued interest
This

50,400,000

200,000 pounds of staple fiber.

May 1, 1950

trust funds under the statutes of various

being pushed to

industrial

the secured

working
deliveries

yarn

The Bonds are eligible for investment by savings banks under the statutes of a majority of the
States, including New York and Massachusetts. The Bonds are also eligible for the investment of

immediate period ahead,
economy

are

rayon

69,700,000 pounds in January. This
9%

rates, the present

relatively
improved in¬
come position of the railroads has
primarily reflected the stimulus
of the war situation to high traf¬
fic levels, rather than the level of
rates.
The
significance of this
experience is that it demonstrates
the practicability of profitable op¬
erations with low freight rates.
low.

by producers in February totaled
63,600,000 pounds, compared with

Due May 1, 1952
Before

re¬

Both of these

ures,

1946
Not Redeemable

during 1945
amounted to 400,000 tons, com¬
posed of 297,000 tons of dissolving
rayon

1/4% Consolidated Federal Farm Loan Bonds
Dated May 1,

four-

rayon

Federal Land Banks

came

the

fiber total, the 1945 figures were
as
follows: cotton, 76.1%; rayon,

$217,000,000

1936-1940

its

3,525,900,000 pounds.
consumption
in
1945 was
nominal, a situation that has pre¬
of

average

other

hand, during the
the railroads, including those

consump¬

still

fiber

Commissioners

important committees.

1942

record

tion of 5,636,700,000 pounds. How¬

Insurance
on

Wool consumed

tion of 652,200,000 pounds in 1941.

were

served

1944.

over

in 1945 totaled 648,200,000 pounds,

sels of the National Association of

Rate Levels Relatively Low

rec¬

"Rayon consumption was at an
all-time high figure of 767,500,000
pounds, representing a 9% in¬

New Issue

higher volume of traffic.

the

below

consumption of 6,871,300,000
pounds in 1942. The advices from

the administration of the

levels of
producion and employment.

14%

was

ord

upon

1928, he succeeded John S.
Andrews
as
Registrar and was
traffic are available from highcable.
Coercive practices against
placed in charge of the Policy Bu¬
level
operations throughout the
carriers desiring to reduce rates reau. On
April 1, 1930, he was ap¬
economy.
Looking backward, the or
improve service for competi¬ pointed Executive Assistant by
high
freight
rates
prevailing
tive
advantage would multiply. Superintendent Conway. The fol¬
throughout the decade of the thir¬
Rates would tend to rise and their
lowing year he was appointed
ties did not bring financial pros¬
stickiness
under
changing
eco¬
Deputy Superintendent by Super¬
perity to the railroads. Their pri¬
nomic conditions
would
be
in¬ intendent
Pink.
Following
the
mary effects were to divert traf¬
creased. The potentialities for im¬
fic to other agencies, to restrict
Resignation
of
Superintendent
the total volume of transportation,
and to retard improvements of fa¬

Total United States consump¬
tion of cotton, rayon, and wool in
1945
amounted
to
5,923,900,000

home in Albany, N. Y., on March

carriers

Consumption

Declines in 1945

through high volume at low rates,
in the American tradition of

policies in transporta¬
The safeguards of prohibit¬

would not be effective under

reasonable return

rate

and service

tion.

port

Thomas J. Cullen, First Deputy
Superintendent of the New York
Insurance Department, died at his

blessing

ing agreements between

Fiber

cluding

forthcoming, or
only after long delay, under ex¬

the

from

restrictive policies.

maintaining

future economic growth, with con¬

isting rate bureau procedure.

competition in the

able to find markets for

as we are

low

areas

Nor is that step necessary to ef¬

produce has been amply demon¬
strated; but production and em¬
ployment will be maintained only

enterprises, as I do for all
legitimate business; but they, like

ful functions of the rate
fective

Our tremendous capacity to

tion.

for

regions of the United States.

bureaus.

problem will be es¬
problem of distribu¬

our

very

trust laws is not necessary to the
preservation of the socially use¬

that

against

|n rates and services.
its
timing by at least

can

forward,
sentially

profits of those roads materially,
they did stimulate a substantially

already experi¬
ence in
operating profitably un¬
der their
typically restrictive op¬
erating authorizations would be
added impairment of their
right

efficiency in those

industry

maintaining the service.

the

To the difficulties that small
riers in that field

stances

no one

organizations.
Whatever legislation that objec¬
tive may require, it should be rec¬
ognized that relief from the anti¬

ones,

particularly in the trucking field.

rior

While

held

they

tricts may not have raised the net

by the larger

degree to which
infractions

The proposed

fronts.

els,

tained

and

production and employment
protected on
all
economic

come,

under the anti-trust laws and the

restrict

rates

will

production

associations

cilities.

operations,

induced only if high levels of in¬

tive

formation, but to authorize the
making of specific agreements to
competition

profitable

sure

finding on the extent to which ex¬
isting associative activity by con¬
ferences, rate bureaus, and execu¬

flict

trust laws.

freight and passenger rates. How¬
ever, as soon as this period is
passed, -the problem of the thir¬
ties, that of inducing a sufficient¬
ly high volume of traffic to as¬

are

car¬

than

procedure

of these laws:
Some
nopoly existed. In such a situation ;
the
competitive
pressures
that legislation may be essential ex¬
tend to reduce cost to a minimum pressly to legalize the clearly le¬
are inoperative.
Therefore, when gitimate functions of rate bureaus

the

up even

increases

is¬

authoritative

hold

return to plague the carriers.
Such a volume of traffic can be

making

controversial

involved.

sues

the

Georgia

before

cases
on

traffic volumes
may
with some general

2103

4,000,000

2104

THE COMMERCIAL & FINANCIAL CHRONICLE

Thursday, April 18, 1945

1!J

The Labor Force
tion, and, second, to a persistent,
product
As shown in the upper
portion
a worker could produce.
of Chart 1, the labor
force in¬

The Business Outlook
(Continued from page 2070)
the

has not materialized.

war

to
now,
unemployment
reached thiee millions.

has

cies of the war—will still be im¬

cerns;

portant.

and services

Third, the longer-run post-war
period will be reached when the

Up
not

gross

With this background, and with
the large supply of money and
low

hardly
surprising tnat ihe stock market
is booming.
To

clouds

tional

situation

certain

are

tne horizon.

widespiead,

clarified,
main

there

sure

rest

iaies,

Labor

un¬

the interna¬
by no means

likely to re¬
high, and the national

taxes

very

are

debt looms large.

But

The

SOME

will somehow

per

creased from about 30
millions in
1900 to about 54 millions
in 1940
The Bureau of the Census

would have increased at the
rate
of about 1% per
year, had the war
not intervened.
This would
have

all

the

worker

the

other

for pre¬

reasons

national product to

gross

of business activ¬

measures

ity: (1) GNP refers to production
after all, is what we are

which,

many

improvement

steady

increase in the
capital
equipment
available to each worker.
Indeed,
the

and

amount

this fabulous growth in pro¬

it is

been the

that has

ductive

power

basis of

"America's greatness.

the

entire

not

simply

economic

system

portion
pect of that system.

LABOR

FORCE
k

ano

MILUONS

working

es¬

the present
labor force

population

about 60 millions in 1950 as
shown

the

dotted

"normal."

CHART

and

or one as¬

one

that during
1940-50, the

the

put

labor

trying to measure, and (2) GNP
is all-inclusive in that it embraces

PRELIMINARIES

has

timated

the

in technical and

how,

two

are

ferring

dispose of a few important pre¬
liminary matters.

situation

ing population, the rapid advance
managerial know-

There

But before discussing the busi¬
ness outlook directly, we should

tional

product
due

decade

total

how.

is felt, will be settled; the interna¬

been

has

health and education of our work¬

national product

sum

produced during a year by our
land, labor, capital, and know-

practice, these three periods
will not be clearly
distinguishable.
They will overlap.
Nevertheless,
I feel that it helps to clear
up our
thinking if we consider each sep¬
arately.

clouds do not dampen the perva¬
sive optimism.
Labor disputes, it

increase

This

factors, the most important being

goods

the

includes

comprises
things

the

will

economy
then be "on its own."

these

even

off.

worn

and

produced for and by
government.
In
other
words,

affects of the war—both
depress¬
ing and stimulating—have large¬

interest

increase in the amount of

curve

marked

Actually, however, the

force has

risen

above

nor-

LABOR

PRODUCTIVITY

PERSONS

Gross National Product and
National

Income

ironed out: and taxes and the debt
will

not

too

burdensome

The Measurement of Business

other

the

tionary

hand, the defla¬
of 1920 and the

episode

order

look,

gether forgotten.

od of

ful
ere

people are concerned lest we
heading for another boom and

bust—or

even

boom.

bust without

They

are
questioning
long-postponed New
really here.

whether
Era is

for

the

present

seems

against

me,

uncritical

situation,

must

guard
acceptance of

prevailing opinions and attitudes.
At a time like this, objectivity is
indispensable in the appraisal of
the business outlook.

What I have to say today is in¬
so much as a forecast

things to come, as an analysis
of some of the factors which may

we must agree upon a

meth¬

For example in

forecasts.

tacks,

and

discuss

the

carefully, it is much
to

have

There

are

measures,

tional

product,

income.

useful

statistical

Not all of the national

activity.

number

however,
such

individuals.

national

income,

production,

number

most useful.

the

simply

goods

ly
of

implicitly,

future

ditions.

£0

product is de¬
the total value of

includes

and

This

income

look ahead

National

Less:

NATIONAL
of

Bad

must,

individuals.

INCOME,

ETC.

1939

1944

Dollars;
1944

Taxes

Business

199

—10

Reserves

Debts,

for

WORKER

DOLLARS

Product

Business

con¬

PER

THOUSANDS

the actual money

was

received

1939

Gross

prediction

future

PR00UCT

1944

benefits, for which there
corresponding production.
adding to national income

lions.

TABLE

(Billions

se¬

tributed profits, gives income
pay¬
ments to individuals of $156 bil¬

new

PRODUCT,

social

and

to social insurance and the undis¬

plant and equipment produced for
use
of private business con¬
NATIONAL

relief

transfer payments, and sub¬
tracting from it the contributions

the

GROSS

1900

the

produced
It includes goods

consumption;

1090

received

Thus,

services

year.

se¬

was

time,

same

individuals

based, explicit¬

upon a

events

curity

services produced for private

Every business decision
loan, every investment,

every contract—is

and

social

payments, principally in

form

was

national

At the

transfer

Gross National Product

all

for

$5 billions

and

uted profits.

that gross national product
(GNP as it is often called) is the

and

—every

taxes

withheld in the form of undistrib¬

employ¬
Of these,

feel

fined

withheld

was

curity

ment, and many others.
I

income,
available
About $4 billions

actually

was

gross na¬

them,

among

product is usually called national

subject

definite

of business

measure

during

can.

After subtract¬

of $10 billions, a net product of
$160 billions remained.
This net

tion,

$199 billions.

was

able, healthy, etc.
But when we
really want to get down to brass

In every dynamic economic situa¬

imponderables
weigh
so
heavily in determining the out¬
come
that
definite
predictions
may be highly misleading.
Yet it
is our duty to look ahead as best

shown

ing business taxes of $29 billions
and charges to business reserves

Gross
business

1944,

in Table II, gross national product

activity with such adjectives as
good, bad, fair, active, unfavor¬

opments.

about

be helpful Jo show

may

lar concepts are related.

It may serve some
purposes to de¬
scribe various levels of business

or in part, the
pattern of future economic devel¬

I find myself somewhat disillu¬

national

how these and various other simi¬

determine, largely

sioned

product

with

confused

income, it

our

out¬

measuring business activity.

industrial

tended not

definite

often

thinking about the business

disaster of 1929 have not been alto¬

Many thought¬

Because gross national
is

Activity

only prosperity is maintained.

Depreciation,

—

Depletion,

Etc

—

even

though our forecasts can be
regarded only as working assump¬

National

are

Income

considering the business

Payments

Less:

out¬

the next several years,
helpful to distinguish three

Less:

(a)

—

Taxes

156

I09O

Savings of

die

Plant

Gross

National

armed

the

Income

business

refers

reserves

and

the

for

relief,

Rapid reduction

Readjustment of

Middle

1949.

(a) Deferred demands.
Wartime

accumulations

purchasing power.
Longer-run Post-War

Sf/si fr in
aituies) ox

can

$19

value

taxes

Period:

the first of these periods.
It has
been a period of economic reor¬
ganization when the major
prob¬
lem has been to get
production

these

saved

payments, in¬
required to pay

were

billions

personal

taxes

living

expenses.

Corresponding

ness

essen-

dicated

and

the

services

are

after

system

national

income, with

accounts

for

the whole

country

comparable to the ac¬
counts maintained
by any private

may

say,

parentheti¬

lions,
year

our

busi¬

mated

decide

example, if

product in a
should be $100 bil¬
in

was

the
we

prosperous

that

regard

good, fair,

bad?

should judge
not in relation

performance,

measure

to par.

mains
omy,

performance in relation

In golf,
about the

par

grows.

same

par re¬

size

econ¬
as

the

capacity of the country
the

produce

This
of

after

year

always increases

productive

the

however,

But for the national

year.

an
—

*°

power

has

progress

our

increased
has

been

a steady growth in

our

1940

1930

Productive

the

labor

unknown

perhaps 61

working popula-

With

remain.

millions

curve

marked

per

force

This

the

long-run

increase

is
in

product per employed
reflecting overall prog¬
technology and expansion
of
capital.
During the 40-year
period, 1900-1940, annual product
per
employed worker, as indi¬

worker,
ress

cated by the dots and solid
curve,
increased
from about
$1,250 to

$2,600,
It

should

figures

have

than 100%.

noted

been

that
of

for

money.
dol¬

1944

lars.

the

increase

rate

was,
of

about

product

the
2%

average,
per

per

year—

though during the depression of
the thirties
productivity was tem¬
porarily less than normal.
Pro¬
jection of this 2% rate into the fu¬
ture suggests that
average product
worker will approach $3,500

per

by 1950.

the

about

equivalent

decade.

In the past, gross national prod¬
has in fact increased at the

rate

shown

curve

labeled

Chart
(The

This

better.

"gross
two

solid
national

the

dots

the
chart

extensions of this curve.)

The rapid increase is shown lor
example, during the decade 192U30, when gross national Profj[]S,
increased from about $75 to ShJ

billions,
of

at just about
year.

per

the rate

During the de¬

pression, gross product fell oi
sharply. By 1941, however it had
increased to $145 billions as com¬
pared with $100 billions in 1-WJ;
by

year, the

1941, the last pre-wai
3% rate of increase haci

about been reestablished.
It

seems

suming that
years

The

the total

year,

per

uct

Thus,

these

corrected

changes in the value
They are expressed in

worker

34% for

product."

the lower half of Chart

value

productive power of the country
may be expected
to increase at
the rate of about 3%
Per year;

are

increase

overall

the

productivity of about 2/o
year and the increase in labor

lower lefthand corner of the

Product Per Employed Worker

shown

Capacity

worker

particularly

expected

shown by the dotted

past year, but rather in
relation the normal
productive ca¬
pacity of the country in the post¬
war year.
As in golf, we would

national
of

per-

some

rapidly.
gross

For

In my opinion,
to

but

them

women—are

national

leave

"projected."

1929, would

people

measure

all

we must next

year

shown

Thus, the 1950 labor force is esti¬

(Consumer Expen-

Historically,

Having adopted
product

gross

shortly,

number

of individuals which

activity,

postwar

15 years.

Par

This

expected

allowance

etc.

prosperity.

the

1939

beyond those in¬
Table II, represent a

'fisliy

services

what level of gross national
prod¬
uct corresponds to full
production

that
gross

product and national
refinements far

benefits,

performance

figures for

also in Table II
The statistics on

business.

pro¬

solid portion of the curve marked
"actual."
Many of these war ex¬
tras have already withdrawn or
force

(Savings of Individuals)

income

cally, that the development of
this
system of national
accounting is
m
my opinion one of the
major
scientific achievements of
the past

will

Product

services for consumption

Second, the catching-up period
will probably extend from
this
«uir#rrer to
perhaps 1948 or 1949.
During this period, the problems
worked out, but large deiesred demands and accumulatwm of purchasing power—lega-

and

™come Payments after deduction

rolling.

reorganization

people, and others into the labor

business.

insurance

are

nearing the end of

service, and the entry
housewives, students, retired

market.

goods

costs>

National

paid

social

spendable income in the
hands of
individuals—of $137 billions.
Of
this amount, individuals
saved $40
billions and spent $97
billions for

War influences largely ter¬
minated.

all

(at

1920

result of

war as a

Commerce.

value

Gross

leaving disposable income— actual

their

1949—

^ income in the hands

can

dividuals
wages and

prices.

Catching-up Period:
1846 to 1948

?nm!?S?0bvL/n™i6 refers
be used JtiVLSk

in Federal

expenditures.

now

refers

Department

IHru.'r"^ p/<y.:''e-nts
Individuals refers to income actually received bv
i?Ua deluding not only income paid for current productive services
but also payments for

forces.

are

including

year

reconversion.
of

during the

selective

—

Product

the

137

—

government.

Tramfer of labor and
capi¬
tal from war
industries to
peacetime industries.

(b)

during

for

(c)

(e)

National

duced

1946.

Demobilization

(d)

Individuals

Expenditures

19©

1900

—

Source:

(b)

«Wf

—

Individuals

NOTES:

Transition Period: 1945 to mid-

security

follows:

TABLE 1

(a)

social

mal

Three Time Periods in
Analysis
of Economic Outlook

relief,

etc.

Personal

Consumer

for

160

over

periods of time

Payments

benefits,

■owsasAieiH!*'

Transfer

Contribution to Social Insurance
Undistributed Profits of
Corporations

always subject to

THREE PERIODS

look

Less:

tions which

revision.
1.

Income

Plus:

then,

reasonable,

1929 and

of relatively full

1941 we

production,

to measure the

growth in our no mal productive capacity by Pj "*
jecting a curve from 1929 whi
increases at the rate of 3 h P
year.

labeled

Chart

this curve

"Capacity Gross

■

National

Product."
iltT

to this curve, o
capacity, i. e., Pai
It
about $170 billions this year

According

productive

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

CHART

billions in 1947

about $175

will be

$19° billions in 1950.
judgment, this projection
of productive capacity is conserv¬
ative.
Many careful students of
the question have concluded that
capacity this year is at least $175
billions and by 1950 will be well
oVer $200 billions.
My lower fig¬
ure of $190 billions for 1950 is in¬
and

Each

these

In my

feasible and realistic

tended as a

It represents a level of ac¬
tivity which could be maintained
without rising prices and which
would
allow for a substantial
par.

frictional unemploy¬

amount
ment.

of course, differences

There are,

of our
power
to produce. There are
some who believe that the rate of
technical progress has been accel¬
opinion as to the future

by the

erated

and that the

war,

1950

goods and services, and (3) capi¬
tal goods.
three

services

and

classes

about

$190 billions
In ap¬
praising the outlook for 1950, i. e.,
in trying to determine whether
we
are
likely to shoot par, we
must estimate the possible pattern

purchased
by expenditures of a particular
type.
(1) Government services

goods

will

of gross

national product.

are

purchased ordinarily by ex¬
penditures called tax payments.

(2) Consumer goods and services
are
purchased by the every-day

III. The upper portion of this chart
is similar to Table II which you

living

have

uals.

chiefly by business firms
expenditures for new plant,

the

for

demand

the

gross

let

begin,

the

250

that

assume

200

can

the

estimate

the other items in the

chart.
As

itures

each of these three
of goods and services.

will

the

see

ernment

outlook

Gov¬

for

operations, total expend¬

(Federal, state and local)
be

about

$35

billions,

which about $20 billions will be
projection of the 3% rate into the
postwar years may actually un¬ Expenditure Requirement for 1950 derived from business taxes and
derstate future productivity. Oth¬
As indicated in Chart 2, par in $15 billions from personal taxes.
ers point to
the fact that in the
TABLE III
present transition period, product
GROSS NATIONAL PRODUCT
per worker is less than normal,
(Billions of Dollars)
and they raise a question as to
1947
1950

high pro¬

whether we can expect

National

Gross

ductivity in the future. Obviously

Taxes

Plus:

Transfer

rapid progress in productive pow¬
er,
characteristic of our whole

Contributions

history, has suddenly come to an
end.
I feel that the projection of

Income

rate

Undistributed

Personal

Disposable

fied.

Less:

Whether

not this projection

Insurance.

Social

Profits

Individuals.

Expenditures

Consumer

capacity is precisely accurate,
it is easy to see that the amount

—

Business

Personal

Taxes

For

Reserves

Undistributed

This

was

economy

be¬
was

Business

worked, and production

was

Expenditures

investment

reserves,

consisting

spurred on by patriotic mo¬
tives.
Now that the war is over,

was

national product is consid¬
erably below the extraordinary

gross

wartime level—even though pros¬

perity continues.

They

year.

war,

plant

capital

our

running con¬
billions before

$7-8
but with the growth of
at

sistently
the

were

may

reach

billions in future years.

With

national product at
high level of $190
transfer payments and

gross

billions,

contributions

social

insurance

possibly balance at
each.
Undistributed profits during the
thirties were often negative.
In

funds

may

about $4 billions

Gross National Product and

Industrial Production

billions

they were $4 billions, and
the war have been run¬
ning at $4-5 billions.
With large
profits and lower taxes, they may
be $5 billions or more after the

expenditures

would

classed

$122
ex¬

penditures used to buy consumer

Business reserves, undis¬
profits, and individual
savings,
totaling
$33
billions,
goods.

tributed

would

classed

able to buy

tal goods,

assumed

the

Consumer

mand for new

190

175

mainly of accruals to the reserves
for depreciation and depletion are
relatively stable from year to

working
under
forced
draft.
Many extra persons were drawn
into the labor force, much over¬
time

Individuals

many

our investment
For this let us turn to

appraise

There are five kinds of

vate

funds avail¬

newly-produced capi¬
e., available for pri¬

investment.

These

are

the

approximate expenditure require¬

(1)

1944.
made

productive fa¬

condition and keep
Moreover, there are

them there.

reasonably informed guesses
to the likely amount
be invested in new

of experts as

that

may

plant, equipment, housing, export
balances, and inventories. Assem¬

Outlook for Private Investment

put the nation's

cilities in top

Chart 3.

122

have

indicating the amount of new cap¬
ital goods that would be required

new

all

bling

private

which the $33 bil¬

to create de¬
production.

lions could be spent

the war, gross national
product (the solid curve) was
considerably above projected
whole

Profits

National

Gross

during

our

Savings

Forced Draft

You will notice in Chart 2 that

capacity.

116

prospects.

Capital Goods

Business

cause

Goods

buy

answer

ment

1950

Consumer

Wartime Production Under

.normal

1947

Taxes

For

1940.

or even

Dollars)

Services

Government

For

EXPENDITURES

(Billions

production required to give us
prosperity, today or in 1950, is of
an
entirely different order from
that which was sufficient in 1929
of

studies

been

1919

from

year

Careful

this question, it may
be worthwhile to pause for a mo¬
To

NATIONAL

billions

investment
to in past

each

capital goods?

GROSS

$33

spend

122

116

each

amounted

Chart 3 shows the amount
item and the total for

years.

billions

141

—

126

capital goods if we are to get $190
of gross product.
Can
we
expect
business to

156

—

141

Taxes

Income

Savings

—

these

what
have

items

buy

—

know

$122 billions of consumer
goods.
But this leaves $33 bil¬
lions which must be spent for new

—

Payments to Individuals.

Less:

thoroughly justi¬

national product is as

gross

Producers' durable equip¬

(industrial and commercial
machinery, fixtures, and equip¬
ment

ment).

these

made some

very

data,

Chart

irregular

dotted

curve

"industrial pro¬

marked

the familiar
Federal Reserve Board index. You
represents

duction,"

will notice that the movement of

industrial

production

similar

that

has been
national

of gross

product. However, industrial pro¬
duction has fluctuated more widely.

This is due to the fact that indus¬
trial

production
includes only
manufacturing and mining which
are relatively unstable portions of
the

whereas gross na¬
tional product includes these and
other more stable industries, such
economy,

trade,

public

and

services

utilities.

the

each of the five items.

edge of Chart 3, as follows (start¬
ing from the bottom):
billions of dollars

(2) Residential construction

o -1

Net inventory change

1-3

(housing).
(3) Non-residential construction

Non-residential

(industrial and commercial plant).
(4) Net exports (foreign invest¬

Residential

Net

exports

construction
Producers

2-5

—

ntraction

(5) Net increases in inventories.

Unfortunately, no reliable meth¬
if $190 billions of gross
od is known for predicting what
product is to be produced.
We have every reason to expect the amounts of these five items
that the Government will spend will be in
a relatively distant

You
that

fairly

So much for the
for

war

year in

preliminaries.

turn

now

period,

outlook

the

the longer-run post¬

say

1950.

Demand

will

the

notice,

estimates

liberal

every businessman knows,
production can be carried on only
if the product can be sold.
This

that

for

every

dollar

production there must be
of

dollar

expenditure to buy the

uct.

prod¬
Therefore, the amount of the

gross national

depends

product in any year
the amount of expen¬

ditures which

are

product.

depends,

Words,

adjustments,

these

estimate of

for

of record only and is under no circumstances to he construed as an

licensed dealers

brokers in this State.

disposable income, as¬

suming a gross product of $190
billions, is $141 billions.
This is
income actually available to con¬
sumers
after allowance for re¬

NOT A NEW ISSUE

taxes, and undistributed
profits. It is the item that large¬
ly controls
consumer expendi¬

,79,719 Shares'

serves,

tures.

In past prosperous years,
viduals have

Puget Sound Pulp and Timber Co.

indi¬

spent for consump¬

seven-eighths of their
disposable income.
On the basis
of this experience, we may set
consumer
expenditures at $122
billions and savings at $19 bil¬
lions.
This estimate of consum¬
er expenditures, it should be not¬
ed, is subject to considerable er¬

Gross

made to buy

the

other

demand.

product, as I
nave
indicated, consists of three
classes of goods apd services: (1)
national

government
otate
and

services'

local),

(2)

Common Stock
(without nominal or par

Price $26.50

value}

(Federal,
consumer

Copies of the Prospectus may

the estimate of
in the upper

This completes
the

Per Share

be obtained only from such of the undersigned as are

licensed dealers

items

various

brokers in securities in this State.

portion of this chart. You will re¬
call that each item has been esti¬
mated

that

grosss

1950

will

on
the assumption
national product in
be $190 billions.

reclassify these
categories of
expenditures to buy the three
classes of gross national product.
This is done in the lower portion
We

can

items into

now

the three

First California

Walston, Hoffman & Goodwin
Lester & Co.

Company

Allen & Company Blair & Co., Inc.

Scherck, Richter Company

Kitchen & Co.

of Table III.

Business
taxes

penditures
services,

and personal
classified as ex¬

taxes

would be

buy Government
totaling $35 billions.
to

case,

1950

expev*or,r,">
(Continued on page 2106)

for sale, or as an offer to buy, or as a solicitation of an offer to buy, any
shares. The offering is made only by the Prospectus. This advertisement is pub¬
lished on behalf of only such of the undersigned as are registered or

our

are

in relation to past
rr"*,Q rrnYim11™-* esti-

offering of these shares

•

With

each

ror.

means

war.

This advertisement appears as a matter

durable

equipment

ment).

ments,

such

have

prospective amount of
These es¬
timates for 1950 are shown by the
small marks
at the right-hand
to

tion about

3. THE LONGER RUN

Let

during

rough estimates

1941,

The

period. If there were such
a
method,
business forecasting
would
be
child's play.* We do
future

Moreover, if

high as $190 billions, we may, op¬
timistically, expect individuals to

161

Payments

the

—

146

Income

National

—

}I950

1920

1910

1900

$35 billions.

at least

190

—

Reserves

Business

Less:

the

175

(Assumed)

Product

Business

Less:

question to set¬
tle.
I have great difficulty, how¬
ever, in accepting the view that
this is not an easy

PRODUCT

(BILLIONS)

Table

column.

second
deduce

amount of

for

classes

turn

national product in 1950 is
as shown at the top

then

product depends upon the amount
of these expenditures.
Thus, to
estimate future gross product, we
must estimate how much will be
spent

DOLLARS

already seen.

gross

The amount of the gross

product.

let

NATIONAL

GROSS
1944

PRODUCTION

$190 billions

equipment, etc. These three kinds
of expenditures together consti¬
tute

this,

chased

(935-39-100

expenditures in that year.
For

expenditures of individ¬
(3) Capital goods are pur¬

U.S.
PROD. INDEX

INDUST.

April 15,194G
unnirrnaua

Thursday, April 18, 1945
Outlook for Private Investment

The Business Outlook

basis

the

tion

and

informa¬

such

as
is
$24 billions — which is and other things would not remain available, and it is admittedly in¬
mate for most types of capital shown by the marks at the upper unchanged. Tax yields would fall adequate, I have made the follow¬
goods is about equal to the high¬ right-hand edge of Chart 3. The off, contributions to the social in¬ ing estimates of capital invest¬
est
figure on record, and the top figure of $24 billions repre¬ surance funds would drop, and ment in 1947 (each estimate is in¬
on
Chart
3
minimum estimate is about equal sents a maximum estimate of the government expenditures would dicated
by small
to
the average performance in amount of production for capital increase. Moreover, the savings of marks):
billions of dollars
account which could be sustained. individuals would decline, along
past years.
Net inventory change
0-1
I
have
some
qualms
as
to It is greater than the 1941 figure with undistributed profits thus re¬ Net
exports
2-5
whether the figures on non-resi¬ of $23 billions, and $6 billions ducing the amount of investible Non-residential
construction
3-5
dential construction and durable greater than the earlier peak of funds below $33 billions.
As a
Residential construction
4-6
producers equipment are not too $18 billions which was achieved in result of all these changes, the Producers durable
The minimum of $12 bil¬ fall
in
high, in view of the enormous de¬ 1929.
gross
national
product
equipment
8-11
velopment of our industrial plant lions on the other hand, is about would tend to be cushioned, even
Combining the five items gives
during the war.
equal to the average for the years if the government did not embark an estimated total for
private cap¬
The mid-point of the upon a full-scale spending pro¬
Adding up the estimates for the 1919-1940.
ital expenditure of $17 to $28 bil¬
five items gives a range of from range of $12 to $24 billions is $18 gram.
lions. The midpoint of this range
Under
these conditions, how¬ is $22 or $23 billions which com¬
CHART
3

(Continued from page 2105)

$12

almost any government, re¬

ever,

PRIVATE
(IN

INVESTMENT

gardless
take

NEW CAPITAL GOODS)

of party,

would

favorably with the $24
might be needed
for capacity production in 1947.
billions

Thus

1944

one's

final estimate of the gross
national product would depend in

DOLLARS

The Business Outlook for 1947
In view of large

what

the

how

political

forecast

would

government

much

do,

spent,

vestment in

will

judgment,

spend

feels

necessary

in power.

on
this
point
is
Therefore, I would

actual

point it
hold the

The recollection

of President Hoover's

gross

experience
5.

strong.

very

national

product

the estimate of $145
to $165 billions indicated
by small
see

the chart.
these

right-hand edge of

You

can

estimated

with

normal

there how

see

levels

compare

capacity in

1950

all

$190 billions.
I

must

are

crudest kind.

that

guesses of the

They

intended

are

illustrate

the problem, not to
specific forecasts.
The
only firm conclusion from all this

provide

analysis

is
that
gross
national
product is unlikely to remain in¬

definitely at or near the capacity
level of $190 billions.
Let

ation

turn

the

now

consider¬

outlook

during

the

catching-up period.

and

THE

CATCHING-UP PERIOD

The

catching-up period will be¬
gin shortly when production gets
into

full

swing

perhaps to 1948
a
period when

and
or

during
'22

billions.
taken

'26

'24

'26

Perhaps

'30

this

reasonable

'34

may

figure

—

though it is just a guess and
should not be regarded as a firm¬
ly-grounded estimate.
The conclusion is that the total
production of plant,

'36

'38

'40

'42

'44

'46

'48

stance, but at this level of gross
national product, incomes would
fall and consumer
expenditures
would be decreased, thus reducing
gross national product still fur¬
ther, thus reducing consumer ex¬

equipment, penditures again, and so on. More¬
housing, net exports, and inven¬ over, as production fell off, public
confidence would be impaired and
investment plans would be can¬

quired

tional product.

capacity

production.

This $33 billions is marked
by an
near the
upper right hand

arrow

corner

of Chart 3.

At best such

celled, again reducing
What

ing for outlet at
scale

will

1949.

the

ferred

extend

It will be

the

production

point of $18 billions is accepted
best estimate, the
would be $15 billions.
The

Business

Offhand,

Outlook for

might

deficiency

1950

thought

not too serious if

we should miss
the goal of $33 billions
by, say, $15
billions.
It might be supposed

that
gross

this

would

national

capacity

level

merely reduce
product from the
of

$190

billions

down to $175 billions which would
be fairly creditable showing.

The truth is, however, that

gap of $15 billions in

The

on.

left

over

same

from

time,

pro¬

gross national product,
shown in Chart 2, will be about
$170 billions (in terms of 1944
as

prices)—as compared with $175
billions in 1947 and $190 billions
in 1950.

For several
reasons, it is

possible that production will
ceed

the

capacity

investment

would reduce
uct to $175

gross national prod¬
billions in the first in¬

turn

gross

describing

na¬

Expenditure

overtime work may be continued
and

considerable number of ex¬
tra persons may remain in the
la¬
bor force.
a

Considering these

tors, it is probable that
tional product in 1946
of

their

expenditures,

This downward spiral
until an equili¬

would

brium

would

sum

reached

of the three

where

types of

ex¬

year

period,

say

can

The
Table
sumed

during the catching-up
1947, the

be used

arithmetic
III.

government services
at

budget would

govern¬

remain

bal¬

anced, an initial $15 billions gap
in

investment might depress the
gross national product down to

$120

$35

was

billions,
billions

proce¬

used for

shown

Starting with

likely assumption that the

$175

same

gross national

penditures would be sufficient to
buy the total product. On the un¬
ment

are

for

estimated

and

expenditures
for consumer
goods at $116 bil¬
lions, including about $6 billions
for deferred consumer
demands.
This leaves $24 billions available

$130 billions or to perhaps for buying capital goods.
These
of capacity.
At this figures are shown in the lower
level, unemployment might reach portion of the table in
the column
15 to 20 million persons. This ex¬
labeled 1947.
plains the overwhelming impor¬
or

tance of investment in maintain¬

ing prosperity.

practice, however, the public
budget would not stay balanced

To determine the
prospects for

private investment to
$24 billions,

reducing

prices

(2) The producers of these
goods
mostly large and well-estab¬

lished firms which are
likely to
show restraint in their
price pol¬
icies for fear of adverse
public re¬

action, more rigid
governmental
controls, and increased
pressure
from labor.

In any case, some
form of gov¬
price control at least on

ernmental

durable

consumer

be continued

goods, is likely

until

the danger

of drastic

price increases subsides
must be
recognized, however
that price controls will
become
It

steadily weaker.
Let us turn now to the
cost side
of the inflation picture.

Although

rates

wage

likely to rise this

are

perhaps

year,

10%

15%
costs

whole will rise.

The cost situation will be
af¬
fected by many diverse
influences.
Costs will be increased not

by the rise in wage rates. They
will be increased also
by a rise in
unit overhead costs due to the de¬
cline in output as compared with

$160 and $180 billions, shown

the small marks in Chart 2.
This compares with
$197 billions
in the year just
passed, 1945, and
about $200 billions in 1944.
Prices
The

possibility
increases

commodity

1946

This is the greatest
tainty for 1946.

very

uncer¬

There

are obvious and
powerful
forces exerting an upward thrust
on prices.
On the one hand, de¬

mands

are

large, liquid funds

enormous, and
a

there

seems

are

growing inflationary psychology

nomic

conditions.

the

other

hand, there are physical problems
getting a flow of goods on the
are

rising.

offset

this

turn again to the

five capital items in
Chart 3.

analysts have concluded
price rises are in¬

many

that

portant

There are,

opposing

however, im¬
considerations,

and these must be examined if
the

whole situation is to be put into
perspective.

During 1946, some of the forces
leading to inflation will subside.

Especially, the government deficit
is being wiped
out, and the cur¬
rent

incomes

be lower—even

still be

individuals

will

though they will

and

services,

i.e.,. most

goods

except
durables, will be
sufficient before the end of the

year to meet

ward

price

them,

among

tion

the

technical

new

applica¬

develop¬

ments, the elimination of premium
wage rates for overtime work, the
withdrawal

marginal workers

from the labor

force, the return of

efficient

workers

from

the

armed

forces, the reduction in la¬
bor turnover, and the down-grad¬
ing of labor.
The net effect of all these influ¬

ences

clearly
will
do

costs

upon

difficult

rate, it is not
established that net costs

rise.

However,
upward,

move

if they
considerable

even

portion of any increase
set

At any

measure.

can

be off¬

the recent reduction in
Moreover, in many lines,
notably retail trade and service
industries,
greater
competition
by

taxes.

will

force

increased

costs

absorbed in profits.

Taking all these factors into
consideration, it appears that any
be moderate.

Even assuming con¬

tinuing relaxation of price con¬
trols, the increase in price will
probably represent a continuation
of wartime price trends and will
be not more than 10%.
There is
doubt, however, that a much
drastic increase could hap¬

All of the factors needed to

pen.

bring this about lie in the back¬
ground and could easily become
active.
The
one
area
where, in my
judgment, a persistent increase in
prices is likely is in housing and
house rent.
Apparently, the only
answer in this field is continued

public control.
are

interpreting

stock prices

manifestation of

inflation. it

Many observers
the

current

seems

least

boom

at
time, can

that stock prices,

the present

explained largely in terms o

the

interest rates
out¬

prevailing low

and the favorable near-term

corporate earnings.
}
it does not necessarily
follow from the behavior of \
look
anv

for

case,

stock

market

commodity

that

prices will advance sharply-

high.

Moreover, the production of
civilian
goods
will
be
much
greater than last year. It is prob¬
able that the supply of most raw
materials, non-durable consumer
goods,

important influ¬
will be operating to reduce

many very

costs,

drastic

evitable.

by increased selling

price advance in 1946 is likely to

hand,
ences

as¬

product

expenditures

two-thirds

gross na¬

Looking only at these factors,

1947

To analyze the business
outlook
for

continue

the

fac¬

will fall
the upper limit of the
range

market, and labor costs

Requirements

For

are

ex¬

Some

the

point in the system reduces
of others, which in

reduces

level.

induced by scarcities and
by bull¬
ish attitudes
regarding future eco¬

1950.

the

large

just

2, capacity gross
national product in
1947, for ex¬
ample, will be about $175 billions
as
compared with $190 billions in

others, etc.

getting
way, and the pipe lines to
consumers are not yet filled.

have

ductive capacity will be less.

dure

the

will

shown in Chart

which reduces the incomes of still

short

goal by an amount ranging from
$9 to $21 billions. Or if the mid¬

(

power

At the

war.

vestment

transition,

will be bolstered by de¬
demands and accumulated

purchasing

the incomes

fall

time when

physical ob¬

ing-up period than later

production is not likely to exceed
$24 billions, and it may well fall
to $12 billions.
Thus, actual in¬
may

great.

market

have

under

To achieve capacity
production
will be much easier in the catch¬

well-known deflationary spiral in
a reduction of
expenditures
one

they

the purpose.
All of this demand will be
press¬

price

which
at

and
for

1950.

tory increases is not likely—even
with the most optimistic
assump¬
tions—to reach the $33 billions re¬
for

the

probably

large during 1946.
thus
the pressure on

very

and distribution costs. On the other

demands,

abundant funds

been surmounted.

'50

will

consumers

ferred

stacles to production, experienced
1920

goods

come

last year and

near

tors, however, likely to
prevent a
drastic rise in the price of
dura hi«
goods. (1) The flow of these

only

Capacity

emphasize

these estimates
to

ers

not

total

several fac

ing desperately to meet their de¬

If you will turn back to Chart

the

1946.

of intense activity. Consum¬
businessmen will be try¬

year

unemployed.

present

you will all agree that
1946 is and will continue to be a

equivalent of 8 to 15 million per¬

marks

the

come

I think

capacity, or roughly $145 to
$165 billions—which would be the

will

now

year,

1950 would be at least 75 to 85%

you

THE CURRENT YEAR 1946

goock

represent

than 15% or
20% of
production. There are

guess that the

which

overall, it is not certain that

the capacity level (see Chart 2).

sons

new

mands, I should expect 1947 to be
a
prosperous year with a gross na¬
tional product of perhaps $170 to
$180 billions which is about at

together and to maintain

economy

itself

any government

whatever

anticipated in¬
capital goods and

pressure

the expenditures of consumers to
make good on their deferred de¬

and

how effective its efforts would be.
In my

industries

which

part

BILLIONS

persistent

prices will be in the durable

pares very

under¬

spending program.

The

opinion

expert

demands without up¬
movements.

These

Business
To

Outlook

summarize,

national product in
or

for

1946

expect

610^

1946 to be ne

capacity rate ot $i
and I expect nrices

above the

billions
move

well

upward
aware,

moderately l
however,

t at

price situation is explos"rP an
rapid advance is by no mean:s
of the

question. If prices «ve

heic

THE COMMERCIAL & FINANCIAL

Number 4482

163

Volume

\r,

during early

reasonable check

U. S. Trade

production will prob¬
up during the latter
oart of the year and the threat of
drastic increases will be averted.
Thus, the next several months are
extremely crucial on the price
then

1946

ably' catch

Opportunities in China

their

furs, ginseng and silver for
the teas, silks and curios of China.

They made friends with the Chi¬
nese people and enjoyed an ami¬

CONCLUSIONS
This completes the analysis of

Celestials.

the

with

trade

the

the next

monopoly

Co.

general economic outlook for
several years. By way of
summary, I should like to review
the main conclusions and to indi¬
cate some of the implications and
qualifications.
Tne general movement of gross
national product for the next sev¬
eral years, as suggested by the
analysis is shown in Chart 2 by
the small marks in the right-hand
portion.
In 1946, gross national
product is estimated to be about
$160-180 billions indicated by the
first pair of marks; in 1947 and
1948, at the height of the catching-up
period, the estimate is
$170-180 billions; in 1949 and 1950,
after the predicted
decline, the

India

products of commercial
value and by their introduction
into the market substantial trade

powerful East
its typical colonial

has

the way you are

be¬

self-sufficing
Celestial
dynasty
and the imperialism of the ever-

expanding

the

War

mate
or

conquerors
infamous Opium

Nanking on Aug. 29,
the British, whereby
was
forced to open five
of

with

1842
China

and character would be

Thereupon, in order not to

suf¬

disadvantage in the com¬

fer any

the

Such

half

A few writers see
of prosperity
I happen to be relatively

to seven years.

indefinite period

most

this point.

I expect

demands

(except¬

deferred

the
end of 1948, and for the level of
production to fall sometime be¬

ing housing) to be made up by

tween 1948 and 1950.

be very wrong on

may

Now

against a

July

machine

unequal
China sought for

which

under

China's

easily

China's authority
to regulate its own tariff and (2)
exemption
of foreign- nationals
from the jurisidiction of the Chi¬

less spectac¬

(1) limitation of

laws.

nese

cannot

One

imagine the harm¬

provisions and
penetrate
political and economic

ful effects of such

the extent to which they

opinion as to the depth of the de¬
pression when it does come.
I
feel that the depression will be

the

unless one has
under their impact in the

life

lived

country

where

country

such

provisions

operated. Under the tariff limipotentially serious, but that the I tation clause China was forced to
government will act fairly! collect a fixed 5% ad valorem
promptly
with
some
sort
of duty plus 2 V2 % transit dues on all
spending program to prevent ca¬
tastrophe. On this, there are other

the results

to what the
and what

might be.

Third, there are differences of
opinion on whether drastic price
increases will develop during the
boom

I feel that prices
in line and

period.

will be held fairly well

that

will

increases

moderate,

but not everyone shares
The

actual

seems

me,

will

small degree upon

able

factors

this view.

of events,

course

depend in no
such unpredict¬

international

de¬

velopments, fluctuations in public
psychology

and

changes

the

nolicy of the Federal Government.
The conclusions
of

in the realm

are

opinions and judgments.

Lew

Speak in Chicago
General

Hahn,

and Treasurer of the

tail

Dry Goods

speak

13th

National Re¬

attending the

conference

Credit

Management

NRDGA,

tion

Manager

Association, will

delegates

annual

the

Division,

"Stimulating Produc¬

Through

Sound

Price Con¬

first class modern war
revealed the real

tremendous

before, for advocating that sales¬

From our viewpoint
You certainly can't
make friends, build confidence (the basis for every business relation¬
ship) or create goodwill by being indifferent to your customers. Some
years ago even Henry Ford had to admit that he had to give the
public what they wanted. People want to be considered important
to somebody else.
We instinctively gravitate to the man who shows
us
consideration, listens to our ideas, asks us for advice, and re¬
members to call us up once in a while and invites us out to lunch.
But no man can be a hypocrite in this game.
If you want to
play it, you've got to be dead on the level. First of all, it isn't every¬
body in this world that you can like, and that will like you.
It's
true that a salesman gets paid for doing a lot of things that many
other people would not do.
But there are enough people to whom
you will gravitate, and they to you; that liking them will come about

has
qual¬

onslaught

vic¬
their own

peril and suffering notwithstand¬
ing, has earned the full recogni¬
tion of the U. S. and other nations
for China's equal partnership in
this armed struggle.
As a result,
the U. S. A. took the lead in sign¬

with China on Jan. 11,
1943
abrogating the extraterri¬
torial rights enjoyed by American
nationals in China since 1844 and
relinquishing
other concessions
and privileges which were incom¬
patible with an independent and
soverign
power.
By the same
treaty U. S. secured for its na¬
tionals: (1) full protection of their
ing a treaty

rights and interests legitimately
acquired in China, (2) the rights
to
travel, reside and carry on
trade throughout the whole extent
of its territory and (3) equal treat¬

ingratiate themselves with their customers.
can't see what is wrong with this policy.

natural sort of thing.
successful

bond

salesman

once

advocated

that

salesman

spend his lunch hour alone.
Five luncheons a week
with different customers or prospects will pay for themselves many
should

never

It's a salesman's way
appropriate occa¬
sion—the theatre party—even a clipping from the paper with a note
—they all have their important place in building a business.
And if you do these things well, and that means sincerely, you
won't have to worry about finding someone that can buy something
from you.
You will only have to think well and hard about what
you want to sell.
That's the big job in this business—finding good
securities for your customers.
The rest consists of using your time
to advantage, using your head, and being yourself.
Like people

times

over

Flowers sent to a customer on an

and show it—business

Aid Voted for
A
to

bill

future business.

in goodwill and in

of advertising.

follows.

Philippines
$525,000,000
rehabilitation

authorizing

expended in
the
Philippine

permit the transfer to the
Philippines of war surplus prop-®
erty to a value of another $100,000,000.
Allocating $120,000,000 for re¬

sion to

ment with its own nationals in of
Islands was
pairs to property of the Philip¬
fixed valua¬ regard to all legal proceedings, in passed unanimously by a voice
vote of the House on April
10. pine Government, the bill under¬
matters relating to the administra¬
tions of certain years, which often
takes to establish a War Damage
tion of justice and to the levying and was sent to a Senate-House
became so obsolete so as to make
of taxes or requirements in con¬ Conference Committee so that the Commission to distribute funds in
the actual collection much less.
nection
therewith.
The
future differences between it and the part payment for war damages.
There was no way for China to
The legislation also makes avail¬
trade between U. S. and China Senate passed measure could be
encourage or discourage any item
will be conducted as between two ironed out, an Associated Press able $5,000,000 to repair damages
or class of commodities for import
Washington dispatch stated.
The to property owned by the United
according to the dictate of her equals, with mutual respect, and
States Government.
House bill also contained provi¬
to the same extent in treatment
economy or national needs; there
on the basis of equality and reci¬
was no way for her
to foster the
Similar
treaties were
growth of her young industries; procity.
signed with Great Britain and
there was no way even at times of
other nations.
A new era is open¬
great financial stress to increase
ed for the free and unhampered
its revenue from customs receipts.
development of China's foreign
For one hundred years China was
Convertible $1 Preferred Stock
trade in general and trade with
deprived of a powerful weapon to
U. S. in particular.

Lipe Rollway Corporation

regulate her economic needs, to
strengthen her national finance
and to assist industrialization.
It
was

only after many years

of de¬

struggle for treaty re¬
vision that the National Govern¬
ment of China was able to make

termined

States

took the

1928 the United
lead in restoring

the tariff autonomy to

China but

nulli¬
fied by the refusal of the Japanese
to follow suit and shortly there¬
after
by invasion of Manchuria
the

benefit was practically

in 1931.

Extraterritorial

rights

enjoyed

foreign nationals in China
a permanent gulf between
the Chinese and foreigners, espe¬

erected

Trade between

U. S. and

cially after

Class "A" Stock

China

enjoved a steady growth since
its inception and reached its high¬
est levels in the years 1918-1921
Has

From 1911 to
1937 American exports to China
exceeded imports from China only
in the years 1921, 1931, 1932 and
1934 and in
other years U. S.
bought more from China than it
sold to China.
From the point of
view of U. S. total trade China's
share has nev# been significanl
with American export to China
occupying 1V2 % to 3 V2 % and im¬
ports from China 3% to 5%. But
basing on China's total trade U.S.
share both in import and export
is much more important. What is
significant is the fact that dur¬

and

Circular

request

again 1927-30.

repeated injustices suf¬
trols" at a luncheon in the La
fered by the Chinese when arbiSalle Hotel,
Chicago, on April 24,
ing the past 100 years China's
tray protection was given to for¬
it
is
announced
by J. Gordon eign culprits by their consuls. As trade has indicated a steady and
cotninuous
growth in spite of
Lakins, Manager of the group. long
as
foreigners were
not
shackles and handicaps and with
Chicago merchants and
retail amenable to Chinese Jaws the Chi¬
a
determined
resiliency
after
nese Government insisted on con¬
executives have been invited to
years of extreme trouble, political
fining their residence and trad¬
Join the credit men when Mr.
and otherwise.
Whenever there
ing activities to the treaty ports.
Hahn presents his views on price Mutual suspicion necessarily re¬ were signs of internal tranquillity
(Continued on page 2108)
stricted the sphere and extent of
control, Mr. Dakins said.

sales

articles of import on

its voice heard. In

Hahn

busy these

men

has

tory of the democracy,

undoubtedly,
the
full
growth
of
foreign
trade,
namely:

shackled

into

would

be sure that he has been mighty

can

been
appreciated these days. Peo¬
ple don't want to be sold anything.
They want to buy things from
people that they like, and that they believe have their welfare at

ity for nation building and whose
tenacity in clinging to the un¬

that had,

two

were

Second, there are differences of

government

You

This column has been criticized

have taken

demonstrated their intrinsic

Treaties

ular.

viewpoints—both

get reservations.

vitality of the 450,000,000 Chinese,
whose
endurance
and
cohesion

century to abrogate.

changes

the World War II?
Eight years of armed struggle un¬
der
the
most trying
conditions

demanded

known

what

place during

Among the unequal treaty com¬
mitments forced upon China there

this.

were

later

review

swerving faith in the ultimate

ity
develops
into
a
first-rate
boom, it may last longer and cul¬
minate
in
a
more
resounding
crash than would be the case if
prosperity

nation.

casual

heart.

Crippling Effects nf Former Trade

Indeed, if the period of nrosoer-

the

were

treaties

perity before a recession sets in.
usually vary from one

pessimistic

vestments.

World War II Changes

Similar rights and priv¬

1844.

were

length of the period of pros¬

ahead.

privileges

treaty was signed on

ileges

Estimates

and

trade with the outside
comparison with that
of China should lead us to dis¬
cover some truth in this assertion.

by and
granted to other powers. These

three points.

First, there are differences as to
the

rights

same

granted the most favored

for wide differ¬

room

somewhat
of

way to develop this relationship is to show an interest in
clients' welfare regarding other matters, as well as their in¬
We know of one salesman who made it his business to
inform those of his customers that were occasional users of the rail¬
road and air line services, that he could help them procure hard-toOne

your

presenting tickets, and those tickets are

merchants.

in Chart 2.

of opinion on

had

harmful ef¬
fects of such treaty provisions, it
is safe to assume that in the ab¬
sence
of such effects trade vol¬
ume
should
have been greater

world and a

regarding my whole anal¬

There is
ence

foreign

changed,

Customers eventually must become

Japan's

Cushing, to negotiate a treaty with
Cluna with instructions to secure

outlook

China's

be.

Nothing is more important than their health and their fi¬
nancial welfare. The doctor and the securities salesman are on a par.
No business is more confidential than the investment business.

special

billions.

business

have

That is the way it should
friends.

past few months doing just that.
He has been making better
talks than he ever made presenting a stock or a bond—he's

grant
privileges to the British

conclusion, I should like to
offer a few warnings and qualifi¬

the

might

time.

different.

character

extent the volume

your

ports to foreign trade and

Qualifications

summarized

what

there not existed the

petitive position of its traders in
China, the U. S. Government sent
its
first
commissioner, Caleb

ysis

might have taken

Although no one can esti¬

trade

1840, terminating by the

Treaty

wider fields

place.

western

resulted

wasted.

If they don't do so there is something wrong with
selling. If you don't get some calls to do an occa¬
sional favor from your customers, better find out the reason why.

upon

the isolationism of the old

tween

the
trade

treaty ports more extensive
in

clash

Had not the for¬

developed.

visiting with your customers is not

business demands that a salesman devote the larger portion
of his time making what are called "service calls," it is the securi¬
ties business.
After a while your customers begin to make demands

If any

eign traders been confined to

trading style.

the

This Is A Personal Business
The time you spend

discovered

the

Unfortunately,

By JOHN BUTTON

lacking where American mis¬
who are allowed to re¬
side in the interior of China have
not

They were able to compete suc¬
cessfully with the English mer¬
chants who operated under the

cation

are

sionaries

cable

estimate is $145-165

Instances

trading activities.

Securities Salesman's Corner

(Continued from page 2083)

front.
6

2107

CHRONICLE

Herrick,Waddell & Co., Inc.
55

LIBERTY STREET, NEW YORK 5, N. Y.

American

Fruit Growers Inc., Com*

Arden Farms Co.,
Fullerton

Pfd. 8C Com.

Oil Co., Com.

Wagenseller 8 Durst, Inc.
Members Los Angeles Stock
626

SO. SPRING ST.

Exchange

TRINITY 5761

LOS ANGELES 14

Teletype: LA 68
Markat

Quotations and Information on all

California Securttfac

::>■■, A#ii

iyyw'^^y^^.^^!^*'1-'.'' *^r '7

THE COMMERCIAL & FINANCIAL CHRONICLE
■>■

required

U.S. Trade
(Continued from page 2107)
external peace the trade voladvanced by its own mo¬
mentum.
What is more signifi¬
or

this

ume

return to

cant

the

fact

while

that

former years Great

Britain, Ger¬
many and Japan have taken the
leading role in China's export and
import, the U. S. has steadily im¬
proved its position and has taken
the lead since 1931, the year that
Japanese
occupied
Manchuria.
Even with the loss of Manchuria,
China's foreign trade continued
its growth. The first six months
of

1937

showed

the

greatest

pansion in China's

ex¬

foreign trade

until its momentum

was

sudden¬

■

machine

rolling

into

China

July. Such phenomenal growth
was
generally attributed to in¬
ternal stability and steady growth
of Chinese industrialization.

victory is

stage is set for

won

and the

what

the

are

and unfavorable factors

favorable
concern¬

ing the prospects.
L Favorable factors:

(a) Removal of former artificial
impediments opened up a
new

for free and equal
between China and

era

trade
other

nations;
(b) China's cooperation

in¬

greatly

gradually

not at all.

Effect of Germany's

On the other

lElimlnation

1936

hand, U. S. exports to China con¬
sisting of cotton, petroleum, wheat,
lumber, tobacco, iron and steel,
metals,
machinery
and
many
manufactured
articles, are also
either insufficiently produced in
or

at all.

not

Due

19.6%

19.8%

16.3%

15.7%

15.9%
11.7%

15.3%

Germany

Gt.

—

Britain__

1936

1937

26.4%

27.6%

14.4%

10.0%

not

most

cluding turbo-generator sets:

possess

the

quality and adaptability of the
original imports and reintroduc-

Germany

have

taken

permanent
Inasmuch

46%

Great Britain

18%

Switzerland

14%

Japan

U. S. A

Electric motors and parts:

governed by her ability to create

na¬

tional will to industrialize;
Accumulation
of
certain

(e)

amount of U.

S. dollar

ex¬

change in private depos¬
its,
government
balances
and U. S.

credits

available

for purchases;
(f) Consuming capacity of
American industry and the

public for Chinese products;
(g) A general enthusiasm of
American
traders
to
get
back to China and pick
up
where they left off;

(h) Resumption
overseas

Chinese

remittances.

(a) Runaway inflation in China
not yet

put under control;
(b) Damage to transportation

equipment

requiring time
repair and recondition;
Manchuria problem and loss
to

(c)

industrial

equipments

there

impede the start of
reconstruction;
(d) High cost of living and dif¬
ficulty
in
transportation
slows down the
production
and

movement

export

commodities.

prewar

emphasis first
goods and later
ducer and capital

pattern

with

consumption

shifted

pro¬

goods., In China

there will be urgent
problems of
rehabilitation, repair and recon¬

ditioning

old

equipment and
industrial plants;
reorganization of
political and financial
*•*

disbanding of soldiers
ing

machinery;

and return¬

refugees to their homes;

organization of
currency and
vival of production. In

there
of

re¬
re¬

the U. S. A.

will

gradual loosening
controls, readjustment of
and price
structure, recon¬

war

wage

version of
of war

industry, reemployment

veterans, reorganization of
shipping and air services, promo-

tion of civilian production.
During

exchange by export of Chi¬

U. S. A

ports

would

the

extent

Germany

39%

im¬

Great Britain

27%

and

Japan

17%

rapidity with which the Chinese
industrialization program will be
carried out. The 8-year war
fought
without an industrial base to
pro¬
vide

war

weapons

U. S. A

Japan

in her

people, leaders and

hard

alike,
and

an urgent desire for quick
large scale industrialization.

hopes

ent

that

world
peace will soon prevail
under the

Fund and World Bank
and U
direct

assistance,

work

pleted

and

rehabilitation

China will

soon

be com

reconstruction

will shortly begin.

work

Stability

insure

will

security and
productivity
yield reasonable return.
It is
hoped that under these

favorable

conditions not only U.
S. Govern¬
credit will continue

ment

as¬

sist China but private
capital will
it desirable to

find

cells

and

other

acces¬

sories:

prived of

war

tries and

being allowed to export
native products only to the
extent
necessary for payment of import
of
necessities, a vacuum will be
created in the Eastern markets.
Due to low
purchasing power of
these markets such
cheap com¬
modities formerly furnished
Japan will

not be produced in the
U. S. China is the
logical country
to fill this vacuum.
If China is
aided and given this
opportunity
she will be able to
manufacture
and export
cheaper grades of man¬
ufactured articles to the Eastern
markets in exchange for materials

deck

for

action.

have

programs

The

Several

indus¬

been

pro¬

earliest and still the

comprehensive

outlined in the

program

book of Dr.

Sun

among other extensive programs
the
building of 100,000 miles of

36%

railway, 1,000,000 miles of high¬

20%

way,

18%

Textile machinery and parts:
•

Japan

71%

Great Britain

19%

Germany

U.S. A

Hand tools:

U. S. A

45%

U. S. A.

20%

Great Britain

18%

Japan

Gas engines:

l--——__34%

U. S. A.

the

his

recently

Heavy and crude oil engines:
34%

Japan

U.S. A

6 k
a

re¬

follows:

Total Output
for 10 years
Steel

10th year

Output
5,000,000 tons
100,000,000 tons
2,500,000 ozs.

14,000,000 tons
500,000.000 tons
12,000,000

Cement

85,000,000 bbl.

ozs.

20,000,000 bbl.

Steel Plates—

Cotton

1,000,000 tons

Yarn—

29,000,000 bales

26%

Steamships—3,000,000

Japan

21%

5,000,000 bales
lines.

new

U. S. A

Germany

11%
10%

prosperity
which

years

the

greatest
in helping the U.
S. to
maintain full production and
full
employment1 and
the
highest
factor

pared with March
failures

ness

number and

involved.

a year ago

busi¬

high in both

were

amount of liabilities

Business

failures

March,

according
to
Dunn
&
Broadstreet, Inc., totaled 86 and
involved

$4,421,000

compared

involving
and

March

with

liabilities
in

$2,983,000
involving $3,880,000

year

February,
liabilities
in

ago.

All

groups into which the re¬
port is divided, with the excep¬

tion

the

Manufacturing

and

Wholesale

groups, had less fail¬
in March than in February.
When the amount of liabilities is

ures

considered

only

the

Wholesale

group had less liabilities involved
in March than in
February.

Manufacturing
March

were

failures in
to 41 from 29 in

February, and liabilities were up
to $2,285,000 in March from $874,000 in February. Wholesale fail¬
ures

numbered. 10 with liabilities

$529,000

against 9 in Feb¬
$888,000.
Retail failures Were down to 17
in March from 27 in February but
liabilities were up to $269,000 in
as

ruary with liabilities of

March from $258,000 in February.
Construction
) insolvencies
i n
March numbered 10 with liabili¬
ties of

$436,000 compared with 14
February with $215,000 liabili¬

ties.

Commercial service failures
in March were down to 8 from U

February but liabilities were
to $902,000 in March from
$748,000 in February.

Dr.

Cleveland,
Louis

Richmond

and

bt.

haa
fewer failures in March than m
Districts

Reserve

February.

The Philadelphia

same

and

number, while all the re¬

maining districts had more
vencies

Locomotives—2.400

Machinery for sugar refining, dis¬
tilling and brewing:
Czechoslovakia
74%

prove' to

may

Atlanta Reserve Districts had the

5,000,000 tons

27%

15%

world

When the country is divided in¬
to Federal Reserve Districts it is
found that the Boston, New York,

are

Great Britain
U. S. A

and

coming

tion which

tain goals for a ten
year program
for China's
industrial reconstruc¬

Railways—48,000 kilo., in
Rails—3,360,000 tons

Steam engines:

the

Germany

published

Destiny" proposed in

Gold

52%

for

Wen-hao, Minister of
Economic Affairs,
proposed cer¬

Coal

Great Britain

Government, in

than proposed
by Dr. Sun Yat-sen.
Dr. Wong

29%

—

Germany

National

"China's

30%

Great Britain

Japan

construction, among other things,
25% the construction of 20,000 kilo¬
22% meters of railways, the produc¬
17% tion of 220,000 automobiles,
12,000 transport
planes and other
projects in more moderate scale

Germany

tural, mineral and manufacturing
industries,
etc.
Generalissimo
Chiang Kai-shek, now Chairman

28%

Machine tools:

•'

improvement of rivers and
canals, iron and steel works, ir¬
rigation, improvement of agricul¬

program of postwar industrial

Great Britain

of consumers goods and
luxuries.

Japanese
Japan being de¬
and heavy indus¬

determination to
industrialize, China is clearing her

Great Britain

without sacrificing
the steady growth of
importation

With

firm

Germany

increase

trade.

U. S. A

Japan

A third factor that is
bound to
influence China's trade with U. S.
is U. S. policy vis-a-vis

With

Japan

and know-how is made
available

percentage of producers goods
machinery and equipment

ances, considered as daily neces¬
sities in this country, are still
luxuries to the Chinese.

Germany

volume

conveni¬

and

most

foreign
government credits or private in¬
vestments in capital
equipment
both

Modern

comfort such as refrig¬
eration, radio, modern plumbing,
heating systems, electrical appli¬
ences

16%

ances,

goods will grow steadily smaller,

amounts

only

Yat-sen, the father of the Chinese
Republic, "International Develop¬
Electrical fittings, fixtures, appli¬ ment of
China," which provided

and

liberal

improvements.

posed.

Great Britain

equipment will grow
steadily larger and for consumer

has

have part or all of these modern

trial

China

expansion

98,000; U. S. has 32,450,000 reg¬
istered motor vehicles, or five
standard of living in the world.
persons to each vehicle, China has
only 71,140, 6,400 persons to each
vehicle; U. S. has 20,830,000 tele¬ Business Failures in
March
phones, China has only 160,000.
Business failures in March were
Among 5,000 cities that need elec¬
lower in number but
higher in
tric lighting, water
works, rapid amount
of
liabilities
involved
transit system, improved sanita¬
than in February.
When com¬
tion and
housing, less than 100

55%

Japan

will be slow and

whereas luxuries will be strictly
limited. On the other
hand, if ex¬
ternal aid in the way of

highways,

U. S. A

changing in
character of her imports will be
selective and slow.
On account of

ery

U. S. has 240,000 miles
railroads, China has only 12,000; U. S. has 545,000 miles of

State

seek

market

Germany

rely entirely on her own financial
strength and technical skill prog¬

exchange control the proportion
for producers
goods, and machin¬

Electric meters:

masses

The will to industrialize is
pres¬
ent everywhere.
If China has to

17%

U. S. A

material taught
lesson and created

30%

Great Britain

war

China

38%

Germany

and munitions

danger of relying on for¬
eign supply at a time of universal

Electric cables and wires:

and the

scramble for

transformers and other
electrical machinery:

The second factor which will af¬
of China's

32%

Electrical

goods.

fect the character

and

In the first two to
three years

the

nese

will

foreign trade between the United
States and China will probably
follow

dollar

and

Future Pattern of Trade

...

serve

ress

II. Unfavorable factors:

are

auspices of the UNO and
internal
stability in China will
establish
itself under a united
and demo
cratic government.
With the as
sistance of UNRRA
and World

Industrialization

market.

mand for all goods in China

(d) Presence in China of

the^

excellent

substitutes

etc.

14%

best supply;

assistance.
Both
again U. S. is in an
position to furnish

will

inevitable

Chinese

28%

can

nical

ran

domestic
foreign, and necessary tech

Electric generators and parts, in¬

laces,

9.6%

8.6%

Germany

U. S. A.

and

easily increa

China trade by U. S. A. that is
important at all. It is the future

5.5%

tion of American goods has to be

complete blockage—
consumers,
producers and
capital goods alike which

industrialization
5

plan quickly and
effectively
depend on how
readily she
secure adequate
capital,

instru¬

replace Germany an
Japan at least partially after th£ir
heavy industries are eliminated.

9.2%

—

urgent de¬

years

made

Britain..

Germany

Great Britain

three

invest¬
development
of
the
ment there.
With sufficient
fi¬
through indus¬ nancial
and technical
aid from
In specific items where U. S. trialization for the coming years
the U. S. China will
be able to
occupied secondary position but that is gong to be epoch making. realize her
dream for
industrial¬
with great possibility of improve¬ Citation of a few figures of com¬
ization.
Its
realization will, no
ment we cite a few as examples parison will help you to grasp the
doubt, open up a new era of trade
immensity of China's potential
(years 1935-1937):

3. Gt.

Japan

over

can

coming and sub¬
developed in this
country, for example—nylon for
silk, linseed and dehydrated cas¬
tor oils for tung oil, new tinning
process for economizing the use of
tin, Indian and Ceylon tea for
China tea, machine made laces for

China's U. S. dollar exchange re¬
is rather limited importa¬

China's

1. U. S. A

Japan

industrial

Whether China will
be able
carry
out
her

telegraph

and

which

the U.
situated to
supply.

It is not the replacing of Ger¬
man and
Japanese shares of the

have

share of the market.

result

terials

its share to

11.7%

Exports

stopped

stitutes

bring about closer coordina¬
tion
in
facilitating trade
between the two countries;

ucts U.

1937

1. U. S. A.

of China's seacoast
Chinese products for several years

have

tutes

16%

Telephone

2. Japan

the

World Fund and Bank will

18%

U.S. A

tion of the goods at competitive
prices will insure a good market
whereas in other instances substi¬

56%

Great Britain

Switzerland

may

normal basis.

U. S. A. in world organiza¬
tions such as UNO, UNRRA,

with

equipment

Germany

cases

of China's foreign

consider

will

1945

hand

further expansion
trade.
Let us

trade

between U.

creased thereby.

■

blockading

Factors
Now the

^ ^ i

Trade

China

Elimination of
Germany and
ments and parts:
Japan from the China market will
Germany
43%
extent. and character of China's
automatically increase, the U. S.
Belgium
17%
future trade with U. S. A.
The share of China trade.
While U. S.
U. S. A
13%
first is to what extent the U. S. A. had
already attained the first po¬
Printing and paper making ma¬
will restore and expand the im¬ sition in china's
foreign trade as a
chinery:
ports from China. Trade between whole there were specific items
Sweden
49%
U. S. and China has been largely in which either
Germany or Japan
Germany
18%
complementary; imports from was still ahead. For example, the
U. S. A
13%
China such as tung oil, hog bris¬ relative
positions of the several
Iron
and
steel
tles, tin, silk, tea, antimony, tungs¬ leading countries during the two
products — in
ten, wool, vegetable oil, egg prod¬ years immediately preceding the most items Belgium, Germany,
Britain
and
ucts, hides and skins, etc., are Japanese attack on China were as Great
sometimes
either commodities which are in¬ follows:
Japan were ahead of U. S. A.
sufficiently produced in the
In all the above classes of prod¬
Imports

China

Favorable and Unfavorable

and

Flour mill machinery:

Three factors will determine the

U S. A.

ly slowed down by the Japanese
war

period

in U. S. manufacturing

industries.

Thursday,' April 18,

ruary.

tons

March

When

than

the

liabilities involved is

Wong estimated that

der to carry out

or¬

seen

out¬

the first

five years would be
about $10
billion of which at least
half must
be spent for

buying

machinery,

mond,

that the New York,

Chicago and Kansas

Reserve Districts had less
ties

involved

March

February, while all of the
ing Districts had

Feb¬

amount of
considered it

modest indus¬

trialization program such
lined above the cost for

insol¬

more.

Rich¬

City

liabili¬

than m

remain¬

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

2109

~'W-

»'•

Improved Mortgage Lending
petition will level off rents

(Continued from page 2085)
oace
investments yield the best

orices

financial institutions
and carry their expenses. Their
bond and stock investments are on
lower yield. I read Sunday that
over one-half of the Metropoli¬
tan Life's vast resources is invest¬
ed in Government bonds yielding
jess
than
2%%.
Real estate
should be proud of its ability to
meet this problem, and should be
to

return

volume

sets

and

produc-

;ion increases.

'Times"
Control":
"It is

put ceilings
rents for

accorded every consideration by
financial institutions in return. I

suggested the 4*4% interest
rate, in spite of a falling rate in
the market, as a long-term solu¬
tion to this joint problem and to
avoid a return to the 5 and 6%
rates of the past. Higher loans will
be required to meet higher costs
of apartment
construction.
For
have

houses or

new

there is

that

Federal

will definitely

better

way

duction

fore¬
being

kept up.

contribution

addition

neces¬

modity

the

its

this year

is to actively work to re¬
shackles

the

from

building business.
As

building

creases,

all

in¬
business

types

mortgage

your

will increase.

this end I

fact

this

Now that the

rec¬

My suggestion to brokers is to
to

tional

of free enterprise

take

constitu¬

get back to
government and
coats off and

our

the
we

sys¬
can

produce.

would
aecome
legal and could be pur¬
chased only where prices are rela¬
tively high, and that many of the

basis

inferior

quality,

prices. This

at the most favorable

has

weakness

long

purchased

been

recog¬

nized, but is inherent in any law

put into effect voluntary plans
of readjustment in which bond¬
holders

asked to put part

were

interest

their

either

contingent

temporarily

manently.

examined, it is found that
under the old law only three of
1932 is

would have met

periods of temporarily poor earn¬

have

ings when prices are low.

New

bonds which could
been purchased in 1933 by
Jersey savings banks if the

new

law

Increase

now

control

rent

construction.

new

ceiling

prices

production

encourage

building materials.
The new order designed to limit
construction to inexpensive houses
lor veterans

represents further

periods of prosperity.

The

new

law is based on an idea

re¬

developed by George M. Grinnell
of
Dick
&
Merle-Smith,
New

the

of the 16 has sub¬
sequently been forced into bank¬
ruptcy.
Only

one

Below

list

some

of the

grade

high

that year.

been

had

effect

The low prices for the

the

York, who collaborated with the

given, together with
current prices.
Obviously, large

housing prob¬
lem. In the first place I feel that
"Veterans' Housing" has become
a political
slogan. Its constant use
may induce Congress to provide

Investment Committee of the Sav¬

blocks

Jersey.

millions

fixed

strictions

and

so-called

will

solve

not

veterans'

subsidies

won't

but

Association

Banks'

ings

New

By substituting a variable
standard
the
earnings of the
roads as
a
whole—for the old
—

better

by uncurbed construction

The

railroad bonds would now be legal

veteran

served

would

of all forms of

mercial

ings, which probably, under more
normal
conditions,
would
not

to sell

housing and com¬
buildings.
Houses built
for $12,000 to $20,000 may

attract families who will give up
apartments or houses that a vet¬
eran

afford

can

apartment

live

in.

construction

New

both

for

veterans and non-veterans would

empty

older

and

less

expensive

result of

qualify.
list

high wartime earn¬

Under the new law the
eligible railroads is still

restricted to

limited number of

the stronger systems.
In

order

test

law would have

the

how

suites that veterans could afford

been in effect in the past,

What

ords of fifty

need is construction, not

further

restrictions.

have

who have been in the

sons

two

Navy

for

three years; neither needs a
house to buy.-On the other hand
I

know

who

lost

hundreds

families

not veterans, but who
in the war and took an

were

sons

active part in war work and who
need either

in various

other

apartments

veterans

workers

business
houses.
The

price ranges.

who
more

houses
I know

former

and

war

stores

for

than they do

new

need

order

seriously

the rec¬

of the important Class
analyzed for the

I railroads were

period ending 1929 and for the
period ending 1932. It was found
that for the period ending 1929,
18
of the fifty -railroads would
have been eligible.
None of these
railroads
has
been
forced into

been

are

control
The

York

State

precaution
on

has

bought
in
substantial amounts
fairly close to these low prices.
The

theory of a flexible stand¬

applicable to the railroad
industry because of the wide fluc¬
tuations in the net earnings of
is

ard

that

industry.

periods of prosperity, that re¬
quirements which can be met by
less than 50% of the railroads, no

Homes

ment, through the FPHA provides

Housing Author¬
of $3,439,000 of

bonds
College

Homes, which
dwelling units.
The
proceeds of the refunding sale will
retire
the
Government's capital
investment in these developments
764

contribution

annual

Austin

and

include

ing and low rents the families can

This contribution also helps

pay.

the local authorities to assure in¬
that

vestors

strated than has been demonstrat¬
ed in the past,

The
over

ly advisable for savings banks to
restrict their
investment to the

Thus

Unquestionably further refine¬
ments should be made in the new

factors,

1929,

went

into

cal

are

method

strong
special
If a logi¬

not eligible.
can be developed for

qualifying such railroads, without
at the same
time lowering the

standard, it
do

will

paid

Public

over

the life of

Utility Securities

$72,186.19

the

for

year

and

developments,

Knoxville

amount

would
per

an¬

Fed¬

which

Government,

for those in

per year

Raleigh.

(Continued from page 2076)
unit exchange method,
sug¬

preferred stock. It avoids the
difficulty of evaluating portfolio
items by obtaining real
market

the

for

this

values

gesting that 25 shares of common
stock be considered equivalent to

tributed.

share of

one

distributed

preferred, with assets

Volun¬

this basis.

tary exchanges were proposed as
alternative.

n v e

t Associates,

m e n

Inc.,

The

feasible

issues

loan

bank

(to

Standard Gas) to pay

appeal, because of the low interest
cost as
compared with the 6%
dividend rate, and
which

loan

stock. Three of the northern

obtaining sub¬
Later Consumers

scription rights.
Power

would also

sold

duce the bank loan. A fourth

re¬

plan

proposed by Albert Shassol,

stockholders, he suggested recapi¬
talizing Ohio Edison and Consum¬
ers
Power and offering these or
other securities to preferred stock¬
The management

plan is

largely

designed

appar¬

avoid

heavy bankers' commissions in the
sale of sufficient stock to pay

off

the speed with

consummated if

can

should

agree

not

money" stocks could

sale of "new

then

until

deferred

Consultants

normal

earning power is somewhat better
established

should

calendar

savings

present

period. However,

recognized that the
1946

year

—

tax

when

realized,
heavily offsetting cost in¬
will

fully

cuts

rate

creases

the

than

interim earnings

later—may

favorable

which

may

very

prove

time to liquidate

hold¬

ing company portfolios.

Municipal Finance
Municipalities

A Constructive Service to

As Consultants on

structive

assistance

in development of plans for new

reorganization

the financing of

existing

debt

structures,

financing,

planning

self-liquidating projects, and financial

517/s

127

73Vs

130

941/2

149

63i/2

109

Ret'd at par

WE
are

NOT

BUY

SELL

pleased to cooperate with finan¬

109

127

relations.

SECURITIES.

823/4

119

Price

140

Refunding 4s,

States and other

This service includes experienced

Low

Price

Lien 4s, 1996.

Municipal Finance we render a con¬

planning service for Cities,

governmental units.

cial institutions and investment houses.

Wainwright, Ramsey & Lancaster
70 Pine Street

The

delaying court appeals,

without

holders.

ently

parties

file

stockholders

mon

was

all

com¬

panies (not including Consumers
Power) would be sold, with com¬

dis¬

be used by
off the pre¬
ferred stock immediately has some
of

which

owns 32,000 shares of com¬
proposed a $75,000,000 bank
to
pay
off the preferred

plan would seem
although the idea

mon,

public
1933

Present

Central Pacific

for 22

be desirable to

so.

Approx.

Northern Pacific Prior

average

refunding

the

need

contributions by the

maximum

1.2874%, and will reduce total in¬
terest

the

$135,431.25

will

stronger railroads.

plan of readjustment involving
placing part of the road's fixed
charges on a contingent basis. Of
32 roads which would not have

bonds

new

mature

years,

less than the bonds being

eral

private

period

refunded.

payments

will

issues

new

years

$237,000

it would seem high¬

law, for there are certain
railroads which, because of

bankruptcy and three were forced

the

interest

obligations

bond

the

will be met.

nual

Net

make

difference between the
actual cost of providing the hous¬
the

eliminates

and

families

the full

pay

decent, privately operated
housing.
The Federal Govern¬

Heights,

unable, to

are

projects is

cost of

reduce

payments

the bonds.

Western

these

low-income

industry,

Federal
follow suit. The risks in construe

are enormous and the profi
motive should be encouraged. The
Public will not be injured as com

who

the

the life of

over

Admission
limited

good the earnings of
are too severe, but
until greater stability is demon¬
the

new

tion

$1,601,854.58.

matter how

housing.
Government should

rents

not be

would

applicable to the public utility in¬
dustry Lecause
of the relative
stability of earnings. It may seem,

taken

eliminating

have

purchased at the low sales,
been

sound and should be revoked.

New

not

these bonds could have

but

injures steel, brick and other pro
ducers, and trades engaged in
structural work. The order is un

wise

could

bonds

bankruptcy nor has any of them
had to put through a voluntary

qualified

restrictive

new

worked if it had

1933

year

standard, the law is greatly

improved. For example, under the
old law a substantial number of

produce houses.

interest

average

per¬

ending

period

the

fied.

Elimination

will

1.282%, and re¬
payments from
$1,989,980.83 to $388,026.25, thus
saving the Raleigh authority

$5,732,858 to $1,121,581,

investors.

On the
other hand, the higher the stand¬
ard, the smaller the number of
intrinsically
high
grade
bonds
which
could
be
purchased
in

all

authorities to

total

of Series A bonds held by

(Continued from page 2092)

$128,000

Housing Authority,

N. J. Amends Rail Bond Investment Law

phon

local

their

enable

strive

$1,704,000

investment

of privately held
bonds outstanding. New net inter¬

obtained

bonds will

new

two

rates

further

Repeal of the new restric¬
tive order No. 1 designed to si¬
homes.

capital
and

bonds to refund outstanding

regulations.

units.

dwelling

462

will be used to retire the FPHA's

private investors.

interest

Low
the

The Knoxville

requirements, whereas under
the new law 16 would have quali¬

veterans

hands

the

ity sale consists

the fifty railroads

into

totalling

re¬

outstanding

Government

the

the Housing

$1,832,000 of bonds on
Chavir Heights and Halifax Court,

consisting of $3,202,000 of Series B

some

sold

issue

consists of

1940, and will

bonds

saving of 60%

The lower
larger the num¬
ber of bonds which would be legal

materials

and

all

from

using fixed yardsticks.

1939

fund

is over,

the standard, the

ommend:

investment

harassed, ham-strung and
driven into the black market by

encouraged

duce total interest

capital

brought

is
war

real estate and builders should be

best bonds could not be

business

mortgage

Federal

move

profitably.

of¬

substantial in¬

effort.

war

con¬

mortgage

The

bonds held by the Federal Public

business,

important

each

make to

can

crease

most

that

tribution

the

and

home.

tem

the

$3,742,877.63

est

this

improve

from

Authority of the City of Raleigh

these projects, which were built

and not

The taxpayer
provides the subsidy and its use

developing
to

brokerage

mortgage
believe

fice

service

form

Estate

Compare Government pegged rents
with price rises in any other com¬

like No. 1 and
again
as
production
increases
prices will level off.
Subsidies
are a sorry substitute for permit¬
ting manufacturers a price that
enables
a
company
to stay in

Shackles

Remove Federal

bonds

$733,555.00.

retire the Federal Government's

is that real estate
and owners of improved property
during the war made a valuable

orders

for

sity

the

The proceeds of the sales will

builders, manufactur¬

feeling

business

provements could be credited on

authorities

direct

financing
from private capital on low-rent
public housing projects in Knoxville, Tenn., and Raleigh, N. C.,
when long -term bond issues to¬
taling
$5,271,000 were sold by
competitive bid to Shields & Com¬
pany and associates of New York
City.

Development

the question

eliminate the

and

than

bonus

industry to kill

new

Encourage Real

June

Ameri¬

housing

100%

entire

short materials will stimulate pro¬

loan
would provide that capital im¬

were

hundred

local

Two

obtained

and labor.

ers

practicable from

the

used to
It would

few

off present

the
ederal domain and placed in that
of the States and localities, where
it properly belongs."
The increase in ceiling prices of
soon

building. During the

preclude

toss

builders

can

of rent control could be taken out

during the period of the highest

building

control

rent

terminate

In this

30, 1947.

third five-year period of the

and

being

sink it in

place of the usual IVz to 3% in
order to bring loans to a stabilized
value over the 10-year period, and

closure if the

dollars

desperately needed. Rent ceilings
should, of course, be retained on
existing houses and apartments.
Congress would do well, however,
to put the States and localities on
notice

bu¬

for millions of

excuse

million dollars to present

I have suggested the
5% amortization for five years in

amortization

costs

prevent the
construction of buildings now so
reduce

courage,

this reason

end

promote prefabrication.

only be to dis¬

can

American

apartments. The

new

effect of this

the

legit¬
imate price raise to a manufac¬
turer.
If a prefabricated house
can't compete with present build¬
ing methods on its merits, then

mistake of the first order

and

American public more than a

"Congress and Price

further Government

reaus

I quote the following from Sat¬
urday's editorial in the New York

net from the

the

New York 5, N. Y.

Telephone WHitehall 4-3540

THE COMMERCIAL & FINANCIAL CHRONICLE

2110

thorized

Controls Cripple Production
(Continued from page 2073)
profits, and stimulating inflation¬

June 30th must be

ary trends.

ited.

On
and

hand

one

the

have CPA,
OPA, and al¬

hand doesn't know what the right
is

doing, and industry holds the
bag.

And over these, we have the
"Czar," Mr. Chester Bowles, the

Director

of Economic Stabiliza¬
He doesn't know what either

hand

doing, or why, but he
keep very busy devis¬

tion,
tion,

definitely lim¬

controls have been highly
effective and he plans to continue
them without

change.
suits, shirts, shorts,
wash dresses and piece goods are
And

while

practically

non-existent,

and

while stocks of unfinished goods
clutter
up
our
factories
and

warehouses, appliances that are
minus parts, radios without con¬
densers, lamps without sockets, or
furniture

without

ing

ever-increasing torrent from

tion."

ernment's

with

dresses, 147%; and girls' cotton
dresses, 111%. These figures re¬
flect quite accurately the price

dollars

payrolls

billion

year, but it would be
mortal crime to increase the
of

price

broadcloth

yard,
might

two

cents

per

even

though that increase

mean

having broadcloth.

Promoting Inflation
Our

Government

doing a
grand job of promoting inflation.
Slowly but surely we are working
our
way
into
an
uneconomic

He is

OPA

has

encouraged.)

scribes

And

de¬

glittering terms how
"extraordinarily successful" his
program has been, and to prove
that price control has not ham¬
pered production, he explains that
in

World

War

production

in¬

that

have

while Mr. Bowles

handled

pricing problems." (In passing, I
might say that no one in industry
feels

rise

"encouraged by the speed

which

experienced

holding the

was

headlines.

OPA stubbornly adheres to the
position that anyone who does not
agree 100% with their arbitrary
narrow viewpoint is a
greedy, ir¬
responsible
lobbyist
advocating
runaway inflation.
Industry has never taken such
a position.
We have attempted to

Commitments

ing

didn't

imum

This

will

continue

in¬

they

apply

their

unreasonable

definitely.

tactics in pricing bombers.

tion

OPA will be
doing business at
the same old stand for another
12
months. It will find
ways to cir¬

Or by
quoting Federal Reserve
figures of a limited cross-section

consultations

and

cumvent the

that

new

amendments and
to continue its vicious
practices.
It will still be in
position to gaze
into a crystal ball and tell all in¬

dustry what their sales will be,
what their costs
ought to be, and
what profits they will be
permit¬

ted

closed.

are

allowable

manufacturer's

temporary, the

deter¬

"hardship"

matter will be

If it grants
any price con¬

cession, it will as a consideration,
the right to regulate
pro¬
duction, and to inspect the books
each 90 days, and to order refunds
reserve

and

price reductions.

The
will

American

continue

though he

business
be

man

treated

was

on
relief, and if
it, he can appeal
OPA's kangaroo court.

One fact is crystal clear:

Production

only if

will

can

stop inflation
keep OPA from

stopping production.

We
most

the

Retail Business
retail

unhappy. We

business

are

completely

tomers, although they have been
extremely tolerant, are finding it

increasingly

difficult

under¬

why they should continue

tolerate

essentials

extreme
or

shortages of

inferior

substitutes.
-

overpriced

Of course we know
that OPA's

current

outmoded,

theoretical and unfair
approaches
pricing problems are a major
impediment to production.

Although the war has been over
for eight
months, the shortage of
consumer essentials is now
more
acute than at
any time

during the

war.

; We must insist that

for not

shirts

having broadcloth

cotton dresses.

Effect
We

has

Retailers' Profits

haven't

handicapped sales

profits—

know that they have
seriously
restricted the production of con¬
we

sumer

terested

probably,

as a

OPA forever.

only in¬
profits,
we
would
body, favor keeping
were

Profits increase by

leaps and bounds whenever
high price

forced into

con¬

abnormally

inflationary controls,

particu-

But

most

industry
meaningless

were

industry advice fell

ears.

deaf

and

consequently

material

costs

the

further

increases

Under the

labor

circumstances, it

really

under the Recon¬

Formula.

goods flowing out of

within

time."

very,

are

very

last

radios

our

short

rapidly picking up

Mr. Bowles' pet
phrases.
told

going

Bowles

July that we'd have

flowing

out

our

ears

long before Christmas.
Frankly, a good many of

us,

quite familiar with the disastrous
effects of
able

arbitrary and

regulations,

are

fed up with OPA's

unwork¬

completely

high

pressure

misleading propaganda machine,
and with their
phoney compari¬
sons

and

cockeyed predictions.

Price controls

ing much
The

strikes

production
harm

are

currently do¬

largely

the

much

result

faulty price control policy. Cur¬
of
production is
the

worst

happen

possible

to!

our

much worse in

thing that could
country todayits overall

average

So,

tionary or extortionate about a
price. OPA implies in its
letters
to
Congress and in its

FAIR

chenille

robes

pear and all of the

Recently,
ducers

We did find
would

facturers

price sufficient to de¬

tial allowances for
and

material

current

costs

and

labor

wives

can

Another
facturer

sockets.

a major impediment
production. Manufacturers are
compelled to discontinue produc¬

tion of
were

prewar

skilled

commodities they

making in great

themselves
to

the

90%
to

instance.

produces

of the

point
production
Soon

the

that

One

thousands

enter

the

approximately

profitable
impossible, he quit.
only sockets available

in the black market.
cent socks for 60

Eightcents, large size
32-cent sockets for $1.25 each.
Or I might cite the
case of a

The
no

manufacturer, who had

deals

lar commodities at
prices consid¬
erably higher than would be nec¬
essary to enable old-line manufac¬
turers to remain in their busi¬
nesses.

This situation is of

course com¬

pletely ridiculous, but the condi¬
tion

widespread and inexcus¬
And in every
instance, the
consumer suffers.
I will mention
only a few of the

able.

whatever
the

with

wartime

had

OPA

period,

read the various
pricing regula¬
tions and believed
every word of
them.
He
assumed
that
they
meant

that

he could

file

ap¬

plication and receive permission
charge a fair price for his
products. I know he sounds
to

naive,

but keep in mind, he had not
dealt
previously with OPA.
He did exactly what we would

effect
larly those that retard produc¬ than
price increases.
tion, force quality
like all industry to do.
He re¬
deterioration,
And, just at the time when countless
force items out of
examples that could be converted
production, en¬ production is sorely
immediately and turned
needed, our cited.
courage subterfuge,
all his machines to
hamper re¬ Government threatens a
producing the
Lawn mowers are a
group of
good cur¬ identical number that he
conversion, raise the cost of liv¬
manu¬
manufacturers, by saying in ef¬ rent example. Old line
ing, and all controls that prevent fect:
manufac¬ factured prewar: 240
"Unless you ship the
needle, mer¬
goods turers, that prewar accounted for
us from
satisfying our customers' you are now
cerized, split-foot hose, an excel¬
holding at a loss, we 85% of total
needs.
production, are not lent quality utility hose that had
won't let you make
any more at producing, and the
We must
reason is ob¬
not been available to
keep firmly in mind a loss." That is
any mer¬
really incentive vious.
that OPA is a wartime
chant
for
three years.
emergency pricing.
In
the
Grey castings have increased course of
agency, that it has no place in a
60 days, he had
Keep in mind that price indices 35%;
pro¬
Xr
J^/A
malleable
peacetime economy. Any controls do not
castings
45%; duced approximately 20,000 doz¬
reflect quality deteriora¬ labor
50%. Last October, OPA au¬
ens,
and having heard nothing
v

—*

X v\>>

JL 11V4.Lwv>O

that

the

manufacturer

then

visited

Washington, and because

case

had received rather wide

price

consideration.

until all these facts

ed to

days

ago

not

was

present¬

were

Committee of Congress 30-

that

OPA

decided

grant price relief, and I am in¬
formed that a pricing order is now

being prepared.

Would

you

call

this fair and equitable treatment?

Further Citations
We

might discuss why there is
no
broadcloth, or 80 square cotton
print, or why our sateen and lowpriced rayons

are exported
why 95% of current yardage
production
is
in
sub-standard
wartime substitute or overfinished

cloths.
Or

why 90%

lumber is

our

why

advantageous to

load West Coast lumber in British

bottoms.
Or

made

were

manu¬

for

affidavit to
character of

War before he would receive
any

manu¬

volume, and to shift to lines in
which they are not experienced.
They have been forced to develop
wholly unnecessary "new" prod¬ Georgia hosiery mill which
clearly
ucts as a subterfuge to obtain indicates the
problem now facing
price relief,
whereas
the
new
practically all industry.
products are in most cases not
This manufacturer, a
large one,
equal to the prewar product? in was engaged entirely in war
pro¬
either quality or utility. At the
duction, from early 1942 to Au¬
same
time, the pricing agency, gust 1945, when Army contracts
with its "in-line"
theory, has per¬ were cut back.
countless

sold in the black market.

brass shells for
light
When his costs increased

file

publicity which was not favorable
OPA, the head of OPA's hosiery

beach this summer.

trative expenses. The strict appli¬
cation of this policy has been and

currently

wrap

bedspreads when they

adminis¬

gentleman

12,000 robes
they were paid for in
cash (no checks) at
$7 each. If
the MAP plan
continued, your

Administrator

section had the gall to inform him
that there would be a Third World

disap¬

provided

new

producers will

one

essen¬

deliver

man's business

his

in the

discontinuing produc¬

tion.
who

manu¬

Call

effect

The

contacted 27 pro¬
found only two that

statements to the press that
pres¬

was

OPA

and

toes.

had changed.
Perhaps then they could give him
special consideration.

over

could deliver any robes and
both
of these are

and

And the best
suggestion
get from the Office of

the

bedspreads, not subject to

ent

pricing policies permit

will

Washington

this

cheapest robes
produced today cost

of thousands of other

case

tials,

facturing field and produce simi¬ throughout

harm than good.
have stifled
caused

can

approximately $3.25.

Certainly there is nothing infla¬

newcomers

which

and

that

not

called

Deputy

Price

The

make

mitted

Controls Doing More Harm
Than Good

must

each.

could

the MAP program.

advocating

ranges.

'going to town'

$2.25

number and applv fnr

and

the

five of

new

number."

largest producers, production
robes

runaway prices or inflation.

shortages become

Administrator, Mr. Porter
announces, and I quote: "Estab¬
lished manufacturers are

heels

consumer.

of four

Then

This is not price
is it legal, but it is in
case

treble-

got the same answer, from
the
head of OPA's pricing section
on
hosiery. "Mix a little nylon in the

1943.
nor

manu

higher price.

Price

is hardly possible to prevent some
increases in prices to
consumers,
but this does not mean

fray current costs and yield pre¬
more and
war
profits, but all industry knows
more
acute, and as we sink deeper that this is not
the case.
The
into a hopeless
abysmal mess, our pricing formulas make
only par¬
new
As

effect. In the
of

sharply since 1942,
operating costs for every type
of business are far above
1942, and
that industry generally is faced

duce

manufac¬

exceed

control,

have increased

damage violation. His only outstraight from OPA—was to
pro¬

produced currently may
the average price of
goods produced during a base pe¬

that

be permitted. It would
be

of goods
not

and sell at

faith
fully and satisfactorily for 20
odd
years, but that couldn't
possibly

mowers.

program.
that the average price

means

the higher costs

prices to bail out
facturer that had served

are

Average

we con¬

York, offering

prewar

becoming in¬
creasingly popular. But OPA has
just notified that industry that
from now on out they will be re¬
quired to produce under the Max¬

riod

•

Everyone knows that labor costs

essentials.

fact, if retailers

only possible antidote

inflation.

costs.

charged that OPA

Congress tailment

restrict the activities of OPA
and
require the immediate removal of
1

unrealistic,

all

or high profits on
high priced novelties are a valid
excuse

ears

with wartime substitutes.
We are tired of
apologizing for
substandard goods. And our cus¬

clear

that high sales

version

stand

been

never

to have

Effect

fed

it's

sumers are

he doesn't like
to

But

for

with

which of your costs
and which are not.
is

OPA activities have not in¬
terfered with civilian production.

earn.

OPA will still set the
Industry
Standards.
It
will
determine

mines

industry, he attempts to show

is the

our aid
and
tacted OPA in New

to pay

being out of the lawn

severely penalizes the

new

that

loss.

He solicited

business all season. This
entire situation is inexcusable and

present controls, and for
devising
ones

ing at

mower

discriminating unfair tactics. We
have urged that some attention be
paid to the words "fair and equi¬
table," and we know that produc¬

lations. We have counseled against

turers were permitted to produce.
Or shall we hold off and take the

chance

profit, he now could well
afford
to sacrifice some of
it by produr

at much higher prices

mowers

or in hio

Was he in the
red?
he deserved no
considers
Because he had
operated at

tion.

delivery in time.
Shall we buy from the newcom¬
ers, realizing that we will be sell¬
than if skilled old-line

diffa£j

costs,

problem.

create

made

prodiictiU6

If not

retailers.

must

Chenille robes

regu¬

kind

ni„

mildlv inter:

his current

•

March loi?
dozen. The

Per

his

current
cost him $2.47 made
no

obtain

once

Just what connection there is be¬
tween OPA and War Production
is not at all clear. I'm sure

honest

this

Our customers need lawn

obtain

and

real problems for

25%, while in World War
II, under OPA, it increased 116%.

realistic

that

ested

tv,

f<2
that tfi

possible way of
obta

g™e.°f.
fact

New Problems for Retailers

Instances

visit

There he

surprise,

18, 1946

price relief, that he
would
sell his hose at the

OPA

creased

mess, and soon we will find more
and more reasons for
retaining

was

vain.

very

OPA, decided to

regional office.
much to his

Industry has protested, in

costs.

do they reflect produc¬
availability of goods, or

men's

oqr factories,"—"the
rapid up¬
ward swing of Industrial Produc¬

doesn't see anything infla¬
tionary about increasing the Gov¬

from

material

labor and

increased

the

quality deterioration, the price of
shirts has increased 93%;
boys' shirts, 90%; women's cotton

hardware, Mr.

Bowles speaks of "goods pouring

increase

requires the low-priced
mower to be produced for $6.73.
becoming more and more preva¬
The manufacturer requires $7.76.
lent, or the cost of subsidies. If
we
continue
to
use
these
for As a result the largest manufac¬
turers in industry have notified
guides, we won't know where we
the trade that they cannot pro¬
are going or -when we get there.
Every housewife knows wheth¬ duce, and the only mowers avail¬
able are extremely high priced
er or not the "line" has been held.
numbers
produced
by
Consumers spent 84% more money "new"
in 1945 than in 1940 for approxi¬ newcomers in the industry, who
are able to obtain high price au¬
mately
the
same
amount
of
thorizations under OPA's ridicu¬
goods.
Since March of 1945, including lous "in-line" pricing theory.

price

manages to

new schemes for raising
wages,
without of course,
having any ef¬
fect whatever on
prices.

nor

overall

17%, not nearly enough to cover

the black market deals which are

But Mr. Bowles "assumes" that

other

though their efforts should be
synchronized, both agencies are
working autonomously. The left

tion.

that are permitted to remain after

Thursday, April

the largest manufac¬
building materials in the

why

turer of

world has had to discontinue pro¬

duction of many essential items.
Or

why

icans

price for

paid Mex¬

our company

the ceiling
order of piece goods

$197,000
one

over

for outsized dresses.

Or why plain wooden chopping
bowls

are

not available.

why there are no shirts—
why we buy Argentine socks,
gloves and bags—
Or

why the underwear situation
an unholy mess—
why 90% of our meat is m

is such

the black market—
Or why the low

priced electric

iron production during the past iz
months has been ekactly zero—
Or

why

250,000

have

vacuum

purchaser
from

cleaners

Britain.
Or why babies have to wear ex¬
cessively heavyweight diapers.
Instances of this kind could oe

quoted by the hour.
But

the

answer

OPA's

same:

to each

adamant

refusal

be fair.

Bungling and Delay
Of

course

ferences

there

honest dii'

are

pricing technique, d

a2ref
clea "
decisions a

every
reasonable person
that competent, equitable,
cut

and

needed

put
~

prompt

men

encourage

industry,
to produ

to work, and

:4v>iic

pminteract

stimulated by forced

being

now

THE COMMERCIAL &

Number 4482

(Volume 163

lower

shortages induced by Gov¬

acute

ernmental restriction.
But instead of prompt decisions,
gling and delay.
It is difficult nowadays

Mr. Bowles

ing

restrictions are

few

eat

can

weeks

tleman

up,

the

Walter

a gen¬

comparing

California,

French

mum"

"Law

1793.

Production

but Bowles?"

would seem that any reason¬

Markets

I received a

ago,

Interestingly

dried up,

supplies

declined,

quality deteriorated, and

Whyte

Says—

Maxi¬

the

Wool—Rayon—Cotton—Lumber— enough, they had base periods
and
maximum
average
Steel—Coal—Meat—Dairy Prod- then,
nets—Oil,
and the complaints prices. They also made the mis¬
take of freezing prices at unrealis¬
have come from primary produc¬
tic
levels, of not allowing for
ers as well as manufacturers and
and
distribution
distributors of end-products. Can transportation
costs.
you help but ask, "Are we all out
of step

Tomorrow's

but

non-existent

the current activities of OPA with

retarding progress.

this week—rails filed a People would get this infla¬
petition asking for higher tion over and done with and
freight rates. The first reac¬ supply and demand would get
tion of the group to the news back into the saddle and
was a great big yawn.
If the everybody would be happy."
rails are to go up I doubt that I can take that argument and
an application for a boost in
knock it into a cocked hat
rates will be the motivating without even trying. A little

news

even

course,

interesting letter from

very

industry has complained—

All

left.

to pick

magazine,
day, anywhere, without find¬
a story or two on how OPA

any

doesn't

cake three times and still have it

newspaper or

any

production.

this program doesn't add

continued stupid bun¬

have

prices.

mention

2111

FINANCIAL CHRONICLE

spark. For between an appli¬

==By WALTER WHYTE=

for

cation

and

raise

inflation indeed!

It's like be¬

the

ing a little pregnant. Every¬
A few more days of dull granting there is loads of body wants.the price of his
room.
In any event the rails goods or his services raised,
draggy markets and the mak¬
are in a little trouble if the
but still wants the things he
ings of rally would be started.
present Congressional hear¬ has to buy daily to remain
Strength here is not bullish.
ings on territorial freight fixed.
*
*
%
In
last week's column I rates as approved by the ICC
To get back to the market.
wrote, "I can see further lead to anything. Again, it is

person
would accept the black markets reached enormous
Food
was
scarce.
premise that no one will produce proportions.
goods except with an opportunity Butter, eggs and meat were ped¬
People
for profit—but not OPA—at least dled in alleys at night.
not the head of their Consumer stood in line for hours to obtain
Advisory Council, who insists that bread. Before long the economic
industry is on strike, that they situation became intolerable and
need no price concessions, and that mobs marched on Paris shouting,
they will produce when they get "Down with the Maximum" and
"Down with the Law of Famine."
"hungry enough."

able

pointed out, there is lots ■ of

....
I can even vis¬
ualize the industrials making

strength

room

between talk and action.

that

previous column I wrote
strength at this juncture

high before this gets So the whole thing may end was ominous and that I'd pre¬
print. But the more where it started—on the front fer some dullness; even some
minor weakness. In the past
strength we see from here on, pages of newspapers.

new

into

the

dangerous I consider

few

days strength has disap¬
peared and both dullness and
of newspapers,
part of last week (even before however, do not dominate some weakness has taken its
this column reached you)
If OPA would concentrate their
More Production is Greatest Need
price trends. What you read place. A few more days of
activities on encouraging produc¬
stocks kept up their pace, and
this and the makings of a
in the subway on the way
Our greatest need today, as then,
tion, they could get the unquali¬
averages
did about every¬ home is stuff that the market rally could occur.
is more production and less con¬
fied and solid support of indus¬
sfc
*
*
try
generally.
A
tremendous trols. We cannot possibly have a thing but make a new high. has known about long before
of good could be accom¬

amount

plished this Spring toward satis¬
fying the pent-up demand for
"hard to get" goods. If such action
there would be

taken now,

were

wide¬

much less likelihood of any

spread upward price trend when
controls
But

lifted next July.

are

all know that OPA has

encouraged production, that
they have not shown the slightest
inclination to encourage produc¬
tion.
Industry has advocated in¬

not

centive.

OPA is

pricing for years.

finally making a half-hearted, in¬
sincere

in¬

pretense of granting
complete farce.

centives—a

And while needed

goods pile up

because

warehouses,

banana flakes, manholes and man¬

hole covers, canned Irish potatoes,
cream sandwich waffles, and

ice

imported

and

canned

domestic

eels!

The

Decontrol

Program is still

torney who took the controls off
baseball

equipment

except

bats, mitts,
apparel and
But currently he has liber¬

balls,
shoes.
alized

his

viewpoint.
Now in¬
of
exempting
"Furniture
entirely of glass," he has

stead
made

changed it to "Furniture made
wholly or predominantly of glass
or mirrors," and he has thrown in
horse

blankets,

racing

and

cars,

obsolete radio parts and tubes, but
this latter only if you can estab¬

lish that you haven't used them in
any sets since 1940.

And Mr. Por¬

ter predicts "substantial increases
in
shipments
of
insignificant

items."
Lefs

not

headlines.
year

little

attempt to get another
year's lease on life. Their excel¬
an

lent public relations staff will
check Congressional reaction daily
and make whatever minor revi¬

sions

and

amendments

nec¬

are

reduced em¬

cannot

Industry

ployment.

There is

desire
rather

industry is uncertain,

So long as

and without incentive,
can't expect maximum produc¬

tion.
The answer to all of this is very

cannot

clear.

permit the ex¬

tension of the Stabilization Act in

anything like its present form.
Perhaps we cannot immediately
remove
all controls.
Certain of
them may be necessary.
test

whether

not

real

off,

but

indication of

take

controls

self-perpetuating
and
that is bound
handicap industry throughout
program

the transition
period, and squeeze
profits unduly indefinitely.
And

won't

help matters any
have the White House attempt
buy its way out of important

pricing messes, after weeks of
consultation with advisers with
inadequate
knowledge
of
the
problem.

!gher

wartime

has

that

agency,

The acid
pricing is
I repeat,

emergency

place

peacetime civilian economy.
tinued restrictive control can

in a
Con¬
only

be reconciled with a lack of con¬

fidence in

productive capacity.

our

must be made for progres¬

Plans

sive decontrol now and for com¬

living

and

did

it hit the

public prints. I know
sounds boring.
I'm

this

all

that

everybody could point to
just as'bored writing it as you
strength. But even while must be reading it. The fact
this was going on, it was no¬
remains that news as we know
ticeable (if anybody cared to
it, whether it comes via hushnotice) that the rails were
hush tip from the senior part¬
still the stepchildren of the
ner, the well-informed cus¬
market.
tomer's man, or the broad
*
*
*

its

maximum

that

English

produc¬

important than
the maintenance of fictitious price
tion

far

levels.

Of Blair & Co., Inc.
Inc., 44 Wall Street,
New
York
City, announce the
election of William W. Pevear as

president of the corpora¬
tion. He will be associated with
its Government bond department.
Mr. Pevear was formerly Assist¬
a

vice

grist for

continue to go up on

can

Blair & Co.,

something else again.
to

seems

some

it
It

that there must

additional momentum

generated from behind-the
to give the market suf¬

scenes

You

ficient ammunition.

be per¬
prices suffi¬
enable him to manufac¬

That every producer

mitted
cient

establish

ture prewar

quality goods at cur¬
opportunity for

beat

horse

George J. Flach Opens
Own Investment Firm

and

current

goods

taken

out

ducers

and

costs

hides
distributors

the

can

of pro¬
be dis¬

the securities busi¬

is engaging in

himself from offices at
155 Montgomery Street.
He was
for

ness

can

Wm. Weston
William

the

seven

years

with

and

City,
for

leave

business

OPA

production.

from

"crippling"

clo

LAMBORN & CO.

SUGAR
Exports—Imports—Futures

Established 1850

H. Hentz & Co.

Central
Orders Executed on

invest¬
the last

principles of this

Pacific Coast Exchanges
iJi

Schwabacher & Co*
Members

kind

certain

and

industry

for years

unduly

will

New York 5, N. Y.

Teletype NY 1-928

COrtlandt 7-4150

York

Exchange,

Commodity
Chicago
New

Exchange
Exchange

Cotton

Board

Inc.
Trad*

Orleans Cotton Exchange
And other Exchanges

N. Y. Cotton

Exchange Bldg.

NEW YORK 4, N. Y.

Private Wires to Principal Offices

delayed

San Francisco

Monterey

hamstrung

wwwmmwmpm

New

Exchange

Curb

York

Exchange (Associate)

—

Santa Barbara

Oakland

—

Sacramento

Fresno

to come.

"-""""'■■mniii

Stock

York

New

Chicago Board of Trade

and carried out without
to

Members
New

York Stock Exchange

New York Curb

14 Wall Street

STREET

Securities

for

reservation, our return to normal

Actually they will

views expressed in this
not necessarily at any
time coincide with those of the
Chronicle. They are presented (is
those of the author only.]
[The

article

Pacific Coast

incorporated in an aggressive

program,

amendments."

—Walter Whyte

DIgby 4-2727

pointed Secretary-Treasurer.
Unless

Thursday.

More next

inflation.
business.

Treasurer

Assistant

corporation, has been ap¬

the

and

courts.

99 WALL

"Just

22 East Fortieth

York

bankers,

ment

years

Corp.,

New

Street,

Promoted

Weston, associated

past

National

are

will call these "crippling

now

Car

alone; have a little
It will be good for

ing.

geles and prior thereto did busi¬
ness as an individual dealer.

immediate right to

OPA

55,

formerly San Francisco manager
for R. L. Colburn Co. of Los An¬

industry be given the

challenge any
all regulations in our regular

half positions in.

Stops remain the same. Here
they are:
Air Reduction at 52; stop

That

New

That

hold

you

troversy

carded.
6.

against new buying. But I do
advise retention of the stocks

brings me to the con¬
of price control,
FRANCISCO, CALIF.— which everybody I know
J. Flach, member of the seems to be in favor of remov¬

SAN

all controls
of legitimate

production be promptly eliminat¬
ed, and this includes the M.A.P.
program, and all like it.
5.
That the false theory that
all increases needed to produce

not you see

something else. Istilladvise

NEW YORK 5, N. Y.

George
San Francisco Mining Exchange,

profit.
any

just

rent costs with an

That

sore arm.

job of pricing be

the

That

restored to industry, to

Whether
is

about 58. American
Foundry at 60, now
improbable that the the mill. It is not the oil which about 69; stop 64. American
industrials can start and go
greases the market machinery. Steel Founders at 42, now
•(s
s(s
way up without the rails tak¬
about 45;
stop 43. Bethle¬
ing any active part in a real
I haven't mentioned infla¬ hem at 99, now about 106;
rally. But if that happens it tion for some time. It isn't stop 99. Electric Auto-Lite at
will be such a-rarity that I'm
that I'm unaware of it; I just 71, now 74; stop 69. Chrysler
willing to go out on a limb. don't know what to
say about at 120, now about 133; stop
Speaking about rails, there it here. That some kind of in¬ 128. Superheater at 30, now
was
an
interesting piece of
flation was coming the market 31; stop 29. U.S.Rubber at
foresaw a long time ago. It's 65 V2, now 75; stop 69. U. S.
Pevear Becomes V.-P. what it went up on. Whether Steel at 82; stop 79.
tape, is just so much

It's not

state in plain

That Congress

shorter work week, a prevent

standard

Front pages

to get to 208.54, so

manage

❖

latter

industrials

the

fact

the

market."

long.
plete discontinuance of practical¬ ant Treasurer of the Guaranty
After a while it will drop
ly all controls by June 30.
Trust Co. of New York and in the
dead. Beating a dead horse
I would recommend that indus¬
past was with Baker, Weeks &
will get you nothing but a
Harden.
try immediately insist:

Federal

Mr. Bowles'
program is a "poli¬
tician's paradise." He's for higher

JC^ges,

that stand in the way

dangerous

"de¬

liver" while in a straitjacket.

essary to get their extension.

control means

price

producers
and distributors, where it proper¬
ly belongs, and that OPA, if re¬
be "taken in" by the tained at
all, have limited review
This is
the time of and
supervisory authority.

for OPA to toss out

bait in

"Successful"

retarded production,

OPA

in charge of the ex-real estate at¬

high-sounding
but
meaningless
phrases
as
"lifting controls as
soon as
possible" or "as soon as
supply
equals demand."
These
sound good, but they are
steel
traps.
So long as production is
held down, demand is bound to
exceed
supply.
Price
control
means
"Production
Control."

adequate is production.
The Decontrol Program

all

along with such

Nor would I go

confused,

OPA's
MAP plan makes it illegal to ship
them, OPA closes its eyes and be¬
comes
very interested in taking
controls off imported dehydrated
in

without free prices.

free economy

the

I1,.,

w» ■vTrin1'

CHICAGO

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND

2112

THE COMMERCIAL & FINANCIAL CHRONICLE

Thursday, April 18, 1945
'

'-3

Some Trend s in Ait of Estc ite Planning
(Continued from page 2075)
metnoci

think, leave
of

with

satisfaction

our art

bu.

that there

are

sense

some

the

with

erty

will,

comparison

out

conquests still to be

the

deceased

First; There were in

has

the boiler

plate days almost never any dis¬
cretionary rights to use, apply or
expend principal for any benefi¬
ciary.
The hard-boiled old-fashior.ed rule

that the benefici¬

was

could

the

income,

by gosh, and be darned to 'em.
That,, of ecu'S3, was before the
days of the 59-ccnt dollar. It was

before the post World War I in¬

flationary experiences of Europe.
Trust income, in those days, was

literally bread and butter income.
Aspects

individual

alone

education,
idiosyncra-

individual

cies, were almost
cors'deration.

taken into

never

You all know how

this method of approach
has changed.
The modern en¬
lightened
broadening
of
this
greatly

cramped-restriction upon the use
of principal has been all for the
good both of individual benefici¬
aries and of society.
We have ar¬
rived

when

number

serious

leaves

the

principal

himself

onstrated
poor

very

Second:

proach

The

boiler

plate
divided

customarily

ap¬

the

entire trust principal into inflexi¬

bly fixed shares.
This was par¬
ticularly common with relation to
the period of time after the grant¬
or
testator's surviving wife

or's

had

been

marry

foolish enough to re¬
unfortunate enough to
this unintelligent ar¬

die.

each

rangement
ceive one

tered

child

would

re¬

equal share—it mat¬
that little Mary would

not

marry a rich man while her sister

Helen would be a social service
worker all her life, poor and un¬

married,

brother Johnny have
infantile paralysis while brother
Bill would grow up to be Presi¬
or

dent of the General Motors

Cor¬

poration. Each child would get an
equal share, by golly, both of in¬
and

come

principal, and each one
the principal outright
attainment
of
majority

would

whether

: bright, or
through college
or
just beginning college, off at
war
or working
as a clerk in a
brokerage house.
This rigorous

dumb,

sick,

well,

part way

technique is
if

even

much

must

longer the

admit

plenty of imaginative
themselves
tion

between

vide

that

them

are

fund

will

vided

grown

who can

in the

men

and do

can

bring

can

and do pro¬

the death

children

still

until

are

distinc¬
boy's share and a

the

too

making

girl's share: who
mother

that

There

remains.

world today who

vogue

the
of

some

minors the family

held

the

together undi¬

kids

"on

and

are

their

least

own";

do provide that the
shares *ball be distributed in in¬
stallments at
varying ages; who
can

tees

and

a»^d Ho provide that the trus¬

cline

shall
to

have

distribute

power

de¬

principal to

daughter who has made

unfor¬

tunate marriage or is ill or to a
son who has wasted whatever has

already been paid to him. In these
respects,

also, therefore, much im¬

provement has been made in the
art-—and tax developments which
tend

restrict

this

elasticity

must be viewed with
some alarm.

Third: In the boiler
plate docu¬
ment the

share of

deceased

son

^be grantor pr testator custom¬
arily passed inflexibly to his sur¬
viving
issue,
however
young,
however old,, without any
regard
whatever for the position or
lems

prob¬

their

surviving mother.

Time and again this produced the
dHrpccjrm family catastrophe of

vesting

substantial

sum

of prop-

mechanical

some

the

testator

assistance

grantor

and

in the hands of the trustees

regulation

allow

that the remainder of the child's

least

when

stand

you

idea

suppose

ning

devoted, to

ment.

the

ing

of the child's

care

Corporate

decide
everything and
nothing for future decision
luckily, begun to dissolve.

Sixth: The old-fashioned boiler

must

leave

has,

Yet I think
the

the

use

must all agree

appointment

limited

still

that

power

much

instrument

board

among a

adays

divide

come

duties.

trust

learn

cor¬

administrative

invest the trust according to their

discretion, without enumeraion of

the investment world and the ter¬

any

or,

broad management powers,
to make matters worse, they
exhorted to manage the es¬

were

and

invest

"gdod, safe

or in some other good
sounding but dangerous language.
A reference to
"good, safe securi¬
ties" is, of course, an invitation

simple
such

confusion, for the
that

reason

thing, there

and

there

safe

security."1

never

discretionary
unhappy. It has
the law that

"good,

reference

mere

is equally

power

turned out to be

trustee who is

been

never has
can

there

em¬

powered and instructed to manage
an
estate in accordance with his
sound

discretion enjoys no power

which he does not in the absence
of

the

language possess.2

I need

hardly point out that in the draft¬
ing of modern instruments this
important subject is more clearly
and

extensively treated.

add, also, with

some

I might

sense

of per¬

sonal

pride at having assisted in
process, that the law of the

the

United

States has
its

ened
upon

greatly broad¬
position

fundamental

the scope of the investment
permitted to trustees.3

powers

Fifth:
ment

cise

The

boiler

almost

and

ways

resignation
is

either

trustee

successor

for

trustees.

most peculiar
thing that
recently the whole subject

until
of

instru¬

provided pre¬

means

the

appointment of
It

plate

never

choice of

tees who

family

are

the

trustee

to have

fund—a

certainly

trus¬

charge of the

matter

which

important

than

any other single thing
relating to
the estate plan—has been a sub¬
ject of comparative neglect or at
best of very hasty decision.
And

porate fiduciary does the routine

The complex

rific

ual

best prepared, acting alone, to

grapple

with

ought properly to require.
few instruments provide for

isfactory
choice of

manner
a

successor

agreed list of

con¬

disaster

Too
a

sat¬

making
trustee.

successor

trustees is

seldom provided.
The problem is
not easy but it should not be al¬
lowed to go by default.

Certainly

it won't do to have the life tenant
in

position to appoint the

ter not only of her
of

that

the

case

fate

own

but

remaindermen.

junior

officer

be skilled

Harvard

(1830». 9 Pick1446.

said in

College

the cele¬
v.

"Do what you

Avnovv

will, the

capital is at hazard;"
2 See

Davis, Appellant (1903),

183 Mass..

499,

and see the Massachusetts Prudent.
in Trust Investments.
Boston Un Law
Review, Vol. XXV, Nov., 1945.
The effect
Df
this language
may be broader in so-alled
Legal List States.
See
Scott
on*

Trusts,

3 The
ment

past

227.

Model

Prudent Man Trust Invest¬

Statute has been enacted
within the
three years by

California,
uumoei

Texas,

Delaware, Minnesota,
Illinois and Maine.
A

oiner states axe

the same reform.

livw

considering

bank

may

have all the good will in the

may

world

but

lack,

may

he must be expected

indeed

to lack, the

intimate knowledge of the family
circle and the working acquain¬
tance with

points

strong points and weak

the

individual

an old
family friend
family adviser might fairly be

expected
tion

ques¬

whether

The

possess.

Johnny is to
have violin lessons, or
Mary is to
have a trip to Europe, or just
what amount of principal is to be
given to the widow,
of

amount

voted

teeth,
well

property

just what

is to be

straightening

de¬

Susie's

questions which might
left, both for the good of

the

corporate

the

good

fiduciary and for
family, in the
hands of individual, co-trustees.
Conversely, the individuals, de¬
pending on who they are, may bp
worse

the

than

invest

useless

the

trust

attempting

funds.

One

to this difficult problem
well be that the instrument

answer

may

drawn

that

the

duties

are

divided among the trustees,

with
suitable provisions fixing respon¬
sibility only in accordance with
the fixation of responsibility.
Trend

Toward

significant

very

assorted

that

some

broad

trends

themselves

the

designing and drafting es¬
planning instruments. These

trends

all

are

in the

direction

elasticity and liberality.

And the
general
drift
accords
with
the
broad sweep of modern human

philosophy.
when

In the Victorian age,

the

Newton
the

ideas

shaped

thinking

were

good

which all of

good

Isaac

deal

mankind,
many

Sir

were

there

absolutes

prone to ac¬

cept as both final and inflexible.
Newton observed, and
nobody de¬
nied, that if an apple was de¬

ple

which

Uses

What

would

tree

ground.

by the
of, an
would

obtain

bough of the

forthwith
now

even

fell

demonstrated that nothing is ab¬
solute.
Everything is relative.
someone

were

ask

could

language of the

That idea

was

under¬

fortified in
by the fact

their minds, moreover,
that the lawyer-like approach

obtain

the trust situation seemed to
dic¬
tate
quite
soundly
that
many

types of the trust

were beyond the
purview of estate taxation. Take,

trust

upon

wast¬

general all-round lack of
efficiency which very often is fa¬
tal to the preservation of his busi¬
the

protection

the legal right to the trust income.

It is

his

trustee

speed

doesn't make

ercises

in the hands

carefully drawn

revocable trust?

He obtains

econ¬

and

becomes

There

sick

protection
for

need

conservator.

There

into

pours

the

time

whole vehicle is
roll.

that

have

the

new

But of

street)

does

not

have

But

used

device

which

trust

the

advantage,

ex¬

actually been brought into being
the gift tax paid.
But once
again the taxing authorities have

depending

been very

local law, of protecting the
property placed in the revocable
trust from the claims of future

was

It is

ance

come

came

automatic

now

turn to the

years

trustmen

"The

1943.

Bulletin.

insurance

Vol.

from

Trust;

XXII

the »wnic

providing °
deem

of discharging an

for t

oblige

for the Pur"

the past few

to Support the income would
lawyers,- be taxable to him.6
Next it

men

to-

Its

Mani¬

fold Uses in Times of War and Peace."
The
Trust

satisfaction

proving support to PeI"
whom he was obliged at law

sons

change which

over

Revocable

him

had \ "

from

pose

No.

March,

sti
^aS

;

5Burnet
4 See

benefit

the

that

tion of the grantor or

the attitude
and

the

purpose

Tax Aspects

taxable

theory

granto

the

his family.5
It was next
that if a trust was created

revocation by death.

I have observed

life

tn^

inst¬

premiums on

the

still

the

ceived

standing on its own feet and is
subject, as is the ordinary
to

was
on

country on war or on
business, because it has the virtue1

attorney,

for

from an irrevocable trust

the

realistic about this,

decided that the i11001!1®

soon

payment

particularly useful, of course, in
the case of
elderly people, or in
the case of a person
departing

power

and

ago,

and

upon

from

I can

day

couldn't be any further taxes to
the grantor after the trust na«

many

creditors of the transferor.4

also,

long

ceedingly useful and valuable in
some jurisdictions.
It may even
have

the

that wasn't very
when everybody sup¬
posed, if a man created an irre¬
vocable
trust,
that
there just
day

estate

standpoint of taxes
though

when it was
suggested in fiduciary advertising
and at other places that even the
revocable trust could be used to
save taxes.
I can remember the

overlook
in

the

remember

without insurance,

that if a

trust had been created.

greedy for tax

can

forms, with
and

are

tended

the

man on

and is to be considered as

Because of
the

all well

authorities

tax

have concluded

from

were be¬

revocable

taxes

save

planners who
savings
it.

the

whole business is to be disregard¬

is one of the most useful,
perhaps the most useful, of the
that

it when

right of alteration, amendment or
revocation is reserved then the

which

years,

planning tools.

that

(and,incidentally, the

the

ginning our careers and which
has developed into its full flower
only during the past 10 or 15

fact

es¬

estate

You would suppose that

course we are now

aware

in its commercial
us

then his

gift tax might be paid, subject
perhaps to refund of some sort it'
the right to revoke is exercised.

trust

that

trust,

aspects when most of

has

every

strong conviction

who

ought not to be taxed
he dies.

created, ready to

revocable

brand

was

death,

levied

must

person

the donor

revocable

his

tax

the

guardian

everything that is in his estate
the

tate

the revocable trust, and
a
simple
will
which

prepares

the

principal has in fact left the

assurance, from the moment when

he signs

income;

You would think, also, that if the

incapacitated.

the

entitled

the
right to recapture it but upon the
person who actually
receives it.

are going to man¬
his affairs after his death. He

personal

income

not

the team who

obtains

else

You would think, if
trained in the law. that

the

He obtains experience with

age

ex¬

Someone

getting

else

were

you

it his unless he

right.

actually

principal.

property in

son.

the

someone

efficiency.
The
the trust never goes
through the probate court.
He
obtains privacy, for the same rea¬
omy,

no longer his.
He may have
right to recall it but that right

family, or both.
What does he
obtain, contrariwise if he places
his corporate shares

a
man
creates a revocable
he actually transfers in law
title to the trust corpus and

the

age and

ness,

example, the revocable trust.

When

you

whether Hannibal is
today cross¬
ing the Alps you would probably
say that he isn't. But if you were

the

triumphant
England

again "beat the rap,"

once

world.

not.

was in fact falling.
From
points of view it might ac¬
tually
be
rising.
Our
modern
prophet Einstein, appears to have

and

notably

that the judges
allowed

was

to use the

tape in the probate court,

apple

es¬

The

for

the

transpires that it

legal

uses were, so to
speak,
parents of the modern trust!
Lawyers may be pardoned, there¬
fore, for assuming that the trust

his
death as to all aspects of his busi¬
ness;
expensive delays and red

ap¬

be certain that the

should

into

escaping

in his estate planning
old-fashioned will?
He

publicity

uses

the

properties

man

all

executed

certain types of use to
escape the
condemnation of the statute.

use,

some

such

that

miscarried

result

give

along with an average
family establishment.

American

the

tate

nary personal and real

estate

Elasticity

therefore,

see,

the

two children and the ordi¬

Parliament's

period, aided and abetted
the church, was clearlv
op¬
posed to the feudal system.' The

study.
Imagine, for examthe situation of a man who
has the controlling interest in a
small proprietary corporate busi¬
ness, and who has, besides, some
insurance, a few securities, a wife,
one

Eng¬
feudal

arrange¬

should

are

King
the

holder

of that

few ad¬

refer
an

the

relieve

But public opinion in the

pie,

benefi¬

ciaries which

could not

Man

may

in human relations and

tached from the

■ 1

1 As Mr. Justice Putnam

brated

mas¬

what

roughly
be called the family "headaches."

art

active and intelligent he
may be.
But it doesn't follow that the bank

have

such

involved

the shoulders of the individ¬
trustee, however wise and

upon

has been too often elided, without
of

than

hope to

Government reports of all sorts
have placed an intolerable burden

the specific safeguards which

templation

can

literature of

requirements

the

possibility of failing trustee¬
ship. whether arising by way of
death, resignation or otherwise,

better

work

the individual trustee

which

It is

modern trust emerged

The

Eng¬

remarkable

attempt to abolish the trust for¬
by declaring in the Statute

that the

Fourth: The trustees, under the
old-fashioned boiler plate instru¬
ment, were told that they should

it.

ment

know that it is intelli¬

gent

remarks.

revocable trust.

deprive

and

property

raised

merit, I hope,

ence may

ever

One of the estate planning de¬
vices to which I have made refer¬
ditional

according to his

its special qualifications. Now¬

have

rare.

dreamed

never

dividing duties

of trustees, each
or

of
too

plate
of

enough.

burden of all kinds.

Revocable Trusts

Individual Trustees

vs.

That

natural

demonstrated

ability

surviv¬

The old idea, in other
words, that the testator or grant¬

great

avoidance of taxes
by
substantial means.

was

tates

spouse.

kindly

for

revenue

cussing today.

so wills, be
degree at least,

some

in its original form
in

lish

including the estate plan¬
concept which we are dis¬

sort,

device

land

only the atomic bomb but has also
produced the modern liberation
from
frozen
concepts of every

in
a

trust

where
make your

you

put

men

thinking has produced not

specifications
which would control the appoint¬
at

way

worth

observation. Certain it is that this
sort of

statute

ment

manner,

nobody
does
knew.
I
everything does depend

donor,

un¬

or,

share can, if the child

get

upon

device for

body know whether Hannibal is,
or isn't, crossing the Alps just at
this particular time?
I suppose

either by way of a list to be left

to disaster and

draftsman.

the

of appointment which the

securities"

which

allow

powers

trust

frozen in rigcr mortis for a period
of practical perpetuity has dem¬

board

wise

an
endlessly useful
depriving the Govern¬
its anticipated
revenue

you

How

inclined to believe.

are

the trust was

see

you

der such circumstances does any¬

Probably

What

subject of taxes. I ca~
remember a day, as will
many 0f
you, when it was assumed
that

Rome.

ward

self-perpetuating,
perhaps with a veto power resid¬
ing in the beneficiaries.
But if
the power to appoint successors
is to be lodged in the trustees
they should certainly be given

the power of appointment alert
draftsmen do provide the children
of the testator with the limited

tate

allow

with what

most unfortunate or un¬

trustees

obstacles in the way of the use of

time, thank goodness,
generally recognized
that anybody who draws a will or
a

stupid

marquee just at the time
she needed it most.
Here

placed

desirable appointment.

a sou

when

may

againWe have made progress. Even
in a day when national tax policy
"Boiler F!atew Wills

let

partner

Certainly

some court to intervene

of the testator was left with¬

son

also indicate

may

outright in minor children,
their guardians, while the

faithful

progress

made.

aries

ward the

remote star some¬
where and looking at the Alps
you might actually see Hannibal's
elephants making their way to¬

standing

S.
6

289

670.)

Douglas

Commissioner
551.

Wells.

S. 670.

•

v.
v.

Willcutts,

296

Schweetzer,

f)Q(j

<~
c

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

speaking broadly, that if coming

fllpcided,

young men

eration

right of reverter
reserved to the grantor the trust
would at once asume a testamen¬
any

was

there

should

the

feeling that they, and they alone,
without the assistance of Govern¬

funds, have attended to their
significance—a doctrine with
own individual problems. Life in¬
which I am in violent disagree¬
surance also provides, as I need
ment but which is now a definite
hardly tell you, the only psycho¬
cart of the tax structured Again it
was decided that
if a trust was logically sound method of con¬
tary

would
have been comical if they had not
been so tragic, with relation to
the taxability of the proceeds of
insurance upon the life of a de¬

tinued

saving. The fault with all
family purposes and
other types of saving, even in¬
short term and if the grantor
cluding the tucking away of mon¬
reserves certain powers of man¬
in

wrench to

real

developed in the tax
world that most lawyers approach¬
ing the matter from the property
jaw viewpoint would have said

could have happened. Tax¬
ation as under Helvering vs. Horst&
and Helvering vs. Eubank,io 0f as¬

own

experience

and

things have

serious
is

abandoned

the best way,

We have been learn¬

other words, that far from
sympathetic toward
the
being
trust as a device for the avoidance
ing, in

bling and without taking an inor¬
dinate time away from one's pro¬
fession or job in life is by the reg¬
ular, steady and intelligent pur¬

modern courts, and
modern public opinion, have di¬
rected vigorous energies toward

of taxes,

our

tax

the companies. The life

insurance
companies have not been wholly
intelligent, let alone generous, in

and

substance

re¬

generally recognized, to re¬
to use the trust or any
other estate planning device
as
primarily a tool for reduction of
or

the tax burden.

now

that

Holmes'

classic

appears,

Wendell

Oliver

indeed,

dislike

certain legal
their

has

evasion.
The
estate planning

be recog¬

primarily devoted to
the lessening of the burden of
tates but as essentially pointed to¬
ward

provision

the dollars

and cents with which taxes must

ought not to close my remarks
engaged in the study of
insurance without voicing a

few

suggestions about the use of
insurance in estate planning and
about the taxation of life insur¬
I

believe

nies could

stimulate the
in

that

the

compa¬

somewhat more to

use

of life insurance

estate

planning and I believe
that life insurance deserves a bet¬

ter

"break"

taxwise

than

Life insurance must be

getting.

regarded for most people of aver¬
age means
as
the one essential

tool

estate

planning.
It pro¬
coming young men,
the only possible safeguard against
sudden disaster. < In so doing it
vides, for

our

ought

to be regarded

friend

our

the best

Government could have

It is
government policy that de-

especially
sound

hard*/times.

pendent women and minor chil¬
dren should be adequately cared
for by
private means.
It is also
sound government
7

8
9

great body
at once

move

enlightened and more
It is getting to be under¬

intelligent thing to
is to
leave part of the grantor's life
insurance on interest or annuity
that

stood
do

certain types of cases

options, taking pains to select the
best and usually the oldest poli¬
cies, and place the rest of the in¬
surance

marshaled

where

trust

can

family fund
ready for use as to income or
principal or both according to
current emergency.
Indeed, there

are a

will

good many companies which
out
special arrange¬

work

ments today for the pouring
trust of any exhausted or

the
are

into
ex¬

amounts which remain under

cess

option settlements. And there
a few companies which now

undertake

afford

the

trustees

much
or nearly as much right,
the option provisions, as
a

family

trust

policy that the

v.
v.

Hallock, 309 U. S. 106
Clifford, 309 U. S. 331.

^1 V. S, 112.

10 311

II loo

Fed.

s- 367.
12 317 U.
S.

Cert.,

denied,

154.

310

The

insurance.

New

than

having

value to get
that

liquidate

his due.

the fact that life
only deprived of

clearance

members

New

the

Ex¬

between

contracts

listed

stocks, which
discontinued in

temporarily

was

annourice-

1942. Mr. Schrarn in his

ment to member firms says:

■

The restoration of the clearance
is

deemed
view

advisable

the

change

since

the

the Ex¬

and

1942

sequent advantages

time

this

increase

volume of transactions

the

con¬

to be gained

from the elimination of deliveries

clear¬

sheet.

The

of "offset"

means

ance

example

nors

contemplated

program

considerably enlarged from the
clearance
operation
previously
conducted by Stock Clearing Cor¬

full

the machine method of

and

qualitative
adult education.
One

system
reform

which

The

utilization of
clearance,
experimented

poration.

being

was

after another,

with at the time the clearance was

and

discontinued,

all directed to good
thoughtful and con¬

sound,

will

the

' permit

servative

bricks

seems

has so often

denounced

with

the

history

human

evils

by Erwin Grisuse by

relation to the

wealthy men of life insurance as
tax

avoidance mechanism have

produced

which

cure

gether too drastic.13
13 See

Prof.

Lpen]

the

Onnvpntinn.
cPp
v

L^e

bert.

12.

T"<-iirnnne to

"Your

Dec. 1945.

remarks

t>h«

Chicago. HI

is alto¬

There are

Griswold's

s^Unn

before

Aberdeen
E.

Albert

Investments," Vol. VI,

stricter discipline upon
departures
from
sound
proce¬
dures. But they are moving in the
right direction and are educating
themselves by drawing upon the

Gil

our fellow mem¬
journals in the field of
administration, taxes and
planning are very helpful.
magazines like "Trusts and

experiences of
The

bers.
trust
estate

From

Bulletin"
of the American Bankers Associ¬
ation and from studies like those

Estates" and the "Trust

discussed

been

for

and

further

the

of
After thq
clearance is in operation some of
these probably will be put into
effect.
However, our principal
refinement

the

clearing

interest

establish
appears

improvement

process.

this

the

time

clearance

to rt2r
what

to be the most practical
under
present-day

manner

./,•

circumstances.
I

hope that the re-institution of

the clearance will prove to be, as
we

believe,

increased

change

step in the further

usefulness

the

organization

members.

Ex¬

to
,

its
C

by the
Institute, a

which have been produced

Lawyers

Practicing

affiliate of the

working
can

Bankers Association,

common

Ameri¬
a

authoritative

can

sense

great

be extracted.

nuggets

many

Monetary Problem

R. C. Leffingwell, Chairman of
growing
that the estate planning job is a the Executive Committee of J. P.
team
job—that a sound estate Morgan & Co., Inc., and M. Sj.
nlan should always be> considered Szymczak, member of the Board

The

the

from

widely

concept

standpoint of the law¬

of Governors

of the Federal Re¬

the trustman andj/jthe under¬ serve System will discuss "Our
writer, and often from the standMonetary Problems" at the 157th
noint of the accountant. All in all
I think the trends in our field in dinned meeting of the Economic

yer.

these

past

have been dis¬

years

tinctly for the good.

Churchill
all

that

oush,"
see

once

but

that the

man

We
the

may

time,

suggested,

needed

win over the

No.

arrived

have

Life

Oct. 5, 1942, and

Tax^s.

taining of the hallmark of ap¬
proval. They need, also, perhaps
to give greater incentives for the
creation of excellent plans and to

to impose

national policy

I fear that

happened

the soeexemption has
the attention of evorv

planner

set

Gove*

extensive

each generation

wold

tax structure of

estate

has

Association

the

for all the world to observe in its

reasonable protective fund

ning.

laws toward life in¬

insurance is not

School

Graduate

The

Exchange announced
19, the decision of the

change to reestablish in the Stock
Clearing Corporation as soon as
practicable—which will probably
be
around
June
15—the
daily

Division of the American Bankers

fraction of their

sound

men

life insurance
to

Board

continuing evidence

Schram

Stock

April

Banking and especially the Trust

would be to encourage the young

from

me,

forms.

by receiving cash outright
rather

mortar at

and

The reneal and removal

our

incomes.

fine cooperative team work. This
is
manifested
in
a
variety
of

in his estate tax collections

distinctly unenlightened
and
discriminatory attitude of our

eial

President
York

They
They

families.

of the way

duced

even

Federal tax

After all,
beings.

worried about what will

are

lasting

income surtaxes Graduate School at Rutgers. The Exchange and settlement dates.
What would be wrong Bar Associations are beginning to The addition of this extra day
with giving a man who can build stretch and move ahead toward appears necessary if the full bene¬
The section of fit of the clearance is to be
only a very modest estate out of these same goals.
his earnings a reasonable deduc¬ the Real Estate Probate and Trust obtained.
The initial charge to
tion for life insurance premiums Law of the American Bar Associa¬
be made by Stock Clearing Cor¬
paid, if those life insurance pre¬ tion has done some notable work. poration for the clearance will be
miums are in fact devoted to the The life insurance and trust coun¬ considerably less than that in ef¬
protection of his surviving fam¬ cils of the United States have fect at the time the clearance
ily?
It seems to me that there brought together lawyers, trust- operation was discontinued.
would not only be nothing wrong men, insurance men and account¬
The Board of Governors of the
with such an exemption but that ants in an extraordinary combina¬ Exchange has considered this plan
it would conform with a sound tion of sincerity and good fellow¬ most carefully.
It is realized that
and
enlightened
policy.
What ship. These councils need to do there can be no unanimity on all
would be wrong with the granting something, to be sure, about lay¬ of the details of a clearance. Un¬
of some reasonable exemption to ing down standards of excellence der the circumstances, we have
estate
life insurance proceeds which are of
plans.
Perhaps they set up what we believe to be the
in fact actually used to pay estate need to create a standing com¬ most
satisfactory
and
feasible
taxes?
Is it not true that Uncle mittee to which proposed plans
plan, taking all viewpoints into
Sam has his burden greatly re¬ might be submitted for the ob¬ consideration.
Various ideas have

expect to try to call public at¬

called

122.
2nd

also

in¬

social

NYSE to !c

human

have

also

and

considera¬

subject.
are

great

operate.

lightened national policy on the
of taxing authorities.
At a
later time and in a different place

surance.

Hpivering
Helvering

They

tax

cause

oart

tention to what seems to me to

the

Congressmen

to build
for
are afforded to the assured himself
their own dependents and to give
or to his
beneficiaries.
So that
them a premium for arranging
we have a right to be optimistic
their affairs so that Uncle Sam's
as to the future use of insurance
collection burdens would be light¬
in
intelligent - estate
planning.
It
conceivably could be
Certain things are needed, to be ened.
sound national policy to take away
sure, one of them a greater and
from a rich man at his death all
more imaginative education upon
the part of the underwriters. But of his accumulated earnings ex¬
a
comparatively
modest
here we see signs of happy devel¬ cept
opment.
The
proposed
school amount. But at least the coming
sessions to be inaugurated this generation and the young men
vear
at Connecticut College by who must provide the national
the C. L. U. is one cheering ex¬ motive power for that generation
should have full opportunity and
ample. We need also a more en¬
incentive to save for themselves
lightened viewpoint on the part of
that
same
permitted
modest
home counsel and executives.
amount.
I am sorry to say that
I can see very little sign of en¬
Need for Tax Exemption for
Insurance Premiums
lightened trend in this generally
But chiefly we need a more en¬ disappointing area of estate plan¬

perfected
of

strument

value.

persons

by
Stock Clearing
thinking has stemmed preparation
from that organization.
The same Corporation of certain lists and
tickets
which
individual
firms
may be said for the C. L. U. As¬
atively low bracket of taxation sociation and it may be that the were
previously
required
to
but
the so-called average man experiment to which I have re¬ prepare.
The restoration of the clearance
who is attempting to build out of ferred
will arrive, after a few
on
this
basis will
involve the
his own efforts any kind of a years of experiment, at the same
modest family protection fund is high place now occupied by the addition of another "skip day" be¬
Bankers
Association tween the date of trades on the
under
a
constant handicap be¬ American

men

ance.

were

right,
Estate Planning

life

ing

elastic.

under

UsC of Life Insurance in

calculations

under

be paid.

apprehensions, part¬

given direction.
I think it
may fairly be said, however, that
home office practices are becom¬

come

They have
of

tion

philosophy undertook,
according to its proponents, to
give the ordinary man a chance
and to make the rich man pay his
full
proportionate share of the
cost of government.
It has suc¬
ceeded, so it seems to me, in
achieving in this respect the exact
opposite of its goal.
The person
who inherited a very considerable
amount of property can keep it
and
can
realize profits upon it
and use those profits for the pay¬
ment of current expenses at a rel¬

because

partly

might exist if

of trustees

expensive wars to be fought, and
from the standpoint of the na¬
tional cash register avoidance is

nized not

trustees to have

underwriting

which

legitimate, will eventu¬

therefore

they
They

Deal

ly because of economic threats to

ally be checked by the will of the
people.
The simple explanation
is that government can't get along
without money,
especially with

exactly as bad
special goal of

allow

attitude

this

reprehensible tax evasion
and legitimate tax avoidance has
done more harm than good.
The
modern fact is that any prolonged
system
of
taxation
avoidance,

to the options.

access

tween

however

Their view¬

dislike to deal with trusts.

be¬

distinction

use

options;

contract

the

favor

gard

the

point even now must reluctantly
described as cramped.
They

court for going too
fast.
But it is generally recog¬
nized as foolish today, and it was
always foolish even though it was
not

toward

the

proved

attitude

the insurance trust.

Stuart12 decision the Congress in¬
tervened

amounts

aspects

their

have

day

steadfastness

and

reasonably large
imagination
and
mindedness, we shall some

open

happen to their precious broods if
er words, what you could do for
anything happens to them. They
any
other
contract
right—you should listen, and in my opinion
can't do it even though you give they
will listen with attentive
it away completely bona fide and ears, to any proposed adjustment
completely settle with the Gov¬ which is based upon sound think¬
ernment for the privilege of mak¬ ing and which is just if not gen¬
ing the gift.
What is more, the erous to the average man of the
impact of the Hallock rule in the United States.
field of insurance is nothing short
Recent Procedure
of devastating, and it should be
I now come to my final obser¬
straightened out forthwith. In¬
deed, I believe that Federal tax vation as to the trend of estate
laws should give a definite pre¬ planning within the past several
mium to the acquisiton of proper years.
There has been, it seems

I should like to say
few words about the attitude of

when after the famous

example,

kind¬

and
considerate
viewpoint
upon insurance from the Govern¬
ment.
But before commenting on

the treasury.
One such
occasion happened,
for

dogs of
notable

therefore, to ask for

son,

that the courts have over¬
the matter of being watch

done

There is rea¬

chase of insurance.

minimizing any latent power pos¬
sessed by the trust to circumvent
the national need with relation to
the inevitable tax burden. It seends,
on occasion, and it is true on occa¬
sion,

by all odds, and in
the only way, to pro¬

vide a modest estate without gam¬

partnership situations have kept
estate planners in a "dither" most
time.

My
lawyer

expenses.

having to do
with the art of estate planning
concentrate their thinking upop
this subject and force upon the
legislative bodies of the country,
see

also have limited

observation of the expe¬
clients has been that

many cases

all

try

fidelity

purpose

I should like

erty given away will not be tax¬
able
again to his estate.
You
can't do for life insurance, in oth¬

values

as a young

that

including Congress,

insurance

cash

law

decided

even give away a life
policy, even though he
pays a gift tax upon the transac¬
tion, with assurance that the prop¬

rience of my

signed future income, taxation as
in the Lehman cases11 of recipro¬
cal trusts and taxation of family

of the

its

taken for ordinary

never

life

the

now

insurance

upright and

when

man

also

something about it.

can't

man

the

savings bank, is that
they are subject to the constant
hazard of easy withdrawal.
It is
ey

agement or benefits in the trust
there might be imposed both in¬
come and estate taxation.8 Other

cedent

for a

admixture

have

which

developments,

about this phase of the work and
I hope there may be others who

manlike

ment

treated for

good many men throughout the
United States who are disturbed

preferred status under the law
it stands but is actually placed
in a position which is more diffi¬
cult than that occupied by other
personal property.
After a series

of every gen¬

have

2113

are

allies

"one

Club'/of New York, Wednesday,

not May 1 at the Hotel Astor, New
as

when
good

At the same time the an¬

York.
nual

election

held.

officers

will

Thomas I. Parkinson, Presi¬

beginning to dent^ the club, will preside and
are

likely to

long run, and if each

does his job with a

act

moderator of the discussion

period which traditionally follows

maximum the delivery of the addresses.

2114

THE COMMERCIAL & FINANCIAL CHRONICLE

change in the American way of

The Search for Economic
(Continued from page 2075)
talistic country of the world, the
-•

depression and the accompanying
unemployment brought about a
great many changes in our eco¬
nomic
tude

structure

and

in the

atti¬

the

people towards the
Government, and, hence, in the
of

power

the

Government

over

the economic life of the nation.

The

and its

war

aftermath, the

are

wage

of wealth that
has taken place in many parts of
the world, and inflation accom¬

panied by a constant decline in
the purchasing power of the cur¬
rencies, have resulted in the im¬
poverishment of many families
and of entire classes.

today

are

These peo¬

Their

based

the

members of

un¬

contracts

are

collective bargaining and
does not have

management

the right to discharge an individ¬
ual as before.

Fifth,

legislation has been
passed and agencies established
which protect the individual
against loss of his home through
foreclosure.

destruction

great

ple

ican workers
ions.

Sixth, considerable
been

made

states

and

the

municipalities,

Federal

ment to care for the

the sick.

progress has

This

Govern¬

indigent and

increase

eco¬

nomic security was achieved
pri¬
Increased

conscious of

Through

Economic

Individual

Security

happen here, for to destroy or
drastically reduce the purchasing
power
of the people's savings

Security

Efforts:

undermine

our

very

eco¬

nomic existence.
The savings of the people con¬

addition the economic security of

sist primarily of cash in the form

great many individuals has im¬
proved as a result of their own
efforts. The savings of the people

insurance and
Government bonds. The purchas¬
ing power of these assets is sub¬

unemployment, for
protection in old age and during
sickness.
They expect their gov¬

today

ject to fluctuation. It is quite evi¬
dent that any sharp increase in
prices of commodities would re¬

ernments

sisting of bank deposits (time and
demand) and Government obliga¬

need

than

for

parts

many

than

toward

security

before.

ever

economic

ever

the

world,
the people look

the government for

pro¬

tection against

provide them
medical care and

shelter,

with
free

education for their children. Only
recently the Parliament in Great
Britain passed a social security
law which actually assures every

resident of the British Isles
nomic

eco¬

security from "the cradle
grave."
It is questionable

to the

whether the British economy can

such a scheme of social
security under conditions as they

support
exist.

This desire for economic

secur¬

ity and the demand that the gov¬
ernment furnish it are to a large
extent responsible for the shift to
the Left and the nationalization of

important

of industry,
the trend toward state capitalism,
the splitting up of large estates
and the passage of various social
security laws. If we look around,
we

segments

find that today

Great Britain

is in the process of nationalizing
considerable
segments
of
her

In France the National

economy.

Acsembly is discussing the nation¬
alization of the
coal
industry,
transportation and electric utili¬
ties.

Czechoslovakia

70%

the

productive capacity of the
country has been nationalized and

extremely large.

are

was

estimated that the liquid assets at
the disposal of individuals, con¬

tions amounted at the end of 1945
to

$145,000,000,000 as compared
with $45,000,000,000 in 1939, an
increase of $100,000,000,000.
In
addition, the volume of life insur¬
ance

written and

people

insured

the number

have

increased

materially.
Life insurance
coverage increased from $98,000,000,000 in 1934 to $154,000,000,000
in 1946.
Hence, a great many
very

Americans

have

protected

their families against want caused

by death.
indebtedness

has

de¬

creased materially, not only that
incurred in connection with the

purchase

durable

consumers'

goods, but also mortgages. Hospialization
plans have been in¬
creased
icans

and

today many Amer¬
protected against the

are

lazards of sickness.
We find,

therefore, that partly

through legislation and partly
through their own efforts the eco¬
nomic security of the American

ments

well

by individuals

could

gradually adopting a system
which, for lack of a better term,
one may call state capitalism.

United States enjoy today a high
degree of economic security which

are

This

trend

and

desire for

eco¬

nomic security must be recognized
in the United States, for to over¬

the

duce

purchasing power of
these assets.
A sharp increase in
prices would drastically reduce
the value of life insurance, of pen¬
sion funds as well

people believe.

most people believe that the
danger of inflation arises only out
of the shortage of
commodities,
and that as

modities

people

this country already
favorably with that pre¬

larger, the
inflation will disappear
so.

One

cluded

cited.

that

compares

vailing

It may

the

people

con¬

favorably with that

parts

many

the

pre¬

the

world. With the exception of wid¬

basis, there remain two
principal problems to be solved in

are,

Solved:

These

ment's

notice

into

cash

to increase

first, to protect the savings of

vailing

promised in

number

of countries.

were

fold:

Second, corporations throughout
the land have recognized the need
for protecting employees in their
old age, with the result that pen¬

sion funds have been established

by
,

a large number of corporations.
Since pension funds are economically sound and socially highly

(1) to protect the

accumu¬

lated savings or the economic

se¬

curity which people have achieved
through their own endeavors. This
involves two phases: (a) to pro¬
tect them against their own acts.
We

must. induce

spend

people

not

their accumulated savings

which they produce, and they are

sMe to Insure their crops against

ffoe-hazards of nature at

ttihr&fr tow cost.

rela-

ban

rural property speculation.

Above all. I believe it would be
desirable if at the present time
some

movement could be started
to encourage a
buyers* strike. If

the people

Wts&xthf about 15,000,000 Amer¬ spend their

were

not

money

eager

freely

weaken

the

once

unbiased

com¬

prepare

and

country

and

ade¬

inequities,

malpractices and
a
large number
people are entirely beyond

the

and

When

above

security of the people and that the

the law, it
invariably'
trouble, particularly when
business activity declines. In
my'
opinion, it is necessary for Con-'

necessary measures will be taken
to prevent the
inflationary forces

effects

commodities

the

causes

economic

gress

study very carefully the
of

the

disequilibrium

from taking deeper roots.
The
second
problem

wage

rates

that

connection

wage

rates

developed
during the past few years. High

in this
large-scale unem¬
This, in my opinion, is
not likely to occur
during the next
is

some

industries,

relatively
low
wage
rates
others, make mass production
mass

three

During the

years.

business activity is at

need

concerning

the

over

the money market.

Our. agricultural

policy needs
complete overhauling, and unless
measures are taken to

change the
policies of
Administration, we will lose
our
foreign markets for American
farm products.
What effect will

high

present

agricultural

the

this have

when business

activity

turns downward?

once

Briefly, during the past dozen
vears

erea+

lanv Yaws

SVsse&e good

have

stoe

b?d

During the next few years when
business activity will be at a high
jevel, when no emergency will

US'

the

legislation

thorities

often unsound,

are

take

banking legislation

currency, banking, and the powers
of the Treasury and Reserve au¬

take the necessary meas¬
to prevent an increase in un-

result

United

States has beeni
passed in almost every session of
Congress. At the present time we

as a

and

the

years

in
and

consumption impossible.

Credit

called

during the next few

has

necessary

confront the country is the time
to study all this
legislation, to re-

really serious

activity

Conclusion:

high level, to prevent

The

I therefore

measures.

only

which

some

tor

economic

security is world-wide and gained
further

impetus during

because

enumer-

seem

desire

impor-

the

the war

ravages

the

greatest conflict that ever afflicted the human race. In many
countries the people gave up

foremost, conservative rights for which

the

generations
had fought in exchange for at
least
a
promise
of
protection
the aid of the Government. We
all
against want.
Politicians as well
know that there is an accumulated
as statesmen
throughout the world
demand for all kinds of
public1 have recognized this desire f°r
works, large and small.
If these
economic security and measures
public
works

were

handled

care-

fully, if their
coordinated

construction

with

were!

are

many

being taken all

fulfill

over

the

form

one

world

an-

the

swings of< other.
cycle, then the Gov-1
Great progress has been made
ernment
during the next few in the United States in furnishing
years, and by government I mean a
large number of people with a
Federal, state and local, would
high degree of economic security,
merely erect the most necessary
Certainly many more people m
works: plans would be
ready and this
country today are protected
the business

then when business
activity begins
to
turn
downward, we
wn-dd

prices

materially
economic
security
or

impoverished

planning of public works, including housing, to be erected with

spend billions of dollars

which many millions of individ¬
uals have obtained for themselves
and

existing labor'

injustices.

activity and cause con¬
siderable unemployment.
Above
all, it will undermine the faith of

commodity

well

people have recognized the conse¬
quences of a sharp rise in prices

First and

millions, and will affect

appoint

of the

ate

business

destroy

during the

quate legislation to correct
pres¬

it is impossible within the time
allotted to me to even mention

It will reduce real income

equities from entering the increase
equity market or engaging in ur¬ would

the

elsewhere,

large-scale unemployment?

foolishly, particularly at the pres¬ the people in democratic institu¬
desirable, they will spread, thus ent time,
(b) Through education tions, and strengthen the demand
providing many more Americans or
otherwise, we must try to pre¬ for greater Government controls.
with security in their old age.
vent people who know
nothing
Inflation, therefore, or a sharp
Third, the farmers are today about
protected by law against a sharp
decline in prices of commodities

rev¬

taxes

the Administration

will be at

sharp rise in prices will reduce
the real savings of the
people, in¬
cluding life insurance on which
the security of so many
people

course

Since

Next, it is essential that Con¬

danger

taken to de¬

future

activity.

expenditures

Federal Government in
the postwar period are bound to be sub-

ent

prematurely lowered. all

the

and

enues

that after the catch-up pe- vise
what needs revision and to
riod is over, we
may have larger pass additional
legislation which
unemployment than we had dur- .will tend
to
prevent wholesale
mg the '30's. All indications point
unemployment for prolonged pein that direction.
What measures .riods of'time
should be taken
during the next
few years, when business

demand

feat the forces of inflation, there
is no
question that commodity
prices will continue to rise.
A

adversely

and business

Personally, I believe, and I cer¬
tainly hope that I am right, that

measures, there is

The controls over consumption
have been prematurely removed.

rests.

study be made of the
ita* system of the country, what
existing taxes have on capital
formation, capital investments

gress

wages, thus setting in motion the
spiral which ultimately leads to

Unless

wages.

for many

that

i thorough

mittee to study the
legislation in this

inflation.

and

granted it will further accentuate
spiral between prices and

are

essential

few years.

er2er

the

measures

1Second, it

tures to the bone

increase in wages, un¬

tiff aCtiVity t hi?h-

reduce the volume of commodities
available
for
consumption.
If

Unless

demand

raw materials and labor,

•

necessary to revamp the ensystem, coordinate it'
the swings of the
business
cycle. Above all, reduce
expendi-1

necessary measures must be taken

higher wages and, if not
granted, to strikes which would

were

thp

additional

the question of economic
security
in the United States will have
been solved to a large extent. The

any ques¬
a

and

plentiful

are

tire taxation

employment, then I believe that

is bound

and, without

On
eco

filled

with

by an increase
in the productivity of
labor, leads
to higher prices and that higher
prices in turn may lead to higher

level,

take place

of living

been

that

accompanied

wnen

for

Taxes

less

has

and expenditures of the
commodGovernment are bound to exercise
wages is '-an influence on business activity,

all that

void

materials

raw

high time that those in
charge of our economic affairs in
Washington realize once and for

ures

That is, to protect the
security which people
have achieved through their own

And, second, to prevent
First, social security legislation large-scale and
prolonged unem¬
has been passed here which
pro¬ ployment.
If we solve these two
tects millions of people
against problems, we will have furnished
want in their old age. It also pro¬
the American
people with the
vides a stipulated income for a
highest degree of economic secur¬
certain period of time during pe¬
ity without at the same time
riods
of
temporary unemploy¬ changing our way of
life, our eco¬
ment, and through compensation nomic system or our
political in¬
insurance
a
large number of; stitutions.
Americans are protected against
The problem, therefore, is two¬
occupational accidents.

era.

deavoring to bring about a further
increase in prices of farm prod¬
this

ra™

which

a. Y larger than before in
Peacetime, it is quite evident

There is a great vacuum of dur¬
able consumers' goods. There is a
great vacuum in housing, et cet¬

wage-price pol¬
icy recently announced by the
Administration, wages and prices
will rise, thus increasing the cost
of production and threatening a
spiral between prices and wages.
Right now, the farm bloc is en¬

construction of these
public work,
could create an

finally realize that it is impossible

not held.

labor

shortage at present
other hand, when
the

the

ministration and its advisers must

ity prices if the line

enterprise for

and

is a

nomic

all, the Ad-

been created during the war.

new

the cost

of bank credit. Above

upon to meet current demands but
also to fill the vacuum which has

ceedingly large.
Under the

which is carried out with the aid

industry and agriculture be

without

economic

the nation.

be done?

can

next few years business
activity
in the United States is bound to
be on a high level. Not
only will

of billions of
dollars, you cannot
increase by billions of dollars the
amount of Government securities
which can be converted at a mo¬

efforts.

compares

What

private

there

two

Government. You cannot increase
the volume of deposits by dozens

tion, this would lead to

Problems to Be

materials

ig46

ployment.

principal causes of inflation
is the huge amount of
purchasing
power in the hands of the people
created by the faulty methods of
financing the war deficits of the

the future.

economic security enjoyed by the

becomes

of the

high degree of economic secur¬
ity, In fact, one may say that the
a

the

production in¬
supply of com¬

by themselves. This is not

then

Security

soon as

and

creases

ucts.

Economic

It is greater be¬

cause

nancial

Increased

other invest¬

The danger of inflation in the
United States is greater than most

Through Legislation: The people
of the United States already enjoy

on.

ments.

ening the social security law to
include more people, to widen its
scope and place it on a solid fi¬

look it is to court trouble later

life

setting inflationary forces at work.
people has increased materially.
Many other measures taken by The floating debt of the country
the Federal, state or local govern¬ is large.
The public debt is ex¬

the estates have been split up. All
east of Czechoslovakia

countries

deposits,

forces of

Private

life.

to maintain the line

the

with

First, stop
they do at the present time, the the aericu: financing of tne Gov¬
danger of inflation would not be ernment and bring about a sur¬
so great.
plus as fast as possible. Second,
But this problem is relatively keep taxes at a high level as far as
minor in character. After all, we possible. Encourage thrift. Third,
know
that most people in the it is highly desirable, in fact necUnited
States
are
thrifty and essary, that the Treasury carry
refunding operations on a
rather
careful as
to
how they out
spend their money. The real prob¬ large scale, which would reduce
lem is how to protect their eco¬ the volume of deposits held by
the banks. Fourth, it is necessary
nomic security against the rav¬
to curb speculation in commodi¬
ages of inflation. The middle class
of Europe was wiped out by in¬ ties, equities and real estate, par¬
flationary forces.
It must not ticularly that type of speculation

would

marily through legislation.

Thursday, April 18,

works,

public

against

the

death and
ever

hazards

h'fe and
than

their occupations

before.

The economic secur-

......

ity achieved by the American peopolicy, in my opinion, is pie so far has been parilv the rewise because the holding back of suit of their own
efforts an
construction of public works at partly the rec"lt of
Such

they

would

begin to look toward the
Government for economic secur¬
'the present time would remove
ity, which means a considerable the
Government from competition
•

social

various typ
Tne gj

legislation.

problem that confronts the nat

•

Volume
t

present time, therefore,

the

While it might not be from town to town and perhaps tories a year earlier. At the same time, at least not while the horse
possible to eliminate entirely the even from neighborhood to time, however, inventories in the shows signs of having its mind
of
business cycle yet through careful neighborhood. The citizens' com¬ hands
newsprint consumers on a short, frantic dash instead of
a long steady pull.
planning by Government, business mittees will help us judge each were 15.6% lower than they had
Believe me, we in Government
and labor, by cooperation among application in its proper perspec¬ been on the same date in 1945.
are just as anxious as anyone else
them, the major swings of the tive.
Trucks and Tires
to get out of the controls picture
For example, it would not make
business cycle can be eliminated.
and get back to our own homes
You will also be interested in
The progress made to achieve sense to grant an application for
and our own businesses.
That
economic security in the United a new factory which would create the outlook for trucks and tires.
States has been substantiajUBased new labor demands in an area With strikes in both the auto¬ time will come when our job is
on the resources of the country it
which already had more jobs than motive and steel industries, truck done, not when we have been
pushed off the scene by one pres¬
is possible to give the people of workers. In another community, production got off to a bad start.
the United States the highest pos¬ where there was some unemploy¬ We produced roughly civilian 55,- sure group or another.
That job is to bring production
sible degree of economic security ment, the committee might favor 000 trucks in January—the best

livelihood.

protect the savings of the peo¬
ple and to, prevent a sharp rise in

commodities. The latter
materially the pur¬
chasing power of the accumulated
savings consisting of deposits, life
insurance, Government bonds,
tensions, etc., and therefore would
impoverish many people, reduce
their standard of living and un¬
dermine confidence in the demo¬
cratic institutions of the country,
•phis problem is more pressing
than is generally believed for few
people realize how great the dan¬
gers of inflation are and how dis¬
astrous its economic and political
nrices

would reduce

war up to such a level that the aboli¬
29,000 in tion of controls will not leave the
ican way of life rests,
February. March production ought average American consumer out
pie time to
There will come a
to be back up to the January on a limb.
act is now.
Now and not tomor¬
row is the time to fight with all
But our average January time when all, or nearly all, con¬
probably be granted. If the com¬ figure.
trols will cease.
Our job will be
the means at our disposal the munity
already had plenty of production for the five years be¬
to
meet
that deadline
with a
dangers of inflation.- Once these drug stores, the answer would be fore we entered the war was ap¬
No."
forces have been defeated the time
proximately 70,000 trucks, and in volume of production which will
smother the threat of wild infla¬
will have arrived for the nation as
By this sort of selective process, 1941 the January production was
a whole to make plans to prevent
How soon we get tion.
going on simultaneously in all over 100,000.
The problem which we face,
large-scale unemployment once parts of the nation, we expect to back to a high rate of production
in
its
inflationary
the pent-up demand has come to set aside enough building mate¬ is doing to depend on how much especially
for
the
veterans' housing strikes interfere with production aspects, cannot be regarded as a
an
end and business depends on rials
domestic one.
Besides
current demand.
A nation which program and for all other essential and on how soon we can over¬ purely
could achieve miracle after mir¬ construction, maintenance and re¬ come parts and materials short¬ being the world's biggest produc¬
the United
States is the
acle during the war certainly can pair.
ages which extend all through the er,
solve this problem too.
The critical shortage of build¬ automotive field. The truck pro¬ world's biggest customer. Uncon¬
trolled inflation anywhere in the
ing supplies has forced us to put duction men in CPA estimate that
controls on construction. Never¬ even if we have no more disloca¬ world hurts us by making us buy
raw
materials at inflated prices
theless, the basic policy of the tions it will be well into 1947 be¬
truck
producers
can
fill and sell our goods in unstable
Civilian Production Administra¬ fore

and at the same time maintain the

foundations

consequences are.

second problem that will

The

be solved during the
period, when business
activity will be at a high level and
when the nation will on the whole
have

catch-up

enjoy
satisfactory employment
conditions, is to prevent large-

and prolonged unemploy¬
which constitutes the great¬
est danger to the economic secur¬
ity of many people who depend on
their wages and salaries for a
scale

ment

The CPA's

which .the Amer¬

Objective

(Continued from page 2074)
return

of industry to some vague

level, usually
"normal." The fact
is that vhat most of us remember
as "normal" production—the pro¬
and

undefinable

described

duction
war

of some

prosperous pre¬

year—would

come

nowhere

crying
permanent
long-range
demand which we
may reasonably expect in the fu¬
near

meeting

the

either

2115

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

needs of today or the

ture.

will
not
be
made
in Washington; they

postponed
arbitrarily

will be made in local communities
and

mittee
be

consultation
of

local

with

com¬

citizens who

familiar with

local

will

needs

simply do not have all of
the building materials needed so
that everyone can go ahead and
build anything he likes:
About
billion

two

cut

out,

dollars' worth

and that is

has to

easy

an application which would create
job opportunities. If a new com¬
munity doesn't have a drug store,
an
application for one would

tion—and

this

the

clearly-stated will of the Con¬
gress—is that controls will be
used as seldom
as
possible, as
sparingly
the extent

possible, and only to
absolutely necessary to

help reconversion and to prevent
dislocations in our economy.
The

month
but

since the end of the

dropped

below

markets.

domestic needs alone.
The

tire

picture

The only

little

brighter. Production of tires for
trucks and buses has been rising
steadily, and was averaging more
than 302,000 tires per week in
February. If we could keep up
this rate of production for a year

flation
every

safe way to beat in¬
bring production of

sort of commodity up

to the

point where it will meet the de¬
mand.
The
Civilian Production
Administration is
industry

trying to help

reconvert

and increase

output.
Keeping in mind that
almost 16 million
ness.
Most of our executives are truck and bus tires—about double various types of control may be
business men, brought to Wash¬ our average annual production for combined to meet a single situa¬
ington precisely because they do the five years before the war. tion, and that no controls are used
know
business from the inside But the demand for tires is so unless they are clearly necessary,
let me tell you briefly what the
and are in sympathy with free
great that you will have to con¬

CPA is not working

against busi¬

it would mean

its

doing.
tires carefully and
First, we have inventory controls
recapped. But I don't
dential
alteration
costing
less ing on the need for controls and think any trucks are going to be must, such as the one on news¬
The purchasing public is raven¬
These limit inventories to
than $400 or a commercial con¬ to eliminate each individual con¬ off the road because of a tire print.
ous now, and I believe that even
minimum
working
levels
and
struction
job costing less than trol as soon as possible. We are shortage.
after
we
appease
the present
prevent
preemptive buying of
$1,000—can go ahead without any prejudiced in favor of removing
hunger we may expect a hea'thy
materials. By this I mean that we
authorization.
So can any project controls; we would rather drop
Inflationary Dangers
appetite for goods and services to
try to keep one producer from
already under way on March 26, them too early than too late.
I
have
covered some of the
continue indefinitely. We are rot
accumulating more materials than
when the order was issued.
But
fields in which you, as newspaper
going back to the demand level
he can currently turn into end
Newsprint Production
the order will mean that if you
and
magazine distributors, are
of the 1930's. The nation is filling
products if this would force other
want to do any major building,
In comparison with otfier in¬
especially interested. I want to
up within its borders; during the
producers to keep labor and ma¬
such as a garage for a fleet of
dustries, the people who publish talk now about a problem which
war an abnormal number of new
chinery idle for lack of the same
trucks or a new office building and distribute books, magazines
families
was
everyone has in common—I mean
formed,, and the
materials.
or warehouse, you will first have
and newspapers haven't done so the
birth rate jumped sharply. Peo¬
danger of inflation.
Second, we have controls over
to get permission from the CPA
badly. Government controls over
ple grew accustomed to better
Unprecedented amounts of a few scarce items, such as tin,
construction field office in your magazine and book papers were
standards of living. The boy who
ready money, accumulated consu¬ lead and rubber, where the sup¬
district.
lifted in 1944, and while there still
n^ed
to run
around in an old
mer
demand, shortages of mate¬ ply will not meet unrestricted de¬
The
standards on
which ap¬ is a shortage of some of these
jaloppy has grown up and wants a
rials and manpower, and the need mand and we want to channel
plications will be judged might be papers, the industry is expanding
new convertible.
to
reconvert factories or build what is available into the most
summed up in two questions:
A few days ago Mr. E. W. Tinker,
new
I think that increased demand
plants—all these and many essential uses. Our controls over
First:
"Is
the
project neces¬ the Executive Secretary of the
other factors have combined to
—greatly increased demand com¬
lead, for example, make it possi¬
sary?"
If the answer to that American Paper and Pulp Asso¬
generate a powerful inflationary ble to produce enough batteries
pared with anything we have
question is "No," the application ciation, estimated that our ca¬
pressure in the United States.
It to keep our cars and trucks and
previously
called
"normal"—is will be rejected.
pacity
for
producing
printing is a pressure which can be re¬
here
to
stay.
The long-range
busses running.
Second: "Even if the project is paper would increase by 600,000
lieved safely
only by bringing
production goals at which we must
Next,
we
have controls de¬
tons in 1946.
He added that ".
aim include a considerably great¬ necessary, can it be postponed?"
production up to the level of de¬ signed to produce an adequate
1947 from the
If the answer to this question is the outlook for
mand. Many factors are involved. volume of low-cost goods. In this
er
output than we
have ever
the application will
be standpoint of the consumer and You can't pick out one bottleneck
achieved before.
Unless we up¬ "Yes,"
connection I have already men¬
distributor justifies some degree
and say that it is the key to the tioned housing. Another example
set our economic
apple-cart by rejected.
of optimism."
Of course that may be an over¬
entire situation.
There may be is the program to produce lowletting inflation get out of hand,
Our
CPA
estimates
of the bottlenecks in prices, in labor, in cos*
more
people
will
want
more simplification. Nevertheless, it is
clothing. Both are important
United
States
production
o f materials
or
in
manufacturing parts of the Administration's stagoods than they have ever wanted a formula which will generally
apply, and I urge that everyone ground-wood printing papers dur¬ facilities. The agencies concerned Dinzation program. Both are also
before, and they'll have more
who is thinking of building apply ing the first three months of this with
each of these
fields are directly related to the needs of
money with which to buy them.
The result should be a healthy, the formula for himself before he year indicate that production is working together, making adjust¬ our returning veterans.
solid
prosperity which will be goes to one of the CPA field con¬ up about 14% over the first quar¬ ment in control as quickly as
Finally, we have controls in¬
For the same period, the need for a change can be fore¬ tended to
struction offices to fill out a form. ter of 1945.
felt in every line of business.
help companies obtain
If you cannot say in all honesty we estimate that book paper pro¬ seen.
One of our greatest needs small amounts of bottleneck mateMust Channel Production
that the work is essential and that duction is up 30% and fine papers is for everyone—in Government,
rails, to give business quick spot
Until we do get over the hump it cannot possibly be deferred* up 10% over what it was a year in industry, in business and in la¬ assistance in getting something the
of accumulated demand and make please do hot submit an applica¬ ago.
bor—to have patience and con¬ lack of which is holding up pro¬
In
newsprint, it is estimated fidence and to take a broad view duction. Since our men at CPA
tion.
up the temporary deficits created
The CPA will process applica¬ that 1,935,000 tons will be availa¬ of the problem.
have a good view of national pro¬
during the war, we must channel
our present production of certain
tions for all non-residential con¬ ble to United States consumers in
Recently some individuals and duction as a whole, they can often
with the exception of the first half of this year. This is
very scarce materials and goods struction
organizations have been clamor¬ show a manufacturer where he
into
buildings.
In
deciding practically the rate at which ing for an immediate dropping of can get his material without any
things where it is most farm
urgently needed.
This policy of whether projects are essential and newsprint was consumed in 1941. all controls, especially price con¬ priority order.
We do not issue
giving the right of way to neces¬ non-deferrable, each CPA field We hope that even more will be trols. Their argument is that once priority ratings when materials
available during the second half.
sities is being applied in the low- office will be advised and guided
available
from
alternate
controls are dropped, our eco¬ are
cost clothing field.
Also, it may by a local committee of outstand¬ There are no accurate figures, nomy will quickly adjust itself on sources, or to enable a producer
reports
from Canada and a
have an immediate and direct ef¬ ing citizens, in whom the com¬ but
supply and demand basis, with to get a better price than he could
most
of
fect on any of you who have been munity should have full confi¬ Newfoundland—where
Priority ratings
production increasing all along otherwise get.
our
newsprint is produced—say the line and prices being held are used sparingly, to break botplanning to do some construction. dence. These citizens are not bu¬
that this should be an excellent
In collaboration with Mr. Wyatt, reaucrats; they are people who
tleneeks.
down by competition. They poohthe Housing Expediter, CPA has are familiar with local conditions, wood-pulp year.
These are the control tools with,
pooh our fears of uncontrolled in¬
Newsprint production in Cana¬ flation.
3ust issued an order which affects local problems, .
—*-*
*
«__«*«__
local peculiarities.
which the Civilian Production is
all non-essential construction and
da, Newfoundland and the United
These persons and groups are trying to help this nation turn
No Arbitrary Yardstick
States during the first two months
conserves materials for the lowout ihe goods it needs. Our prob¬
saying to us, in effect: "Let go of
of this year was 22% higher than
cost
The
construction
needs of
a
homes which the veterans
the reins—that horse won't run lem is to decide, first, the mini¬
it was a year ago. Consumption of
need. This order is not as restric¬ thousand
towns
from
coast
to
mum of controls necessary in any
away." Unfortunately, when we
tive as it may be made to sound. coast
cannot
be
measured ac¬ newsprint, on the other hand, was
went through this sort of a peri¬ given situation, and second, how
task.

The small stuff—such

Purchasing Public

Ravenous

as a

resi¬

private enterprise.
It is our policy to keep check¬

tinue

using

CPA is

having them

curately against any one arbitrary

definitely does not prohibit any
non-housing construction which is

essential

and

Postponed.
ls

which

Decisions

necessary

and

cannot
as

what

Washin*?-

26%

higher.

At the end

of February of this

newsprint inventories in the
There are human elements and hands of manufacturers were alcommunity
needs which
vary most 13% higher than the inventon and written in

what

may

d^velooed

legal language.' year,

and to what extent unavoidable
of the reins and the controls will be applied. During
horse did run away. We can't af¬ the war our predecessor agency,
(Continued on page 21M)
ford to take another chance this

od after the first World War we
did

let

THE COMMERCIAL & FINANCIAL CHRONICLE

2116

be said to have been exchanged
a
direct or indirect benefit.

for

(Continued from page 2115)

Board, had a requests from an industry or from
group
are founded on
on which to a trade
base its decisions—the war needs reasonable need, but we also have
overrode all others, and if some¬ exposed to pressure from interests
thing was needed in the war pro¬ which want us to put into effect
gram it went under controls. To¬ a control principally because it
day the CPA has no such yard¬ would put them in a favorable
stick, and its decisions often in¬ competitive position or serve some

the War Production

yardstick

volve

difficult

evaluation

other selfish interest.

needs,

difficult

classification

song

these

selfish requests goes some¬

degrees of essentiality.
We have
few simple choices between black

thing

the

The theme

people

make

who

this:

"Sure, I think
and white, and many tough de¬ controls should be dropped as soon
cisions between varying shades of as possible.
But put back just
grey.

this

Nevertheless, we are trying to
do more than just make decisions.
We have adopted a definite policy
of going out of our way, of cut¬
ting across lots and of sweeping
away red tape, in order to give
every possible- assistance to in¬
dustry. We know that controls are
not an end in themselves, that
goods are produced in factories
and not in Government agencies.
We want to help industry, and to
that end we will use not only con¬
trols, but also any other means

exception."

of assistance within

our

reach.

attempting to maintain

are

great flexibility because the pro¬
duction
situation changes from

one

control

I'm

me.

and

emphasize
controls

that
not

were

intended, and will not be used,
substitute

for

individual

self-

reliance and resourcefulness.
do not want businessmen to

We
come

to the Government for : priorities
when the exercise of their own
initiative

would

enable

them

satisfy their needs. I am sure that
they don't want to do it. We are
not going to institute any robPeter-to-pay-Paul controls which
merely reshuffle our materials
without
increasing the overall
production of critical goods.

All

illusory."

was

Stockpiling and Dollar Scarcities

Concerning stockpiling and the
problem of dollar scarcities, the
committee's report makes the fol¬
lowing observations:
"The most serious

ing

problem fac¬

in foreign surplus-property

disposal is the scarcity of dollars
in the hands of foreign govern¬

foreign nationals with
which to purchase
our surplus
property and at the same time buy
everything else they need to re¬
ments and

establish their economies.

-want

priorities

for

formally to the executive agencies
This, however, was not the case. (appendix XVI) that experts in
The consideration which we re¬ the Government departments draw

The CPA's Objective
clear-cut

"This

problem is not only the
most serious, but is the most diffi¬
cult to solve. It is the same prob¬
lem which underlies our trade re¬

lations

nations,
past-

the

future

other

with

indeed, it has in the

as,

For example, be¬
of differences between la¬

hope that the coal strike will not
last so long that it will be neces¬
sary to institute any broad alloca¬
tion system for steel, but we do
know

that

occasional

emer¬

gency action will be necessary to
make the best use of the steel we

.
...

"The committee called attention
to this

problem over a year ago in
the report made by Senator James

may

example illustrates how
be forced at any time to
when

controls

use

counted

had

not

using them.
Not all
situations are as simple. Actually,
on

the Civilian Production Adminis¬

tration frequently is approached
by industry and asked to institute
reinstate controls.

ministration

Usually such

Production
an

point

there

about

isn't

Ad¬

excellent

from

In most

question

any

it; the goods
I can promise

ob¬

which

follow this reconversion.

fields

are

the

you that we
at CPA—and I think
everyone in

Government—will

and

North

Africa

and

the

have

everything

learned the simple
principle that there must
be a balance between exports and
imports. After a period of years,
when exports exceed imports, we
arrive at a point where it is un¬

economic

favorable for

because of the scarcity of our me¬
exchange in the hands of
foreign countries. Even if we can¬
cel the billions of dollars' worth of
our

lend-lease

consumed

commodities

and

the

are

pro¬

speed with which they
In

the meantime,

the

continued

are

pa¬

tience, fairness and confidence of

terms

conserve

are

the

are

controlling facts
price in any commercial transac¬
tion. That they were deemed to be

unimportant by the Foreign Liq¬
uidation

Commissioner

con¬

ducting his negotiations with the
British is an indication of the cas¬
ual fashion in which these
public
assets were handled."

As to the lend-lease
settlement,
under which the United States is
scheduled
year
some

receive

over

55-

period 8.5% of the cost of
$5V2 billions of still-un-

consumed, lend-lease

supplies in
the hands of the British, the com¬
mittee states in part as follows:
"...

only

it is apparent that the

specific

benefit

which

been received

for the

the

excess

furnished
dom

over

the

has

settlement

lend-lease
United

aid

King¬

reciprocal aid furnished

by the United Kingdom to the
United States is that the Govern-

|ment of the United Kingdom has
I promised, as indeed it had already
promised in the master lend-lease
Agreement, to participate in an
international

conference

sider ways and

means

con¬

of eliminat¬

ing obstacles to trade between

na¬

tions, and in general terms has
agreed to support the position an¬
nounced by our State Department.

"The committee is unable to see
any reason

why the United King¬
refuse to participate

dom should
in

such

conference,

even

lend-lease

aid

furnished.

Whether any benefits
derived will depend

are

upon

achieving

all

had

been

agreement

with

other countries. In such
agreement
the United States will also
have to
make
concessions, such as the

lowering

or elimination of tariffs,
which concessions, in
themselves,
ought to be sufficient considera¬
tion for like concessions made
by
other governments.
The United

other

vantages it'has in world trade be¬
of

restrictions

special
privileges,%ince the very under¬
taking it has made contemplates
or

"If

reestablish

them

other

limitations to accomplish the
same
objective, then the immedi¬
new

ate cancellation of the
lend-lease
credit balance in our favor could

The

present

which

the

United
more

Government to

drafts

have

is said still to be
form.
Successive
been
making
the

rounds

effort

to a strong wartime economy,

sary

which determine the extent of

our

ability to defend ourselves. One of
the most important and, of course,
the most apparent shortage with
which

entered the

for

quires

raw

war was our

materials.

surplus

property

rights (ap,
1

pendix XVII).
"One

the

natural

channels

into which exports
may flow when
dollars are scarce
abroad is the
investment of our
capital in for

eign countries. Disastrous
experi
in

ences

foreign investments

private capital in the past
to
gether with the instability of
our

gov¬

ernments, in some areas, and
the
threat of expropriation of
proper

ty, render it unlikely that
problem of dollar scarcities
be solved
ment

unless

soon

itself

takes

our

the

will

Govern

lead

The

most

appropriate occasion for the
Government blazing this
pathway
is

the

disposition

its

own

assets

abroad, which is now clear¬
ly and unmistakably a
responsi¬
bility of the State Department it¬

self."

The report, it
thought, may ask for broader
Board authority over reserves of
banks, such as the power to re¬

quire banks to observe

proportion

expert to state that

portfolios.

viewpoints,

pending in Con¬
piling of criti¬

gress for the stock
to

tional

the

defense

mineral

and

sources

which

used

for

our

na¬

acquiring the

raw-material
are

said

consultation

Secretary
than

and

prevailed
$

be
be¬

the

under

Board

report

members

while

same, it is believed.
❖

the

Bank

President
is

the

selected

man

States

nominated by the
is

sure to get the
Whether this will be Lew

Douglas will be settled in

according to

cations.

President

Who

vitally

re¬

neces¬

sary to war production and
economic btrengm?
iviontns

few

indi¬

present
Truman

has

i l be

Central Bank of China the desig¬
nation

of
"appointed bank," li¬
censing it to deal in foreign exchange.
Shen's
appointment,
which surprised many people fa¬

miliar

with

Chinese

the

post does not go to him,
there seems to be a good chance
that it will be offered to another
Canadian. At Savannah there was

should

our

ago,

not

American

too

much

influence

North

the

top

member of the Chinese delega¬

ing of Fund and Bank governors.
The Soongs are reputed to be one
of China's wealthiest families to¬
day.
❖

Former

Secretary of the Treas¬
ury
Morgenthau apparently has
lost out in his public opposition to
Mr. Lew Douglas as President of
the World Bank on the grounds
of Mr.

Douglas' "connections with

Big Business and Wall Street fi¬
nance, his tie-ins with interna¬

general
Mr.
Morgenthau did not object to Mr.
Douglas on this score, it is not
and

point of view."

But even if

and Bank

leave

France is to be represented by
Mendes-France as executive

Bank

would

profit-making
themselves
and

all

In not

few coun¬

tries of the world the

personal en¬
richment of holders of public of¬
fice or their associates is viewed
complacently by their fellow citi¬
officials

and

taking office

behind

institutions function is North

Fund

the

under the
Bretton Woods plan
fostered by Mr. Morgenthau would
insure that the directors of Fund

time,

American money.

his

clear that the international man¬

agement of

zens.

fact remains that the money
which will really make the two

tion to the recent Savannah meet¬

the

❖

friendship

Soong, brother of Ma¬
Chiang, China's "Missimo."
Another brother, T. L. Soong, was

management of Fund and Bank,

new

affairs,

his

attributed to

tional financiers

General

Manager
of the Wo.Ud Fund is still a pend¬
ing question.
On the train re¬
turning from Savannah the matter
was
put
to Governor
Graham
Towers, of the Bank of Canada.
If

Shanghai, is believed to
mainly speculative in the char¬
acter of its operations.
Presum¬
ably because it does very little
legitimate foreign exchange busi¬

the

executive directors in theory, ac¬

days,

China in

dame

Con¬
is in recess, the report will
be made public at once just the
upon

post.

Fund,
Shanghai
a reputation in the
past as an exchange speculator.
His bank, the Continental Bank of
a

with T. V.

'I*

gress

Most of these

acquired from
abroad. Why should not our sur¬
plus property, which goes begging
dollars,

there

smoother

tually the

China's

the

Lai-Ching, is

proclivities

materials.

Treasury Department

the problem from quite different

United

Chi¬

banker with

their friends.

steel, rubber, petrole¬
and a host of other raw

have

and the Federal Reserve Board see

While

the

ness,
$

World

the
Continental Bank in
March failed to receive from the

While the

Should

director

Belgium and Mr. J. WJ Beyen of
the Netherlands for this
position.
While some Europeans think there

be short of

now

securi¬

government-bond

executive

Mr. Shen

our

suddenly discovered ourselves to

"A bill is

certain

member

discussion of M. Camille Gutt of

it was, would have been
stronger
and more effective if we had not

um, sugar,

short-term

their

tween

1941

delegation at BW.

of the other group or agency

agree

from

which the whole Board
Pains are being taken
unnecessarily antagonize

interests involved.

much

China

nese

ties

Vice Minister of

was

and

agree.
not

any

Finance
1944

guage on
can

chun, who

lan¬

to find

China's executive director of
the
World Bank is to be Dr. Koo Yu-

re¬

effort, strong and effective

raw

chrysalis

stated that he favors Mr. Douglas.

nation, that another
emergency will not find us de¬
prived of those elements so neces¬

for

control powers

have learned the lessons

mined,

cal

not

have.

of this war, we should be deter¬

will

United Kingdom had undertaken

some¬

vate enterprise to do so.

that concessions will be made
by

trade had been eliminated and
the

our

is to find

our

credit-

additional

for

need

Mr. Morgenthau's regime.

Desiring to

find abroad those things which we
need as a nation than it is for pri¬

other

like-minded governments.'
If actual barriers to
United States

favorable for

war

ments, the United Kingdom could
hel<| to* make any conces¬
sions whatever in any present ad¬

(Continued from page 2087)
the

Chairman

States finds itself renders it

the settlement and the
statements
in the master lend-lease
not be

transfer

settlement of claims or in
return
for other
property or

Bank and Fund

war,

desire and which

nations

need

agree¬

thev

Developments in World

poor

products or items
needed than those

"The problem

Kingdom is committed to noth¬
ing specific. By the very terms of

cause

1946, and since section 32 of
the Surplus Property Act of 1944
permits the exemption of disposi¬
tions of property located in for¬
eign areas from the provisions of
the' Surplus
Property Act, full
authority now exists in the State
Department to solve the problem
31,

dollars to buy our surpluses.

use

situation

pertinent
and
in establishing

regulation-

the

making authority of the Surplus
Property Administrator on Jan.

the

included in

(Continued from page 2082)
facts

new

thing which

These

"Since the transfer to the State

remain

dollars.

sorely

Lend Lease Settlements
Kingdom.

result of

as a

surplus
inventories, foreign countries and
foreign nationals are reluctant to

Head Committee and

United

pending in Congress to ex¬
pand the authority of the Foreign
Liquidation Commissioner to ac¬
cept property and intangible rights
in payment for surplus property,
in lieu of dollars, foreign cur¬
rency, or credits.

such dollar assets for the

purchase of

American people.

favor

other countries will

which

the

bill is

further

dium of

to export

balances in

the

the committee has been able

learn, no steps have been taken
in this direction. It is true that a

abroad.; An amendment was is
sued by the
Secretary of Sta<;e on
March 15,
1946, permitting the

Middle

possible to increase the volume of

counting

insofar

surplus-property disposal

Feb. 15,

Feb. 19, 1945, subse¬
quent to an investigation of sur¬
plus - property - disposal problems
1945,

essential

duced.

far

abroad.

property

one

Civilian

servation

surplus

of dollar scarcities
restrict

M. Tunnell and Senator Harold H.
Burton to the Senate

"We

The

controls

our

with

way.

will have.

That

used

bill of particulars of our
needs, which we could then pro¬
ceed to fill through the exchange
a

Department

are
being East. The committee had hoped
objective: to get that tangible progress would be
cause
production into high gear as quick¬ made by our surplus-property-dis¬
bor and management the
steel ly as
possible. We all wishwecould posal officials and that solving the
mills
have
failed
to
produce throw a switch and
immediately dollar scarcity problem with rela¬
6,000,000 tons of steel on which transform the volume of goods we
tion to Government surplus prop¬
industry had counted. This loss produced for war into a similar
erty might well pave the way
cannot be made up.
It will be volume of
goods for peace.
Un¬ toward its solution for the benefit
felt throughout our economy for
fortunately, few industries are of our private commercial enter¬
a long time, and it has complicated
adapted
to
lightning
changes; prises in the future. The commit¬
our job at CPA. Now, with a coal
most of them have needed time tee
regrets that it must report
strike in progress and steel mills for
reconversion. But they have that it is
unable-to see that any
already curtailing operations for done an excellent
job—physical substantial * progress
has
been
lack of coal, we may have even
plant reconversion is pretty well made.
more complications. We certainly
done.

week to week.

recommended in¬

committee

the

ceived

Thursday, April 18, ig46

some

places, even in our
have risen from

poverty to riches while their coun¬
try has been experiencing mone¬

tary and financial distress. Those
who next month meet around the
directors tables of the Fund and
Bank will bring together different
standards of behavior. Hence their

director of both Fund and Bank.
°irme be cannot be in Washington

every action should be

in time for the

great circumspection.

opening of the May
directors' meetings, France will
be represented by alternate direc¬

done witn

❖

Venezuela, whose multiple ex¬
tors.
M. L'Argentaye has been
change rates have thus far pre¬
suggested in this connection.
vented
ratification' of
Bretton

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

decide to join the
before long and
trust to work out its monetary
commitment afterwards. Venezue¬
by using different exchange
rates for different categories of
exporters, in effect is subsidizing
coffee and cacao and taxing petro¬
leum exports.
If on the other
hand Venezuela were to use a sin¬
gle exchange rate, and instead re¬
sorted to outright subsidies and
outright taxes, would this violate
may

Woods,

spirit

the period of inflation during
after the first World War.

On the other hand is the real and

destructive
snowballing inflation, followed by
imminent danger of a

collapse which might
our entire economy.

ruinous

shatter

well
To

grasp

before

lies

the opportunity
will

not

that
easy.

developed by| increasing, are far below the nor¬
,
in the mal levels.
The most acute of some of these-.
particular industry or locality in¬
needs
may
be
satisfied fairly
volved, since V-J Day.

brief

World War the price of steel
increased by 232%.
Since

plates
Aug¬

commodities

Between 600 and

building

are:

35%;

increases

problem by fall.
Common
knowledge

hour and 20 cents.

both labor

that

stabilized

thus

have

has

range

earnestly

Fundi audiBank meetings

durable goods
satisfied.

Slichter, of Harvard,

cooperate with the Government's

in this dif¬
relations.

stabilization program

Wage Stabilization Board
the Chairmanship of Mr.
Willard Wirtz has been perform¬

worth.

of the economy,

under

simply to replace those more than
nine years old. The acute demand

ing an outstanding service.
This
tri-partite board was forced to

for

ficult field of industrial

the record of un¬
controlled prices by contrast is
one
of instability.
Current in¬
commercial

creases

rents

The

run

resent Britain as

has been

an
alternate director of the Bank for

among

have

1939,

less

fortunate

income per

average of more

than $2,-

Cash
,

groups

farm against $735 in 1939.
income from farm market¬

ings,

after

300 per

note that
the directors of the Bank
to

interesting

farm

than

net

popular with Henry Morgenthau,
Jr., and Harry White, as the press
conferences
at
Bretton
Woods
is

some

than others,
farm stands more
three times -higher than in

been

Settlements, an in¬
stitution which is extremely un¬

comparison

adjustments for sea¬
is 22% higher

differences

sonal

V-J Day.
While some workers

than

modities

under

World

first

achieved

price

far

greater

the actual cost of an
which

measured

control

the record of the
War.
We have also

stability in
hour's labor,
by

"average

earnings rose
150% in
manufacturing industries. The in¬
crease
this time has been 61%

which

1939, and 5.4% since
1943 (the effective date of

have

loan to France.

Also at Savannah

of the Netherlands

J. W. Bey en, ,g,t
President of the BIS*'a

Kenneth

was

time

one
4

Mackey Joins
Webster Firm

Stone &
York
neth

Air

Broad

Street, New
announces that Ken¬

City,
K.

Mackey, Lt. Col., U. S.
Corps Reserve, has become

associated

with

the

firm

its

municipal bond department.
In
the past Mr. Mackey was with L.
P. Rothschild & Co. and Mackey,
Dunn & Co.

which in¬
factors as
payments and shift pre¬

of labor per hour

pass

operation than two years ago.
While we naturally have some

production bottlenecks and delays,
industrial
production,
already
nearly 70% above the pre-war
average, is at record peacetime
levels, with new high levels being
achieved each week.
Retail sales

overtime
miums.
It

was

inevitable that we should

period of labormanagement difficulties following
V-J Day, just as we did after the
armistice in the last war.
With
the termination of the "no strike"
through

pledge and the dissolution
War
Labor Board, direct

of the
wage

generally
shortly after V-J Day. La¬

control for the economy
ended
bor

and

management were

asked

system
of free collective bargaining, sub¬
ject only to limitations upon the
extent to which wage increases
are
110% above 1939 and 18%
could be reflected in
price in¬
above the first quarter of a year
creases.
ago.
Even with due allowance for
It was inevitable that some dif¬
increases
in
the
general price
to

return

our

pre-war

Collective
bargaining
skills
had
become
a staggering increase in the actual
J.
volume of
merchandise flowing rusty. Tempers following a long,
strained
period of all-out war
over retail counters.
The stability of our economy were frayed on all sides.
Management was worried about
J. Murphy, member of the which we achieved in war has so
far
been
maintained in peace. future costs and the mechanical
level

John

cost

cludes, of course, such

Stone & Webster Securities Cor-

portaion,

going through a tem¬

porarily slim profit period, divi¬
dend payments in the first quarter
after V-J Day (the last quarter of
1945) were equal to the wartime
peak, with profit prospects gener¬
ally accepted as excellent. Bank¬
ruptcies are at the lowest peace¬
time point in 40 years. There are
at least 400,000 more business men

member

delegation

Mr.

been

are

since

1939,

this

represents

ficulties would

follow.

Murphy Forms

John
New York

and
forming Murphy

August, 1939, the beginning problems of reconversion. Labor
was
deeply concerned about the
of the war period, the consumer
J Co. as of May 1, with offices at price index of the Department of drastic cuts in take-home pay
39
Broadway, New York City. Mr.
which would inevitably result as
Labor has increase 31%.
The in¬
Murphy was formerly a partner
overtime
work
was
eliminated
crease since May, 1943, has been
of Thomas Marsalis & Co.
and we returned to a normal work
only 3.4%. Since V-.T Day the in¬
week.
j| —
crease has been only l/10th of 1 %.
The new wage-price policy an¬
E. Sanford Hatch Dead
Even when we allow for deter¬
nounced by the President on Feb.
ioration in quality, this record is
E. Sanford
Hatch, a member of
34th to deal with the situation
the New York.
Stock Exchange vastly better than that which we which had developed is working
achieved in World War Li when
for
nearly fifty yef£S, died at
more effectively
than I dared to
home after a lon^iriness at fate the cost of liviioig rose bf 108%.
The details of the wage
The record is better than most of hope.
oge of 74.: Mr. Hatch bought a
stabilization rules which the Presus dared to hope when the stabili¬
seat on the
Exchange in Novem¬ zation program was launched a jdeiit laid down have been care¬
fully worked out by the Wage
ber 1896 for
$20,000, selling it in little mere than, four years ago.
Stabilization Board in conjunction
The average of wholesale in¬
May 1927 for $194,000, to retire.
with my own office.
These rules
dustrial prices is 27% higher than
Two months later be returned,to
have established a basis for wage
August,? 1939, 4.8% higher than
the
stabilization based primarily on
Exchange, paying $218,000 for in May, 1943, and 1.4% higher
the patterns for wage increases
hls seat.
;
than on V-J Day.
This compares
are

first

Since

The

thousand

planes and five million
shipping in a single yeaF.
During the war period we have
seen
management and labor far
exceed the early wartime produc¬
tion quotas laid down in 1941. We

tons of

with shortages

de¬

flection

that for

held

after the
steady and then

result of this in¬

lated

regained by March, 1946, their
peak war levels.
The
most astonising
develop¬
ment since V-J Day has been the

increase in con¬
expenditures, which oc¬

the stupendous purchasing
developed by our indus¬
machine
working
at
full

months to come—
when present bottlenecks are

even

eliminated

and

are

sumer

four

million

while consumer in¬
temporarily declining.
are
spending an in¬

and

receive

greatly

in¬

dollars.

creased number of

During the first three quarters
1945,

expenditures

consumer

Day—they rose to $111 bil¬
lions. In the first quarter of 1946,

V-J

they

estimated

are

reached

have

rate of $120
increase has oc¬

annual

This

billions.

major consumer

curred before the

durable goods have become avail¬
able and
represents mainly in¬
creased

for

spending

food

and

clothing.

question marks

One of the great
across

for

our

how

future is whether and

this

long

rate of consumer

extraordinary

expenditure will

We know that current consumer
needs

lions

Mil¬
returning veterans have

are

abnormally high.

had to start from

scratch or near

wardrobe, set up
a household and furnish it.
The
immediate market for shirts, for
example, is estimated at 320,000,000, against a production level of
160,000,000 before the war.
The
market for men's suits is at leas<
40 million a year, against a pre¬
war output of 21 million.
Consumer stocks of almost all

acquire

goods are low, and distributors'
inventories,
although gradually

additional

three or
workers.

parallels the intens¬

consumer demand.
Pro¬
ducers have been adding heavily

plant and equipment and
of raw materials

to their

inventories

and
:

goods in process.
Business spending has

reflected

and

forward

deferred

demands

buying as well as buying to meet
heavy current requirements. Man¬
ufacturers' inventories of mate¬
appear to have
substantially. How¬
ever, there is evidence that these *
inventories are in many cases still
below the requirements of present
high level operations.
Distribu¬
tors' inventories, unquestionably,

rials

and

parts

been built up

are

continue.

demand

ness

ity

at an average

employment
by

expenditures represents specula¬
tive or frightened buying is im¬
possible to tell. How much of thi«
kind of buying there will be here¬
after is a major question mark
across our future.
Current busi¬

annual rate of
$103 billions.
In the fourth quar¬
ter—the first full quarter after

were

our

increased

How much of current consumer

even

creasing proportion of the income

satisfied

cannot be wholly

blast,

for many, many

rolls

they

confidence

power

extraordinary

Consumers

new

production record

of demand accumu¬
through four years of war,

trial

was

and delays is a re¬

our
no

The backlogs

plus

come

impossible. It will be easier on
however, if we face up
cold facts of our problem.

payments to individuals had

curred

flood

all of us,

employment and the in¬
in mustering-out pay, in¬

crease

the

to the

crease

goods that have poured from our
factories.
Our impatience today

employment,

drop,

come

marvelled

have

the

eight

haps that is why so many people
reacted skeptically in 1941 when
President Roosevelt called for 50

far less than expected

increased.

declined,

first

at
was

because

Exchange,

Stock

John Shields

cline

that

unemployed was a nature!
things and that we had
become a mature economy with
restricted industrial horizons. Per¬

state

sharp drop in employment which
we
anticipated did not material¬
ize.
While wage and salary pay¬
ments

said

million

post V-J Day expecta¬

our

who

those

were

demand

proved to be wrong.

tions

still May,
International Settlements to¬
the Hold-the-Line Order).
Aver¬
day
are
Maurice
Frere
and working for low wages, average
age hourly earnings have dropped
Camille Gutt of Belgium and Em¬ hourly earnings
are about 60%
3% since V-J Day.
manuel Monick, all three of whom higher than in 1939, and only 3%
Let
me
emphasize that these
were
participants in the recent lower than on V-J Day. Employ¬
figures are not hourly wage rates.
Savannah meetings.
M. Monick is ment is at an all-time peak.
While some businesses, particu¬ They are the actual wages paid
now
in Washington, assisting M
out by manufacturers—the actual
Leon Blum in the negotiations for larly
in the reconversion field,
for

Therr

instances almost defeatist.

wartime level. Here
several respects in

is roughly the
is the first of

our

spendable
income
$138 billions, which

•

huge production ability, 7 ;
1940, before the war, our
proach to production was in many
in

of current supply.
Consumer

' r
im¬

forthcoming in record
reflection of their faith

time

civilian goods, based on real
needs, still far exceeds the total

hourly earnings."
In the first World War average

hourly

should

for

continues

million am*

patient to get the goods which
they have gone so long without,
and
their feeling that
supplies.

recognized

is that the total of current

since August,

basic fact to be

around

a'quarter per year.
The
public is naturally

lessening.
They are,
however,
still
tremendous, and
they are greater than we had ex¬
pected to encounter.
The

housing is estimated at 10 mil* *
level f

of demand

gradually

stability in all the com¬

relative

While

International

disclosed.

World

ably favorable.

also

Cobbold

Mr.

post.

troubling the country.
During the entire period
of
War II, we have achieved

deeply

country's position as we emerge
from four years of war is remark¬

England, but there has
nothing official on this

Bank

Stand Today

Judged by the ordinary indica¬
tions of economic well-being, the

prices which is so

of rising

sense

It will take 14 million cars

lion homes with a sustained

•

Cobbold, Deputy Governor of the

estimatesoth*

demand for
consumer
durable goods alone at $50 bul¬
lions.
In our biggest year, 194J..
we
produced only $10 billion#

backlog

prices of commodities under
price control and, in so doing,
maintained the general stability

•••„-

Where Do We

be a

will

month will be J.

executive direc¬
tor of the Fund is not yet known.
A name heard at Savannah last
month was that of Mr. Cameron F.

u&.

automobiles, and other
is huge and that it
long time before it is
Professor Sumner H.

for houses,

next
The Executive Branch of the from 30 to more than 100%. Urban tackle a peculiarly difficult prob¬
V. Joshi and N. Government has the duty of as¬ real estate prices have shot up by lem following the adoption of the
new
Sundaresan, but there seems to
wage-price program.
It has
60 to 65 % since the spring of 1940,
sisting Congress, first, by provid¬
been handling this task efficiently,
be uncertainty at this writing as
ing it with full information and and by 15 tc 23% since September,
to which will serve on the Fund
1945, alone.
Farm land values constructively, and courageously,
sound advice on which wise de¬
and with a rare sense of group
and which on the Bank.
cisions may be reached; and sec¬ have gone up 69% since March,
*
*
*
1940.
Since V-J Day, stock prices tolerance and give and take.
ond,, by carrying out the policy
While we have thus come a
Britain's temporary executive
decisions which Congress makes have risen over 20%, and the
director on the Bank in May will with all possible skill and effec¬ price of cotton has shot up by long way in the transition, we are
still in mid-passage.
25%.
probably be Mr. R. H. Brand, who tiveness.
The underlying economic pres¬
These increases
attest to the
heads the United Kingdom Treas¬
In carrying out my part of this
sures making for inflation, as dis¬
ury delegation in Washington. Mr.
task, let me first outline as briefly strength of the inflationary pres¬
Brand was on the British delega¬ as possible the main facts of our sures that permeate the economy. tinguished from speculative and
In large part they explain the other psychological pressures, are
tion at Savannah.
Who will rep¬ economic position as I see them.

the

tells

however, that the backlog of need

and management

striving

been

stance, should cease to be a major

patterns, or the supplementary
standards, is a clear indication
have

While

which approval

requested

cents an

The shortage of men's

quickly.

shirts, shorts, and pajamas, for in*

between 5
The
fact that 85% of all the requests
have fallen within the allowable
been

the

people it must bear re¬
sponsibility for, the consequences

of its decision.

and

1,000 cases are

being handled by the Wage Sta¬
bilization Board each week.
The

30%.

American

218%

materials,

been

collective bargaining,

free

ust, 1939, the increase has been
13%.
Corresponding figures for
other

have

which

plate
be easier
glass, 271% and zero; copper, 65%
and 15%; anthracite coal, 82% and
tween our fingers.
Congress is responsible, in the 44%; bituminous coal, 675% and
the other hand, could
than to let it slip be¬

Nothing,

persons..

directors

and

comparative glance at
typical basic commodities is
also reassuring.
During the first

expected to ratify Bretton Woods. fullest sense of the word, for de¬
Haiti had no observer at Savannah.
termining the course to be taken.
When the Fund and Bank are in
It must decide what the situation
full operation in a year or two it
is with which it has to deal.
It
is estimated that their'combined
alone must decide what is to be
payrolls will reach 750 to 1,000 done. And before history and the
executive

some

Woods?
Conceivably, the Fund
may have to face this question.
Haiti's new government is

India's

165%

increase of

total

greatest opportunity we have ever
had to lay the foundation for a
future of long-range prosperity.

Bretton

with

(Continued from page 2073)

la,

letter

2U7

Retaining Price Control the Best Choice

and Bank

Fund

still

depleted.

to build
inventories to meet reasonable
requirements we do not know,
Another
major
question mark
across the future is whether man¬
ufacturers and distributors will
seek to build up inventories ab~ve
reasonable requirement® in the
hope of speculative profits on a
rising inflationary market.
The enormous business and con¬
sumer demand which I have de¬
scribed does not rema5n unsatis¬
fied because of failure to vet pro¬
duction. As I have said, the prof
How

long it will take

(Continued on page 2118)

Thursday, April 18, 1946

THE COMMERCIAL & FINANCIAL CHRONICLE

Retaining P rice Control the Best Choice
(Continued from page 2117)
duction of civilian goods is
higher
than

before

ever

and

history,

our

issue

squarely and honestly.
Do
actually need these controls

don't we?

The

be expected
to maintain their high levels to a

comes, wage

to this

answer

greater extent than they did
when prices hit the toboggan slide
in 1920.
Such a situation in the

steadily going up.
question turns mainly on an issue
are
What would happen if
naturally of fact.
asked:
where
are
these
goods we let the controls go?
Why do heavy inflationary pres¬
Even
the
NAM
agrees
that
sures continue in the 'face of this
prices would go up. How far up
questions

production?

the

these questions is that

answer

Part

flow

production

has

not

continued long enough to
satisfy
urgent needs even in the areas
in which production is
greatest.
The

important part of the
however, is that the in¬

answer,

crease

production

has

been

concentrated in the field of indus¬
trial materials and
equipment and
in the
preparatory

stages of

duction

finished

goods.

was

in this

pro¬

consumer

that

area

could

utilize directly the
great
expansion of capacity during the

This

war.

the

area,

moreover;

where any major increase in the
production of finished consumer

goods has to begin.
have

While

tremendous

thus

rise

the

potential supply of finished

con¬

sumer
goods,
the
result
has
scarcely begun to make itself felt

retail

shelves.

helpful

entire

think

the

production

civilian goods as a single
pipeline,
from the first stages of
production
of

materials to the point of
final sale to the consumer.
Since
raw

V-J Day the input into this
pipe¬
line has been huge.
The

output

by comparison with the demand
which
We

face

conversion
in

1942 in

that

seems

at the same

are

peace

our

puny.

stage in
as

were

conversion to

time

our

war.

gigantic

pro¬

ductive effort had thus far been
reflected in only a thin trickle of
tanks, guns and planes. Not until
1943 did the pipline fill
up and
yield a flood of finished weapons.
con¬

sumer

goods will eventually pour
our present
pipeline. Even
after the
outpouring begins, how¬
ever, it is evident, as I have sug¬
gested, that it will take time be
fore the tremendous
accumula¬
out of

tion of urgent demand can be
met.
Our present task is to
maintain
our
economic and psychological

equilibrium during the crucial in¬
terval while this process is work¬
ing itself out. The question prer
sented by the bill now before this
committee is how best to do this.
In the great national
debate op
extension of the stabilization laws
which is now in
progress, three
main alternative courses of action
are

being urged. The first is the
proposal, put forward by the Na¬
tional Association of Manufactur¬
ers and others to
drop

price, rent,

and

controls

wage

immediately,

except in a few selected fields.
The second is the present
program
for the firm maintenance of
con¬

framework

while longer but to

lax their restrictions
move

prices and rents would not at first
10%.

exceed

The

Control

Act

the

Price

many as possible of

far

than

that.

gest that the complete elimination
price control would result in

initial increase.
The really important question is
what the secondary consequences
of
these initial
price increases
would be. In the light of the over¬
all shortage of goods in relation
minimum

business
which

needs

scribed,

believe

and

with

further price

destructive

increases, and

the

desirability
instead

fail to

occur

and

buying

later

rising

with

not

money

spend.
In

addition

current

$138 billions of

the

spendable income, con¬
have $145 billions of

sumers

which

goods if they

turn

into

they

try
think

can

duction.

current

profits, have $80 billions
of liquid assets and further bor¬
rowing power as well. This vast

were

became

that

buyers

were

with

are

same

rather

strikes

speculative withholding.

tation

ex¬

gap between total supply
total demand would
quickly

the

not fail

cost

to set

off

I think I

essential

can

issues

best set forth the

before

the

Con¬

by discussing each of these
three plans in turn.

gress

than

wave

Choice. One:
I

should

hesitate to

all price,

take

riod

time

suggestion to drop

rent arid wage controls

y at this stage of the transition

pe¬

it had not been seriously
by representatives of a
organization of business¬

advanced

major
men.

Discussion

however,

the

suggestion,
advantage of

has the
clearing the air.
Here are con¬
trols which nobody wants unless

they are needed and which no¬
body would tolerate as a contin¬
uing part of American life.
The
NAM's proposal presents the basic

those

de¬

unstable prices and costs.
We
do not have to
rely on our com¬
on

de¬

mon

the

fixed
the

income

trolled

From

groups

and

gener¬

uncon¬

infla¬

stronger

now

ter the last

are

far

than they were af¬
when the rapidly

increasing cost of living pushed
up sharply.
Many labor
groups already have wage con¬

much

they did last
that

our

inflationary

ascent

this

secured

costs.
ures

came

the

can

midst of

again

means, too.
1

production

col¬

with

stable

can

prices

I need not repeat the

duction.

was

that when the inevitable
collapse

that

huge-volume

means

also be much higher than it
after World War I.
It

After

In this war we tried the oppo¬
site experiment and proved that

likely to rise
sharply even than
This

peak in

tion.

are

time.

lapse of both prices and produc¬

tracts
with
escalator
clauses
which tie wages
directly to living
costs.
If prices get
wages

the postwar

15V2%

1920.

wages

time,

and

war

away

start

the

January, 1920,
above January,
1919,
then, while prices were still
rising, fell off steadily until June,
of

organizations

rose

tion.
Labor

not

prices and the cost of living in¬
creased
approximately 25%. Dur¬
ing the same period production

Surely here

uncontrollable

did

upsurge in January, 1919, to its
peak
in
June, 1920, wholesale

consumers

materials of

raw

stimulus

last, and it
certainly did not stop inflation.

gen¬

ally holding the bag.

Experience

After the last war we tried the
experiment of lifting all the con¬
trols to get
production.
Produc¬
tion did get a quick
stimulus; but

Higher wages would
whatever prices had not
already.

scramble—with

and

sense, however.

proves it.

At this point the country would
be launched upon a free-for-all
fight of industry, labor and agri¬
culture to get its share in the
eral

alone should be

ume

increases and of

support

sense

enough to tell us that huge-vol¬
production cannot be based

living could

mands. The further spurt of
prices
would double and redouble these

are

Dropping all Controls Now
to discuss the

for wage

strikes

Common

increase
in

more.

lost, we would face

the penalty of a
tion and
still

destructive infla¬
destructive

collapse.
Whether

the

penalty
would
full, no one
can be sure.
Certainly at some
point the corrective processes of
democracy would begin to work,
have

paid

it became clear to

once

what

everyone

traveling.
Certainly also, the measures which
road

aroused

public would demand,

effort

economic

restore

asked to extend for

year in or¬

der to maintain

stability.
what these last-ditch

Exactly

would be cannot

measures

predicted.

our

record

Now

respect

had the

now

neces¬

out

they
increases

are

by
in
buying prices or other related
prices.
To be effective in
in¬
creasing production, a price
in¬

crease

the

must

selective—that

particular

raised

price

in relation

must

is
be

other prices

—and the selection must
be made

carefully

that other
permit production to ex¬

factors

sure

pand.
A

stable

is equally
the demand
side of the balance from
being in¬
flated by abnormal and
sneculative

economy

necessary

keep

buying.

repeat:

can

hope to produce
enough to
satisfy the unnatural demand
that
never

would be generated

panicky

movement to turn the vast,
reser¬
voir of liquid assets into

goods.

To lick inflation

gambling

we must

keep the

and the

money

fright¬

ened money out

of the market.
the best way to
estab¬
atmosphere of stability in

What is

lish

which

people

are

prices and costs
The first and

confident that

are

not

going to

away?

run

for

indispensable step

the Congress
promptly and.

firmly to extend the stabilization
laws for

now

they

action

will

full year,

substantially

stand.

Given

firm

by the Congress, the
cleared

firm

for

administration

way

period

which

will

complete the sense of confidence

have

start

trols

But

anew.

alone could

inflation

controls

be effective

not

had

these

con¬

begun to

once

wild.

run

Drastic fiscal and monetary meas¬
ures
would
have
to
be
tried.

Heavy increases in taxes
comes—beyond
anything
experienced
taxes

we've

date—and

in¬

severe

capital gains and on all
liquid and capital assets would
probably be necessary.
on

devices

best

such

these

would

merely cushion the inevi¬
collapse—a collapse which
top of four hard and costly

table
on

years of war would result in grave

disillusionment
bitterness.

and

deep-seated

Continuation of

The

second

Our

Present

the

alternatives

keep meeting this
danger of inflation intelligently
and courageously and to continue
to

what

necessary

stop

now.

The task
is

must

bring

the
goods

available

balance

with

demand

moment.

set ourselves

total

supply

into

the

reasonable

total

earliest

When

this

urgent

possible

balance has

been achieved, the basic economic
pressures toward inflation will be¬

gin to subside.
to

Buying will

dominated

cease

acute

need,

obvious shortages, and the expec¬
tation of higher prices.
Instead,
it

will

begin to

reflect

anticipa¬

tion of postwar improvement and
better prices.
At this

bulk of the controls

lifted,

though

even

the

This

intact.

chance

will

give

preventing

food

prices from increasing materially.
If we succeed, 40% of the cost of
living for the average low income
and middle income

family will

re¬

main stabilized.

Rents

and

can

must

held

firmly.
An additional 16% of(
the cost of living will thus be sta¬
bilized.
Firm control must like-,
wise

all

maintained with

other

in business costs.

respe,ct

commodities

which

important in the cost of living

are

prices

The bulge in

metal-using

goods

Existing

policies must also be
respect to decon¬
trol.
The primary principle must
be to decontrol particular com¬
modities only when the purposes
followed

is to

tinued

must be held to a minimum.

Program
before

stability.
During the dangerous period
immediately ahead, the principal
existing subsidies must be con¬

the

point, the
be safely
shortages of

can

particular commodities remain.

with

stabilization

the

laws

will be

served by

doing so. This principle
will permit the steady relinquish¬
ment of controls over

which

the

are

cost

costs.

With

living or in business
respect to more im¬
however,

commodities,

portant
the

commodities

unimportant either in

relinquished
during the dangerous period im¬
mediately ahead only in those
cases in which prices will not rise
as

controls

can

result of the action.

These price policies are the nec¬
essary foundation for a firm wage

policy.
The
present round
wage-rate increases based on

of
the

patterns already established must
be
completed
on
an' equitable
basis. President Truman's execu¬
tive order of February

What is the quickest and surest

this possible.

14 makes

The order contem¬

to bring the total supply of
goods into balance with total de¬

plates, however, that there will be
no second round of wage rate in¬

mand?

creases

way

The

experience

both

this war and of the last
gives us
unmistakable answer. We must

maintain
which

stable

people

are

prices and costs
run

economy

confident

are

not

in
that

going to

The

of the stabilization
depends on the achieve¬

success

program
ment

this

objective.

round of wage rate

fore

away.

Such

forcing further price in¬

creases.

they

are

new

increases, be¬

justified by demon¬

is necessary
to build up the
supply side of the
supply-demand
balance.
Only

strated increases in labor produc¬

when prices and costs

l/nies
control trie
cost of living, new rounds of wage
increases, each feeding back mm
higher and still higher prices, ar

ably stable

economy

are

reason¬

businessmen plan
production schedules with confi¬
dence and then meet them.
Only
under
move

can

stable

prices

to market

will

goods

freely and in

nor¬

produced.

production.
In light of this record of
expe¬

production

and

would

fig¬

over

help

uation,

by setting up price and wage

mal

peacetime

prices

not

cancelled

sary determination to save the sit¬

and

wartime pro¬
are
in
the

proving the point all

with

to make this method of
increasing
production work;.;.
Increases in selling

were

stability, would be much more
stringent, much less palatable, and
of much longer duration than the
controls which Congress is now

for

with it.

other.

be multiplied.

rising prices means the
withholding of goods from the
market or their exchange between
middlemen seeking a quick profit
by buying and selling to each

isting

10%

demands

keep

away.

The

enforce

wages to

Finally, an increase in produc¬
tion, even if achieved, would be
futile to stop inflation unless the
goods
produced
were
brought
promptly to market. The expec¬

Speculative bidding for goods, in
other words, would start to climb
at
precisely the same time as

and

If against all odds we won the
gamble, we would gain an earlier
release than otherwise from the
irritations of control, and nothing

Choice Two:

higher

to Sell

right

premature,

essen¬

prices mean a rising
living, and an outburst of

cost of

available

reasons,

than

one

Rising

goods

deciding to buy right

ing, for the

and

On the flimsy hope

duction.

away instead of later, sellers with
available goods would be decid¬

later

The lack pf

holding of parts and materials in
the expectation of rising prices
would create a paralysis of pro¬

better bet than money.

While
funds

clear

tial part can stop a whole produc¬
tion line.
The systematic with¬

safely out of the market would
begin to pour into it the moment
a
general rise in prices began,
and

scheduling

and

rising prices,
moreover, means the withholding
of materials and parts.
This is a
blow in the solar plexus of pro¬

better bet than money.
Businessmen, in addition to high

now

planning

The expectation of

reservoir of funds which

would

production.

now

liquid assets

prices

cripple pro¬
duction
instead
of
being halted
by it.
Rising prices, as we have
seen, mean rising costs, including
rising wages. Rising costs are un¬
certain
costs.
Uncertainty
de¬
stroys the basis for confidence in

to every businessman

consumer

people. We can
hope to produce enough to

voir of liquid assets into goods.
The
second
difficulty is that

right

could

reasonable peo¬

even

would be generated by a panicky
movement to turn the vast reser¬

of where the rise would stop,

away

demo¬

satisfy the unnatural demand that

How could we reasonably ex¬
pect anything else to happen?
With prices rising and no assur¬
ance

convince

never

inflation.

runaway

within

free

alone frightened

this question should be clear. The
result would
be a snow-balling

gone up

them.

de¬

answer

employment

ple that, with controls removed,
prices would not keep going up, let

con¬

have

the

and

framework

society.
Considering the present pres¬
sures, what is there which might
stop this process of spiraling in¬
flation and collapse? The answer
of the NAM is production and the
expectation of production.
The first difficulty with
this
answer
is that the potential in¬
crease in production is not enough

ex¬

cratic

any lesser

force up

irritations and headaches that
go

the

now

not understand the NAM to sug¬

re¬

the

duction

pending before
Congress would raise prices and
rents

have

determination to achieve full pro¬

amendments

re¬

wages—even

disastrous than any

demands.

the

perienced.
Such a collapse would
represent a serious setback to our

plan

keep

ultimately

the immediate impact on the cost

mands

can only mean a collapse
production and employment and

of living and the general level of

trols while the danger of
inflation
continues and their
orderly liqui¬
dation as soon as the
danger sub¬
sides. The third is a
compromise
controls

possxble estimate and suppose that

goods are

A similar flood of
finished

This

make the most conservative

irresponsible.
that the re¬
lease from control would not be
reckless

us.

did after the last war.

of judging the proposal,

purpose

sumer

to
of

process

they would go at first is a matter
of conjecture.
This, however, is
not the critical question.
For the
let

facts of

known

present position, I must re¬
peat that the proposal to drop all
price and wage controls at this
stage of the transition period is

it asks us to gamble
away the solid accomplishments
threaten
industry
with
great
of four years of stabilization and
losses.
To avoid such losses* in¬
the expectations of a successful
dustry can be expected to curtail
transition to which they entitle
employment more sharply than it
midst of rapidly falling prices will

record

can

far

The

rates

the

and

rience,
our

channels

fast

they

are

To increase the
supply of goods
the
maximum we must,
of

course,

adjust

price

ceilings

whenever they stand in the
way
of production.
Here again, how¬
ever,

need

stable

economy

tivity, would
bilization.

question
we

be ruinous

And

about

let

this

there

fact:

continue firmly tor

inevtiable.

following
these
courageously I believe
By

continue

stability
the

to sta¬
be no

cost

maintain

of
of

we c
the gener

the economy and
living under the la

they now stand. But ev
though the present law is renew
as

stands,

Pollcie^

inflation will co

unchecked through

to flow

tinue

THE COMMERCIAL & FINANCIAL CHRONICLE

163 -Number 4482

Volume

acts to close
them
I particularly want to em¬
phasize the need for curbing real
estate prices through adoption of
the Patman housing bill—includ¬
ing
control of speculative in¬
creases in the prices of existing
homes.
I want to repeat again
the plea
I made in November,
1944
that action be taken to
check the rise
in commercial
rents.
Sharp increases in rentals
for business space have seriously
hamstrung
many
thousands of
7

Congress

unless

duration

Require price ceilings to yield a
profit to every producer in every
product

stoppages

"We

Raise

dustry price ceilings are
to

concentrate

discharging

duction

high-priced, long-mar¬

obvious obligation

nation to help feed the starv¬
ing millions abroad. Our estimates

as a

world food supplies were up¬
by last season's short crops in

other

countries.

Obviously, we
do not know what this year's crop
is going to be, either in this coun¬
try or abroad.
These

only examples of

are

which

and

might

and

con¬

not

must

credit

the

good

the other day when he told

news

in bal¬

that the budget will be

expect¬
We must bend every effort,
than

sooner

ance even

reducing Government expen¬
to speed the day when

President stated,
Whether or

higher tax rates are called for,
too soon to tell.
Present

seem

high for the economy's longneeds, once the production of

run

goods really begins to

consumers'

But we must be quick
when and if the need be¬

out.

pour
to

not

does

income

consumer

too

act

clear.

comes

firm price and
coupled with firm
use of all supporting powers, will
give us our best chance for an
early end to the need for controls.
control,

The

resolute

the

time

present
the

sooner

danger

action

our

of danger, the
will be over.

demand.

the

which

production

finished

form

CQn-

steadily and
What goes in the
pipeline must come out. The mil¬
itary take from the production we
will

goods

sumer

will steadily decrease.

assuming

Still

reasonable

sta¬

that total
production will steadily increase.
bility,

know

also

As demobilization continues, more

to the la¬

workers will be added

Labor productivity will

bor force.
rise

it always has after a war.

and output will ex¬

Both capacity

finished

solid ground to hope
following this course
which I have outlined, we will be
is

There

of the

out

woods

in¬

extreme

flationary danger by the end of
1946.
If
this
happens, controls
can
be lifted generally by June
30, 1947, in all but the areas of
acute

shortage.

I state this

only

pectation will
not.

And

hope and

Neither I
a
crystal

so.

has

globe that tells the future
of

economic

complex

this

can¬

apologize for

not

else

anyone

true.

come

I do

being unable to do
nor

course

events

unsettled postwar

world.

Apart from questions which de¬
pend

the

upon

decision of Con¬

this bill, there are obvi¬

gress on
ous

uncertainties which make def¬

inite prediction impossible.
f

We have

of unsat-

measure
consumer needs.

^fied

We do not know how long con¬
sumers will continue to
Present

high

proportion

We have no
the
inventory

exact

Manufacturers

and

cur¬

measure

distributors,

they will

reasonable

requirements

at all of what

none

regard

require¬

canno.t

can

workers

the

exact

production.

be confident that busi¬

farmers
will

gent need

cannot

foresee

patterns of>

nessmen,

and

for

tell

developments are cer¬

and

industrial

the ur¬
production, but we

respond

with

assurance

strength of the

response

what

will

Only their

dependable.

Effort

Compromise
is

invit¬

who urge this course

action have the realism to recog¬
nize

that

and

wage

the

Congress has the responsibility
deciding whether the advan¬

making

tages

lifting

any

these

changes in the law, whatever the
advantages
be,
are
worth the
My responsibility is to give
unmistakable warning

risks.

and

clear

judgment the risks

of what in my

As I read and hear

they

posals,
based

seem

of these pro¬

genuine

misunder¬

standing of the country's position.
All the

proposals assume that the

present stabilization balance has a
solidity which in fact it does not

They

have.

made out of an

are

impression of safety which is an
illusion.
If we put aside that il¬
lusion and look at the facts, it be¬
apparent that these sugges¬

comes

tions of relaxation in the laws
volve risks which even

appreciate

their

in¬

pro¬

not wish to take

only are needed to

these

of all price

controls is not a prac¬

possibility at this time but
a
pipe-dream
of wishful
thinkers.
What they propose is a
tical

only

compromise—keep the controls a
while longer, but relax them in
order to get rid of the irritations
and headaches that go with them.
variety of plans for do¬
ing this will be urged upon you
in the next few weeks.
Here, for
A great

example, are a few of the propos¬
als that have already been ad¬
vanced:

risks:

of the tenseness of

view

clear

the pres¬

and a realization of

explosive possibilities, in the
of this tension, of a deci¬

the

midst
sion

by Congress that price and
should now be loos¬

rent controls

ened.
Let

in the

review briefly the factors

present situation which cre¬

ate the

and.

would

We thought these pressures
ease

for

while after V-J

Day but they did not.
The ex¬
traordinary increase in consumer

expenditures has kept them up.
Partly also the pressures come
from costs.
The transition bulge

consumer's food bill.

subsided.

Jump food prices 8V2 % by drop¬
ping all food subsidies right away,
or
force
the
subsidies
to
be

is attained;

parity standard so as

provide a basis for wide-scale
increases in farm prices, even at
the cost of a 15% increase in the

according

to
regardless of

rigid

schedule,
whether
the stabilization program can ab¬
sorb

the

shock

the

resulting

price increases.
Prevent the stabilization of cot¬
ton

prices

and

let

speculators
cotton.

bid up

production

costs has not yet

As volume production
as

labor productivity

improves; as temporary elements
in labor costs, such as overtime,

disappears; as parts and materials
once again become available from
normal sources and in steady sup¬

ply, these costs will inevitably go
down.
Until they do, however,
business is naturally uneasy.

With pressures high, very few
textile and
upward as prices have softened since V-J
the price of Day. As a result, the increases in
price ceilings which have been al¬

clothing prices escalate
raw

suffi¬

everywhere

Buy¬
will

agencies to do

their job under it in
hard realities.
Only

to be assumed
inflation cannot
take place as long as the stabili¬
zation laws are on the books and
a
framework of price control is
maintained.
No belief could be
more unfounded or more danger¬

Congress

the

cies are

to legislate

additional price increases now.
It is

to say

overstatement, I think,

that the effect on the mor¬
would be dev¬

ale of stabilization

This effect would carry
beyond the particular price in¬
creases which Congress legislated.
Stabilization is, in every sense

astating.

of the word, a common

de¬

enterprise

I know
^hat new
of this magnitude could

already resisting.

basis for assuming

pressures

have to ask
effect would

were

have

developments

The

scribed, if they occurred, would
generate enormous pressures on
top of those the stabilization agen¬

spreading.
what

seems

runaway

ous.

In this situation we

ourselves

often

successfully.

be resisted

the breaking
stabilization line is

where

Exactly

in the

point

neither I

nor anyone

lating just how

of calcu¬
much pressure on

particular relaxation
develop*

the line any

law would

in the

Unless

misjudge

completely

position,

the

else can say.

there any means

Nor is

too much to

however, we have
lose and too little to

Its suc¬ gain to warrant the risks that
would be involved in any one of
cess depends upon general recog¬
these price-raising amendments.
nition of a common danger by all
What we have to gain from any
economic groups and the fair and
uniform application of the con¬ weakening of the laws is at most
a temporary advantage, or an eas¬
trols to all of them.
A
decision by Congress
that ing of temporary restrictions, for a
relatively small group of sellers.
price controls should be relaxed in
favor
of
one
or
more
special What we have to lose is a stable
and prosperous economy and our
groups would undermine the basis
hopes for a stable and prosperous
for a firm policy as to others.
of the American

people.

that
be relaxed
generally would amount to a de¬
A

decision

Congress

future.

The

policy of

stabilization has

successfully through
nial
that
any
serious common more than three and a half years
danger does exist and thus put in of war and eight months of peace.
question the basis for the program Past experience and present pro¬
duction give us solid assurance
as a whole.
Either decision would encourage that if we adhere to this policy we
shall be moving by next fall or
new and more insistent demands
upon OPA for price increases. The winter steadily and surely out of
weight of either decision would danger.
break down the will as well as the
To
legislate further price in¬
ability of the agency to resist the creases now would be to put this
demands effectively.
prospect in jeopardy and perhaps
L§t me repeat: During the next to lose it. In the months to come,
crucial months of intense infla¬ instead
of
stability, continued
tionary pressures, prices must be prosperity
and growing confi¬
held firmly or we will he started dence that inflation will be defi¬
up the wage-price spiral with the
nitely
and
finally licked, we
lines of retreat blocked.
would have instability, increasing
Another round of wage rate in¬ hardship from higher living costs
creases before they have been jus¬
and fear that inflation is finally
tified. by increased productivity going to get the better of us.
and lowered costs, would have a
The American people are en¬
disastrous effect upon the general
titled to expect that they will not
price level.
be subjected to these risks for the
Any substantial increase in the benefit only of minorities greedy
cost of living during the rest of to cash in on the opportunities
this year would build up unbear¬ created by the common disaster

A deci¬

Raise the

the real estate mar¬

able pressures on wages.

tension.
pressures

sellers

of the stabilization

almost all sion by Congress to relax price
controls at this time, and a serious
price ceilings, as I have pointed
out, are strong and in many cases upward movement of prices fol¬
lowing that decision, would take
tremendous.
Partly these are pressures of de- away the basis for resisting those
The

the action of Congress on

study

price controls should

are.

ent situation;

ing one on the surface.
Those

Two things

and last of the main
us

the least

postpone the time when the con¬
trols can be safely removed.

with their eyes open.

Choice Three:

The third

any

ponents would

timing is in doubt.

dropped

ments.
rate

tain

spend the

rent income.

and

seek these

alternatives before

firm assurance that the ex¬

you a

products assumes more
relationships.
In the stable economy, which we

normal

I wish I could give

expectation.

which
considerable

proposals

involve

prevent inflation, and at

surely increase.

factors
permitting,
these pand as the organization of pro¬
policies will give us a period of duction improves, as new plants
full civilian production at stable and facilities are added, as bottle¬
prices of the kind which is essen- necks are eliminated by the build¬
tal to give total supply a chance to
ing up of adequate inventories,
come into balance with urgent de¬
and as the flow of materials and

that,

the

All

will

this danger.

this bill and the continued ability

far

unsettling of prices would cer¬
tainly jeopardize our ability to

already being satis¬
production continues.
beyond doubt that the

We know

Other

mand.

might not tip the bal¬

fied

takes

are

stock market,

toward inflation.

would

proportion

markets where
uncontrolled—in the

ulation

Many of the most pressing needs

secure

This program of

wage

prices

can

laws

remove

and

ers

the

clearly

We
most

consequences

the

of buyers are
as

the

see

can

only to make some general com¬
what is involved, from

this balance is achieved.

not

beginning to bet on inflation.

ments upon

might

the

up.

ket, and the cotton exchange. The
expectation of rising prices is
abroad and the contagion of spec¬

ance

ous

the blunt fact that the country

particular proposal, I shall be glad
to furnish it.
My purpose here is

with urgent

he reduced.

We must face

all.

off
for

analyze

ily and rapidly toward a balance

Taxes.

factor

taken

each of these

tell

cannot

cient to

that

the precise effect of
proposals or of sim¬
ilar proposals.
If the Committee
wishes
such
analysis
of
any
to

No half-hearted extension of the

bility.

This steady rise in

chance

con¬

prices is the
background of the most danger¬

even

top of the steady

showing signs of inflation jitters.
This is not the occasion to try Everywhere men and women are

ditures,

must not

that

assure

still

will

breakdown of

margin of safety.

alto¬

some

point of view of stabilization
the
tell as a whole, in proposals of this
their general direction and desti¬ type.
Some of the proposals would
nation, assuming reasonable sta¬
bility in the economy.
The cur¬ make continued stabilization flatly
rent rate of production gives us impossible. Revision of the parity
solid assurance that, assuming this standard or abolition of cost ab¬
Others
stability, supply will move stead¬ sorption are examples.
Although

re¬

there

prices to go

protecting itself

time-table of events,

President Truman gave us

ed!

from

nation

will

ceilings

while

will

ahead

supply and demand

threaten to do so.
rise in the
general level of prices, however,
they do definitely narrow ou|r

see

can

by themselves upset our sta¬

bility,

six months.

which

future not

early bal¬

the light of
determined
and unequivocal action will stand
up
under this scrutiny, in the
present state of inflation jitters,
and carry the conviction of sta¬

not

decontrol standard into

law

price

absorption

for

retailers

Write

and
disabling

chance

against economic disaster.

laxed.

the

worse

the

powers it confers.
The present regulations
sumer

cost

abolish it for

are

prices
on
As I have said, the price

increases

volume.

all

chance of making a bad guess

ever

immediate

advance is to take at least the

extended for a full year;
we must stand ready wher¬
necessary
to exercise the

in
commodities—

some

others.

attempt to fix the exact date

must be

prospect on

between

and threaten

stabilization

price increases

15%.
Require price ceilings to reflect
pre-war unit profit margins in all
cases, regardless of huge increases

best

Act

Further

Raise rents 5%, 10% or

Abolish

de¬

hopes of

our

ance

substan¬

keep the cost of living
tially even.

softening

gether,

pro¬

trols.

the

controls will be gone.

emergency

tion.

prices softened were we able to

slow-down—would

duction

stroy

pro¬

lines.

taken in combination with

prices. The index of wholesale
prices has gone gradually but
steadily up.
Only because egg

much

un¬

our

their

the general level

and in

contingencies

confound

clothing manufacturers a

net increase in

Raise hotel rates 10%.

gin

the program of firm guesses.
We
cannot
determine
in
ad¬
price and wage controls which I
vance
by
Act of Congress
or
have outlined by using, or being
ready to use, all the other powers otherwise, the date on which sup¬
of government that can strength¬ ply will come into, balance with
en
us in
the fight against infla¬ demand and the need for these
Powers

protect.
Give

will buttress

War

that in¬
required

wise, moreover, we

Second

the profit floors

license

certainties

The

industry on

every

product.

every

production

We have not yet gauged the ef¬
fect upon our own economy of

set

caused

have

then

what stoppages will occur in
the future.

our

since

lowed

nor

nesses.

are

coal

outcome

cannot predict.

pending

who want to start new
ventures and have pinched more
thousands of existing small busi¬
we

and

do not know the duration of other

veterans

the

of which

the midst

are

strike

existing gaps in the laws

serious

2119

pressures.
Even more dangerous

than these
slow-moving pressures
would be the instant effect of a
decision to relax controls upon the
psychology of inflation.
The decision would tell people
that prices are going up, and the
only question would be how fast
and how much.
Those who have
goods would keep them to see.
Those who have not would try to
buy as much and as fast as they
could. Speculative withholding of
parts and materials would slow
down production.
The multipli¬
relatively

carried

and sacrifice of war.

has steadfastly ad¬
principle of stabili¬
Through more than four

Congress

to the

hered

zation.

difficult years
heavy pressure

and in the face of
from special inter¬

its wisdom and firm¬
fruit in a stable
economy which contributed to the
winning of the war and has al¬
ready laid the foundation for the
winning of the peace.
est

groups

ness

have borne

deciding the issue

today

before it

Congress carries an enor¬

responsibility^ On its deci¬
depend the future
prosperity of our people and the

mous

sion may well

health of our free

enterprise sys¬

tem.

With

the

facts

our

present

position before it, I am confident
cation of orders in anticipation of that Congress will continue to be
higher prices, the building up of wise and firm and will extend for
excessive inventories, the growth the benefit of the American peo¬
of
speculative
trades
between ple as a whole the full measure of
of
the
stabilization
middlemen,
the withholding of protection
finished

goods from consumers—

laws.

THE COMMERCIAL & FINANCIAL CHRONICLE

2120

Thursday, April

18, 1945

1I s

(Continutu

-<■

Olid!

IJfet-li

Union,

bui,

that tne
in

2084)
6ainsiihe soviet
>.~>re never heard

the

Russia's

v c
activities toward
innumerable racial mi¬

oppre&oi

any ox tne
norities

•

The

who

lixO>jV»

ignis

facts

win

bieacnn

and

teveal

iiixt

where

a*«y

even

one

lynched

mat vast country

/idual

n.ui

because

has

of, the

life

been

The

land

Soviets

the

de¬

fair recognition throughout
the world for its historic achieve¬
serves

tolerance and
-eradicating prejudice.
Our

eftoit

that

different

than

invaded by the

should be to be able to face the

are

other nations of the world serene

monopolies

in the

and

our

major

record

cannot escape the

fatt

thak

dice

and

must face it
overcome

sume

squarely if

our

we are

deficiencies and

as¬

countries.

England

the

States

of the

Even

America,

there

tions, there

spirit

Soviet

Union.

magnify
of

to be

seems

intolerance

Russian

statement

Scare

distort

and

troops,
in

growing

headlines

every

move

Russian

world

diplomacy,
every new political development
in
the European countries that
border

Russia.

upon

Intolerance, my friends, is based
upon ignorance. To cure intoler¬
ance,

need

knowledge

tial

minority

convinced
a

who

that

There

our

seem

Russia

direct threat to

represents
of life.

way

are

give

rise

•

fear

and

undermine the Russian system
any

with

leave

vision

reforms—health

security,

and

proved

low

for¬

move

courage

social

very

insurance, social

rent

housing,

minimum

im¬
river

wages,

valley

authorities, and
similar
programs—which justify and up¬
hold our capitalistic
democracy.
A

New

all,

orientation

policy.

need

American

need

new

foreign

American

of minority
groups—whether they be Negroes,

Jews

for which

understanding

Catholics.

Achieve

Better Knowledge of
Russians

soldiers and sailors

our

have fought, and upon the
prac¬
tical realities of the atomic
age.
Let me list seven
points which,
in

my opinion and in the opinion
Russia, it is imperative
that we do everything in our of some of my colleagues in the
should guide us in the
power to achieve more widespread Senate,
knowledge concerning the Russian conduct of our foreign affairs.
First, it must be America's aim
people, and a deeper understand¬
the
framework
of
the
ing of Russian ideals and achieve¬ within
United
Nations Organization
ments.
to

for

I have often been

asked, "What
is the single most
important prob¬
lem

What

international

relations?

the

single problem that
greatest significance for

has

the

future

peace

of the world?"

My friends, I believe that all of
us here
tonight know that World
•/

Problem Number One is whether
Communist Russia and Capitalist
America

can

by side.
Our

two

course, arc

based

systems,
entirely different.

continuous

lationships
time that

tween

with

and

powers

same

the

gave

the

other

achieve

re¬

great
peace¬

unity of action be¬

great

which

powers

Victory

working

The

war.

United Nations Organization

can¬

not serve as a substitute for
con¬
tinuous roundtable discussions on
a

private ownership of the

means

production. The great
majority of
American* want -this system to
continue. Under it, we have made
greater advances than
been accomplished in

have

ever

any other
part, of the world. Of
course, we
would like to see still further im¬
provements under our system. We

would,also like to

it improved

see

■"

between President
Truman, Mar¬
shal Stalin and Prime
Minister

Attlee.

America^ our economy is
upon the' profit motive and

V-.!

maintain

day-to-day basis between Amer¬
ica, the Soviet Union and Great
live peacefully side
Britain, or for regular meetings

economic

coming

trade

full

and

employ¬

borders with¬

own

never

must

unshakeable
to

our

sistent

with

American

traditions.

It would give voice to the

aspira¬
citizen in

tions

every

city, town and rural

the

country.

our

average

the

build

area

It would provide

granite foundation
edifice

upon

which to

the

United

Nations Organization.

lined would
the

and for all solve

once

problem

great

nomic

differing

eco¬

and

political systems
peacefully together side

live

Within

side.

such

whether

not nations with

the

can

framework

policy,

hand

we can work hand
with the Soviet Union

rebuilding

the

countries

vastated by the war, in

de¬

promoting

world

trade, in raising standards
living, and in overcoming pre¬
judice and intolerance wherever
of

they

arise.

may

The

activities

deaf

those

ear

to the

who

Third,

must

colonial
be

transferred

our

the

element

the,

American
are

this

relationships

•

more friendly,
tjie
Birobidjan Committee

American

will be able to set for itself

higher

goals,

and

its

even

work

will

become

increasingly effective.
by working together with
Russia on Birobidjan, we can all
help to develop that mutual un¬
derstanding between the Ameri¬
And

can

people and the Russian people

which is
ization

essential to

of -mankind's

just and durable

the

trol under the

international

con-,

Trusteeship Council

new

drachma, are again characterized

from the currency"

"a flight

Currency in circula¬

goods.

has

passed the 1

trillion lei mark.

real¬

hopes for

peace.

The

Europe

Inflation

inflation

causes

familiar and require

are

little elaboration.

consider¬

in¬

nations

jected additional amounts of liq¬
uid

funds

neutral

the

into

The

stream.

monetary
supply of
expanded pri¬

money

countries

marily

result of large

chases— sometimes

emptive

The

the

nature:—by

nations.
ents

Some

credit.

the

Yet, despite large increases

incomes,

money

price

inflationary
assumed large

movements

proportions
of the

only

toward the

end

when widespread phys¬
and the break¬

war

destruction

down of the

European transporta¬
tion system, consequent to largescale fighting on the Continent,
aggravated supply shortages. Fol¬
lowing the cessation of hostilities,

administrative

moreover,

and

relaxation

trols
of

encouraged

new

con¬

large amount

wave

chaos

wartime

dissaving which

reflected

was

price increases.

The

depletion of the commodity
supplies of the former Axis sat¬
ellites

result

played

Eastern

major

Europe,

reparation

deliveries,
in

part

the

ac¬

areas

concerned.

Wartime Price Controls

thg

controls
of
tal

whole,

wartime price
high degree

achieved

efficiency and
in diverting

instrumen¬

were

excess

consumer

income into monetary hoards. In
Great Britain, Germany, and to a
lesser extent in
tral

some

of the

neu¬

nations, inflation, in the tra¬

ditional
not

occur

tent

sense

any

despite

the

word,
appreciable

huge

did
ex¬

increase

the amount of cash and bank de¬

posits held by the public.
ive

demand

and

these

the

available

tional share for each four shares
The rights expired at noon

April 13.
Net

rise

these
added

to the
company's general
corporate funds to be used to re¬

Expendi¬

tures during 1945 and 1946 for
pansion
and
modernization

plants and facilities
at

are

ex¬

estimated

$8,255,000, of which $1,984,539

was

spent to

deposits

February 1, 1946.

was

ijiain

an—

the

of available

the

value

wartime

part

the

for

scene

(at

stable

consumption

goods, and services.

Heavy

European

taxa¬

economic

considerable time to

come.

Steps to Contract the Money
Supply
The

numerous

sharp

schemes

contraction

supply, which
eration

were

for

the

money

into op¬

put

recent

months, testify
the fact that European govern¬

ments

view

not

with

equa¬

nimity the existence of huge and
uncontrolled liquid funds in their
monetary structure. While differ¬

ing

detail

from country to
these reform programs
ordinarily provide for the with¬

country,

drawal of practically all outstand¬
ing currency, the issue (subject to
statutory conditions) of limited
amounts of

an
entirely new
and the temporary or

rency,

manent

the

freezing of all

withdrawn

cur¬

per¬

part of

and of

currency

bank

deposits existing immediate¬
ly prior to the, execution of the
relative decrees.

have

type

Measures of this

been

carried

(in

out

time sequence) in Belgium, Yugo¬

slavia, Denmark, Norway, Hol¬
land, Czechoslovakia, Austria, and
Finland.
Apart from exerting a
restraining influence on the
spending rate of the public, these
schemes had

numerous

purposes, such as
lic dependent on

subsidiary

making the pub¬
earnings instead

savings 5nd depriving it of the
ready cash which can be used for
feeding black

The de¬
and of

markets.

tection of concealed wealth

tax

currency

evasion, the determination

the

amount lost or de¬

stroyed, and cancellation of notes
acquired by the enemy were other

important objectives.
Finland's Currency Reform

sup¬

increase

outstripped
prices—in sharp con¬

prices)

Several

money

fully reflected in the

monetary

measures

interest, enacted in the
course
of the past year, have—
unlike the Belgian and Dutch ex¬
periment—received relatively lit¬
tle attention in this country. Fin¬
unusual

land's

currency

reform,

for

in-

though a relatively nuia
measure, is worth mentioning be¬
stance,

cause

technique

unusual

the

employed in its execution. A_oepassed by the Finnish rai-

The

Continent's

Acute

Monetary

Problems
There

Europe's financial maladies can
learn from the current discussions
of
the
inflationary potential in
this country. The continent's mon¬
etary problems
of

than

much

those

are

far

greater

of the

where

hope
inflationary

liament

acute

magnitude

United

States,

fo^ an abatement
pressures rests

of
the

500

and full

Dec. 29

providedI tna
1,000 an

cut

two.

Jaw

From

1946, on, only the left half of tne
bank notes retained its legal te def quality to the extent of oneMlf the value of the original no •

The

right-hand

note

were

pieces

converted

into

ea
a

government loan,
he refunded by 1949.
siP
compulsory

u5.

^ustria

use .of

the country's
vastly expanded capacity to pro¬
duce civilian goods.
Few coun¬

denominations we

finmark

prospect for budgetary equilibri-i
um

all bank notes in 5,000,

little that the student

The distinctive feature
tria's

tries in

currency

reform

of Aus¬

law

Europe may look forward Nov. 30, 1945, providing for tne
receipts sufficient to withdrawal of all currency m
j
cover the most?urgent government:
nominations of over 5 reichsma
•
outlay, and fewer yet to a flow of Of 5 Allied miiitary; schillings,
to

revenue

:'>G>

confronted with

cree

and

proceeds from the sale of
additional shares will be

For this
reason

sponds

were

offering

offered to common sharehold¬
of record March 26, last, at
$54
share at the rate of one addi¬

goods.

Effect¬

countries

wartime

supply of

the

ers

monetary in.

without, however, a parall
in the
production of

problem of reducing consumer ex*
penditures to a level that corre¬

pre¬

Europe financed war ex¬
penditures mainly by the printing
press and by the creation of bank

Europe

was

increase

consumer

warring
belliger¬

the

represented the unsubscribed por¬
tion of an issue of
178,364 shares
of additional common stock
which

high levels

alone, European governments
if
they wish to prevent
steadily 'in
creasing prices, will continue

pur¬

price level.

share.

recon¬

struction tasks which will
tend to

create

tion, strict rationing and priorities
will probably remain an
integral

liberated

stock of Eaton
a

eoun

tries ravaged
by war has been
greatly impaired, if not almost
en
tirely destroyed. Large
parts of
Europe are facing huge

services

trast to the experience
during the
First World War when the
expan¬
sion in the note issue and bank

62%

price levels
While
country has added
substan
tially to its material wealth
the
industrial potential of
the

extent,

An underwriting
group headed
by Merrill Lynch, Pierce, Fenner
& Beane offered
April 16 to the
public 11,518 shares of common
at

at reasonable

this

basic conditions for
a
rapid upsurge of prices were
generated by central bank finan¬
cing of Nazi Germany's exactions
from occupied Europe. Allied mil¬
itary expenditures for goods and

able

equated by rationing rather than
by runaway prices.
In most of

Manufacturing Co.

goods of a size
adequate
equilibrate supply and
demand

come

The Causes of European

plies

Merrill Lynch Offer
Eaten Mfg. Shares

consumer

lei

picture.

imburse the company for
past and
fc" '• future
expenditures.

countries
should:
made independent or

drachmas

old

billion

between

and

intimate

culminated

im¬

want

policy

War

World

First

November, 1944, in the issue of a
new
currency at the rate of 50

celeration of inflation in the

Birobidjan Committee
portant

where

hyper-inflation reminiscent of the
German experience following the

ical

Finally,
a
truly
democratic
foreign policy such as I have out¬

determination

Germany and Japan
their
military potential.

Germany and Japan rebuilt

either

firm

let

regain
We must turn
siren songs of

that

tively advance the interests of all
our
people.
It would be con¬

held.

Second,
and

A
foreign
policy
developed
along these lines would be a truly
democratic policy. It would effec¬

America and Russia become

foreign policy that is based upon
the principles on which our
coun¬
try was founded, on the ideals

maintenance

Orientation of

Foreign Policy

Above

provide all the people of our coun¬
try with
more
knowledge and

must

bring into being those

must

the

employment, we should propose
that every nation commit itself to

and

America,

ward

whatsoever.

way

and

stone unturned in the endeavor to

collaboration

conference

unemployment in other countries.

understanding.
At
home, we

economic

nations.

tremely vocal and rather influen¬

the

toward

world.

out resort to measures that create

are

relations with other Na¬

our

the

ex¬

proaches

elected

people

rest

ment within its

mistaken conviction.

representatives of
hostility.
Both of them lead in
often victims of the direction of
war. Both of them
intolerance when they seek to do
must be rejected.
something for the welfare of the
In the Soviet Union, there must
people. At times, this racial and
be
more
understanding of the
religious prejudice is dormant, and
fact
that
progressive capitalism
manifests Lself only in silent illhas nothing to fear from
Russia,
feelings. At other times, it breaks
and can have no motive for at¬
out into the open—and endangers
tempting to "encircle" Russia or
the peace of our countries.
the

full

world

Soviet

people both here and
in other capitalist countries who
ship in the world.
At home, we still find rampant
always hoped that Hitler would
prejudice toward every minority destroy the Russians because of
group—toward Catholics, toward their fear of the Russian political
Negroes,
toward" Jews,
toward system.
Italians,
toward
Filipinos,
and
My friends, both of these ap¬

others.

among

bitterly opposed

are

the

Seventh, we must move more
rapidly toward the development

Monetary

Greece,

tion in Rumania

browbeat

They

United

Sixth, we should assume moral
leadership
in
working
toward
genuine international control of
atomic power.
We must not at¬
tempt to use our atomic resources
as
a
Big Stick with which to

convinced that today capitalist

value.

prewar

into

the

position of moral leader¬

capitalist

mate¬

raw

its

conditions

rials of the earth.

preju¬

still widespread through¬
out these United States. This is a
fact which cannot be hidden.

sanction

not

the critical

system in Russia. That, of course,

sad

are

intolerance

nations

troops of all the

the continuation

is untarnished.

But,

That

ours.

They cannot forget that at the end
of World War I, Russian soil was

any

other country in the world.
The
hope
of
all
Americans

knowledge that

must

Europe

(Continued from page 2071)

peoples of India, Asia

government

In Continental

with respect to the

eyes

Fourth,

italist

should

America

excel

our

Organiza¬

longer afford to

and the Middle East.

believe in what is called the "cap¬
encirclement"
of
Russia.

ments in pi emoting

always

Economy

antipathy which more than
anything else contributed to light
the fires of war in Europe which
all but destroyed the continent.
In Russia, there are some who

color of

skin.

his

oppressed

Planned

Nations

upon

thiougixoixt the whole length

case

United

We cag no

the basic

individuals. But the

the

the continuation of the present
ownership of race for military bases, which is
means of production and
every bit as dangerous as a fullthe elimination of capitalist en¬
fledged armament race.
terprise. There is no reason for us
Fifth, it must be our policy to
to quarrel with the Russian peo¬
help provide, rather than merely
ple merely because their way of talk about, equal access among

allege that

Soviet pmici^ivs fail to recognize
the

people.

our

Russians, on the other hand,
planned economy based

have

borders.

ivS

Wiuu..

masses

tion.

has engaged

^nion

sovxtt

so that it would work still
equitable for the welfare of

upon

i.*«m page

u ux.a

''t t■

only in limited
proof of necessity,
withdrawals from funds deposited
cince liberation and prior to the
announcement
of the decree
were permitted up to 40% of the
Nov 30 balance, and in excess of
that amount if the owner was
unable for specified reasons to
support himself.

precipitously. The registration of
jash holdings has furnished fiscal
authorities

checking

owners
amounts upon
their

Yugoslavia

monetary reform
com¬

Yugoslavia's

program stands out in that it
bined the withdrawal of

cash

and the freezing of de¬
posits with a drastic capital levy

holdings

monetary wealth. At the time
country's currency reform
in April, 1945, each person re¬
ceived no more than 5,000 new
dinars upon surrender of the cur¬

of the

Denmark,
close

500

than

while

payroll for

may

con¬

19,

while

month.- Cer¬

reflects

undesirable dimen¬
which made their appear¬
of

nomena

sions
ance
a

Czech authori¬
deflationary phe¬

avoid

some

result of

countries where, as
overly rigid block¬

ing procedure, business was de¬
prived of its working capital.

early to pass
the over-all
of
currency
reform in
Europe, certain tentative conclu¬
sions may be drawn at this point
from the monetary experience- of
a few of the countries under re¬
view. With certain qualifications,
it may be said that the Belgian,
Dutch, Danish, and Norwegian
Pgform programs, at least in their
early stages, have achieved a con¬
siderable measure of success. The
blocking of their Money supply
may have been too rigid durihg
While it is yet too

final

judgment

effects

phases

of .the contraction
other stages, too

program and, at

loose
to

Spending power
level equal to the value of
to

reduce

ceiling
Rationing and other con¬

available

Prices.

supplies

There

have

rerhmriaht!

means

become

But inflationary

several

are

portance

reasons

are

rumors

throughout Germany
currency reform plans.
industrial production

for

spreading
of Allied

Moreover,
has been ex¬

acts

tion

achieved
can

their

over

bribe

currency contrac¬
Under a decree is¬

19 all notes in de¬

of 1,000 pengoe and
had to have adhesive stamps
in

order

retain

their

Since the stamps were sold

value.

stamped,
the
measure,
which
closely resembled a confiscatory

drag on the recovery
economy

and is an

economic re¬
People holding sub¬
cash prefer to
rather than accept

stantial amounts of

poorly
paid
jobs which yield
earnings sufficient to buy the of¬
ficial rations but not to permit

purpose

inferred from their

live in idleness

have

measures

Dec.

affixed

monetary uncertainty

construction.

factor in the

primary

and

will¬

blocking of
In Belgium, where

to relax the

black

market purchases.

In view

uncertainty as to the fu¬
value of the currency, more¬

the

ture

Jugoslavia

and

long way from financial

the

countries will de¬

Balkan
on

check

nominations

obstacle to plans for

feel

reform

their

scheme.

sued

sale, and the gap be¬
supply of goods and the

German

the

governments of these
quite certain that

the

That

futile,

pletely

The existence of large currency
hoards

soon

the early execution
of currency
reform schemes of
the kind employed in other parts
of Europe than on rebuilding of
plant and equipment,
the im¬
provement of transportation, the
solution of problems of economic
organization,
other
non¬
monetary conditions.

ment, in December, 1945, resorted
to a drastic and unusual, but com¬

than narrowed.

Bulgaria

still

pend less

capital levy on monetary wealth,
wiped out in one single blow 75%
of the nominal value of the cur¬

expansion.

countries

desperate effort to

Consequently, mone¬

inflation, the Hungarian Govern¬

tary income is substantially in ex¬
cess
of the
aggregate value of
tween the

rehabilitation

stability. Monetary reconstruction

by the Government at three times
the
value
of
the
note
to
be

large scale.

how¬

decreasing.

ceedingly slow to recover. Re¬
gional and local governments are
operating on a deficit. The influx
of Allied currency continues on a

manufacturers are holding
production because they do
not want to exchange their stocks
of raw materials, etc., for money

over,

back

rency

stock existing at the time of

Bank bal¬

the issue of the decree.

claims, and debts, as well
wages, and salaries, were un¬
affected
by the measure.
Un¬

jtl.T

(Continued from
McCarran

has

2082))

page

asked

have

witnesses heard.

the

consumers

the

Evidently,
have less strength

Committee

than

-they
Once; the
acts, the full Ap¬
propriations Committee will offer
thought

some

time ago.

subcommittee
another

agreement

there, is

hurdle—unless

definite

compromise.

price
••

Senator Green states: "I am still

hopeful
of
getting
the
rider
through.
The delaying tactics of
the Mining Bloc have been very
harmful not only to industry, but
to the whole country."
Meanwhile

Senator

McCarrap

ances,

sticks to his bill with the ultimate

$1.29 proviso.
In the bill he also
seeks to get repealed the tax fea¬

stamped notes remained legal ten¬
der at 25%
of their face value
until Dec. 31.

ture of the Silver Purchase Act of

That feature stands in the

1934,

resumption of silver
the Commodity Ex¬
Its repeal is being
change, Inc.
its objective of stopping the on¬ sought in Washington by Handy
slaught of inflation. For several and Harman, silver dealers and
days prior to the announcement manufacturers. Supporters of the
of the decree, rumors concerning silver tax repeal have told Mc¬
its impending issue were spread¬ Carran that resumption of New
ing among the public. This time, York trading is the surest way to
interval
gave
everybody suffi¬ bring about a $1.29 price. With¬
cient
opportunity to use every out abandoning his efforts for a
conceivable means to evade the higher statutory price, McCarran
decree.
The first reaction of the is willing to trv the New York ap¬

Despite
its rigorousness,
the
scheme failed entirely to achieve

was to
the banks

public
with

of
trading

way

deposit currency proach
and

to purchase

well.

Industrial

.....

fear

interests

the

method of tax two-stage price increase proposed
by McCarran, lest hoarders be en¬
against loss on couraged to syphon silver into
Monetary reform in Germany
their
currency
receipts
by
a hoards in anticipation of the max¬
tions, one to be "temporarily un¬ is a
highly complex issue in view
three-fold increase in prices. On imum price. This would create an
available" and one to be "perma¬
of the considerable differences in
Dec. 19 the contraction of the cur¬ industrial shortage, which is just
nently blocked," the first general
monetary conditions in the Rus¬
what they wa it to avoid.
They
rency amount to 25% of its former
deblocking measure ,wAs taken in
sian and Western occupation
value began to make itself felt on are thinking of the situation of
June, 1945, when tfre 'funds held zones.
While in Western Ger¬
1933 and 1934, as reflected in a
the price level, but the subsequent
by depositors, who on Oct. 6, 1944,
many practically all banks con¬
decline in prices did not wipe out, Treasury-preoared Senate docu¬
owned less than 15,000 francs in
tinue to operate—by and large—
to any considerable
extent, the ment, "List of Silver Hoarders."
currency and bank deposits, were
without any withdrawal restric¬
Industrial silver interests have
preceding rise. Within a few days,
entirely released. In December,
tions, all bank deposits in the
very
active
over
recent
prices began to reverse their de¬ been
1945, 25% of the remaining tem¬
Russian zone, existing as of May,
cline and within a week inflation months in Washington and around
porarily blocked funds were de¬
1945, have been eliminated in one
was again in full swing.
On Dec. the country, seeking to get the
frosted.
The "permanently
single stroke, but deposits made
Their ef¬
blocked" portion of bank deposits
31, the note circulation reached Green Act reinstated.
under the occupation regime in
was
transferred to the Belgian
approximately the same level as forts until just recently largely
newly established state, provin¬
immediately prior to the date on have avoided publicity, being con¬
Treasury which in turn issued to
cial, county, and municipal banks which the
decree
became
ef¬ fined to quiet pressure on mem¬
the original owners bonds carry¬
are not
subject to blocking and
bers of the Congress and discusbeen

had

and deposits

into two

divided

likely to depreciate.

goods, the easiest

avoidance.

por¬

of 3.5%. These are, in fact, growing at an in¬
and
creasing
rate.
There is little
can
only be transferred for the
doubt that the Russian solution,
purpose of payment of the extra¬
though exceedingly painful, has
ordinary taxes which were im¬
eliminated excessive liquidity in
posed late in 1945. In the Nether¬
the business world which, in the
lands, on Jan. 2, 1946, bank de¬
Russian zone, has become depend¬
posits up to an amount of 10,000
ent upon credits for its operations.
guilders, which until then could Credit
policy in the Russian zone
only be used for transfer from one
has thus greater scope and exer¬
account to another, became freely

bonds

rion-marketable

are

cises greater influence on the di¬
that
date,
rection of economic activity than
also be used
in Western Germany where busi¬
for subscription to 50-year Gov¬
ness within certain limits can still
ernment bonds, which for the time
fall back on its old liquid re¬

available.

Since

blocked deposits may

being are not marketable, and to
i limited extent for the purchase

savings certificates. Nor¬
November, 1945, de¬
blocked all time and savings de¬
posits and a substantial part of
frozen demand 'deposits.
of 5-year

way,

'in

'fjsg'J r.
oi
Situation Alarming
.

German

The monetary
eral

Continental

ample

cause

situation of sev¬
countries gives

for alarm.

In Ger¬

many, where during the war
urice control was enforced

years
in p

effective manner

whe^e elS* in

Furooo and

Sellers of goods pro¬

tected themselves

ing an interest rate

than ar»vwhero
devpionments were held in check conser»upr>tlv, tho accumulation of
and black-market
prices declined unspendable funds was pariicu-

trols

in the Russian

spread of monetary disturb¬
ances in Germany.
Of major im¬

Unblocking- Bank Deposits

some

also have been a

currency

of the

ties

credit

fact,

the

greater currency needs of the
public at the prevailing level of
prices and wages. The desire for
holding relatively large precau¬
tionary balances, a habit carried
over
from the wartime period,

all blocked currency

employers

desire

some

production increases.

of rising economic
resulted from the

ing a period
activity and

required for
Otherwise
all deposits were blocked. The ex¬
tension
of
special
withdrawal
the

plethora of liquid funds in quest
for outlets is being widened rath¬

purposes.

privileges

The

larger part of the currency reinfiltration process occurred dur¬

leased to business, if

legitimate

reflect to

may

bank deposits.

crowns,

are

goods

corporations

one

immediately
conversion in

overexpansionary

ingness

October

Both

phenomena associated with an ad¬
vanced
phase of hyperinflation.

ex¬

is,

foreign commerce improves.

conditions actually exhibit all the

policies, not too much importance
should be attached to them. The

additional amounts were re¬

tain

currency

they

extent

their

crowds

September, 1945, to 1.4 billion in
February, 1946.
Substantial
though these increases are, and

permitted to draw in cash
than the equivalent of

were

the

after

tically every type of currency was
withdrawn.
Individuals received
businessmen and

their wartime high after

million

890

1945, represents one of the most
radical measures of its kind. Prac¬

currency

they had been halved. In Norway,
currency in circulation rose from

Czechoslovakia

guilders. In
holdings are

billion

3.1

imately

10,000 kroner.

decree

ex¬

currency

Nederlandsche Bank was approx¬

only to the extent of 800 kroner,
or
10% of the deposits, but not

version

of the

change, the note circulation of the

released

Czechoslovakia's currency

economic

country, monetary

and

commodities,

position

part of which may be employed
to the advantage of the country's

wealth.

increase

those available against ra¬
cards, are sold at a large

cept

Prior to the an¬

of April.

nouncement

and over.

than

all

practically

will depend
on
close monetary and

program

ning

Depositors re¬
ceived an initial grant of 100 kro¬
ner to tide them over the conver¬
sion period; 40% of the deposits
in excess
of this amount were
blocked in an interest-bearing ac¬
count, and 60 per cent, but not
more
than
5,000 kroner,
were
made immediately available. The
Norwegian decree differs from
similar measures in that its block¬
ing provision drew a distinction
between
demand
deposits
and
time deposits.
While the former
were freely
available up to 800
kroner, plus 30% of the remain¬
der, savings deposits and deposits
requiring six months' notice be¬

the

In the latter

financial

not entirely hopeless in view
of the country s huge gold stock,
ever,

Hyperinflation in Hungary

occupation zone, a "free" market
is officially tolerated, being con¬
sidered a desirable incentive for

withdrawal of all notes of 5

were

storing

purpose

Barter

creases.

Sept. 5, 1945, called for

withdrawal

the

guilders in October, 1945, to
almost 2.2 billion at the begin¬

Norway

fore

gen¬

nia's

in Rumania, Greece, anc

Hungary,
where
prices have risen to an enormous
multiple of their prewar level.

possible, into tangible
goods.
Cigarettes and watches,
rather than money, are used for

re¬

currency

far

especially

wherever

lion

Norwegian currency reform

kroner

recent

eral tendency to convert currency,

circulation increased from 1.1 bil¬

owners.

the

There

months.

for

the

population is unwilling to re¬
tain any part of its money re¬
tion
sufficiently
fiscal controls.
multiple of their prewar value. ceipts and practically the whole
Reliable estimates of the propor¬ money stock is in constant circu¬
Currency Reflation
tion
of
current
production di¬ lation. Government expenditures
The process of currency refla¬
verted into black markets are im¬ are almost entirely met from ad¬
tion in these countries has been
possible to obtain, but according vances by the National Bank. The
quite rapid. In Belgium currency to most observers a not incon¬ increase, in terms of pengoe, of
in circulation rose from 41 billion siderable amount does not reach foreign exchange rates is outstrip¬
francs at the end of 1944 to 73.2 legal markets.
The Russians do ping price increases for commod¬
billion in the middle of March, not appear to have shown much ities. The real value of the total
in combating
price in¬ monetary stock is continuously
1946. In the Netherlands, the note interest
form

dismemberment in
The balance of cur¬
rency holdings was blocked for a
period of three months, during
which all bank deposits, except
those of certain public organiza¬
tions, became subject to a sharply
progressive tax with different
rates
for various
classes of

decree of

success

marked, monetary condi¬
greatly deteriorated in

larly

tions have

and

however, that improvements
situation have
been at least of equal importance
.0
financial
recovery.
And the
final

data

.rue,

April, 1941.

The

useful

evasions

of the basic supply

its

following

with

tax

preparation of capital levies. It is

introduced in the country

rencies

...

post-liberation deposits
the former are available to

While

differentiation between

sharp
and •

♦he

2121

THE COMMERCIAL & FINANCIAL,CHRONICLE

Number 4482

163

Volume

fective.

Another

device re¬
in Hungary is

interesting

cently introduced

so-called "Tax Pengoe," a
standard of value established on

the

Jan.

1946.

though as¬

Taxes,

sessed in paper pengoe,

must now

°ions witb
date

To
to

this

in in of ren^esentatives.

approach has failed

produce the expected solution.
steadily more

The situation grows

urgent
reach

and they may have to
quick settlement with

onponents
paid at the prevailing rate for
in the Senate. Indeed, this seems
pengoes on the date of pay¬
to have h°en recognized in an in¬
ment. This measure does not at¬
dustry "War Council" held in New
tack the basic causes of inflation,
York less than a month ago. De¬

their better entrenched

tax

instrumental in in¬
partmental arouiescence to a Sen¬
which, late
ate deal for higher silver price is
in 1945, were approaching zero
certain.
As of April 4, the value of the
The situation b*mg critical, it is
tax pengoe was fixed at 34 paper
serves.
no longer a nueatton of appease¬
pengoe, reflecting a depreciation
In most of Southeastern Europe
ment, but of howUnuch appease¬
of Hungary's currency within ?
ment.
Tve^e. may-) be a silver
monetary expansion during the
months to one thirty-fourth of its
"peace in ourttime,"ibut after that,
war period, unlike in other parts
value at the
beginning of the
what?
of the Continent, was fully re¬
year.
flected in the price level.
Ra¬
Rumania's monetary positionJs
tioning and other control meas¬
Office
ures
have proved largely inef¬ apnroaching a crisis, and hvner(Special 4o The Financial ChroniweI
inflation, on the Hungarian model
fective. Economically this area is
BATTLE CREEK. MICH.—Wil¬
-haracten'zed
Hhieflv bv small is a distinct possibility. At least
liam Scott Trowbridge has onened
one half of the government's reve¬
farm units, while politicallv it is
offices in the Michigan National
Matured by the lack of a strong nue needs1 are financed bv th*
Bank Builfling to encage in the
enough governmental organization National Bank. At the end of 1945
securities business.
He has re¬
enforce such restraints on in- the note circulation in Rumania
amounted to about 1.912 billion cently been with Morel an rT& Co.
^ationarv

Uavo

been

in Europe

price
movements 'as
introduced. Nowhere

has inflation proceeded

but it may be

creasing tax revenues

l*i, which comnares with

bil¬

1944.

Ruma¬

lions

at the end of

t*»e r»°"t

firm in Battle

p^««*ncted his own
Creek.

"*ui

a*""*1!'*.1"" »»•

>fi? ^

THE COMMERCIAL & FINANCIAL CHRONICLE

Thursday, April
(Special to The Financial

centage of speculative securities it is within his right to

Price Control and the

LOS

so.

Margins of spread and of profit are based upon many
one of them is the public demand.
Interference
with the free flow of such a margin constitutes a public dis¬
(Continued from page 2071)
service, because it places obstacles in the way of market
The other is the Benquet stock under discussion which
liquidity and discourages venture capital.
was a private transaction involving risk.
Allen & Company, the designated underwriters, had
purchased the securities on a sliding scale up to a price of
-or
$2.10 per share. In a preliminary memorandum, the Securi¬
(Continued from page 2071)
ties Division of Ohio decided that the offering price of $4
The people that have bought some of these new
a share would
give to Allen & Company an "unconscionable today.
issues did not even know what they were buying—PROS¬
profit spread."
It further decided that "the proposed offer is upon PECTUSES TO THE CONTRARY NOTWITHSTANDING.
grossly unfair terms and should be withdrawn from this They only heard that a certain new issue was "a buy" and
thus their speculative
appetite was whetted.
division or otherwise denied."
Some of the complaints from the public to the effect
The offering was in fact withdrawn without prejudice.
that they couldn't get in on a certain offering, have em¬
This brings us into the region of our pet peeve, the

Trading Load

New Issues

attempt by regulatory bodies in the securities field to con¬
trol spreads and profits.
Recent

history of this effort is not without significance.
The Securities and Exchange Commission espoused its
philosophy of the control of spreads and profits by proffer¬
ing the principle that sales by dealers must be reasonably
related to the market price.
Implementing this principle was not simple because in
many instances as to over-the-counter trading, establishing
a market price presented numerous
stumbling blocks.
The quotation sheets which did not show any sales were
subject to the objection that they were no proof of the
market price.
Then there was some attempt to relate the dealer's
selling price to his purchase price. This presented the prob¬
lem of giving effect to the risk that had been assumed by
the dealer by virtue of the position he had taken, particularly
where the securities he offered and sold were part of his
standing inventory.
The

National Association of

Securities Dealers

came

along with its 5% spread interpretation wherein the taking
of
it

more than 5% put a member on the defensive and made
mandatory for him to explain the transaction.

Realism

Theory?

ert

investors

commodity transactions.. Attempting to treat
if they hadn't come of
age evidences stupid

ignorance of the facts.

doing business is becoming
ever
more
burdensome.
Public offerings contain everincreasing restrictive requirements and the Benguet attempt
to control

Not

profits is about the last straw.

only SEC rules and regulations must be met, but

also those in the various States.
It is

high time that there

was

uniformity of laws in the
State yield

eignty in thh making of such laws.
take.

>n'

its

That would be

sover¬
a

mis¬

»
..

We do suggest,

however, that the various authorities
get together and attempt to effect uniform
legislation.
We

advocate

uniform law

tial

It is

our

thought that regulatory bodies

are

not

in¬

tended to be guarantors of the investments of
the public.
Each investor may
judge of his own portfolio and if
with knowledge of the facts he wishes to
purchase a

per¬

ANGELES, CALIF:—James

Fessenden is with

Slayton

Co., Inc.
(Special

LOS
ert

The

Financial

Chronicle)

ANGELES, CALIF.-Rob-

Bestor,

Stanley K. Cham¬
bers, Robert W. Gale,
Kenneth J

Kmdblad, Eugene P.
Kuntz, and
Carl V. Olson have been
added to
the staff of William R.
Staats Co.,

640 South

(Special

Spring Street.

The Financial

Chronicle)

MADISON,

WIS.—David
tt
Geraon is with
Holley, Dayton &

possible latitude in its
quest for working capital, expansion, and its promotional
If

MIAMI

•

activities.

uncles and aunts, to make

initial

writings, then let's have it.

If it

was

with

Blair F. ClayLincoln Road.

Co., 421

formerly with Tellier

Co.

of such under-

success

(Special to

that hundreds of

means

BEACH, FLA.—Victor

Moore

baugh

takes inside
subscriptions of partners of under¬
writing firms, participating dealers, and even their cousins,

MIAMI

The" Financial

Chronicle)

BEACH,

FLA.—Frank
L. Harney, Jr., has
joined the staff
of Atwill & Co., 605 Lincoln Road
(Special to

MIAMI

The Financial

Chronicle)

BEACH, FLA—Edwin

S. Crooks is connected with Thom¬
&

son

McKinnon,

Lincoln

1037

Road.

BETTER WE SHOULD HAVE NO RULING AT
ALL,
ONE THAT WILL STIFLE THE
OPPORTUNITY

(Special

The

Financial

Chronicle)

THAN

MINNEAPOLIS, MINN.

— Paul
Baumgartner is associated with E.

TO OBTAIN PUBLIC FINANCING.

H. Rollins & Sons, Inc. He was for¬

merly

officer

industries
tional &

NEW
(Special

The

Financial

Chronicle)

BECKSVILLE, OHIO—G.

Walter & Hurry, 621 South
Street.

Paul

Gordon, who has recently been in
the armed forces, is now associat¬

(Special .to

ed with Bache and Co.

LOS
M.

BEVERLY
Ernest

Chronicle)

HILLS,

MacLean

nected with Atlas

now

con¬

Sixth Street.

The

Financial

(Special

LOS

Lee

The

Financial

(Special

ill

years

Chicago.

GULFPORT, FLA.—Charles
Herrick, Waddell

Inc.

LOS

Financial

now

Douglas,

Insurance

ORLANDO, FLA.
No well

now

Chronicle)

—

Robert E.

with Thomson &

McKinnon, 18 Wall Street.

The

Financial

(Special to The Financial chronicle)

Chronicle)

Martyn

with

Buckley

erick M. Swan & Co., is how
Clifford J. Murphy Co., 443
.

with
Con¬

gress Street.

(Special

LOS

The

Financial

ANGELES,

ward

staff

Walden
Nelson

510 South

Chronicle)

(Special to The Financial

CALIF.—Ed¬

has joined the
Douglass & Co.,

Spring Street.

(Special

man

Co.,

210

West

LOUIS, MO.—Alfred O. An¬
derson, and Orta James Stratton are
with
Slayton & Co.,
North Fourth Street.

(Special to The Financial

Seventh

Street."

(Special to The Financial

riey
Chronicle)

with

Chronicle)

ST.

to The Financial Chronicle)

ANGELES, CALIF.—Jos¬
eph R. Manwaring is with Fair-

ANGELES, CALIF.—Fran¬

cis Douglas is

John

—

PORTLAND, maine — pauline
L. McClain, previously with Fred¬

ANGELES, CALIF.—Ham-

LOS
Twf

NEB.

Building.

Spring Street.

Fhilbrook has been added to the

Robert E.
Cooper has been added to the staff

LOS

(Special to The Financial
Chronicl/)

facial

Chronicle)

The Financial

Inc.,

I11

with Harris Trust &
Savings

staff of

has. become affiliated

chronicle)-

lac, WIS —Roger

ice; prior thereto for 10
was

Wilsen

OMAHA,

Chronicle)

ANGELES, CALIF.—John

LOS

Gormican has joined the staff of
Joseph L. Gormican, 10 South
Marr Street.
fcfr the past three
years he has been in
military serv¬

Bank of

Chronicle)

Financial

Brothers, 530 West Sixth Street.
(Special to The Financial

The

Co.,

ing in the U. S. Army Air Force
officer since 1939.

510 South

has become associated with
Slayton & Co., Inc. He has
been serv¬
an

(Special to

M. Cunningham, has been added to
the staff of G. Brashears &

Chronicle)

DAYTON, OHIO—blames A.

Flax

HAVEN, CONN.—William

(Special to The Financial

was

& Goodwin.
(Special

King, Libaire, Stout
Co., 197 Church Street.

Chronicle)

with Blyth

Securities, Inc.,

9494 Wilshire Boulevard.

Financial

ANGELES, CALIF.—Louis

with Eisele &
&

Fabian, formerly with William
Staats Co., is now connected
& Co., Inc., 215 West

CALIF.—

The

Spring

and of the Winona Na¬

Savings Bank:

(Special

throughout the country

providing that in the absence of fraud or any other
wrong¬
doing in connection with the sale of securities no adminis¬
trative body may control
spreads and profits.

Hopkins, Harbach

Gernon,
First
National
completely before their eyes.
Bank
ruling should he made.that would handicap the ini¬ Building.
sale and offering of issues. For the time
being, big and
(Special to The
FinanciaLa/Oheoniclb)

fond

We do hot suggest that
any

staff of

LOS

small business alike needs the widest

securities field.

Chronicle)

Gulick has been
added to

(Special to The Financial Chronicle)

harm than good.

previously with Walston, Hoffman

The underwriters' load of

Street"

ANGELES, CALIF.-Rob-

the

In"

Harris

blind in its securities transactions

than it is in its

Chronicle)

Co,, 609 South Grand
Avenue.

vanish

(Special to The Financial

no more

Financial

(Special to The Financial

LOS

casting doubt regarding the initial success
possible oversubscription of new issues it will impede
new flotations.
The larger, well-known company will fare
badly enough, but the smaller ones will see the first oppor¬
tunity for obtaining equity capital during the past 15 years

child.

public is

The

West Sixth

and

The

ham C. Wylde is
with
ham & Co., 523

has the effect of

misrepre¬

haven't the slightest use.
Dishonestly must be brought to justice.
However, there are ample teeth in existing laws to
realize this without
treating the securities field as a step¬
sents,

ANGELES, CALIF.—wo

limiting the participation of so-called insiders

arms.

For the cheat and the fraud and for him who

Cheonicle)

ANGELES, CALIF.-Aley

(Special

Benguet case places underwriters and offerers in
pretty much the same position.
Editorially, we have unremittingly opposed attempts
to control spreads and profits.
We have taken the position that such controls are not
properly within the domain of the regulatory securities
bodies. We have advocated legislation
prohibiting the regu¬
latory bodies from delving into these fields.

„

Street

When the Securities Dealers Committee put this inter¬ free riders also
plimb on board and help along, let's have
pretation to the test, the SEC held in effect that the mere them too.
Many people are going to get hurt when they
size of a spread or profit did not constitute any wrongput money into young, struggling and expanding business
dc.ng, that the firm which took it was not placed upon the organizations. That is
always the way it has been during
defensive, but that anybody charging wrong-doing had the the
history of this growing, progressive country. But, by
Lurden of proof.
the same token, some few are
going to reap exceptional
Up to this point the dealers in securities were up in rewards.
The

Harbison
Gregory, 210 West Seventh

buyers that make for the kind of bull markets that
more

ander F. Smith is
with

and any ruling that is directed to assist them in
obtaining
participations in new issues is certainly going to help a class
of stock

Mernice

(Special to The Financiae

LOS

any

in the long run do
If any rule

and

Spring Street. Mr Tat.
formerly with Lester & Co

was

no idea of staying with a
reasonable length of time. Surely these
no legitimate complaint. They are the hit-andopportunists that abound in every period of rising prices,

run

Slater

with Gross, Van
Court

are

639 South

anated from "soreheads" who had

security for
people have

Chronicle!

ANGELES, CALIF .—An

gustus

factors and

18, i946

Bingham,

Chronicle)

ANGELES, CALIF.-SidHook, previously with
Co., is now with

Dean Witter &
First

South

California

Company,
Spring Street.

650

SAN

FRANCISCO,

Chronicle)

CALIF

—

Wiley R. Reynolds has become as¬
sociated with Davies & Mepa
Russ Building. He was
with Schwabacher & CoM

formerly
for man}

years.

(Special to The Financial

san

francisco,

Frank T. Brid^

Chronicle)

calif-

with Schwa¬

bacher & Co., 600 Market

Street.

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

Power

Light Co. which also
retire $21,861,500 of
outstanding preferred shares.

that

ers

the claims of

to dispute

able or

peace of
propositions. There is today
no guarantee that the United Na¬
tions Organization will evolve in¬
to a world government. It is un¬
both

that

likely

considerable

not a

en¬

viable
living
figment of a

World
We are living in a dangerous
world littered with highly explo¬
sive stuff and incendiary mate¬
rials. This explosive stuff and in¬
cendiary material consist of the
same
unresolved
political and
ideological issues which led the
world into two universal wars,

than

The

tive

begin to solve any one

ket

pathways for Ameri¬
But the creation
of a new League of Nations in¬
creases rather than diminishes the

was

living

date

25-year

state of

issue

the emergency this
today is greater
than the one which impelled it to
concert its energies in order to
sense,

faces

For the

foreign policy
accorded primacy
over
internal politics.
We must
unfetter the productive forces of
our economy in order to meet our
of

our

lives

will have to be

World
peace will largely depend on a
successful solution of our domes¬
tic problems, i.e.: on the economic
well being and social equilibrium
we achieve at home.
Like Atlas
we
carry
the
globe
on
our
international obligations.

shoulders.

which

cannot

cure

They

human

race.

the
world

Moreover a

government cannot function in a
spiritual vacuum.
A world com¬
munity cannot be created by con¬
stituuonai riat.
stitutional fiat. If it ever will beii 11
win uea reality—and I believe that
realization of the city of man
is—as history goes—not a
long

time off—it will rise from

the re-

conciliation of the distinct national

differences
today still interpose insur-

and

which

ideological

mountable barriers

between peo-

world govern¬
ment must possess the allegiance
of all peoples just as nations now
possess
the
allegiance of their
In

pies.

short,

outstand¬

for

was

and insur¬
notably the

with savings banks,

companies,

ance

Philadelphia

showing

group,

the
more
attractive
by
restrictions
written into the indenture defin¬
securities

itely

made

were

restricting the borrowing
of subsidiaries, and by the
sinking fund
provisions
call

for payments

each

under¬
is offering to
the public 178,000 shares of com¬
mon
stock,
par
value $1 per

||?are'

?*';a1t

iffa

In non

Of
I? j+.
shares are^being sold -by <&£
?anJ,a
f
rM
*or t^11accoun1i4®!f eLlhi?
ton Mills, a selling ^tock o d .
Proceeds from the financing
will be used by the company to

present bank loans; to pay
part of the cost of new plant in¬

repay

cluding machinery and equipment
to be erected in northern Ohio; to

of $1,-

from 1947 to
annually from

1956 to 1970.

Rubber

Co. 2^s

big

the

1976.

mature in

This is entirely a new money

be along
proposal
completes the required period
of "hibernation" under the law.
Funds will be used for multifold
purposes,
all looking toward
expansion of the firm's opera¬
tions,
particularly
into new

operation and should
due

course

Bretton

provides

through

tives

Bank

the

I
who

Management,

Illinois, Kansas, - Louisiana, New
nations Mexico, Oklahoma and Texas.
Subsidiaries operate pipe lines,
formally adhered

their

have

legs.

that

glad

not

those

suXas

the

members

the

all

area,

some

the

but

to
not

sterling

will automatically lead to the

break-up of the sterling area. For
part I can see no reason why
The fact that under

in the interior trim¬
automobiles and also into
Weapons do not
interior door panels for the same
produce war.
It is the will to use
purpose.
The company's facilities
weapons which impells nations to have been reconverted from war¬
seek recourse to violence.
The time to peacetime operht'ons.
will to violence is fed by precisely

preventive

stallation

week

ming of

bankers have

war.

those unresolved issues and polit¬
ic?! and ideological divergencies
which today still bar
world

the

Must Solve Basic Issues

We must seek to insure peace
by dealing promptly and intelli¬
gently with these basic issues and,

specifically, with concrete
cases
in
international relations.
The world-wide threat of mass
starvation, the plight of displaced
m°re

Persons, the abatement

of terri-

developed

that

formed at least one

to bid for prospective new
of
Northern
Indiana
Public Service Co., which has an

group

securities

issue

$45,000,000

series C

Utah Power & Light Co. soon1

Stock Offered at I26V2
A
First

headed by
April 15
the public an issue of

banking .group

California * Co. on

offered to

79,719 shares of common

stock (no

par) at $26.50 per share. The
sue
does not represent new
nancing in

is¬
fi¬

behalf of the company.

bids for

proposed $32,000,600 of new
which have
been approved
by SEC along
its

first mortgage bonds

with
«;il«

$11,500,000
to

certain

Meanwhile

Public

notes

for

The

State
Board
Commissioners

resort; and the use of the facilities

provided by the Fund is made ex¬
pensive for that reason. So if, for
example, Britain remains in the
Bretton Woods Plan and

stays outside, there is

Australia

nothing to

prevent the continuance of the ex¬
isting arrangements between the

moment Britain has the Canadian
credit

million Canadian
dollars.
She may also get the
American credit of 3,750 million
U. S. dollars.
If so, she will be ir
a position to get
back above her
fell

1,250

center"

solely

efforts in the

able

below

the
war.

make

which

she

her

result

She will ther

full

use

of the

stabilizing resources of the Bret¬
ton Woods Monetary Fund, anc1
so

will

overcome

and in Hawaii.

Goldman, Sachs Offers
Globe-Union Stock
Goldman, Sachs & Co. headed a

public offering April 16 of 120,000
shares of capital stock of GlobeUnion Inc. at $23 a share. Of the
total stock being offered, 81,000
shares are being sold by certain
stockholders and the balance by
the company.

public offering
Globe-Union, Inc.,

This is the first

stock

which has developed from a

small

lighting equipment business
nitiated in Milwaukee before 1908

farm

major supplier of storage

ko a

bat¬

teries for the

automobile replace¬

market

and of basic elec¬

ment

tronic component

parts for use in

radio, television, radar

and other

electronic equipment.

The com¬

pany,

which noy^ operates

plants, sells
ts

storage

park plugs
3ears,

nine

substantial portions of
batteries, as well as

^nd^-pller skates, to

Roebuck and Co.

The net

her difficulties.

proceeds to be received

the company from the issue
its general funds,

will be added to

William Bianchi Opens
William

J. Bianchf is

engaging

in the securities business from of¬

approved a proposed issue of
fices at 127 East 106th Street, New
$12,500,000
of new cumulative
York City.
preferred stock by Jersey Central

has

tinez, and Dominguez, California
Houston, Texas. Products are

and

distributed in most of the 48 states

During the past five years the
company's over-all crude oil re¬
serve position has improved con¬
settle
their
foreign
exchange
siderably.
Estimated net oil re¬
transactions
through the Mone¬
serves
at
January
1,
1946
tary Fund does not compel them
amounted to 745,516,000 barrels
to do so to the exclusion of other
compared with 675,775,000 barrels
means of settlement, such as those
at January
1, 1941.
325,659,000
provided by the sterling area. On
barrels had been withdrawn from
the contrary the use of the Fund
the properties during this period.
is regarded as a means of settle¬
ment of last resort and not first

banks.

Utility

located at Shell Point, Mar¬

are

its adherents can

Woods

Bretton

"dead

3J/«s outstanding.

should issue a call for

roacl to

government.

when

Chemical plants

River, Illinois.

should.

The atom bomb has

international terms, means an un¬
controllable
tendency
towards

Coalinga and Dominguez-WU^

1 mington, California, Houston,

pay for machinery and equipment
fields.
in Louisville, Miss.; Trenton, N.
Scope of the projected expan¬ two countries.
indubitably
J., and Los Angeles, Calif, and to
hightened pur consciousness of pay for warehouses in Los An¬ sion in this case is emphasized b,y
Australia Would Gain
the action,. early this
week, of
danger. However, its value as an geles and Waterford, N. Y.
stockholders in approving an in¬
educational device for demonstrat¬
If
anything, Australia would
National
Automotive
Fibres crease in common capital to 2,ing the necessity of peaceful col¬
gain by the continuance of these
was incorporated under Delaware
500,000
shares
from
1,918,412 arrangements. For she would ob¬
laboration is of limited value. It
laws in 1928 and is engaged prin¬ shares, the additional stock to be
is true that the frightened man
tain via Britain second-hand ac¬
cipally in a textile specialty busi¬ used
as
needed for
financing cess to the conveniences of the
will run faster. But a very fright¬
ness,
the products of which are
growth of operations.
ened man will lose all sense of
Fund.
This is not, however, an
sold to the automobile industry.
direction and fall prey to uncon¬
argument for Australia staying
Utility Issues Expanding
The business includes the cutting
trollable fear neurosis. The result
out.
The list of potential utility un¬
and assembly of
materials into
is panic.
Panic, translated into
All this for the future.
For the
seat cushions and backs for in¬ dertakings
was
augmented this

citizens.

water

ttaesTis,Texas; Norco, Louisiana and Wood

the adherence

Woods

Bretton

area

Australia.

whether

asked

sterling

the

anri

cars,

storage facilities, etc.
Refineries are operated at Martir

two members of the

Fmnirp

tank

trucks,

terminals,

Among such nations are
British nez,

servers.
one or

motor

represented

meeting by ob¬

Savannah

the

industrial
firms which is definitely in the
market for new money, U. S. Rub¬
ber Co., has filed necesary regis¬
tration for sale of $40,000,000 of
new 30-year 2V2%
debentures to
of

Another

her representa¬ the related chemical field within
will the United States and Hawaii.
continue to take her full share in Crude oil is being produced prin¬
getting both the Fund and the cipally in the states of California,

Britain,

Reynolds & Co. heads an

writing group which

year

the
the

upon

The

loan.

Plan

ad-

own

Congress

to Bretton Woods are

marked interest.
The

contingent
by

de¬

they

material

for
the
dropping-out of a country at its
will, and while it is to be hoped

of institutional in¬
reported widespread

Response

Woods

oil reserves, etc.

vestors

when

not to adhere to

Nor

ratification

funds avail¬
expanding operations,

exclusive of accrued interest to be

ing company. Its subsidiaries are
engaged in the oil industry and

Plan.

herence

general

added

which

come

the

100 V2

Parliaments of the

and

the moment that Britain's

obligations, with the bal¬
ance of almost $39,000,000 being

liberal

NatT Automotive Stock

settled first at

out, there is no need to face that
contingency yet.
As things are,

the

ing

1055 and $5,000,000

possess

Bretton

was

nations,

cided whether

is to be ap¬

$86,355,614

plied to retirement of

000,000

patient,

the

raised

will

$5,835,000 out¬
standing serial notes, due January
15, 1947-53, $66,155,000 15-Year
2Vz %
Debentures, due July 1,
1954,
and
$13,071,000
20-Year
2%% sinking fund Debentures,
due January 15, 1961.
The total
cost of redemption of these issues,

that Britain will not have to drop

various

American

amount

total

the

the financing

paid out of treasury funds, is $86,355,614.
The remainder of the proceeds
will be added to general funds of
the corporation. A program is un¬
der consideration for expanding
operations of subsidiaries and affiliates, including replacement of
and additions to crude oil reserves,
extension and improvement of refining and marketing
facilities, the installation of additional chemical plants and other
related projects.
Shell Union Oil Corp. is a hold¬

ernments

Oil

yesterday at 101 V2.

able

the

That

the Bretton Woods Conference it¬

reoffered the

yet

price

who

of a disease

only imperfect knowledge.

scheme.

for the
Woods

responsible

principle

powers

cure

nosis to the symptoms

Union

2V2% coupon for which the com¬

mal

rest

not

are

ers

$125,000,000 of
debentures
carrying a

received

defeat the Axis powers.

Shell

bankers

cently taken place at Savannah,
Georgia. Very wisely it has been
said there that the embryo Manag¬

involving

Corp.,

They are plausible
remedies if we confine our diag¬
about

that

from

country

management of the Bretton Woods
Monetary Fund and Bank has re¬

self, and since then by the Gov¬

projects

these

Largest

pany

2Yz%.

obscured by the for¬
cessation of the fighting and
enthusiasm of reconversion.

the

cost of around

net

emergency,

are

capital mar¬

the

terms

for

years

new

still

unprecedented, with best
names being
able to

are

borrow

urgent need for a considered and
forceful American foreign policy.
We

Current

the least.

say

Proceeds

(Continued from page 2079)

industrial

initiative.

can

conditions

physical and spiritual, to
task.
The Charter of UN

opens

market is highly attrac¬

money

Organiza¬

sources,

the

prevailing character of the

the

has been offered since the advent

be used to redeem

naturally
call for additional capital and

times.

our

1971, at 101*6% and accrued in¬

of the Securities Act of 1933.

undertakings

Such

problems if the United
States does not apply all its re¬

constitutional
devices
for the chronic ills of

Clever
are no

Nations

plated expansion.

Oil

terest. These Debentures represent
the largest industrial issue that

Credits to Britain

of contem¬

of $125,000,000
Corp. 25-year
Debentures, due April 1,

Union

Vh%

one.

Canadian and U. S.

these

Chronic His

Cure for

first look at that

from

toward their programs

but

United

tion cannot

thirty-five years ago, and long
years of unspeakable
privations
entailed the stark brutalization
and subjection to arbitrary rule of
a large part of mankind.
No

reconversion

their

toward completion, indus¬
trial companies are beginning to
look with a more aggressive eye

international
politics is a compendium of in¬
finitely varied and complicated
problems.
There are no curealls, no short-cuts.
prescription,

overwhelmed the League of Na¬
tions (which, be it repeated, com¬
pares not unfavorably with UN),
and possess destructive potentiali¬
ties far greater than those of the
atomic bomb.
The fact is that
nationalism has been
strength¬
ened,
not
weakened, by two
world wars originating principally
in
nationalizing
the
economic
equilibrium of the world is far
today

offering April 17
Shell

companies doubtless got

along

nations, these are the
problems of internation¬
al politics.
You may say that this
is a large order and that there is
nothing startlingly new in my

constitution.

stable

Morgan Stanley & Co. headed
nationwide group of 149 invest¬
ment bankers that made a public
a

peacetime tasks pretty well

concrete

Living in Dangerous

less

With
war

creation of a real and
world government
as a
paper

$25,-

Co.*

104J4 to yield about 2.75%. In¬
surance

wealths of

hancement of UN's powers of en¬
forcement would result in the

organism and

Shell Union Debentures

Shawini-

Power

for private sale in the U. S. at

tariffs, the eman¬
cipation of dependent peoples and
the
gradual
transformation
of
colonial
empires into common¬

problem of world

the

far as bank¬

000,000 of series M 3% mortgage
and collateral bonds, due 1971,

the reduction of

nuclear physicists and economists,
but I do question the relevancy to

Water

which

issue

concerned

are

gan

torial rivalries, the resumption of
world-wide economic exchanges,

world government is desir¬

utility

has little interest

(Continued from page 2077)

Morgan Stanley & Go.
Offers $125,000,000

Another

Foreign Policy
^

proposes

The UN and American
Beardsly Ruml says, "is a just and
durable peace
It is not my purpose to deny

2123

but

may

with
1—*

used in connection

contemplated
«nd

locations.

expansion of

equipment at various
>

i>;";

2124

THE COMMERCIAL & FINANCIAL CHRONICLE

Thursday, April

18, i946

■P

Securities

til

•

|t
Hi

Air

Products, Inc., Chattanooga,* Tenn.

Lir

If;
$5

te
w

one

share of each at $11 per unit.

Of remaining

com¬

share.

Remaining 40,000 shares common are being
offered by company directly to certain officers and em¬
ployees at $1 per share and are not underwritten. Pro¬
ceeds
$60,000 to purchase machinery and equipment
per

—

heretofore rented from Defense Plant
Corp.; $81,500 to
purchase of plant at Emmaus, Pa., together with $70,000
for cost of conversion and
moving; balance (estimated
$913,500) for general working capital. For details see
issue of April 4.

£u

I
I

•

Sr'

Ambassador Mines Corp.,

for their shares.

exchange offers
For details
•

reserved

April

I::

and

offered for labor,

principal
ployed.

underwriter,

but

•

may

April

,'Sf

I
fi7.
TJ

I:-

em¬

IV"

Acoustics, Inc., New York (4/22)

(letter

Aro

unit.

per

Warrants: will be sold at

cent

•
Proceeds—Payment of obligations to be assumed
and to pay Pressurelube Inc. for inventories and other

are

offered

filed

Underwriters—Blyth & Co., Inc.
indefinitely.

Ky.

For details

Offering postponed

issue of March 7.

see

Corp.,

March 30 filed 350,000 shares of

Bankers Bond Co., W. E. Huttoii &
Co., and Stein Bros.
& Boyce.
Offering—Price to

share.

Underwriters—Laird, Bissell & Meeds. Offering—Price
to public by amendment.
Proceeds—Payments to and

public $13.75

see

per

Barium

common

chase of

(4/25)

etc.

equipment,

stock (par $1).

For details

capital, for pur¬
loans, development,

repayment

issue of April 4.

see

Dividend rate by amendment.

Bendix

Underwrit¬

ers—Lehman Brothers and Union Securities
Corp. Offer¬
ing—Price to public by amendment.
Proceeds—Work¬

ing capital to provide funds in connection with
product known as "AMF Automatic Pinspotter."
details

hart &

For

stockholders given right to subscribe for
49,602 shares
$20.50 per share on basis of 48/100 of a share for

each share

held.

For

details

see

issue

American Manufacturing
Co., Inc.,
Ala.

March 21.

March

one

$17

see

(par

peso,

150,000

American Screw Co.,
Providence, R. I. (5/1)
March 29 filed 21,550 shares of
4 Vz% cumulative con¬
vertible preferred stock
(par $50) Underwriters—G. H.
Walker & Co.
Offering—Common stockholders may
subscribe to new preferred at rate
of one share of
pre¬
ferred for each four shares
of common held at
$52 per
share.
Unsubscribed shares will be
purchased by un¬
derwriter.
Proceeds—Proceeds, together with a term
loan of $1,250,000 and
current funds will be used
to
finance the purchase of a
plant formerly belonging to
the Defense Plant
Corp. for $1,750,000, purchase of ad¬
ditional machinery and

equipment and for other plant
see issue of April 4.

details

Amerian Water Works
Co., Inc., N. Y.
March 30 filed
2,343,105 shares of common (par

additional number determinable only after
sults of1
competitive bidding

are

known.

$5) plus
the

re¬

Underwriters—

Bush Mfg. Co., West

new

estate of

common

stock

Offering—Common stocks
are

Issue

(par
hold¬

given the right to subscribe

common

for -each
not

being

issue of March 28.

10 shares held,

underwritten.

$25

Co.

702,302 shares of capital stock value
equivalent in U, S.
currency to 50 cents

Underwriters—Allen & Co. The shares are
of 852,302 shares
purchased by Allen

total

from

five

were

stockholders.

sold

the

privately at the

Purchase price

Allen

Offering—Price by amendment.

852,302 shares,

cost

price to Allen
$2.10 per share.

was

For details

March 21.

see

issue of

•

Bonanza Gold
Mining
Los
Angeles, Calif.
April 8 (letter of

Syndicate, Inc.,

notification) 100,000 shares.
Under¬
writers—David A.
Hatfield, Jack Peterman and Aubrey
E. Crothers. Price to
public $1 per share.

Burlington Mills Corp.,
Greensboro,S.C. (4/23)
March 30 filed
100,000 shares ofv3%%
convertible second

see

issue

Underwriters—Kidder,

Co.

Offering—Price

pubiic

used

finance

construction

capital.

For details

see

new

plant

issue of

and

for

working

April 4.

Capitol Records, Inc.,
Hollywood, Calif. (4/24)
28 filed 95,000 shares of
common stock
(par
25 cents).
Shares are being sold by
stockholders Blyth
& Co., Inc., and Union Securities
Corp. which
are

selling
47,500 shares each.
Underwriters—To be selected
by
Blyth & Co., Inc., and Union Securities
Corp. OfferingPrice to public by amendment.
For details
see issue
of April 4.

Central Maine Power
Co.,

Augusta, Me.

March 18 filed 220,000 shares of
preferred stock ($100
par). -Dividend rate by amendment.
By amendment
filed March 29
company proposes to issue
$13,000,000 1st

1,000,000 shares

(par $10). Securities will be sold
through com¬
petitive bidding. Underwriters—By
amendment. Probable
bidders include
Glore, Forgan & Co.; W. C.
Langley &
Co.; The First Boston Corp.; Coffin &.
Burr; Harriman
Ripley & Co.; Blyth & Co., InC;, arid

& Co.

Kidder, Peabody
(Jointly). Offering—Company will offer to hold¬
preferred, $6 preferred and 5% $50 preferred
right to exchange such stock on the basis of
one

of 7%

ers

new preferred for.
each $100 par value of
old
preferred plus a cash adjustment.
Balance of new pre¬
ferred stock will be sold to
underwriters, to be selected
by competitive bidding.
Bids Invited—Company will

receive

bids up to May 7 for the
purchase of the bonds,
preferred stock and common stock. The
interest rate on
the bonds and div. rate on the
preferred Stock are to be

specified in the bids. For details

Pea-

see

issue of April 4.

Colorado Fuel & Iron
Corp., Denver, Colo.
March 14 filed
275,000 shares of common stock (no par).

are

being sold by certain stockholders.

writers—No

underwriting agreement.

Under¬

Offering—Price

the New York Stock
Exchange.

Compania Litgrofica De La Habana

S. A.

(Havana (Cuba)
Lithographing Co.)
March 18 filed
19,419 shares of 6% cumulative con¬
vertible preferred stock
(par $25) and 197,000 shares
of common
(par 10c).
The 19,419 shares of preferred
and 162,000 shares
of common are
the

underwriters

being purchased by

from

maining 35,000 shares

certain

stockholders.

common

are

The

Corporate and Public
Financing
1i
!

Consolidated Gas Electric
Light & Power Co.
of Baltimore

March 29 filed
$44,660,000 series R first refunding mort¬
gage^ bonds due April
1, 1981.
Interest rate by amend¬
ment.

Probable

bidders

include

filed

amendment.

Halsey,

Stuart & Co., Inc.;
& Co., and Alex. Brown & Sons
and White Weld &
Co., and the First Boston
Corp. (Jointly).
Offering—Bonds will be offered for
sale at
competitive bidding, and the
price to the public
filed by amendment.
Proceeds—Net

Harriman,
(Jointly),

Ripley

proceeds, together
with money from
general funds as required, will be
applied to redemption of
$20,844,000 series N 3%% bonds
and
$23,816,000 series O 3y4%- bonds at 105y2 and 107,
respectively. For details see issue of
April 4.

—

Underwriters and Distributors of

United States Government
Securities
☆

i||
?h

State and

n».

Municipal Bonds

Corporate and Municipal
1

Securities

The

c. J. DEVI n e

FIRST BOSTON
CORPORATION
NewYork

•

Boston

•

CO.

INC.
43 WALL ST., NEW
YORK 5, N. Y.

Chicago and other cities

Chicago
☆

•

Boston

•

Cincinnati

Philadelphia
•

St. Louis

•

HAnover 2-2727

Pittsburgh

•

San Francisco

Cleveland

re¬

being purchased

from the
company.
Underwriters—Hirsch & Co., New
York.
Offering—Price by amendment. For details see
issue of March 21.

☆
SPECIALISTS IN

Hartford, Conn. (4/26)

☆
—

and

better

share for preferred and $10 per
share for com
Proceeds—Proceeds from sale of
stocks
appro*i"
mately $298,000 from sale of 4%
sinking fund deben"
tures, together aggregating $844,500, will

Underwriters—To

Bowser, Inc., Fort Wayne, Ind.
(4/25)

March 25 filed
200,000 shares of $1.20 cumulative
pre¬
ferred stock (par
$25), with common stock
purchase
warrants attached.
Underwriters—Blair & Co
Inc
New York.
Offering—Price to public
by amendment!
For details see issue
of March 28.

preferred stock (par
$100).

and

per

to public "at market"

filed

share).

part
&

1946

10,000 shares com"
Underwriters—Lee Higginson
Corp and

(par $5).

Chas. W. Scranton &

Benguet Consolidated Mining
Co., Manila, P. I.

Proceeds—Acquisition of additional
machinery, working
capital, etc. For details see issue of April 11.

Alabama.

(par 50c).

of the

Appliances, Inc., South Bend, Ind.

104,301

share.

per

March
per

For

share of

For details

April 5 filed 1,000,000 shares of common
(par $1). Un¬
derwriters—No underwriting—to be offered
directly to
the public by the
company.
Offering—Price to public
$1 per share. Issue will be sold within
State of

improvements.

filed

of record March 30

Montgomery,

(4/?4)

33% cents per share).
ers

-stock

Bendix, deceased.
-Underwriters—Kobbe, GearCo., Inc., For details see issue of Feb. 20.

Bendix Home
American Mail Line
Ltd., Seattle, Wash. (4/22)
March 11 filed 49,602 shares of common
stock (no par).
Underwriters—Blyth & Co., Inc.
Offering—Common
at

account

Vincent

new

issue of April 4.

see

common

plants and equipment.

incluiT

additions
For details

share of

Helicopter, Inc., New York

Feb. 13 filed 507,400 shares of
Shares are being sold for the

$8,000,000

for

April 4.

stock

preferred stock

(par $100).

program

common

Corp., S. E. Canton, O.

advances to subsidiaries for
working

issue of March 21.

American Machine & Foundry
Co., N. Y.
March 28 filed 80,000 shares of cumulative

Steel

& gen. mtge bonds series N
due 1976 and

March 13 filed 101,086 shares of common stock
(par $1).
Shares are being sold by certain stockholders.
Under¬
writers — Almstedt
Bros,, Equitable Securities

For details

ments to

approximately

March

by amendment.

Inc., Louisville,

pursuant

the

Feb. 28 filed 30,000 shares of
series A cumulative pre¬
ferred stock ($50
par).
Dividend rate

property acquired from it, working capital, etc.
Filter Co.,

The securities

Equipment Corp., Bryan, Ohio

1947

Atlas Imperial Diesel
Engine Co., Oakdale, Calif.

each.

American Air

(4/29)
30,000 shares of cumulative preferred
stock, 41/2% series (par $50) and 20,000 shares of com¬
mon
(par $2.50).
Underwriters—Central Republic Co.,
Inc., and Reynolds & Co.
Offering—Pricey to public
by amendment. For details see issue of March 21.
March

expenditures

unsuh

Proceeds

mon.

(letter

stockholder.

The

scribed shares will be sold to
underwriters.
For corporate
purposes, which are expected

mon

market.

purchase warrants and 149,500 shares of common to be
issued upon conversion of preferred at rate of 2*/2 com¬
mon for 1 preferred.
Underwriters—L. D. Sherman &
Co. Offering—Stocks to be offered in units of one share
each at $5

Exploration Corp., New York
of

common

notification) 59,800 shares of 6%
cumulative convertible preferred stock (par
$5) and
59,800 shares of common stock (par 10c); 100,000 stock

|»r

expire April 99
appertaining to 55,106 shares of
common hat
by directors and officers so as to
make not
sible the ratio of three-fifieths of
a share.

Rights

been waived

March 29 filed 20,000 shares 4^%
cumulative convert
ible prior preferred (par
$25) and

Armstrong Rubber Co., West Haven, Conn.

American

of notification) 3,000 shares Class A
stock, without par value. Underwriter—F. Eberstadt & Co., Inc. Stock
being sold by Frederick Machlin,

mining equipment, etc.
salesmen

(letter

Offering—Preferred stock is
offered to com
stockholders of record April 10 in
ratio of thro
fiftieths of a share of preferred for
each share
of com'
mon
held at $100 per share.
Rights

to be sold for cash to underwriters.

are

issue of April

see

body & Co.

mon

issued under

notification) 66,000 shares capital
Price to public $3.50 per share.
No underwriting.

stock.

hriJ

Stock not subscribed

Aracaibo Oil

April

Spokane, Wash.

April 8 (letter of notification) 600,000 shares of com¬
mon stock, of which
400,000 shares are to be sold at 15
cents per share and 200,000 shares at 15 cents will be

If-

Registration

filed by amendment.
Probable bidders include
Dillon, Read & Co. Inc., White Weld & Co., and Shields
& Co. (jointly), and W. C. Langley & Co. and The
First Boston Corp. (Jointly).
Offering—Price to public
by amendment.
Purpose—The common stock, together
with $15,000,000 10-year 3% collateral trust bonds (to
be sold privately) are to be issued to
acquire certain
assets of American Water Works & Electric, liquidate
two subsidiaries,
Community Water Service Co. and
Ohio Cities Water Corp., and provide cash working capi¬
tal.
Common stock is to be offered initially for cash
to common stockholders of
parent and to public holders
of preferred stocks of
Community and Ohio in exchange

mon, 150,000 shares will be offered at discretion of un¬
derwriter to purchasers of such Units or to others at
$1

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

(4/29)
April 2 filed 100,000 shares class A stock (par $1) and
290,000 shares common stock (par $1). UnderwritersReynolds & Co.
Offering—100,000 shares of class A
stock and 100,000 shares of common are offered in units

Now

Kidder.Peabod^Co.
Founded 1865

Members of the New York and Boston Stock
Exchanges
New York

Boston

Philadelphia

Chicago

163 ^ NumbeS^ 4482

Volume

THE COMMERCIAL &

FINANCIALlCHRONICLE

:,x. k

—■-"ficae -'.'Is'

J&.

Continental Engineering Co., Carrizozo, N. Mex.

•

(letter of notification) 540,000 shares common
50c). Price to public 50 cents per share.
No
underwriting agreement.

April 11
(par

New Issue Calendar

Corporate Leaders of America, Inc., N. Y. (5/4)

•

2,500 periodic payment certificate and 500

April 15 filed

(Showing probable date of offering)

single-payment certificates.

Sponsor—Corporate Lead¬
ers of America, Inc.
Offering—There are two methods
by which the plan may be employed—periodic monthly
payments or a single payment. Proceeds—For invest¬
ment. Business—Periodic payment plans.

April' 26, 1946

April 18, 1946
Maxson Food System Inc

Common

Sylvania Electric Products Inc

Common

Preferred and Common
Gerity-Michigan Die Casting Co
Common
Red Top Brewing Co
Class A Common
Manufacturing Co

Bush

April 19, 1946
•

Crampton Hardware Co., Grand Rapids, Mich.

F. & R.

April 9 (letter of notification) 22,000 shares convertible
5% cumulative preferred stock, par $10. Underwriters—
Dudley H. Waters & Co., MacNaughton-Greenawalt &
Co. and W. J. Banigan & Co. Price to the public $10

Publishing Corp

Hallmark

Shirt

April
Sharon

share. Proceeds—Will be used to apply on the pur¬
chase price of all of the partners', interests in the Crampton Hardware Co., a partnership.

Steel

-Common

Co. Inc

Preferred

21,

Crowoll-Collier Publishing Co., N. Y.

100,000 shares

March 29 filed

common

stock

writers—Wertheim & Co.
j

■

''-'tv'.'*&

"Sf"

Curtis
March 30

•

United Transit Co

Companies InCi, Clinton, Iowa
filed 46,050

Phipps Stores Inc.___
Graham-Paige Motors Corp
Queen Anne Candy Co
Roberts & Mander Corp

Under¬

Offering—Price to public by
issue. of April 4.

i•

Co.

Curtis

stock

Burlington Mills Corp
Greenfield Tap & Die Corp
Joy Manufacturing Co
Panhandle Eastern Pipe Line Co
St. Joseph Light & Power Co

Publishing Co;

April 12 (letter of notification) Mary Curtis Zimbalist,
Philadelphia, will sell through Charles A. Greeff (of
Granbery, Mar ache & Lord) a sufficient number of
common shares so that aggregate proceeds thereof shall
not exceed $97,500.
Shares will be sold at market on
the New York Stock Exchange.

filed

25,000 shares of capital stock (par $10).
named.
Offering—Company has

Common
Common
Common
Bonds
Common
Common
---.Debentures
Preferred

Selected Industries, Inc
Sonotone

Corp.

Capital Stock

Steep Rock Iron Mines Ltd

(4/29)

Pierce, Fenner and Beane, and Baker, Simonds and Co.
Offering—Price to public by amendment.
For details
see issue of April 11.

shares at $6 per share until April 25, 1950.
Warrants non-exercisable until April 25, 1947.
Under¬
writers—Cohu & Torrey, and W. J. Banigan & Co.
Of¬
common

warrant

unit.
9

to 'buy

Proceeds—For

DeVifbiss Co.,

one

share of preferred

common

$10

per

working capital, etc.

Toledo, Ohio

(5/1)

April 12 104,138 shares common stock (par $5). Under¬
writers—Laurence M. Marks & Co., and Ball, Burge &
Kraus.
Offering—Price to public by amendment. Pro¬

ceeds—$525,000 for redemption of 50,000 shares of 7%
preferred stock July 15, 1946, at $10.50 per share and
divds.; $775,000 for expenditures at Toledo plant and
balance for working capital, etc. Business—Atomizers
and air pressure spray equipment.
Diamond T Motor Car Co.,

Chicago,

III.

(5/1)

March 29 filed 60,000 shares of common stock (par $2).
Shares are being sold by certain stockholders. Underwrit¬

ers—Hallgarten

DuMont
N. J.

Co.

Offering—Price

For details

amendment.

(Allen B.)

see

public by

issue of April 4.

Laboratories, Inc., Passaic,

(4/29)

March 29 filed 650,000 shares of class A common stock
(par 10 cents), of which 525,000 shares are being offered
for sale by underwriters.
Underwriters—Van Alstyne,
Noel & Co. and Kobbe, Gearhart & Co., Inc.
Offering—

Price to public by amendment.
Proceeds—To expand
television broadcasting and manufacturing facilities and
operations in the low-frequency fields.

.—Common
____Commoh

Taca Airways

--Common

National Co.
Samson United

Debentures

United States Rubber

May

1946

Preferred
Common
.Common

Vilbiss

Diamond T Motor Car Co

Common

Hytron Radio & Electronics Corp
National Skyway Freight Corp

Common
Common

Peerless Casualty Co

May

1946

Corporate Leaders of America, Inc._ .Payment Ctfs.
United Wallpaper, Inc..
.Preferred

1946

Common
Common
Common

Engineering Corp

Corp

Preferred

May

1946

Debentures and Preferred

Walworth Co

Common
u—Preferred

Stromberg-Carlson Co.

Preferred

Minneapolis-Honeywell Regulator Co

May

1946

10,

Common

Hoffman Radio Corp

(4/22)

Inc., Scranton, Pa.

(letter of notification) 29,900 shares of 5% %
cumulative preferred stock (par $10) and 49,900 option
warrants entitling holders thereof to purchase 24,950

and

April 30, 1946
L'Aiglon Apparel Inc

Preferred

Monsanto Chemical Co

April 11

fering—To be offered in units of

-Preferred
Preferred and CommOii

Mercantile Stores Co., Inc

Common
Debs., Pref. & Common

Public Flyers Inc.,.

Dean Phipps Stores,

Co.Pref erred m

Federal Mfg. &

Longines-Wittnauer Watch Co
Mading Drug Stores Co

•

Preferred

NeW; Haven Clock & Watch

Standard Steel Spring Co

Preferred

Foundry Co

filed 100,000 shares common stock (par $1).
Shares are outstanding and are being sold for account
of certain stockholders.
Underwriters—Merrill Lynch,

April

Investment Certificates

Eureka Williams Corp

Bowser Inc.

Bros., Inc., Detroit, Mich.

Common
I——Common

Preferred and Common

Holley Stores Inc
Jessop Steel Co.__

Preferred

American Machine &

For details see issue of Feb. 28.

Davidson

Firth Carpet Co.Hamilton Fund

May

1946

April 25,

unsubscribed stock at public or private sale at $20
share.

Common

Laboratories Inc

American Screw Co

Manufacturing Co., Inc
Capital Records Inc
Curtis Companies, Inc
Harrisburg Gas Co
Kansas City Fire & Mar. Insur. Co
Morris Plan Corp
Pref. and

granted holders of capital stock rights to subscribe at
$20 per share to new stock at rate of one share of new
for each share held.
Company reserves right to sell
per

DuMont (Allen B.)

American

Underwriters—None

any

2nd Preferred
Common
Common
Debentures
Bonds

April 24, 1946

Dallas Title & Guaranty Co., Dallas, Texas
Feb.

-Common

—

Common

Inc

Utility Appliance Corp

$12.25 per share. f
•

Equipment Corp
Crowell-Collier Publishing Co

April 23, 1946

Shares are being sold by certain stockholders.

writers—Cruttenden

Preferred
Debentures
-Common
Common

(4/24)

($2 par).
Under¬
Offering—Price to public
common

Common

Dean

see

■

Preferred and Common

Preferred

Aro

Davidson Bros.

American Mail Line Ltd

(no par).

Shares are being sold by certain stockholders.

amendment. / P\3r details

April 22, 1946

(4/29)

Class A Stock

Air Products Inc
.Common

Acoustics, Inc

Debentures

April 29, 1946

1946

Corp

per

American

April 27, 1946
Norwalk Tire & Rubber Co

For details see

issue of April 4.

•

Eureka Williams Corp.,

Detroit (5/6)

shares common stock (par $5).
Shares being sold are either owned by officers and
employees or their relatives or are held by the company
and are subject to options not yet exercised.
Offering—
Shares may be sold from time to time upon the New
York Stock Exchange or the Detroit Stock Exchange by
the owners of 'such shares.
Proceeds—The proceeds
heretofore received by the qojnpgmy from the sale of the
shares included in the offering became a part of the
working capital of the company and the proceeds re¬
ceived from payment of shares under option also will
become part of working capital.
The owners will receiye
the proceeds from the sale of the shares covered in
the prospectus.
Business—Vacuum cleaners, oil bur¬
April

filed

17,000

etc.

ners,
•

F. & R.

Publishing Corp., N. Y.

Proceeds—To Ruth G. Vischer, Wash¬

ington, D. C.
•

issue of April 4.

Yellowknife Gold Mines,

Ltd., Toronto, On*.

81,249 common shares ($1 par, Cana¬
dian).
Shares are being offered to residents of United
States and Canada by Toronto Mines Finance, Ltd. These
on

Feb.

are

filed

part of a recent offering of an aggregate

and

controlled

Offering—Price
States

United

its

It is wholly owned

underwriter.
parent

$5.10

company,

(Canadian)

equivalent.

For

per

details

Ventures, Ltd.
share, or the
see

issue

Eng. Corp., Brooklyn

(5/6)

116,000 shares common stock (par $1).
Shares are being sold by four stockholders.
Under¬
writers—Sills, Minton & Co., Inc.
Offering—Price to
public by amendment. Business—Photographic appara¬
tus and scientific educational toys.
16 filed

Firth Carpet

Rorcupine Mines, Ltd., Toronto, Dtit.
(par $1)
Canadian
currency.
Underwriters—No underwriters
named.
Offering—Company is offering common stock
4 filed

shares common stock (no par),
shares are being sold by company, 61,150

Wadely, President, and 30,414 by Graham
Treasurer and Secretary. Un¬
& Co. Offering—Price to public
by amendment.
Proceeds—To finance inventories, ac¬
counts receivable, general working capita}.
For details
see issue of April 4.
j
by Harold E.

600,000 shares of common stock

share. If com¬
purchase the stock,
company will sell to such dealers, if any, at 32.5 cents
U. S. currency per share for resale at 50 cents U. S.
to

public at 50 cents U. S. currency per

accepts offers from dealers to

pany

(4/29)

Co., N. Y.

March 29 filed 125,000
of which 33,436

currency

Hunter, Vice-President,

per

share.
(Continued

page

2126)

N. Y.
notification) filed 20,000 shares of
common stock (par $1). Sale^or benefit of S. C. Korn,
Underwriter—Floyd D. Cerf Co.
Offering—Price to

Industrial, Public Utility, Railroad
and

Municipal Securities

(letter of

public, :$5 per share.
Frailey

Hemphill, Noyes

Co.

Members New York Stock ExchangeNEW YORK

PHILADELPHIA

ALBANY

PITTSBURGH

CHICAGO

TRENTON

INDIANAPOLIS
WASHINGTON

Lee Higginson Corporation

Fleming-Hall Tobacco Co., Inc., Rejv York,

April;! I

Gold City

Jan.

derwriters—Reynolds

UNDERWRITERS—DISTRIBUTORS—DEALERS

525,000 shares offered by the company in Canada to its
own shareholders at $5
(Canadian) per share.
Under¬
writers—Toronto Mines Finance, Ltd., 25 King Street.,

Feb. 28.

Federal Mfg. &

April

see

West Toronto, is named

(4/19)

April 12 (letter of notification) 1,000 shares of . common
stock.
Underwriter—Silberberg & Co.
Offering—Price
$52 per share.

150,000 shares by certain stockholders.
Underwriters—
Buckley Brothers, Mercier, McDowell & Dolphyn, Aihfes,
Emerich & Co., Inc., and Dempsey & Co.
Offering—
Price to public by amendment.
Proceeds—To pay note
to Associates Discount Corp.; to retire 1,967 shares of
cumulative 6% preferred stock ($100 par), balance to
finance increased inventories and payrolls.
For details

Industries,

March 13 (letter

,
•

»■<

INVESTMENT SECURITIES

Inc.

of class A
Underwriter—Edward R. Parker & Co.
of notification) 58,680 shares

(par $1).
Proceeds—Working capital, etc.

stock

Underwriters, Distributors
and Dealers

Price $5 per share.

Gerity-Michigan Die Casting Co*, Detroit

(4/26)

BOSTON

NEW YORK

shares of common' stock (par $1),
shares are being sold~t>y company and

March 27 filed 450,000
of which 300,000

xgrv *JI.

—'4'

CHICAGO

2126

THE COMMERCIAL & FINANCIAL CHRONICLE

Thursday, April 18, 1945

■

•

Securities
•

(Continued from

page

(5/1)

ber of common shares to be reserved for issuance
upon
of the debentures, and 25,000 shares of

common, to be issued to Allen & Co., pursuant to a
proposed standby agreement.
Underwriters—Allen &
Co., New York.
Offering—Price to public by amend-

issue of Feb. 28.

shares of

Underwriters—Offering

filed 125,000 shares common stock (par $1).
Underwriters—Herrick, Waddell & Co., Inc., Offering—
Price to
public by amendment.
Proceeds—Working
capital for expanding operations and to retire present
bank borrowing.
Company intends to advance to Air
King Products Co., Inc., a subsidiary recently acquired,
$500,000 to equip new plants and for working capital.
For details see issue of April 4.

the conversion

see

March 29 filed 75,000

March 29

Feb. 21 filed $12,000,000 4% secured convertible deben¬
due March 1, 1956, and an indeterminate num¬

For details

Lynch Corporation, Anderson,

Hytron Radio & Electronics Corp., Salem, Mass.

tures

ment.

Registration

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

2125)

Graham-Paige Motors Corp. (4/22)

Now

not

Inc.

common stock

underwritten.

(par $2)

Ottering--!

Company is offering the shares to holders of
common
stock of record April 18, at the rate of one
share for
each five shares held at $15 per share.

Management

expects to offer at $15 per share to key personnel,
other
than the President, such shares of present
offering as
are not subscribed for.
Proceeds—Proceeds to pay bank
loans $581,000; to .reimburse treasury for
addition to
Toledo

Illinois

Greenfield Tap & Die Corp., Greenfield, Mass.
Feb.

(4/23)
March 28 filed 51,591 shares of common stock

Underwriters—Tucker, Anthony & Co.

curities will be

offered

with price and
cessful bidder.

Offering—Price

to public by amendment.
Proceeds—Net proceeds, with
additional treasury funds will be applied to
redemption,

McGraw

interest rates to be named by the suc¬
Underwriters—Names by amendment.

Probable

about May 1, 1946 of 9,000 shares of $6 preferred

and

stock at 105.

plant $125,000; to discharge other indebtedness
$150,000 and for working capital $244,000.
For details
see issue of April 4.

Co., Decatur, III.

27 filed $45,000,000 first mortgage bonds due 1976
$9,000,000 sinking fund debentures due 1966.
Se¬

and

(no par).

Power

bidders

The

First

for sale at

competitive bidding

Halsey, Stuart & Co., Inc.,
Corp.
For details see issue of

Stearns

March 7.

Gulf Atlantic

Transports Co., Jacksonville, Fla.

Jan. 17 filed 270,000 shares of common stock
(par $1).
Underwriters-^-Allen & Co. Offering—Price to the pub¬
lic by amendment.
Stock is being offered initially to

present shareholders at

a price to be filed by amend¬
approximately 200,000 shares have
agreed to waive their preemptive rights.
The under¬
writer will receive 50,000 five-year warrants to
pur¬
chase common stock at a price to be filed
by amend¬

ment.

Holders

ment.

For these warrants the underwriter will
pay the
10 cents each or a total of $5,000. Postponed

company

indefinitely.

For details

issue of Jan. 24.

see

Commission

the

securities

will

be "submitted

for

public bidding.

Offering—Company is offering to hold¬
140,591 shares of 5 xk % cumulative preferred stock
opportunity to exchange their shares for new 4%
preferred, the exchange carrying a cash adjustment.
Unexchanged preferred will be sold to underwriters. For
of

ers

the

see

ten.

Offering—To

$1,000

per

unit.

be offered

Proceeds—To

units

enlarge plant, facilities

equipment, etc.

•

Co.

Offering—Prices

(Ind.)

Power & Light Co.

March 8 filed 142,967 shares of common stock
(no par).
Underwriters—To be sold through competitive
bidding
in accordance with

ruling of State Commission, original¬
ly underwritten by Lehman Brothers, Goldman, Sachs &
Co. and The First Boston Corp.
Offering—Company is of¬
fering the stock to holders of common stock at a price
to be filed by amendment at rate of

ficates

common

for each five shares held.

one

share of

For details

public by amend¬

see

new

issue

of March 14.

(4/25)

30 filed $500,000 5% sinking fund
debentures50,000 shares of 55-cent cumulative preferred stock
($5
par) and 40,000 shares of common ($1 par). Underwrit¬

ers—Alex. Brown &

Sons, Rauscher, Pierce & Co., Inc.
Offering—Price of debentures
100 and prices of preferred
and common stocks
by
amendment.
Proceeds—Purchase of 3,587 shares of
com¬
mon stock of Mading's Drug
Stores, Inc.; general cor¬
porate purpose, including the opening and acquisition of
and G. H. Walker

& Co.

additional stores. For details
•

Indianapolis

issue of March 28.

see

issue of March 14.

Hamilton Fund, Denver, Colo. (4/29)
April 11 filed six series of accumulative investment certi¬

aggregating $4,175,000.
Depositor — Hamilton
Funds, Inc. Business—Accumulative investment certifi¬

Hartford, Conn.

Mading Drug Stores Co., Houston, Tex.

originally un¬
derwritten by Lehman Brothers, Goldman, Sachs & Co.
and The First Boston Corp., uue to
ruling of Indiana
State

Co.,

March

Hallmark

Shirt Co., Inc., N. Y.
(4/19)
April 12 (letter of notification) 2,000 shares of 6% pre¬
ferred stock (par $100).
Underwriters—Not underwrit¬

and

Power & Light Co.

March 9 filed 120,000 shares of 4% cumulative
preferred
stock (par $100). Underwriters—Although

details
•

(Ind.)

For details

ment.

Indianapolis

shares of $1.50 preferred stock
(no
par) and 100,000 shares of common (par 10 cents).
derwriters—Granbery,
Marache
&
Lord
and
Bear

include

Boston

H.)

(F.

March 25 filed 36,000

Maxson

Food

Systems,

issue of April 4.

Inc.

(4/IS)

April 11 (letter of notification) 18,000 shares of common
stock (par 25c).
Underwriters—None.
Offering—Stock
will be offered at

per

behalf of W. L. Maxson

Corp.
Mercantile Stores Co.,

April
The

filed

279,250

are

Inc., New York

outstanding

and

(5/6)

stock

common

(no

par).

being sold by 21
stockholders.
Underwriters
Clark, Dodge and Co.
Offering—Price to public will be filed by amendment.
are

—

cates.

Jefferson-Travis Corp., New York, N. Y.

Harrisburg (Pa.) Gas Co.

Feb. 27 filed

(4/24)

30,000 shares of $1.25 cumulative convert¬
(no par) and 130,000 shares of common

March 19 filed $2,200,000 first mortgage bonds due
May
1,' 1971. Bonds will be offered for sale at competitive

bidding and interest

Minneapolis-Honeywell
apolis

ible preferred

rate filed by

amendment. Under¬
Probable
bidders
include

writers—By
amendment.
Halsey, Stuart & Co., Inc.; W. C. Langley & Co.; Harrinian Ripley
& Co.; Mellon Securities Corp.; Kidder,
Peabody & Co.
Offering—Price to public by amend¬
ment.

Bids

Invited—Company is inviting bids to be
considered April 23 for the
purchase of the bonds the
bidder to specify the interest rate. For details see issue
of March 28.

(par 25c).
Common shares are reserved for conversion
preferred.
Underwriters—Richard J. Buck & Co.
Offering—Price to public $25 per share.
For details
issue of March 7.

see

Hayes Manufacturing Corp., Gr. Rapids, Mich.

Jessop Steel Co., Washington, Pa.

Feb. 27 filed 215,000 shares of common stock

are

($2 par).

being sold by certain stockholders.
Under¬
Bissell & Meeds have withdrawn as
Offering—Price to public by amendment.

writers—Laird,
underwriters.

For details

see

Hendry

issue of March 7.

(C. J.)

Co., San Francisco, Calif.

March

20 filed 24,000 shares of
preferred stock, 51/2%
cumulative (par 425).
Underwriters—First California
Co. Offering—Price to public
$25 per share. For details
see

issue of March 28.

•

Hoffie System,
Inc., N. Y.
April 11 (letter of notification) 4,000 shares of
6% par¬
ticipating, cumulative, non-redeemable,
non-convertible,
non-voting preferred stock (par $10) and 1,000 shares of
common
(par $10). Underwriters
Not (Underwritten.
Offering—Shares will be sold direct to
public in units of
4 shares of
preferred and 1 share of common at $50
per
—

unit.

Proceeds—To be used in
establishing

Hoffman Radio Corp., Los
Angeles, Calif. (5/10)
March 30 filed- 120,000 shares

Underwriters—Cohu

stock

common

(par $1).

Torrey. Offering—Price to pub¬
lic $6 per share.
Proceeds—$97,125 to redeem preferred
stock and
approximately $400,000 to retire short-term
bank borrowings; balance for
details

working

see

issue of April 4.

capital.

For

•

cent expenditures
made in retirement of

< preferred stock

and

class A stock at

in prepayment of

7% cumulative

cost of

$200,010;

$400,000 3% promissory note payable:to
Manufacturers Trust Co., and on account of
$153,000
for construction
or
remodeling of six store
premises. Business—Operates chain of 64 retail
women's

see

V-Loan; balance
issue of April 4.

for

additions.

For

Kansas City

(Mo.) Fire & Mar. Ins. Co-

being offered to
at rate of

one

held.

expire

May 24.

underwriters.

plus.

stockholders of record May 11
stock for each share of com¬
by amendment.
Subscription rights
Unsubscribed shares will be sold to

common

share of

Price

new

Proceeds—To

For details

see

issue of

increase

capital

and

sur¬

April 4.

Keyes Fibre Co., Portland, Me.

Minne¬

conversion

common

the

convertible

preference

stock to be reserved for

series

preference stock.
Corp.
Offering—New

Securities

preference stock is. being offered to the holders of out¬
standing 85,700 shares of preferred stock consisting of
30,700 shares of 4% convertible series B, 25,000 shares
414% cumulative series C and 30,000 shares 4% cumula¬
tive series D.

sell

As the price

underwriters

at which the company will

of series A stock not
issued under the exchange offer is at $108
per share and
accrued dividends.
The basis of exchange will be 4%
series D, callable at $108, share for share; 414 % series C,
at

any

$107.50, share for share

company of. 50 cents per share,
able at $105, share for share on

on payment to the
and 4% series B, call¬
payment to company of

$3 per share.
Unsubscribed shares will be
derwriters who will offer them to the

to lih-

sold

public at $108
per share.
Purpose—To refinance preferred stock. All
old shares of preferred will be called for
redemption.

Mopspnto Chemical Co., St. Louis, Mo.
March

(4/25)

filed

316,967 shares of $3.25 cumulative pre¬
ference stock, series A (no
par) convertible into common
before
Co.

June 1, 1956.
Underwriters—Smith, Barney &
Offering—Shares are offered holders of common

stock of record April 8 on basis of one share of
preference
for each four shares of common held at
$101.50 a share.

Rights will expire 3

p.m.,

April 24, 1946.

For details see

•

March 28 filed $2,800,000 first
mortgage bonds due April
1, 1966.
Interest rate by amendment.
Underwriters—
Coffin & Burr, Inc.;
Paine, Webber, Jackson & Curtis,
Estabrook & Co., E. H. Rollins &
Sons, Inc., and H. M.
Payson & Co. Offering—Price to public by amendment.
Proceeds—To redeem $1,800,000 4*4% first

Motorette Corp., Buffalo, N. Y.
April 11 (letter of notification) 23,530 shares of common
stock.
Underwriters—Not underwritten.
Stock will be
sold to public at $10 per share.
Proceeds will be used
to increase
inventories, working capital and pay loan
of $45,000 to Smaller War Plants
Corp.

mortgage

sinking fund; cost of construction and equipment of the
Hammond plant.
For details see issue of April 4.
L'Aiglon Apparel, Inc., Philadelphia
(4/$0)

March

11, 130,000 shares of common stock,
par $1.
Of
the total 80,000 shares are
being purchased by the under¬
writer from the company and
50,000 shares from two

stockholders.
to

public

Underwriters—Otis & Co. Offering

$6.50

per

share.

Price

Proceeds—Approximately

$100,000 for the purchase of new machinery and
equip¬
ment; not exceeding $250,000 to acquire' ari additional
plant site and construct new plant thereon, or
obtaining
an

additional

plant

by purchase
Manufacture of women's dresses.

lease.

Business—

Longines-Wittnauer Watch Co., Inc., N.Y. (4/25)

apparel stores in Middle West, South and East.

March 29 filed 125,000 shares of
Shares are being sold

•

ment and

Co.,

issue of March 21.

spent

Hydraulic Products Co., Chicago
April 11 (letter of notification) 150,000 common shares
(par $1). Price to public $2 per share. No
underwriting.

issue

(5/24)

March 28 filed 50,000 shares of common stock
(par $10).
Underwriters—First Boston Corp.
Offering—Shares are

mon

17 filed 85,700
(par $100) and

callable

(4/23)

filed

51,400 shares common stock (par $1).
Shares being sold by Adams Express Co.
(35,600) and
American International Corp. (15,800).
Underwriters—
Hallgarten & Co. and R. W. Pressprich & Co.
Offering
—Price to public by amendment.
For details see issue
of April 4.

•

Holly $tores, Inc., New York (4/29)
April 10, 32,000 shares 5% cumulative convertible
pre¬
ferred (par $25), and
100,000 shares of common (par $1).
Underwriter—Carl M. Loeb, Rhoades & Co.
OfferingPrice to public
by amendment.
Proceeds—Will be
added to working capital to reimburse
company for re¬

regulation

Joy Manufacturing Co., Pittsburgh
March

chain of

food-dispensing units.

(4/29)

Proceeds—$825,000 to

details

stock

Underwriters—Union

March 28 filed 60,000 shares of
cumulative convertible
preferred stock (par $25).
Dividend rate by amend¬
ment.
Underwriters—Paul H. Davis & Co.
Offering—
Price to public by amendment.
retire

April

Regulator

(5/6)

common stock

and Emanuel & Co.
Offering—Price to public by amend¬
ment.
For details see issue of

(4/24)

preferred by amendment.

000 additional shares of
rants.

The statement covers

common

reserved

Underwriters—Eastman, Dillon

—Price

public by

series A

attached
Dividend rate

(10c par).

amendment.

For

200,-

against war¬

Offering

& Co.
details

see

issue

of Feb. 7.
•

Murray

Consolidated

Mining

Co.,

Spokane,

Wash.

April 8 (letter of notification) 500,000 shares. Under¬
writer—Marvin Claude Meddock.
Price to public
1
cents per share.

National

(par $1).

by Ira Guilden, research, develop¬
manufacturing consultant of company. Under¬
writers—Paul H. Davis &
Co., A. C. Allyn & Co., Inc.,

April 4.

Morris Plan Corp. of America, N. Y.

Jan. 29 filed 100,000 shares of
preference stock,
(par $1) with common stock purchase warrants
and 150,000 shares of common

For prospecting and

Co.,

Inc.,

Maiden,

March 20 filed 200,000 shares of
of

which

company

stockholders

Goodwin, Inc.
For

details

development worK.

Mass.

common

(4/25)

stock (par

selling 50,000 shares and

$1)>

ceyal„

150,000
shares.
Underwriters—Bond
Offering—Price to public $6 per shar

see

issue

March 28.

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

163

Volume

National Skyway Freight Corp.,
Calif- (5/1)
-

Los Angeles,

filed 500,000 common share (par $1).—Under.•iters—Bond & Goodwin, Inc. Offering—Price to public
Soer share. Proceeds—Working capital. For details

of April 4.

issue

Clock & Watch Co. (4/29)
March 29 filed 62,500 shares of 4V2% cumulative con¬
vertible preferred stock (par $20). Underwriters—Rey¬
nolds & Co.
Offering—Price to public by amendment,
proceeds—To repay at $481,360 bank loan; to redeem
4376 shares of 6V2% cumulative preferred stock; balance
for purchase of new machinery.
For details see issue
of

April 4.

•

cumulative

preference stock

Cleveland, O.

For details see issue of April 4.

of notification)

(letter

April 8,

20.

Inc., N. Y.

(4/25)

April 4 filed 200,000 shares of common stock (par $1).
Underwriters—Bond & Goodwin, Inc.
Offering—Price
to public $3 per share.
Proceeds—Payment of notes,
purchase of flight equipment, additional hangar facili¬

properties and to purchase non-producing mineral rights
under lands that are now under effective oil and gas

For details

uses.

Service

filed

see

stock (par $100).

issue of April 11.

Corp., Pinellas Park,

Fla.

(par $1).
Offering

250,000 shares common stock

Underwriter—Floyd D. Cerf Co., Inc., Chicago.

public is $3.25 per share. Proceeds—Purchase
of plant occupied under lease, new dryer, working capi¬
tal, etc.

—Price to

(4/23)

Line Co., Chic.

Panhandle Eastern Pipe

Co.

Inc.

by amendment.

bidders in¬
Ripley & Co.

Probable

clude

Kuhn, Loeb & Co. and Harriman
(jointly); Glore, Forgan & Co.; the First Boston Corp.
Offering—Company proposes to issue the 150,000 shares
of new preferred for purpose of refinancing at a lower
dividend rate the 148,186 outstanding shares of old pre¬
ferred 5% cumulative series A.
Exchange will be on a
share for share basis with cash adjustment.
Bids for
the purchase of the shares will be received by the com¬
to 11

CST April 26. For details see issue of

a.m.

filed

102,000 shares of preferred stock ($100
par).
Stock is to be offered at competitive bidding,
with dividend rate supplied by amendment.
Under¬
writers—By
amendment.
Probable
bidders
include

Blyth & Co., Inc. (jointly); Coffin & Burr and the First
Boston Corp. (jointly).
Offering—Stock will first be
offered to holders of company's $6 and $5 dividend
preferred stock on an a share for share basis, with
cash adjustment. Bids Invited—Bids for services in soli¬
citing exchanges of preferred shares and for purchase
of any new stocks not exchanged will be received by the
company up to 12 noon EST April 22.
For details see
March 7.

issue

Public

Service Co.

of New

Hampshire

notes and pay cost of

Smith, Barney & Co. (jointly); Kidder, Peabody & Co.
and
Blyth
&
Co.,
(jointly);
The
First
Boston
Corp. and Coffin & Burr (jointly).
Offering—Com¬

Paulsboro
March

construction work

(N.

now

authorized.

11.

Co.

filed

9,886 shares 6% cumulative preferred
(par $100); 31,000 common stock purchase warrants and
31,000 shares of common, issuable upon the exercise of
the warrants.
Underwriters—Butcher & Sherrerd, Phil¬
adelphia.

of common stock (par $10).
Underwriters—Names by amendment. Probable bidders
Include Kuhn, Loeb & Co.; Harriman, Ripley & Co., and

will sell at compettiive bidding, for an aggregate
price of $5,000,000, not exceeding 500,000 shares of com¬
mon stock,
the number of shares to be determined by
each bidder.
Proceeds—New common and preferred are
pany

Manufacturing

J.)

being

are offered in exchange
(one new share for 10
shares) for shares of 4% preference stock ($10 par),
together with all dividends accrued thereon.
Exchange

conditioned

common

cumulative

stock purchase

ceeds—Purchase

purchase of remaining 8,000
preferred and of the 31,000

warrants by underwriter. Pro¬
of a plant and nec¬

construction

essary machinery and
of April 4.

equipment.

For details see issue

Peerless Casualty Co., Keene, N. H.

(5/1)

March 8 filed 50,000 shares of common stock

and

extension.

(par $5).

Offering—Common stockholders given right to subscribe
shares in ratio

new

11 shares

held, at $14

additional shares for each

of 5

per

share.

For details see issue of

March 14.

filed

$23,500,000

and

interest

by amendment.
ble

first

mortgage

bonds,

bidders

and

dividend

rates

will

•

Radio-Electronics

include

Stuart

Halsey,

be filed

Co., Inc.

(bonds

(preferred only); Kuhn,

& Co.

Institute

America,

Inc.,

New York

Loeb & Co.. and Lehman Brothers (jointly).
Offering
^■Prices to public by amendment.
For details see issue
of March
28.

optioned to him through the medium
registered broker or brokers in the United States.
Offering—Price to public is 40 cents per share, U. S.
a

funds.
ment

$100 per unit.

Red

Proceeds—For electronic training,
etc.

St.

March
stock

Edwards

(4/26)

filed 7,500 shares

(<p4 par).

4V2% cumulative preferred

$100) and 26,164 shares of common stock
Underwriters—Wisconsin Co. Offering—Com¬

mon stock is being offered
oasis

to common

of one share of new common for

neld.

Price

amendment.

snares and
preferred stock will

underwriters.

For details

see

stockholders on

each five shares

Unsubscribed common
be publicly offered by

issue of March 28.

Pharmaceutical Organics, Inc., Dover, Del.
(letter of notification) 35,350 shares of Class A
°mmon
stock, par $3. Underwriters—Hautz & Engel,
Pril 9

(4/23)

April
Bonds will be sold at competitive bidding with

Co.; Halsey, Stuart & Co., Inc.; Harris, Hall &
(Inc.); Glore, Forgan & Co., and Harriman, Ripley
Co. (jointly). Offering—Price to public by amendment.

Co.
&

Bids

Invited—Bids

ceived

for

purchase

office

Salt

Dome

Oil Corp.,

of bonds

will

re¬

United Light &

Power Service Co.,
105 West Adams Street, Chicago, up to 12 noon, CST,
April 22. For details see issue of March 28.

Texas

Hofiston,

March 28 filed certificates of interest for 800,000
cates in

certifi¬

overriding royalty in oil, gas and surplus. Under¬
Offering—Company is offering the cer¬
on basis of one share

tificates of interest to stockholders

interest represented thereby for each share of common
stock held at 58 cents per share.
Proceeds—Exploring
and

developing.

For details

Samson United
March

see

issue of April 4.

Corp., Rochester, N. Y.

(4/25)

15 filed

125,000 shares of cumulative convertible
preferred stock (par $8). Dividend rate by amendment.
Underwriters—Burr
amendment.

For

details

Co.,

Inc.

see

issue

Electric Co.,

Scranton
March

filed

Offering—Price
of March

21.

by
'

'■

Scranton, Pa.

shares of cumulative preferred
stock and 1,214,000 shares common stock (par $5). Com¬
mon stock is being sold by American Gas & Electric Co.
(parent). Underwriters—By amendment. Probable bid¬
ders include Smith, Barney & Co.; Mellon Securities
Corp.; Merrill, Lynch, Pierce, Fenner & Beane, and Kid¬
der, Peabody & Co.,
(jointly).
Offering—Price by
amendment. Proceeds—Net proceeds from sale of pre¬
ferred, together with treasury funds, will be used to
redeem 53,248 shares o£ $6 preferred at $110 per share.
Common shares are being sold by American Gas & Elec¬
tric Co. For details see issue of April 4.
53,248

Scranton-Spring
Barre, Pa.
Feb. 8 filed

15,

1976,

Brook

Co.,

Water

Wilkes-

$23,500,000 first mortgage bonds, due March
100,000 shares of cumulative preferred

and

stock (par $100).
Interest and dividend rates by
ment. Underwriters—By amendment.
Probable

amend¬
bidders
Halsey, Stuart & Co., Inc. (bonds only); Mor¬
gan Stanley & Co.; Kuhn, Loeb & Co., Lee Higginson
Corp. and Smith, Barney & Co. (jointly); Mellon Securi¬
ties Corp. Offering—Bonds and preferred stock will be
sold at competitive bidding. For details see issue of Feb.

include

1.4.

Segal Lock & Hardware Co., Inc.,

N. Y.

March 30 filed 738,950 shares of common (par $1).

Un¬

derwriters—Floyd D. Cerf & Co.
Offering.—Holders of
common stock, 7% preferred stock and $2,50 cumulative
preferred stock are given right to subscribe to new
common
shares at rate of one share of common for

Price by amend¬

Proceeds—Purchase of additional machinery and

ment.

equipment for modernization of present facilities, etc.
For details
•

see

Securities

issue of April 4.

Acceptance Corp.,

Omaha

(letter of notification) 12,500 shares common
($4 par).
Price to public $10 per share.
No under¬
writing.

stock
certain stockholders.

Sons,

Loewi

Cruttenden & Co.,
Co., Stein Bros. &

the Ohio Company, and Piper, Jaffray &
wood.
Offering—Price to public $10.50 per share.
details see issue of March 28.
,iBoyce,

HopFor

10,000 shares common stock (par $10).
Shares are being offered by the company.
Underwriters
—Not
underwritten.
Offering—Company is offering
new common to holders of common stock at rate of one
share for each two shares of common held at $15 per
share.
Proceeds—To increase the capital and surplus.
For details all issue of April 4.
March 27 filed

(par

Light & Power Co.

Weld &

Selected

Roberts & Mander Corp.,

Hatboro, Pa.

(4/22)

April 2 filed 283,790 shares of common stock (par $1).
Company is offering 175,000 shares and Stroud & Co.
Inc. is offering 108,790 shares which it owns.
Under¬
writers—Stroud & Co. Inc.
Offering—Price to public

Industries,

Inc.,

(4/24)

N. Y.

$6,900,000 debentures due April 1, 1961.
Interest rate by amendment. Underwriters—Union Se¬
curities Corp. Offering—Price to public by amendment.
Proceeds—To pay $6,900,000 bank loans.
For details
see issue of April 4.

March 30 filed

Republic indemnity Co. of Amer., Tucson, Ariz.
Perfex Corp., Milwaukee, Wis.

(Mo.)

150,000 shares of class A common

(par $1). Shares are being sold by
Underwriters—Westheimer & Co.,
G.

Joseph

successful bidder naming interest rate.
Underwriters—
Names by amendment. Probable bidders include White,

April

Top Brewing Co., Cincinnati, Ohio

March 26 filed

Proceeds—Proceeds will be applied to develop¬
For details see issue of April 4.

work, etc.

each two shares of any such stock held.

April 10 (letter of notification) 2,500 5% cumlative
preferred and 100,000 shares common. Underwriters—
Not underwritten. Offering—To be offered to the public
in units of one share of preferred and 40 shares of com¬

due

Underwriters—By amendment. Proba¬

Jnly); Smith, Barney

(4/22)

108,000 shares of common stock (par $1).
Shares are being sold by certain stockholders.
Under¬
writers—Link, Gorman & Co., Inc., Brailsford & Co.,
Shillinglaw, Bolger & Co., Kalman & Co., Inc., Straus
& Blosser, Herrick, Waddell & Co., Sills, Minton & Co.,
O. H. Wibbing & Co., Mercier, McDowell & Dolphyn,
Berwyn T. Moore & Co., Inc., and Irving J. Rice & Co.
Offering—Price to public $5,125 per share.
For details
see issue of April 4.

research and development,

1976, and 101,000 shares of cumulative preferred stock,
series C, par $100.
Securities will be sold at competitive

bidding,

and

Queen Anne Candy Co., Hammond, Ind.

mon

Pennsylvania Electric Co., Johnstown, Pa.
March

117,404 shares of old preferred
provide funds for construction
For details see issue of April 4.
retire

March 28 filed

Underwriters—Herrick, Waddell & Co., Inc., New York.
for

serial notes

Offering—1,886 shares of 6% cumulative pre¬

old

issued

and

ferred

offer

option to
purchase 300,000 of the 500,000 shares optioned to Mr.
Kemerer at 30 cents per share.
Mr. Daniels plans to

Philadelphia.

Public Service Co. of New Hampshire
March

March 29 filed 500,000 shares

privately; balance
underwritten by Kidder, Peabody & Co., Merrill Lynch,
Pierce, Fenner & Beane, and Halsey, Stuart & Co., Inc.
Offering—Price to public by amendment. Proceeds—To
redeem outstanding $30,250,000 bonds, prepay promissory
issue of April

Mr. Kemerer

writers—Cohu & Torrey, New York, and Yarnall & Co.,

First $20,000,000 maturities to be sold

see

share, payable in Canadian exchange.

1, 1976.

Ind.,

150,000 shares of cumulative preferred
Dividend rate by amendment. Under¬

writers—Names

April 4 filed $50,000,000 serial debentures, dated May
1, 1946.
Interest rate by amendment.
Underwriters—

For details

1946, to Morgan U.

March 22 filed $3,750,000 first mortgage bonds due

Kuhn, Loeb & Co., Harriman, Ripley & Co. and Smith,
Barney & Co. (jointly); Kidder, Peabody & Co. and

leases.

Palmetex

Feb. 20,

has assigned to Mark Daniels, 371 Bay
Street, Toronto,
in consideration of $1, the former's
right and

ties, improvement of airport property and other related

59,250 shares capital

(par

March 22 filed

exclusive option dated

March 28.

Mass.

$5). Underwriter—Arthur G. Wadsworth &
Co., New Bedford. Price to public $5 per share. Proceeds
—To defray expenses in connection with acquisition of
stock

March 27 filed 300,000 shares of common stock
($1 par).
Underwriters—Not underwritten. Company has granted

per

150,000 shares of common stock (par $1).
Underwriters—Hayden, Stone & Co. Offering—Price to
public will be filed by amendment. For details see issue

pany up

New Bedford,

Inc.,

Prospects,

its

issue

Kemerer of Toronto to purchase
500,000 treasury shares
at 30 cents per share and 500,000 treasury shares at 40 cents

filed

March

filed $32,000,000 first mortgage bonds,, due
1976; $5,500,000 serial notes and 156,300 shares of cum¬
ulative preferred stock (par $100).
Interest rate on the
bonds and notes and dividend rate on the preferred
stock by amendment.
Underwriters—To be filed by
amendment. Probable bidders include Mellon Securities
Corp.; Halsey, Stuart & Co., Inc. (bonds only); the First
Boston Corp. Offering—Prices to public by amendment.
Proceeds—Redemption and payment of bonds, notes and

Oil

use

see

market the shares

preferred stock.

There are no
Proceeds

share.

Piper Aircraft Corp., Lock Haven, Pa.

Public

Public Service Co.,

(par $100).

Price to public, $100 per

Public Flyers,

filed $1,444,500 convertible debentures due
1056. Interest rate by amendment. Underwriters—Carl M. Loeb, Rhoades & Co. Offering—Com¬
mon stockholders of record April 11 given right to sub¬
scribe for new debentures at rate of one $500 debenture
for every 70 shares of common stock held at 101.
Rights
expire April 27.
For details see issue of March 28.
Ohio

For details

Rockridge Gold Mines Ltd., Toronto, Can.
150 shares of $5.50 non-

for working capital.

(4/27)

March 21
April 15,

March

Proceeds—Company plans to

Inc., Oceanside, Nassau Co.,

(letter of notification)

amendment.

share of the proceeds for the payment of
$600,000 bank

underwriters.

Feb.

loans, balance for working funds.
of April 4.

Pickering & Co.,

of Feb.

Norwalk (Conn.) Tire & Rubber Co.

Pro¬

materials, inventories, working

raw

capital, etc.

April 9

Haven (Conn.)

Hew

Offering—Price to public $3 per share.

ceeds—Purchase of

.,arch 30

see

New York.

2127

Sharon Steel Corp., Sharon, Pa.

(4/21)

April 2 filed 150,000 shares common (no par).
Under¬
writers -T- Mellon Securities Corp.
Offering — Price to

public by amendment. Proceeds—To redemption of out¬
standing convertible $5 preferred stock. For details see
issue of April 4.
i

Sinclair Oil Corp., N. Y.

150,000 shares of common stock (no par).
being sold by H. F. Sinclair. Underwriters—

Dec. 26 filed

are

Kuhn, Loeb & Co.
on

market.

Offering—Price to the public based

For details see issue of April 4.

(Continued

page

2128)

I
II

2128

COMMERCIAL & FINANCIAL CHRONICLE

•

•Thatesd#, AjSril 18,1945

Securities

IK*

Now

Registration

•

INDICATES ADDITIONS SINCE PREVIOUS

•

Twin Peaks Mine, Inc.,

I (V
(Continued from page 2127)

^
£.«*•

Sonoionc Corp., Elmsford, N. Y.

|■

April 11

(4/24)

March 25 filed 60,000 shares
$1.25 cumulative convertible
preferred stock, series A (par $20).
Underwriters—Van
Alstyne, Noel & Co.
Offering—Price to public is $25
per share. For details see issue of March 28.

I M*i
<<

(letter of notification)
Price to public 15 cents

mon.

ISSUE
interest rate to be filed by
amendment.

Seattle, Wash.

Probable bidders
include HalseT
Co., Inc., and The First Boston
Corp. Offering
—Price to the public will be filed
by amendment
Stuart &

writers.

details

Steel

April 10 filed 100,000 shares of convertible preferred stock
(par $50). Dividend rate by amendment. Underwriters

f•

—Goldman, feaehs and Co. Offering—The price to pub¬
lic by amendment.
Proceeds—Principally for expanding
of bumpers for pas¬
senger automobiles. For details see issue of
April 11.

!•

fc:
V v

i
w<
Ik
ft

I'1

Steep Rock Iron Mines Ltd., Ont., Can. (4/24)

Union Wire Rope

March 27 filed
500,000 shares of capital stock (par $1).
Underwriters—Otis & Co. Offering—Price to
public by
amendment.
Proceeds—Net proceeds will be added to
the general funds and will be
available for general
corporate purposes.
For details see issue of
April 4.

record

preferred
four

April 8

shares of

rata

pro

basis

common

expire April 24 at 3

p.m.

i
j

rights to subscribe
share

one

two

1
.#•

after

the

stockholders

effective
at

date

$15.50

per

has

pany

authorized

purchase of machinery and
equipment, and remain¬
working capital. For details see issue of
April 4.

der for

products; for research and tech¬

the

lic

Sylvania Electric Products,
Inc., N. Y. (4/18)
April 11 (letter of notification)
2,600 shares maximum,
but not to exceed
$100,000.
Shares are being sold
by
executors of
the estate of B. G.
Erskine.
Sales will be effected
largely or

Webber, Jackson
Exchange. Price
Taca
m
.

tt#

Curtis

the

New

York

Stock

Airways, S. A., N. Y.

Inc., Washing¬

for fur¬

research;and exploration

are

a new form of

Tucson

patent

covering

lighting. At present there

(Ariz.) Gas, Electric Light & Power
Co.
147,000 shares common stock

Underwriters—By

(no par).

outstanding

common stock of

by Federal Light and Traction Co.

amendment.

clude Harriman

Probable

bidders

in¬

Ripley & Co.; The First Boston
Corp..
Blyth & Co., Inc.
Offering—Federal will offer

stock for sa^e -at
competitive
will be filed
by amendment.

number

common

are

amendment.

filed

3,500 shares of

notification).
holders.
•

are

common

for account

stock
of

(letter

certain

stock¬

the

bidding and price to public

For

details

see

issue

United States funds.

For details

Yank Yellowknife Gold

see

issue of Aug.
2,1945,

Mines, Ltd., Tor., Ont.

Feb. 13 filed 1,000,000 shares of
common stock
(par $1),
Underwriters—J. J. Carrick, Ltd.,
Toronto, Canada. Of¬
fering—Price to public 30 cents per
share, United States
funds.
For details see issue of Feb.
21.

Walworth Co., N.Y.
March

filed

(5/7)

$4,500,000

convertible

debentures

due

May 1, 1976, and 20,000 shares of cumulative convertible
preferred stock

(no par).

by amendment.

Underwriters—Paine, Webber, Jackson

Curtis
to

and

Rollins

Sons,

dividend rates

Inc.

Offering-

public

redeem

$619,120

Interest and

by amendment.
Proceeds—$4,590,000
first mortgage 4% bonds due
April 1, 1955;

to restore working
capital expended for re¬
demption of 6% preferred; $800,000 for
improved foun¬
dry and finishing equipment; $220,000 for

acquisition of

two

tails

warehouses; balance for working capital.
see issue of
April 4.

For de¬

San Francisco, Calif.
10,000 shares 4% convertible preferred
($50 par) and 1,501.6 shares common (no par).

stock

filed

Underwriters

N'one named. Offering — Price of
pre¬
ferred stock is $50 per share and of
the common stock
$40 per share. Proceeds—General funds for use in
oper¬
ations.
For details see issue of
—

April 4.

Wallpaper, Inc., Chicago (5/4)

•

April 15 filed 40,000 shares cumulative convertible
pre¬
ferred stock (par $50). Dividend
rate by amendment.
Underwriters
Hemphill, Noyes & Co.
Offering —
Price
to
public
by
amendment.
Proceeds
Net
—

proceeds

from

proceeds

from

for

share.

Weeden & Co.,

Underwriter—A. G. Becker & Co.

United

used

per

Under'

Bay Street, * Toronto
Offering—Price to pub¬

For

Universal-Cyclops Steel Corp., Bridgeville, Pa.
Feb.

working capital'

220,000 shares of capital stock
(par,$l—
Underwriters—Willis E. Burnside &
Co.
Offering—Offering price to public 28 cents

New York.

shares being offered

common

Offering—Price to public
details see issue of April 4.

and

filed

Stock constitutes all of
the
Tucson and is owned

and

underwriters of the securities.

March 29

intermediate

The

(4/22)

—

April 1 (letter of notification) 160 shares.
Selling price
is
approximately $90 per share to raise funds

daylight, bulb,

Richmond, Va.

Inc.

(4/30)

Terrell Electrical Products
Co.,
ton, p. C.

ther

filed

and

Co*

filed

March 28

March 30 filed
500,000 shares common (par $5). Under¬
& Co. and G. H. Walker
& Co.
Offering—Pi ice to public by amendment.
Proceeds—
No specification of the net
proceeds has been made.
For details see issue of
April 4.
•

Co.,

outstanding and are owned by Equitable Securities
Corp., A. C. Allyn & Co., Inc., and Paul M. Davis of
Nashville, Tenn. Underwriters—Harriman Ripley & Co.,

market.

writers—Hallgarten

Underwriters—

wholly through Paine,

March

shares (par $1).

cents

Canadian).

Price

United Transit

•

issue of April 4.

see

March 14.

June 24

purchase, enlargement and
plant at Port Elizabeth, South Africa, at
a cost estimated at
approximately $5,000,000 for the man¬
ufacture of tires, tubes and other rubber
goods.
equipment of

additional

Canada, is named underwriter.

(4/30)

nical development
work, and for rehabilitation and
restoration of foreign plantation
properties if and when
repossessed by subsidiaries of the company. The com¬

(par $1).
Underwriters—Sutro & Co. and Van
Alstyne, Noel & Co.
Offering—Price to public $6 per share.
Proceeds—
Approximately $575,000 will be applied in
payment of
existing current liabilities, including bank
loans; $200,000
for

and

Virginia Red Lake Mines, Ltd.

manufacture of various

stock

tooling

of business
Occidental Stove

and

details

April 11, $40,000,000 2Vz% debentures, due May 1, 1976.
Underwriters—Kuhn, Loeb & Co. Offering—Price to
public by amendment. Proceeds—To provide additional
working capital, for expansion of company's business
through the development and acquisition of new lines
of products; for increasing
capacity; for constructing or
acquiring additional domestic and foreign plants for the

new

Sattler

Verity Porcupine Gold Mines, Ltd.,
Tor., Can,

issue of Feb. 7.

United States Rubber Co., N. Y.

March 12 filed 250,000 shares of
common stock.
writers-^-Mark Daniels & Co., 371

Under¬

For

and

For details

registration for

share.

•

preferred for each

common

see

held at $50 per share.
Rights
For details see issue of Mar. 21.

weeks

sale

Gaffers

additions

Inc., New York. Offering
—Company will offer the 42,000 shares for a period of

Super-Cold Corp., Los
Angeles, Calif.
March 29 filed
200,000

Proceeds—Purchase

assets

Corp., Kansas City, Mo.

Feb. 4 filed 42,000 shares capital stock
(no par).
writers—P. W; Brooks & Co.,

Stromberg-Carlson Co., Rochester, N.Y.
(4/25)
March 19 filed 67,731 shares of 4%
convertible preferred
stock (par $50). Underwriter—First
Boston Corp. Offer¬
ing—Company is offering to holders of common stock

Underwriters—Bate-

man, Eichler & Co., Los Angeles.
Offering—Price K
public is $16,625 a share for preferred and
$5.25 a share
for the common.

April 4.

Ia •

(4/29)

March 29 filed 80,000 shares cumulative
preferred stock
$1 dividend convertible series ($15
par), and 80 000
shares common stock ($1 par).

with respect to exchange plan and purchase of the new
stock.
Purpose—To refinance old preferred stock at a
lower dividend rate.
For details see issue of

existing facilities for manufacture

March 28.

Utility Appliance Corp., Los Angeles

29 filed 130,000 shares of preferred stock
(no
par).
Dividend rate by amendment.
Underwriters—
By amendment.
Probable bidders include White, Weld
& Co., and Shields & Co.
(jointly); Dillon, Read & Co.
Inc.; Lehman Brothers, and Blyth & Co., Inc. Offering—
New preferred will be issued in connection with an ex¬
change offer and company will ask for competitive bids

Spring Co., Corapolis, Pa.

(4/29)
|-f

issue of

see

Union Electric Co. of Missouri
March

Standard

Underwriters

Names by amendment.

400,000 shares of com¬
per share.
No under¬

sale

corporate

equipping

preferred

Stock

together

with

of, $2,000,000 3% note will be
purposes,
including enlargement

factory building at Montgomery,
111., at cost of $2,350,000.
Other funds will be used to
extent of $710,500 to reimburse
treasury for funds ex¬
a

pended to redeem 6% prior preference stock and
$650,000 for the erection of a
building at Appleton, Wis., and
for removal of
machinery and equipment; balance to
working capital.
Business—Manufacture of wallpaper
and related products.
Utah Power & Light
Co., Salt Lake City
March 20 filed
$32,000,000 first mortgage bonds due May
1, 1976. Bonds will be sold at
competitive

bidding with

Western Tin Mining
Corp., Washington, D. C.
April 8 (letter of notification)
500,000 shares common

stock, par one cent. Underwriters—No underwriters. It
is proposed to sell
200,000 shares at 30 cents and 300,000
shares at 80 cents. Proceeds—1To
prove the extent of a
tin deposit. The
prices are graduated for no reason ex¬
,

cept that first buyers before
property is proven, are en¬
titled to consideration in
price, the letter stated. It is
added $60,000
ought to definitely prove values.

Young Radiator Co., Racine, Wis.
Jan. 29 filed 100,000 shares
of common stock (par $1);
also registered
40,000 shares of common for issuance upon
exercise of warrants.
Underwriters—Van
&

Alstyne, Noel

Co.

Offering—Price

40,000 warrants to purchase
share prior to Feb.
1, 1951,

public $8.25
common

per

share. Of
$8.25 per

stock at

20,000 were issue to stock¬
recapitalization and 20,000 are being sold to
10 cents per warrant share.
Offering
postponed indefinitely.
For details see issue of Feb. 7.
holders

underwriters at

Prospective Security Offerings
(NOT YET IN
•

Air

Services, Inc., New York

April 1 company

was

reported planning sale of
150,000
stock through B. G.
Cantor & Co.,
New York, as
underwriter.
Price about $2
per share.
Companv.c headquarters will
be located within
eight
miles of New York
City.
Principal business will be
student
training and charter service.
shares

common

■

i-i*

Alden's, Inc., Chicago, III.
Ma> 14 stockholders

will vote

uf j;
approving

50,000 preferred shares (par
$100).
preferred will consist of
not,

Lehman
•'

exceed

4%%).

an isfeufe of
First series of mew

40,000 shares, (dividend rate*
Proceeds fov working

Brothers and associates
will

canital.

be.

underwriters.

American Bosch Corp.

April 16 reported that Alien Property Custodian
may
shortly ask for bids on 535,000 shares
(77.24%) of the
stock of the
corporation. ' Probable bidders
include

J*
fa

REGISTRATION)

INDICATES ADDITIONS SINCE
PREVIOUS ISSUE

Glore, Forgan & Co. and Lehman Brothers
(jointly),
Blyth & Co., Inc., and Merrill
Lynch, Pierce, Fenner
& Beane
(jointly).

Arkansas Power & Light
Co., Little Rock,

and

.!Uv.

,cn
/

i.'

American Brake Shoe Co., New Yorkb-

April 23 stockholders will vote on
increasing common
from 1,000,000 shares to
2,000,000 shares. Action is being
taken to have stock available if and
when heeded;
Com¬
pany has no present plans to issue the
stock. 'Previous
underwriters for preferred stock included

Morgan Stan¬
ley & Co., Inc., Drexel & Co., Mellon
Securities Corp.,
Harris, Hall & Co. (Inc.), and Spencer Trask & Co.
•

American Gas &

of its

new

some

part

Power Co.

common

(not in

stock.

public

excess
.

common

874^078 shares)

Ark-

planned to issue 290,0
$12.50) and $5,000,000
profnissory notes, for purpose of paying current pr°m
sory notes and finance expansion
program.
reported

company
stock
(par

Art-Craft Brier Pipe Co., Brooklyn, N. Y.
April 12 .company has arranged the sale of 100,000 shaies
of common stock at
$2.25 per share.
Proceeds for
pansion.
Underwriter—B. G. Cantor & Co., New
•

Atlantic Coast Line

RR.
f

April

Under amended
plan approved by SEC April
10, Amer¬
ican Gas & Power Co.
(name to be changed to Min¬
neapolis Gas Go.) reserves the
right to make a

offering of

March

16 stockholders voted to authorize a
L!L
1,350^000 common shares (no par value) add *50,0«u P
ferred shares (par $100).
Outstanding 823,427 com

shares
for

(par $100) would be exchanged share for s
no
par stock and the 5% existing pret
outstanding and designated

new

would remain

ferred stock" and the

new

"orlSin.^ * ted

preferred would be desig

THE COMMERCIAL & FINANCIAL CHRONICLE

163. Number 4482

Volume

preferred stock" and would be issued as diauthorize. In view of present market condinns
C. McD. Davis, President,-states that directors
of opinion that additional capital stock should be
alade available for debt retirement if favorable oppor¬
tunity offers.
'series

•p

Atlas Imperial
Calif.

April
tock 2

Engine Co.,

Diesel

Oakdale,

19 stockholders will vote on splitting common
for 1 and on creating new preferred issue of 300,-

whhd1 150,000 shares would be issued
purchase of constituent company,
improvements, etc. Blyth & Co., Inc., probable under¬
sold to finance

writers.

Beneficial Industrial Loan Corp., New York

directors voted to offer common stockholders
subscribe to one new share for each five shares
held subject to effectiveness of registration statement
to be filed, with SEC at early date.
Eastman, Dillon
& Co. probable underwriter.
April 3
right to

Brooklyn

(N. Y.)

Greer

Hydraulic Corp.

•

Indiana

Public Service Co.

bidders, Halsey, Stuart & Co. Inc., and Harriman, Ripley

•

Heyden Chemical Corp.,

May

stockholders

calling

for

will

vote

21/2-for-l

split-up of
200,000 shares of

financing

stock and
preferred stock
(par $100).
Company intends to issue from 80,000 to
120,000 shares of new preferred and use part of proceeds
to retire $4,800,000 4% preferred stock now outstanding
the

and

balance

for

Co.

was

program

Northern Pacific Ry., St. Paul,

common

new

capital purposes.
Probable
G, Becker & Co. Inc.; Lehman
Brothers; Merrill Lynch, Pierce, Fenner & Beane; Hornnew

Minn.

reported April 10 that company has under con¬
sideration the refunding of $55,000,000 collateral trust
4%% bonds due 1975 and the issuance of

collateral

bonds.

trust

Prospective

new

series,

Morgan

bidder,

Stanley & Co.

underwriters include A.

blower &

Weeks, and Ladenburg, Thalmann & Co.

•

Norway,

Kingdom

reported

that

the

ers,

autumn

subscribe for

come

held, requiring approximately 228,000 shares. Proceeds
for working capital.
W. E. Hutton & Co. will be

clude

Lazard

additional share for each

of
informal

result of

discussions

seven

offering of $100,000,000 bonds in the
that country's financial needs has be¬

public

April 1 directors voted to offer stockholders rights to
one

between representatives of Norway and American bank¬

Hudson Motor Car Co., Detroit, Mich.

underwriter.

Union Gas Co.

Northern

April 17 reported company is to file letter of notification-A April 17 reported that company has under consideration
for common stock (under
the refunding of its $45,000,000 series C 3V8S with issue
$300,000).
Probable under¬
of about same size carrying lower coupon rate. Probable
writers, Townsend, Graff & Co.

authorization

flOO (par
nd

•

'2129

meet

possibility.
Freres

Probable underwriters would in¬
& Co., Inc.; Kuhn, Loeb & Co.;

Glore, Forgan & Co.; Kidder, Peabody & Co.; Laden¬
burg, Thalmann & Co., and Halsey, Stuart & Co. Inc.

approving a plan to
mortgage 3V2s and $11,850,000
said to provide for $10,000,000
new preferred stock, mortgage bonds and serial notes
to be sold through competitive bidding.
Approval of
stockholders and New York Public Service Commission
necessary.
Probable bidders will include Halsey, Stuart
& Co., Inc. (bonds only), Mellon Securities Corp. and
Stockholders will vote May 7 on

refund $29,240,000 first
4% debentures.
Plan is

Harriman Ripley
•

(The)

& Co.

Industrial Rayon

March

Ohio Edison Co.,

Corp., Cleveland, Ohio
increased

stockholders

authorized

common

from

common stock.
Proceeds for expansion, etc. Probable
bidders include First Boston Corp.; Glore, Forgan & Co.;

White, Weld & Co.-Shield & Co. (Joint); Morgan Stan¬
ley & Co.
* "

Co.

Budd Co., Philadelphia

and

associates

underwrote

preferred

unissued

stockholders

basis of

Pacific

approving sale of 145,shares.
It is proposed to give
to purchase additional shares on

$2,000,000 expansion program

rights

share for each five

common

shares held.

White, Weld & Co. will be underwriters.

Pacific

Central & Southwest Utilities Co.,

Wilmington,

Del.

Probable underwriters include

Forgan & Co.; Lehman Brothers-Lazard Freres & Co.
(Joint); Smith Barney & Co.-Harriman, Ripley & Co.
(Joint); Blyth & Co., Inc., Stone & Webster Securities
Corp. and First Boston Corp. (Joint).
City Investing Co., New York
May 2 stockholders will vote
for

and

•

approving $5,000,000 of debentures to pro¬
Probable underwriter, The First

Corp.

Columbus & Southern Ohio Electric Co., Colum¬

cumulative

stock expected
Conti¬
nental Gas & Electric Co., parent pursuant to Utility
Holding Company Act. Sale will be by public bidding.
date

bonds, to be sold at competitive bidding, would
initially, it is said, involve $100,000,000. Morgan Stanley
new

& Co. probable underwriters.

Consumers Power Co., Jackson, Mich.
March 14 filed with Michigan P. U. Commission appli¬
cation to sell at competitive bidding 876,568 common
shares, after capital adjustment. Proceeds for extensions.
Probable bidders include Morgan Stanley & Co.; Leh¬

Brothers; Harriman, Ripley & Co., and Mellon Se-

curites Corp. (jointly).

formed to consider
refinancing of $65,000,000 3V2s and 4s. Probable bidders
mclude: Mellon Securities Corp., First Boston Corp.,
Dillon, Read & Co. Inc., Coffin & Burr, Halsey, Stuart
&
Co., Inc., and Spencer Trask & Co.
committee

Eastern Racing Association, Inc.
April 6 U. S. District Court for Massachusetts has or¬
dered receivers of Aldred Investment Trust to offer at
sale

May 1 at 11 a.m., at Copley-Plaza
Boston, 14,991 shares of E. R. A. stock.
*

Hotel,

El Paso Natural Gas

April

nonds

$40,000,000 financing through

first mortgage

and preferred and common stock possible when
xpansion program has approval of Federal Power Com¬
mission and stockholders.
Probable underwriters in¬
clude

Marquette Ry.

company

will open bids for purchase of $l,300,r
equipment trust certificates of 1946
than

Bids will be opened at noon and no bids for less
99 will be considered.
Successful bidder will

White, Weld & Co., and Stone & Webster Securi¬

Corp.

issue of serial

dividend rate.
&

Possible

bidders

include

name

Halsey, Stuart

Co., Inc., and Salomon Brothers & Hutzler.

Corp.

Philadelphia Dairy Products Co., Philadelphia
Pa"

Kansas City

Southern Ry., Kansas City, Mo.

stockholders will vote on proposal to issue
$14,000,000 additional first mtge. bonds as part of program
to
refund $14,000,000 Louisiana & Arkansas Ry.
1st
Mtge. 5s.
14

Company, manufacturer of various electrical relays and
clocks, is reported planning the sale of 100,000 shares
of common stock through B. G. Cantor & Co.
Price
about

$3 per share.

Michaels

April 8 it

Brothers, New York

through

was

May 13

Rivers,

Corp., Philadelphia

stockholders

will

vote

increasing

capital

stock from 2,000,000 shares of common to a total of
3,370,057 shares, consisting of 250,000 preferred shares
(par $100), 2,500,000 common shares (par $3), and 620,057
class B stock

(par $3). Purpose is to secure permanent
capital as may be required for future expansion. Smith.
Barney & Co. probable underwriter if sale of securities
takes place.

reported company plans new financing,
stock, with Burr & Co. as under¬

Michigan Gas & Electric Co., Three

from

Philco

Pittston

common

writers.

stockholders will vote

increasing commor
125,000 shares (25c par) to 500,000 share?
to take care of future financing.
stock

May

Kurman Electronic Corp.

Co., Hoboken, N. J.

Company it is understood expects to register at an early
date for public offering an issue of 15-year debentures
and additional income debentures.

Mich.

April 1 filed with SEC application to sell (a) $3,500,000
first mortgage bonds due April 1, 1976, (b) 14,000 pre¬
ferred shares (par $100) and (c) $400,000 common stock
(par $10). All issues would be sold through competitive
bidding.
Probable bidders include Blyth & Co., Inc.;
Kidder, Peabody & Co.; The First Boston Corp.; Harris,
Hall & Co.
(I(nc.); Merrill Lynch, Pierce, Fenner &
Beane, and Ira Haupt

•

Plough,

April
from
share

Inc., New York

May 1 stockholders will vote on

approving a split-up

creation of 40,000 shares of new
41/2% cumulative preferred stock (par $50).
New pre¬
ferred if sold will probably be underwritten by Allen

States

Telephone & Telegraph

Co.,

Denver, Colo.

reported that company is preparing
new debentures. Morgaft^Stanley &
and,Hajgey* Stuart & Co., Inc. are probable bidders.
^
s •< 10 ... ■
New England Gas & Electric Association, Cam-

March
to

30,

it was

issue $30*100,000

Co.

bridge, Mass.
March 27 filed amended

recapitalization plan1 with SEC

competitive bidding of (a) 22,500,000 20-year sinking fund collateral trust bonds, plus
(b)' sufficient shares of new common stock out of the
original issue of 2,300,000 shares to supply $11,500,000.

providing for sale at

retire at par and interest out¬
Bidders may include Halsey. Stuart
& Co., Inc. (for bonds,only). Bear, Steams & Co. (for
stock onlv)
First P^t.o" ^oro., White*! Weld & Co.-?
fur
Kidder, Peabody & Co. (Joint), .j*
Proceeds will be used to

standing debentures.

for

each

two

held

and

par
one

common

additional

authorized

undertaken.

& Co.

of common stock and

Mountain

Inc.

16 stockholders voted to change
$7.50 to $5 per share and issue

the
issuance of 150,000 additional shares.
Peltason, Tenenbaum Co., St. Louis, possible underwriter if financing

•

Miller-Wohl

directors

Public

Pere

April 25
000

& Co.

Detroit Edison Co., Detroit, Mich.
19

(par $100), proceeds to be

5V2%, 6% and 7% preferred issues. Sale
competitive bidding. Probable bidders
may include Blyth & Co., Inc.; E. H. Rollins & Sons Inc.;
Eastman, Dillon & Co., and W. C-. Langley & Co.; Merrill
Lynch, Pierce, Fenner & Beane-White, Weld & Co.
(jointly); Glore, Forgan & Co., and The First Boston

Consolidated Edison Co. of New York, Inc.

March

preferred stock

common

preliminary to divestment by

March 18 stockholders granted management's request to
mortgage system's properties said to be forerunner to
refund $304,240,000 callable debentures. Contemplated

man

(b) 101,000 shares of series C cumulative preferred
stock, with a dividend rate not to exceed 4%.
Both
issues are to be sold through competitive bidding.
5

will be through

bus, Ohio
Registration of 744,000 shares of

at early

Pennsylvania Edison Co., Altoona, Pa.
March 28 company applied to the SEC for permission to
issue (a) $23,500,000 first mortgage bonds series of 1976,

April 16 New Jersey Board of Public Utility Commis¬
sioners authorized company to issue $12,500,000 4V2%

May

and

Jersey ^Central Power & Light Co.

splitting common shares

vide additional funds.

Boston

ferred.

Blyth & Co., Inc.

used to retire

plan filed with SEC in March provides
that company be merged with American Public Service
Co. into corporation known as Central & South West
Corp.
Sufficient number of shares of new company
would be sold at competitive bidding to provide funds,
not otherwise supplied, to retire outstanding preferred
stocks of Central and American.
Possible bidders: Glore,
Third amended

authorize an issue
of a new class of preferred, which com¬
expects to offer share for share for existing pre¬

of 400,000 shares
pany

Lighting Corp., San Francisco

Paper Co., New York, N. Y.

Stockholders will be asked May 8 to

Peoria, III.
March 29 company announced it was negotiating with
underwriters for sale of $20,000,000 of securities, prob¬
ably in 10-year debentures, proceeds to be used to
meet cost of proposed expansion program.
Blyth & Co.,
Inc., probable underwriter.
Caterpillar Tractor Co.,

under way.

Possibility of the company issuing $15 000,000 first mort¬
gage bonds upon completion of pipe line facilities fore¬
seen. Proceeds would be used to replenish working capi¬
tal.

International

& Co.

now

common

one new

Can Co.

Reported that company may announce shortly details of
a proposed issue of additional common stock to finance
a

May 20 stockholders will vote

bidding 204,153

through competitive

•

Chicago, III.
834

sell

financing

International Minerals & Chemicals Corp.,

stockholders of Edward G. Budd Co., and Budd
Manufacturing will vote on merging, the surviving com¬
to be The Budd Co. Additional capital would be
provided through sale of 537,000 shares of common stock
to be initially offered to stockholders on a one for five
basis. New company would also sell $30,000,000 of de¬
bentures
to retire existing indebtedness.
Probable
underwriters are Blyth & Co., Inc., and Carl M. Loeb,

application
shared of

shares will be available for issuance when needed for
future expansion.
Kuhn, Loeb & Co., Harriman, Ripley
in 1944.

pany

Toledo, Ohio

March 21 filed with Ohio P. U. Commission

1,200,000 shares (no par) to 3,000,000 shares (par
$1). The outstanding 759,325 shares were split 2 for 1,
increasing outstanding shares to 1,518,650.
Unissued

June 11

Rhodes

Rochester

(N. Y.)

Telephone Corp.

New York P. S. Commission

Apr. 10 in withholding
pany's request to place privately $6,238,000 of new

first
and

mortgage bonds
suggested

notes,

com¬

2V2"%

refinance outstanding bonds
broader tvne of financing and

to
a

advised company to consider marketing the new securi¬
ties through competitive bidding. Probable bidders will

include Halsey, Stuart & Co., Inc. if company decides on
public financing.
,

Southern

Natural

Gas

Co.

Company has under consideration a plan for refunding
its approximately $15,000,000 of mortgage bonds and
serial notes outstanding, stockholders were advised in
the annual report for 1945.
Probable underwriters in¬
cluded*

Halsey,: Stuart & Co., Inc.; Kidder, Peabody &,
(jointly).
(

Co. ahd Blyth & Co., Inc.

Standard Gas & Electric Co., Chicago,
Standard

Power

Light Corp. has reouested

III.

permis¬
sion of SEC to sell, either through private sale or in the
public markets 1,160,000 shares of common stock of
Standard Gas & Electric Co.
Sale is preliminary to
liquidation of the Power & Light as ordered by the SEC.
'

(Continued

page

2130)

THE COMMERCIAL & FINANCIAL

2130

•

refunding its
outstanding $90,000,000 3%s Of 1971 with lower COst
obligations. Possible bidders would: include Dillon, Read
& CO. Inc., and Halsey, Stuart & Co., Inc.
It is rumored that company contemplates

•

United States

Rubber Co., New York, N.

stockholders voted to increase authorized
common from 1,918,412 shares to 2,500,000 shares, so as
to have available shares for the purchase of additional
property, creation of additional working capital and
16

April

No immediate issuance of
additional stock contemplated, it is said.
other

corporate

Pacific

not to exceed 2%%, to be guaranteed

by parent
Issup
through competitive bidding. Possible bidder*
include Halsey, Stuart & Co., Inc.; Morgan Stanley I
Co.; Lehman Bros., Harriman Ripley & Co. and Union
Securities Corp. (Joint); Blyth & Co., Inc.; Shields £
Co. arid White, Weld & Co. (Joint); W. C. Langlev &
Co.; Merrill, Lynch, Pierce, Fenner & Beane and Kidder

RR.

to be sold

Electric Co. of Missouri

Uniort

Western

PREVIOUS ISSUE

INDICATES ADDITIONS SINCE

•

(Continued from page 2129)

Thursday, April 18, 1945

CHRONICLE

purposes.

April 11 ICC conditionally authorized company to issue
$10,000,000 first mortgage bonds, series B, due Jan. 1,
1981', proceeds to be used to refund a like amount of
first mortgage 4% bonds due Jan. 1, 1974, and held by
RFC.
Interest rate to be specified in bids.
Probable
bidders include Blyth & Co., Inc.; Bear, Stearns & Co.;
Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner & Beane; Shields & Co., and Glore, Forgan & Co.

York County

•

Directors have

(Pa.)

approved

Gas Co.
tentative financing plan

under

which all present

Yonkers

(N. Y.)

Electric Light &JPpwfr Co.

debt (Dec. 31, 1945, $2,482,300) would
retired. Plan, in addition to issuance of $459,000
bank

loan and sale of 3,660 shares of Pennsylvania Gas
&
Electric Co. preferred now owned, calls for the sale of

Consolidated Edison Co. of
New York, Inc. applied to New York P. S. Commission
for authority to issue $9,000,000 30-year debs., int. rate

Jan. 21" company and parent

$1,700,000 new first mortgage bonds.

gestions of interested persons be sent to the Director of the
Trading and Exchange Division on or before May 1, 1946."

SEC Would Prohibit Allotments

The

A| ir*«„

:J—

u \\i

"Chronicle" invites comments from underwriters

on the views expressed above by the Commission
proposed rule appearing below. Where requested,
(Continued from page 2071)
comments will be published anonymously. Letters should
in the accounts of their partners, officers and key employees. be addressed to
Editor, Commercial & Financial Chronicle,
In many cases such shares were almost immediately resold 25 Park
Place, New York 8, N. Y.
by the partners, officers and employees at prices higher than
Proposed Rule X 15C2-3
the specified public offering price, frequently before any
(a) The term "fraudulent, deceptive, or manipu¬
payments were made therefor. (2> in other cases, members
lative act or practice," as used in section 15 (c) (2) of
of the selling group on the initial date of the offeriifg placed
the Act, is hereby defined to include any act or practice
a substantial portion of their allotted shares in their firm's

and dealers

and

trading account. Such shares, instead: of being offered at
the public offering price, were sold; at higher prices in the
Street, i.e., to other brokers and dealefs on a professional

(3) Certain dealers who were not members
of either group, having acquired shares at the public offering
price less a dealer's concession* without making any attempt
to distribute the shares to their customers at the specified
price, withheld them for their own accounts. These shares
were within a very short time Sold in the Street at higher
prices. (4) Some firms were found who placed their alloted
shares in the firm trading account for resale in the Street at
the same time they were accepting purchase orders from
customers.
They executed the customers' orders by pur¬
chasing from dealers at prices higher than the specified
public offering price instead of supplying the stock from

since

not

of such actions

is to

dealer who receives

use

of the mails

interstate

of any means or

specified price, but shortly after the commencement of such
offering they have stated that the issue had been heavily
over-subscribed and that the available supply was exhausted.
"It is notorious that within recent times the general in¬
vesting public has been more than eager to put its money
into new stock issues.
It has been generally accepted by the
investing public and the financial community that such issues
would be bona fide offered to the public at the price specified
in the registration statement and prospectus.
To make a
wide distribution of a new issue, it is traditional that there
be underwriters, selling
groups and distributing dealers.
The usual pattern followed is to allot a number of shares to
the selling groups and through them to other distributing
dealers at prices equal to the stated public offering price
less concessions.
The very purpose of granting concessions
from the public offering price to dealers is to compensate
them for their assistance in making the distribution to the
public at large. At a time when public demand for a new
issue is stimulated by the normal distribution and sales
process and by reports that the public demand has resulted
in an over-subscription of the issue, the practices enumer¬
ated above, which artificially restrict the supply of stock at
the public offering price, are & major factor in driving the
price of the stock above the public offering price.

(2) such broker
for

clarify

any

doubts in the financial community

to the pro¬

priety of such practices, the Commission requested its staff
to recommend

some means

of preventing and curbing these

The staff has suggested

practices.

rule under the provi¬

sions of Section 15 (c) (2) of the Securities

1934,

Exchange Act of

of which is set forth below. The rule so recom¬
being circulated for comment and suggestions.

a copy

mended is

Any counter proposals designed to resolve the problem
invited.

The Commission requests

that comments and

are

sug¬

the following remarks:1 •
It has been argued that
raising
interest
rates
on
Government
in limes

bonds

interest

has

dealer

Judging

any

investment bankers
headed by Hemphill, Noyes & Go.,
F.

Moseley & Go. and H. F.
Boyhton & Co., Inc. on April 16
offered 35,000 shares of Avon Al¬
lied Products, Inc. 4% cumulative
preferred stock ($50 par), at $51
per share, plus accrued dividends
from April 1, 1946, and 100,000
shares of no par common stock at
$19 per share. This offering rep¬
resents the first public financing
by the company which was started
as
an
individual
enterprise in
,1886.
Of the preferred stock

offered,

yield
is

Government

on
a

of the primary step of

the

The repercussions

of higher in¬
burden of

the country has
Without

cussed.

been widely dis¬
going into details

entering this discussion

at this
ask.

juncture, I would like only to

If the
argument of those who
ddny the dangers of a huge Gov¬
ernment debt because lfa Govern¬
ment debt internally held is n°
debt at all3' is correct, then why

argument no longer van
higher interest rates area vocated for the fight against in¬
flation?
Cannot the higher inter¬
this

when

Avon

common

Products, Inc.,

order that the latter
company may
make a payment of a like
amount
m reduction of its
ten-year 214%

proceeds,

Under such
yield¬

higher.

terest rates od the tax

Part of the proceeds of the
20,200 shares of preferred
being sold
by the company will be used to
make a loan of
$500,000 to a sub¬

note,

between

rates

Federal Reserve Board.

being offered by selling

$1,750,000.

much

quence

offer

stockholders.

with such rediscount

secondary step
which would be taken as a conse¬

being sold by the
14,800 shares by

and
stockholders.
All of the

sidiary,

money

new

They would have to

2V2%.

securities

are

company

A group of

prevent

ing Government bonds would not
sell at a premium; What ndeds to
be emphasized • is that it is pri¬
marily the rediscount rates of the
Federal Reserve System which
have to be raised. The fixing of a

circumstances these higher

Company Act of 1940.

higher would be nec¬

even

course

yield

security acquired by any broker or dealer more
days after the date of the initial public offering,
or (3) to
any sale of a redeemable security issued by a
registered investment company within the meaning of

stock

height which

prevailing at the time.
from historical experi¬

issuable

and

Avon Allied Stocks

to- a

rates Government loads would not

than 30

20,200 shares

with the raising of the
of the Federal Re¬

getting into circulation and to
syphon back into the Federal Re¬
serve Banks money hoarded and
threatening of being spent.

security initially retained for investment, pursuant
sepecific disclosure to that effect made in the. pros¬

the Investment

essary

pectus or letter of notification, by any person named
therein as an underwriter, or (2) to
any sale or offer
of

policy

interest rates between 4 and

ences

beneficial interest.

Discount

rates

credits

higher
or

low

result

of combating infla¬

System

serve

bona fide attempt

only

corresponds to the actual scarcity

dealer or to any person
controlling, controlled by, or
under common control with such broker or dealer or to

account in which such broker

of otherwise

would

profits.

the aim

tion begins

than such

such person

rates

in a premium for the bonds—a
premium which would flow to the
speculator rather than to the in¬
vestor.
However, the argument

with

any

to what I

the aforementioned

article

ranted

instrumentality of

May I add
in

bonds nothing is changed but that

security at4 no
public offering price. No sale or offer
shall be deemed to be a part of a bona fide
attempt to
distribute a security where such sale or offer is to a
partner, officer, director, or employee of such broker
more

"It is the Commission's view that not

In order to

said

have

the speculator can pocket unwar¬

reasonable time to distribute the

tices enumerated above

investing public.

the discussion of low interest rates
has grown.

correctly understood. In¬
one begins by raising the
interest
rates
on
Government

to sell

dealer has made

2074)

Meanwhile

deed, if

induce any persons to buy,
securities exchange, any

only have the underwriters represented that a
were to be publicly offered at a

page

me.

are not

or to induce or
attempt to
otherwise than on a national
security comprising an un¬
distributed part of any such offering unless (I) the sale
or offer is
part of a bona fide attempt to distribute the
security and is not above the initial public offering price
specified in the prospectus or letter of notification, or

commerce

shows that the proposals of those
in favor of higher interest rates

"fraudulent, deceptive or manipulative" in paragraph
(a) of this rule, no such broker or dealer shall make

stated number of shares

and deceive and mislead the

(Continued from
satisfactory

interest

mislead the public,

only are the prac¬
contrary to accepted business ethics
and practices, but they are against the public interest, since
they contribute to disorderly marketing of new securities

concession from the

(b) In order to prevent any act or practice defined

their unsold allotment.

effect

broker

public offering price in connection with any distribu¬
tion of securities registered pursuant to the Securities
Act of 1933 or exempted pursuant to Regulation A under
that Act, or who otherwise participates in any such
distribution, which act or practice is effected for the
purpose of distributing any of such securities above the
initial public offering price specified in the prospectus
filed pursuant to the Securities Act of 1933 or the letter
of notification filed pursuant to Regulation A,

trading basis.

"The

the

now

amounting

The balance of the
together
with
other

funds in the
treasury of the Com¬
pany, will be used to expand and
modernize the facilities of
the
Company and its subsidiaries.

est

rates

Government

the

disregarded as are interes
charges when deficit spending
debt be

discussed?

However, the threat

of inflntiod

wisd

not only puts to test the
oc
the low interest financing

It also p
validity of the

the Government debt.
to

test

money
easy

the

philosophy in
money

general.

philosophy

the

assumption

Lord Keynes'

tere°+

(Continued on page

•
.

°
"General Theory
Employment, Interest andI M
from which if received its
retical foundation—that 1°^.
from

_•

f
,,

evasion

2131)

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4482

Volume 163

Page
Bank

Personnel

Hitler. Unfortunately, however, for the
argument is it that these letters were dated 1940 and 1941,
when the Moscow foreign office was just as "palsy-walsy" with
Herr Ribbentrop.
In any event, can the United Nations as an organi¬
zation permanently take action because of "slacker" ibehavior that
was pracitised during the war?
And hasn't the Organization gone
as far as it should in having barred
Spain from membership?
from Franco to

league of nations, adjudicating for peace

on a

Canadian Securities

Municipal

2090

Investment

mendations

News

Recom¬

2109

Notes

and

2082

enabled

2124

cost items,

Reporter on Governments
Reporter's Report

Mutual Funds

2088

NSTA Notes

2078

Securities

clear how far the Polish-Soviet Communist team wants

cleverly

XORPORRTiOn

clared two dividends, each

emphasized

cents per

Stock

share,

the

dividend

the Common

payable

Jjs

Although he and his govern¬
ment abhor Franco, he urged the Council
to make its decision
without sentiment on "hard, firm ground."
If the UN were to
which he evidenced in

San Francisco.

diplomatic relations, this would immeas¬

break off economic or even

urably hurt the innocent
the

wrong

Van Kleffens then declared that

cannot set a precedent by intervening
Spain's domestic jurisdiction. In support thereof he cited rulings
the Court of International Justice which denied the right to
light of the Charter we

in the
in

Spanish people, would rally additional in¬
kind behind Franco, and would unleash

the country.

another civil war on

meddle in any country's

PRODUCTS

1946.

The transfer books

dividend

quarterly

declared

been
of

JAMES

such

action

avoiding

May

unruly
over

one-half

cents

what

credits

Undoubtedly
serious

dilemma

means a most
if one is faced

with the choice between continua¬
tion of inflationary monetary

pol¬

the enforcement of a pain¬
ful adjustment process.
However,
it should be considered
that if
icy

the

inflationary

ruins its
restrictive

boom

not hindered by

course

monetary policy the ensuing crash
will

even

pose

serious ad¬

justment problems.
L. ALBERT HAHN.

business

the

be the aim

must

business cycle policy.

every

increasing

by
to

amounts

New York City,

April 17, 1946.

same,

MEETING NOTICE

IMPERIAL
OF

LIMITED

OIL

ANNUAL

GENERAL

SHAREHOLDERS

general meeting of the shareholders of Imperial Oil

been sent to all
For the

of busi¬

afternoon.

Notice in this respect has

registered shareholders.

guidance of holders of share warrants, they are advised

that in accordance With

procedure established under the Supple¬

mentary Letters Patent and by-laws of the Company, such" share
warrants may be deposited up to and including Saturday, April
27th, with

McDERMOTT,

The

General

Secretary, Imperial Oil Limited, 56 Church St., Toronto, Ont.,

Royal

Bank

of Canada, 68

The

MEETING NOTICE

Royal

Bank

of Canada, 383 Richmond Street,

William

Canada, King

Street,

Yonge

New

Sts.,

York

Toronto,

City
Ont.

Virginia,

Roanoke,

Meeting

Annual

The

Western

and

pursuant to the By-laws, at
the
principal office of the Company ir.
Roanoke, Virginia, on Thursday, May 9:
1946,
at 10 o'clock A. M.,
to elect four
Directors
for a term of three years.
Stockholders of record at the close ol
rusiness
April 19, 1946, will be entitled
will

held,

vote

such

meeting.
L.

COX.

Secretary.

with undoubted

Royal

Bank

of Canada,

Royal

Bank

of Canada, 360 St. James

The

Royal

Bank of Canada, St. James

The

Royal

Bank of Canada, George &

Hollis Sts., Halifax,

The

Royal

Bank

of Canada, 22-26 King St., St. John, N. B.

The

Royal

Bank

of Canada,

The

Royal

Bank of Canada, Main &

The

Royal Bank

of Canada,

The

Royal

of Canada, 241

The

Stockholders oi
Railway
Company

Royal Bank of Canada, 147 North Front St., Sarnia, Ont.

The

Bank

Bank of Canada, Ouellette &

The

1946.

MEETING

STOCKHOLDERS

Royal
Royal

The

April 5,

ANNUAL

NOTICE

RAILWAY

The

Royal Bank of Canada,

The

NORFOLK AND WESTERN
COMPANY

Royal

Bank

Investment
EXPERIENCED

Dealers,!

Dr. Quo-Tai-Chi, Retiring Council

Fresiawt wth A. Wll1Hd
May of The Chronicle.

coming adopcomplete procedural

code.,

SECURITY

ANA¬

LYST, able
to
write sharp-minded
up-to-date analyses of bank, indus¬
trial and railroad stocks, available for

paid analyses and for
mail inquiries. Write
Box
L-43,
Commercial & Financial
Chronicle, 25 Park Place, New York 8,

individually
answering

your

Ont.

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St.,

Ottawa,

Ont.

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N. S.

Queen Street, Charlottetown, P.E.I.

111

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Canada, Hastings

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Bank

Royal

Bank

of Canada,

The

London,

Sts., Windsor, Ont.

The

Attention,

Sparks

Pitts

Bank

The

SITUATION WANTED

"could

by the

for

which

zation

The

Hafez Afifi Pasha of Egypt, will

helped

flationary

Canada

partial list of
was
decided on;
and his
successor taking the chair today,

tion

and,

obviously

hour of 2:30 o'clock in the

Secretary.

rules

be followed by a de¬
depression, i.e., to the
contrary of the economic stabili¬
to

Limited will be held at the head office of the Compariy in the city
of Sarnia, Ontario, on Tuesday, the 30th day of April, 1946, at the

1946.

JOHN

Council
Table
procedural details.

Toward the end

its

come
too
soon."
He very
ably resolved the many and some¬

wrangles

The annual

dividend

not

times

spite

money

inflationary boom that

is bound

ex¬

period

MEETING

Checks will be mailed.

increasing

President

Council

lead to

in spite of its huge

post-war

easy

policy in inflationary times must

Treasurer.

payable on May
to
stockholders

1946

ness

sincerity that the end of his ten¬
ure

the

$0.45 per share ha5
payable June 10,
the close

of record at the close

tendency of members to make of
it a
"sounding-board and propa¬
ganda
organization"; . and ^ a
medium fo.r power politics.
says

record as of
1946.

WICKSTEAD,

and

twelve

Norfolk

xthe

done

continuation

the

stock,

declared

22,

progress

war

employment be created.

tainly not be without political arid
social dangers. On the other hand

price

credit

by lowering other cost items
full

adjustment process would cer¬

credit demand and it has not been

demand

(12y2c) per share on the out¬
standing common stock of the

that
one
growing basic flaw in the Coun¬

Quo

close.

not

Company

international conflict.

believes

Qua

inflationary

costs

There is, however, no doubt that
under prevailing conditions such

This has not been done

NOTICE

of unilateral
policy, and hence carries no in¬
ference of the policy she would
advocate as proper for the UN as
an
organization. "That is an en¬
tirely different matter," he sdid,
"dependent on the rules and spirit
Charter.".

also
can

soon

the supply

painful

The Board of Directors of

properly the result

Dr.

the

Stockholders
business
May 18,
to

1946,

regime, Dr. Quo,
delegate, jn an inter¬
that

when

very

by lowering interest rates and riot

that the de¬

Spencer Hellogg & ikons;, 3m.
A

Although the Chinese Govern¬
has*5 severed all delations

cil's

quar¬

treasurer

vith the Francb

Dr.

THOS. A. CLARK

ment

of the

will

March 28, 1946.

Company,

stated

check

pansion.

terly dividend of 75tf per share on the out¬
standing Common Stock, payable on May 1,
1946, to stockholders of record on April 15,

The Chinese Position

view

increases,

during the

position on two

That the change be made by peaceful means,

China's

CORPORATION

The Board of Directors has declared

has

arid

pros¬

interest

low

to the degree

and

NATIONAL DISTILLERS

government should be removed, but by

war

guarantee

reality

only appropriate

are

mand

Spanish periple, arid

bloodshed frriiri civil

order

demand for credits is low. As

Secretary

Wentworth Manufacturing

That the Franco

rates

April 16, 1946.

the

15, 1946.

have

rates

low level in

and

J. MILLER WALKER

objectives:
1.

maintain

perity.

concentrated the United States'

Stettinius

June

remain at

holders of record at the close of
on

interest

July 1, 1946 to stock¬

dbmestic jurisdiction.
*

Mr.

conditions

adjustment

ployment could be achieved in
spite of high interest rates.
For
it is an error to assume that only

of credits has to be raised in order

delegates today, Dr.
performed consistently with the clarity and brilliance

Van Kleffens

dividuals

payable

May 6,

other dividend

and the

'i5

answering the Polish, French and Mexican

May 15,

might be necessary also to take
action against the Soviet dictatorship, the Organization could not pos¬
sibly survive the strains ensuing from such administrative policy. The
confusions between democracy and authoritarianism on the one hand,
and political aggression and the "love of peace" on the other, would

1946,

for consistency's sake,

j»i

one

1946 to stockholders of record at

cannot avoid the im¬

business

hopeless.

of 30

Corporation,

the close of business

tionary times lowering of interest
rates
is an adequate means of
achieving reflation and prosperity.
But the easy money policy as ex¬
pressed today in innumerable ut¬
terances goes further.
It applies
a
depressionand
deflationborn
theory to
a
clearly
in¬
flationary economy, when it states
that
even
under
inflationary

The Board of Directors has de¬

pression that it is the indisputably undemocratic form of the present
Spanish government which really constitutes the focal point of the
agitation. And it should be seen that the UN body cannot possibly
forage around the world cleaning up sovereign governments of whose
ideologies a majority of its members might disapprove. Whether or
not it then,

credit

expansion incites
higher employment. It can be cor¬
rectly concluded that in defla¬

RRDIO-KEIfH-ORPHEUItl

implications are external. Then it must be asked how the
Council is going to determine at just what stage matters of internal
one

necessitate

especially wages. With such
adjustment process, full em¬

that the

jurisdiction become external matters.
In listening to the debate realistically

would

(Continued from page 2130)
and

increase certain

especially wages. This
means,
indeed, that the whole
economy has adapted itself to the
low interest rate level and that
the
adoption
of
an
inflationchecking high interest rate policy

and

for a longer period than against Germany or Japan.

his case fit the Charter, Mr. Lange

them

downward

UN to go. If it is subsequently going to get to economic sanctions,
in accordance with France's expressed demand, it must be realized
that this is considered a war measure.
Thus stringent enemy steps
To make

2111

Says

The Interest Rate

the

might be taken

2107

Corner

Miarkets—Walter Whyte

DIVIDEND NOTICES

wide scale,

It is not

Registration

Salesman's

Tomorrow's

world¬

continue to carry on a war permanently-^as joint allies?
And how can the Organization act as a continuing police force,
poking its nose into the internal affairs of a country, either when¬
ever it disapproves of its form of government, or when it suspects
it of not being equally "peace-loving"?
—

Utility Securities

2078

Literature

and

2092-

Real Estate Securities

Public

Calendar of New Security Flotations.
Dealer-Broker

has

Railroad Securities

Our
Our

2089

Business Man's Bookshelf

Russian

savings by pri¬

vate individuals. The consequence

been that the profit margin
entrepreneurs of all sorts have
gained from low interest rates has

2086
2122

Items

Page
2100
2123
2076

Securities Now in

Stocks

Insurance

and

Broker-Dealer

(Continued from first page)

How can a

6f withdrawals of

INDEX

Political Issues Engulf UN
letters

2131

Royal

Bank

Granville

Sts.,

Vancouver,

1106-1108 Government St., Victoria,

B. C.

B.C.

Canada, 226-236 Water St., St. John's, Nfld.

Such warrant holders will receive in exchange therefor certificate
entitling them to attend and vote at the annual general meeting.
Such share warrants so deposited will be returned to the holder
thereof

following

the

meeting on presentation to the above
given in exchange for such warrants.
to be represented by proxy, form for

certificate

addresses of the

If warrant holder desires
same

should be obtained at the above addresses and mailed with

certificate of

deposit to reach The General Secretary, Imperial Oil
Limited, Sarniaf Ont., Canada, at least 24 hours prior to the meet¬

ing.
be

Certificates forwarded with such proxy forms to Sarnia will

returned

order

for

holder

concerned

secure

return

warrants.

More Political Implications in
A

H*.

basic

contention

the Iran Controversy

that

Gromyko is flagrantly inconsistent.

extended
be

bone

that

grievance

was

before

not
the

within

Council

ettled by bilateral dealings.

of sovereignty,

which

Last month Mr. Gromyko

Iran's sovereign rights to bring
because

the

matter was

Now he declares that

(Continued on page 2132)

being

it would violate

Copies of annual report

EXECUTIVE

Commercial
Park

Place,

Financial Chronicle,
New York 8, N. Y.

will be available on request to The
Limited, 56 Church Street, Toron¬

General Secretary, Imperial Oil

qualified financial officer, over 20
years'
sound experience in securities,
finance, banking, accounting and
man¬
Taxes and security reports.
agement.
Age 45.
Address replies to Box A-ll,

Well

to, Ont., Canada.
Dated at Toronto this 15th

day of April, 1946.
COLIN D.

CRICHTON,

General Secretary.

2132

THE COMMERCIAL & FINANCIAL CHRONICLE

(Continued from page

The Council cannot have its

by the wishes of any power—large or
political aims.
%

New England Public
Service

direction blown hither and

yon

,?"

;2i31)

at stake.

are

small—to accord with its

Gaumont-British "A"
Rhodesian Selection
American Molasses

S;i

her sacred rights not to accede to a withdrawal of the case.

In any
event, this phase of international relations will have to be defined.
;
The placid Secretary General, Trygve Lie (the pronunciation of
whose Christian name has been man handled with variations running
from

the

"Trigger"' of the journalists to the
"Trygerf" uttered by Council President Quo),
has finally "taken over" with a vengeance. His

Gromyko has again raised the issue as to whether any Power
emasculate the functioning of the Council by indiscriminate

Mr
can

exercise of the Veto—either

has

taken

any

absenting one's-self from the proceedings could not give

resolve

the

question,

because,

Trading Markets

interpretations.

Int'l Resist.

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evident that conversely Iran tried to make the Council
football for her own political help. For her

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the

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Council, through the pressure
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dealings, the Council's

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It will be remembered that the Iranians reported to the Council

Automobile,
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and

to get better terms for themselves
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categorically ithat under their country's Constitution no oil agree¬
ment Whs permitted to be negotiated while
foreign troops were
present,
yet it is now obvious that negotiations
leading up to
the oil concession to the
Russians, were at (that very moment in
full swing.
*

BS 328

time, the Iranian Govern¬

mystery. Likewise is it a deep mystery why the Russians' latest
communication convinced the Iranians that the
troops would be out

;

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kept on the agenda despite Mr.
Gromyko's contrary request. Only the day before the change-offafce note Prince Mozaffar Firouz, local
propaganda minister and
his country's spokesman, issued a statement
saying that it is a ques¬
tion which the Security Council itself must decide.
So, as late as
Sunday noon the Iranian Government had no intention of withdraw¬
ing its complaint; and the reason for the quick following reversal is a

assurances

Hanorer 2-7913

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suddenly became convinced by the "categorical" assurances of
the Russian Ambassador there. As late as
April 9 Ambassador Ala

sians' similar

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by May 6, whereas they

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Four times the Iranians denied the Soviet's affirmations of a
pending
agreement—these Soviet affirmations being made in the background
of the Soviet'ls
undisputed treaty-breaking maintenance of her

matter

•

Kobbe, Gearhart & Company

complaints and reports to
the Council have terminated in
inconsistency and incomprehensibility.

the

United Elastic
Corp.

O'Sullivan Rubber

Then there is the practice of using the Council and nations as
political tools. Dr. Lange, the Polish Delegate, accuses the Council
of using Iran as a political football in
power politics. But it appears

that

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Iranians," and specifically impugns the United States' motives.
Sir Alexander Cadogan's temper is
ruffled, and he testily
reminds his "Soviet colleague" that it is not
Washington or London,
but Russia that persists in raising the issue at this time.

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Iran controversy continues, the
become involved. First there is the
the rift between the Big Three Powers.
Mr.
Gromyko calls the American proposals and the Council decisions
"senseless" and "useless"; reiterates that the Americans and
British,
in seeking to "inflate and prolong" the
issue, "are more Iranian than
any

M. S. Wien & Co.

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been referred, is certain to report with differing

Pearson, some observers are unkindly saying that his present action
has political connotations.
more

Mexican Corp.
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in the

Mr. Lie having been elected to his office by
Soviet backing against the strong candidacy of Canadian Ambassador

Finishing

Publicker Ind.

Committee of Experts to whom the opinion has

legal

bombshell.

U.:S.

nation

decision of the Council

first place, as President Quo said, the SecretaryGeneral functions merely as the chief adminis¬
trative
officer; and in the second place, the

Trygve Lie

Threw

way

guide

form

the

Scophony, Ltd.

affirmatively or passively through the

technique. Dr. Van Kleffens-observed- that the Charter
specified the opportunity for any power to vote and that merely
walkout

the right to paralyze the Council. Mr. Gromyko merely in essence
legal bombshell again reiterated his country's Veto - theories so strenuously advanced
Dumbarton
Oaks,
Yalta and
San Francisco: stating
that
upsetting the oscillating Iran status, just as 8 at
of the 11 members were about to vote to keep
because the Russians abstained from the proceedings, the decisions
the matter on the agenda. Mr. Lie's legal opinion
were "invalid," and that a veto over any Council decision, even in¬
was wholly unsolicited, and
surprising and irri¬
volving procedure only, is permissible. Under the Russian concept,
tating to most of the delegates—irritating because
they knew nothing of Mr. Lie's unprecedented UN is merely an instrument to carry out the commands of the Big
action
in
telling them how to interpret the Five Powers, whereas the Western Democracies are trying to uphold
Charter, until an hour before their Council majority rule.
meeting' convened. The maneuver does not in

first attempt to

18, ig46

oMhe.Security Council

The intrinsic authority and entire future

Political Issues Engnll UN

■Thursday, April

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Full text of Commercial and Financial Chronicle : April 18, 1946, Vol. 163, No. 4482, Section 1

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